Petitioner Had No Locus to Challenge Auction Sale as She Failed to Participate in Auction Process and Deposit Whole Amount | HC

Case Details: Mrs. Renu Jain v. Union of India - [2024] 168 taxmann.com 608 (HC-Delhi)

Judiciary and Counsel Details

• Manmohan, CJ. & Tushar Rao Gedela, J.
• Manav Gupta, Sahil Garg, Samitosha Jain & Abhinav Jain, Advs. for the Petitioner.
• Ravi Prakash, CGSC, Ashim Vachher, Kunal Lakra, Ajay Shanker, Nishant Awana, Ms Nitya Sharma & Ms Parul Yadav, Advs. for the Respondent.

Facts of the Case

In the instant case, a secured asset was auctioned for Rs. 3.61 crores. The petitioner was aware of the auction but did not participate. She later claimed that bank officials misled her about the property’s value. The petitioner filed her application/objections before the Recovery Officer, Debt Recovery Tribunal (DRT), increasing the bid amount to Rs 4.33 crore, but the Recovery Officer rejected objections filed by the petitioner and confirmed the sale of the subject property in favour of respondent nos.2 & 3/auction purchasers.

The petitioner filed an appeal before the DRT and claimed to have deposited a total sum of Rs. 4.33 crores to show her bona fide. The DRT reversed the order and directed the Recovery Officer to fix a date for conducting inter se bidding between the petitioner and auction purchasers.

Aggrieved by the said order, auction purchasers filed an appeal before the DRAT, which was allowed vide the impugned order and, thus, confirming the sale of the subject property in favour of auction purchasers.

It was noted that if one were to apply an interpretation of Rules 60 & 61 of the Income-Tax Act, 1961, then the application filed suffered from the vice of being time-barred and non-compliant with the mandatory condition of deposit of Reserve Price.

High Court Held

The High Court observed that the application was barred by delay and laches and was also not maintainable due to the lack of mandatory deposit as per the scheme of Rules 60 and 61 of the Second Schedule to the Income-tax Act, 1961.

The High Court, further observed that the petitioner appeared to be a third party who did not participate in the auction process, subsequently made her offer, and did not deposit the whole amount. Therefore, the petitioner had no locus to file any such application or objection.

The High Court held that the question of whether the petitioner had offered a higher price and whether it could be a ground to interdict sale confirmation etc., was inconsequential and held untenable. Thus, there was no reason to interfere with the impugned order passed by the DRAT.

List of Cases Reviewed

• K. Kumara Gupta v. Sri Markandeya and Sri Omkareswara Swamy Temple & Ors, AIR 2022 SC 1220[Para 24] followed

List of Cases Referred to

• Mohan Lal v. Hari Prasad Yadav (1994) 4 SCC 177 (para 11),
• Vedica Procon Private Limited v. Balleshwar Greens Private Limited & Ors., (2015) 10 SCC 94 (para 12)
• purchasers. It is trite that fraud vitiates all acts, whether ecclesiastical, ministerial or administrative. (See S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1 (para 26).