Calcutta High Court Upholds Auction Sale: Borrowers' 23-Year Litigation to Stall Recovery Finally Ends

Case Reference

Rajesh Kumar Gupta & Ors. Vs High Rank Estate Advisory Pvt. Ltd. & Anr.
Court: Calcutta High Court
Tribunal Below: Debts Recovery Appellate Tribunal (DRAT), Kolkata
**Appeal No.😗* 112 of 2022

Background and Context

In a significant ruling reinforcing the integrity of debt recovery processes, the Calcutta High Court dismissed a civil revisional application filed by borrowers who had spent over two decades attempting to obstruct the completion of an auction sale of their mortgaged property. The core issue before the Court was whether the Debts Recovery Appellate Tribunal (DRAT), Kolkata, had correctly reversed the order of the Debts Recovery Tribunal (DRT)-3 and restored the Recovery Officer's original directions concerning the auction sale.

The matter traces its origins to a mortgage executed in 2003, when petitioners No. 1 and 2 mortgaged a property in favour of the bank, with petitioners No. 3 and 4 acting as guarantors. Upon default in repayment, the bank secured an ex-parte recovery certificate under O.A. No. 13 of 2006 before the Debts Recovery Tribunal, Kolkata-3, and subsequently initiated recovery proceedings in R.P. Case No. 44 of 2009.

The Auction Sale and Initial Objections

During the course of the recovery proceedings, the mortgaged property situated at premises No. 23/1-A, Barrackpore Trunk Road, P.S. Chitpur, Kolkata – 700 002 was put up for public auction. The property was acquired by the highest bidder — the auction purchaser, High Rank Estate Advisory Pvt. Ltd. — for a sum of Rs. 23.61 lakhs in 2010.

Following the confirmation of the sale, petitioners No. 3 and 4 filed applications before the Recovery Officer contending that the property had been sold at a gross undervalue. This objection was raised after the sale had already been confirmed — a fact that would later prove critical to the outcome of the case.

The Recovery Officer, by his order dated 10 January 2012, rejected the objections raised by the certificate debtors. The relevant extract from the order reads:

"43/10.01.2012 No one appears for the CDs... It is seen from the record that today is set for issue of final order in the case. On perusal of the affidavits of the CDs, the purchaser and the rebuttal of the CHB, I am of the opinion that sufficient time and opportunity has been given to the CDs to make payment for the debt, but they have not utilised the opportunity and repaid the dues till date. There is no reason to delay the sale process any longer. The plea of the CDs No. 3 & 4 is thus rejected and disposed off..."

The Recovery Officer further directed the Receiver and the concerned bank to arrange for transfer of ownership, registration of the property in favour of the successful auction purchaser, and handover of possession. Police assistance from the Deputy Commissioner of Police (North), Kolkata Police was also requisitioned through the Officer-in-Charge, Police Station Chitpur, for delivery of physical possession.

A Prolonged Journey Through Tribunals

What followed was an extraordinarily protracted sequence of appeals and remands across multiple forums:

  1. Petitioners No. 3 and 4 challenged the Recovery Officer's order by filing Appeal No. 1 of 2016 before the DRT, which was disposed of on 10.07.2012.
  2. Both the petitioners and the auction purchaser filed separate appeals, which were disposed of on 28.04.2014 with a direction for fresh adjudication by DRT-3.
  3. DRT-3 adjudicated afresh on 08.12.2014, against which both respondents again approached the DRAT.
  4. The DRAT, by its order dated 12.05.2017, directed DRT-3 to adjudicate the matter once more.
  5. DRT-3 ultimately allowed the appeal filed by the petitioners and set aside the Recovery Officer's order by its order dated 05.10.2020, directing fresh valuation and a new transparent auction.
  6. The auction purchaser challenged this order before the DRAT in Appeal No. 112 of 2022.
  7. The DRAT, by its judgment dated 22 June 2023, allowed the appeal of the auction purchaser and restored the Recovery Officer's original order.

It was the DRAT's order dated 22 June 2023 that was brought before the Calcutta High Court in the present civil revisional application.

The DRAT's Key Findings

The DRAT's reasoning, which ultimately found favour with the High Court, rested on a fundamental legal point: the application filed before the Recovery Officer was itself not legally maintainable. The relevant extract from the DRAT's judgment reads: