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Saturday, November 19, 2016

The prosecution in our estimate, has failed to prove this indispensable component of the two offences beyond reasonable doubt. The factum of unnatural death in the matrimonial home and that too within seven years of marriage therefore is thus ipso facto not sufficient to bring home the charge under Sections 304B and 498A of the Code against them. (39) The predicament of the prosecution is compounded further by the by its failure to prove, the precise cause of the death of the deceased. It is not clear as to whether the death has been suicidal or homicidal. It is also not proved beyond doubt, the origin and cause of the external injuries. Though the obscurity of the causative factors is due to the putrefaction of the body, the benefit of the deficiency in proof, logically would be available to the persons charged.-To reiterate, the prosecution has failed to prove the crucial ingredient of cruelty and harassment by direct and cogent evidence thereby disentitling itself to the benefit of the statutory presumption available under Section 113B of the Act.-Whereas the analysis of the evidence by the Trial Court, in our view, has been in the proper perspectives, factual and legal and thus the findings recorded by it are valid, the High Court based its determination substantially on presumptive inferences taking the aid of Section 113B of the Act, divorced from the attendant facts and the evidence with regard thereto. We are thus of the opinion, that the conclusions of the High Court do not constitute a plausible view on the materials on record and cannot be sustained. -2016 Nov.http://judis.nic.in/supremecourt/imgst.aspx?filename=44316- BAiJNATH AND ORS Vs. STATE OF M P

                                                                  REPORTABLE

                             IN THE SUPREME COURT OF INDIA
                              CRIMINAL APPELLATE JURISDICTION

                           CRIMINAL APPEAL NO.1097 OF 2016
                    [ARISING OUT OF S.L.P. (CRL.) NO.9718 OF 2014)



BAIJNATH & OTHERS                        .…APPELLANTS

                                      VERSUS

STATE OF MADHYA PRADESH             ....RESPONDENT

                               J U D G M E N T

AMITAVA ROY, J.

       The  appellants,  the  in-laws  of  the  deceased  Saroj  Bai,  being
aggrieved by the conversion of their acquittal into conviction by  the  High
Court under Sections 498A and 304B of  the  Indian  Penal  Code  (for  short
hereinafter referred to as the “Code”) seek defeasance of  this  verdict  in
the present appeal.

(2)   Heard Mr. Siddhartha Dave, learned counsel for the appellants and  Mr.
Naveen Sharma, learned counsel for the respondent.

(3)   The genesis of the prosecution case lies in the information lodged  by
appellant Baijnath, the elder brother of the appellant  No.2,  Shivraj,  the
father-in-law of the deceased. The information disclosed that on  09.06.1996
at  about  8  p.m.  the  family  had  dinner  together  and  after  watching
television, retired to the respective rooms for the night. The deceased  was
married to Rakesh, son of appellant No.2. According  to  the  informant,  in
the next morning she was found dead, hanging from the fan by a ligature.

(4)   On this information Merg No.20/1996 was registered with  the  Chanderi
Police Station and on the completion of the investigation  charge-sheet  was
laid against the appellants together with Rakesh, husband  of  the  deceased
and Prem Bai, wife of the appellant No.1 under  Sections  302,  304B,  498A,
201 read with Section 34 of the Code.  According  to  the  prosecution,  the
investigation revealed that the husband  of  the  deceased  along  with  the
appellants had been demanding dowry and in  pursuit  thereof  had  subjected
the deceased to  harassment  and  torture  in  the  proximate  past  of  the
incident.

(5)   At the trial, the learned Additional Sessions Judge  concerned  framed
charges against the accused persons under Sections  304B  and  498A  of  the
Code, which were denied by the accused persons.  Subsequent  thereto  Rakesh
committed suicide on 09.06.1998 by consuming poison  and  therefore  he  was
deleted from the array of the persons indicted.

(6)   The prosecution at the  trial  examined  12  witnesses  including  the
Investigating Officer and  the  Doctor  who  had  performed  the  postmortem
examination. The defence, after the  recording  of  the  statements  of  the
appellants under Section 313 Cr.P.C., examined 4 witnesses.

(7)   The Trial Court on an exhaustive assessment of the  evidence  adduced,
acquitted  the  accused  persons  of   the   charges   against   which   the
respondent/State preferred  appeal  before  the  High  Court.  The  impugned
decision has been rendered thereby upturning the acquittal.

(8)   The learned Trial Court while recording the admitted fact of  marriage
between the deceased and Rakesh and also that the incident had  occurred  in
the matrimonial home of the wife within 7 years of the  alliance,  dismissed
the  evidence  with  regard  to  demand  of  motorcycle  in  dowry  and  the
imputation  of  torture,  cruelty  and  harassment  as  projected   by   the
prosecution and thus exonerated the accused persons of the charges  levelled
holding  that  in  the  attendant  materials  on   record,   the   statutory
presumption  as  envisaged  in  Section  113B  of  the  Evidence  Act,  1892
(hereinafter  referred  to  as  the  “Act,  1892”)  was  not  available  for
invocation.

(9)   The High Court however being of the  opinion  that  the  deceased  had
died an unnatural death in suspicious circumstances in her matrimonial  home
within 7 years of marriage and that the  same  was  preceded  by  persistent
demands for a motorcycle  as  dowry  in  marriage  accompanied  by  cruelty,
returned the finding of guilt against the  appellants  but  exonerated  Prem
Bai, the wife of appellant No.1 i.e.  Baijnath.  It  accepted  the  evidence
adduced by the prosecution qua the charge of dowry  demand,  harassment  and
cruelty    in    connection    therewith    and    applied    the    deeming
prescription/statutory presumption contained in Section  304B  of  the  Code
and Section 113B of Act, 1892.

(10)   The  learned  counsel  for  the  appellants  has  in  this   backdrop
insistently urged that the evidence in support of the charge of  demand  for
a motorcycle as dowry in marriage by the  husband  and  his  family  members
being  patently  inadequate  and  unconvincing  to  furnish  the  ingredient
relating thereto qua the charges  levelled  against  the  appellants,  their
conviction is utterly unsustainable and if allowed to stand would amount  to
travesty of justice. According to Mr. Dave,  the  imperative  essentials  of
Sections 498A and 304B of the Code not having been proved,  the  High  Court
had fallen in error in  applying  the  deeming  edict/statutory  presumption
mandated by Section 304B of the Code  and  Section  113B  of  Act,  1892  in
converting their acquittal to  conviction.  The  learned  counsel  contended
that as the medical evidence as well did not  disclose  with  certainty  the
cause of death–homicidal or suicidal, there was  as  such  no  incriminating
evidence on record to prove the culpability of the appellants. As  not  only
the testimony of the prosecution witnesses  with  regard  to  demand  for  a
motorcycle as dowry in marriage is  visibly  inconsistent,  mutilating  each
other, the  defence  evidence  to  the  contrary  formidably  establish  the
falsity of this charge, he urged. According to Mr. Dave the analysis of  the
evidence on record by the High Court has been erroneous leading to  findings
not borne out by the materials on record and thus are  indefensible  in  any
view of the matter warranting the acquittal of the appellants.

(11)  In emphatic refutation, the learned counsel  for  the  respondent  has
argued that as admittedly  the  unfortunate  incident  had  occurred  within
seven years of marriage in the matrimonial home and that too  in  suspicious
circumstances, all the prerequisites of the  offences  under  Sections  498A
and 304B were proved beyond reasonable doubt and thus the impugned  decision
does not merit interference. The learned Trial Court did err  in  evaluating
the  evidence  in  the  correct  perspectives  and  the  High  Court  having
undertaken a painstaking review thereof, the  findings  arrived  at  by  it,
following a proper appreciation of the materials  on  record  are  not  only
valid in law but also in the exigent espousal of the cause of justice.

(12)  After outlining the rival  submissions  as  above,  it  is  considered
expedient next to take a synopsised stock of the  evidence  adduced  by  the
parties, so as to facilitate a better comprehension of  the  facets  of  the
lis and the desired adjudication.

(13)  PW-1 Kundan Singh,  the  uncle  of  the  deceased,  deposed  that  the
families of the accused persons were joint and that at  the  marriage,  cash
and other valuables were gifted to the in-laws of the deceased and that  the
ceremony was solemnized without any hassle. The witness however referred  to
a grievance being expressed later on by the deceased alleging that  she  was
being harassed by her husband Rakesh and the  appellants  as  well  as  Prem
Bai, the wife of appellant No.1 relating to  the  demand  of  motorcycle  in
dowry. The witness  also  referred  to  another  occasion  where  a  similar
complaint had been made by the deceased to him. He claimed to have seen  the
dead body of the deceased hanging from the fan.

(14)   In  cross-examination,  this  witness  deposed  about  a  demand  for
motorcycle at the time of marriage but however conceded  that  no  complaint
was made to the police for such demand at any point of time. He  denied  the
suggestion that the deceased had committed suicide as because  her  fidelity
to her husband was being questioned in the face of  her  love  affairs  with
the son of one Thoran Singh, the Sarpanch of the village.

(15)  PW-2 Jahar Singh, the father  of  the  deceased  mentioned  about  the
demand for a motorcycle by the husband and the in-laws of  the  deceased  at
the time of the marriage and also the  harassment  in  connection  therewith
suffered by the deceased as  reported  by  her  to  him.  The  witness  also
referred to the same demand by the husband in the year 1996 on the  occasion
of Chowk Vidai, a ritual, whereupon he was  assured  that  as  and  when  it
would be financially feasible, the same would be arranged. This  witness  as
well stated that though the demand for the motorcycle was being  made  since
the time of marriage in the year 1994, no complaint was  made  by  him  with
regard thereto to anybody. When confronted with his statement in  course  of
the investigation, he admitted of the omission in the  disclosure  that  the
deceased had confided in him about such demand during her  limited  stay  at
the matrimonial home and the  harassment  and  mal-treatment  in  connection
therewith. He denied the suggestion that the deceased had  eloped  with  the
son of Thoran Singh and that as a result there was a  confrontation  between
him with the family of Thoran Singh. He also denied the suggestion  that  in
view of this episode there was unpleasantness in the family of  the  in-laws
of the deceased for which they had some reservation in accommodating her  in
the nuptial house.

(16)  PW-3 Jhulla, who at the relevant time was the Sarpanch of the  village
deposed that the deceased had committed suicide and  that  when  he  visited
the spot, he did not see any injury on her body.

(17)  In cross-examination, he clarified that the appellant No.1 was  living
separately from the in-laws of the deceased from  before  the  marriage.  He
also mentioned that the accused persons were held  in  high  esteem  in  the
village and used to behave decently  with  their  daughter-in-law.  He  also
stated that he had not heard about any demand of dowry made by  the  accused
persons.

(18)  PW-4 Narayan Singh, a neighbour did mention  about  the  demand  of  a
motorcycle in dowry at the time  of  marriage  and  that  the  deceased  had
disclosed to her father about harassment meted out to her by the  appellants
and Prem Bai in  connection  therewith.  In  cross-examination  the  witness
testified that there was no demand for dowry before the  marriage  and  that
there was no report with regard thereto to the police.

(19)  PW-5 Prembai, the mother of the deceased testified that no  dowry  was
fixed before the marriage and no demand was made by the accused persons  but
they still offered Rs.1 lac to them. She stated that  her  son-in-law  while
dining made a demand for motorcycle  which  according  to  the  witness  was
assured as and when the finances would be available.  This  witness  deposed
that even after two years of marriage,  the  appellants  repeated  the  said
demand to which a similar assurance was again given.

(20)  In cross-examination, this witness admitted that before  the  marriage
no demand for motorcycle had been made as dowry, though she mentioned  about
the complaints made by the deceased to her about harassment by  the  accused
persons for not providing the bike. She admitted that no complaint  in  this
regard was ever made and the relations as well were not informed  about  the
treatment suffered by the deceased.

(21)  PW-7 Jahar Singh did state  about  a  demand  of  motorcycle  made  by
Rakesh, the husband of the deceased.

(22)  PW-8 Gyasibai, a neighbour deposed that  the  deceased  had  committed
suicide and that when she visited the  place  of  occurrence,  she  did  not
notice any injury mark on her body. In cross-examination the witness  stated
that the deceased did never speak to her  about  the  demand  and  testified
that the in-laws did treat her properly and that there was no  confrontation
at any point of time.

(23)  PW-11 Manish Kapuria, the Investigating  Officer  narrated  the  steps
taken by him in course of  the  inquisition  and  mentioned  amongst  others
about the preparation of  the  panchnama  of  the  dead  body.  Though  this
witness stated that the whole exercise was videographed,  he  admitted  that
the same had not been produced as evidence. He  claimed  to  have  seen  two
ligature marks on the neck of the deceased.

(24)  PW-12 Dr. R.P. Sharma, who had performed the  postmortem  examination,
stated to have identified contusion on the right cheek, middle of left  side
of neck and middle of left  parietal region in the dead body.  According  to
him, the ligature mark was found  to  be  ante-mortem  in  nature.  He  also
mentioned that the  3  contusions  were  ante-mortem  but  opined  that  the
ligature mark  was  postmortem  in  occurrence.  On  an  overall  assessment
however, the witness stated that as at the time  of  autopsy  the  body  had
started putrefying, no opinion as to the cause of death could be  given.  In
cross-examination the witness admitted that the dead body did not  wear  any
other injury other than those mentioned.

(25)  The witnesses of the defence, namely, DW-1 Gaya  Prasad,  DW-2  Munna,
DW-3 Har Kunwar Bai and DW-4 Sirnam Singh in  unison  testified  that  there
was no demand for dowry or motorcycle  ever  made  by  the  husband  of  the
deceased or her  in-laws.  They  further  stated  that  the  appellant  No.1
Baijnath had been residing separately from the in-laws of the deceased  from
before the marriage. According to them, the family of  the  in-laws  of  the
deceased was sufficiently well-off and did enjoy appreciable  reputation  in
the society. These witnesses were all neighbours of the appellants.

(26)  DW-3 Har Kunwar Bai, in addition stated that the deceased  had  during
her marriage eloped with the son of Pradhan of the Village Chitara and  that
in the night of the incident she was with her,  watching  television  before
they parted for their  respective  rooms  to  sleep.  This  witness  is  the
daughter-in-law of appellant No.2 and asserted  that  neither  she  nor  the
deceased had ever been harassed in the family.

(27)  The evidence on record and the competing arguments have  received  our
required attention. As the prosecution is on  the  charge  of  the  offences
envisaged in Sections  304B  and  498A  of  the  Code,  the  provisions  for
reference are extracted hereunder:

“304B. Dowry death.-(1) Where the death of a woman is caused  by  any  burns
or bodily injury or occurs otherwise than under normal circumstances  within
seven years of her marriage and it is shown that soon before her  death  she
was subjected to cruelty or harassment by her husband  or  any  relative  of
her husband for, or in connection with, any demand  for  dowry,  such  death
shall be called “dowry death”, and such husband or relative shall be  deemed
to have caused her death.

      Explanation. - For the purpose  of  this  sub-section,  “dowry”  shall
have the same meaning as in section 2 of the  Dowry  Prohibition  Act,  1961
(28 of 1961).

(2) Whoever commits dowry death shall be punished with  imprisonment  for  a
term which shall not be less than  seven  years  but  which  may  extend  to
imprisonment for life.



498A.  Husband  or  relative  of  husband  of  a  woman  subjecting  her  to
cruelty.—Whoever, being the husband or the relative  of  the  husband  of  a
woman, subjects such woman to cruelty shall be  punished  with  imprisonment
for a term which may extend to three years  and  shall  also  be  liable  to
fine.

      Explanation.—For the purpose of this section, “cruelty” means—

(a) any wilful conduct which is of such a nature as is likely to  drive  the
woman to commit suicide or to cause grave injury or danger to life, limb  or
health (whether mental or physical) of the woman; or

(b) harassment of the  woman  where  such  harassment  is  with  a  view  to
coercing her or any person related to her to meet any  unlawful  demand  for
any property or valuable security or is on account of failure by her or  any
person related to her to meet such demand.



(28)  Whereas in the offence of dowry death defined by Section 304B  of  the
Code, the ingredients thereof are:


(i)   death of the woman concerned is by any burns or bodily  injury  or  by
any cause other than in normal circumstances and


(ii)  is within seven years of her marriage and


(iii)  that  soon  before  her  death,  she  was  subjected  to  cruelty  or
harassment by her husband  or  any  relative  of  the  husband  for,  or  in
connection with, any demand for dowry.


the offence under Section 498A of the Code is attracted qua the  husband  or
his relative if she  is  subjected  to  cruelty.  The  explanation  to  this
Section exposits “cruelty” as:


(i)   any wilful conduct which is of such a nature as  is  likely  to  drive
the woman to commit suicide or to cause grave  injury  or  danger  to  life,
limb or health (whether mental or physical) or


(ii)  harassment of the woman, where such harassment   is  with  a  view  to
coercing her or any person related to her to meet any  unlawful  demand  for
any property or valuable security or is on account of failure by her or  any
person related to her to meet such demand.



(29)  Patently thus, cruelty or harassment of the lady  by  her  husband  or
his relative for or in connection  with  any  demand  for  any  property  or
valuable security as a demand for dowry or in connection  therewith  is  the
common constituent of both the offences.

(30)  The expression “dowry” is ordained to have  the  same  meaning  as  in
Section 2 of the Dowry Prohibition Act, 1961. The expression  “cruelty”,  as
explained,  contains  in  its  expanse,  apart  from  the  conduct  of   the
tormentor, the consequences precipitated  thereby  qua  the  lady  subjected
thereto. Be that as it may, cruelty or harassment  by  the  husband  or  any
relative of his for or in connection with any demand of dowry  to  reiterate
is the gravamen of the two offences.

(31)  Section 113B of the Act enjoins a statutory presumption  as  to  dowry
death in the following terms:

“113B. Presumption as to dowry death. -  When  the  question  is  whether  a
person has committed the dowry death of a woman and it is  shown  that  soon
before her death such woman has been subjected by such person to cruelty  or
harassment for, or in connection with,  any  demand  for  dowry,  the  Court
shall presume that such person had caused the dowry death.


      Explanation. - For the purpose of this section,  “dowry  death”  shall
have the same meaning as in section 304B of the Indian  Penal  Code  (45  of
1860)”



(32)  Noticeably this presumption  as  well  is  founded  on  the  proof  of
cruelty or harassment of the woman  dead  for  or  in  connection  with  any
demand for dowry by the person charged with the offence. The presumption  as
to dowry death thus would get activated only upon  the  proof  of  the  fact
that the deceased lady had been subjected to cruelty or  harassment  for  or
in connection with any demand for dowry by the accused and that too  in  the
reasonable contiguity of death.

      Such a proof  is  thus  the  legislatively  mandated  prerequisite  to
invoke the otherwise statutorily ordained presumption of commission  of  the
offence of dowry death by the person charged therewith.

(33)  A conjoint reading of  these  three  provisions,  thus  predicate  the
burden of the prosecution to unassailably substantiate  the  ingredients  of
the two offences by direct and  convincing  evidence  so  as  to  avail  the
presumption engrafted in Section 113B of the Act against the accused.  Proof
of cruelty or harassment by the  husband  or  her  relative  or  the  person
charged is thus the sine qua non to inspirit the statutory  presumption,  to
draw the person charged within the coils thereof. If the  prosecution  fails
to demonstrate by cogent coherent and  persuasive  evidence  to  prove  such
fact, the person accused of either of the above referred offences cannot  be
held guilty by taking refuge  only  of  the  presumption  to  cover  up  the
shortfall in proof.

(34)  The legislative primature of relieving the prosecution of  the  rigour
of the proof of the often practically inaccessible recesses of  life  within
the  guarded  confines  of  a  matrimonial  home  and  of  replenishing  the
consequential void, by according a presumption against the  person  charged,
cannot  be  overeased  to  gloss-over  and  condone  its  failure  to  prove
credibly, the basic facts enumerated in the Sections involved, lest  justice
is the casualty.

(35)  This Court while often dwelling on the scope and  purport  of  Section
304B of the Code and Section 113B  of  the  Act  have  propounded  that  the
presumption is contingent on the fact that the prosecution first  spell  out
the ingredients of the offence of Section 304B as in Shindo  Alias  Sawinder
Kaur and another Vs. State of Punjab – (2011)  11  SCC  517  and  echoed  in
Rajeev Kumar Vs. State of Haryana  –  (2013)  16  SCC  640.  In  the  latter
pronouncement, this Court propounded that one of the  essential  ingredients
of dowry death under Section 304B of the Code is that the accused must  have
subjected the woman to cruelty in connection  with  demand  for  dowry  soon
before her  death  and  that  this  ingredient  has  to  be  proved  by  the
prosecution beyond reasonable doubt and only then  the  Court  will  presume
that the accused has committed the offence  of  dowry  death  under  Section
113B of the Act. It referred to with approval, the earlier decision of  this
Court in K. Prema S. Rao Vs. Yadla Srinivasa Rao – (2003) 1 SCC 217  to  the
effect that to attract the provision of Section 304B of  the  Code,  one  of
the main ingredients of the offence which is required to be  established  is
that “soon before her death” she was subjected  to  cruelty  and  harassment
“in connection with the demand for dowry”.

(36)  Tested on the judicially adumbrated parameters as  above,  we  are  of
the unhesitant opinion that the  prosecution  has  failed  to  prove  beyond
reasonable  doubt,  cruelty  or  harassment  to  the  deceased  for  or   in
connection with any demand for dowry as contemplated in either  of  the  two
provisions of the Code under which the accused  persons  had  been  charged.
Noticeably, the alleged demand centers around a  motorcycle,  which  as  the
evidence of the prosecution  witnesses  would  evince,  admittedly  did  not
surface at the time of finalization of the marriage.  PW-5,  the  mother  of
the deceased has even conceded that  there  was  no  dowry  demand  at  that
stage. According to her, when the husband (who is dead) had insisted  for  a
motorcycle thereafter he was assured that he  would  be  provided  with  the
same, finances permitting. Noticeably again, the demand,  as  sought  to  be
projected by the prosecution, if  accepted  to  be  true  had  lingered  for
almost two years. Yet admittedly, no complaint was made thereof  to  anyone,
far less the police. Apart from the general allegations  in  the  same  tone
ingeminated with parrot like similarity by the  prosecution  witnesses,  the
allegation of cruelty and harassment to  the  deceased  is  founded  on  the
confidential communications by her to her parents in particular and  is  not
supported by any other quarter.

(37)  To the contrary, the evidence of the defence witnesses  is  consistent
to the effect that no demand as imputed had ever been made as the family  of
the husband was adequately well-off and further the appellant No.1  Baijnath
had been living separately from  before  the  marriage.  According  to  them
there was no occasion for any  quarrel/confrontation  or  unpleasantness  in
the family qua this issue. Significant is also the testimony  of  DW-3,  the
sister-in-law of the deceased who indicated abandonment of  the  matrimonial
home by her with the son of Thoran Singh, the Sarpanch of  the  village  for
which she understandably had incurred the displeasure of the in-laws.  DW-4,
the father of  DW-3 who had given his  daughter  in  marriage  in  the  same
family had deposed that he did not ever encounter any demand for dowry.  The
testimony of the prosecution witnesses PW-3 and PW-7 fully  consolidate  the
defence version.

(38)  A cumulative consideration of the overall evidence  on  the  facet  of
dowry, leaves us unconvinced about the truthfulness of the  charge  qua  the
accused persons. The prosecution in our estimate, has failed to  prove  this
indispensable component of the two offences  beyond  reasonable  doubt.  The
factum of unnatural death in the matrimonial home and that too within  seven
years of marriage therefore is thus ipso facto not sufficient to bring  home
the charge under Sections 304B and 498A of the Code against them.

(39)  The predicament of the prosecution is compounded  further  by  the  by
its failure to prove, the precise cause of the death of the deceased. It  is
not clear as to whether the death has been  suicidal  or  homicidal.  It  is
also not  proved  beyond  doubt,  the  origin  and  cause  of  the  external
injuries. Though the obscurity of  the  causative  factors  is  due  to  the
putrefaction of the body, the benefit of the deficiency in proof,  logically
would be available to the persons charged.

(40)  In all, tested on the overall scrutiny of the evidence as a whole,  in
our comprehension, the conviction  of  the  accused  persons  including  the
appellants herein on the basis of the materials on record would not  be  out
of risk. To reiterate, the prosecution  has  failed  to  prove  the  crucial
ingredient of cruelty and harassment by direct and cogent  evidence  thereby
disentitling itself to the benefit of the  statutory  presumption  available
under Section 113B of the Act.

(41)  Whereas the analysis of the evidence by the Trial Court, in our  view,
has been in  the  proper  perspectives,  factual  and  legal  and  thus  the
findings recorded by it are valid, the High Court  based  its  determination
substantially on presumptive inferences taking the aid of  Section  113B  of
the Act, divorced from the attendant facts  and  the  evidence  with  regard
thereto. We are thus of the opinion, that the conclusions of the High  Court
do not constitute a plausible view on the materials on record and cannot  be
sustained.

(42)  The appellants thus in view of the  evaluation  made  hereinabove  are
entitled to the benefit of  doubt.  The  appeal  is  allowed.  The  impugned
judgment and order is set-aside. The appellants are  hereby  ordered  to  be
set at liberty forthwith if not wanted in connection with  any  other  case.
Let the records of the Trial Court be remitted immediately for the needful.



                             …...........................................J.
                       (DIPAK MISRA)



…...........................................J.
                       (AMITAVA ROY)
NEW DELHI;
NOVEMBER 18, 2016.

It is clear from a plain reading of Section 22 A of the Act that the Board can issue a direction not to dispose of assets only to a sick industrial company. There is no dispute that the First Respondent is not a sick industrial company and that it purchased the assets from a sick industrial company in accordance with the Sanctioned Scheme. The BIFR was not correct in passing an order of status quo and directing the First Respondent not to alienate/transfer the assets by its orders dated 05.05.2008 and 30.06.2008. We express no opinion on the jurisdiction of BIFR under other provisions of the Act. It is open to the BIFR to review the implementation of the Sanctioned Scheme and pass suitable directions. As stated supra, the AAIFR held that the Second Respondent has no liability in respect of Kota units which have been sold to the First Respondent. The said findings were not challenged by the First Respondent in the Writ Petition filed in the High Court. The High Court set aside the entire order dated 11.12.2008 without taking note of the findings in favour of the Second Respondent. The petition filed for clarification by the Second Respondent was also dismissed by the High Court. The High Court ought not to have disturbed the findings in favour of the Second Respondent as they were not in challenge in the Writ Petition filed by the First Respondent.= 2016 Nov. http://judis.nic.in/supremecourt/imgst.aspx?filename=44315 - PRESI. SECY, J.K.SYNTS.MAZ.UN.,KOTA&ANR Vs. ARFAT PETROCHEMICALS PVT.LTD & ORS.

                                                              NON-REPORTABLE


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL No. 8597 of 2010


PRESIDENT/SECRETARY, J.K. SYNTHETICS MAZDOOR  UNION  (CITU),  INDIRA  GANDHI
NAGAR, KOTA & ORS.


                                                           .... Appellant(s)
                                   Versus

ARFAT PETROCHEMICALS PVT. LTD. & ORS.

                                                             ….Respondent(s)

                                    With

                        CIVIL APPEAL No. 8598 of 2010


GENERAL SECRETARY, RAJASTHAN TRADE UNION KENDRA & ANR.


                                                           .... Appellant(s)
                                   Versus

ARFAT PETROCHEMICALS PVT. LTD. & ORS.

                                                             ….Respondent(s)
                                    With

                        CIVIL APPEAL No. 8599 of 2010


M/S J.K. SYNTHETICS LIMITED

                                                           .... Appellant(s)
                                   Versus

M/S ARFAT PETROCHEMICALS PVT. LTD. & ORS.

                                                             ….Respondent(s)



                               J U D G M E N T


L. NAGESWARA RAO, J.

      Civil Appeal Nos. 8597 and 8598 of 2010 are filed by  President,  J.K.
Synthetics Mazdoor Union, Kota  &  Ors.  and  General  Secretary,  Rajasthan
Trade  Union  Kendra  &  Anr.  respectively  against  the   judgment   dated
28.07.2009 of the Rajasthan High Court at Jaipur in Civil Writ Petition  No.
2006 of 2009. Civil Appeal No. 8599 of 2010 is filed by M/s J.K.  Synthetics
Ltd. against the same judgment to a limited extent that the findings in  its
favour   given   by   the   Appellate   Authority   for    Industrial    and
Financial (AAIFR) vide order dated  11.12.2008  were  reversed  without  any
challenge to the same.
The parties will hereinafter be referred to as arrayed in Civil  Appeal  No.
8597 of 2010.  The facts relevant for adjudication of the dispute  in  these
Appeals are as follows:
J.K. Synthetics Limited (now Jay Kay Enterprises Ltd.), who  is  the  Second
Respondent was  declared  a  sick  industrial  company  on  02.04.1998.  The
Industrial Development Board of India (IDBI), who is the  Fourth  Respondent
was appointed as the Operating Agency.  A Draft  Rehabilitation  Scheme  was
submitted on 06.06.2000.  As per the said Scheme, a revival  of  the  cement
units by de-merging them into a separate unit was proposed.   This  was  not
accepted by  the  creditors  and  the  Operating  Agency.    The  Board  for
Industrial and Financial Reconstruction (BIFR) directed an advertisement  to
be issued for a change of management of  the  company  for  the  purpose  of
rehabilitation. The Second Respondent challenged the order dated  06.06.2000
by filing an  Appeal  before  the  AAIFR.   The  AAIFR  circulated  a  Draft
Rehabilitation Scheme for approval on 31.01.2001.   The  AAIFR  allowed  the
said Appeal by its order dated 23.01.2003 by setting aside the order of  the
BIFR dated 06.06.2000.   By the said order, the AAIFR sanctioned  the  Draft
Rehabilitation Scheme dated 31.01.2001 by which  the  proposal  of  the  de-
merger of cement units was accepted.
In the meanwhile,  the  Second  Respondent  entered  into  a  Memorandum  of
Understanding (MoU) with M/s Arafat Petrochemicals  Pvt.  Ltd.  (APPL),  the
First Respondent herein.  According to the said MoU the assets of  the  Kota
Units of Respondent No. 2 were to be sold to Respondent  No.1  for  a  total
consideration of Rs. 15  crores.   The  liability  towards  payment  to  the
workmen was to be borne by APPL.  It is also relevant to mention  here  that
a Tri-Partite Labour Settlement Agreement (TLSA) was  executed  between  the
First Respondent, Second Respondent and the  Labour  Unions  on  09.10.2002.
Another  TLSA  on  the  same  terms  was  entered  into  between  the  First
Respondent, Second Respondent and  Staff  Association  on  22.10.2002.   The
total liability  under  the  TLSAs  worked  out  to  approximately  Rs.43.69
crores.  There is no unanimity between the  parties  on  the  scope  of  the
above mentioned TLSAs.   The  First  Respondent  claims  that  there  is  no
compulsion on its part to provide future  employment  to  all  the  existing
workmen whereas the workmen contend  to  the  contrary.   There  is  also  a
dispute about the obligation of First Respondent to revive the  Kota  units.

On 07.01.2005, the AAIFR sanctioned a Scheme for transfer of the Kota  units
to the  First  Respondent  in  terms  of  the  MoU  dated  19.10.2001.   The
liability of the First  Respondent  was  fixed  at  Rs.52.46  crores  (Rs.15
crores to be paid to JK Synthetics Limited/Second  Respondent  and  Rs.37.46
crores to  be  paid  to  the  workmen).   The  order  dated  07.01.2005  was
challenged by the Appellant in the High Court of  Delhi  by  filing  a  Writ
Petition which was dismissed on 26.07.2005.  The AAIFR refused to  interfere
with the Sanctioned Scheme dated  07.01.2005  on  the  ground  that  it  was
substantially implemented.  By an order dated 30.05.2007 the AAIFR  directed
the BIFR to monitor the implementation of the Sanctioned Scheme.
The Appellant filed Civil Suit No.63 of 2008  in  the  Court  of  Additional
Civil Judge, Kota seeking an injunction against the  First  Respondent  from
selling, removing or dismantling any assets  of  the  Kota  units  till  the
entire amount due to the workmen was  determined  and  settled.    The  said
suit was dismissed on 08.04.2008 on the ground that the  matter  has  to  be
decided under the Industrial Disputes Act, 1947.
On 24.03.2008 a sale deed was executed by the Second  Respondent  in  favour
of the First Respondent for sale of the assets of the Kota units.    In  the
review meeting held on 05.05.2008, the BIFR  took  note  of  the  complaints
that  were  made  regarding  the  sale  of  assets  of  the  Kota  units  as
waste/scrap by the First Respondent.   The BIFR held that  the  interest  of
the workmen have to be safeguarded in accordance with the Sanctioned  Scheme
of 2005.  The BIFR also  held  that  the  Second  Respondent  cannot  escape
responsibility towards the rehabilitation of the Kota  unit  on  the  ground
that there is change in management.   After holding  that  sufficient  steps
have not been taken by the First and Second Respondents towards  revival  of
the Kota Units, the BIFR gave the following directions:
“IDBI (MA) would expeditiously carry out spot inspection of  the  Kota  Unit
and submit a detailed status report to this Board  regarding  implementation
of the SS-03 & SS-05 within a period of 30 days.
M/s JKSL/M/s APPL would maintain status  quo  and  would  not  alienate  any
material/assets whatsoever from the factory site of Kota Unit  till  further
orders from this Board.
Permission is granted to all Association (s)/Union  (s)/  Employees  of  the
company M/s JKSL present today to proceed u/s 22(1) against the company  M/s
JKSL/M/s APPL/their promoter(s)/guarantor (s) for  recovery  of  their  dues
through legal action(s) in appropriate forum(s).
Chief Secretary/ Resident Commissioner, Govt. of Rajasthan shall attend  the
next hearing as fixed by this Board.
Allahabad Bank, Central Bank of India and Syndicate Bank are  exempted  from
attending any further hearing in the matter. The  address  list  be  amended
accordingly,  as  requested  by  the  company.    The  employees  and  other
respondents listed by Hon’ble AAIFR in order of 31.08.2006  be  noticed  for
the next hearing.”

The First Respondent participated in the next review  meeting  held  by  the
BIFR on 30.06.2008.  It  complained  of  no  notice  being  issued  for  the
earlier meeting dated 05.05.2008.  The First Respondent  informed  the  BIFR
that it is not a sick company and no directions can therefore be  issued  to
it.   The BIFR held that the First Respondent was not  right  in  contending
that it does not fall within the purview of the  Sick  Industrial  Companies
(Special Provisions) Act, 1985 (hereinafter referred to as “the  Act’’)  and
need not implement the orders issued by the Board.   The BIFR  directed  the
IDBI to carry out an inspection of the Kota units and to  submit  a  report.
There  was  a  direction  to  maintain  status  quo  in   respect   of   the
material/assets at the factory site of the Kota Units till  further  orders.
There was also a stay on  transfer/alienation  of  land  or  assets  of  the
company without the permission of the Board.   The orders  dated  05.05.2008
and  30.06.2008  of  the  BIFR  were  assailed  by  the  First  and   Second
Respondents before the AAIFR.  The  AAIFR  by  its  order  dated  11.12.2008
dismissed the Appeals filed by the First Respondent and  directed  the  BIFR
to re-examine the exact position relating to the  payment  of  dues  to  the
workmen.  The BIFR was also directed  to  continue  the  monitoring  of  the
Scheme and review the efforts made by the First Respondent  towards  revival
of the Kota units.  The contention of the First  Respondent  that  the  BIFR
has no jurisdiction  over  a  company  which  is  not  a  sick  company  was
rejected.   It is relevant to refer to the findings of the AAIFR  in  favour
of the Second Respondent in paragraphs 38, 39 and  40  of  the  said  order.
In the said paragraphs the AAIFR held that it is only the  First  Respondent
who would be responsible for the payment of the dues to the workmen.   While
holding that the Second Respondent is not liable to make  any  payment,  the
AAIFR allowed the Appeal of the  Second  Respondent  by  setting  aside  the
directions issued by the BIFR to the Second Respondent.
Aggrieved by the order dated 11.12.2008 of the AAIFR, the  First  Respondent
filed a Writ Petition in the Rajasthan High Court.  The High  Court  allowed
the Writ Petition by holding that  the  BIFR  and  the  AAIFR  do  not  have
jurisdiction  to  issue  directions  to  a  company  which  is  not  a  sick
industrial company under Section 22 A of the Act.  Being  aggrieved  by  the
said judgment of the High Court, the Labour Unions filed  Civil  Appeal  No.
8597 and 8598 of 2010.  Civil Appeal  No.  8599  of  2010  is  filed  by  JK
Synthetics Limited aggrieved by the judgment in so far as it set  aside  the
findings in its favour which were not challenged in the Writ Petition.
The only point that falls for consideration in these  Appeals  is  regarding
the scope of Section 22 A of the Act.  Section 22 A is as follows:
“22 A. Direction not to dispose of assets: - The Board  may,  if  it  is  of
opinion that any  direction  is  necessary  in  the  interest  of  the  sick
industrial company or creditors or shareholders or in the  public  interest,
by order in writing direct the sick industrial company not  to  dispose  of,
except with the consent of the Board, any of its assets—
(a)   during the period of preparation or consideration of the scheme  under
section 18; and
(b)   during the period beginning with  the  recording  of  opinion  by  the
Board for winding up of the company under sub-section (1) of section 20  and
up to commencement of the proceedings relating to the winding up before  the
concerned High Court.”

“Sick industrial company” is defined in  Section  3  (1)  (o)  which  is  as
under:
“(o) "sick industrial company" means an industrial company (being a  company
registered for not less than five  years)  which  has  at  the  end  of  any
financial year accumulated losses equal  to  or  exceeding  its  entire  net
worth.
Explanation: - For the removal of doubts, it  is  hereby  declared  that  an
industrial company existing immediately before the commencement of the  Sick
Industrial Companies (Special Provisions) Amendment  Act,  1993,  registered
for not less than five years and having at the end  of  any  financial  year
accumulated losses equal to or exceeding its  entire  net  worth,  shall  be
deemed to be a sick industrial company;”
It is clear from a plain reading of Section 22 A of the Act that  the  Board
can issue a direction not to dispose of assets only  to  a  sick  industrial
company.   There is no dispute that the  First  Respondent  is  not  a  sick
industrial company and that it purchased the assets from a  sick  industrial
company in accordance with the Sanctioned Scheme.  The BIFR was not  correct
in passing an order of status quo and directing the First Respondent not  to
alienate/transfer the assets by its orders dated 05.05.2008 and  30.06.2008.
 We agree with the findings of the High Court in the impugned judgment  that
the BIFR does not have competence to issue directions to a company which  is
not a sick industrial company under  Section  22  A  of  the  Act.   We  are
fortified in this view by a judgment of  this  Court  in  U.P.  State  Sugar
Corporation Ltd. v. U.P. State Sugar Corporation Karamchari Association  and
Anr. reported in (1995) 4 SCC 276 wherein it was held as follows:
“It runs counter to the express terms of Section  22  A  of  the  Act  which
confers a limited power on the Board to pass an  order  prohibiting  a  sick
industrial company from disposing of  its  assets  only  during  the  period
specified in Clause (a) and (b).”

Several contentions have been raised by both  sides  during  the  course  of
hearing of these Appeals which we have not  adverted  to  as  they  are  not
relevant for adjudication of the dispute in these  appeals.  We  express  no
opinion on the jurisdiction of BIFR under other provisions of  the  Act.  It
is open to the BIFR to review the implementation of  the  Sanctioned  Scheme
and pass suitable directions.
As stated supra, the AAIFR held that the Second Respondent has no  liability
in respect of Kota units which have  been  sold  to  the  First  Respondent.
The said findings were not challenged by the First Respondent  in  the  Writ
Petition filed in the High Court.  The  High  Court  set  aside  the  entire
order dated 11.12.2008 without taking note of the findings in favour of  the
Second Respondent.  The petition  filed  for  clarification  by  the  Second
Respondent was also dismissed by the High Court.  The High Court  ought  not
to have disturbed the findings in favour of the Second  Respondent  as  they
were not in challenge in the Writ Petition filed by  the  First  Respondent.

For the aforesaid reasons, Civil Appeal Nos.  8597  and  8598  of  2010  are
dismissed.   Civil  Appeal  No.  8599  of  2010  is  allowed.    No   costs.

                      .…............................J.
                 [ANIL R. DAVE]

                                          ................................J.
                             [L. NAGESWARA RAO]

New Delhi,
November 18, 2016

the Deputy Registrar had no jurisdiction to entertain appeal against the order of confirmation of sale issued under Section 89A read with Rule 38 of the Rules; and also because, admittedly, the debtor failed to pay the awarded amount in spite of repeated opportunities given to him from time to time. Moreover, the debtor cannot succeed in the Writ Petition filed by the auction purchaser and the Bank against the decision of the Deputy Registrar and get higher or further relief in such proceedings. Thus, the Division Bench having finally disposed of the writ appeal ought not to have entertained the application preferred by the debtor in the guise of clarification and to pass any order thereon - which would enure to the benefit of debtor who is in default, having become functus officio.= 2016 Nov. http://judis.nic.in/supremecourt/imgst.aspx?filename=44312- P.M.ABUBAKAR Vs. STATE OF KARNATAKA & ORS.

                                                             [REPORTABLE]

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                     CIVIL  APPEAL NOS.10894-10895/2016
             (Arising out of S.L.P. (C) Nos.30130-30131 of 2012)

P.M. Abubakar
….Appellant(s)

                             Vs.

State of Karnataka and Ors.                                …Respondent(s)

                                    WITH

                      CIVIL APPEAL NOS.10896-10897/2016
             (Arising out of S.L.P. (C) Nos.33314-33315 of 2012)

                                    WITH

                      CIVIL APPEAL NO.10898-10899/2016
             (Arising out of S.L.P (C) Nos.25613-25614 of 2013)


J U D G M E N T


A. M. KHANWILKAR, J.

      Delay condoned.

2.    Leave granted.

3.    These cross appeals have been filed by the debtor (Keshva  N.  Kotian)
and auction-purchaser (P.M. Abubakar). As the debtor  committed  default  in
repayment of loan to  the  Bank  (Mahalakshmi  Co-operative  Bank  Limited),
recovery proceedings were initiated by the Bank.  That  culminated  with  an
award passed by the Joint Registrar  Co-operative  Societies,  Mysore  dated
02.01.2004 against the  debtor  for  recovery  of  Rs.  13,  65,899.70  with
interest at 19% p.a.  As the debtor failed to pay the  amount  in  terms  of
the award, execution petition was filed.   The  debtor,  however,  filed  an
appeal  being  Appeal  No.  419  of  2004  before  the  Karnataka  Appellate
Tribunal, Bangalore.  On  21.06.2004,  the  Tribunal  passed  a  conditional
order of stay requiring the debtor to deposit  40%  of  the  awarded  amount
within eight weeks, failing which the stay would stand vacated.  The  debtor
failed  to  deposit  that  amount.  Therefore,  the  bank  after   obtaining
valuation report  relating  to  the  mortgage  property,  issued  notice  on
2.2.2005 in Form No. 6.  In spite of notice, no  payment  was  made  by  the
debtor.   As a result, the Bank issued notice of attachment in  Form  No.  7
on 25.02.2005.   The notice of  attachment  was  followed  by  a  notice  of
auction issued on 3.3.2005, fixing  the  auction  date  as  11.04.2005.   On
7.3.2005, the debtor’s brother (Shri Anand Kotian)  filed  an  objection  to
the said proceedings. According to him, the  property  was  a  joint  family
property.   This objection was enquired into and rejected on 22.3.2005.

4.    The debtor submitted letters dated 6.4.2005  and  8.4.2005  requesting
to stay the auction in view of the financial difficulties faced by  him  and
paid only Rs. 25,000/-  in  the  execution  case  filed  against  him.   The
auction sale was postponed pursuant to the request made by the debtor.   The
execution case was then transferred to the Assistant Registrar  Co-operative
Societies  (hereinafter  referred  to  as  ‘ARCS’),  as  per   the   revised
Government notification.  A fresh notice was issued on 9.5.2005 for  auction
sale to be held on 17.6.2005, as no further payment was made by  the  debtor
till that date.

5.    The debtor’s brother filed a Writ Petition before the  High  Court  of
Karnataka at Bangalore being Writ Petition No. 15737  of  2005,  challenging
the  sale  proclamation.    The  High  Court  passed  an  interim  order  on
condition of payment of 25% of the awarded  amount  within  two  weeks.   In
view of the interim order  passed  by  the  High  Court,  the  auction  sale
scheduled  on  17.6.2005  stood  postponed.   The  Writ  Petition  filed  by
debtor’s brother was, however, disposed of on 29.6.2005 with an  observation
to consider his objection.

6.    In the meantime auction sale was proposed to  be  held  on  18.8.2005,
but in view of the aforementioned High Court  order  the  auction  sale  was
postponed.  The objection filed by the debtor’s brother  was  considered  on
eight dates. He, however,  filed  a  memo  before  ARCS  on  21.12.2006  for
withdrawal of his objection.  The said objection was  finally  dismissed  on
16th July, 2007.

7.    On 30.4.2007, appeal preferred by the  debtor  challenging  the  award
dated  2.1.2004  was  dismissed  by  the   Karnataka   Appellate   Tribunal,
Bangalore. That decision has not been challenged.

8.    Once again a notice for auction sale  of  the  mortgage  property  was
issued on 18.7.2007, fixing the date of auction on 28.08.2007.   The  debtor
filed a Writ Petition No. 13204  of  2007  (CS-DAS),  challenging  the  sale
proclamation.   The  High  Court  by  order   27.08.2007   granted   interim
protection to the debtor on condition  of  depositing  40%  of  the  awarded
amount within two weeks, failing which the protection would  stand  vacated.
The debtor had deposited Rs.1,00,000/- on 21.8.2007.  He  deposited  further
amount of Rs. 50,000/- on 27.8.2007 and  assured  to  pay  Rs.  50,000/-  on
30.8.2007.   On  his  request  the  auction  sale  fixed  on  28.8.2007  was
postponed.

9.    As the debtor failed to pay the balance awarded amount as directed  by
the High Court, again a notice was issued on 9.10.2007  fixing  the  auction
sale on 12.11.2007.  The debtor   filed memo before the High Court  in  Writ
Petition No. 13204 of 2007 (CS-DAS), on the basis of  which  the  said  Writ
Petition was dismissed as withdrawn having become infructuous.

10.   As the balance awarded amount was not forthcoming, a fresh notice  for
auction was issued on  30.11.2007,  fixing  the  date  of  auction  sale  as
27.2.2008.  The debtor then filed a fresh Writ Petition  No.  3098  of  2008
(CS-DAS) challenging the auction sale.  The  High  Court  vide  order  dated
25.2.2008 showed indulgence to him and stayed  the  auction  sale  scheduled
for 27.2.2008 subject to the debtor depositing  Rs.  10,00,000/-   (Rs.  Ten
Lakhs only) within six weeks.  It was made clear that if the  debtor  failed
to pay the amount as directed, the protection as given shall  stand  vacated
and then it would be open to the bank to proceed with the sale  of  mortgage
property.

11.   The debtor once again failed to pay the amount as  directed    by  the
High Court vide order dated 25.2.2008.  As a  result,  a  fresh  notice  for
auction sale was  issued  on  28.7.2008  fixing  the  date  for  auction  as
10.9.2008.   The  Respondent-Bank  had  obtained  valuation   report   which
estimated the value of  the  mortgage  property  at  Rs.  44,80,000/-.   The
debtor was served with the notice of the  auction  sale.   That  notice  was
also published in the local Newspaper and by proclamation and tom tom.   The
debtor did not file any  objection  to  the  sale.   The  auction  sale  was
accordingly, held on 10.9.2008, in which the appellant -  auction  purchaser
was  the  highest  bidder  for  Rs.51,50,000/-  .   The  debtor  then  filed
objections before the ARCS for setting aside the sale. That objection  after
due enquiry was rejected by the ARCS on 14.10.2008. That order has not  been
challenged.

12.   Besides the objection filed before ARCS, the debtor also filed a  writ
petition before  the  High  Court  of  Karnataka  at  Bangalore  being  Writ
Petition No. 12901/2008 (CS-DAS), challenging the  sale  in  favour  of  the
auction purchaser.  The High Court  once  again  showed  indulgence  to  the
debtor by passing conditional  interim  order  on  7.10.2008  directing  the
debtor to  deposit  Rs.5,00,000/-  within  three  weeks  failing  which  the
interim protection would  cease  to  operate.    The  debtor  deposited  Rs.
5,00,000/- on 3.11.2008.

13.   Significantly, the Writ Petitions  filed  by  the  debtor  being  Writ
Petition  No.  3098/2008  and  Writ  Petition  No.  12901/2008  came  to  be
dismissed by the High Court on 3.12.2008.   By  these  Writ  Petitions,  the
debtor had challenged the auction sale  with  a  prayer  to  set  aside  the
auction in favour of the auction purchaser.  With the dismissal of the  said
Writ Petitions, the challenge to the auction sale of  the  subject  property
on 10.09.2008 became final.   Indeed,  the  debtor  filed  Writ  Appeal  No.
1914/2009 against the rejection of his writ petitions.   That  was  disposed
of on the basis of statement made by the debtor that writ  appeal  filed  by
him  before  the  Karnataka  Appellate  Tribunal  against  the  award  dated
2.1.2004 was pending. That  statement  was  incorrect  as  the  said  appeal
(Appeal No. 419/2004) was already dismissed on  30.4.2007.  Because  of  the
said misleading statement made by the debtor,  the  High  Court  vide  order
dated 15.1.2009, whilst disposing the writ appeal observed that it would  be
in the fitness of things for the Tribunal to take up the  appeal  on  merits
expeditiously  preferably within six  weeks.   It  also  observed  that  the
objections filed by the debtor against the auction  sale  be  considered  in
accordance with law.

14.   The Sales Officer on 17.2.2009, after due consideration of the  matter
recommended confirmation of the sale in favour  of  the  auction  purchaser.
On the basis of the said recommendation, ARCS passed  a  detailed  order  on
2.3.2009,  confirming  the  sale  in  favour  of  the   auction   purchaser.
Thereafter, Sale Deed in Form No. 10 was executed in favour of  the  auction
purchaser on 5.3.2009; and sale certificate was also issued in  his  favour.


15.   The debtor, however, chose to file appeal before the Deputy  Registrar
of Co-operative Societies,  Udupi  District  (DRCS)  against  the  order  of
confirmation of sale dated 02.03.2009, being appeal No. 07/08-09.  The  DRCS
entertained the said appeal and by his order dated 18.7.2009 held  that  the
sale was in accordance with the Rules but it was a case of  under  valuation
of the property.  On that ground, the confirmation of sale was set aside  on
condition that the debtor shall deposit Rs. 59,46,965/- with interest at  6%
p.a. from 13.2.2009 till payment.  The  operative  order  passed  by  Deputy
Registrar Co-operative Societies reads thus:

                                   “ORDER

      The confirmation order passed  by  the  Asst.  Registrar  Co-operative
Societies    also    Recovery    Officer's     Court     in     case     No.
AR38/case/83/Executive/82/08-09 dated 02-03-2009 is hereby set-aside.

      The Petitioner should remit the below  mentioned  amount  within  four
weeks from the date of this order-
      1) Auction amount           Rs.   51,50,000-00
      2) Registration charges                  4,84,465-00
      3) Solatium account                 2,57,500-00
      4) Khatha expenses                     25,000-00
      5) Court expenses                      20,000-00
      6) Other expenses                      10,000-00
                                        -------------------
                             Total Rs.  59,46,965-00
                                               ----------------------
He has to remit  at  6%  from  13-02-2009  until  depositing  the  money  at
Mahalakshmi Co-operative Bank (Ltd), Udupi. Under the said  head  the  court
charges and other charges shall born by the said  bank  and  Respondent  No.
(4) equally (i.e. the person who purchased the property in auction).   After
remitting the balance amount, the  bank  shall  transfer  the  same  to  the
respondent No. (4) within 3 days.

      This order pronounced in the open court today i.e. on 18-07-2009.

                                                                        Sd/-

                                        Deputy Registrar of Co-op. Societies
                                                     Udupi District, Udupi.”


Even this order has not been challenged by the debtor  and  was  allowed  to
attain finality.   At the same time, the debtor did not deposit  the  amount
as directed in the said order.

16.   The auction purchaser and  the  bank  being  aggrieved  by  the  order
passed by the DRCS, preferred Writ  Petition  No.23690/2009  and  23196/2009
(CS-DAS) respectively.  These writ  petitions  were  heard  by  the  learned
Single Judge. He opined that considering the  wide  difference  between  the
high value of the property and the awarded amount, there  was  no  necessity
to sell the entire property.  In that, the property consisted of a  building
and also vacant property. The learned Single Judge was of the  opinion  that
the reason recorded by the Appellate Authority (DRCS) was  just  and  proper
and did not warrant any interference in exercise of writ jurisdiction.    As
a result, the writ petitions filed by the auction  purchaser  and  the  Bank
were dismissed by a common judgment dated 11.01.2010.

17.   The auction purchaser and the Bank preferred  separate  Writ  appeals,
being  W.A.  No.  1006/2010  (CS-DAS)  and  W.A.  No.   2433/2010   (CS-DAS)
respectively. The Division Bench of the High Court vide its common  judgment
dated 24.8.2011 disposed of both the  appeals.   The  Division  Bench  noted
that the Appropriate Authority concerned was  competent  to  set  aside  the
sale even if there  was  no  application  for  setting  aside  the  sale  or
factually such application has already been rejected.  It  noted  that  from
the orders of DRCS and the learned Single Judge, it  was  evident  that  the
debtor did not fulfill his  obligation  in  spite  of  repeated  opportunity
given to him to pay the awarded amount. Even after  noting  this  fact,  the
Division Bench opined that as the property in question was under  valued  at
the time of auction sale, no  fault  could  be  found  with  the  discretion
exercised to set aside the sale under proviso to Sub rule 6(a) of  Rule  38.
On that finding, the Division Bench rejected the plea of the debtor and  the
Bank that without a pre deposit of the  awarded  amount  as  required  under
Rule 38 and that too within the time prescribed under  the  said  Rule,  the
Appropriate Authority could not have  set  aside  the  sale.   The  Division
Bench then adverted to the memo of  calculation  filed  by  the  debtor  and
proceeded to pass order, which in its opinion was just and proper so  as  to
adjust equities between the parties. The relevant extract  of  the  impugned
judgment, reads thus:

“11.  A   memo of calculation filed by the advocate for Respondent  No.5  on
11.8.2011 indicating the different amounts deposited by the appellant is  as
under:

                             Memo of Calculation



      (a)   Amount deposited by the
            Appellant on 10.09.2008:-Rs. 7,72,500/- interest @
                                  8% for 2 years 11 months
                                        Rs. 1,80,250/- (A)
      (b)   Amount deposited by the
                Appellant     on     25.10.2008:-Rs.43,77,500/-     Interest
      8% for 2 years 10 months
                                        Rs. 9,92,233/- (B)
      (c)   Stamp duty for registration
            paid on 06.03.2009:-  Rs. 4,84,465/- interest @
                                  8% for 2 years 6 months
                                        Rs. 96,893/- (C)
                                  (A)+(B)+(C)=Rs.12,69,376/- (D)
      (i)   Amount in deposit with
            A.R.C.S. from 25.10.08:-Rs. 20,82,616/- interest @
                                  4% for 2 yrs 10 months
                                        Rs. 2,36,030/- (E)
      (ii)  Amount deposited by the
            Respondent No.5 on
            06/02/2010:-          Rs. 41,69,200/- interest @
                                        4% for 1 yrs 6 months
                                        Rs. 2,50,152/- (F)
      (iii)      Amount in F.D. On orders
            of this Hon'ble Court:-     Rs. 62,51,816/- interest @
                                        8% for 3 months
                                        Rs. 1,25,036/- (G)
                             (E)+(F)+(G)=Rs. 6,11,218/- (H)
      12. He has calculated  the  interest  deposited  by  the  appellant  -
purchaser for different periods as stated above.   He  has  also  shown  the
amount in deposit with the ARCS after deducting the amount that  has  to  be
paid to the appellant - bank.

       13.   The  appellant  -  bank  has  also  filed  a  calculation  memo
indicating the actual claim amount, the date of  receipt  of  claim  amount,
number of days from the auction date till the amount received on  13.3.2009,
rate of interest and the actual amount of interest payable  apart  from  the
expenses incurred by them after 10.9.2008  for  various  litigations.   This
amount totally comes to Rs. 3,05,149/- as indicated below:

      1.       Date of Receipt of Claim amount
            13-3-2009
      2.    Claim amount                Rs. 30,67,384.00
      3.    Number of days from auction date
            10-9-2008 to amount received
            date 13-3-2009                   160 days
      4.    Rate of interest                       17%

      5.    Interest receivable for 160 days Rs. 2,28,583.00
      6.    Court expenses spent after
            10-9-2008 for various disputed   Rs. 76,566.00
                                             -------------------------
                                  Total            Rs. 3,05,149.00
                                             -------------------------


      14. So far as the auction purchaser is concerned, we note that he  has
made the following payments:

1.    10.9.2008                         :    Rs.   7,72,500/-

2.    25.10.2008                  :     Rs. 43,77,500/-

3.    Stamp duty for registration

      Paid on 6.3.2009                  :    Rs.  4,84,465/-



      15. As per the orders of the DRCS, he has to receive  Rs.  59,46,965/-
including solatium with interest at 6% per annum from 13.2.209.   Till  date
so far as auction purchaser is concerned not even a single pie is paid  back
to him. In case, the auction purchaser were  to  have  the  confirmation  of
sale in his favour, this calculation would not be  of  any  relevance.   The
fact remains the concerned authority has exercised the discretion and  there
is prima facie  material  to  indicate  there  was  under-valuation  of  the
property as well.  But this does not mean  the  auction  purchaser  who  has
parted with different amount by selling his own property should  be  put  to
financial loss apart from hardship.  So far as the bank  is  concerned,  the
amount was lying with the Recovery Officer and only on  13.3.2009  they  got
the claim amount.  However, this claim amount includes  interest  only  upto
the date of  auction  and  not  the  subsequent  interest  payable.  If  the
respondent - borrower intends to retain his property for  the  reasons  best
known to him, either for emotional attachment or other  reason,  he  has  to
compensate the purchaser for causing the loss to him.   The  amount  of  Rs.
59,46,965/- includes solatium of Rs. 2,57,500/-, but it does not  spell  out
the interest he would have got on this amount or the profit  he  could  have
got on the property which he sold in order to pay the auction price.

      16. In order to meet the ends of justice, it would be just and  proper
to order payment of interest at 12% per annum for the date of  deposit  made
by him on different amounts indicated  above.   He  shall  also  be  paid  a
solatium of Rs. 2,57,500/- apart from the interest at 12% per annum  on  all
the amounts he has spent till the date of  payment.  So far as the  bank  is
concerned, interest has to be paid for 160 days and Court  expenses  of  Rs.
76,566/-.  The amount was laying with the Recovery Officer  for  quite  some
time and it cannot be  the  entire  fault  of  the  respondent  -  borrower.
Therefore the bank shall get interest at 6% per  annum  on  Rs.  30,67,384/-
for 160 days apart from the Court expenses of Rs. 76,566/- spent by them.

      17. with these observations, the appeals  are  disposed  of  directing
the 5th respondent to pay the amount as indicated above within a  period  of
four weeks from the date of receipt of copy of  this  order,  failing  which
the order of confirmation of sale shall stand.”



18.   In spite of the aforementioned order,  the  debtor  did  not  pay  the
amount as directed by the High Court.  The  matter,  accordingly,  proceeded
before the Assistant Registrar of Co-operative Societies (ARCS), who  issued
a detailed communication to the debtor on 21.12.2011.  The  ARCS  considered
the plea taken by the debtor that he was entitled  for  certain  adjustments
and was not required to pay any further amount.  The  ARCS  did  not  accept
the said stand taken by the debtor and was of the opinion  that  the  amount
as directed by the Division Bench  has  not  been  paid.  The  ARCS  in  his
communication dated 21.12.2011 has noted that a sum of Rs.  80,64,916/-  was
payable by the debtor out of which  he  had  remitted  only  a  sum  of  Rs.
41,69,200/-  on 6.2.2010 and  Rs.  20,19,925/-  on  22.9.2011  totaling  Rs.
61,89,125/-.  There was still shortfall of Rs. 18,75,791.40 payable  by  the
debtor. The communication of the ARCS dated  21.12.2011  was  challenged  by
the debtor,  by  way  of  Writ  Petition  No.  48814/2011(CS-DAS)  filed  on
29.12.2011 before the High Court of Karnataka at Bangalore.

19.   When the said Writ Petition No. 48814/2011 (CS-DAS) was  pending,  the
debtor filed an application being IA No. 1/2012 in disposed of writ   appeal
No.  1006/2010  (CS-DAS)  and  writ  appeal  No.  2433/2010  (CS-DAS),   for
clarification of the order  dated  24.8.2011.   On  8.6.2012,  the  Division
Bench passed the following order on the said  IA  No.  1/2012,  which  reads
thus:

                          “ORDER ON I.A. No. 1/2012

Heard the learned counsel for the applicant, who is 5th respondent  in  W.A.
No. 2433/2010 (CS)  on  I.A.  No.  1/2012  filed  seeking  clarification  of
judgment dated 24.8.2011.

It is seen that by judgment dated 24.8.2011 this  Court  allowed  W.A.  Nos.
1006/2010 c/w 2433/2010 with certain  directions.   As  could  be  seen,  in
paragraph 16 of the judgment the intent of this Court is  very  clear,  that
is, the auction purchaser appellant in W.A. No. 1006/2010  should  get  back
his money with solatium, interest damages, etc.  as  specified  therein  and
the same was required to be paid by 3rd respondent.   No  mode  for  payment
was specified in the said judgment.

However, it is seen that ARCS, 3rd respondent in the appeals has  taken  his
own time in trying to interpret the  said  order  by  his  order  which  was
initially passed on 21.11.2011 and thereafter  corrected  as  21.12.2011  to
say that entire amount should have been deposited by the 5th  respondent  to
comply with the judgment of this Court which we  are  not  agreeable.   With
the available money, the 3rd respondent –ARCS should have first cleared  off
the amount to the auction purchaser with  interest,  solatium,  damages  and
whatever he is entitled to from out of the amount that  was  available  with
3rd respondent.  Thereafter, 3rd respondent should have  cleared  the  money
due to the bank, appellant in W.A. 2433/2010 alongwith interest at the  rate
specified therein.  If any is found in excess he should  have  given  it  to
5th respondent.

      In any event, if he had any  doubt  with  regard  to  the  above  said
aspect he should have approached this Court through the  Learned  Government
Advocate by filing an application seeking clarification.   Instead,  he  has
taken the responsibility of trying to  interpret  the  same  in  the  manner
known to him and also contrary to the intent of this Court.  In  any  event,
this Court feel there is no justification to keep  this  litigation  pending
forever.  Therefore,  to  put  quietus  to  this  litigation  it  is  hereby
directed that 3rd respondent ARCS  shall  immediately  disburse  the  entire
amount that is required to be paid to the auction purchaser and also to  the
bank within one week from today.  The excess of amount  that  remains  after
disbursing the amount shall be retained by him until further orders of  this
Court.

       Further,  after  receiving  the  amount  the  bank  and  the  auction
purchaser shall file memo of calculation to seek  additional  interest  from
the date of the judgment till actual date of  receipt  of  money  for  which
they are  entitled  to.   Whether  the  confusion  is  at  the  end  of  5th
respondent or at the instance of  3rd  respondent-ARCS  should  not  be  the
reason to deprive the fruits of the judgment to the  auction  purchaser  and
the  bank.  Therefore, they are called upon to  receive  the  entire  amount
pursuant to the judgment of this Court and  thereafter  file  memo  to  this
Court regarding the  extent  of  interest  they  are  entitled  to  for  the
different period, which will be considered by this Court at  the  next  date
of hearing.

Call this matter on 29.6.2012”.

The Division Bench thereafter  passed  the  following  order  on  29.6.2012,
which reads thus:

“These two writ appeals were disposed of by  common  judgment  on  24.8.2011
wherein  certain  directions  were  given  for  re-payment  of  the   amount
deposited by the auction purchaser and also the  amount  due  to  the  Bank.
Though sufficient amount was available  with  the  3rd  respondent-ARCS,  he
tried to interpret the order of  this  Court  differently  and  caused  some
delay in making payment  to  the  parties.   Though  strictly  there  is  no
mistake  on  the  part  of  the  5th  respondent-original  owner  in  making
available the requisite fund in terms of the order for refund of  money  due
to the auction purchaser and to clear the dues to the Bank,  it  is  because
of ARCS trying to interpret the order of this Court  differently,  confusion
has arisen in disbursement of the amount due to the  auction  purchaser  and
the Bank for which the auction purchaser and the Bank should not be made  to
suffer.

      Insofar as the money that they were required to receive on  or  before
24.9.2011 which they have not received, they are entitled  to  interest  for
the difference period i.e.,  from  24.9.2011  till  they  receive  the  said
amount.  In that behalf, the ARCS is required to pay the  interest  for  the
difference period from out of the excess  amount  which  is  available  with
him.  If the said amount is short of interest to be paid for  the  different
period, he is directed to call upon the owner to  deposit  the  said  amount
within ten days therefrom or  if  the  amount  is  sufficient,  to  pay  the
interest from out of the  amount  available  and  to  return  the  remaining
amount to the original owner of the property.

      With this observation, the clarification sought to the judgment  dated
24.8.2011 is clarified.

      It is made clear that the ARCS shall see that the clarificatory  order
dated 8.6.20112 and the  order  passed  today  regarding  interest  for  the
difference period should be implemented within ten days  from  the  date  of
receipt of a copy of this order”

.

The Division Bench directed the ARCS to act upon to the clarificatory  order
dated 8.6.2012 and 29.6.2012 respectively and to implement the  same  within
10 days.

20.   The writ petition filed  by  the  debtor  (against  the  communication
dated 21.12.2011 of the ARCS) was allowed by the learned Single  Judge  vide
order dated 7.9.2012, which reads thus:

                                   “ORDER

      An extent of 32 cents in Sy.No. 260/7 of  Kodavoor  village  in  Udupi
Taluk belonging to the  petitioner  was  brought  to  sale  to  recover  the
outstanding amount due to respondent No. 4 financial institution.  The  said
property was put to auction on  10.9.2008  for  Rs.  51,50,000/-.   The  3rd
respondent was the successful bidder and he deposited the amount  also.   On
appeal, the Deputy Registrar of Co-operative Societies set aside  the  order
dated 2.3.2009 by which the auction sale  was  confirmed  and  directed  the
petitioner  to  deposit  Rs.  59,46,965/-  within  four  weeks.    The   3rd
respondent-auction purchaser as well as the 4th respondent Bank were  before
this Court questioning the  said  order.   This  Court  dismissed  the  writ
petitions, against which W.A. Nos. 1006  and  2433/2010  were  filed.   This
Court disposed of the writ appeals with certain directions  in  as  much  as
the petitioner was directed to deposit Rs.  61,89,125/-  which  is  interest
component on the auction amount deposited by the 3rd respondent.

2.    It appears, the 3rd  respondent-Assistant  Registrar  of  co-operative
Societies was of the view that the petitioner was required  to  deposit  Rs.
80,64,916/- and there  was  short-fall  of  Rs.  18,75,791/-.     Hence,  an
application was filed by  the  petitioner  seeking  clarification  and  this
Court on two occasions clarified the position and was of the view  that  the
amount deposited by the petitioner was just  and  proper.    Notwithstanding
the clarification, made, the impugned order at Annexure-A is passed  calling
upon the petitioner to deposit the short-fall on calculation.

3.    When the  matter  is  taken-up,  Mr.  S.R.  Hegde  Hudlamane,  learned
counsel for the 3rd respondent auction purchaser  submits  that  as  against
the clarificatory order, the  auction  purchaser  has  filed  Special  Leave
Petition, which is yet to come-up before the Apex Court.

4.    In the circumstances, I am of the view that no useful purpose will  be
served by keeping this writ petition pending in as much as the  decision  to
be rendered by the Apex  Court  in  the  Special  Leave  Petition  filed  by
respondent No. 3 would regulate the present proceedings.   Till  such  time,
the matter is required to be kept pending by the 2nd respondent.  Hence  the
following order:-

      The petition is allowed.   The  impugned  order  is  set  aside.   The
proceedings  are  remanded  to  2nd  respondent,  who  shall  keep   pending
adjudication.  The proceedings shall be regulated  by  the  decision  to  be
rendered by the Apex Court”.



21.   In the present appeals filed by  the  appellant  -  auction  purchaser
before this Court, he has challenged the judgment rendered  in  writ  appeal
dated  24.8.2011  as  well  as  both  the  orders  passed  on  clarification
application dated 8.6.2012 and 29.6.2012 respectively. The  debtor,  on  the
other hand, has filed appeal against the  judgment  of  the  Division  Bench
dated 24.8.2011 in Writ Appeal No. 1006/2010.

22.   We have heard the learned counsel for the parties at length. From  the
indisputable facts mentioned in the  preceding  paragraphs,  it  is  evident
that the Award passed by the Competent Authority on 02.01.2004 became  final
after the dismissal  of  appeal  (Appeal  No.  419/2004)  by  the  Karnataka
Appellate Tribunal, Bangalore on 30.04.2007. The  debtor  did  not  pay  the
awarded amount in spite of  repeated  opportunity  given  to  him  on  every
occasion.  Thus,  for  effectuating  the  Award  and  for  recovery  of  the
outstanding dues from the debtor, his mortgage property was required  to  be
auctioned.  That auction sale was finally held  on  10th  August  2008.  The
appellant - auction purchaser turned out  to  be  the  highest  bidder.  The
debtor unsuccessfully attempted to  apply  for  setting  aside  the  auction
sale. He also challenged the sale by way of Writ  Petition  No.  12901/2008.
Even the Writ Petition was dismissed on 3rd December 2008. In the said  writ
petition, the debtor had also prayed  for  setting  aside  the  sale.   That
prayer was also rejected. Indeed, the debtor  resorted  to  remedy  of  writ
appeal being Writ Appeal No. 1914/2009.  That was disposed of  by  recording
an incorrect statement of the debtor that his appeal against the  Award  was
still pending. As a matter of fact,  the  appeal  preferred  by  the  debtor
before the  Karnataka  Appellate  Tribunal  being  Appeal  No.419/2004,  was
already dismissed on 30th April, 2007.  As a  result  of  which,  the  Award
passed against him had become final.

23.   Be that as it may, it is common ground that the debtor did not  prefer
application for  setting  aside  the  sale,  inconformity  with  the  remedy
provided  in  that  behalf  in  terms  of  Section  89A  of  the   Karnataka
Cooperative  Societies  Act,  1959  read  with  Rule  38  of  the  Karnataka
Cooperative Societies Rules.  That remedy could be  availed  by  the  debtor
only after depositing the awarded  amount  together  with  interest  thereon
with the Recovery Officer, in terms of Rule  38(4)(a)  of  the  Rules.   The
application as filed by the debtor was dismissed by the ARCS on  14.10.2008.
Resultantly, the Competent Authority proceeded to confirm the  auction  sale
on 02.03.2009, followed by grant of a certificate of sale and  execution  of
a Sale Deed in the prescribed Form. The sale of the subject  property  thus,
became final.

24.    The debtor, however, was ill advised to prefer an appeal  before  the
Deputy Registrar (CS) of Cooperative Societies, against the decision of  the
Competent Authority confirming the auction  sale.   For,  remedy  of  appeal
before that Authority could be availed only in terms of Section 106  of  the
Act, against an order passed by the Authority  (Registrar)  in  exercise  of
powers ascribable to the provisions  referred  to  therein.   The  order  of
confirmation of sale is ascribable to Section 89A of the Act read with  Rule
38 of the Rules.  No remedy of appeal against  that  decision  is  provided.
Section 106 of the Act does not provide for  an  appeal  against  the  order
confirming an auction sale, passed under Section  89A  read  with  Rule  38.
Section 89A of the Act read with Rule 38 of the Rules provide for a  special
dispensation.  Thus understood, the order passed  by  the  Deputy  Registrar
(CS) on the appeal preferred by the debtor being Appeal  No.7/2008-2009,  is
without jurisdiction. The learned Single  Judge  as  well  as  the  Division
Bench has completely glossed over this crucial aspect.

25.   The order passed by the Deputy Registrar (CS) dated  18th  July  2009,
assuming that it is ascribable to Rule 38(6)(a) as held by the  High  Court,
the fact remains that the debtor  failed  to  comply  with  the  said  order
requiring him to  pay  an  amount  of  Rs.59,46,965/-  along  with  interest
thereon within the specified time. On  account  of  non-compliance  of  that
direction, the relief granted by the  Deputy  Registrar  (CS)  in  terms  of
order dated 18th  July  2009  of  setting  aside  the  auction  sale  became
ineffective. Admittedly, the debtor deposited a  sum  of  Rs.41,69,200/-  on
6th February 2010 and Rs.20,19,925/- on 22nd September 2011.  That  was  not
in compliance with the order dated 18th July 2009.

26.   The fact that Writ Petitions were filed by the auction  purchaser  and
the Bank against the order of Deputy Registrar (CS) dated  18th  July  2009,
that could not extricate the debtor from complying with the order of  Deputy
Registrar (CS) which he allowed to attain finality. As  a  matter  of  fact,
the said order was passed on an appeal preferred by the debtor  himself  and
thus he was bound by the same.

27.   The debtor cannot be heard to claim benefit of the proceedings in  the
form of Writ Petitions  followed  by  Writ  Appeals  filed  by  the  auction
purchaser and the Bank. For, it is noticed that the Division  Bench  in  its
order dated 24th August 2011 determined the liability of the debtor  to  pay
Rs.59,46,965/- along with solatium and interest thereon.  At least in  terms
of that decision, the debtor ought to have paid the entire amount.  However,
there was  still  a  shortfall  of  Rs.18,75,791.40.  The  debtor,  instead,
represented before the ARCS that he  was  not  liable  to  pay  any  further
amount in  excess  of  the  amount  already  deposited  by  him  until  22nd
September 2011 totalling  Rs.61,89,125/-.  In our view, in the facts of  the
present case, it is only upon deposit of  the  entire  awarded  amount,  the
request of the debtor to absolve him of his liability could be  entertained.


28.    The  argument  pursued  on  behalf  of  the  debtor  that  there  was
calculation error in  determination  of  his  liability  to  the  extent  of
Rs.59,46,965/- including the interest accrued  thereon   as  directed;   and
not giving adjustment of the  deposits  already  made  prior  to  the  order
passed by the Division Bench on 24th August 2011 as was  manifest  from  the
no dues certificate given by the Deputy Commissioner,  Commercial  Tax  vide
letter dated 20th September 2010,  cannot  be  countenanced.  In  the  first
place, the communication dated September 2010 was tendered  across  the  Bar
for the first time before this Court during the argument.  It was  not  made
part of the record before the  High  Court  nor  was  pressed  into  service
before the High Court. Moreover, the said communication  is  in  respect  of
the effect of exemption of 90% of the interest under Tax Settlement  Scheme.
Thirdly, the matter on hand arises out of the order  passed  by  the  Deputy
Registrar (CS) setting aside the sale confirmed in  favour  of  the  auction
purchaser.

29.   As aforesaid, the debtor unsuccessfully challenged  the  auction  sale
and prayed for setting aside  the  same  by  filing  writ  petitions.   That
relief has been rejected. In that, a formal application  for  setting  aside
the sale filed by the debtor was rejected by the ARCS on  14.10.2008.    The
appeal preferred by the debtor before the Deputy Registrar (CS) was  against
the decision of the Competent  Authority  confirming  the  auction  sale  on
02.03.2009. That it was not maintainable under Section 106 of the  Act.  The
Deputy Registrar (CS) had no jurisdiction.

30.    Further,  once  the  auction  sale  is  confirmed  by  the  Competent
Authority, it is not open to the Authority  to  exercise  power  under  Rule
38(6), to  set  aside  the  sale.  That  would  be  against  the  spirit  of
legislative intent of giving finality  to  the  auction  sale  process  upon
passing of an order of confirmation of sale.

 31.  It is only the Authority referred to in Rule 38, who  could  have  set
aside the sale by recording reasons in writing in exercise of  powers  under
Rule 38 of the Rules, albeit before passing an order confirming the  auction
sale.  Rule 38 reads thus:

“38. Attachment and sale of immoveable property.-  (1)  Immoveable  property
shall not be sold in execution of a decree unless  such  property  has  been
previously attached:

      Provided that where the decree has been obtained on the basis of a
mortgage of such property it shall not be necessary to attach it.

(2) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

(3) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

(4) (a) Where immoveable property has been sold, any  person  either  owning
such property or holding an interest therein by virtue of a  title  acquired
before such sale may apply to have the sale  set  aside  on  his  depositing
with the Recovery Officer.-

(i) For payment to the purchaser a sum equal to 5 per cent of  the  purchase
money; and

(ii) for payment to the decree-holder the amount  of  arrears  specified  in
the proclamation of sale as that for the recovery  of  which  the  sale  was
ordered together with interest thereon and the expenses  of  attachment,  if
any, and sale and other costs due in respect of  such  amount,  less  amount
which may since the date of such proclamation  have  been  received  by  the
decree-holder.

(b)   If such deposit and application are made within 30 days from the  date
of sale, the Recovery Officer shall pass an order  setting  aside  the  sale
and shall repay to the purchaser the purchase money so far as  it  has  been
deposited together with the 5 per cent deposited by the applicant.

Provided that, if more persons than one have made  deposit  and  application
under this sub-rule, the application of the first depositor to the  Recovery
Officer shall be accepted:

       [Provided further that where the purchaser  is  the  Government,  the
sale be  set  aside  if  the  person  owning  the  property  or  any  person
interested, therein,-

Makes the application within sixty days from the date of sale along with,-

A sum equal  to  five  per  cent  of  the  purchase  money  for  payment  to
Government; and

Fifty per cent of the amount due under the decree for payment to the  decree
holder; and

Pay the balance within thirty days thereafter i.e., within ninety days  from
the date of sale.]

If a person applies  under  sub-rule  (5)  to  set  aside  the  sale  of  an
immoveable property, he shall not be entitled to make an  application  under
this sub-rule.

(5) (a) At any time within  30  days  from  the  date  of  the  sale  of  an
immoveable property, the decree-holder or any person entitled to share in  a
rateable distribution of the assets or whose interests are affected  by  the
sale, may apply to the Recovery Officer to set aside the sale on the  ground
of a material irregularity or mistake or fraud in publishing  or  conducting
it:

       Provided  that  no  sale  shall  be  set  aside  on  the  ground   of
irregularity or mistake  or  fraud  unless  the  said  Recovery  Officer  is
satisfied that the applicant has sustained substantial injury by  reason  of
such irregularity, mistake or fraud:

       [Provided further where the purchaser is Government the sale will  be
confirmed,-

After the expiration of sixty days where no application  to  have  sale  set
aside is made under sub-rule (4); or

After the expiration of ninety days where an application to set aside  under
sub-rule (4) is made but the balance of the amount due under the  decree  is
not deposited within ninety days from the date of sale.]

If the application be allowed, the said Recovery  Officer  shall  set  aside
the sale and may direct a fresh one.

(6) (a) On the expiration of thirty days  from  the  date  of  sale,  if  no
application to have the sale set aside, either under sub-rule  (4)  or  sub-
rule (5) is made or if such application has been made and is  rejected,  the
said Recovery Officer shall make an order confirming the sale:

      Provided that if he shall have reason to think that the sale ought  to
be set aside notwithstanding that no such application has been  made  or  on
grounds other than those alleged in any application which has been made  and
rejected, he may, after recording his reasons  in  writing,  set  aside  the
sale;

      (b) Whenever the sale of any immoveable property is not  confirmed  or
is set aside, the deposit or the purchase money, as the case may  be,  shall
be returned to the purchaser.

(7)    On the confirmation of a sale under this rule, the  Recovery  Officer
shall grant a certificate of sale bearing his  seal  and  signature  to  the
purchaser, and such certificate shall state the property sold and  the  name
of the purchaser, and it shall be conclusive evidence of  the  fact  of  the
sale to such purchaser.

(8)    the land purchased by Government in satisfaction of any decree  prior
to commencement of the Karnataka Co-operative Societies (V amendment)  Rules
  1977 shall be reconveyed to the person who own the  property  or  held  an
interest therein by virtue of a title acquired before the sale if  he  makes
application for such receonveyance and deposits with  the  recovery  officer
with in a period of ninety days from the date of coming into force of  these
rules, -

          (a) five per cent of the purchase money as solatium;

          (b) purchase money at  the  interest  of  eight  and  a  half  per
cent per annum from the date of sale up to the date of deposit.”



32.   The order passed by the learned Single Judge dated 7th  December  2012
to set aside the communication of the Assistant Registrar  (CS)  dated  21st
December 2011 cannot extricate the debtor from the consequences  of  auction
sale having become final on issuance of sale certificate  and  execution  of
the agreement in favour of the auction purchaser. Similarly, the  fact  that
the debtor deposited certain amounts after  the  decision  of  the  Division
Bench cannot come to his aid. For, he ought to have  deposited  the  awarded
amount along with interest accrued thereon and that must be accepted by  the
auction purchaser as satisfaction of the order of the Division Bench of  the
High Court. Admittedly, the debtor had failed  to  pay  the  entire  awarded
amount.  Significantly, the auction  purchaser  did  not  acquiesce  of  the
order of the Deputy Registrar or that of the High Court, but has  challenged
the same in the present appeals.

33.   We are also of the considered opinion  that  the  writ  appeal  having
been disposed of, in the guise of clarification, the  Division  Bench  could
not have passed any order at the instance of the debtor who  had  failed  to
challenge the decision of the Deputy Registrar. The writ appeals were  filed
by the auction purchaser and the Bank assailing the  wrongful  rejection  of
their Writ Petitions by the learned Single Judge.  As the  decision  of  the
Deputy Registrar deserves to be set aside, the debtor cannot succeed on  the
basis of some observations made in the impugned judgments  of  the  Division
Bench or for that matter by the learned  Single  Judge  and  including  some
infirmity in the letter of the Assistant Registrar (CS) dated 21st  December
2011.

34.   That takes us to the decision of this Court in the case  of  Annapurna
vs. Mallikarjun & Anr.[1] That decision  is  in  respect  of  provisions  of
Order 21 Rule 89 of C.P.C. The question decided in this case is whether  the
time limit prescribed in Article 127 of the Limitation Act, 1963 would  come
into play even in respect of an application to set aside sale  in  terms  of
Order 21 Rule 89 of the Code of Civil Procedure.   In the present case,  the
debtor did not choose to file an application for setting aside the  sale  in
terms of Rule 38(4) of the Rules at all. Instead,  he  preferred  an  appeal
under Section 106 of the Act before the Assistant Registrar after the  order
of confirmation of sale  was  passed  by  ARCS  in  favour  of  the  auction
purchaser.  Such appeal under Section 106 of the Act was  not  maintainable.
The decision of confirmation of  sale  is  not  ascribable  to  any  of  the
provisions expressly referred to in Section 106 of the Act,  in  respect  of
which remedy of appeal is provided. Further, the order passed by the  Deputy
Registrar dated 18th July 2009 in favour of the  debtor  to  set  aside  the
auction  sale  on  conditions  specified  therein,  in  our  view,  is   not
ascribable even to an order passed under Rule 38(6).   That  discretion  has
to be exercised only by the Recovery Officer  and  more  importantly  before
the order of confirmation of auction sale.

35.   The counsel for the debtor, however, placed reliance on two  decisions
of this Court in J.Rajiv Subramaniyan & Anr.  Vs.  Pandiyas  &  Ors.[2]  and
Vasu P.Shetty vs. Hotel Vandana Palace &  Ors.[3]  Emphasis  was  placed  on
paragraphs 18 and  29  of  the  decision  in  Subramaniyan’s  case  (supra).
Firstly,  that  decision  is   in   respect   of   proceedings   under   the
Securitization and Reconstruction of Financial  Assets  and  Enforcement  of
Security Interest Act, 2002.  Further, the decision is on the facts of  that
case. In this case, the grievance regarding under valuation of the  property
could have been raised by the debtor by way of a formal  application  to  be
filed for setting aside the sale, as  per  the  statutory  provisions  (Rule
38).   That contention is not relevant to answer the matters  in  issue,  in
the present case.  Reliance was then placed on the dictum in  paragraphs  23
and  25  in  the  case  of  Shetty  (supra)  to  contend  that  inaction  or
intentional  conduct  of  the  debtor  does  not  extricate  the  Bank  from
following mandatory conditions including proper valuation of  the  property.
We fail to understand as to how this decision will come to the  aid  of  the
debtor who has failed to pursue statutory remedy for setting aside the  sale
as per Rule 38; and moreso after the sale  has  already  been  confirmed  in
favour of the auction purchaser. Notably, even  after  the  confirmation  of
sale, the Deputy Registrar  showed  indulgence  to  the  debtor  to  deposit
Rs.59,46,965/- with interest only at 6% from 13th  February  2009  till  the
date of payment. The debtor, however, remitted the  amount  firstly  on  6th
February 2010 a sum of Rs.41,69,200/- and thereafter on 22nd September  2011
Rs.20,19,925/-. It was not in  conformity  with  the  order  passed  by  the
Deputy Registrar dated 18th July 2009.



36.   Taking any view of the matter, therefore, we must hold that  the  High
Court committed manifest error in dismissing the  Writ  Petitions  filed  by
the appellant - auction purchaser challenging the  decision  of  the  Deputy
Registrar (CS) dated 18th July 2009. The High Court ought  to  have  allowed
the Writ Petition as the Deputy Registrar had no jurisdiction  to  entertain
appeal against the order of confirmation of sale issued  under  Section  89A
read with Rule 38 of the Rules; and also  because,  admittedly,  the  debtor
failed to pay the awarded amount in spite of  repeated  opportunities  given
to him from time to time. Moreover, the debtor cannot succeed  in  the  Writ
Petition filed by the auction purchaser and the Bank  against  the  decision
of  the  Deputy  Registrar  and  get  higher  or  further  relief  in   such
proceedings. Thus, the Division Bench having finally disposed  of  the  writ
appeal ought not to  have  entertained  the  application  preferred  by  the
debtor in the guise of clarification and to pass any order thereon  -  which
would enure to the benefit of  debtor  who  is  in  default,  having  become
functus officio.



37.   Accordingly, we allow the appeals preferred by the  auction  purchaser
(P.M.Abubakar) being Civil Appeals arising out  of  SLP(Civil)  Nos.  30130-
30131/2012 and SLP(Civil) Nos. 33314-33315/2012  in  the  above  terms.  The
order passed by the Deputy Registrar (dated  18.7.2009);  and  of  the  High
Court (dated 11.01.2010; 24.8.2011, 8.6.2012 and 29.6.2012)  confirming  the
order of the Deputy Registrar of setting  aside  the  sale  of  the  subject
mortgage property in favour of the auction purchaser, are hereby set  aside.
The Civil Appeals arising out of SLP(Civil) Nos. 25613-25614/2013  filed  by
the debtor (Keshava N. Kotian)  are  dismissed  with  observation  that  the
Appropriate  Authority  shall  proceed  to  disburse  the   amount   already
deposited by the debtor and  including  the  amount  of  sale  proceeds,  in
accordance with law forthwith. No order as to costs.

                                             ……………………………..J.

                                                             (Anil R. Dave)





                                               ……………………………J.

                                                        (A.M.Khanwilkar)

New Delhi,
Dated: November 17, 2016














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[1]    (2014) 6 SCC 397
[2]    (2014) 5 SCC 651
[3]    (2014)5 SCC 660