2026 INSC 197

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 1 of 61

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos. 002545 - 002548 OF 2026

(Arising out of SLP (C) No. 12343-12346/2018)

M/S. ADISHAKTI DEVELOPERS …APPELLANT (S)

VERSUS

THE STATE OF MAHARASTRA & ORS.

…RESPONDENT(S)

WITH

CIVIL APPEAL No. 002549 OF 2026

(Arising out of SLP (C) Nos. 12617/2018)

MAHANAGAR CO-OPERATIVE BANK LTD

….APPELLANT (S)

VERSUS

THE DIVISIONAL JOINT REGISTRAR, CO-OPERATIVE

SOCIETIES & ORS. …RESPONDENT(S)

WITH

CIVIL APPEAL No. 002550 OF 2026

(Arising out of SLP (C) No. 12591/2018)

MAHANAGAR CO-OPERATIVE BANK LTD.

...APPELLANT (S)

VERSUS

THE STATE OF MAHARASTRA & ORS.

…RESPONDENT(S)

J U D G M E N T

MANOJ MISRA, J.

1. Leave granted.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 2 of 61

2. These six appeals are directed against common

judgment and order dated 26.03.2018 passed by the High

Court of Judicature at Bombay

1 whereby four writ

petitions i.e., W.P. No. 1543 of 2009; W.P. No. 6544 of

2009; W.P. No. 393 of 2010; and W.P. No. 1779 of 2010

were disposed of.

Facts

3. A plot of land bearing No. 21, admeasuring 810 Sq.

mtr., pertaining to Survey No. 14, Village Chembur, Tehsil

Kurla, Bombay Suburban District

2 was subjected to

auction sale to recover dues of Mahanagar Co-operative

Bank

3 payable by a partnership firm i.e., M/s. Borse

Brothers

4. The firm had availed cash credit facility of Rs.

10,00,000/- from the Bank. As it failed to repay the

amount, proceedings were initiated by the Bank under

Section 91 of Maharashtra Co-operative Societies Act,

1960

5. In the said proceedings, on 04.04.1994 the Co-

operative Court passed an ex parte award of

1

High Court.

2

Hereinafter described as property in dispute.

3

Hereinafter described as the Bank.

4

Hereinafter referred to as the firm.

5

Hereinafter referred to as the 1960 Act.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 3 of 61

Rs.24,19,904.92 plus interest @ 17.5% per annum against

the firm, which was represented through its partners

including Panditrao Borse. Pursuant to the award, on

04.07.1996 the Co-operative Court issued a recovery

certificate under Section 98 of the 1960 Act. Thereafter, a

notice of demand of Rs.52,27,800 was served upon the

firm and its partners. On 16.04.2004, the Special

Recovery and Sale Officer

6 took possession of the disputed

property. However, legal representatives of Panditrao

Borse i.e., one of the partners, who died in between, moved

an application before the Co-operative Court for setting

aside the ex parte award and for stay of execution. This

application was rejected by the Co-operative Court on

06.09.2004. On 24.12.2004, notice inviting bids for the

property in dispute was published in the local newspapers.

On 29.01.2005, SRO found bid of M/s. Adhishakti

Developers at Rs.1,51,00,000 highest and the same was

accepted. On the same day, M/s. Adhishakti Developers

deposited Rs. 52,85,000 and balance of Rs. 98,15,000 was

6

Hereinafter referred to as SRO

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 4 of 61

deposited on 17.03.2005, which the Bank accepted. On

18.03.2005, SRO issued order for confirmation of sale and

handed physical possession to M/s. Adhishakti

Developers. Thereafter, on 21.03.2005, sale certificate was

issued, followed by execution of registered conveyance

deed dated 13.06.2005 in favour of M/s. Adhishakti

Developers.

4. The heirs/ legal representatives of Panditrao Borse

filed a writ petition before the High Court, which was

dismissed on the ground of availability of alternative

remedy under Rule 107 of Maharashtra Co-operative

Societies Rules, 1961

7. However, instead of availing that

remedy, the legal representatives of Panditrao Borse filed

a Revision Application No. 326 of 2008 under Section 154

of 1960 Act before Divisional Joint Registrar, Co-operative

Societies, Mumbai

8.

5. In between, acting on the conveyance deed, the

appellant i.e., M/s Adishakti Developers (i.e., the appellant

in the appeal title) moved an application for correction /

7

Hereinafter referred to as 1961 Rules

8

Hereinafter referred to as Joint Registrar

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 5 of 61

mutation of the revenue records. However, the Collector,

vide order dated 09.03.2006, rejected the application. This

order was challenged by the appellant by filing an appeal

which came to be dismissed vide order dated 01.12.2008.

Aggrieved therewith, the appellant filed Writ Petition No.

1543 of 2009, and the Bank filed Writ Petition No. 6544 of

2009.

6. In the meantime, vide order dated 20.03.2009, the

Joint Registrar condoned the delay in filing of revision by

heirs and legal representatives of Panditrao Borse against

the auction sale and, later vide order dated 29.12.2009,

the Joint Registrar set aside the auction including its

confirmation and consequential sale dated 18.03.2005

while exercising power under Section 154 of the 1960 Act,

read with Rule 107 of the 1961 Rules.

7. Aggrieved by the order of condonation of delay and

allowing of revision, Writ Petition No. 393 of 2010 was filed

by Adishakti Developers and Writ Petition No.1779 of 2010

was filed by the Bank. All the aforesaid four writ petitions

were tagged and decided by the impugned order.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 6 of 61

8. Writ Petition Nos. 393 of 2010 and 1779 of 2010

were taken as leading petitions because they questioned

the order cancelling the auction sale. As far as other two

petitions were concerned, their fate depended on whether

the auction sale is affirmed or cancelled. In that sequence

we shall narrate the facts and the issues which arise for

our consideration.

9. Condonation of delay in filing revision against the

auction sale was sought, inter alia, on the ground that the

legal representatives of Panditrao Borse became aware of

confirmation of sale / conveyance when proceeding for

mutation in the revenue records was undertaken before

the Collector. The Bank as well as the auction purchaser

contested the delay condonation application as well as the

revision by claiming that there is no sufficient explanation

for the delay of four years and title had already vested in

the purchaser. The Joint Registrar accepted the

explanation offered and condoned the delay. Further, the

auction sale was cancelled on the ground that the entire

auction amount was not deposited within 15 days from the

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 7 of 61

date of sale which violated Rule 107 (11) (h) of 1961 Rules.

Joint Registrar found that the property in dispute was

auctioned on 29.01.2005 for Rs. 1,51,00,000; on the same

day only Rs. 50,96,000; was deposited; and thereafter,

Rs.25,00,000 was paid by cheque dated 05.03.2005,

Rs.23,15,000 was paid by cheque dated 07.03.2005, and

Rs.50,00,000 was paid by cheque dated 17.03.2005. Joint

Registrar held that as per law the entire amount had to be

deposited within 15 days from the date of auction but, in

the case on hand, the entire amount was deposited not

before 17.03.2005 i.e., much after 15 days. According to

the Joint Registrar deposit of entire amount within the

period of 15 days was a mandatory condition and,

therefore, the auction as well as its confirmation and

consequential conveyance was rendered void.

10. Impugning the order of Joint Registrar, before the

High Court, it was urged:

(i) Ordinarily, violation of a mandatory auction

condition/ rule renders the auction sale a nullity, but

if the party, for whose benefit the condition /rule is

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 8 of 61

there, waives the same, auction need not be set aside

for infraction/ violation of that condition. As

stipulation for deposit of entire auction amount within

a period of 15 days is for the benefit of the creditor (i.e.

the Bank) and once the Bank raised no objection and

accepted the deposit, there was no justifiable reason

to set aside the auction sale on that ground.

(ii) Legal representatives of Panditrao Borse had

knowledge of sale in October 2005 when notice qua

mutation was served on them yet no revision was filed

and therefore, on the ground of delay alone, the

revision ought to have been dismissed.

High Court’s Reasoning

11. High Court rejected the first submission holding

that condition to deposit within 15 days is mandatory and

a violation thereof would render sale a nullity. In support

of its view, it relied on decisions of this Court in Manilal

Mohanlal Shah and others vs. Sardar Sayed Ahmed

Sayed Mahmad and another

9; Sardara Singh (Dead)

9

AIR 1954 SC 349: (1954) 1 SCC 724

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 9 of 61

By L.Rs. and another vs. Sardara Singh (Dead) and

others

10; Rao Mahmood Ahmad Khan Through L.R. vs.

Ranbir Singh and others

11; Gangabai Gopaldas

Mohata vs. Fulchandand others

12; and Shilpa Shares

& Securities and others vs. National Co-operative

Bank Ltd. and others

13. High Court found that it is an

admitted position that only 15% of the auction amount

was paid on the date of auction and balance was not paid

within 15 days; rather, paid in four installments, spanning

over next three months. Therefore, it held, the sale was a

nullity.

12. On the issue of waiver, High Court held that there

was no waiver on part of the owner (including the borrower

or legal heirs of one of the partners of the borrower) of its

right to challenge the auction on the ground of non-deposit

of auction price within the stipulated period therefore,

even if the Bank had accepted the money beyond the

stipulated period, there could be a valid challenge to the

10

(1990) 4 SCC 90

11

1995 Supp. (4) SCC 275

12

(1997) 10 SCC 387

13

(2007) 12 SCC 165

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 10 of 61

auction sale on that ground. High Court also pointed out

that there was no material on record to show that legal

representatives of the borrower had knowledge of auction

purchaser not depositing the entire auction price within

the stipulated period. Hence, there was no occasion to

raise the plea of waiver.

13. On question of delay, High Court held that auction

sale came to the notice of legal representatives of the

judgment-debtor only when application was submitted for

mutation in revenue records and, therefore, it was not a

case of any deliberate or intentional delay. Hence,

interference with the order of condonation of delay was not

called for.

14. Besides above, High Court noticed the offer made

by the legal representatives of Panditrao Borse to pay off

entire outstanding amount to show their bona fides and,

in consequence, dismissed the writ petition(s) impugning

the order of Joint Registrar. However, while accepting the

offer of the legal representatives, it directed them to deposit

a sum of Rs. 79,44,042 with the Bank within a period of

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 11 of 61

12 weeks from the date of the order and, in turn, directed

the Bank to refund a sum of Rs. 1,51,00,000 to the

appellant (M/s. Adhishakti Developers) with such interest

as may have accrued from time to time on the surplus

amount of Rs.71,55,958 held by the Bank. Additionally,

M/s. Adhishakti Developers was given liberty to adopt

such steps as may be permissible in law for recovering

damages, if any, suffered by them because of cancellation

of auction sale. As a result, High Court dismissed the other

two petitions, namely, Writ Petition Nos. 1543 of 2009 and

6544 of 2009.

15. We have heard learned counsel for M/s Adishakti

Developers; learned counsel for the legal representatives of

Panditrao Borse; learned counsel representing the Bank;

and learned counsel representing the State of

Maharashtra and have perused the records including

written submissions filed by parties.

Submissions on behalf of M/s. Adishakti Developers

(Auction Purchaser)

16. Submissions on behalf of M/s. Adishakti

Developers (Auction Purchaser) are as follows:

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 12 of 61

(i) Revision under Section 154 of 1960 Act before

Joint Registrar was not maintainable because the

legal representatives of Panditrao Borse had earlier

filed writ petition challenging the auction, which

was dismissed by the High Court vide order dated

26.09.2005 by observing that remedy lay under

Rule 107 of 1961 Rules. Instead of taking recourse

to the remedy available under 1961 Rules, a

revision was filed, that too, with a delay of about

04 years. Such delay ought not to have been

condoned. Moreover, under Section 154, revision

lies where any decision or order is passed by a

Subordinate Officer against which no appeal lies.

Certificate of confirmation of auction sale is based

on an order of a Subordinate Officer therefore,

remedy was available under Rule 107 of 1961

Rules and to avail it, the owner of the property had

to deposit the amount as prescribed under Rule

107(13) of 1961 Rules. Hence, revision should not

have been entertained.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 13 of 61

(ii) Even if there is violation of the procedure

prescribed by Rule 107 (11) (g) (h) of 1961 Rules,

borrower may waive the violation thereof by its

conduct as it is for the benefit of the creditor and,

therefore, in absence of any objection by the creditor,

the auction sale is not rendered void. In this regard

reliance was placed on decision of this Court in

General Manager, Sri Siddheshwara Co-operative

Bank Ltd. And another vs. Ikbal and Ors.

14

(iii) While considering application for mutation, the

revenue authority cannot go into the validity of

auction sale. Such an enquiry at the end of the

Revenue Authority is impermissible. Therefore, they

ought to have mutated the revenue records in terms

of the conveyance/certificate of sale.

Submissions on behalf of legal representatives of the

partner of M/s. Borse Brothers

17. Submissions on behalf of the legal representatives

of the partner of M/s. Borse Brothers are as follows:

14

(2013) 10 SCC 83

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 14 of 61

(i) Compliance of Rule 107(11) (g) (h) of 1961 Rules

is mandatory. Any violation thereof, renders the

auction void.

(ii) Remedy under Rule 107 (13) of 1961 Rules does

not dilute statutory revisional powers under

Section 154 of 1960 Act.

(iii) This Court in Shilpa Shares (supra) held

compliance of provisions of Rule 107(11)(g) is

mandatory and any infraction thereof renders

auction sale a nullity. In such circumstances,

validity of the auction sale can be questioned even

in a collateral proceeding.

(iv) The decision of this Court in Siddheshwara

Co-operative Bank Ltd. (supra) relied by auction

purchaser on the issue of waiver is not applicable

on facts of the case as those proceedings emanated

under the provisions of Securitisation and

Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002

15 and

15

SARFAESI Act

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 15 of 61

Security Interest (Enforcement) Rules, 2002

16. The

decision therein was in the context of those

provisions including Rule 9(4) of 2002 Rules.

(v) Once auction sale is void, it can be ignored.

Therefore, refusal to mutate the revenue records on

basis thereof was justified.

(vi) Property in dispute was sold by the Government

to Panditrao Borse. Though Panditrao Borse was a

partner in the Firm i.e., M/s Borse Brothers, but

the Firm was not its owner. Panditrao Borse died

on 17.04.2001 and his legal representatives were

not served with notice of auction proceeding.

Therefore, auction was in clear violation of the

principles of natural justice.

(vii) There appears collusion between auction

purchaser and the Bank which is evident from the

following facts:

(a) Auction was conducted on 29.01.2005 and

34% of the amount was deposited not at the

16

2002 Rules

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 16 of 61

time of auction, as required under Rule

107(11) (g), but four days before the auction

i.e. 25.01.2009 which indicates that auction

purchaser was sure about auction going in its

favour.

(b) Chairman of the Bank, namely, Gulab Rao

Shelke, who was an Advocate, had

represented the auction purchaser in a

proceeding. This issue was specifically raised

in the revision application, and a complaint

was made to the Bar Council of Maharashtra

which initiated disciplinary proceeding

against him.

(viii) Credit facility taken by the Firm from the

Bank was secured by hypothecation of two trucks

and fixed deposit receipt, yet instead of proceeding

against those assets, the land was put to auction.

(ix) Public notice of auction instead of being

published in two daily newspapers was published

in one newspaper only.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 17 of 61

(x) The property in dispute was allotted to

Panditrao Borse by the Government and one of the

conditions of allotment proscribed mortgage

without prior consent of the Government. There

exists no material on record to show that any such

consent was obtained therefore, there was no valid

mortgage and as such the property could not have

been subjected to auction. Moreover, there is no

challenge to Collector’s finding in mutation

proceedings that mortgage of land was illegal.

Based on the aforesaid submissions, on behalf of legal

representatives of Panditrao Borse, it was prayed that the

appeals be dismissed and the order passed by the High

Court be affirmed.

Submissions on behalf of State of Maharashtra

18. On behalf of the State, it was submitted that the

District Collector held that the property in dispute was

purchased by Panditrao Borse in a public auction;

condition no.2 of that auction sale was that the property

shall not be sold or mortgaged without prior permission of

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 18 of 61

the Government. No prior permission was taken to

mortgage the said property. Even the Bank, though aware

of the conditions, took no permission for accepting the

mortgage. In these circumstances, State was justified in

denying mutation in favour of M/s. Adishakti Developers.

Submissions on behalf of Bank

19. On behalf of the Bank, it was submitted:

(i) Bank sanctioned and disbursed loan of Rs.

10,00,000/- by way of cash credit facility on

equitable mortgage of the property in dispute made

by Panditrao Borse i.e., predecessor-in-interest of

respondents 3 to 5.

(ii) On 07.08.1992, Panditrao Borse defaulted in

paying the loan as a result the Bank raised dispute

under Section 91 of 1960 Act.

(iii) On 20.01.1993, the Co-operative Court passed

an order of attachment and, on 04.04.1994, an

award was passed in favour of the Bank directing

Panditrao Borse to pay Rs. 24,19,905 with 17.5%

interest starting from 01.09.1993 till realization.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 19 of 61

And, for effecting recovery, certificate was issued

on 04.07.1996.

(iv) On 24.01.2000, a demand notice under Section

156 of 1960 Act read with Rule 107 of Rs.

52,27,800 with 17.5% interest was issued.

(v) On 06.04.2004, SRO took possession of plot and

published a public notice thereof.

(vi) On 24.05.2004, Panditrao Borse died. On his

death, respondents 3 to 5 (i.e., legal

representatives of Panditrao Borse) applied to set

aside the ex parte award dated 04.04.1994, which

was rejected by Co-operative Court on 06.09.2004.

(vii) On 30.09.2004, valuation of plot was carried

out and possession was taken on 30.10.2004.

(viii) On 24.12.2004, public notice for auction sale

of the property in dispute was published in daily

newspaper “Sakal”.

(ix) On 29.01.2005, bids were opened and M/s.

Adishakti Developers being the highest bidder was

declared successful.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 20 of 61

(x) On the same day, the bidder deposited Rs.

52,85,000 i.e. 35% of bid amount, which was more

than 15%, as required by the Rule.

(xi) The legal representatives of Panditrao Borse

were throughout aware of the amount due as also

about the steps taken by the Bank.

(xii) On 18.03.2005, SRO confirmed the sale and

physical possession was handed over to the bidder

along with possession receipt.

(xiii) Ultimately, on 21.03.2005 certificate of

confirmation was issued in favour of the bidder.

(xiv) On 13.05.2005, SRO issued letters to the

legal representatives of Panditrao Borse about the

auction sale, and on 13.06.2005 registered sale

was executed in favour of the bidder.

(xv) Between the date of auction and issuance of

certificate of sale, the legal representatives of

Panditrao Borse could have applied, within 30

days, under Rule 107(13) of 1961 Rules to set aside

the sale, but they took no such step. On the

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 21 of 61

contrary, they filed Writ Petition No. 5401 of 2005

which was dismissed with liberty to avail remedy

under Rule 107 of 1961 Rules. However, they did

not avail the statutory remedy, as a result, the sale

certificate dated 21.03.2005 attained finality in

terms of writ court’s order dated 26.09.2005.

(xvi) Revision under Section 154 of 1960 Act was

filed with an inordinate delay of 1236 days and it

was not even against an order, rather against the

certificate of sale confirmation, therefore, it was not

even maintainable. More so, when deposit under

Section 154 (2A) of 1960 Act was not made.

Otherwise also, the revision was nothing but forum

shopping. Besides that, the delay in filing the

revision was condoned without recording reasons.

Moreover, the revision should not have been

entertained in light of the order of the High Court

dated 26.09.2005 passed in Writ Petition No. 5401

of 2005.

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Based on the aforesaid submissions, it was prayed that the

order of the High Court as well as the one passed in

revision be set aside. Besides, it was submitted that the

High Court could not have given more time to the Borrower

to settle the dues as already sufficient time had been

provided to the borrower to make good the loan amount.

Issues

20. On consideration of the rival submissions, in our

view, following issues arise for our consideration:

(i) Whether the legal representatives of Panditrao

Borse could challenge the validity of the equitable

mortgage of the property in dispute made by

Panditrao Borse in favour of the Bank when the

award of the Co-operative Court has attained

finality?

(ii) Whether the revision preferred by the legal

representatives of Panditrao Borse under Section

154 of 1960 Act was maintainable and could have

been entertained when the High Court, vide order

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 23 of 61

dated 26.09.2005, gave them liberty to raise

objections under Rule 107 (13) of 1961 Rules?

(iii) Whether on failure to deposit the balance sale

consideration within the period stipulated under

Rule 107 (11) (h) of 1961 Rules, the auction sale

was rendered void?

(iv) Whether the requirement of deposit of purchase

money within the period stipulated in Rule 107 (11)

(h) of 1961 Rules is for the benefit of the creditor

and can therefore be waived? If so, whether it was

waived by the creditor bank?

(v) Whether for violation of condition attached to

the allotment of the property in dispute, the

auction sale was rendered void? If not, whether the

same is a curable defect, and therefore, on that

ground, the auction proceeding cannot be

nullified?

(vi)Whether, upon finding the auction sale void, the

final order passed by the High Court is justified? If

not, what would have been the appropriate order?

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 24 of 61

Issue No.1:

21. Records reveal that Case No. CC/III/1044 of 1993

was filed before the Co-operative Court by the Bank

against M/s. Borse Brothers through its partners

including Panditrao Borse. On 04.04.1994, an ex parte

award was passed against Borse Brothers including its

partners and one Sri Bhagwan Rambhau Thorat in the

following terms:

“Opponent No. 1 to 3 are jointly and severally liable

to pay and to pay Rs. 24,19,905.02 with interest at

17.5% on Rs. 24,19,905.92 from 01.09.1993 till

realization of the amount…

Attachment before judgment order and ad-interim

injunction order dated 22.10.1993 is hereby

continued till full realization of the claim amount.”

22. Misc. Application No. 44 of 2004 was filed by legal

representatives of Panditrao Borse for setting aside the ex

parte award, inter alia, stating (a) that Panditrao Borse

expired on 17.04.2001 leaving behind the applicants,

namely, Smt. Usha Panditrao Borse; Shri Vivek Panditrao

Borse; and Smt. Vaishali Udaysingh Gaikwad as Panditrao

Borse’s legal heirs; and (b) that the applicants came to

know about the award only when SRO had pasted the

award on the property on 16.04.2004. The aforesaid

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 25 of 61

application was rejected by the Co-operative Court on

06.09.2004, inter-alia, on the ground that the award was

passed on 04.04.1994 during lifetime of the predecessor-

in-interest of the applicants yet he did not challenge the

award. Besides, the certificate for execution of the award

had been issued and the same became executable as a

decree of Civil Court. Therefore, such a belated application

was liable to be rejected. Admittedly, the order rejecting

the prayer to set aside the award has attained finality. In

such circumstances, the validity of the award is not open

to challenge.

23. What is important is that the amount payable

under the decree is jointly and severally recoverable from

three persons including Panditrao Borse. In such

circumstances, Panditrao Borse was a judgment-debtor

and his property including the property in dispute was

liable to be attached and sold for realization of the decretal

amount. Therefore, the objection that because there could

be no mortgage of the property in dispute without prior

permission of the State Government and the property

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 26 of 61

could not have been sold, in our view, is of no relevance as

the property was of the judgment debtor and as such

amenable to auction for realization of the decretal amount

from the judgment-debtor. This is so because Section 98

of the 1960 Act provides that a certificate signed by the

Official Assignee or the Registrar or the Co-operative Court

or a liquidator shall be deemed to be a decree of a Civil

Court and shall be executed in the same manner as a

decree of such Court, or be executed according to law and

under the Rules for the time being in force for the recovery

of arrears of land revenue. In such circumstances, the

award passed by the Co-operative Court operated as a

money decree which could have been executed by

attachment and sale of the property of the judgment-

debtor and as the predecessor-in-interest of respondents

3 to 5 was the judgment-debtor, the property in dispute

being property of the judgment debtor was liable to be

subjected to an auction sale for realizing the amount

payable under the award. Issue No.1 is decided

accordingly.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 27 of 61

Issue No.2

24. Section 154 of 1960 Act, as it stood at the relevant

time, provided as follows:

“154 Revisionary Powers of State Government and

Registrar:

(1) The State Government or the Registrar,

suo-motu or on an application, may call for

and examine the record of any inquiry or

proceedings of any matter, other than those

referred to in sub-section (9) of section 149,

where any decision or order has been passed

by any subordinate officer, and no appeal lies

against such decision or order, for the

purpose of satisfying themselves as to the

legality or propriety of any such decision or

order, and as to the regularity of such

proceedings. If in any case, it appears to the

State Government, or the Registrar, that any

decision or order so called for should be

modified, annulled or reversed, the State

Government or the Registrar, as the case may

be, may, after giving the person affected

thereby an opportunity of being heard, pass

such orders thereon as to it or him may seem

just.

(2) Under this section, the revision shall lie to

the State Government if the decision or order

is passed by the Registrar, the Additional

Registrar or a Joint Registrar, and to the

Registrar if passed by any other officer.

(2-A) No application for revision shall be

entertained against the recovery certificate

issued by the Registrar under section 101 or

Certificate issued by the Liquidator under

Section 105 unless the applicant deposits

with the concerned society, fifty percent,

amount of the total amount of recoverable

dues:

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 28 of 61

Provided that, in case of such revision where

revisional authority has granted a stay to the

recovery of dues, the authority shall, as far as

may be practicable, dispose of such revision

application as expeditiously as possible but

not later than six months from the date of the

first order.

(3) No application for revision shall be

entertained, if made after two months of the

date of communication of the decision or

order. The revisional authority may entertain

any such application made after such period,

if the applicant satisfies it that he had

sufficient cause for not making the

application within such period.

(3-A) The revisional authority, in order to

prevent the ends of justice being defeated,

may pass such interim orders including order

of stay against the impugned order, pending

the decision and final hearing of the Revision

Application:

Provided that, if any interim order has been

passed by the revisional authority without

hearing the other side, the revisional

authority shall decide such application within

a period of three months and pass the

necessary order on merits after giving an

opportunity of being heard and for the

reasons to be recorded in writing.

(4) The State Government may, by order,

direct that the powers conferred on it by this

section shall, in such circumstances and

under such conditions if any, as may be

specified in the direction, be exercised also by

an officer of the rank of Secretary to

Government.”

25. A plain reading of Section 154 would make it clear

that the power of revision vests in (a) the State Government

and (b) the Registrar. The power is to call for and examine

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 29 of 61

the record of any inquiry or proceedings of any matter,

other than those referred to in sub-section (9) of section

149, where any decision or order has been passed by any

subordinate officer, and no appeal lies against such

decision or order. In case the decision or order is passed

by the Registrar, the Additional Registrar or a Joint

Registrar, revision shall lie to the State Government and if

it is passed by any other Officer, to the Registrar. The

power so vested is to satisfy itself as to the legality or

propriety of any such decision or order, and as to the

regularity of such proceedings and, if it appears to the

State Government or the Registrar, as the case may be,

that any decision or order so called for should be modified,

annulled or reversed, to pass such order as it may seem

just. Sub-section (2-A) inserted by way of amendment

17

provides that no revision application shall be entertained

against recovery certificate issued by the Registrar under

Section 101 or Certificate issued by the Liquidator under

Section 105 unless the applicant deposits with the

17

Maharashtra Act No.41 of 2000.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 30 of 61

concerned society, 50% amount of the total amount of

recoverable dues.

26. Sub-section (3) of Section 154 provides that no

application for revision shall be entertained if made after

two months of the date of communication of the decision

or order. However, the revisional authority is empowered

to entertain any such application made after such period,

if the applicant satisfies the revisional authority that he

had sufficient cause for not making the application within

such period.

27. The argument on behalf of the auction purchaser

is that the revision was not maintainable because the sale

confirmation certificate issued is not an order as

contemplated in Section 154 of the 1960 Act. In support of

its submission, the learned counsel for the auction

purchaser has relied on a decision of the Bombay High

Court in RamChandra Sitaram Mulik vs. Janata

Nagari Sahakari Patsanstha Ltd.

18

18

2018 (2) Mah LJ 245 : 2018 SCC OnLine Bom 484

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 31 of 61

28. Additionally, it was submitted on behalf of auction

purchaser that once the respondents 3 to 5 (i.e. legal

representatives of Panditrao Borse) were relegated to

remedy under Rule 107, their revision could not have been

entertained, particularly in absence of any deposit made

by them. In support of the aforesaid submission, reliance

was placed on a decision of the Bombay High Court in

Smt. Pratibha vs. State of Maharashtra & others

against which Special Leave to Appeal (C) No. 29256 of

2015 filed before this Court was summarily dismissed vide

order dated 26.10.2015. They also relied on a decision of

this Court in Deenadayal Nagari Sahakari Bank

Limited and another vs. Munjaji and others

19

.

29. We have accorded due consideration to the

submissions and have perused the decisions cited.

30. In RamChandra Sitaram Mulik (supra), a

petition under Article 227 of the Constitution of India was

filed before the High Court against an order passed by the

Joint Registrar dismissing a revision filed under Section

19

(2022) 7 SCC 594

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 32 of 61

154 of the 1960 Act. In that case, on 04.05.2010, the

property was auctioned by SRO pursuant to a recovery

certificate issued under the Act. On 30.08.2010, sale was

confirmed and made absolute in terms of Rule 107 (14) of

1961 Rules and, thereafter, a registered sale-deed was also

executed in favour of the auction purchaser. Revision was

filed in the year 2012 impugning the order dated

30.08.2010. The revision was dismissed inter alia on the

ground that the sale confirmation certificate issued by the

Deputy Registrar is not an order amenable to a revision

under Section 154 of 1960 Act. In that context, the High

Court held that sale of property could have been

challenged in terms contemplated under Rule 107 and

that the revision was not maintainable because sale

confirmation certificate issued by the Deputy Registrar

was not an order against which a revision would lie.

31. In Deenadayal Nagari Sahakari Bank Limited

(supra), a writ petition was filed before the High Court

impugning an order of the Joint Registrar dismissing a

revision under Section 154 of the 1960 Act against auction

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 33 of 61

proceeding and a sale certificate. As the borrower had not

availed its remedy under Rule 107 of the 1961 Rules, the

High Court held that the revision under Section 154 was

not maintainable; yet it set aside the auction sale and

cancelled the sale certificate on the ground that auction

sale/ sale was in breach of Rules 107 (11) (e), (f) (g) and (h)

of 1961 Rules. This Court set aside the order passed by

the High Court, inter alia, on the ground that once the High

Court found revision not maintainable under Section 154,

it ought not to have entered the merits particularly when

the borrower had not applied to the Recovery Officer to set

aside the sale on the grounds of material irregularity,

mistake or fraud in publishing or conducting it. In that

context, it was held that once the borrower had failed to

apply to the recovery officer to set aside the auction sale

on the grounds of material irregularity, mistake or fraud

in publishing or conducting the auction sale within a

period of 30 days from the date of sale of immovable

property, it was not open for him to challenge the sale on

the ground of material irregularity. Interestingly, in that

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 34 of 61

case, this Court specifically observed that there was no

breach of Rules 107 (11) (g) and (h) of the 1961 Rules and,

therefore, the decision of this Court in Shilpa Shares &

Securities (supra) was not applicable to the facts. In our

view, therefore, where there is infraction of Rule 107 (11)

(g) and (h) of 1961 Rules, the decision in Deenadayal

Nagari Sahakari Bank Limited (supra) would not be an

authority qua maintainability of revision under Section

154 of the 1960 Act.

32. In the case on hand, vide order dated 18.03.2005,

SRO confirmed the sale in favour of M/s. Adishakti

Developers. The order confirming the sale recites (a) that

pursuant to award dated 04.04.1994, SRO took

possession of the property; (b) that notice inviting tenders

was published in daily newspaper on 02.11.2004; (c) that

as no bids were received, a fresh notice was published on

24.12.2004, upon which, six bids were received; (d) those

bids were opened in the presence of the bidders on

29.01.2005; (e) thereafter, amongst those bidders present,

open bidding process was carried out and M/s. Adishakti

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 35 of 61

Developers, who was already the highest bidder, increased

its bid value to Rs.1,51,00,000 from Rs. 1,32,01,000; (f)

consequently, M/s Adishakti Developers’ bid, being the

highest, was accepted. The confirmation order also recites

the mode and manner of payment of the total

consideration of Rs. 1,51,00,000. Details of which are

extracted below:

“….The purchaser paid the total consideration amount of

1,51,00,000 (Rupees One Crore Fifty-One Lac only) as

follows:

Cheque Date Cheque/DD

No.

Cheque

Amount

25.01.2005 621768 1321000

25.01.2005 464153 1775000

25.01.2005 464154 2000000

29.01.2005 464155 189000

05.03.2005 618250 2500000

07.03.2005 73582 2315000

17.03.2005 618388 5000000

Total 15100000

”

After extracting the details of payment, SRO observed that

he did not receive any application from any interested party

or parties within 30 days from the date of sale or even till

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 36 of 61

date for setting aside the sale. In consequence, he passed

the confirmation order in the following terms:

“ORDER

M/s. Adishakti Developers are declared as highest

bidder for the sale of property of Shivsrushti Plot No.

21, Survey No. 14 (Part) C.T.C. No. 114, Chembur

Village, Taluka Kurla, Mumbai-400024 Total area

810 sq. mt. belonging to 1 Shri Vinayakrao

Shankarrao Borse and 1. Smt. Usha Panditrao Borse

2. Shri Vivek Panditrao Borse 3. Smt. Vaishali

Udaysingrao Gaikwad heirs and legal representatives

of Late Shri Panditrao Borse within the limit of

Municipal Ward bearing No. “L” Ward, Kurla, Nehru

Nagar, Kurla €, Mumbai 400071 within the

registration District and Sub-District of Mumbai City

and Kurla Suburban and the sale…..confirmed under

Section 156 of Rule 107(14)(v) of Maharashtra Co-

operative Societies Rule.

Mumbai

Dated: 18.03.2005

Sd/-

R.Y. Kulkarni

Special Recovery Sale Officer

(Grade I) Co-Op. Department Under

Section 156 Rule 107 MCS Act

The Mahanagar Co-Op. Bank Ltd.

Lalbaug, Mumbai 400012.”

33. Pursuant to the sale confirmation order,

possession was handed over to M/s. Adishakti Developers

on 18.03.2005.

34. Aggrieved by the sale confirmation order and

delivery of possession, the legal representatives of

Panditrao Borse filed Writ Petition No. 5401 of 2005 before

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 37 of 61

the High Court which was disposed of vide order dated

26.09.2005 reproduced below:

“It is the case of the Petitioners that though

there was an award against her late husband, the

property which is sought to be attached is exclusively

belonging to her pursuant to order of the State

Government dated 8.4.2002. Earlier, it is pointed out

that the order of taking possession was passed on

10.3.2005 and the possession in fact was taken back

on 21.3.2005. The order of attachment is of 16.4.2004

which is after the property was allotted to the

Petitioner herein. It is Petitioner’s further case that on

23.4.2004 the Petitioner was put in possession.

Rule 107 of the M.C.S. Rules, provides a

complete procedure of the person aggrieved to file

objections. Once that be the case, this will not be a fit

case for this court to exercise extra ordinary

jurisdiction. Petitioner has remedy at law. Hence,

petition rejected.”

35. Sub-rules (13) and (14) of Rule 107 of 1961 Rules

are as follows:

“(13) (i) Where immovable property has been sold by

the Sale Officer, any person either owning such

property or holding any interest therein by virtue of a

title acquired before such sale may apply to have the

sale set aside on his depositing with the Recovery

Officer:-

(a) for payment to the purchaser a sum equal to 5

per cent of the purchase money; and

(b) for payment to the applicant, the amount of

arrears specified in the proclamation of sale as that

for the recovery of which the sale was order together

with interest thereon and the expenses of

attachment, if any, and sale and other costs due in

respect of such amount, less amount which may

since the date of such proclamation have been

received by the applicant.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 38 of 61

(ii) If such deposit and application are made within

thirty days from the date of sale, the Recovery Officer

shall pass an order setting aside the sale and shall

repay to the purchaser, the purchase money so far as

it has been deposited, together with the 5 per cent

deposited by the applicant:

Provided that if more persons than one have made

deposit and application under this sub-rule, the

application of the first depositor to the officer

authorised to set aside the sale, shall be accepted.

(iii) If a person applies under sub-rule (14) to set aside

the sale of immovable property, he shall not be

entitled to make an application under this sub-rule.

(14) (i) At any time within thirty days from the date of

the sale of immovable property, the applicant or any

person entitled to share in a rateable distribution of

the assets or whose interests are affected by the sale,

may apply to the Recovery Officer to set aside the sale

on the ground of a material irregularity or mistake or

fraud in publishing or conducing it:

Provided that no sale shall be set aside on the ground

of irregularity or fraud unless the Recovery Officer is

satisfied that the applicant has sustained substantial

injury by reason of such irregularity, mistake or

fraud.

(ii) If the application be allowed, the Recovery Officer

shall set aside the sale and may direct a fresh one.

(iii) On the expiration of thirty days from the date of

sale, if no application to have the sale set aside is

made or if such application has been made and

rejected, the Recovery Officer shall make an order

confirming the sale:

Provided that if he shall have reason to believe that

the sale ought to be set aside notwithstanding that no

such application has been made or on grounds other

than those alleged in any application which has been

made and rejected, he may, after recording his

reasons in writing, set aside the sale.

(iv) Whenever the sale of any immovable property is

not so confirmed or is set aside, the deposit or the

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 39 of 61

purchase money, as the case may be, shall be

returned to the purchaser.

(v) After the confirmation of any such sale, the

Recovery Officer shall grant a certificate of sale

bearing his seal and signature to the purchaser, and

such certificate shall state the property sold and the

name of the purchaser.”

36. Sub-rule (13) of Rule 107 enables any person either

owning such property or holding any interest therein by

virtue of a title acquired before the auction sale to have the

sale set aside on his depositing with the Recovery Officer:

(a) for payment to the purchaser a sum equal to 5% of

the purchase money; and

(b) for payment to the applicant, the amount of arrears

specified in the proclamation of sale as that for the

recovery of which the sale was ordered together with

interest thereon and the expenses of attachment, if

any, and sale and other costs due in respect of such

amount, less amount which may since the date of

such proclamation have been received by the

applicant.

Clause (iii) of sub-rule (13) of Rule 107 of 1961 Rules

makes it clear that that if a person applies under sub-rule

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 40 of 61

(14) to set aside the sale of movable property, he shall not

be entitled to make an application under this sub-rule.

37. A plain reading of sub-rule (13) of Rule 107 of 1961

Rules makes it clear that an application therein can be

maintained within 30 days from the date of sale and

subject to deposit as contemplated therein. Admittedly, in

the case on hand, neither such application was submitted,

nor such deposit was made.

38. In so far as sub-rule (14) of Rule 107 of 1961 Rules

is concerned, it confers a right on the applicant or any

person entitled to a share in a rateable distribution of the

assets, or whose interests are affected by the sale, to apply

to the Recovery Officer, within 30 days from the date of the

sale of immovable property, to set aside the sale on the

ground of material irregularity or mistake or fraud in

publishing or conducting it. Admittedly, no such

application was filed.

39. The High Court had dismissed the writ petition

against confirmation of sale on the ground that there is

alternative remedy available. No doubt, the High Court

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 41 of 61

cited Rule 107 as an alternative remedy, but it did not rule

out remedy, if any, available under Section 154 of the 1960

Act. The legal representatives of the defaulter chose to file

a revision under Section 154 which confers wide powers

on the State Government or the Registrar to call for and

examine the record of any inquiry or proceeding of any

matter, other than those referred to in sub-section (9) of

section 149, where any decision or order has been passed,

and against which no appeal lies, for the purpose of

satisfying itself as to the legality or propriety of any such

decision or order, and as to the regularity of such

proceeding. Importantly, revisional powers conferred by

the Statute are not subject to any Rules made under the

Statute. Further, remedies available under sub-rules (13)

and (14) of Rule 107 are not in the nature of an appeal to

set aside any decision or order rather it is an application

to set aside sale on grounds specified therein. In our view,

therefore, the revisional power conferred by Section 154 is

extremely wide which would include examining the legality

and propriety of a proceeding qua confirmation of sale.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 42 of 61

Moreover, such power, in our view, cannot be limited by

the Rules framed under the Statute. Thus, in our view,

merely because the applicant had not taken recourse to

the remedy available under sub-rules (13) and (14) of Rule

107 of 1961 Rules, the State Government or the Registrar

were not denuded of their power to call for the records of

any enquiry or proceeding of any matter, where any

decision or order has been passed by a subordinate officer,

to satisfy themselves as to the legality or propriety of any

such decision or order, and as to the regularity of such

proceeding. Another contention against the

maintainability of revision is non-deposit of the decretal

amount, which, in our view, is misconceived as that would

be required under sub-section (2A) of Section 154 when

revision is against the recovery certificate. Here, the

revision was against the confirmation of sale. Therefore, if

the sale confirmation is void, being in teeth of the

provisions of extant 1961 Rules, a revision to annul the

same would not require a pre-deposit as contemplated in

sub-section (2A) of Section 154 of the 1960 Act. For the

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 43 of 61

aforesaid reasons, we are of the view that the revision

preferred by the legal representatives of the borrower was

maintainable under Section 154 of the 1960 Act.

40. At this stage, we shall consider another submission

made before us, which is, that Special Recovery Sale

Officer (SRO), Court I, who passed the confirmation order,

being not an officer subordinate to the Registrar, revision

would lie not to the Registrar but to the State Government.

41. To address the above issue, we shall take note of

certain provisions of the 1960 Act and 1961 Rules. Section

2 (24) of 1960 Act defines “Registrar” as a person

appointed to be the Registrar of Co-operative Societies

under this Act. Section 3 of 1960 Act provides that State

Government may appoint a person to be the Registrar of

Co-operative Societies for the State; and may appoint one

or more persons to assist such Registrar with such

designations and in such local areas or throughout the

State, as it may specify in that behalf, and may, by general

or special order, confer on any such person or persons all

or any of the powers of the Registrar under this Act. The

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 44 of 61

person or persons so appointed to assist the Registrar and

on whom any powers of the Registrar are conferred shall

work under the general guidance, superintendence and

control of the Registrar. They shall be subordinate to the

Registrar, and subordination of such persons amongst

themselves shall be such as may be determined by the

State Government.

42. Section 156 deals with the Registrar’s power to

recover certain sums by attachment and sale of property.

Sub-section (1) of section 156 provides that the Registrar

or any officer subordinate to him and empowered by him

in this behalf or an officer of such society, as may be

notified by the State Government, who is empowered by

the Registrar in this behalf, subject to such rules as may

be made by the State Government, but without prejudice

to any other mode of recovery provided by or under this

Act, recover (a) any amount due under decree or order of a

Civil Court, obtained by a society; (b) any amount due

under a decision, award or order of the Registrar, Co-

operative Court or Liquidator or Co-operative Appellate

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 45 of 61

Court; (c) any sum awarded by way of costs under this Act;

(d) any sum ordered to be paid under this Act, as a

contribution to the assets of the Society; (e) any amount

due under a certificate granted by the Registrar, under

sub-section (1) or (2) of section 101 or under sub-section

(1) of section 137; or section154B-29 together with

interest, if any, due on such amount or sum and the costs

of process according to the scales of fees laid down by the

Registrar, from time to time, by the attachment and sale

or by sale without attachment of the property of the person

against whom such decree, decision, award or order has

been obtained or passed.

43. Section 165 of the 1960 Act confers power on the

State Government to make rules for the conduct and

regulation of the business of such society or class of

societies, and for carrying out the purposes of this Act.

Sub-section (2) of section 165, inter alia, provides that

without prejudice to the generality of the foregoing power,

such rules may, (lx) prescribe the procedure to be followed

for attachment and sale of property, for the realization of

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 46 of 61

any security given by a person in the course of execution of

proceedings; and (lxviii) prescribe, in case of sale of

immovable property under Chapter XI -- (a) the procedure for

proclamation and conduct of the sale and the conditions on

which an attempt of sale may be abandoned; (b) xxx (not

relevant) (c) the procedure for the receipt of deposit and

disposal of the proceeds of sale; (d) the procedure for a

resale, if, an attempted sale is abandoned or the purchase

money is not deposited within the prescribed time and the

penalty to be levied against the purchaser who fails so to

deposit the purchase money.

44. Rule 107 provides for the procedure of attachment

and sale of property under Section 156. Clause (iii) of sub-

rule (14) of Rule 107 of 1961 Rules provides that on the

expiration of 30 days of sale, if no application to have the

sale set aside is made or if such application has been made

and rejected, the Recovery Officer shall make an order

confirming the sale. The Recovery Officer is defined in Rule

2(h) of 1961 Rules as follows:

“recovery officer” means any person empowered to

exercise, in any district, the powers of the Registrar

under Section 156”.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 47 of 61

Upon consideration of the aforesaid provisions, in our

view, the Recovery Officer is an Officer who exercises the

power of the Registrar to effect recovery under Section 156

of the 1960 Act. As per Section 156 he may or may not be

an officer subordinate to the Registrar. As this point was

not discussed by the High Court, we do not wish to address

the aforesaid issue and decide whether he was an officer

subordinate to the Registrar. Moreover, if we conclude

that sale confirmation was void rendering the sale a

nullity, nothing much turns on the said issue.

Issue Nos. 3 & 4

45. As issues 3 and 4 are interrelated we shall deal

with them together. While deciding issue no.2 (supra), we

have taken note of Clause (lxviii) of sub-section (2) of

Section 165 of the 1960 Act empowering framing of rules,

inter alia, prescribing the procedure for a resale, if, an

attempted sale is abandoned, or the purchase money is not

deposited within the prescribed time. We shall now

consider the Rules framed in that behalf.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 48 of 61

46. Rule 107 (11) (g) (h) (i) (j) and (k) of 1961 Rules

provides as under:

(i) Rule 107 (11) (g) provides that a sum of money

equal to 15 per cent of the price of the immovable

property shall be deposited by the purchaser in the

hands of the Sale Officer (with effect from

30.08.2014, it is ‘Recovery Officer’) at the time of

the purchase, and in default of such deposit, the

property shall forthwith be re-sold; provided that

where the applicant is the purchaser and is entitled

to set off the purchase money under clause (k), the

sale officer shall dispense with the requirements of

this clause.

(ii) Rule 107(11) (h) provides that the remainder of the

purchase money and the amount required for the

general stamp for the sale certificate shall be paid

within fifteen days (with effect from 30.08.2014, it

is 30 days) from the date of sale: provided that the

time for payment of the cost of the stamp may, for

good and sufficient reasons, be extended at the

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 49 of 61

discretion of the Recovery Officer up to thirty days

(with effect from 30.08.2014, it is forty five days)

from the date of sale: provided further that in

calculating the amounts to be paid under this

clause, the purchaser shall have the advantage of

any set off to which he may be entitled under

clause (k).

(iii) Rule 107(11) (i) provides that in default of payment

within the period mentioned in the last preceding

clause, the deposit may, if the Recovery Officer

thinks fit, after defraying the expenses of the sale,

be forfeited to the State Government and the

defaulting purchaser shall forfeit all claims to the

property or to any part of the sum for which it may

subsequently be sold.

(iv) Rule 107 (11) (j) provides that every resale of

immovable property in default of payment of the

amounts mentioned in clause (h) within the period

allowed for such payment shall be made after the

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 50 of 61

issue of a fresh proclamation in the manner and

for the period herein before prescribed for the sale.

(v) Rule 107 (11) (k) provides that where an applicant

purchases the property, the purchase money and

the amount due on the decree shall be set off

against one another, and the Recovery Officer shall

enter up satisfaction of the decree in whole or in

part accordingly.

47. A conjoint reading of clauses (g) to (k) of sub-rule

(11) of Rule 107 of 1961 Rules make it clear that if 15 per

cent of the price of the immovable property is not deposited

at the time of the purchase, the property shall forthwith be

re-sold. If the said amount of 15 per cent is deposited, in

terms of the provisions of Clause (h), the remainder of the

purchase money and the amount required for the general

stamp for the sale certificate is to be paid within fifteen

days (w.f. 30.08.2014, it is 30 days) from the date of sale.

The first proviso to clause (h) gives discretion to the

Recovery Officer to extend the time for payment of the cost

of the stamp, for good and sufficient reasons, up to 30 days

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 51 of 61

from the date of sale. However, no such discretion is vested

in the Recovery Officer to extend the time for making

payment of remainder of the purchase money. Rather,

clause (i) provides for consequences of non-payment.

Clause (i) of sub-rule (11) of Rule 107 states that if the

payment is not made within the period mentioned in the

preceding clause, the deposit may be forfeited to the State

Government and the defaulting purchaser shall forfeit all

claims to the property or to any part of the sum for which

it may subsequently be sold. Clause (j) further clarifies

that every resale of immovable property in default of

payment of the amounts mentioned in clause (h) within the

period allowed for such payment, shall be made after the

issue of a fresh proclamation in the manner and for the

period herein before prescribed for the sale. In our view,

therefore, there is no discretion vested in the Recovery

Officer to extend the period for deposit of remainder of the

purchase money. Not only that, if the remainder of the

purchase money is not deposited, the amount already

deposited may be forfeited. Additionally, it is provided, the

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 52 of 61

property would have to be re-sold and for which a fresh

proclamation shall be necessary.

48. The aforesaid provisions were considered and

interpreted by this Court in Shilpa Shares & Securities

(supra). In the context of Rule 107 (11)(g)(h) of 1961 Rules,

this Court held that if full purchase money is not deposited

within the prescribed period, the sale is a nullity and not

a mere irregularity. While holding so, this Court placed

reliance on earlier decisions in Manilal Mohanlal Shah

and others vs. Sardar Sayed Ahmed Sayed Mahmad

and another

20

and Balram v. Ilam Singh and others

21

.

49. By relying on Shilpa Shares & Securities

(supra), on behalf of the legal representatives of the

judgment-debtor, it has been argued that even if the

revisional decision is bad for want of jurisdiction, as is

alleged, the auction sale being void, a nullity, could be

discarded even in a collateral challenge to it, and therefore,

the view taken by the High Court as regards auction sale

being void is not liable to be interfered with.

20

AIR 1954 SC 349, (1954) 1 SCC 724

21

1996 (5) SCC 705

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 53 of 61

50. Per contra, on behalf of the auction purchaser

submission is that the auction purchaser had deposited

more than 15% on the date of auction sale and later, he

deposited the entire amount within the period allowed by

the Recovery Officer. Further, the amount required to be

deposited was for the benefit of the Bank. Thus, once

neither the borrower nor the Bank raised any objection in

respect of subsequent deposits, the right to raise such an

objection would be deemed waived. Thus, it cannot be a

ground to hold the sale void. In support of the above

submission, learned counsel for the auction purchaser

placed reliance on a decision of this Court in Sri

Siddheshwara Co-operative Bank Ltd. (supra).

51. In Sri Siddheshwara Co-operative Bank Ltd

(supra), the borrower committed default in repayment of a

Housing Loan. Despite several reminders, when the

borrower failed to make payment of the loan amount, the

Bank issued a demand notice under Section 13(2) of the

SARFAESI Act, 2002 on 30.06.2005. On failure to pay, on

18.12.2005 the Bank published a notice to auction the

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 54 of 61

secured assets. The auction purchaser made deposit of

Rs.90,000 towards earnest money on 18.12.2005 itself

and on 11.01.2006 public auction was conducted. The bid

of the auction purchaser of Rs. 8,50,000 was accepted,

being the highest bid. The auction purchaser thereafter

paid Rs. 1,45,000 towards 25% of the sale consideration.

However, the auction purchaser did not make payment of

remaining 75% within 15 days of the confirmation of sale

in his favour. Rather, he paid the balance sale price in

installments spread over a period extending up to

13.11.2006. On 16.11.2006, the Bank issued the sale

certificate in favour of the auction purchaser. As sale

proceeds fell short of the total outstanding amount against

the borrower, the Bank moved the Joint Registrar of Co-

operative Societies for recovery of the outstanding amount.

In those proceedings, an ex parte award for a sum of Rs.

2,37,038 was passed. The Bank applied for execution of

the award somewhere in 2011. At that stage, the borrower

challenged the sale certificate through writ petition(s). The

Single Judge Bench as well as Division Bench of the High

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 55 of 61

Court quashed the sale certificate and the demand notice,

inter alia, on the ground that mandatory requirement of

Rule 9 was not followed. The matter came to this Court.

The issue which arose for consideration there was as to

what would be the consequence of an infraction of Rule

9(4) of the Security Interest (Enforcement) Rules, 2002

22

i.e., whether it would vitiate the auction.

52. Rule 9(4) of the Enforcement Rules provides that

the balance amount of purchase price payable shall be

paid by the purchaser 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 parties. Rule 9 (5) thereof provided that if the balance

amount of purchase price is not paid as required under

sub rule (4), then the deposit shall be forfeited 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 which it may subsequently be sold.

22

Hereinafter referred to as Enforcement Rules.

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 56 of 61

53. Interpreting the said provisions, in Sri

Siddheshwara Co-operative Bank Ltd (supra), this

Court held that the period of fifteen days in Rule 9(4) is not

that sacrosanct, and it is extendable if there is a written

agreement between the parties for such extension. The

Court went on to observe that Enforcement Rules do not

prescribe any form for such agreement except that it must

be in writing. Consequently, it held:

“14. … The use of term ‘written agreement’ means a

mutual understanding or an arrangement about

relative rights and duties by the parties. For the

purposes of Rule 9(4), the expression “written

agreement” means nothing more than a manifestation

of mutual assent in writing. The word ‘parties’ for the

purposes of Rule 9(4) we think must mean the

secured creditor, borrower and auction purchaser”.

The Court thereafter went on to hold: -

“19. There is no doubt that Rule 9(1) is mandatory but

this provision is definitely for the benefit of the

borrower. Similarly, Rule 9(3) and Rule 9(4) are for the

benefit of the secured creditor (or in any case for the

benefit of the borrower). It is settled position in law

that even if a provision is mandatory, it can always be

waived by a party (or parties) for whose benefit such

provision has been made. The provision in Rule 9(1)

being for the benefit of the borrower and the

provisions contained in Rule 9(3) and Rule 9(4) being

for the benefit of the secured creditor (or for that

matter for the benefit of the borrower), the secured

creditor and the borrower can lawfully waive their

right. These provisions neither expressly nor

contextually indicate otherwise. Obviously, the

question whether there is waiver or not depends on

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 57 of 61

facts of each case and no hard and fast rule can be

laid down in this regard.”

54. In our view, the aforesaid judgment is of no help to

the auction purchaser because in the case on hand the

judgment-debtor(s), including the legal heirs, by their

conduct, or otherwise, had not given up their right to

challenge the validity of the auction. Besides, there is no

provision pari materia Rule 9(4) of Enforcement Rules in

Rule 107 of 1961 Rules, enabling extension of time to

deposit the balance amount.

55. Further, the decision of this Court in Shilpa

Shares & Securities (supra) still holds the field. In such

circumstances, the view taken by the High Court that

confirmation of the auction sale was void as the remainder

payment was not made within the period prescribed by the

1961 Rules cannot be faulted. Moreover, provisions of the

nature as incorporated in Rule 107(11)(h) are not only for

the benefit of the creditor but they serve a public purpose

to maintain the sanctity of public auctions else non-

serious bidders would participate to manipulate the price

to be discovered in a public auction, which may,

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 58 of 61

ultimately, delay the whole process. For the aforesaid

reasons, we are of the considered view that clauses (g) and

(h) of sub-rule (11) of Rule 107 of 1961 Rules are

mandatory and serve a larger purpose not limited to the

interest of the creditor. We further hold that there is

nothing on record to indicate that the benefit of the said

provision has been waived by the borrower including his

heirs. In view of the discussion above, we do not find any

fault in the order passed by the High Court holding the

sale confirmation as null and void.

Issue No.5

56. As we have already held that the sale confirmation

was bad in law and a nullity, the question whether the

property in question was liable to be sold is rendered

academic, and therefore, we do not propose to address the

same. The same is, therefore, kept open for consideration

at an appropriate stage in an appropriate proceeding.

Issue No.6

57. Now, the question that arises for our consideration

is as to what would have been the appropriate order of the

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 59 of 61

High Court on finding the auction sale void i.e., being in

violation of the provisions of Rule 107 (11) (g) & (h) of 1961

Rules. The operative portion of High Court’s order reads

thus:

“(i) Writ Petition Nos.393 of 2010 and 1779 of 2010

are dismissed;

(ii) Respondent Nos. 4 to 6 in Writ Petition No. 393

of 2010 (who are Respondent Nos. 4 to 6 even in

the companion petition) shall deposit a sum of Rs.

79,44,042 with Mahanagar Co-operative Bank

Limited (Respondent No.2 in these petitions) within

a period of 12 weeks from today;

(iii) Mahanagar Co-operative bank limited shall

refund a sum of Rs. 1.51 crores to M/s. Adishakti

Developers with such interest as may have accrued

from time to time on the surplus amount of Rs.

71,55,958 held by them so far;

(iv) M/s. Adishakti will have liberty to adopt such

steps as may be permissible to them in law for

recovering damages, if any, suffered by them as a

result of cancellation of the auction sale on an

application made four years after such auction

sale;

(v) Writ Petition No. 1543 of 2009 and Appellate

Side Writ Petition No. 6544 2009 are dismissed;

(vi) No order as to costs.”

58. It is not in dispute that the auction purchaser i.e.,

M/s. Adhishakti Developers had deposited in total a sum

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 60 of 61

of Rs. 1,51,00,000 in terms permitted by the Recovery

Officer. In such circumstances, the auction purchaser

cannot be penalized for the fault of the Recovery Officer.

Likewise, the Bank cannot be penalized by letting them

forgo the interest which has accrued, and which continues

to accrue under the award. Further, Rule 107 (11) (j)

provides for a resale of the property on default in payment

of the amount(s) within the period specified in clause (h)

and such sale is to be made after issuing a fresh

proclamation. Consequently, taking a conspectus of the

facts and law, we are of the view that ends of justice would

be served if the order of the High Court is modified and

substituted by the following order:

ORDER

The auction sale held on 29.01.2005 is set aside.

Consequently, the confirmation of sale, dated 18.03.2005,

is declared null and void. The subject property shall be put

to a fresh auction in terms of Rule 107(11) (j) of 1961 Rules

for realization of the amount payable under the award. The

Bank shall refund the amount deposited by M/s Adishakti

SLP (C) Nos. 12343-12346; 12617 & 12591/2018 Page 61 of 61

Developers along with interest at the rate of 6% per annum

from the date of deposit till the date of repayment. The writ

petitions before the High Court shall stand disposed of in

the aforesaid terms. However, it is clarified that subject to

the right of M/s Adishakti Developers to get a refund under

this order, this order shall be without prejudice to the right

of the Bank (decree /award holder) and the judgment

debtor(s) including their legal representatives to arrive at a

settlement/ compromise regarding the dues payable under

the award and file such compromise/ settlement before the

recovery officer for discharge of the recovery proceedings.

59. These appeal(s) are disposed of in the above terms.

60. All pending applications, if any, shall also stand

disposed of.

61. There shall be no order as to costs.

….............................................J.

(Pamidighantam Sri Narasimha)

................................................J.

(Manoj Misra)

New Delhi;

February 25, 2026