# Nishant Kumar v. State of U.P. & Ors

- **Citation:** (2024) 4 ILRA 1498
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-03-19
- **Case number:** Writ C No. 8607 of 2024
- **Bench:** Manoj Kumar Gupta, Kshitij Shailendra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/nishant-kumar-v-state-of-u-p-ors-51731
- **Pages:** 7

## Headnote

C.S.C., Sri Ramesh Kumar Shukla

Securitisation
and
Reconstruction
of
Financial
Assets
and
Enforcement
of
Security Interest Act, 2002 -Aggrieved
against a communication issued by the Bank
stating that 25% of the sale price deposited by
him- has been forfeited-as he had failed to
deposit the remaining 75% of the sale price
within fifteen days from the date of confirmation
of sale- the balance amount of purchase price
has to be deposited within fifteen days of
confirmation of sale -said period could be
extended as may be agreed upon in writing
between the purchaser and the secured
creditor- but it could not exceed three months-
extension beyond fifteen days is based upon
agreement -in instant case-the Bank has refused
to extend the period- meaning there was no
agreement between the parties for extension of
time - no illegality or infraction of any statutory
provision in the action of the Bank.

Writ Petition dismissed. (E-9)

List of Cases cited:

## Text

1498 INDIAN LAW REPORTS ALLAHABAD SERIES
alleged therein that from the surrounding
plots, soil upon a depth about 6 feet had been
extracted for construction of a railway
flyover. As a result, the land of the petitioner
become much higher than the surrounding
plots. This resulted in soil erosion from
petitioners' plot during the rainy season.
Therefore, the petitioner had merely leveled
his plot using agricultural equipments and
tractor.

7. In our considered opinion, the
reply filed by the petitioner amounts to an
admission of what has been alleged in the
notice against him. In order to level his field
to the level of the surrounding plots, to
prevent erosion of soil, petitioner was
necessarily required to remove soil up to a
depth of 5 to 6 feet. Nothing less would
prevent erosion of soil.

8. In the light of the above factual
situation, this Court is required to analyze
what is contained in Rule 3 of the Rules
2021. The explanation to this Rule, which is
being relied upon by learned counsel for the
petitioner reads as follows:-

"Explanation:- For the purposes of
this rule manual digging or manual extraction
of ordinary clay, ordinary earth for making
bricks and pottery shall not be treated as
mining operations:"

9. Perusal of the portion extracted
above makes it clear that it is applicable only
where manual digging or manual extraction
of ordinary clay has been carried out and
such excavation is not deeper than two
meters. Only if these two conditions are
fulfilled and the soil is excavated for making
bricks or pottery, will the excavation of soil
not amount to illegal mining and the
petitioner would not be charged of illegal
mining.
10. From the facts noticed in the initial
part of this order, it is admitted that the so called
leveling carried out by the petitioner was by
using agricultural tools and tractor. Moreover,
as already discussed above, if the petitioner's
case is accepted in toto, the same necessarily
amounts to removal of soil to make the plot of
the petitioner equal in height with the adjoining
plots.

11. It is not the case of the petitioner
that this soil which had to be removed by using
machinery was for making bricks and/or
pottery.

12. Under the circumstances, the
petitioner is not entitled to any benefit of the
explanation to Rule 3. For the same reason, the
impugned orders cannot be faulted with.

13. It is additionally submitted that no
royalty could be imposed in view of the Entry 8
of the IInd Schedule. The argument is of no
consequence because no royalty has been
demanded from the petitioner. The amount that
is demanded by the impugned orders is only
that of penalty which can be very well imposed
in view of Rule 58 of the Rules, 2021.

14. Accordingly and in view of the
above, the writ petition fails and is dismissed.
----------
(2024) 4 ILRA 1498
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.03.2024

BEFORE

THE HON'BLE MANOJ KUMAR GUPTA, J.
THE HON'BLE KSHITIJ SHAILENDRA, J.

Writ C No. 8607 of 2024

Nishant Kumar ...Petitioner
Versus
State of U.P. & Ors. ...Respondents
4 All. Nishant Kumar Vs. State of U.P. & Ors.
1499
Counsel for the Petitioner:
Sri Vivek Saran

Counsel for the Respondent:
C.S.C., Sri Ramesh Kumar Shukla

Securitisation
and
Reconstruction
of
Financial
Assets
and
Enforcement
of
Security Interest Act, 2002 -Aggrieved
against a communication issued by the Bank
stating that 25% of the sale price deposited by
him- has been forfeited-as he had failed to
deposit the remaining 75% of the sale price
within fifteen days from the date of confirmation
of sale- the balance amount of purchase price
has to be deposited within fifteen days of
confirmation of sale -said period could be
extended as may be agreed upon in writing
between the purchaser and the secured
creditor- but it could not exceed three months-
extension beyond fifteen days is based upon
agreement -in instant case-the Bank has refused
to extend the period- meaning there was no
agreement between the parties for extension of
time - no illegality or infraction of any statutory
provision in the action of the Bank.

Writ Petition dismissed. (E-9)

List of Cases cited:

1. Authorised Officer, Central Bank of India vs.
Shanmugavelu reported in 2024 SCC OnLine SC
92

2. Authorized Officer, State Bank of India vs. C.
Natarajan reported in 2023 SCC OnLine SC 510

(Delivered by Hon'ble Manoj Kumar
Gupta, J.
&
Hon'ble Kshitij Shailendra, J.)

1. The instant petition is directed
against a communication dated 13.02.2024
issued by the Chief Manager, Punjab
National Bank to the petitioner stating that
25% of the sale price i.e., Rs.30.03 lakh
deposited by him, has been forfeited, as he
had failed to deposit the remaining 75% of
the sale price within fifteen days i.e., by
11.01.2024 from the date of confirmation
of sale.

2. The facts necessary for disposal
of the instant petition are as follows:

M/s Laxmi Food Products, a
proprietorship concern of father of the
petitioner
had
taken
loan
from
the
respondent-Bank. As there was default in
re-payment of the loan, the respondentBank had proceeded to auction the
mortgaged property. E-auction was held on
27.12.2023 in which the petitioner was the
highest bidder for an amount of Rs.120.10
lakh. As per terms and conditions of eauction, the petitioner deposited 25% of the
bid amount (inclusive of earnest-money) on
the next date i.e., 28.12.2023 whereupon
the sale was confirmed by order dated
28.12.2023. The order confirming the sale
specifically mentioned that the petitioner
would be required to pay the remaining
75% of the sale price within fifteen days.
The petitioner filed an application before
the respondent-Bank on 11.01.2024 seeking
seventy five days' further time to deposit
the remaining 75% of the sale price. He
stated in his application that he had applied
to a Bank for a home loan. Since there was
no approved building plan of the land,
which was subject matter of auction nor
any declaration under Section 143 of U.P.
ZA and LR Act, therefore, delay had
occurred in approval of the loan. He
should, therefore, be granted further time
so that he gets the loan sanctioned and
would then be in position to deposit the
remaining amount.

3. The aforesaid prayer of the
petitioner was turned down by the Bank by
sending him an e-mail. A copy of the said
communication has been placed before us
1500 INDIAN LAW REPORTS ALLAHABAD SERIES
by learned counsel for the respondent-Bank
and with regard to which, there is no
dispute between the parties. The said
communication is reproduced below:

"From: Circle Sastra Bijnore
Sent: 11 January 2024 07:14 PM
To:
NISHANT
KUMAR;
nks01180@gmail.com
Cc: Circle Sastra Bijnore
Subject:
RE:
Your
letter
dt.
10.01.2024 for extension of time to deposit
remaining sale amount
Attachments: Nishant_0001.pdf
हदनांक : 11-01-2024
श्री धनिांत कुमार पुर्त्र श्री अरविंद
कुमार
पता:
िाम-
रामठेरा,
पोस्र्-
िबीबिािा,
तिसीि- िामपुर, वबजनौर

विषय: नीिामी हदनांक 27.12.2023 में
खरीदी गयी संपवत्त की िेष राधि के जमा करने
के धिए आपके द्वारा प्राप्त पर्त्र 11.01.2024 संबंि
में
मिोदय,
जैसा हक आप अिगत िैं हक आपने बैंक
द्वारा हदनांक 27.12.2023 को की गयी ईनीिामी द्वार एक संपवत्त रुपए 1,20,10,000.00/-
(एक करोड बीस िाख दस िजार रुपए) में
खरीदी र्थी म्जसकी 25% राधि धनयमानुसार
हदनांक 28.12.2023 तक जमा कर हदया र्था एिं
िेष 75% राधि को जमा करने की धिए आपको
15 हदनों का समय हदया गया र्था जो हक आपको
ईमेि हदनांक 27.12.2023 द्वारा भी सूधचत
हकया गया र्था हक आपको िेष नीिामी राधि को
हदनांक 11.01.2024 तक जमा करना िै हकन्तु
आपने अभी तक िेष राधि जमा निीं की िै तर्था
आपने
ईमेि
द्वारा
अपने
पर्त्र
हदनांक
11.01.2024 के द्वारा अधतररि 75 हदनों की मांग
की िै एिं आपने यि बताया िै हक आपने ऋण
के धिए आिेदन हकया िै और आपके द्वारा
खरीदी गयी संपवत्त ना िी का नक्िा पास िै एिं
ना िी संपवत्त िारा 143 के अंतगजत आिासीय
घोवषत िै।
mijksDr पर्त्र के संदभज में आपको सूधचत
हकया जाता िै हक नीिामी की जानी िािी
संपवत्त की सभी प्रकार की जानकारी आपको
संपवत्त के खरीदे जाने से पूिज की जानी चाहिए र्थी
क्योंहक बैंक द्वारा समपवत्तयों हक नीिामी "As is
where is", "As is what is" and "Whatever
there is" के आिार पर की जाती िै एिं आपको
यि भी सूधचत हकया जाता िै हक आपके ऋण के
आिेदन के स्िीकृत िोने में िोने िािे वििंब से
बैंक का हकसी भी प्रकार का समबंि निीं िै।
जो संपवत्त आपने ई नीिामी में हदनांक
27.12.2023 को खरीदी िै िो संपवत्त मै० िक्ष्मी
फूड प्रोडक्र्स (NPA ऋण खाते) में बंिक िै
म्जसमे आपके वपता श्री अरविंद कुमार पुर्त्र श्री
िखपत धसंि प्रोपराइर्र िै जो की बैंक के
हडफालर्र भी िै अतः आप इस संपवत्त के बारे में
भिी भांधत अिगत र्थे।
अत: आपको िेष नीिामी राधि जमा
करने के धिए अधतररि समय देने का कोई
आिार निीं बनता िै इसधिए आपके द्वारा िेष
नीिामी राधि को जमा करने के धिए अधतररि
4 All. Nishant Kumar Vs. State of U.P. & Ors.
1501
75 हदनों की मांग अस्िीकायज िै एिं आपको
तुरंत पूणज राधि तुरंत जमा करने की सिाि दी
जाती िै एिं पूणज नीिामी राधि के जमा ना िोने
की म्स्र्थधत में आपके द्वारा जमा की गयी समस्त
राधि बैंक द्वारा धनयमानुसर जब्त (forfeit) कर
िी जाएगी और बैंक उधचत एिं अधिम
कायजिािी के धिए स्ितंर्त्र िोगा।
िन्यिाद
पंजाब नैिनि बैंक
सुनीि कुमार िमाज
प्राधिित अधिकारी (मुख्य प्रबन्िक)"

4. Learned counsel for the
petitioner submits that the Bank had the
power to extend the time up to ninety
days. The petitioner had applied for a loan
and since it was not sanctioned, therefore,
delay had occurred. It is submitted that in
such circumstances, the decision of the
Bank to forfeit 25% of the amount
deposited by the petitioner is wholly
illegal. He places reliance on Rule 9 of the
Security Interest (Enforcement) Rules,
2002 framed under the Securitisation and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002
(for short 'the Act') in support of his
contention.

5. On the other hand, learned
counsel for the respondent-Bank submits
that the time permissible for depositing the
remaining amount was fifteen days from
the date of confirmation of the sale. The
said
period
was
extendable
at
the
discretion of the Bank provided there was
justifiable ground and material to the said
effect. It is urged that in the facts of the
instant case, the Bank did not find any
justifiable ground to extend the time limit.
6. Sub-rule (3), (4) and (5) of Rule
9, which are relevant, are extracted below:

"(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.
(4)
The
balance
amount
of
purchase price payable shall be paid by the
purchaser to the authorised officer on or
before the fifteenth day of confirmation
of sale of the immovable property or such
extended period as may be agreed upon in
writing between the purchaser and the
secured
creditor,
in
any
case
not
exceeding three months.
(5) In default of payment within
the period mentioned in sub-rule (4), the
deposit shall be forfeited to the secured
creditor and the property shall be resold
and the defaulting purchaser shall forfeit
all claim to the property or to any part of
the sum for which it may be subsequently
sold."

7. It is clear on a plain reading of
the aforesaid provisions that twenty five
percent of the amount of sale price
inclusive of earnest money is to be
deposited by the auction purchaser as
soon as his bid is declared to be
successful.
The
balance
amount
of
purchase price has to be deposited within
fifteen days of confirmation of sale of the
immovable property. The said period could
be extended as may be agreed upon in
writing between the purchaser and the
secured creditor but it could not exceed
three months.
1502 INDIAN LAW REPORTS ALLAHABAD SERIES
8. The extension beyond fifteen
days is based upon agreement between the
purchaser and the secured creditor. In the
instant case, the Bank has refused to
extend the period meaning thereby that
there was no agreement between the
parties for extension of time limit
prescribed under the statute.

9. The loan was taken by the
proprietorship concern of the father of the
petitioner. The petitioner knew that it was
an agricultural land and there was no
approved building plan. He purchased it
on "as is where is" and "as is what is"
basis. He was well aware of the fact that
under the terms and conditions of
auction, he was required to deposit 25%
of the purchase price within fifteen days
and also the consequences of its failure.

10. In the Authorised Officer,
Central
Bank
of
India
vs.
Shanmugavelu reported in 2024 SCC
OnLine SC 92, the Supreme Court held
that
Rule
9(5)
was
consciously
incorporated
by
the
legislature
to
subserve the larger object of the Act i.e.
timely resolution of the bad debts of the
country. It has been held that any dilution
of the forfeiture provided under Rule 9(5)
would result in the entire auction process
under
the
Act
being
derailed
by
mischievous auction purchaser(s) through
sham bids, thereby undermining the
overall object of the Act of promoting
financial stability, reducing NPAs and
fostering a more efficient and streamlined
mechanism for recovery of bad debts.

11. In the aforesaid judgement, the
Supreme Court dis-approved the decision
of the High Court to reduce the extent of
amount forfeited in view of the fact that
subsequent sale of the secured asset had
fetched a higher price. It has been observed
as follows:

"However, we are not in agreement
with the aforesaid observations of the High
Court. When an auction fails and a fresh
auction is required to be conducted in
respect of the Secured Asset, there looms a
degree of uncertainty as to the extent of
bids that may be received in the future
auction or whether the fresh auction would
even be successful or not. More often than
not, with the efflux of time, the value of the
Secured Asset erodes. In such a case it
would be preposterous to tie or limit the
forfeiture
under
Rule
9(5)
of
the
SARFAESI Rules on an eventuality or a
contingency of a subsequent sale of the
secured asset if any.
The consequence of forfeiture of
25% of the deposit under Rule 9(5) of the
SARFAESI Rules is a legal consequence
that has been statutorily provided in the
event of default in payment of the balance
amount. The consequence envisaged under
Rule 9(5) follows irrespective of whether a
subsequent sale takes place at a higher
price or not, and this forfeiture is not
subject to any recovery already made or to
the extent of the debt owed. In such cases,
no extent of equity can either substitute or
dilute
the
statutory
consequence
of
forfeiture of 25% of deposit under Rule
9(5) of the SARFAESI Rules."

12. The Supreme Court in the said
judgement also considered the scope of
judicial review in respect of a decision
taken by a secured creditor not to extend
the time limit and to forfeit the amount
deposited at the time of confirmation of the
auction. The Supreme Court approved the
previous judgment in Authorized Officer,
State Bank of India vs. C. Natarajan
reported in 2023 SCC OnLine SC 510,
4 All. Nishant Kumar Vs. State of U.P. & Ors.
1503
and held that it is only in very rare and
exceptional
case
where
extraneous
conditions beyond the control of the
purchaser had led to default in deposit of
the balance amount that the Court could
intervene. It has also been observed that
while carrying out the said scrutiny the
Court must be careful and cautious and
direct their attention to examine each case
in some depth to locate whether there is
likelihood of any hidden interest of the
bidder to stall the sale to benefit the
defaulting borrower. The court should not
be swayed by sentiments as sympathy,
grace or compassion are outside the scope
of the legislation. The relevant extract from
the judgment in C. Natarajan (supra) on
which reliance was placed by the Supreme
Court in arriving at the above conclusion is
extracted below:

"13.... If, however, circumstances
are shown to exist where a bidder is faced
with such a grave disability that he has no
other option but to seek extension of time
on genuine grounds so as not to exceed the
stipulated period of ninety days and the
prayer is rejected without due consideration
of all facts and circumstances, refusal of
the prayer for extension could afford a
ground for a judicial review of the
decision-making
process
on
valid
ground(s).
One
such
exceptional
circumstance led to the decision in Alisha
Khan v. Indian Bank (Allahabad Bank)
[2021 SCC OnLine SC 3340], where this
Court
intervened
and
granted
relief
because, due to COVID complications, the
appellant had failed to pay the balance
amount.
xxx xxx xxx
24. The up-shot of the aforesaid
discussion is that whenever a challenge is
laid to an order of forfeiture made by an
authorized officer under sub-rule (5) of rule
9 of the Rules by a bidder, who has failed
to deposit the entire sale price within ninety
days, the tribunals/courts ought to be
extremely reluctant to interfere unless, of
course, a very exceptional case for
interference is set up. What would
constitute a very exceptional case, however,
must be determined by the tribunals/courts
on the facts of each case and by recording
cogent reasons for the conclusion reached.
Insofar as challenge to an order of
forfeiture that is made upon rejection of an
application for extension of time prior to
expiry of ninety days and within the
stipulated period is concerned, the scrutiny
could be a bit more intrusive for
ascertaining
whether
any
patent
arbitrariness or unreasonableness in the
decision-making process has had the effect
of vitiating the order under challenge.
However, in course of such scrutiny, the
tribunals/courts
must
be
careful
and
cautious and direct their attention to
examine each case in some depth to locate
whether there is likelihood of any hidden
interest of the bidder to stall the sale to
benefit the defaulting borrower and must,
as of necessity, weed out claims of bidders
who
instead
of
genuine
interest
to
participate in the auctions do so to rig
prices with an agenda to withdraw from the
fray post conclusion of the bidding process.
In course of such determination, the
tribunals/courts ought not to be swayed
only
by
supervening
events
like
a
subsequent sale at a higher price or at the
same price offered by the defaulting bidder
or that the secured creditor has not in the
bargain suffered any loss or by sentiments
and should stay at a distance since
extending sympathy, grace or compassion
are outside the scope of the relevant
legislation. In any event, the underlying
principle
of
least
intervention
by
tribunals/courts
and
the
overarching
1504 INDIAN LAW REPORTS ALLAHABAD SERIES
objective of the SARFAESI Act duly
complimented by the Rules, which are
geared
towards
efficient
and
speedy
recovery of debts, together with the
interpretation of the relevant laws by this
Court should not be lost sight of. Losing
sight thereof may not be in the larger
interest of the nation and susceptible to
interference."
(Emphasis supplied)

13. One of the plea in the aforesaid
case like in the instant case was inability of
the auction purchaser to get the loan
sanctioned. In the instant case as noted above,
the petitioner was fully aware of his financial
capacity still he participated in the auction
and made bid of an amount which was
beyond his means. The mortgaged property
belonged to the firm of his father and there
was every likelihood that the bid was made to
create obstacle in the way of the secured
creditor in recovering its dues. There was no
extraneous
condition
pleaded
by
the
petitioner as may have incapacitated him
from depositing the balance amount. The
factors pleaded for getting extension were his
own creation and not attributable to any
external force. Therefore keeping in mind the
limited power of judicial review, we are of
the considered opinion that there was no error
in the decision of the secured creditor in
rejecting the request to extend the time for
payment of the balance amount.

14. It is noteworthy that by our
previous order dated 15.03.2024, we
granted time to the petitioner to make
payment of the remaining amount by
18.03.2024 alongwith interest for the
period of delay beyond 11.01.2024 and
fixed today's date.

15. Shri Vivek Saran, learned
counsel for the petitioner, at the outset,
submitted that the petitioner could not
comply with the said order as he is not in
position to deposit the remaining amount,
inasmuch as the loan, which he had applied
for, has yet not been sanctioned.

16. Keeping in mind the aforesaid
facts, we are of the opinion that there was
no illegality or infraction of any statutory
provision in the action of the Bank.

17. The petition lacks merit and is,
accordingly, dismissed.
----------
(2024) 4 ILRA 1504
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.04.2024

BEFORE

THE HON'BLE DINESH PATHAK, J.

Writ-C No. 10173 of 2024

Smt. Adiba ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri M J Akhtar, Sr. Adv.

Counsel for the Respondents:
C.S.C., Sri Dharam Vir Jaiswal, Sri Harsh Vikram,
Sri Kushagra Vaibhav Singh, Sri Pradeep Kumar
Singh

U.P. Panchayat Raj Act, 1947 - Section
95(1)(g) - Uttar Pradesh Panchayat Raj
(Removal of Pradhans, Up Pradhans and
Members) Enquiry, Rules, 1997 - Rule 5Petitioner is an elected Pradhan in the
Panchayat Election 2020-21-during his tenure
being Pradhan, a complaint has been moved by
private
person-
pointing
out
some
embezzlement in the development work done by
the petitioner- District Magistrate on behalf of
State Government has constituted a committee-
to conduct preliminary inquiry against the
incumbent- petitioner has no right to participate