Court’s decision
The Bombay High Court allowed all connected writ petitions filed by auction purchasers and set aside the revisional authority’s order that had declared the auction sale void. The Court held that the statutory timelines under Rule 107(11)(g) and (h) of the Maharashtra Cooperative Societies Rules are intrinsically part of the execution proceedings. Therefore, the delay in depositing the remaining 85% of the bid amount—caused solely due to the Covid-19 pandemic—stood fully protected under the Supreme Court’s suo motu orders exempting the period from 15 March 2020 to 14 March 2021 from computation of limitation in all “suits, appeals, applications or proceedings.”
Facts
The dispute arises out of auction sales conducted in March 2020 under execution proceedings initiated pursuant to a recovery certificate under the Maharashtra Cooperative Societies Act. The auction was held on 17 March 2020, and the purchasers deposited the mandatory 15% of the bid amount on the same day. However, due to nationwide lockdown and financial disruption caused by the Covid-19 outbreak, they could not deposit the remaining 85% within the time prescribed under Rule 107(11)(h). They therefore sought an extension from the Special Recovery Officer, who granted it after considering the unprecedented situation. The purchasers deposited the balance amounts in May 2020 and the sale was subsequently confirmed by the District Deputy Registrar.
Issues
The High Court considered the following central questions:
- Whether the timelines for depositing auction amounts under Rule 107(11)(g) and (h) constitute part of a “proceeding” covered by the Supreme Court’s Covid-related exclusion orders.
- Whether the delay in depositing the 85% balance amount during the pandemic could be condoned in light of the nationwide suspension of limitation.
- Whether the revisional authority erred in declaring the auction void and setting aside the confirmed sale despite the purchasers depositing the entire amount during the exempted period.
- Whether the recovery and confirmation process complied with statutory requirements.
Petitioner’s arguments
The petitioners argued that the Supreme Court, in suo motu proceedings during Covid-19, directed exclusion of the period from 15 March 2020 to 14 March 2021 for computing limitation in all proceedings under general and special laws. They contended that the auction deposit timelines are part of an execution proceeding and cannot be treated as mere contractual obligations. Since the balance amounts were deposited in May 2020—squarely within the excluded period—the purchasers were protected. It was submitted that the Revisional Authority mechanically ignored the Supreme Court’s order and incorrectly invalidated an auction that had already been lawfully confirmed after due hearing.
Respondent’s arguments
The respondent–borrower argued that Rule 107(11)(h) contains strict timelines, and failure to deposit the balance amount within the prescribed period renders the auction void. They contended that the Supreme Court’s exclusion order applied only to limitation periods for initiating legal proceedings and not to statutory timelines for completing auction formalities. According to the borrower, the deposit deadlines were mandatory, not directory, and the Special Recovery Officer had no authority to extend them. It was therefore asserted that the revisional authority had rightly struck down the sale confirmation as being contrary to the Rules.
Analysis of the law
The Court examined Clause 2 of the Supreme Court’s suo motu order, noting that the expression “suit, appeal, application or proceedings” is intentionally broad. It held that execution processes—including statutory timelines for auction deposits—are a part of legal proceedings. Each step, including payment of instalments, issuance of proclamation, confirmation of sale and registration of the deed, is interlinked and carries legal consequences. Thus, the act of depositing money under Rule 107(11)(g) and (h) is not a private act but a compulsory step within a legal framework. The statutory nature of the timeline brings it within the protective ambit of the Supreme Court’s exclusion order.
Precedent analysis
Supreme Court Suo Motu Writ Petition No. 3 of 2020
This landmark order was central to the High Court’s reasoning. It excluded the entire period from 15 March 2020 to 14 March 2021 for computation of limitation across all proceedings. The High Court relied on this principle to hold that the pandemic-induced delay in deposit stood automatically protected.
Execution proceedings jurisprudence
The Court drew from established principle that auction steps under execution are not contractual but statutory. Therefore, compliance timelines form an essential component of legal proceedings.
Rule 107 jurisprudence
Prior decisions have held that auction steps under this Rule are sequential and interdependent; failure at one stage terminates the process. Here, the Supreme Court’s exclusion order preserved compliance despite delay.
Court’s reasoning
The Court held that the timelines under Rule 107(11)(g) and (h) are not mere conditions but vital components of the statutory execution process. It observed that:
- The Supreme Court intended to protect litigants from adverse consequences of the pandemic.
- The term “proceedings” must be given its ordinary, wide meaning.
- Deposits under Rule 107 form part of the execution proceedings and therefore fall within the protected period.
- The petitioners deposited the full amount during the excluded period.
Accordingly, the Revisional Authority erred by ignoring the Supreme Court’s exclusion direction. The Court concluded that the auction stood validly completed, and the revisional order had to be quashed.
Conclusion
The Bombay High Court set aside the revisional authority’s order and restored the confirmation of the auction sale. The Court held that the purchasers had complied with statutory deposit requirements within the period protected by the Supreme Court’s Covid-19 exclusion order. Therefore, no illegality tainted the sale. All connected petitions were allowed, and the Rule was made absolute. The judgment reaffirms the principle that equitable relief must be granted where litigants are prevented from compliance due to circumstances beyond their control, especially during a national crisis.
Implications
This ruling will have significant impact on all execution auctions conducted during the pandemic period. It clarifies that statutory payment timelines embedded in execution proceedings stand protected by the Supreme Court’s exclusion orders. It prevents unwarranted invalidation of sales caused solely due to pandemic-related disruptions. It also strengthens legal certainty for auction purchasers, cooperative societies, and recovery authorities. Going forward, authorities must treat auction timelines as part of legal proceedings rather than immutable deadlines when external circumstances impede compliance.
Summary of referred cases
Suo Motu Writ Petition No. 3 of 2020
Held that the entire period of the pandemic must be excluded from limitation computation in all proceedings. This judgment directly applied it to auction timelines under Rule 107.
Execution-proceeding principles
Courts have treated auction steps as statutory components of legal proceedings. This forms the foundation for treating deposit deadlines as protected.
Rule-based auction jurisprudence
Earlier rulings emphasise adherence to statutory sequence. Here, compliance was preserved due to the Supreme Court’s exclusion order.
FAQs
1. Does the Supreme Court’s Covid-exclusion order apply to auction-deposit deadlines?
Yes. The Bombay High Court held that deposit deadlines are part of “proceedings” and are protected.
2. Could the Recovery Officer extend deposit timelines during Covid-19?
Yes, because the Supreme Court’s exclusion order automatically protected the delay.
3. Is an auction void if the balance amount was deposited late during Covid-19?
No, if the deposit occurred within the excluded period (15 March 2020 – 14 March 2021).