Adishakti Developers v State of Maharashtra: Supreme Court on Rule 107 Auction Sale Deadlines

Case Summary

• Case name: M/s. Adishakti Developers & Anr. v. The State of Maharashtra & Ors. (Civil Appeals arising out of SLP (C) Nos. 12343–12346; 12617 & 12591/2018; Civil Appeal Nos. 002545–002550 of 2026)

• Date of judgment: 25 February 2026

• Bench: Honourable Justice Pamidighantam Sri Narasimha; Honourable Justice Manoj Misra

• Advocates: learned counsel for M/s. Adishakti Developers (auction purchaser); learned counsel for the legal representatives of late Panditrao Borse; learned counsel for Mahanagar Co-operative Bank Ltd.; learned counsel for State of Maharashtra (individual names not specified in the supplied summary)

• Statutes / rules considered: Maharashtra Co-operative Societies Act, 1960 (Sections 91, 98, 101, 137, 154, 156, 165); Maharashtra Co-operative Societies Rules, 1961 (Rule 107 and its sub-rules (11)(g)–(k), (13), (14)); references to SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002 in cited precedents

• Key issues framed: maintainability of revision under Section 154; effect of non-deposit of balance sale consideration within period prescribed by Rule 107(11)(h); whether the requirement is waivable; consequences of auction being void; propriety of High Court directions on refund and compensation

• Principal precedents cited: Shilpa Shares & Securities v. National Co-operative Bank Ltd. (2007) 12 SCC 165; General Manager, Sri Siddheshwara Co-operative Bank Ltd. v. Ikbal (2013) 10 SCC 83; Deenadayal Nagari Sahakari Bank Ltd. v. Munjaji (2022) 7 SCC 594; Manilal Mohanlal Shah v. Sardar Sayed Ahmed (AIR 1954 SC 349); Balram v. Ilam Singh (1996 5 SCC 705); and other supporting authorities

Introduction and Context

This judgment of a Division Bench affirms two important principles that govern recovery sales under the Maharashtra Co-operative Societies legislation: (a) the revisional jurisdiction vested in the statutory revisional authorities under Section 154 is wide and not automatically ousted by the existence of remedies under Rule 107; and (b) the payment deadlines prescribed by Rule 107(11)(g)–(h) are mandatory in character and, where breached, can render the sale a nullity. The decision is particularly relevant for practitioners advising banks, recovery officers, auction purchasers and judgment-debtors in cooperation law and revenue mutation disputes.

Maintainability of Revision under Section 154

The Court analysed the scope of Section 154 and held that the revisional power of the State Government and of the Registrar is plenary in its domain: it may call for and examine the record where any decision or order has been passed by any subordinate officer, and no appeal lies against such decision or order. The Bench rejected a narrow construction that would confine a judicial or quasi judicial challenge to the procedural remedies in Rule 107, sub rules (13) and (14). The reasoning is sound: the Rules are framed under Section 165 and cannot curtail the statutory revisional power, which is intended to secure legality and propriety in subordinate decision making. Accordingly, a party aggrieved by a confirmation of sale may seek revision under Section 154 even if Rule 107 provides an in house mechanism to challenge the sale, subject, of course, to questions of delay and condonation.

Delay and Condonation

The judgment carefully distinguishes between procedural laches and substantive illegality. The heirs of the judgment debtor received a High Court direction in 2005 to pursue statutory remedies; nevertheless, they later invoked Section 154 and sought condonation of delay. The Court accepted the Joint Registrar's explanation for condonation, treating the delay as not necessarily deliberate or in bad faith where knowledge of the confirmation was only discovered during mutation proceedings. For practitioners, this reiterates the importance of granular fact finding on when notice is deemed to have been received and the need for clear recording of reasons when revisional authorities condone delay.

Mandatory Nature of Rule 107(11)(g)–(h) and the Waiver Argument

The core substantive holding is that Rule 107(11)(g) and (h), requiring a 15 percent deposit at auction and the balance within 15 days from date of sale as then in force, are not merely for the creditor’s private advantage but serve a public and systemic purpose: to preserve the integrity of public auctions and to prevent manipulative or non serious bidding. The Bench reaffirmed Shilpa Shares & Securities and other precedents that non compliance with the prescribed timeframe can render the sale a nullity. The Court also rejected the auction purchaser’s reliance on Sri Siddheshwara, a SARFAESI context, to argue waiver: unlike the SARFAESI Rules where a written agreement can extend the time, Rule 107 has no pari materia provision allowing such extension and serves a wider public interest.

Practical Consequences and the Remedy Crafted by the Court

On the facts, the auction purchaser had paid in instalments extending beyond the 15 day period. The Joint Registrar had set aside the sale for non deposit; the High Court affirmed that view but directed the heirs to deposit a substantial sum and directed the Bank to refund the auction price to the purchaser. The Supreme Court modified the High Court’s remedy. Recognising that the auction purchaser had deposited the full amount, albeit belatedly, and to avoid penalising an innocent purchaser for the lapse of an officer, the Court declared the sale null and void and ordered a fresh auction under Rule 107(11)(j). It further directed the Bank to refund the purchaser’s deposit with interest at 6 percent per annum. The Court’s order reflects equitable calibration: it upholds the mandatory rule, preserves the statutory resale mechanism, but mitigates unfair loss to the purchaser who had in fact discharged the auction price.

Key Quotations from the Judgment

• 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.

• 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.

• 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.

Implications for Practitioners

• For banks and recovery officers: strict compliance with Rule 107 timelines is indispensable. Where discretion exists, for instance stamp cost extensions, reasons must be recorded and any extension should be documented in writing to avoid later challenge.

• For auction purchasers: secure contemporaneous written confirmation of any agreed extension; maintain traceable deposits and contemporaneous bank evidence for each instalment. Consider insisting on a formal acknowledgement by the Recovery Officer if any concession is allowed.

• For judgment debtors: timely utilisation of remedies under Rule 107(13) and (14) remains the primary route, but Section 154 remains available and should not be assumed to be precluded by earlier High Court directions unless the facts and law clearly so indicate.

• For counsel: when arguing waiver, demonstrate unequivocal conduct by the party for whose benefit the provision was made; mere inaction by a creditor will not necessarily amount to waiver where the rule serves a broader public interest.

Conclusion

This decision reaffirms the mandatory nature of Rule 107(11)(g)–(h) in the Maharashtra Rules, preserves the revisional ambit of Section 154 and provides a pragmatic remedy that balances statutory fidelity with equitable protection for an innocent purchaser. It is a useful authority for disputes where auction formalities and timelines are contested and clarifies the interplay between rules framed under statutory power and the revisional jurisdiction expressly conferred by statute.

Extract from the Judgment

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 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 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 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 property would have to be re sold and for which a fresh proclamation shall be necessary.