2018 INSC 0161
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3156    OF 2018
(Arising out of SLP (C) No.7626 of 2017)
RAKESH BIRANI (D) THROUGH LRS. ...APPELLANT (S)
                                                                 VERSUS
   
PREM NARAIN SEHGAL & ANR. ...RESPONDENT (S)
O R D E R
1.  Leave granted.
2. The   auction   purchaser   has   come   up   in   this   appeal   against   the
judgment   and   order   passed   by   the   Division   Bench   of   the   High   Court
affirming the judgment passed by the Single Bench.
3.   The   brief   facts   in   the   present   case   are   that   the   auction   of   the
property   was   held   on   14 th
  February   2013.     The   appellant   was   the
highest   bidder.     He   offered   a   bid   of   Rs.38.30   lakhs   and   deposited   a
sum   of   Rs.3,80,500/­   as   earnest   money   on   1 st
  February   2013.     He
further   deposited   25%   of   the   auction   amount   of   Rs.5.80/­   lakhs   on
15 th
  February   2013   and   remaining   amount   of   Rs.28,69,500/­   on   13 th
March   2013.     The   auction   purchaser   claimed   that   he   was   intimated
regarding confirmation of sale by the Authorised Officer of the secured
creditor   by   letter   dated   27 th
  February   2013.       As   soon   as   he   was
intimated   of   the   confirmation,   he   further   deposited   the   75%   of   the
auction amount on 13 th
  March 2013 within 15 days of confirmation of

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sale.
4. The   owner   and   principal   borrower   whose   property   was   sold   in
auction questioned the same by way of filing a writ petition.   The Writ
Petition   (Civil)   No.20653   of   2013   was   filed   by   the   respondent.     The
Division   Bench   passed   the   order   on   25 th
  April   2013   that   as   the
property has already been auctioned, directed the respondent to file an
appeal   under   the   provisions   of   Securitisation   and   Reconstruction   of
Financial   Assets   and   Enforcement   of   Security   Interest   Act,   2002
(hereinafter referred to as “the Act of 2002”).  Thereafter, an appeal was
filed that  was registered as S.A.  No.113 of  2013.    The  Debts Recovery
Tribunal,   Allahabad   vide   order   dated   19 th
  December   2013,   has   set
aside   the   sale,   the   order   was   confirmed   by   the   Debts   Recovery
Appellate   Tribunal   as   well   as   by   the   Single   Judge   and   the   Division
Bench   of   the   High   Court.     Hence,   the   present   appeal   by   the   auction
purchaser.
5.   The   main   question   that   arises   for   our   consideration   in   the
appeal   is,   from   which   date   the   period   of   fifteen   days   would   start   for
making   the   deposit   of   remaining   75   percent;   from   the   date   of
communication of confirmation of sale or from the date of the auction.
The   aforesaid   dates   are   not   in   dispute.       The   decision   depends   upon
the   interpretation   of   Rule   9   of   Security   Interest   (Enforcement)   Rules,
2002   (for   short   "the   2002   Rules).     Rule   9   of   the   2002   Rules   reads   as
under:
        
"9.   Time   of   sale,   issues   of   sale   certificate   and   delivery   of

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possession, etc.­ 
(1)     No sale of immovable property under these rules, in
the   first   instance,   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 sub­rule (6) of rule 8 or notice of sale has been
served to the borrower:
  Provided   further   that   if   the   sale   of   immovable   property
by   any   one   of   the   methods   specified   by   sub­rule   (5)   of
rule   8   fails   and   sale   is   required   to   be   conducted   again,
the authorised officer shall serve, affix and publish notice
of   sale   of   not   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   shall   be
subject to confirmation by the secured creditor:
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 percent of the amount of the sale price, which
is   inclusive   of   earnest   money   deposited,   if   any,   to   the
authorized   officer   conducting   the   sale   and   in   default   of
such deposit, the property shall be sold again.
(4)   The   balance   amount   of   purchase   price   payable   shall
be   paid   by   the   purchaser   to   the   authorised   officer   on   or
before  the fifteenth day  of  confirmation of the  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

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months).
(5)  In  default  of  payment  within  the   period  mentioned  in
sub­rule (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 such it may be subsequently
sold.
(6) On confirmation of sale by the secured creditor and if
the   terms   of   payment   have   been   complied   with,   the
authorised officer exercising the power of sale shall issue
a certificate of sale of the immovable property in favour of
the   purchaser   in   the   form   given   in   Appendix   V   to   these
rules.
(7)   Where   the   immovable   property   sold   is   subject   to   any
encumbrances,   the   authorised   officer   may,   if   he   thinks
fit,   allow   the   purchaser   to   deposit   with   him   the   money
required to discharge the encumbrances and any interest
due   thereon   together   with   such   additional   amount   that
may   be   sufficient   to   meet   the   contingencies   or   further
cost,   expenses   and   interest   as   may   be   determined   by
him:
(Provided   that   if   after   meeting   the   cost   of   removing
encumbrances   and   contingencies   there   is   any   surplus
available   out   of   the   money   deposited   by   the   purchaser
such surplus shall be paid to the purchaser within fifteen
days from the date of finalisation of the sale.)
(8)   On   such   deposit   of   money   for   discharge   of   the
encumbrances, the authorised officer shall issue or cause
the   purchaser   to   issue   notices   to   the   persons   interested
in   or  entitled   to   the   money   deposited   with   him  and   take
steps to make the payment accordingly.
(9) The authorised officer shall deliver the property to the
purchase   fee   from   encumbrances   known   to   the   secured

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creditor   on   deposit   of   money   as   specified   in   sub­rule   (7)
above.
(10) The certificate of sale issued under sub­rule (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.”
6. The submission raised by learned counsel appearing on behalf of
the   appellant   was   that   Rule   9(4)   of   the   2002   Rules   provided   that   the
amount   has   to   be   deposited   only   after   confirmation.     Rule   9(2)   also
contemplates   confirmation   of   the   bid.     Learned   counsel   has   also   taken
us   through   Rule   9(5)   so   as   to   contend   that   in   default   of   the   payment
within   the   period   mentioned   in   sub­rule   (4),   the   deposit   made   shall   be
forfeited. The forfeiture is only to follow as consequence of non­deposit of
75   percent   of   amount   after   confirmation   of   sale.     Learned   counsel   has
also   relied   upon   the   provisions   of   Rule   9(6)   to   submit   that   after
confirmation of sale, in case, terms of sale have been complied with only
then   sale   certificate   is   issued.     In   this   case,   sale   certificate   has   been
issued by the owner in favour of the auction purchaser.   Thus, the High
Court has erred in law in interpreting the rule 9 of the rules of 2002 to
mean that date of the auction is also the date of its confirmation.
7. On   the   other   hand,   learned   counsel   appearing   on   behalf   of   the
borrower­respondent   No.1   contends   that   it   is   apparent   from   Rule   9(2)
that  there is  confirmation of  sale  as  soon  as  highest  bid  is accepted  by
the   authorised   officer,   within   fifteen   days,   the   deposit   of   75%   of   the
amount   is to  be  made,  failing  which  the  only  course  is the  forfeiture  of
the   remaining   25%   of   the   amount   that   has   been   deposited   and   the

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property has to be resold.
8. In order to comprehend the rival submissions, it is necessary to
ponder   as  to   intendment   of   Rule   9   of   the   2002   Rules   which   deals   with
the time of sale, issues of sale certificate and delivery of possession, etc.
Public notice of sale is to be published in the newspaper and only after
thirty   days   thereafter,   the   sale   of   immovable   property   can   take   place.
Under  Rule 9(2) of the 2002 Rules, the sale is required to be confirmed
in favour of the purchaser who has offered the highest sale price to the
authorised   officer   and   shall   be   subject   to   confirmation   by   the   secured
creditor.  The proviso makes it clear that sale under the said Rule would
be confirmed if the amount offered and the whole price is not less than
the reserved price as specified in Rule 9(5).  It is apparent that Rule 9(1)
does   not   deal   with   the   confirmation   by   the   authorised   officer.     It   only
provides confirmation by the secured creditor.   Rule 9(3) makes it clear
that   on   every   sale   of   immovable   property,   the   purchaser   on   the   same
day or not later than next working day, has to make a deposit of twenty­
five percent of the amount of the sale price, which is inclusive of earnest
money deposited if any.  Rule 9(4) makes it clear that balance amount of
the   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.   Thus,
Rule  9(2)  makes it  clear  that  after   confirmation by  the  secured  creditor
the   amount   has   to   be   deposited.     Rule   9(3)   also   makes   it   clear   that
period of fifteen days has to be computed from the date of confirmation.

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In   this   case,   confirmation   has   been   made   and   communicated   on   27 th
February   2013   and   within   fifteen  days   thereof   i.e.   on   13 th
  March   2018,
the amount of seventy­five percent had been deposited.  Thereafter, sale
certificate   has   been   issued   under   Rule   9(6).     Rule   9(5)   also   makes   it
clear that in default of payment within the period mentioned in sub­rule
9(4), the deposit shall be forfeited.  There cannot be any forfeiture of the
amount   of  25  percent   in deposit  until  and  unless  the  sale  is  confirmed
by  the secured creditor and there is a default of payment of 75 percent
of the amount.   The interpretation made by the High Court thus cannot
be accepted.
9. If we read the provisions otherwise then we find even before the
confirmation   of   sale   within   fifteen   days,   the   amount   would   be   forfeited
by   the   authorised   officer   who   may   decide   not   to   confirm   the   sale   that
would   be   a   result   not   contemplated   in   Rule   9(2),   9(4)   and   9(5)   which
fortify our conclusion that it is only after the confirmation is made under
Rule 9(4) that amount has to be deposited and on failure to deposit the
amount, twenty­five percent amount has to be forfeited and property has
to   be   resold.     The   provisions   of   Rule   9(6)   also   fortifies   our   conclusion,
inasmuch   as   it   is   the   expression   used   that   on   confirmation   of   sale   by
the   secured   creditor   and   “if   the   term   of   payment   has   been   complied
with”   sale   certificate   is   issued   otherwise   the   forfeiture   takes   place,   this
compliance  has  to be only  after  the confirmation of  sale and not  before
it.   Thus, various provisions of Rule 9 makes it clear that interpretation
made   by   Debts   Recovery   Tribunal   and   Debts   Recovery   Appellate
Tribunal and as affirmed by the High Court cannot be said to be correct.

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10.  Thus,   we   find   that   the   provisions   had   been   fully   complied   with
by the auction purchaser as he has complied with the provisions of Rule
9   by   making   a   deposit   of   75   percent   of   the   amount   from   the   date   of
confirmation of sale.   The sale certificate was rightly issued in favour of
auction   purchaser.       Thus,   the   auction   could   not   have   been   set   aside.
Since the sale certificate has been issued, let the possession be delivered
in accordance with law, as expeditiously as possible.
11. The appeal is allowed and the impugned orders are set aside. No
order as to costs.
....................................J.
(ARUN MISHRA)
....................................J.
(UDAY UMESH LALIT)
NEW DELHI;
      MARCH 21, 2018.