The High Court on 4 May upheld the order of the Debts Recovery Appellate Tribunal (DRAT) restoring auction sale proceedings, holding that borrowers cannot indefinitely stall recovery actions after failing to repay dues for over two decades. The Court observed that repeated challenges raised by the borrowers after completion of the auction process were aimed only at delaying recovery proceedings.

A Single Bench of Justice Shampa Dutt (Paul) dismissed the civil revisional application filed by Rajesh Kumar Gupta and others against High Rank Estate Advisory Private Limited and others. The Court affirmed the DRAT’s order, which had restored the Recovery Officer’s decision approving the auction sale of the mortgaged property. They held that “The petitioners herein, only to stall the total proceedings, in spite of not having made any payment, have not cooperated in any of the proceedings before the authorities concerned but have continued the litigation for 23 long years.”

The dispute arose from recovery proceedings initiated by the bank after the borrowers defaulted on repayment of loan dues. The bank had obtained an ex parte recovery certificate and auctioned the mortgaged property in recovery proceedings. The borrowers later challenged the auction sale, alleging undervaluation of the property and sought the setting aside of the sale before the Recovery Officer and the Debts Recovery Tribunal (DRT).

The DRT had earlier set aside the Recovery Officer’s order and directed a fresh valuation of the property. However, the DRAT later reversed the DRT’s findings and restored the Recovery Officer’s order, holding that the application filed by the borrowers before the Recovery Officer was itself not maintainable.

Before the High Court, the petitioners contended that the property had been sold at a substantially lower value and argued that technical defects should not defeat substantive rights. They also submitted that amounts deposited before the DRAT ought to be treated as sufficient compliance under the applicable provisions relating to setting aside auction sales.

The auction purchaser opposed the plea, arguing that the borrowers never objected to the sale proclamation at the relevant stage and had failed to make mandatory deposits required under Rule 60 of the Second Schedule to the Income Tax Act. It was further contended that the borrowers adopted delaying tactics despite repeated opportunities granted during the proceedings. The court also mentions in this case:

“The petitioners, being the certificate debtors did not appear before the Recovery Officer in spite of sufficient opportunity being granted and as such the Recovery Officer was pleased to proceed with the sale proceedings.”\

The High Court noted that the property, valued at Rs 33 lakh in 2003, was ultimately auctioned for approximately Rs 23.61 lakh in 2010, which was nearly double the valuation assessed in 2009. The Court also took note of the fact that the tenancy status of the property had changed over the years, affecting its market value.

Holding that the DRAT had extensively dealt with all issues and rightly restored the Recovery Officer’s order, the Court found no reason to interfere in revisional jurisdiction. It directed the completion of the sale process within sixty days and dismissed the revisional application.