If done after banking hrs, bid amount can be deposited on next day of auction.

1.  The petitioner company had by an agreement taken certain financial assistance from the respondent bank.

2.  The subject property was offered by the petitioner, and accepted by the respondent bank, as mortgage to secure the interest of the creditor.

3.  Concededly, on account of non-payment of the dues under the agreement, the respondent bank declared the loan account as a Non-Performing Asset (NPA) and served a notice under section 13(2) to such effect on the petitioner company (borrower/mortgagor).

4.  The respondent bank took actual physical possession of the mortgaged property in terms of section 13(4), taking recourse to one of the permitted measures in order to recover the secured debt.

5.  The petitioner challenged the said action by way of Securitization Application (SA) under section 17 before the DRT. The said challenge remained unsuccessful as the Securitization Application registered by DRT was dismissed by DRT.

6.  The respondent bank followed up on the proceedings under section 13 by publishing a sale notice in respect of the subject property.

7.  Pursuant to the sale notice published on auction was conducted with reserve price in respect of the mortgaged property brought to auction fixed at Rs. 3 crores.

8.  The bid submitted by the second respondent at Rs. 333.10 lakhs was found to be the highest and, thus, declared successful.

9.  It was alleged by the petitioner that the second respondent deposited the amount equivalent to 25 per cent of the bid amount only on 24-9-2012. It was his contention that such deposit was in violation of the ninth condition of the public notice for sale as also in breach of the command of rule 9(3) of the Security Interest (Enforcement) Rules, 2002 which govern the action of the secured creditor under section 13.

10.  The petitioner challenged the auction sale in favour of second respondent by way of Interim Application in the course of proceedings arising out SA. His contention before the DRT was that in terms of the public notice of sale, and rule 9(3) of the Security Interest (Enforcement) Rules, 2002, the second respondent was obliged to deposit 25 per cent of the bid amount 'immediately after acceptance of offer/bid' and, therefore, the deposit of the 25 per cent amount on 24-9-2012 could not have been accepted as 'immediate' compliance. Thus, it argued that the confirmation of sale in favour of the second respondent was invalid.

11.  The DRT rejected the objection raised by the petitioner with reference to rule 9(3) through IA, the DRT took note of the facts, inter alia, that the auction proceedings resulting in the second respondent being declared as the highest bidder were concluded on 20-9-2012 at about 6:30 P.M. by which time, the banking hours were already over. The authorized officer of the respondent bank, thus, had allowed second respondent to deposit 25 per cent of the bid amount by 1:00 P.M. on the next day i.e. 21-9-2012. The amount was deposited by the second respondent in the form of a banking instrument on 21-9-2012.

12.  The petitioner challenged the order of the DRT before the DRAT. The DRAT called upon the petitioner to deposit 50 per cent of the amount in dispute as per the demand notice. This was a pre-condition to the appeal being entertained in terms of the second proviso to section 18(1). The petitioner did not comply with the said direction. The appeal against the order of DRT (along with other appeal against an earlier order of DRT) was, consequently, dismissed by the DRAT.

13.  The petitioner filed writ petition for the issuance of writ in the nature of certiorari quashing the order of Delhi Debts Recovery Appellate Tribunal ('the DRAT'), and the auction sale,mandamus to direct the first respondent to hold a fresh auction in accordance with the statute and not to alienate or create third-party interest in the subject property.

HC Held as under :

12.  In the instant case, one need not even go into the question as to whether stipulation of the deposit of 25 per cent 'immediately' after the auction sale is to be construed as mandatory or directory. It has been found during inquiry on facts by the lower forums that the auction proceedings could conclude on 20-09-2012 only by 06:30 P.M. By such time, the banking hours were already over. 

13.  Thus, the officer authorized by the bank, which was conducting the auction proceedings, had no option but to call upon the second respondent to deposit the 25 per cent of the bid amount by next day i.e. 21-09-2012. The amount was accordingly deposited on 21-09-2012. It is inconsequential that the credit was reflected to such effect in the account of the petitioner company on 24-09-2012. For purposes of the second respondent, the compliance had been duly made on 21-09-2012. In the given facts and circumstances, such deposit has to be treated as deposit made immediately after the bid of second respondent had been declared successful. 

14.  Thus, the petition assailing the orders of the lower forums is found devoid of substance. It is dismissed.