1. Heard Counsel for the parties.

2. Both the aforesaid Appeals have been filed challenging the common order dated 8th November, 2014 passed by DRT-3 Kolkata. Appeal No. 72 of 2017 has been filed by the Bank arid Appeal No. 36 of 2015 has been filed by the auction purchaser.

3. The case has a chequered history. The respondent is the borrower-guarantor in both the Appeals. When the amount could not be paid the Bank has filed an Original Application being O.A. No. 13 of 2006. The said Original Application has been allowed vide order dated 28th April, 2009 for an amount of Rs.12,07,421/- along with simple interest at the rate of 6% per annum from the date of filing of the original Application till the date of realization. The said order has not been challenged and attained finality. In pursuance of the aforesaid order, the matter has been referred to the Recovery Officer. Before the Recovery Officer the case has been registered as R.P. No. 44 of 2009. To recover the amount the property in dispute has been put to auction sale on 25th August, 2010. It appears that some objections have been filed by the respondent before the Recovery Officer. However, the same has been rejected vide order dated 10th January, 2012. Being aggrieved, the respondent filed an Appeal being Appeal No. 01 of 2012 before the DRT under Section 30 of the RDDBFI Act. The property has been sold for Rs.33 lacs. The learned Presiding Officer vide order dated 10th July, 2012 had held that the sale consideration of the property was less and not fair price. The Tribunal, was of the view that the property was sold on a lesser amount and determined the value of the property at Rs.23,84,810/- and accordingly directed the auction purchaser to pay another sum of Rs.9,39,000/-. The direction given by the Tribunal is as follows:

15. The learned Counsel for the respondent Nos. 1 and 5 submits that the subject premises was mostly tenanted and therefore would fetch much lesser value when sold in public auction since the property had been burdened with such encumbrances. However, the learned Counsel for the appellants has disputed the same. Although the learned Counsel for the respondent Nos. 1 and 5 argued that the subject premises is mostly in occupation of the tenants and should be treated as burdened with encumbrances but nothing has been stated in their affidavit-in-opposition. In the valuation report submitted by the valuer Mr. Shubhasish Majumder, it is stated that the property consists of, (a) a three concrete storeyed structure; (b) a two storeyed structure; and (c) a single storey asbestos shed. It, therefore, appears that there are three different structures lying on the premises. He has valued the land and structures at Rs.53,13,277/-. Taking into consideration that the property is almost 80% tenanted, that the rental income being fetched from the property and the area/locality of the premises, nature of structures etc., he has stated the distress value at Rs.12,65,000/-. It is true that the valuer has mentioned that the property is almost 80% tenanted but it is not stated clearly in which of the portions of the structures of (a), (b) and (c) the tenants are residing. Even the Advocate-Receiver in one of his report filed on 12th April, 2010 has stated that the ground floor and the first floor are occupied by tenants and, of course no particulars have been giver, as to in which of the buildings i.e. (a), (b) and (c) they were residing and the particulars of the tenants. The valuation report given by the office of the ARA-1, Kolkata has mentioned the land value at Rs.81,25,000/- and the market value of the structures at Rs.26,73,713/- and both together valued at Rs.1,07,88,713/-. It is common knowledge that the office of the Registrar of Assurances will assess the value for the purpose of collecting stamp duty and registration fee and it cannot be taken as a basis for fixing the reserve price while putting the property in auction sale. I agree with the contention of the learned Counsel for the respondent Nos. 1 and 5 that the property in occupation of tenants would fetch much lesser value when sold in open market with tenants and normally the purchasers will offer a lesser amount when the property is burdened with encumbrances with tenancy rights. The property occupied with tenants would normally fetch lesser than a free hold property. However, it is surprising that the valuer has put the distress sale value at Rs.12,65,000/- that is only about 23.81% of the total value of the property of the land and buildings and thereby deducted about 76.19% giving reasons for capitalization of deficit rent etc.

16. Significantly the appellants in their Appeal have stated that the respondent No. 1 Bank itself had valued the property at the time of granting the loan at Rs.33 lacs in March, 2003. Although the appellants have not filed objection to the valuation report taken during recovery proceedings, but it clearly appears that such valuation report was not provided to the certificate debtors. Considering the overall position, the distress sale value as shown by the Valuer appears to be on much lower side. The respondent No. 1 certificate holder Bank did not deny the averments made in the Appeal that the Bank itself had valued the property at Rs.33 lacs at the time of granting of the loan. Even the respondent No. 5 also did not deny the allegation except stating that it is a matter of record. The Bank did not choose to file the valuation report taken at the time of granting the loan which goes to suggest that what has been stated in the memo of Appeal that the property was valued by the Bank at the time of granting the loan at Rs.33 lacs is correct. It is also true that the certificate debtors although appeared during the recovery proceedings, did not choose to file objection to the sale till 26th November, 2010. Such inaction and silence on the part of the certificate debtors could not be glossed over. But still the fact remain that the distress sale value of the property has been made on the lower side at least by another sum of Rs.9.39 lacs taking into account the earlier value of Rs.33 lacs. In the given facts and circumstances of the case in hand, the decision relied by the learned Counsel for the appellants AIR 2009 Orissa 147 and 2012 (1) CLJ (Cal.) 404 are not applicable.

(1) The respondent No. 5 Auction purchaser is directed to pay another sum of Rs.9,39,000/- (Rupees nine lacs thirty-nine thousands only) towards sale consideration by depositing the same with the respondent No. 1 Bank and also the related poundage fee in the Tribunal within four weeks from the date of this order so as to remain as successful purchaser of the subject property.

(2) In case, the respondent No. 5 commits default in depositing the aforesaid sums within the stipulated period, the sale held in favour of the respondent No. 5 shall stand set aside and the certificate debtors become entitled to redeem the property by paying off the total certificate dues stood as of his date together with 12% interest on Rs.23,84,810/- [Rs.23,61,000/- + Rs.23,810.00 (poundage fee)] (Rupees twenty-three lacs eighty-four thousand eight hundred ten only) by depositing the same with the respondent No. 1 Bank within four weeks from the date of default by the respondent No. 5 (i.e. 8 weeks from the date of this order).

(3) In case of such whole deposit of the amount made by the certificate debtors, as stated above, the Recovery Officer shall order refund of the sum of Rs.23,84,810/- (Rupee twenty-three lacs eighty-four thousand eight hundred only) together with interest @ 12% per annual thereon to the respondent No. 5 (auction purchaser within five days from the date of deposit by certificate debtors.

(4) In case the certificate debtors also fail to deposit the amounts as stated above, the Recovery Officer shall go ahead with the sale of the property afresh in accordance with law after calling for fresh valuations from both sides, and in which case the certificate holder Bank shall refund the amount of Rs.23,84,810/- (Rupee twenty-three lacs eighty-four thousand eight hundred ten only) to the respondent No. 5 auction-purchaser.

(5) The order dated 10th January, 2012 of the Recovery Officer to the extent of giving the direction to the Advocate-Receiver to take physical possession of the property is hereby quashed and in case the respondent No. 5 deposits the amount as stated above at Para 18(1), the Recovery Officer has to relook into the matter whether the auction purchaser is entitled to have, the actual physical possession of the property by getting eviction by the tenants and pass the suitable orders in accordance with law.

4. Being aggrieved by the said order, the respondent filed Appeal No. 111 of 2012 and the High Rank State Advisory Private Ltd. filed an Appeal being Appeal No. 121 of 2012 before the DRAT and the DRAT vide the impugned order dated 28th April, 2014 set aside the order passed by the DRT and remanded back the matter to the DRT to decide the matter afresh. The matter has been remanded back to consider the issue relating to the valuation of the property. The DRAT has made observations and directions with regard to the valuation of the property as follows:

The Presiding Officer in para Nos. 15 and 16 of the impugned order no doubt expressed his anguish as well as his surprise over the under valuation mainly on the ground that the reserve price of the property to be sold was fixed at 12.65 lacs so to say, at 23.81 % of the total value of the land and building, excluding 76.19% of the total value of the land and building; simply because 80% of the building was under occupation of the tenants, the gross under valuation, was not tenable. However, the learned Counsel for the appellants in Appeal No. 121 of 2012 would find default with such a finding on the ground that a qualified surveyor assessed it based on certain criteria and without having any objective evidence to the contrary the Presiding Officer had wrongly held as though the property was undervalued. But, one fact is clear that both the appellants would find fault with the approach of the Presiding Officer. Objective evidence is the hall mark of rendering justice in adversarial proceedings. Here without entertaining any evidence, simply the Presiding Officer on his own assumption gave his finding in paragraph Nos. 15 and 16 of his order. I would like to indicate that there is no hard and fast rule that whenever valuation officer files a valuation report, it has to be taken for gospel truth. It is open for the Recovery Officer as well as the Presiding Officer to consider the correctness of the valuation. Because a person is an authorized valuer, he cannot base on his subjective satisfaction to arrive at a value. He must be able to show objectively on what recognized principle of valuation, he arrived at his assessment. He assessed the land and building at Rs.23.81% of the real value, excluding 76.19% of the total value of the land and building without any solid basis. Over and above, there is another point here to be noted, there is nothing to indicate as to how he arrived at the total value of the land and building in a sum of Rs.53,13,277/- when the Government valuation as given in ARA-1, Calcutta was to a tune of Rs.1,07,88,713/- (81,25,.000/- towards land value + 26,63,713/- towards value of the structure). As such in this case even though the Presiding Officer expressed some prima facie doubt about the value, yet he failed to arrive at a conclusion objectively nonetheless which warrants this DRAT to interfere and mandate that the Presiding Officer, DRT-3 shall entertain objective evidence and consider as to what should be the proper valuation. In that regard both sides should be given liberty to put forth their case on being remitted to him.

The contention of the appellants in Appeal No. 121 of 2012 that the alleged irregularities in the sale procedure as put forth by the appellants in Appeal No. 111 of 2012 in no way could be considered by the Recovery Officer by the Presiding Officer because such grievances were not raised by the owners of the properly but only by the respective wives of the appellants, who happened to be the guarantors. I am of the considered view that the locus standi principle is having no application here as the appellants are the guarantors for the repayment of the loan and certificate is against them also. They are jointly and severally liable and once the Presiding Officer took notice of certain defects in the sale then that would be sufficient for the Presiding Officer to proceed further or that line or probe. I would like to point out further that the defects in a sale could be taken note of even suo motu by the Presiding Officer as the Recovery Officer is virtually under the control of the Presiding Officers, who could mandate as well as guide them in their official acts. As such at whose instruction the defects were pointed out, is not germane, so far this factual matrix is considered.

The learned Counsel for the appellants in Appeal No. 121 of 2012 would pray for merely setting aside the impugned order and leave as such the matter so that the sale in his favour would automatically become final and permanent and his client also need not pay the additional sum of Rs.9.39 lacs. In my considered opinion, to the risk of repetition and pleonasm but without tautologous, I would like to point out that once the Presiding Officer had noted certain defects in the sale, then it is ineluctable that it has to be gone into fully and parties should go the whole hog in that connection and they cannot shun it. Hence in this view of the matter, the impugned order is remitted back to the DRT-3 with the aforesaid mandates to decide the points within a time of three months from the date of receipt of a copy of this order till then status quo shall continue. Accordingly, the two Appeals are disposed of.

Till then statues quo shall continue.

The pre-deposit made by the appellants under Section 21 of RDDBFI Act and lying in F.D. of this DRAT shall stand transferred to DRT-3 immediately and it is for the DRT-3 to pass appropriate order while disposing of the matter.

After the matter being remanded back, the DRT has decided the Appeal by the impugned order and made the following observation:

7. In view of the observations made in the previous order dated 10th July, 2012 the auction purchaser was directed to pay another sum of Rs.9.30 lacs towards cost of the property. This is ample clear that the reserve price of the property was fixed at much lower and the property has been sold at the below market price. I am of the opinion, that once it is observed and found that the Recovery Officer has sold the property below market price, the sale should have been set aside. The direction to the auction purchaser to pay some more amount in my view, was not appropriate. I also find that the property has been sold at the below market value.

Honble DRAT, Kolkata has also observed in its order dated 10th July, 2012 quoting the judgment of Honble Supreme Court in the matter of L.K. Trust v. E.D.C. Ltd., 2011 (2) D.R.T.C. 305 (E.G.), wherein it has beer, held that-

This Court in the said case further explained that the extinction of the right of redemption has to be subsequent to the deed conferring such power and the right to redemption is not extinguished at the expiry of the period. The Court emphasized in the said decision that the equity of redemption is not extinguished by mere contract for sale.

8. I may quoted another judgment of Honble Supreme Court passed in the matter of Ram Kishan v. State of U.P., wherein Honble Supreme Court has held that the sale can be set aside even after confirmation of the same if the valuation of the property has not been made fair and correctly. The relevant paragraph of the said judgment is as quoted below:

Ram Kishun v. State of Uttar Pradesh, (2012) II SCC 51. Relied upon Paras 14, 17, 22, 26 and 27 of the judgment.

14. A right to hold property is a constitutional right as well as a human right. A person cannot be deprived of his property except in accordance with the provisions of a statute (Vide Lachman Dass v. Jagat Ram and State of M.P. v. Narmada Bachao Andolan). Thus the condition precedent for taking away someones property or disposing of the secured assets, is that the authority must ensure compliance with the statutory provisions.

17. Therefore, it becomes a legal obligation on the part of the authority that property be sold in such a manner that it may fetch the best price. Thus, essential ingredients of such sale remain a correct valuation report and fixing the reserve price. In case proper valuation has not been made and the reserve price is fixed taking into consideration the inaccurate valuation report, the intending buyers may not came forward treating the property as not worth purchase by them, as a moneyed person or a big businessman may nat like to. involve himself in small sales/deals.

22. In view of the above, it is evident that there must be an application of mind by the authority concerned while approving/accepting the report of the approved valuer and fixing the reserve price, as the failure to do so may cause substantial injury to. the borrower/guarantor and that would amount to material irregularity and ultimately vitiate the subsequent proceedings.

26. In Divya Mfg. Co. (P) Ltd. v. Union Bank of India, this Court held that a confirmed sale can be set aside an the ground of material irregularity or fraud. The Court does not become functus officio after the sale is confirmed. In Valji Khimji and Co. v. Official Liquidator of Hindustan Nitro Product (Gujarat), the Court held that auction sale should be set aside only if there is a fundamental error in the procedure of auction e.g. not giving wide publication or on evidence that property could have fetched more value or there is somebody to offer substantially increased amount and/or only a little over the auction price. Involvement of any kind of fraud would vitiate the auction sale.

27. In FCS Software Solutions Ltd. v. La Medical Devices Ltd., this Court considered a case where after the confirmation of auction sale, it was found that valuation of movable and immovable properties, fixation of reserve price, inventory of plant and machineries had not been made in the proclamation of sale, nor disclosed at the time of sale notice. Therefore, in such a fact situation, the sale was set aside after its confirmation.

This is an eye-opener case, where Honble Supreme Court established and laid dawn, the principles and guidelines for recovery of public dues and sale of properties by authorities.

9. In view of the above, I am of the opinion that the sale has been done at the below market value.

In view of the above, I pass the following order-

(1) The sale held by Recovery Officer as per order dated 27th October, 2010 (in R.P. No. 44 of 2009) is set aside. The Sale Certificate and other connected papers confirming the sale etc. are hereby quashed.

(2) Appellants and other certificate debtors are granted liberty and directed to redeem the property by making payment of Rs.23,61,000/- (Rupees twenty-three lacs sixty-one thousand) as recorded in order dated 12th November, 2010 (in R.P. No. 44/2009) i.e. sale consideration, to the respondent No. 1 (C.H. Bank) along with interest thereon @ 5% per annum simple from the date of payment of said amount to the respondent No. 1 Bank. In turn respondent No. 1 is directed to refund the amount of sale consideration to the respondent No. 5 (auction purchaser) along with interest thereon @ 5% per annum simple from the date of payment of amount to the Respondent-Bank.

(3) In case appellants and other certificate debtors do not make payment of above mentioned amount to the Respondent-Bank within 30 days from the date of this order, respondent No. 1 (Bank) is directed to refund the said amount along with interest as mentioned above to the respondent No. 5 within 30 days.

(4) Respondent No. 5 (auction purchaser) is directed to vacate the property and hand over peaceful possession of the same to the appellants and other certificate debtors within 30 days from the date of this order.

(5) In the above circumstances, respondent No. 1 Bank shall be entitled to proceed with execution of recovery certificate in its favour and to get the said property put on sale afresh, as per law and to recover its dues.

5. Learned Counsel for the appellants states that the learned Presiding Officer has not applied his independent mind on the issue of valuation and has simply adopted the opinion and observation of the previous Presiding Officer which stood set aside. He submitted that the learned DRT proceeded as if the finding of the earlier DRT so far as valuation is concerned has been upheld by the DRAT. He further submitted that while arriving to the conclusion that the property has been sold below the market value, he has not made any fresh adjudication independently in accordance with the direction given by DRAT. He submitted that the Tribunal ought to have examined the issue of valuation afresh and independently and, thereafter, adjudicate the issue. He submitted that so far as the issue relating to the redemption is concerned, the D~ T in its order on a consideration of Section 60 of the Transfer of Property Act has observed that it is not for the Presiding Officer to give a direction regarding redemption and as such that much portion of the impugned order was not warranted at all and it is set aside and, therefore, the order of the learned Presiding Officer relating to the redemption is not in accordance with and is liable to be set aside.

6. Mr. Sil, learned Counsel for the respondent submitted that it is true that the h issue relating to the valuation has not been properly adjudicated by the learned Presiding Officer, DRT. He has not applied his mind independently on the issue and has swayed with the observation and the finding recorded by the earlier DRT in his order while he ought to have applied his independent mind on the material available on record and adjudicate the issue relating to the valuation. He, however, submitted that so far as the right of redemption is concerned, the observation of the DRAT in its order is not conclusive and the said issue is to be examined in accordance with Section 60 of the Transfer of Property Act.

7. I have considered the rival submission and perused the record. The only submission raised by the Counsel for the parties relates to the valuation of the impugned order and whether the sale of the said impugned property was on a fair market value and if the sale was not made one a fair market value it was not valid.

8. I am of the view of the order of the learned Presiding Officer is criptive, mechanical and without application of mind inasmuch as without following the direction given by the DRAT in the appellate order referred hereinabove. The Appellate Authority has set aside the order of the DRT on the issue of valuation and, therefore, the said order does not exist and should not be adopted. The DRT should have examined the material on record relating to the valuation placed by either side and independently adjudicate the issue relating to the valuation, namely, whether the reserve price fixed in the sale notice fixed at Rs.12,65,000/- was reasonable and justified and the property sold at Rs.23,84,810/- was the fair price of the property on the basis of materials available on record and pleadings and submissions of the parties. The DRT should also consider the law laid down by the Apex Court in the case of Ram Kishun v. State of U.P. VII (2012) SLT 242=IV (2012) BC 527 (SC)=(2012) SCC 511.

9. So far as the direction of the DRAT relating to the redemption is concerned, the same is not sustainable inasmuch as it is not in accordance with law. None of the provisions supports such direction. Learned Counsel for the Respondents is not able to support the said direction. The said direction is liable to be set aside. However, it is open to the respondents to raise the plea of redemption if it is available to them under any provisions of the Act and if so raised the same may be considered in accordance with law having regard to the findings recorded by the DRAT in its earlier order which has attained finality.

10. In the result, both the Appeals are allowed. The impugned order dated 8th December, 2014 is set aside. The matter is relegated to DRT-3 to decide the matter afresh in the light of the observations made above.

11. The matter is quite old and both the parties are suffering a lot. I direct the DRT to decide the matter expeditious within a period of two months from the date of presentation of the certified copy of this order, which the Appellant undertakes to file within a week.

Appeals allowed.