IDBI BANK LTD.versusRAMSWAROOP DALIYA AND ORS.

                [2024] 10 S.C.R. 1371 : 2024 INSC 780

                          IDBI Bank Ltd.
                                v.
                     Ramswaroop Daliya and Ors.
                  (Civil Appeal Nos. 11115-11116 of 2024)
                                16 October 2024
               [Pankaj Mithal* and R. Mahadevan, JJ.]

                            Issue for Consideration
       Whether there was any default on part of the respondents-auction
       purchasers in depositing the balance auction amount within the
       time prescribed pursuant to the auction sale so as to attract Rule
       9(4) of the Security Interest (Enforcement) Rules, 2002 and allow
       the appellant-Bank to cancel the auction which had already been
       confirmed.

                                   Headnotes†
       Security Interest (Enforcement) Rules, 2002 – r.9(4), (5) – When
       not applicable:
       Held: The period to deposit the balance sale consideration under
       r.9(4) is not absolute/sacrosanct and is extendable with the consent
       in writing of the parties – r.9(4) will only come into play when there
       is default on part of the party i.e. the auction purchaser to deposit
       the amount and will not apply where there is no default or that
       the default, if any, lies upon the auctioneer i.e. appellant-Bank in
       the present case – Respondents were always ready and willing
       to deposit the balance auction amount, no material on record to
       justify non-acceptance of the balance sale consideration from
       the respondents within 15 days of the confirmation of the sale –
       Silence on part of the appellant in either immediately revoking
       the sale confirmation or refusing to extend the time as sought
       by the respondents, impliedly amounted to extension of time in
       writing with consent – Reason for the non-issuance of the sale
       certificate was solely attributable to it – Since there were no
       latches, negligence or default on part of the respondents in offering
       to deposit the balance auction amount, non-deposit of the said
       amount within the stipulated period would not be fatal within the
       meaning of sub-Rules (4) and (5) of r.9 – Unilateral cancellation


* Author
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    of the auction sale without any notice or opportunity of hearing to
    the respondents was per se in violation of the principles of natural
    justice and was illegal – In the peculiar facts and circumstances of
    the case, High Court did not commit any error in holding that the
    appellant-Bank erred in cancelling the auction sale and in directing
    to issue sale certificate/register the sale deed in favour of the
    respondents after getting the balance auction amount deposited
    within four weeks. [Paras 18-22]
    Practice and Procedure – Appellant-Bank cancelled the auction
    sale vide communication dated 24.12.2019 without referring
    to the default, if any, by the respondents in depositing the
    balance auction amount as per r.9(4) – Said plea was taken
    by the appellant for the first time through the counter affidavit
    filed in the writ petition filed by the respondents-auction
    purchasers before the High Court – Impermissibility:
    Held: Validity of an order can only be adjudged on the basis of the
    reasoning contained in the order and the said reasoning cannot
    be supplemented in any manner much less by means of a counter
    affidavit or a supplementary affidavit when the parties have entered
    into a litigation – Parties cannot raise new pleas not contained in
    the order impugned while assailing the correctness or the validity of
    such an order – Thus, the appellant-Bank was not entitled to raise
    the plea of default u/r.9(4) through the counter affidavit. [Para 12]

                             Case Law Cited
    Union Bank of India v. Rajat Infrastructure Private Limited and 14
    Others [2023] 14 SCR 666 : (2023) 10 SCC 232 – held inapplicable.
    Mohinder Singh Gill & Anr. v. Chief Election Commissioner and
    Ors. [1978] 2 SCR 272 : (1978) 1 SCC 405; Varimadugu Obi
    Reddy v. Sreenivasulu and Ors. [2022] 16 SCR 1108 :(2023) 2
    SCC 168; General Manager, Sri Siddeshwara Cooperative Bank
    Ltd. and Anr. v. Ikbal and Ors. [2013] 8 SCR 532 : (2013) 10 SCC
    83 – relied on.

                               List of Acts
    Security Interest (Enforcement) Rules, 2002.

                            List of Keywords
    E-auction; Auction sale; Auction purchasers; Default; Depositing the
    balance auction amount; Balance sale consideration; Auctioneer;
[2024] 10 S.C.R.                                                              1373

             IDBI Bank Ltd. v. Ramswaroop Daliya and Ors.


     Sale confirmation revoked; Extension of time in writing with
     consent; Latches; Negligence; Correspondence between the
     parties; Unilateral cancellation of the auction sale; Sale certificate;
     Non-issuance of the sale certificate; Principles of natural justice;
     Auction sale cancelled; Counter affidavit; Supplementary affidavit;
     New pleas; Order impugned; Plea of default; Non-deposit of balance
     sale consideration; bona fide; Non-acceptance of balance sale
     consideration; Ready and willing to deposit the balance auction
     amount.

                             Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 11115-11116
     of 2024
     From the Judgment and Order dated 19.09.2022 and 29.11.2022
     of the High Court for the State of Telangana at Hyderabad in WP
     No. 3820 of 2020 and RP No. 1 of 2022 respectively

                          Appearances for Parties
     Krishan Kumar, Nitin, Seemant K. Garg, Advs. for the Appellant.
     R Anand Padmanabhan, Sr. Adv., Shashi Bhushan Kumar,
     Arimardhan Sharma, Ms. Ruchi Arya, Ms. Laxmi, R. Sharath,
     Advs. for the Respondents.

                Judgment / Order of the Supreme Court
                                  Judgment

     Pankaj Mithal, J.
1.   Leave granted.
2.   The appellant-IDBI Bank has preferred these two appeals challenging
     the judgment and order dated 19.09.2022 passed by the High Court
     in Writ Petition No. 3820 of 2020, “Ramswaroop Daliya and 3 Ors.
     vs. IDBI Bank Ltd.” and the order dated 29.11.2022 passed in Review
     Petition No. 1 of 2022 arising from the above writ petition.
3.   The respondents who were the petitioners in the writ petition
     are the auction purchasers of the property which comprises of 2
     guntas of land of Survey No. 121 part, situated at Bogaram village,
     Keesara Mandal, Medchal Malkajgiri district, Telangana. Pursuant
     to the e-auction notice dated 17.03.2018, the auction took place on
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       10.04.2018. The respondents were the highest bidders for a total
       sum of Rs. 1,42,50,000/-. They deposited 25% of the bid amount
       i.e., Rs. 36,00,000/- on the day of the auction itself. The auction
       was confirmed but the sale certificate was not issued and the sale
       deed was not executed as the respondents could not deposit the
       balance sale consideration within 15 days, may be for the reason
       that the appellant-Bank refused to accept the balance amount for
       various reasons. Finally, the appellant-Bank vide communication
       dated 24.12.2019 cancelled the auction and refunded the amount
       deposited by the respondents by means of four demand drafts which
       were never encashed by the respondents.
4.     The respondents as such invoked the writ jurisdiction of the High
       Court challenging the action of the appellant-Bank cancelling the
       auction dated 10.04.2018 unilaterally and for seeking a direction to
       issue the sale certificate after receiving the balance sale consideration
       of Rs. 1,06,50,000/-.
5.     The aforesaid Writ Petition No. 3820 of 2020 filed by the respondents
       was allowed by the impugned judgment and order dated 19.09.2022
       passed by the High Court holding that the appellant-Bank was
       not justified in withholding the sale certificate. The respondents
       were always ready and willing to pay the sale consideration. The
       appellant-Bank could not have denied the issuance of the sale
       certificate and the execution of the sale deed. The issuance of the
       sale certificate was not refused by the appellant-Bank for want of
       non-deposit of the balance sale consideration within 90 days as
       stipulated under Rule 9(4) of the Security Interest (Enforcement)
       Rules, 2002,1 therefore, such a plea taken by the appellant-Bank
       for the first time in the writ petition is not tenable.
6.     The argument of the learned counsel for the appellant-Bank is that in
       view of the statutory provisions contained under the Rules, especially
       Rule 9(4) of the Rules, since the respondents had not deposited the
       balance sale consideration within the mandatory period of 90 days,
       the High Court has erred in directing the appellant-Bank to issue
       the sale certificate and to execute the sale deed. The balance sale
       consideration was never deposited by the respondents within the time
       permitted and the letter(s) of the respondents clearly establishes that


1    Hereinafter referred to as ‘the Rules’
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                     IDBI Bank Ltd. v. Ramswaroop Daliya and Ors.


       they kept on seeking extension of time without depositing the amount.
       Moreover, on the complaint of the appellant-Bank to the Central
       Bureau of Investigation2 made on 08.03.2018, the Enforcement
       Directorate3 had taken suo moto cognizance and issued an advisory
       to the appellant-Bank not to release the title deeds.
7.     In the facts and circumstances of the case, the only issue which
       arises for consideration is as to whether there was any default on
       part of the respondents in depositing the balance amount within the
       time prescribed pursuant to the auction sale dated 10.04.2018 so
       as to attract Rule 9(4) of the Rules and allow the appellant-Bank to
       cancel the auction which had already been confirmed.
8.     There is no dispute to the fact that the appellant-Bank had issued
       e-auction notice on 17.03.2018 and had conducted the auction on
       10.04.2018. The respondents had participated in the said auction
       and were recognized as the highest bidder who deposited 25% of
       the auction money amounting to Rs. 36,00,000/- then and there.
       On the very same day, a sale confirmation letter was issued by the
       authorized officer of the appellant-Bank requiring the respondents
       to pay the balance amount of Rs. 1,06,50,000/- within 15 days so
       that the sale certificate may be issued.
9.     It may be noted that the respondents at no point of time have
       denied payment of the balance auction money as demanded to be
       paid within the 15 days period. It was only the appellant-Bank that
       denied the issuance of the sale certificate, first on the pretext that
       the guarantor had filed Writ Petition No. 12390 of 2018 challenging
       the e-auction notice dated 17.03.2018 and had obtained a stay order
       on 18.04.2018. Secondly, the appellant-Bank on 08.03.2018 had
       made a complaint to the CBI and that ED took suo moto cognizance
       whereby an advisory was issued to the appellant-Bank not to release
       the original property documents and that the same be kept in safe
       custody of the bank till further directions of the ED.
10. The appellant-Bank issued e-auction Notice on 17.03.2018 after it had
    already made the complaint to the CBI but this aspect of the matter
    was not disclosed in the advertisement. Thus, a conscious decision



2    In short “CBI”
3    In short “ED”
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     was taken by the appellant-Bank to go ahead with the e-auction
     despite there being a complaint to the CBI. It is subsequent to the
     complaint to the CBI that the e-auction notice was issued and the
     e-auction was conducted on 10.04.2018 which was also confirmed
     in favour of the respondents. In such a situation it does not lie in
     the mouth of the appellant-Bank to take shelter on the basis of
     the complaint made to the CBI and to deny issuance of the sale
     certificate, particularly when there was no specific direction either
     of the CBI or the ED not to confirm the auction sale or to issue the
     sale certificate. The only rider was to keep the property documents
     in safe custody. The respondents, on the other hand, never insisted
     for the release or the handing over of the property documents rather
     submitted that they would not create any third-party interest in the
     property auctioned and that the original documents of the property
     would be collected by them, subsequently on the consent and
     clearance from the CBI and ED. In the light of such a stand taken
     by the respondents on affidavit, the appellant-Bank apparently was
     not justified in refusing to issue sale certificate to the respondents
     on the pretext that there was an advisory from the ED. It is worth
     noticing that even the advisory of ED dated 08.06.2018 is not material
     for not accepting the balance sale consideration within the period of
     15 days stipulated in the sale confirmation letter dated 10.04.2018
     which period expired on 25.04.2018, much before the issuance of
     the above advisory. The respondents were not responsible either for
     the delay in depositing or non-acceptance of the balance auction
     amount by the appellant-Bank.
11. As far as the filing of Writ Petition No. 12390 of 2018 by one of the
    guarantors is concerned, an interim stay order was passed therein
    on 18.04.2018 by which time the auction had already taken place
    and confirmed. The said writ petition was ultimately dismissed on
    18.07.2018 and as such the interim stay order ceased to exist. The
    interim stay order granted therein was of no effect insofar as the
    issuance of sale certificate to the respondents was concerned as
    the sale had already taken place and stood confirmed before the
    passing of the interim stay therein. There was no direction or stay on
    the issuance of sale certificate. The passing of the interim stay order
    in the above writ petition was not on account of the respondents so
    as to assign any default on their part in depositing the balance sale
    consideration within the time stipulated.
[2024] 10 S.C.R.                                                        1377

                IDBI Bank Ltd. v. Ramswaroop Daliya and Ors.


12. The communication dated 24.12.2019, by which the appellant-Bank
    took a decision to cancel the auction sale and to return the amount
    deposited by the respondents, is completely silent as regards the
    default, if any, committed by the respondents in depositing the balance
    auction amount as per the mandate of Rule 9(4) of the Rules. The
    said plea was taken by the appellant-Bank for the first time through
    the counter affidavit filed in the writ petition. It is well recognized
    that the validity of an order can only be adjudged on the basis of
    the reasoning contained in the order and the said reasoning cannot
    be supplemented in any manner much less by means of a counter
    affidavit or a supplementary affidavit when the parties have entered
    into a litigation. In Mohinder Singh Gill & Anr. v. Chief Election
    Commissioner and Ors.4 it has been clearly laid down that the
    parties are not permitted to raise new pleas not contained in the
    order impugned while assailing the correctness or the validity of
    such an order. In view of the law so laid down, the appellant-Bank
    was certainly not entitled to raise the plea of default under Rule 9(4)
    of the Rules through the counter affidavit.
13. Notwithstanding the above, the provisions of sub-Rules (4) and (5) of
    Rule 9 of the Rules, if read together in conjunction,would reveal that
    it is only for the default in payment of the balance auction amount
    within the period mentioned that the property could be resold and
    that the period of 15 days stipulated therein for the deposit of the
    balance sale amount may be extended, as may be agreed upon in
    writing. It means that first there has to be a default on part of the
    auction purchaser to invite cancellation of the auction and second,
    that the period of deposit stipulated therein is not absolute rather
    extendable with the agreement of the parties.
14. Sub-Rules (4) and (5) of Rule 9 of the Rules are extracted below:
            “(4) The balance amount of purchase price payable shall
            be paid by the purchaser to the authorized 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].



4   [1978] 2 SCR 272 : (1978) 1 SCC 405
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            (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.”
15. In Varimadugu Obi Reddy v. Sreenivasulu and Ors.,5 this Court
    while interpreting Rule 9(4) of the Rules observed that it refers to
    a period of 15 days for deposit of balance sale consideration or
    such extended period for which no outer limit has been prescribed.
    Therefore, it appears that the time stipulated therein is not sacrosanct
    and the period can be extended as agreed upon in writing by the
    parties. A similar view has also been expressed in an earlier decision
    of this Court in General Manager, Sri Siddeshwara Cooperative
    Bank Ltd. and Anr. v. Ikbal and Ors.6 wherein referring to Rule 9(4)
    of the Rules, it was held that the time for deposit stipulated therein is
    not sacrosanct and may be extended if there is a written agreement
    between the parties.
16. In the case at hand, the correspondence between the parties reveals
    that the respondents only sought extension of time for the reason that
    the appellant-Bank itself was not in a position to accept the amount
    as there was a complaint to the CBI, an advisory of the ED and a
    stay from the High Court. The silence on part of the appellant-Bank
    in either immediately revoking the sale confirmation or refusing to
    extend the time, impliedly amounted to extension of time in writing
    with consent.
17. Secondly, the non-deposit of the balance sale consideration within
    the time limit prescribed under Rule 9(4) was not attributable to the
    respondents so as to call them defaulters within the meaning of the
    provisions of Rule 9(4) and (5) of the Rules.
18. The correspondence on record clearly reveals that the respondents
    were always ready and willing to deposit the balance auction amount
    of Rs.1,06,50,000/- and had rather submitted a bank draft dated
    15.10.2022 of the said amount and had requested for the issuance of
    the sale certificate and possession of the auction property. The said



5   [2022] 16 SCR 1108 : (2023) 2 SCC 168
6   [2013] 8 SCR 532 : (2013) 10 SCC 83
[2024] 10 S.C.R.                                                      1379

               IDBI Bank Ltd. v. Ramswaroop Daliya and Ors.


     correspondence clearly establishes the bona fide of the respondents
     and it was only the appellant-Bank who had avoided the issuance
     of the sale certificate. There is no material on record to justify non-
     acceptance of the balance sale consideration from the respondents
     within 15 days of the confirmation of the sale and whatever pleas
     have been taken by the appellant-Bank to avoid acceptance are all
     subsequent and are not very material.
19. In these facts and circumstances, reason for the non-issuance of
    the sale certificate is solely attributable to the appellant-Bank and
    that there were no latches, negligence or default on part of the
    respondents in offering to deposit the balance auction amount. Since
    there is no default on their part, non-deposit of the said amount
    within the stipulated period would not be fatal within the meaning of
    sub-Rules (4) and (5) of Rule 9 of the Rules.
20. It is pertinent to mention here that the cancellation of the auction sale
    vide communication dated 24.12.2019 is purely unilateral in nature
    without any notice or opportunity of hearing to the respondents. The
    said cancellation as such is per se in violation of the principles of
    natural justice and is illegal.
21. Learned counsel for the appellant-Bank, relying upon Union Bank
    of India v. Rajat Infrastructure Private Limited and Others,7 had
    submitted that the statutory period prescribed under Rule 9(4) is
    not liable to be extended by this Court even in exercise of powers
    under Article 142 of the Constitution of India. In the said case, this
    Court accepted that though the plenary powers of the Supreme Court
    under Article 142 of the Constitution are inherent which are of very
    wide amplitude but the said power cannot be used to supplement
    the substantive law by ignoring the express statutory provision.
    The aforesaid authority cited on behalf of the appellant-Bank is not
    of any help to it in this case as we are not providing for any new
    period of limitation for depositing the balance sale consideration or
    extending the time period provided under the Rules. We are simply
    holding that the period to deposit the balance sale consideration, as
    provided under the Rules, is not sacrosanct and is extendable with
    the consent in writing of the parties and that Rule 9(4) will only come
    into play when there is default on part of the party i.e. the auction


7   [2023] 14 SCR 666 : (2023) 10 SCC 232
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     purchaser to deposit the amount and will not apply where there is
     no default or that the default, if any, lies upon the auctioneer i.e.
     appellant-Bank in the case at hand.
22. Accordingly, we are of the considered opinion that the High Court has
    not committed any error of law in the peculiar facts and circumstances
    of the case in holding that the appellant-Bank manifestly erred in
    cancelling the auction sale dated 10.04.2018 and in directing to issue
    sale certificate/register the sale deed in favour of the respondents
    after getting the balance auction amount deposited within a period
    of four weeks.
23. In view of the foregoing,the civil appeals are dismissed with no order
    as to costs.
24. Pending application(s), if any, shall stand disposed of.

     Result of the case: Appeals dismissed.



     †
         Headnotes prepared by: Divya Pandey