# M/s Al-Can Export Pvt. Ltd v. Prestige H.M. Polycontainers Ltd. & Ors

- **Citation:** 2024 INSC 500
- **Court:** Supreme Court of India
- **Decided:** 2024-07-09
- **Case number:** Civil Appeal No. 7254 of 2024
- **Bench:** J. B. Pardiwala, Manoj Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-al-can-export-pvt-ltd-v-prestige-h-m-polycontainers-ltd-ors-37912
- **Pages:** 58

## Headnote

Matter pertains to the legality, validity and propriety of the auction
proceedings conducted by the Tahsildar of the subject property,
originally owned by the respondent No. 1; whether the provisions of
Order XXI r. 90 CPC would apply to the writ proceedings u/Art. 226
of the Constitution; and whether the Additional Commissioner, had
the jurisdiction to decide the two appeals filed by the respondent
nos. 1 and 6 respectively u/s. 247 of the Maharashtra Land
Revenue Code, 1966.
Headnotes†
Maharashtra Land Revenue Code, 1966 - ss. 194, 195, 212 -
Auction sale - Matter pertaining to auction proceedings
conducted by the Tahsildar of the subject property originally
owned by the respondent No. 1 - Respondent no. 1 mortgaged
its property in favour of the Bank and obtained loan - Bank
assigned the debts due and payable to it in favour of the
respondent no. 6 - Respondent no. 1 was in arrears of land
revenue and despite issuance of demand notices failed to make
the payment and as such the property owned by him was put
to auction under the provisions of the Land Revenue Code -
Appellant declared the successful bidder and sale certificate
issued by the Additional Collector in his favour - Legality,
validity and propriety of the auction proceedings conducted
by Tahsildar of the subject property originally owned by the
respondent No. 1:
Held: There was gross violation of the mandatory provisions of
the Revenue Code as regards the conduct of the auction sale -
Sale of the property took place before the expiry of the mandatory
30 days' notice, thus, the sale was conducted in breach of the
provisions of s. 194 - Sale certificate was issued on the same day,
* Author
[2024] 7 S.C.R.
475
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
i.e., on the date of the auction itself, much before the confirmation
of sale by the Additional Collector, thus, the sale was conducted
in breach of the provisions of s. 212 - Appellant-purchaser was
put in possession of the property much before the sale came to
be confirmed and that too prior to the cheque being realised, thus,
breach of the provisions of ss. 212 and 208 respectively - Undue
haste was exhibited by the Tahsildar in completing the sale in
favour of the appellant - Tahsildar supressing an important fact
before the Additional Collector as regards the objections received
by him from IFCI itself indicates that there was some collusion
between the Tahsildar and the appellant - Said lapses, cannot be
termed as irregularity - Various illegalities were committed even
in confirming the sale - If all the illegalities taken note of were to
be condoned or overlooked, applying the provisions of Ord. XXI
r. 90 CPC, the same would result in nothing but gross travesty of
justice - No interference warranted with the impugned judgment
of the High Court - Having taken the view that the High Court
committed no error, much less any error of law, the appeals could
have been dismissed - However, the appellant having running an
oxygen cylinder manufacturing plant on the suit property, for almost
15 years after investing a huge amount wherein 200 employees
are working, it is fit to give one opportunity to the appellant to
save its industrial unit set up on the subject land - Appellant to
deposit a sum of Rupees Four Crore Only with the respondent
no. 6 towards full and final settlement of all liabilities - In case
of the failure to deposit the amount, the competent authorities to
take over the possession of the entire unit with the land and put
the same once again for sale by way of fresh auction process.
[Paras 56-64, 66-67, 75-78]
Code of Civil Procedure, 1908 - Ord. XXI r. 90, ss. 141 and
9 - Constitution of India - Art. 226 - Ordinary civil jurisdiction
and extraordinary original jurisdiction - Applicability of the
provisions of Ord. XXI r. 90 to writ proceedings u/Art. 226:
Held: Provisions of the CPC do not apply to writ petitions u/Art. 226
except some of the principles enshrined therein like

## Text

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[2024] 7 S.C.R. 474 : 2024 INSC 500
M/s Al-Can Export Pvt. Ltd.
v.
Prestige H.M. Polycontainers Ltd. & Ors.
(Civil Appeal No. 7254 of 2024)
09 July 2024
[J. B. Pardiwala* and Manoj Misra, JJ.]
Issue for Consideration
Matter pertains to the legality, validity and propriety of the auction
proceedings conducted by the Tahsildar of the subject property,
originally owned by the respondent No. 1; whether the provisions of
Order XXI r. 90 CPC would apply to the writ proceedings u/Art. 226
of the Constitution; and whether the Additional Commissioner, had
the jurisdiction to decide the two appeals filed by the respondent
nos. 1 and 6 respectively u/s. 247 of the Maharashtra Land
Revenue Code, 1966.
Headnotes†
Maharashtra Land Revenue Code, 1966 - ss. 194, 195, 212 -
Auction sale - Matter pertaining to auction proceedings
conducted by the Tahsildar of the subject property originally
owned by the respondent No. 1 - Respondent no. 1 mortgaged
its property in favour of the Bank and obtained loan - Bank
assigned the debts due and payable to it in favour of the
respondent no. 6 - Respondent no. 1 was in arrears of land
revenue and despite issuance of demand notices failed to make
the payment and as such the property owned by him was put
to auction under the provisions of the Land Revenue Code -
Appellant declared the successful bidder and sale certificate
issued by the Additional Collector in his favour - Legality,
validity and propriety of the auction proceedings conducted
by Tahsildar of the subject property originally owned by the
respondent No. 1:
Held: There was gross violation of the mandatory provisions of
the Revenue Code as regards the conduct of the auction sale -
Sale of the property took place before the expiry of the mandatory
30 days' notice, thus, the sale was conducted in breach of the
provisions of s. 194 - Sale certificate was issued on the same day,
* Author
[2024] 7 S.C.R.
475
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
i.e., on the date of the auction itself, much before the confirmation
of sale by the Additional Collector, thus, the sale was conducted
in breach of the provisions of s. 212 - Appellant-purchaser was
put in possession of the property much before the sale came to
be confirmed and that too prior to the cheque being realised, thus,
breach of the provisions of ss. 212 and 208 respectively - Undue
haste was exhibited by the Tahsildar in completing the sale in
favour of the appellant - Tahsildar supressing an important fact
before the Additional Collector as regards the objections received
by him from IFCI itself indicates that there was some collusion
between the Tahsildar and the appellant - Said lapses, cannot be
termed as irregularity - Various illegalities were committed even
in confirming the sale - If all the illegalities taken note of were to
be condoned or overlooked, applying the provisions of Ord. XXI
r. 90 CPC, the same would result in nothing but gross travesty of
justice - No interference warranted with the impugned judgment
of the High Court - Having taken the view that the High Court
committed no error, much less any error of law, the appeals could
have been dismissed - However, the appellant having running an
oxygen cylinder manufacturing plant on the suit property, for almost
15 years after investing a huge amount wherein 200 employees
are working, it is fit to give one opportunity to the appellant to
save its industrial unit set up on the subject land - Appellant to
deposit a sum of Rupees Four Crore Only with the respondent
no. 6 towards full and final settlement of all liabilities - In case
of the failure to deposit the amount, the competent authorities to
take over the possession of the entire unit with the land and put
the same once again for sale by way of fresh auction process.
[Paras 56-64, 66-67, 75-78]
Code of Civil Procedure, 1908 - Ord. XXI r. 90, ss. 141 and
9 - Constitution of India - Art. 226 - Ordinary civil jurisdiction
and extraordinary original jurisdiction - Applicability of the
provisions of Ord. XXI r. 90 to writ proceedings u/Art. 226:
Held: Provisions of the CPC do not apply to writ petitions u/Art. 226
except some of the principles enshrined therein like res judicata,
delay and laches, addition of parties, matters which have not been
specifically dealt with by the writ rules framed by the respective
High Court - As a court of plenary jurisdiction, the writ court while
exercising powers u/Art. 226 is free to adopt its own procedures
and follow them - It cannot be compelled to follow the procedures
476
[2024] 7 S.C.R.
Digital Supreme Court Reports
prescribed in the CPC - This is so for the specific provision made
in its s. 141 explanation - High Court while exercising jurisdiction
u/Art. 226 has jurisdiction to pass appropriate orders - Such power
can neither be controlled nor affected by the provisions of Ord. XXI
r. 90 - It would not be correct to say that the terms of Ord. XXI r.
90 should be mandatorily complied with while exercising jurisdiction
under Article 226 - Proceedings u/Art. 226 stand on a different
footing when compared to the proceedings in suits or appeals
arising therefrom - High Court exercises its writ jurisdiction u/Art.
226, whereas the Civil Courts exercise their jurisdiction in terms
of the provisions of the respective State Civil Courts Acts read
with s. 9 CPC - High Court exercises constitutional function, the
Civil Court exercises a statutory function - High Court exercises a
wide power u/Art. 226 and in a given situation, it can even mould
the reliefs in order to do substantial justice between the parties.
[Paras 39, 48-50]
Code of Civil Procedure, 1908 - Ord. XXI r. 90 - Auction sale
conducted by the State through its authorities - Legality, validity
and propriety of - Auction sale challenged on the ground of
mala fides, undue favour for extraneous considerations and
gross violation of the mandatory provisions of law - Principles
enshrined in Ord. XXI r. 90 CPC, if applicable:
Held: It would be hazardous to apply the principles enshrined in Ord.
XXI r. 90 CPC - Human values and ethics in public functionaries
have degraded to a considerable extent - Corruption is on a
rampage - Having regard to the same and in order to protect
and uphold the rule of law, the courts have a duty to ensure that
the State authorities have conducted public auctions in a fair
and transparent manner and have not done anything by which
public exchequer has suffered - It would be too much to say that
although the writ court may find auction sale conducted by a public
functionary to be in gross violation of the mandatory provisions of
law and the action of such public functionary to be arbitrary, yet
the aggrieved party complaining about the same should be told
to establish the dual conditions stipulated in Ord.XXI r.90 CPC -
First and the foremost aspect that the writ court should look into
is fairness and transparency on the part of the State in conducting
the auction sale so as to be in conformity with Art.14 - Once the
action of the State is found to be unfair and arbitrary, then that is
end of the matter for the writ court. [Para 55]
[2024] 7 S.C.R.
477
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
Maharashtra Land Revenue Code, 1966 - s. 247 - Appeal and
appellate authorities - Matter pertaining to auction proceedings
conducted by the Tahsildar of the subject property originally
owned by the respondent No. 1 - Respondent no. 1 mortgaged
its property in favour of the Bank and obtained loan - Bank
assigned the debts due and payable to it in favour of the
respondent no. 6 - Respondent no. 1 was in arrears of land
revenue and despite issuance of demand notices failed to make
the payment and as such the property owned by the respondent
no. 1 put to auction under the provisions of the Land Revenue
Code and the appellant was declared the successful bidder
and sale certificate issued by the Additional Collector in his
favour - Appeals filed by the original owner and respondent
no. 6 u/s. 247 - Jurisdiction of the Additional Commissioner
to decide the appeals - Plea of the appellant that the appeals
before the Additional Commissioner u/s. 247 not maintainable
as there was remedy available u/s. 210 of the Code:
Held: Under s. 210, an application before the Collector to get the
Sale set aside has to be made within a period of 30 days and it
is after considering the objections the sale is to be confirmed -
Remedy u/s. 210 rendered illusory as the sale was finalised by
the Tahsildar much before the confirmation by the Collector - In
fact, the sale certificate was issued and the possession was also
handed over to the appellant - Confirmation was done by the
Tahsildar much before the expiry of 30 days - There was nothing
left for the Collector to consider and decide u/s. 210 of the Revenue
Code - Once the sale certificate is issued, then the remedy falls
u/s. 247 instead of s. 210 of the Revenue Code - Furthermore, s.
210 may be applicable in case of owner of the property but not to
a lender who has valid subsisting mortgage - Respondent No. 6
does not fall within the category as provided u/s. 210(1) nor has
the respondent No. 6 claimed to be the owner of the property or
has an interest in the property by virtue of the "title acquired" -
Assuming that the Additional Commissioner had no jurisdiction
to adjudicate and decide the two appeals filed by the respondent
No. 1 and respondent No. 6 respectively, yet the common order
passed by the Additional Commissioner allowing the appeals and
remanding the matter back to the authority concerned could not
have been disturbed and the High Court rightly did not disturb
the same - Had the High Court taken the view that the Additional
Commissioner had no jurisdiction and the order passed by it was
478
[2024] 7 S.C.R.
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a nullity, the result would have been the revival of the illegal order
passed by the Additional Collector confirming the sale - Moreso,
the writ court should not quash the order if it revives a wrong or
illegal order. [Paras 69-74]
Auction - Auction sale - Conduct of, by the court in the
execution proceedings initiated by the decree holder under the
provisions of the CPC, and by the State through its revenue
authorities like Tahsildar, etc. under the provisions of different
enactments like Land Revenue Code etc. - Difference between:
Held: There is a fine distinction between the two - Whole object
behind Ord. XXI r. 90 CPC appears to be to discourage the
judgment debtors from filing frivolous application complaining
about the irregularity or fraud in the conduct of the auction sale
- Lot of sanctity is attached to the auction sale conducted by the
executing court under the provisions of the CPC compared to
the auction sale conducted by the State through its authorities -
Execution is the enforcement by the process of the court of its
orders and decrees - This is in furtherance of the inherent power
of the court to carry out its orders or decrees - Order XXI CPC
deals with the elaborate procedure pertaining to the execution of
orders and decrees - Sale is one of the methods employed for
execution - r. 89 of Ord. XXI CPC is the only means by which
a judgment-debtor can escape from a sale that has been validly
carried out - Object of the rule is to provide a last opportunity to
put an end to the dispute at the instance of the judgment debtor
before the sale is confirmed by the court and also to save his
property from dispossession. [Para 38]
Code of Civil Procedure, 1908 - Ord. XXI r. 90 - Nature and
scope of:
Held: R. 90 of Ord. XXI deals with cases of setting aside auctionsale on the ground of material irregularity or fraud in publishing or
conducting such sale and the applicant proves substantial injury by
reason of such irregularity or fraud - Explanation to r. 90 clarifies
that mere absence of or defect in, attachment of property sold
would be no ground for setting aside sale - Ord. XXI is exhaustive
and in the nature of a complete code as to how the execution
proceedings should take place - This is the second stage after
the success of the party in the civil proceedings - Another legal
battle, more prolonged, starts in execution proceedings defeating
the right of the party which has succeeded in establishing its
[2024] 7 S.C.R.
479
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
claim in civil proceedings - This is the reason why Ord. XXI r. 90
provides that both the conditions enumerated therein should be
fulfilled. [Paras 36, 37]
Public functionaries - Role of - Conduct of auction sale -
Requirement of fairness and non-arbitrariness by the State:
Held: State action must be informed by reason and the action
uninformed by reason is per se arbitrary - Basic requirement of
Art. 14 is fairness in action by the State and non-arbitrariness in
essence and substance is the heartbeat of fair play - These actions
are amenable to the judicial review not only to the extent that the
State must act validly for a discernible reason and not whimsically
for any ulterior purpose - Public authorities are governed by the
"rule of law" - Such authorities are constitutionally obliged in
law to maintain absolute fairness and transparency during the
conduct of the auction sale right from the initiation of the same
till its completion - Judicial audit and scrutiny play a key role in
ensuring that the public authorities do not act in an unreasonable
manner. [Para 55]
Public functionaries - Public efficiency - Maintenance of
balance between accountability and autonomy of action - Test
of justness, fairness, reasonableness:
Held: Accountability is an impediment to efficient discharge of the
duty - There is a distinction between prying into details of dayto-day administration and of the legitimate actions or resultant
consequences thereof - To enthuse efficiency into administration, a
balance between accountability and autonomy of action should be
carefully maintained - Over-emphasis on either would impinge upon
public efficiency - But undermining the accountability would give
immunity or carte blanche power to deal with the public property
or of the debtor at whim or vagary - Whether the public authority
acted bona fide would be gauged from the impugned action and
attending circumstances - Authority should justify the action
assailed on the touchstone of justness, fairness, reasonableness
and as a reasonable prudent owner - Test of reasonableness is
stricter - Public functionaries should be duty conscious rather
than power charged - Its actions and decisions which touch the
common man have to be tested on the touchstone of fairness and
justice - That which is not fair and just is unreasonable - And what
is unreasonable is arbitrary - An arbitrary action is ultra vires - It
does not become bona fide and in good faith merely because no
480
[2024] 7 S.C.R.
Digital Supreme Court Reports
personal gain or benefit to the person exercising discretion has
been established - An action is mala fide if it is contrary to the
purpose for which it was authorised to be exercised - Dishonesty
in discharge of duty vitiates the action without anything more -
An action is bad even without proof of motive of dishonesty, if
the authority is found to have acted contrary to reason. [Para 67]
Words and phrases - Illegality and irregularity - Distinction
between :
Held: Once it is evident that the mandatory provisions as stipulated
under the rules and regulations are not followed or abridged, any
action pursuant to the same could be termed as gross illegality -
There is a fine distinction between illegality and irregularity -
Whereas the former goes to the root of the matter and renders
the action null and void, of no effect whatsoever, the latter does
not ipso facto invalidate the action, unless prejudice is caused to
the person making a complaint. [Para 64]
Case Law Cited
Chilamkurti Bala Subrahmanyam v. Samanthapudi Vijaya Lakshmi
and Another [2017] 3 SCR 826 : (2017) 6 SCC 770; Mahesh
Chandra v. Regional Manager, U.P. Financial Corporation & Ors
[1992] 1 SCR 616 : (1993) 2 SCC 279; M/s Jagan Singh & Co. v.
Ludhiana Improvement Trust & Ors. [2022] 14 SCR 747 : (2024)
3 SCC 308 - relied on.
Mathew Varghese v. M. Amritha Kumar [2014] 2 SCR 736 :
[2014] 5 SCC 610; Saheb Khan v. Mohd. Yousufuddin (2006) 4
SCC 476; Dhirendra Nath Gorai v. Sudhir Chandra Ghosh [1964]
6 SCR 1001 : AIR 1964 SC 1300; Jaswantlal Natvarlal Thakkar
v. Sushilaben Manilal Dangarwala (1991) Supp 2 SCC 691;
Kadiyala Rama Rao v. Gutala Kahna Rao [2000] 1 SCR 1045 :
(2000) 3 SCC 87; State of U.P. v. Vijay Anand [1963] 1 SCR 1:
IR 1963 SC 946; Babubhai Muljibhai Patel v. Nandlal Khodidas
Barot [1975] 2 SCR 71 : (1974) 2 SCC 706; Puran Singh & Ors.
v. State of Punjab & Ors. [1996] 1 SCR 730:(1996) 2 SCC 205;
Tata Cellular v. Union of India [1994] Supp. 2 SCR 122 : (1994)
6 SCC 651; Jagdish Mandal v. State of Orissa and Others [2006]
10 Suppl. SCR 606 : (2007) 14 SCC 517; State of Punjab &
Others v. Mehar Din (2022) 5 SCC 648; Ashutosh v. Behari Lal
(1908) 35 Cal 61; Gadde Venkateswara Rao v. Government of
[2024] 7 S.C.R.
481
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
Andhra Pradesh AIR 1966 SC 828; Maharaja Chintamani Saran
Nath Shahdeo v. State of Bihar [1999] Supp. 3 SCR 518 : (1999)
8 SCC 16 : AIR 1999 SC 3609 : 1999 AIR SCW 3623; M.C.
Mehta v. Union of India [1999] 3) SCR 1173 : (1999) 6 SCC 237:
AIR 1999 SC 2583; Mallikarjuna Mudhagal Nagappa v. State of
Karnataka [2000] Supp. 3 SCR 102 : (2000) 7 SCC 238: AIR
2000 SC 2976 : 2000 AIR SCW 3289; and Chandra Singh v. State
of Rajasthan [2003] Supp. 1 SCR 674 : (2003) 6 SCC 545 : AIR
2003 SC 2889 : 2003 AIR SCW 3518; Raj Kumar Soni v. State
of U.P. [2007] 4 SCR 733 : (2007) 10 SCC 635 - referred to.
Holmes v. Russel (1841) 9 Dowl 487 - referred to
List of Acts
Maharashtra Land Revenue Code, 1966; Securitisation and
Reconstruction of Financial Assets and Enforcement Of Security
Interest Act, 2002; Maharashtra Realisation of Land Revenue Rules,
1967; Code of Civil Procedure (Amendment) Act, 1976; Code of
Civil Procedure, 1908; Constitution of India.
List of Keywords
Auction proceedings conducted by the Tahsildar; Provisions of Order
XXI r. 90 CPC; Writ proceedings u/Art. 226; Auction sale; Sale
certificate; Illegality and irregularity; Jurisdiction of the Additional
Commissioner; Role of public authorities; Amenability to judicial
review; Judicial audit and scrutiny; Human values and ethics in
public functionaries; Test of fairness and justice; Accountability;
Public efficiency.
Case Arising From
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7254 of 2024
From the Judgment and Order dated 09.12.2015 of the High Court
of Judicature at Bombay in WP No. 415 of 2011
With
Civil Appeal No. 7255 of 2024
Appearances for Parties
P.S. Patwalia, Sr. Adv., Abhay Kumar, Janak R. Shah, Shagun Ruhil,
Advs. for the Appellant.
482
[2024] 7 S.C.R.
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K.M. Nataraj, A.S.G., Amar Dave, Sr. Adv., Sachin Patil, Siddharth
Dharmadhikari, Aaditya Aniruddha Pande, Bharat Bagla, Sourav
Singh, Aditya Krishna, Ms. Preet S. Phanse, Adarsh Dubey, Geo
Joseph, Durgesh Gupta, Risvi Muhammed, Mukesh Kumar Maroria,
Adit Khorana, Ms. Nisha Bagchi, Shailesh Madiyal, T.S. Sabarish,
Ishaan Sharma, B.K. Satija, Ms. Amrita Narayan, Mohit D. Ram,
Ashwin Rakesh, Anubhav Sharma, Madhav Sharma, Advs. for the
Respondents.
Judgment / Order of the Supreme Court
Judgment
J. B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts:
INDEX*
A.
FACTUAL MATRIX
3
B.
SUBMISSIONS ON BEHALF OF THE APPELLANT
13
C.
SUBMISSIONS ON BEHALF OF THE RESPONDENT
NO. 6/Asset Reconstruction Co. (India) Ltd. (ARCIL)
16
D.
ISSUES FOR DETERMINATION
21
E.
RELEVANT STATUTORY PROVISIONS OF THE
REVENUE CODE
21
F.
ANALYSIS
26
i.
Whether the provisions of Order XXI Rule 90
of the Code of Civil Procedure would apply to
the writ proceedings under Article 226 of the
Constitution?
26
a. Difference between the auction sale conducted
by the court in the execution proceedings
initiated by the decree holder and the auction
proceedings conducted by the State through its
revenue authorities like Tahsildar, etc.
36
* Ed. Note: Pagination as per the original Judgment.
[2024] 7 S.C.R.
483
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
ii. Whether the Additional Commissioner, Konkan
Division, Maharashtra had the jurisdiction to
decide the two appeals filed by the respondent
nos. 1 and 6 respectively under Section 247 of
the Maharashtra Land Revenue Code, 1966?
52
G.
CONCLUSION
55
1.
Leave granted.
2.
Since the issues raised in both the captioned appeals are the same;
the subject-matter also being the same; the parties are also same and
the challenge is also to the self-same judgment and order passed by
the High Court, those were taken up for hearing analogously and are
being disposed of by this common judgment and order.
3.
The captioned appeals arise from the common judgment and order
passed by the High Court of Judicature at Bombay dated 9.12.2015
in Writ Petition (C) No. 415 of 2011 with Writ Petition (C) No. 418 of
2011 respectively filed by the appellant herein by which the High Court
rejected both the writ petitions and thereby affirmed the common order
dated 18.02.2010 passed by the Additional Commissioner, Konkan
Division, Mumbai setting aside the order of sale passed by the Tahsildar,
Talasari dated 3.12.2008 as affirmed by the Additional Collector, Thane
dated 15.01.2009 passed in favour of the appellant herein.
4.
The subject-matter of the present litigation relates to the legality, validity
and propriety of the auction proceedings conducted by the Tahsildar,
Talasari of the subject property which was originally owned by the
respondent No. 1 herein, namely, Prestige H.M. Polycontainers Limited.
5.
The subject property owned by the respondent no. 1 herein was put
to auction under the provisions of the Maharashtra Land Revenue
Code, 1966 (hereinafter referred to as "the Revenue Code"). In the
said auction proceedings, the appellant herein was declared as the
successful bidder and ultimately, sale certificate was issued by the
Additional Collector, Thane in favour of the appellant.
A.
FACTUAL MATRIX
6.
This litigation has a chequered history and therefore, it is necessary
for this Court to look into the events that occurred over a period of
time giving rise to the present two appeals before us:
484
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a.
The respondent no. 1, M/s Prestige H.M. Polycontainers,
executed necessary loan and security documents in favour
of the State Bank of India thereby mortgaging its property
situated at Village Vadavali, Taluka Talsari, District Thane (Now
District Palaghar), Maharashtra (hereinafter referred to as "the
property") bearing Survey No. 87/11, admeasuring 13,978 sq.
mts. Subsequently, the State Bank of India by an assignment
agreement assigned the debts due and payable to it in favour
of the respondent no. 6, Asset Reconstruction Company (India)
Ltd. (hereinafter referred to as "ARCIL") under the provisions
of The Securitisation and Reconstruction of Financial Assets
and Enforcement Of Security Interest Act, 2002 (hereinafter
referred to as the "SARFAESI Act, 2002").
It is the case of the respondent no. 6 that accordingly it became
legally entitled to recover the debt due and payable from the
respondent no. 1 by way of the sale of the property subject to
the pre-existing mortgage in favour of the respondent no. 6.
b.
Two demand notices dated 15.10.2007 and 20.11.2007
respectively of Rs. 29,52,000/- were issued as per Form No.
1 under Section 178 of the Revenue Code and Rule 5(1) of
the Maharashtra Realisation of Land Revenue Rules, 1967
(hereinafter referred to as "the Rules") to the respondent no.1
by the office of the Tahsildar.
The notices were pasted on the main door of the respondent
no. 1 and also on the office board of the Gram panchayat.
c.
The Office of the Circle Officer, Talasari issued a letter dated
27.11.2007 to the Tahsildar, Talasari stating that the demand
notices were sent to the respondent no. 1 as it was in arrears
of land revenue to the tune of Rs. 29,52,000/-. It also noted
that since the company was closed, the notices were affixed
on the gate of respondent no. 1 in the presence of panchas.
d.
The respondent no. 4 issued a letter dated 14.08.2008 addressed
to the government certified valuer, Mr. Dilip Sahani of the M/s
Trimurti Industrial Engineering Services, with a request to
calculate the upset price of the property for the purpose of
recovery of the arrears of land revenue, as the respondent no.
1 had failed to make the payment towards penalty.
[2024] 7 S.C.R.
485
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
e.
The respondent no. 4 thereafter issued a letter dated 18.08.2008
addressed to the Circle Officer, Talasari informing him about
the facts of the case and requesting him to seize and seal the
premises of the respondent no. 1.
f.
The respondent No. 4 also issued a letter dated 21.08.2008
addressed to the Police Inspector, Talasari apprising him of
the necessary facts of the case and further informing that they
would undertake the necessary exercise of determining the
valuation of the property. In view thereof, the respondent no.
4 requested him to provide one police guard.
g.
The valuation report of the property dated 21.08.2008 was
issued by Mr. G.W. Sahani of M/s Trimurthi Industrial Engineering
Services with a disposal value of Rs. 69,00,000/- and Distressed
Value of Rs. 51,75,000/-
h.
Although it is the case of the respondent No. 4 that the Director
of Respondent No. 1, viz. Mr. P.K. Gupta had issued a NoObjection Certificate dated 20.10.2008 for conducting the
auction sale of the property, yet the said fact was outrightly
denied by Mr. P.K. Gupta in proceedings before the Additional
Commissioner and the High Court.
i.
On 20.10.2008, respondent no. 4 issued a letter to the SubDivisional Officer, Dahanu division, informing him of the valuation
of the property at Rs. 51,75,000/- and requesting him to fix the
upset price.
j.
On 07.11.2008, the respondent no. 4 issued a letter to the Sub
Divisional Officer, Dahanu Division stating that No-Objection
Certificate had been received from the Director Mr. P.K. Gupta
of the respondent no. 1 for the auction of the Property.
k.
On 17.11.2008, the Sub-Divisional Officer, Dahanu Division
approved the price of the land at Rs. 54,33,750 being a total of
Rs. 51,75,000 (which had been fixed by M/s Trimurti Industries
Eng. Services, Mumbai) + 2,58,750 (+5%) under Rule 13 of
the Rules.
l.
Notice dated 18.11.2008 came to be published by the respondent
no. 4 in the newspaper viz. Dahanu Times for public auction
furnishing details of the suit property with the upset price, auction
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date and time.The notice specified that if the dues towards the
arrears of revenue would not be cleared on or before 03.12.2008,
the Property, free from encumbrances would be put to auction
at the Tahsildar's office.
m.
The Board Officer, Talasari issued a letter dated 19.11.2008 to
the respondent No. 4 informing that they had pasted the copy
of the notice on the gate of the property of the respondent no.
1 as per Namuna 5, Rule 12(2)A of the Rules.
n.
Respondent no. 4 issued a letter dated 20.11.2008 to the
Assistant Director, Director of Enforcement requesting to keep
one representative present on their behalf on 03.12.2008 at
11 AM.
o.
On 21.11.2008, respondent no. 4 issued a letter addressed to
the Collector, Thane; Additional Collector, Thane H.Q. Jawar;
Sub-Divisional Officer, Dahanu Division; Group Development
Officer, Talsari; Gram Panchayat Vadavli-Bhavane and Talathi
Saja, Vadavli requesting them to display the public notice on
their office notice boards and to provide a publicity report
regarding the public advertisement of the immovable and
movable properties of the respondent no. 1 proposed to be
auctioned on 03.12.2008.
p.
Respondent no. 4 issued a letter dated 21.11.2008 to the
respondent no. 1 informing that the auction was fixed on
03.12.2008 at 11 AM at the Office of Tahsildar, Talsari district,
Thane. It was further notified that if the amount toward the
arrears would be paid the auction would be cancelled.
q.
Respondent no. 4 issued another public notice on 23.11.2008
in the local newspaper called the Dahanu Times.
r.
On 29.11.2008, respondent no. 4 requested the Additional
Collector Thane, Head Office Javar, to accord sanction for the
auction of the Property since the arrears had not been received.
s.
On 01.12.2008, the Additional Collector Thane, Head Office,
Jawar accorded its sanction for the auction.
t.
Ultimately the public auction was held on 03.12.2008 wherein
the appellant was declared as the highest bidder having offered
Rs. 54,50,000/-.
[2024] 7 S.C.R.
487
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
u.
The appellant was issued the Sale Certificate dated 03.12.2008
of the Immovable Property which was sold under liquidation
by the respondent no. 4 according to Specimen 8 as per Rule
14(A) of the Rules.
v.
On 04.12.2008, the appellant deposited the entire auction
amount.
w.
On 10.12.2008, the IFCI raised its objections with respondent
no. 4 which came to be recorded in its letter dated 19.12.2008.
x.
The respondent No. 1 issued a letter dated 16.12.2008 to the
Assistant Director, FEMA stating that they had not received the
Enforcement Order dated 12.08.2003.
y.
On 18.12.2008, respondent no. 4 in its letter recorded that
full sale consideration of the property was deposited by the
appellant on 04.12.2008.
z.
On 19.12.2008, respondent no. 4 issued a response to the
letter dated 10.12.2008 of the IFCI.
aa. On 26.12.2008, the WP (C) No. 2998 of 2008 (renumbered as
WP 207 of 2009) was preferred by the respondent no. 1 against
the auction and sale dated 03.12.2008 before the Bombay High
Court. Vide the said writ petition the respondent no. 1 sought a
direction to quash and set aside the enforcement order dated
12.08.2003 and all the consequential acts of recovery of penalty
by auction of the properties.
bb. The Bombay High Court by its order dated 31.12.2008 passed
in WP (C) NO. 2998 of 2008 (renumbered as WP 207 of 2009)
directed Union of India, the respondent therein, to provide
photocopies of the relevant documents and to allow inspection.
cc. The Additional Collector, Head Office, Jawar issued a letter
dated 07.10.2009 to respondent no. 4, directing him to submit
a detailed report on whether all the conditions as stipulated
under Section 208 of the Revenue Code had been fulfilled.
dd. Respondent no. 4, vide its letter dated 12.01.2009 addressed to
the Additional Collector, Head Office Jawar, informed that except
for the writ petition pending before the High Court of Bombay,
no objections were received. Thereby all requirements under
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Section 208 of the Revenue Code had been fulfilled (despite
IFCI raising its objections).
ee. On 15.01.2009, the office of the District Collector, Thane informed
the respondent no. 4 that the auction sale had been approved
and the appellant had been declared and confirmed as the
auction purchaser of the suit property as per the Section 208
of the Revenue Code.
ff.
Respondent no. 4 issued a letter dated 16.01.2009 to the
appellant informing that the auction sale was approved and the
appellant was declared and confirmed as successful auction
purchaser of the property by the Additional Collector as per
the Sections 207 and 208 respectively of the Revenue Code.
gg. The Writ Petition No. 207 of 2009 with Chamber Summons No.
49 of 2009 filed by the respondent no. 1 was permitted by the
High Court to be withdrawn.
hh. On 4.04.2009, respondent no. 6 filed the Writ Petition (C) No.
648 of 2009 before the High Court of Judicature at Bombay
challenging legality and validity of the sale of the said property.
ii.
A division bench of the High Court, vide its order dated
16.04.2009 passed in WP No. 648 of 2009, recorded that as
the respondent no. 1 had filed an appeal under the Revenue
Code, the respondent no. 6 should also prefer an independent
appeal. Accordingly, the said writ petition was dismissed.
jj.
On 09.07.2009 the respondent no. 1 filed an appeal being the
Appeal No. 195 of 2009 under Section 247 of the Revenue
Code before respondent no. 8, the Additional Commissioner,
Konkan Division, Maharashtra.
kk. On 17.11.2009, the appellant filed Writ Petition No. 3444 of
2009 in the High Court of Judicature at Bombay. Vide order
dated 17.11.2009 the High Court directed the respondent no.
4 to release the arrears due to MSEDCL from the balance
auction amount relying on the newspaper auction notice that
mentioned the property was to be free from all encumbrances.
ll.
On 18.06.2010 the respondent no. 1 and respondent no. 6 filed
Appeal Nos. 195 and 288 of 2009 respectively under Section
247 of the Revenue Code against the sale of the property.
[2024] 7 S.C.R.
489
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
Both the appeals came to be allowed by respondent no. 8 by a
common order wherein it was held that the order of sale dated
03.12.2008 and the process followed by respondent no. 4 and
affirmed by the Additional Collector, Thane H.Q. Jawar dated
15.01.2009 was illegal and accordingly remanded the entire
proceedings to the Additional Collector, Thane for appropriate
fresh adjudication.
mm. Against the aforesaid order dated 18.06.2010, the appellant
filed WP No. L-1564 of 2010/W.P. No. 415 of 2011 and WP No.
418 of 2011 before the High Court of Judicature at Bombay.
nn. The High Court in WP No. 1564 of 2010 vide its order dated
07.09.2010 stayed the operation of the order dated 18.06.2010
and directed the parties to maintain the status quo.

7.
Both the writ petitions filed by the appellant herein, i.e., Writ Petition
(C) No. 415 of 2011 with Writ Petition No. 418 of 2011 ultimately
came to be adjudicated by the High Court and vide its impugned
judgment & order dated 9.12.2014 were rejected. The relevant
observations made by the High Court while rejecting both the writ
petitions are as under:
"33. Heard the learned counsel for the parties at length.
Considering the submissions made by both the counsel
and after going through the pleadings, the issue involved
in the petitions is "whether the Petitioner has made out a
case for setting aside the common order dated 18/02/2010
passed by the Additional Commissioner, Konkan Division
in appeal No.195/2009 and 288/2009".
34. As per section 192 of the code, for holding an auction,
the Collector, has to issue a proclamation in a prescribed
form with its translation in Marathi of the intended sale
specifying its time and place, along with description of the
immovable property. Such proclamation is required to be
made by beat of drum at the headquarters of Taluka and
in the village in which the immovable property is situated.
As per section 193 of the Code, a written notice of the
intended sale of immovable property and its time and place
is required to be affixed in the office of Collector of District,
office of Tahsildar of the Taluka in which the immovable
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property is situate and other public building in the Village
in which it is situate and the dwelling place.
35. As per section 195, if the sale is postponed for a
period longer than 30 days, for sufficient reason, a fresh
proclamation and notice is required to be issued unless
defaulter consents for waiver of it.
36. Section 202 to 210 provide a procedure when payment
to be made, when confirmation of auction sale to be done,
how to deal with objections before confirmation etc.
37. In the present proceedings, admittedly, a fresh notice
was issued by the Authority on 08/11/2008 for public
auction in two newspapers i.e. "Nirdhar" and "Dahanu
Times" informing the details of the property and time and
date of auction. The Authority Mandal Adhikari, Talasari
issued letter dated 19/11/2008 to the owner of the property
informing that they have pasted the copy of notice on the
gate of the suit property. The auction was held by the
Tahasildar on 03/12/2008 and same was confirmed on
the same date. This shows that the auction took place
before expiry of 30 days from the date of proclamation
which is contrary to section 193 of the Code. Moreover, the
Tahasildar confirmed the said auction sale in favour of the
Petitioner on the same day and handed over possession
to the suit property receipt executing a possession receipt.
This means, without waiting for 30 days from the date of
proclamation, the Tahasildar held a public auction and
handed over possession to the Petitioner, which was
contrary to law.
38. It is interesting to note that after handing over
possession to the Petitioner, the Collector, by order dated
16/01/2009 confirmed the sale of the suit property in favour
of the Petitioner. That means, before confirmation of the
auction sale in favour of the Petitioner, the Tahasildar on
his own, without any authority, handed over possession to
the Petitioner. This court, in the matter of Shravan Vithoba
Dekate (supra) in paragraph 12 specifically held that the
provisions of the Code in respect of the auction sale to be
strictly followed. The Apex Court, in the matter of Mathew
[2024] 7 S.C.R.
491
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
(supra) categorically held that if the Rules framed for
public auction under the SARFAESI Act are not followed
strictly, the auction sale is required to be set aside. These
facts are considered by the Additional Commissioner at
the time of passing the impugned order. The Additional
Commissioner categorically held that the orders passed
by the Tahasildar as well as the Additional Collector were
contrary to the provisions of the Code. Hence, the Additional
Commissioner Konkan Division set aside both the orders
and the matter was remanded to the Additional Collector
to decide on its own merits.
39. It is to be noted that, allowing the petition amounts to
revival of illegal order and same is not permitted in view
of the Apex Court judgment in the matter of Maharaja
Chintamani (supra).
40. Considering the above mentioned facts that the
Tahasildar as well as the Additional Collector, without
following due process of law as required under the said
Code, passed the order dated 3/12/2008 and 15/01/2009
and handed over possession of the suit property to the
Petitioner and in view of the law declared by the Apex
Court as stated herein above, I am of the opinion that
the Petitioner failed to make out any case for interference
with the well reasoned impugned common order dated
18/02/2010.
41. Hence, following order is passed:
a. Rule stands discharged.
b. Writ Petitions stand dismissed with cost.
42. At this stage, the learned counsel for the Petitioner
submits that the interim protection granted by this court to
continue for a period of 12 weeks to enable the Petitioner
to take chance in higher court.
43. Considering the fact that the Petitioner is in possession
of the subject property for last several years and there
is a running factory, I am of the opinion that the interim
protection granted by this court (Coram : S. J. Kathawalla,
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J.) on 07/09/2010 shall continue for a period of 12 weeks
from today. Same is granted."
(Emphasis supplied)
8.
It appears from the materials on record that against the above
referred impugned judgment passed by the learned Single Judge
of the High Court two appeals were filed, i.e., (Appeal (L) No. 41
of 2016 in Writ Petition (C) No. 418 of 2011 with Appeal No. 42 of
2016 in Writ Petition (C) No. 415 of 2011).