TMI Blog2018 (4) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be taken to its logical conclusion as per the Rules which were in vogue at the time when the process was initiated and even if there is subsequent change in the Rules, then also the process which already stood initiated has to be completed as per old Rules itself. Amendments are always prospective until and unless the language of the Rule itself envisages that the amendment is sought to be retrospective - In the present case, it is not in dispute that the amendment so incorporated in Sub Rule (4) of Rule 9 (supra) was introduced w.e.f. 4.11.2016. Thus the amendment itself makes it clear that the same is prospective and not retrospective. Whether the act of respondents No.2 and 4 of forfeiting the amount so deposited by the petitioner and thereafter subjecting the property to re-auction is arbitrary or not? - Held that: - Respondent-Bank rather than permitting the petitioner to deposit the balance amount, of course along with interest for the delayed period, went ahead to re-auction the property. Now the reauction was slated for the month of May, 2017 i.e. subsequent to the month in which petitioner had assured respondents No.2 and 4 that he shall be paying the entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Thereafter respondent No.4 invited bid for auction of the said commercial property by issuing advertisement Annexure P-1. Reserve price of the property was fixed at ₹ 4,50,00,000/-. 29.11.2016 was the date of inspection on which date, property could be inspected between 12:00 noon to 3:00 p.m. The date and time of auction were fixed as 15.12.2016 between 2:30 p.m. to 3:30 p.m. Last date for deposit of earnest amount was 9.12.2016 upto 16:00 hours. The petitioner who was eligible to participate in the bid deposited 10% of the reserve price vide RTGS receipt, Annexure P-2. Auction of the property was conducted on 15th December, 2016, on which date the bid of the petitioner for an amount of ₹ 4.50crore was accepted vide communication of even date Annexure P-3. The petitioner was directed vide said communication to deposit an amount of ₹ 67.50lac towards 15% of the auction amount as per the terms and conditions of the auction notice. Said amount of ₹ 67.50lac stood deposited by the petitioner on 15.12.2016 (Annexure P-4). Though as per terms of the auction, the successful bidder was to pay balance 75% of the sale consideration i.e. an amount of ₹ 3,37,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Counsel further argued that there was no undue delay in making the payment on behalf of the petitioner, as petitioner was making arrangements in this regard and delay if any was caused by respondent-bank as there was no confirmation of sale in favour of the petitioner so made by respondents No.2 and 4 to facilitate the petitioner s obtaining the loan for the purchase of the said property. It was further submitted by learned Senior Counsel that petitioner was willing not only to deposit the entire balance amount but was also willing to compensate the respondent-Bank for additional expenses which stood incurred by it, details of which stand furnished by the respondent-Bank on the directions of this Court by way of an affidavit dated 30.6.2017. 6. Mr. Sanjeev Bhushan, learned Senior Counsel appearing for respondents No.2 to 4 while defending the act of respondent-Bank submitted that there was no arbitrariness in the acts of the respondent- Bank, as the respondent-Bank had acted in its best interest pursuant to the acts of omission on the part of the petitioner to comply with the terms of auction. It was further submitted by learned Senior Counsel for respondents No.2 to 4 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale has been served to the borrower: PROVIDED FURTHER that if the sale of immovable property by any one of the methods specified by sub Rule (5) of Rule 8 fails and sale is required to be conducted again, the authorized officer shall serve, affix and publish notice of sale of note less than fifteen days to the borrower, for any subsequent sale.] ( 2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor: PROVIDED that no sale under this Rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-Rule (5) of [Rule 8] : PROVIDED FURTHER that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price. [( 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sset free from any encumbrances known to the secured creditor or not. 11. Sub Rule (4) of Rule 9 as it stands post amendment envisages that the balance amount of purchase price shall be paid by the purchaser to the authorized officer on or before 15th day of confirmation of immovable property or such extended period as may be agreed upon in writing between the purchaser and secured creditor which in any case will not exceed three months. 12. Rule 9 as it stood before the said amendment read as under:- 9. Time of sale, Issue of sale certificate and delivery of possession, etc.- (1) No sale of immovable property under these Rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-Rule (6) or notice of sale has been served to the borrower. ( 2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor: Provided that no sale under this Rule shall be confirmed, if the amount offered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-Rule (7) above. ( 10) The certificate of sale issued under sub-Rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not. 13. Sub Rule (4) of un-amended Rule 9 thus, inter alia, provided that the balance amount of purchase shall be paid by the purchaser to the authorized officer on or before 15th day of confirmation of the sale of immovable property or such extended period as may be agreed upon in between the parties. The embargo of maximum of three months was not there in the un-amended Rules. This embargo has been created by the amended Rules which have come in force w.e.f. 4.11.2016. 14. Now coming to the facts of this case, herein the process to auction the property in issue was put into motion by way of issuance of an advertisement which was published in the newspapers on 2.11.2016. In other words, when the process to auction the property in dispute was put into motion by way of issuance of advertisement, the amended Rules were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s forward not backward. As was observed in Phillips vs. Eyre , a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 29. The obvious basis of the principle against retrospectivity is the principle of fairness , which must be the basis of every legal Rule as was observed in the decision reported in L Office Cherifien des Phosphates v . Yamashita-Shinnihon Steamship Co. Ltd . Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The short point on which these appeals must succeed is that the Tribunal fell into an error in taking the view that since the Government had indicated its intention to amend the relevant Rules, its action in proceeding on the assumption of such amendment could not be said to be irrational or arbitrary and, therefore, the consequential orders passed have to be upheld. We are afraid this line of approach cannot be countenanced. The relevant Rules, it is admitted, were framed under the proviso to Article 309 of the Constitution. They are statutory Rules. Statutory Rules cannot be overridden by executive orders or executive practice. Merely because the Government had taken a decision to amend the Rules does not mean that the Rule stood obliterated. Till the Rule is amended, the Rule applies. Even today the amendment has not been effected. As and when it is effected ordinarily it would be prospective in nature unless expressly or by necessary implication found to be retrospective. The Tribunal was, therefore, wrong in ignoring the Rule. 18. A three Judges Bench of Hon ble Supreme Court of India in Katikara Chintamani Dora and others Vs. Guntreddi Annamanaidu and others , (19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent-bank and that the entire amount shall be paid by the month of April, 2017. Respondent-Bank rather than permitting the petitioner to deposit the balance amount, of course along with interest for the delayed period, went ahead to re-auction the property. Now the reauction was slated for the month of May, 2017 i.e. subsequent to the month in which petitioner had assured respondents No.2 and 4 that he shall be paying the entire purchase amount to the bank. In this view of the matter, according to us, the act of the respondent-bank forfeiting the amount deposited by the petitioner and initiating fresh steps for reauctioning the property in issue is arbitrary. The interest of the bank is to get its money back which it had given by way of loan to original borrower and it is not understood as to how this interest of the bank was being served by on one hand not permitting the petitioner to deposit the auction amount with interest in the month of April, 2017 and further while putting the entire property to re-auction in the month of May, 2017. Incidentally we find in the notice of re-auction even the reserve price is the same as it was in the notice of auction dated 4.11.2016. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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