# Arun Kumar Jain & Ors v. P.O., Debts Recovery Tribunal, Allahabad & Ors

- **Citation:** (2023) 9 ILRA 821
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-08-22
- **Case number:** Writ-C No. 10936 of 2014
- **Bench:** Saurabh Shyam Shamshery
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/arun-kumar-jain-ors-v-p-o-debts-recovery-tribunal-allahabad-ors-50765
- **Pages:** 14

## Headnote

Standing
Counsel,
Sri
Brijesh
Kumar
Kesharwani, Sri Anadi Krishna Narayana,
Sri D.V. Jaiswal, Sri K.M. Asthana, Sri
Manish Mehrotra, Sri Rajesh Kesarwani, Sri
Sandeep Kumar Singh

Civil
Law
-
Securitisation
and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002 - Section 13(2), 13 (3A), 13(4) &
18(1)- Security Interest (Enforcement)
Rules, 2002 - Rule (8)(1), 9(3), 9(4) -
Auction
held
on
12.08.2010,
auction
purchasers paid earnest amount before
auction proceedings and 25% of sale
amount deposited on next working day -
Remaining
75%
was
due
by
26/27.08.2010
-
Meanwhile,
on
23.08.2010, DRT granted borrowers 30
days to clear dues, they failed to do so -
Anticipating default, auction purchasers
paid
remaining
amount
between
21.09.2010 and 25.09.2010 - Though
beyond 15 days, delay is explained, causes
no prejudice to borrowers - During writ
proceedings, borrowers failed to offer
amount - Whether 25% sale amount
includes earnest money, if deposited on
next working day, and whether amended
Rule 9(3) of Rules, 2002 applies - DRT
took rigid view requiring 25% deposit on
auction day itself - Mandatory provisions
must not be enforced in way that makes
compliance impractical - Act of auction
purchasers
was
under
category
of
'immediately',
without
any
delay,
prescribed
procedure
followed
-
Amendment clarified that 25% includes
earnest money already deposited - In view
of sale notice, bank's reply and rule
clarification, DRAT erred in treating it
otherwise - Impugned order erroneous,
hence, set aside. (Para 20, 23, 26, 29, 33,
35)

Writ Petition allowed. (E-13)

List of Cases cited:

## Text

_Characters 0–39,803 of 45,484. This is a partial read: ask again with offset=39803 for what follows._

9 All. Arun Kumar Jain & Ors. Vs. P.O., Debts Recovery Tribunal, Allahabad & Ors.
821
(2023) 9 ILRA 821
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.08.2023

BEFORE

THE HON'BLE SAURABH SHYAM
SHAMSHERY, J.

Writ-C No. 10936 of 2014

Arun Kumar Jain & Ors. ...Petitioners
Versus
P.O., Debts Recovery Tribunal, Allahabad
& Ors. ...Respondents

Counsel for the Petitioners:
Sri H.N. Singh (Sr. Adv.), Sri Vineet Kumar
Singh, Sri Sudeep Harkauli, Sri Shekhar
Chaudhary

Counsel for the Respondents:
Standing
Counsel,
Sri
Brijesh
Kumar
Kesharwani, Sri Anadi Krishna Narayana,
Sri D.V. Jaiswal, Sri K.M. Asthana, Sri
Manish Mehrotra, Sri Rajesh Kesarwani, Sri
Sandeep Kumar Singh

Civil
Law
-
Securitisation
and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002 - Section 13(2), 13 (3A), 13(4) &
18(1)- Security Interest (Enforcement)
Rules, 2002 - Rule (8)(1), 9(3), 9(4) -
Auction
held
on
12.08.2010,
auction
purchasers paid earnest amount before
auction proceedings and 25% of sale
amount deposited on next working day -
Remaining
75%
was
due
by
26/27.08.2010
-
Meanwhile,
on
23.08.2010, DRT granted borrowers 30
days to clear dues, they failed to do so -
Anticipating default, auction purchasers
paid
remaining
amount
between
21.09.2010 and 25.09.2010 - Though
beyond 15 days, delay is explained, causes
no prejudice to borrowers - During writ
proceedings, borrowers failed to offer
amount - Whether 25% sale amount
includes earnest money, if deposited on
next working day, and whether amended
Rule 9(3) of Rules, 2002 applies - DRT
took rigid view requiring 25% deposit on
auction day itself - Mandatory provisions
must not be enforced in way that makes
compliance impractical - Act of auction
purchasers
was
under
category
of
'immediately',
without
any
delay,
prescribed
procedure
followed
-
Amendment clarified that 25% includes
earnest money already deposited - In view
of sale notice, bank's reply and rule
clarification, DRAT erred in treating it
otherwise - Impugned order erroneous,
hence, set aside. (Para 20, 23, 26, 29, 33,
35)

Writ Petition allowed. (E-13)

List of Cases cited:

1. General Manager, Sri Siddheswara Coop. Bank
Ltd. & anr. Vs Ikbal & ors.. (2013) 10 SCC 83
(Para 19)

2. Zile Singh Vs St. of Har. & ors., (2004) 8 SCC
1 (Para 14 to 18)

3. Varimadugu Obi Reddy Vs B.Sreenivasulu &
Ors, (2023) 2 SCC 168 (Para 44 to 46)

(Delivered by Hon'ble Saurabh Shyam
Shamshery, J.)

IMPUGNED ORDER

1. This writ petition is being filed by
auction purchasers being aggrieved by
impugned order dated 19.11.2013 passed
by Debt Recovery Appellate Tribunal,
Allahabad in Appeal No. R-214 of 2013
whereby said appeal filed by petitioners
was dismissed. By amendment, petitioners
have also challenged the order dated
23.10.2013 passed by Debts Recovery
Tribunal,
Allahabad
in
Securitization
Application No. 153 of 2009.

FACTUAL MATRIX
822 INDIAN LAW REPORTS ALLAHABAD SERIES

2. M/s Firozabad Cold Storage Ltd.,
its Managing Director and others, who are
respondents no. 4 to 8 (hereinafter referred
to as "borrowers") have availed credit
facility from the respondent bank (Bank of
Baroda) sanctioned on 14.10.2005 for the
business of cold storage.

3. The borrowers have failed to
repay the loan amount, therefore, the
respondent bank has issued a notice dated
06.04.2009 under Section 13(2) of the
Securitisation
and
Reconstruction
of
Financial Assets and Enforcement of
Security Interest Act, 2002 (for short
"SARFAESI Act"). The borrowers have
submitted their reply on 01.06.2009
under Section 13 (3A) of SARFAESI
Act.

4. The borrowers remained failed to
repay the loan, therefore, a notice dated
13.09.2009
under
Section
13(4)
of
SARFAESI Act and Rule (8) of Security
Interest (Enforcement) Rules, 2002 (for
short "Rules") was issued by the bank.
Later
on,
an
auction
notice
dated
14.11.2009
was
published
by
the
respondent bank for auction of property in
question.

5. The borrowers have filed a S.A.
No. 153 of 2009 before the Debts Recovery
Tribunal,
Allahabad
on
14.12.2009
challenging the notice dated 13.09.2009 i.e.
a possession notice issued under Section
13(4) of SARFAESI Act and Rule 8(1) of
Rules made therein.

6.
The
respondent bank
took
possession of property under auction on
23.09.2009 and auction sale was fixed on
16.12.2009, however, auction was not
materialized on 16.12.2009.

7. During pendency of above referred
S.A. No. 153 of 2009, the respondent bank
has published a second auction notice on
05.07.2010
in
newspapers,
fixing
12.08.2010 for auction sale. The terms and
conditions as mentioned in notice are
reproduced hereinafter -:

"स्नयम व र्तेः- (1) इच्छुक स्नस्वदाकताश
सम्बस्न्धत सम्पस्त्त क्रय करने हेतु अपने प्रथताव टेंडर रास्र् मांि ड्राफ्ट
द्वारा जो प्रास्धकृत अस्धकारी बैंक ऑि बडौदा के पक्ष में आहररत
स्कया िया हो के साि बंद स्लिािे में िेजें। असिल स्नस्वदाकताशओं
को बयानों की रास्र् स्बना स्कसी ब्याज के वापस कर दी जाएिी।
यस्द सिल बोलीदाता स्वक्रय की र्तों समय का पालन नहीं करता
या अन्य स्कसी प्रकार की चूक करता है तो बयान की रास्र् स्बना
स्कसी पूवश सूचना के जब्त कर ली जाएिी। प्रथताव सम्बस्न्धत र्ाखा
के पास स्दनांक 12.8.10 को दोपहर 2 बजे तक या इससे पहले
जमा कर स्दए जाएँ। (2) सील बन्द स्नस्वदाएँ प्रास्धकृत अस्धकारी
द्वारा उपस्थित स्नस्वदाकताशओं के समक्ष ऊपर दस्र्शत जिह व समय
पर खोली जाएँिी। (3) स्नस्वदाएँ खुलने के बाद प्रास्धकृत अस्धकारी
के स्ववेक पर इच्छुक खरीदारों को परथपर सहमस्त द्वारा प्रथतास्वत
मूजय को बढाने का अवसर स्दया जा सकता है। (4) सिल
स्नस्वदादाता को स्वक्रय मूजय की 25%धनरास्र् (बयाना रास्र्
सस्हत) स्वक्रय स्तस्ि को ही नकद अिवा उपरोक्तानुसार माँि ड्राफ्ट
द्वारा जमा करनी होिी स्वक्रय मूजय की र्ेष धनरास्र् प्रास्धकृत
अस्धकारी अिवा स्सक्योडश क्रेस्डटसश द्वारा स्वक्रय की पुस्ष्ट के 15
स्दन के िीतर अिवा स्दए िये समय तक जमा करनी होिी। इसमें
चूक होने पर उस समय तक जमा की ियी सम्पूणश रकम जब्त कर
ली जाएिी। (5) सिल स्नस्वदादाता को सम्पस्त्त की रस्जथरी कराने
हेतु समथत थटॉम्प व रस्जथरेर्न र्ुजक व अन्य व्यय थवयं वहन करने
होंिे। प्रास्धकृत अस्धकारी के पास स्बना कारण बताए स्कसी िी
स्नस्वदा को थवीकृत/अथवीकृत/थिस्ित/रद्द करने का अस्धकार और
स्वक्रय स्नयमों एवं र्तों में संर्ोधन करने के अस्धकार सुरस्क्षत होंिे।
(6) प्रास्धकृत अस्धकारी, मास्लक/बोलीदाता/आम जनता को
सूचना स्दए स्बना स्बक्री को रद्द/थिस्ित कर सकता है और/या स्कसी
िी स्नयम व र्तों को स्कसी िी समय बदल सकता है/ जोड सकता
है/हटा सकता है। (7) इच्छुक खरीददार सम्बस्न्धत र्ाखा से स्कसी
िी कायश स्दवस में सम्पकश कर सम्पस्त्त का मुआयना कर सकते है एवं
अस्धक जानकारी के स्लए सम्पकश कर सकते है।

थिानः आिरा
 स्दनांकः- 5.07.10
प्रास्धकृत अस्धकारी"
9 All. Arun Kumar Jain & Ors. Vs. P.O., Debts Recovery Tribunal, Allahabad & Ors.
823

(Emphasis supplied)

8. T he petitioners were successful in
auction proceedings being highest bidder
for Rs. 1,05,00,000/-. They paid entire
amount i.e. firstly, 25% (including earnest
amount) and later on remaining 75% in
different slots.

9. There is a dispute in regard to
details of amount paid on different dates by
the
petitioners
(auction
purchasers),
therefore, for reference, details provided by
the auction purchasers are as follows -:

Date
Amount
Mode
16.08.2010
10.20 lakh
Cheque
13.08.2010
16.05 lakh
Cash
21.09.2010
15.00 lakh
RTGS
23.09.2010
12.675 lakh
Cheque
23.09.2010
21.00 lakh
RTGS
24.09.2010
2.50 lakh
Cash
25.09.2010
14.00 lakh
Cheque
25.09.2010
8.00 lakh
RTGS
25.09.2010
2.80 lakh
Cash
25.09.2010
2.775 lakh
Cash

10. Meanwhile, the Debts Recovery
Tribunal, Allahabad passed following order
dated 23.08.2010 in S.A. No. 153 of 2009 -
:

"In support of its application, Ld.
Counsel for the applicants stated that the
bank published sale notice on 5.7.2010 and
fixed 12.8.2010 for sale by fixing reserve
price of the secured asset to Rs. 102.00
lacs. The bank had received a bid offering
Rs. 105.00 lacs. Bank vide letter dt.
14.8.2010
offered
the
applicant
for
arranging a bidder whose offer is more than
Rs. 102.00 lacs within' 10 days failing
which the bank shall accept the bid of the
bidder as per terms of advertisement of
sale. In response to the bank's letter di
14.8.2010 applicant submitted a detailed
proposal and submitted that applicant has a
prospective buyer who has offered Rs.
108.50 lacs although it is more than the bid
received by the bank.

Considered the rival contention of
the parties. Seen the earlier sale notice
dated 14.11.2009 showing the reserve price
of the buyer who will purchase the said
property in better price than the offer of Rs.
105.00
lacs
received
by
the
bank.
Reportedly, they have a buyer offering Rs.
108.50 lacs. In view of this, I am of the
opinion
that
applicant
be
given
an
opportunity
of
30
days
to
arrange
prospective buyer. If prior to 30 days, a
more reasonable offer is received by the
applicants, they are free to offer the said
amount along with a token money of 25%
of the said offer. The bank shall consider
the same. Failing this the bank will be at
liberty to act according to the terms and
conditions of the sale notice.

Fix
27.09.2010
for
further
orders."

(Emphasis supplied)

11.

The
respondents,
despite
opportunity, was unable to produce any
buyer who could offer more than what
petitioners
have
offered
and
before
27.09.2010 i.e. next date fixed in the SA,
the auction purchasers have deposited
entire amount.

12.

A
sale
certificate
dated
27.09.2010 was accordingly issued to the
824 INDIAN LAW REPORTS ALLAHABAD SERIES
petitioners, the auction purchasers and
possession was also handed over to them.

13. The respondents, therefore, have
approached this Court by filing a Writ C
No. 74713 of 2010, however, this Court
without allowing their prayer, disposed of
the writ petition by an order dated
23.12.2010 with a direction to the Tribunal
to decide pending matters.

14.

Some
other
attempts
of
respondents were also failed, however, the
Debts Recovery Tribunal by order dated
13.04.2013 allowed the S.A. No. 153 of
2009, filed by the respondents and held that
process initiated by the bank under
SARFAESI
Act
was
defective
and
accordingly, it was set aside and status quo
ante was restored. The auction sale, sale
certificate and sale deed issued or executed
by bank and all ancillary and subsequent
steps taken by bank qua to auction of
secured assets were set aside. The Debts
Recovery Tribunal held that -:

(a) reply/objection of the debter
dated 01.06.2009 to demand notice dated
06.04.2009 was not disposed.

(b)
auction
purchasers
have
deposited the remaining amount (25% of
bid) on the next day of auction and not on
the same day as per the terms of auction.

(c) The auction purchasers have
deposited remaining 75% of bid amount
after 30 days' time was expired on
23.09.2010. They have started depositing
the said amount on 21.09.2010 and
concluded in different installments/slots on
25.09.2010.

15.

The
petitioners
(auction
purchasers) being aggrieved by above
order, preferred an Appeal No. 455 of 2013
under Section 18(1) of SARFAESI Act,
which was rejected by impugned order
dated 19.11.2013.

16. The Debts Recovery Appellate
Tribunal has held that -:

"On the basis of the same, it is
clear that the view which has been already
taken by this Tribunal that towards 25% of
the sale price which was deposited by the
appellant immediately after the sale in that
amount the earnest money cannot be
included
and
therefore,
under
these
circumstances, while depositing the amount
there was no deposit of 25% of the amount
immediately on the date by the appellant.

With reference to the balance of
the amount it was deposited by the
appellant by the end of 25.09.2010. The
question arises for consideration is whether
extension in absence time of under any the
of agreement as per Rule 9 (4) of the
Security Interest Enforcement Rules, 2002
whether it was a valid deposit in
compliance to Rule 9 (4) of the Rules,
2002? In this regard, this is to be seen that
the Tribunal passed an order on 23.08.2010
by which an opportunity was given by
passing the interim order by the Tribunal to
produce the prospective buyer who is ready
to purchase the property for a higher
amount in pursuance to the order passed by
the Tribunal. The borrower failed to
produce the prospective buyer who could
offer the higher amount than offered by the
appellant the auction purchaser. When the
Tribunal passed the order, the appellant
was not a party at that point of time. Thus,
nothing prevented to the appellant to
deposit 25% (sic 75%) of the amount
within a period of 15 days from the date of
the sale as per Rule 9 (4) of the Security
9 All. Arun Kumar Jain & Ors. Vs. P.O., Debts Recovery Tribunal, Allahabad & Ors.
825
Interest Enforcement Rules, 2002. It is also
not the case of the appellant auction
purchaser that he offered the Bank to
deposit the balance of the amount but the
bank did not accept the same. Under these
circumstances, the appellant being the
auction purchaser cannot shirk from his
responsibility in not complying with the
provision of Rule 9 (4) of the Security
Interest Enforcement Rules, 2002. The
Apex Court in G. M., Sri Siddeshwara Co-
operative Bank Ltd. & Anr. Vs. Ikbal and
others [2013 (2) D.R.T.C. 457 has held that
the compliance of Rule 9 (3) and (4) of the
Security Interest Enforcement mandatory
Rules, nature 2002 but are the in mandatory
condition can also be waived. The waiver
of the mandatory condition is to be under
an agreement between the parties. In the
present case, the Bank alone can not extend
the period of deposit and the appellant also
has not applied for any extension of time. It
may be that on 23.08.2013, the Tribunal
while passing the interim order gave an
opportunity to the borrower to produce
some prospective buyer who is prepared to
offer better price than received appellant by
the Bank from who is the the auction
purchaser. On the basis of the aforesaid
order of the DRT, the appellant/auction
purchaser was not prevented in any case
either by the Tribunal or by the Bank to
deposit balance of the amount and it is also
not the case of the appellant auction
purchaser that he offered to deposit but the
same was not accepted and D.R.T. also did
not ordered that the Bank will not accept
the deposit from auction purchaser.

Under
the
facts
and
circumstances of the case, the judgment
passed by the Apex Court in G. M., Sri
Siddeshwara Co-operative Bank Ltd. &
Anr. Vs. Ikbal and others [2013 (2)
D.R.T.C. 457 (supra) applies with full force
to the present case to hold that for the
firstly there was no compliance of Rule 9
(3) as the 25% of the sale price was not
deposited by the appellant immediately
after the sale and the money deposited is
inclusive of 10% of the amount of earnest
money which cannot be adjusted towards
the 25% of the sale price but it is deposited
only as an earnest money to participate in
the auction and as such the money is to be
excluded from 25% of the sale price.

On the basis of my over all
assessment, I am of the view that in the
present case the Tribunal has rightly set
aside the auction and the order passed by
the DRT is not called for any interference.

The learned counsel for the
appellant submitted that in the present case
the Tribunal has committed a glaring
mistake while setting aside the auction and
directing to restore the possession it has not
directed to refund the amount which was
deposited by the appellant. This deserves to
be accepted.

Under the circumstances, the
Bank is directed to return the amount of
auction purchaser alongwith the interest at
the rate of 10% simple interest per annum
and to this extent the appeal stands
allowed."

(Emphasis supplied)

SUBMISSIONS

17. Learned Senior Advocate Sri H.N.
Singh assisted by Sri Vineet Kumar Singh,
Advocate for petitioners has submitted that
-:

(i)
The
petitioners/auction
purchasers have paid entire auction amount
826 INDIAN LAW REPORTS ALLAHABAD SERIES
i.e. 10% earnest amount, before the bid,
25% (including 10% earnest amount) on
next working day of auction and remaining
75% of the amount also within the
stipulated time i.e. time granted to
borrowers, whereas respondents/borrower
have neither deposited the outstanding loan
amount nor has come forward with any
buyer who could offer more than bid price
of the petitioners.

(ii) The DRAT has rejected the
appeal filed by the petitioners only on
ground that 25% of bid amount required to
be deposited soon after auction proceedings
does not include 10% amount deposited at
the time of bid and has placed reliance on
General
Manager,
Sri
Siddheswara
Coop. Bank Ltd. and another vs. Ikbal
and others (2013) 10 SCC 83 that Rule
9(3) and 9(4) of the Rules are mandatory
except waived off expressly.

(iii) Learned Senior Advocate has
further submitted that in the present case,
bid were opened on 12.08.2010 at about
3.00 PM and process was finalized at about
4.30 PM and by that time, bank was closed
and on very next date (i.e. 13.08.2010) Rs.
16,05,000/- was deposited in the form of
draft making 25% whereas Rs. 10,20,000/-
was
already
deposited
being
earnest
amount.

(iv) Learned Senior Counsel
referred the conditions mentioned in
auction notice published in newspaper that
successful bidder has to deposit 25% bid
amount (including earnest money) on the
day of auction.

(v) Learned Senior Counsel has
further submitted that amended Rule 9(3)
of the Rules (w.e.f. 04.11.2016) has
clarified an ambiguity that purchaser shall
on the day of auction or not later than next
working day, pay a deposit of 25% of the
amount of the sale price which is to be
inclusive of earnest money deposited, if
any. Amended Rule 9(3) of Rules, 2002 is
as follows -:

"(3) On every sale of immovable
property, the purchaser shall immediately,
i.e. on the same day or not later than next
working day, as the case may be, pay a
deposit of twenty five per cent. of the
amount of the sale price, which is inclusive
of earnest money deposited, if any, to the
authorized officer conducting the sale and
in default of such deposit, the property
shall be sold again."

(vi) Learned Senior Advocate has
urged that at relevant time, unamended
Rule 9 (3) of Rules was in force, but
amended Rule has clarified the ambiguity,
therefore, its benefit could be extended
retrospectively in facts and circumstances
of present case.

(vii) Learned Senior Advocate in
order to buttress his argument has referred
Zile Singh vs. State of Haryana and
others, (2004) 8 SCC 1 that under certain
circumstances, effect and benefit of an
amendment would operate retrospectively
from the date of its commencement.
Relevant paragraphs 14 to 18 thereof are
mentioned below -:

"14. The
presumption
against
retrospective operation is not applicable to
declaratory statutes.... In determining,
therefore, the nature of the Act, regard must
be had to the substance rather than to the
form. If a new Act is "to explain" an earlier
Act, it would be without object unless
construed retrospectively. An explanatory
Act is generally passed to supply an
obvious omission or to clear up doubts as
9 All. Arun Kumar Jain & Ors. Vs. P.O., Debts Recovery Tribunal, Allahabad & Ors.
827
to the meaning of the previous Act. It is
well settled that if a statute is curative or
merely declaratory of the previous law
retrospective
operation
is
generally
intended.... An amending Act may be
purely declaratory to clear a meaning of a
provision of the principal Act which was
already implicit. A clarificatory amendment
of this nature will have retrospective effect
(ibid., pp. 468-69).

15. Though retrospectivity is not
to be presumed and rather there is
presumption
against
retrospectivity,
according to Craies (Statute Law, 7th
Edn.), it is open for the legislature to enact
laws having retrospective operation. This
can be achieved by express enactment or by
necessary implication from the language
employed. If it is a necessary implication
from the language employed that the
legislature intended a particular section to
have a retrospective operation, the courts
will give it such an operation. In the
absence of a retrospective operation having
been expressly given, the courts may be
called upon to construe the provisions and
answer the question whether the legislature
had sufficiently expressed that intention
giving the statute retrospectivity. Four
factors are suggested as relevant: (i)
general scope and purview of the statute;
(ii) the remedy sought to be applied; (iii)
the former state of the law; and (iv) what it
was the legislature contemplated. (p. 388)
The rule against retrospectivity does not
extend to protect from the effect of a
repeal, a privilege which did not amount to
accrued right. (p. 392)

16. Where a statute is passed for
the purpose of supplying an obvious
omission in a former statute or to "explain"
a former statute, the subsequent statute has
relation back to the time when the prior Act
was passed. The rule against retrospectivity
is inapplicable to such legislations as are
explanatory and declaratory in nature. A
classic illustration is the case of Attorney
General v. Pougett [(1816) 2 Price 381 :
146 ER 130] (Price at p. 392). By a
Customs Act of 1873 (53 Geo. 3, c. 33) a
duty was imposed upon hides of 9s 4d, but
the Act omitted to state that it was to be 9s
4d per cwt., and to remedy this omission
another Customs Act (53 Geo. 3, c. 105)
was passed later in the same year. Between
the passing of these two Acts some hides
were exported, and it was contended that
they were not liable to pay the duty of 9s
4d per cwt., but Thomson, C.B., in giving
judgment for the Attorney General, said:
(ER p. 134)

"The duty in this instance was, in
fact, imposed by the first Act; but the gross
mistake of the omission of the weight, for
which the sum expressed was to have been
payable, occasioned the amendment made
by the subsequent Act: but that had
reference to the former statute as soon as it
passed, and they must be taken together as
if they were one and the same Act;" (Price
at p. 392)

17. Maxwell states in his work
on Interpretation of Statutes (12th Edn.)
that the rule against retrospective operation
is a presumption only, and as such it "may
be overcome, not only by express words in
the
Act
but
also
by
circumstances
sufficiently strong to displace it" (p. 225).
If the dominant intention of the legislature
can be clearly and doubtlessly spelt out, the
inhibition contained in the rule against
perpetuity
becomes
of
doubtful
applicability as the "inhibition of the rule"
is a matter of degree which would "vary
secundum materiam" (p. 226). Sometimes,
where the sense of the statute demands it or
828 INDIAN LAW REPORTS ALLAHABAD SERIES
where there has been an obvious mistake in
drafting, a court will be prepared to
substitute another word or phrase for that
which actually appears in the text of the
Act (p. 231).

18. In a recent decision of this
Court
in National
Agricultural
Coop.
Marketing
Federation
of
India
Ltd. v. Union of India [(2003) 5 SCC 23] it
has been held -:

that there is no fixed formula for the
expression of legislative intent to give
retrospectivity to an enactment. Every
legislation
whether
prospective
or
retrospective has to be subjected to the
question of legislative competence. The
retrospectivity is liable to be decided on a
few touchstones such as: (i) the words used
must expressly provide or clearly imply
retrospective
operation;
(ii)
the
retrospectivity must be reasonable and not
excessive or harsh, otherwise it runs the
risk
of
being
struck
down
as
unconstitutional; (iii) where the legislation
is introduced to overcome a judicial
decision, the power cannot be used to
subvert the decision without removing the
statutory basis of the decision. There is no
fixed formula for the expression of
legislative intent to give retrospectivity to
an enactment. A validating clause coupled
with a substantive statutory change is only
one of the methods to leave actions
unsustainable under the unamended statute,
undisturbed. Consequently, the absence of
a validating clause would not by itself
affect the retrospective operation of the
statutory provision, if such retrospectivity
is otherwise apparent."

(Emphasis supplied)

(viii) Learned Senior Advocate
has also submitted that a registered notice
dated 01.06.2009 was sent by an Advocate
of respondents/borrowers which could not
be considered to be an objection to the
notice dated 06.04.2009 issued by the bank
under Section 13(2) of SARFAESI Act,
since contents of registered notice dated
01.06.2009 did not refer that it was in reply
to said notice as well as it did not refer any
objection or about discharge of complete
liability in terms of notice either, rather it
was a notice (not a reply) and a request to
waive the interest or fine and fix four
installments
with
simple
interest
for
repayment. This would not fall under
representation or objection required to be
dealt with in terms of Section 13(3A) of
SARFAESI Act.

18. Per contra, Sri Brijesh Kumar
Kesharwani,
learned
counsel
for
the
respondents (borrowers) has referred para
19
of
General
Manager,
Sri
Siddheshwara (supra) that -:

"19. There is no doubt that Rule
9(1) is mandatory but this provision is
definitely for the benefit of the borrower.
Similarly, Rule 9(3) and Rule 9(4) are for
the benefit of the secured creditor (or in
any case for the benefit of the borrower). It
is settled position in law that even if a
provision is mandatory, it can always be
waived by a party (or parties) for whose
benefit such provision has been made. The
provision in Rule 9(1) being for the benefit
of the borrower and the provisions
contained in Rule 9(3) and Rule 9(4) being
for the benefit of the secured creditor (or
for that matter for the benefit of the
borrower), the secured creditor and the
borrower can lawfully waive their right.
These provisions neither expressly nor
contextually indicate otherwise. Obviously,
the question whether there is waiver or not
depends on the facts of each case and no
9 All. Arun Kumar Jain & Ors. Vs. P.O., Debts Recovery Tribunal, Allahabad & Ors.
829
hard-and-fast rule can be laid down in this
regard."

(Emphasis supplied)

(i) Learned counsel has submitted
that since auction had taken place on
12.8.2010,
therefore,
provisions
of
unamended Rule 9 (3) of Rules, 2002
would govern and not amended Rule 9 (3)
of Rules, 2002 which came into effect from
4.11.2016. Retrospective effect has to be
mentioned specifically in the amended
statute and it cannot be inferred that 25%
percent of sale amount did not include
earnest money.

(ii) Learned counsel also referred
an order dated 23.10.2013 passed by Debts
Recovery Tribunal wherein the S.A.
No.153 of 2009 filed by the respondents
(borrowers) was allowed and entire auction
proceedings being contrary to mandatory
provisions was set-aside. Learned counsel
has referred following findings returned by
Debts Recovery Tribunal that -:

"Non disposal of a notice dated
1.6.2009 issued by the borrower and thus
Bank failed to comply the provisions of
Section 13 (3A) of SARFAESI Act, which
states that -:

"[(3A) If, on receipt of the notice
under sub-section (2), the borrower makes
any representation or raises any objection,
the secured creditor shall consider such
representation or objection and if the
secured creditor comes to the conclusion
that such representation or objection is not
acceptable
or
tenable,
he
shall
communicate [within fifteen days] of
receipt of such representation or objection
the reasons for non-acceptance of the
representation or objection to the borrower:

Provided that the reasons so
communicated or the likely action of the
secured
creditor
at
the
stage
of
communication of reasons shall not confer
any right upon the borrower to prefer an
application to the Debts Recovery Tribunal
under section 17 or the Court of District
Judge under section 17A.]"

(iii) Learned counsel also referred
that a specific reply to notice issued under
section 13 (2) of SARFAESI Act, was sent
on 30.12.2010, though delayed but it
remained unanswered.

(iv) Auction purchasers have
failed to deposit 25% of sale amount on the
date of auction. The bank has failed to
facilitate deposit after closure of cash
amount
considering
the
urgency.
Undisputedly, remaining balance (25%)
was deposited on the next day of auction,
but including earnest amount which was
not demand of statute.

(v) The auction purchasers have
deposited remaining 75% amount in
different slots which continued after 30
days of mandatory period.

(vi) There is no illegality or
irregularity in the impugned order. The
bank can initiate fresh proceedings of
auction and money deposited by auction
purchaser has been directed to be refunded
with 10% interest and therefore, petitioners
have no prejudice.

19. Learned counsel for the Bank has
adopted the arguments of the petitioners
and submitted that the appeal filed by the
Bank against the order passed by Debts
Recovery Tribunal is still pending before
Debts Recovery Appellate Tribunal and he
referred few paragraphs i.e. 17, 18, 22 and
830 INDIAN LAW REPORTS ALLAHABAD SERIES
23 of the counter affidavit filed on behalf
of Bank, which are mentioned hereinafter:

"17. That, by the time i.e. 4.30
P.M. on 12-8-2010 the auction proceedings
were finalized the banking hours had
closed and cash counter of the Bank was
closed therefore due to non - availability of
the cash counter, the auction purchaser
could not deposit the balance of 15% of the
25% of the bid amount on 12-8-2010 and
they deposited the same on the very next
working day i.e. 13-8-2010 and thus the
requirement of complying with rule 9(3)
was fulfilled.

18. That, under Rule 9(3)
instead of having a mechanical of the
word "immediately" to meaning of the
mean simultaneously or synchronizing
with which happens in the matter of
private auction sale under the Sale of
Goods Act 1930, where payment of the
bid amount is required to be made by
fall of the hammer and contrary to it
here
under
clause
the
word
"immediately" has been given contextual
meaning to mean "with all reasonable
quickness
and
within
a
reasonable
prompt time" as the Hon'ble Apex Court
has interpreted in the matter of Ram
Mahmood Khan V/S Sh. Ranbir Singh
and others AIR 1995 SC 2195 (2198) a
similar and identical provision of the law
dealing
recovery
and
auction
sale
contained in Rule 285-D of the U.P.
Zamindari Abolition and Land Reforms
Rules, 1952.

22. That, the Tribunal itself put a
restraint on the concerned branch to wait
for 30 days to finalize the auction sale
which the Tribunal totally misinterpreted in
the final judgment that there was no stay
order in this regard.

23. That, a requirement provided
in an order to consider something if done
within time is nothing but a stay order and
after the clog in the form of the above stay
order ended/ was over, the auction
purchaser paid the balance 75% of the
auction price between 21-9-2010 to 25-92010 as the borrowers were directed to
approach prior to expiry of 30 days time
and 21-9-2010 was 30th day from the date
of the order dated 23-8-2010 and Tribunal
grossly erred in law and on fact by holding
that 30th day ended on 23-9-2010. "

CONSIDERATION
&
CONCLUSION

20. The issue of consideration is
whether 25% of sale amount shall be
inclusive of earnest amount or not and
whether in some circumstances, said
amount could be deposited on next working
day also and effect of amendment carried
out in Rule 9(3) of Rules, 2002 (i.e.
'Doctrine of Relation Back') has any
bearing in facts and circumstances of
present case?

21. In the background of undisputed
facts that the petition (auction purchasers)
have paid the earnest amount well before
the auction proceedings and auction sale
was finalized on 12.8.2010 at about 4.30
P.M. i.e. after working hours of Bank were
over and remaining amount of 25% of sale
amount (including earnest amount) was
deposited on next working day i.e.
13.8.2010, the Court proceed to consider
the rival submissions on facts and on law as
well.

22. Before the amendment by
substituting Rule 9 (3) of Rules 2002 words
used
were
"purchaser
shall
pay
immediately a deposit of twenty five
9 All. Arun Kumar Jain & Ors. Vs. P.O., Debts Recovery Tribunal, Allahabad & Ors.
831
percent of the amount of its sale price".
Neither the word 'immediately' nor the
words 'twenty five percent' were clear and
there was some ambiguity, therefore, in
2016 Rule 9 (3) of Rules, 2002 was
substituted and it was clarified i.e. words
'immediately' and 'twenty five percent'
were clarified that:

"3. On every sale of immovable
property, the purchaser shall immediately,
i.e., on the same day or not later than next
working day, as the case may be, pay a
deposit of twenty-five per cent. of the
amount of the sale price, which is inclusive
of earnest money deposited, if any, to the
authorised officer conducting the sale and
in default of such deposit, the property
shall be sold again."

23. As referred above earlier
ambiguity has now been clarified. The
Debts Recovery Tribunal has taken a very
technical and strict approach that auction
sale purchasers has to deposit 25% of sale
amount on the day of auction only and for
that Bank has to facilitate deposit of
amount
even
after
working
hours.
Compliance of provisions are mandatory
but they could not be made complexed to
the extent that provisions itself become
impossible to follow.

24. The word 'immediately' means
stronger
than
expression
'within
a
reasonable
time'
and
imply
prompt
vigorous action, without any delay. It
means with all convenient speed. The word
'immediately' should not be construed so
as
to
require
something
which
is
impossible. (Halsbury's Law of England,
4th Ed., Vol.23, para 1618, p.1178)

25. As per Black's Law Dictionary
(6th Edition) word 'immediately' means
doing of a thing straight away or forthwith
but when used in the context of contract, it
is usually construed to mean within a
reasonable time having due regard to the
nature of circumstances of the case.

26. 'Immediately' means 'prompt',
'within
reasonable
time'
or
'within
stipulated period.' In the present case,
admittedly, auction proceedings got over
by 4.30 P.M. on 12.8.2010 when working
hours of Bank were over and in normal
circumstances, 25% of the sale amount at
the earliest could be deposited no sooner
than before next working day. The
petitioners
(auction
purchasers),
have
immediately
on
next
working
day
(13.8.2010) deposited the amount i.e. 25 %
of sale price which includes the earnest
amount. The act therefore, definitely was
under the category of 'immediately',
without any delay. Therefore, it could not
be held that procedure prescribed was not
complied.

27. Now by the amendment (by
substitution) in Rule 9 (3) of Rules, 2002
(amended in 2016) has removed all
ambiguity by clarification that "on the
same day of not later than next working
day". The approach of DRAT has,
therefore, a legal flaw and the concerned
finding could not be legally justified.

28. The connected issue as to whether
25% amount will be inclusive of earnest
amount or not, has to be considered in the
background that auction notice dated
5.7.2010 (published in newspaper), which
is part of para 2 (v) of judgment, has
clearly stipulates that 25% amount of sale
to be deposited immediately would be
inclusive of earnest amount. The specific
words used are सिल स्नस्वदादाता के स्वक्रय मूजय की
२५% धनरास्र् (बयाना रास्र् सस्हत) स्वक्रय स्तस्ि को ही नकद
832 INDIAN LAW REPORTS ALLAHABAD SERIES
अिवा उपरोक्तानुसार मांि ड्राफ्ट द्वारा जमा करनी होिी,
however this fact has completely skipped
from consideration by the DRAT. Supreme
Court in Sri Siddheshwara (supra) has
held that Rule 9 (3) and 9 (4) being for
benefit of the borrower, are mandatory
provisions but could be waived of. This
judgment has not dealt with an issue as to
whether 25% would be inclusive of earnest
amount or not, where it has dealt a case
where borrower has given consent that
remaining amount i.e. 75 % could be
accepted by the auction purchaser belatedly
or not.

29. The amendment by substitution
carried out in 2016 has clarified that 25%
amount shall be inclusive of earnest money
already deposited. Therefore, considering
the condition mention in notice, reply of
the respondent bank and subsequent
clarifications to the Rules, according to
Court's opinion 25% of sale amount will be
inclusive
of
earnest
amount
already
deposited. Therefore, DRAT has made a
legal error on this issue also. The
amendment
in
Rules,
by
way
of
clarification
could
be
considered
retrospectively in certain circumstances as
referred in Zile Singh (supra) that:

" Where a statute is passed
for the purpose of supplying an obvious
omission in a former statute or to "explain"
a former statute, the subsequent statute has
relation back to the time when the prior Act
was passed."

30. The amended Rule 9 (3) of Rules,
2002 has clearly stipulated a clarification
and part of Rule begins from i.e. ("that is"
or "in other words"), which is shortening of
the Latin expression 'id est' and it is
normally used to introduce a further
explanation or paraphrase. As referred in
Zile Singh (supra) a clarification could be
related back i.e. it could be applicable
retrospectively. The amendment being
explanatory, therefore, it may be construed
as retrospective in nature.

31. The other issue urged is nonconsideration of the alleged objections of
borrowers to the notice of bank under
Section 13 (4) of SARFAESI Act. I have
carefully perused the legal notice dated
1.6.2009 (sent by an Advocate on behalf of
the borrower and alleged to be reply to
referred notice), however, contents thereof
does not indicate that it was in reply to
notice of bank. It does not refer about said
notice either, therefore, it would not be
deemed as an objection to notice issued by
the Bank an as per rules a belated reply, if
any, was not required to be considered.

32. The counsel for respondents
(borrowers) has pointed out that 75% of
sale amount was deposited after 15 days
and thus, violated the mandatory conditions
of Section 13 (2) of the Act.

33. The auction took place on
12.8.2010 and as referred above, 25% of
sale amount including earnest amount was
paid by the auction purchasers (petitioners)
on very next working day. According to
Section
13(4)
of
SARFAESI
Act,
remaining 75% amount of sale price was to
be deposited on or before 26/27-8.2010.
However, during intervening period on
23.8.2010 (i.e. before 15 days), the Debts
Recovery Tribunal, on an application of the
borrowers, granted them a period of 30
days to deposit Rs.1.08 Crore to clear
outstanding loan amount and admittedly
borrower has failed to deposit said amount.
It appears that when auction purchasers
found that the borrower might fail to
deposit said amount, he started payment of
9 All. Arun Kumar Jain & Ors. Vs. P.O., Debts Recovery Tribunal, Allahabad & Ors.
833
75% remaining amount in different slots
between 21.9.2010 to 25.9.2010 i.e. before
the date fixed before DRT and just two
days after 30 days to borrower were over.
The time of 15 days is not sacrosanct since
it
could
be
extended.
In
above
circumstances, though there was no written
agreement, still delay has been explained
and said delay has not prejudiced the
borrowers in any manner, since even during
pendency
of
present
writ
petition,
borrowers have failed to offer money.

34. In similar circumstances, Supreme
Court in Varimadugu Obi Reddy Vs.
B.Sreenivasulu & Ors, (2023) 2 SCC 168 ,
has held that delay in payment of 75% of
sale amount would not be an illegality,
when borrower has sought time for
repayment and failed. Relevant paragraphs
44, 45 and 46, therefore, being relevant, are
reproduced hereinafter -:

"44.