Dr. Mandeep Sethi vs. UOI & Ors. AIR 2013 P & H 82
An instruction issued by the Government of India, Ministry of Finance directing the Presiding Officers of the Debt Recovery Tribunals to conduct all auctions electronically was subject matter of challenge.
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 confers power u/s. 29 of the said Act to the Debt Recovery Tribunal to sell the property of the certificate debtors in terms of 2nd and 3rd Schedules to the Income-tax Act, 1961 and also Income Tax (Certified Proceedings) Rules, 1962. Part-II of 2nd Schedule to the Income Tax Act deals with attachment and sale of immovable property. Rule 56 of the Rules contemplates sale by public auction.
The counsel for the petitioner vehemently argued that e-auction i.e. where the intending bidders give their bids not in person, but through the medium of electronics on computer in a prescribed format, is not a public auction within the meaning of Rule 56 of the Rules. In support of the argument, he relied upon the judgment of Hon’ble Supreme Court in Chairman and Managing Director, SIPCOT, Madras & Ors. vs. Contromix Pvt. Ltd. By its Director (Finance) Seetharaman, Madras & anr. AIR 1995 SC 1632. On the other hand, counsel for the respondents relied upon sections 4 and 10-A of the Information Technology Act, 2000 to contend that the electronic format is a substitute for anything which shall be required to be done in writing or in the typewritten or in the printed form.
The High Court held that there is no provision in the Statute which confers jurisdiction on the Central Government to issue directions to the Debt Recovery Tribunals. Section 35 of the Act confers powers on the Central Government to publish an order in the official gazette not inconsistent with the provisions of the Act, if it appears to be necessary or expedient for removing a difficulty. Even such an order could be passed within three years from the date of commencement of the Act. Therefore, the Central Government was not competent to issue any directions to the Debt Recovery Tribunals under the provisions of the Statute. In M/s. Raman and Raman Ltd. vs. The State of Madras & Ors. AIR 1959 SC 694, the Supreme Court while examining Section 43-A of the Motor Vehicles Act, 1939 held that the power with the Government to issue instructions to dispose of cases in a particular way, would be destructive of the entire judicial process envisaged by the Act. The circular at best be treated as a suggestion to conduct auctions electronically, which the Debt Recovery Tribunals may consider to conduct free, fair and transparent auctions. Therefore, the said circular is, in fact, only giving an option to the Debt Recovery Tribunals to conduct the sale through the preferred mode of e-auction. Though the circular was not within the jurisdiction of the Central Government, keeping in mind the salutary purpose, which it seeks to achieve, the process of e-auction is a valid option. The Debt Recovery Tribunals are therefore, directed to adopt the process of e-auction in the case of properties, which are being sold in municipal areas, where the computer knowing personnel would be available to participate in the process. It should be treated as a preferred mode of auction. But in respect of properties situated in rural areas, where the exposure to the computers is less and it is the discretion of the Debt Recovery Tribunals to order e-auction or otherwise. Even after adopting e-auction, if the Tribunals find that the response is not adequate or for any other reason, the Tribunals are free to choose such method it may consider appropriate for sale of property of the defaulters. The petition was disposed off.
