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Auction purchaser's rights

The right of a bona fide purchaser of property for consideration in a public auction was asserted by the Supreme Court in the judgment, Sadashiv Prasad Singh vs Harendar Singh. In this case, a partnership firm took loan from Allahabad Bank mortgaging certain properties but the debt was not repaid, leading to public auction by the recovery officer appointed by the debt recovery tribunal. Later, a partner challenged the auction in the Allahabad High Court. It set aside the auction on the ground that the recovery officer had not complied with Rule 11 of the Income Tax (Certificate Proceedings) Rules. The high court held that the proceedings before the recovery officer were in flagrant violation of the IT Rules. The purchaser moved the Supreme Court, which set aside the high court order. The court said that the objection raised to the auction long after the property had passed on to a third party should have been rejected by the high court.

 Article referred: http://www.business-standard.com/article/opinion/sc-resolves-arbitration-dilemma-114011900826_1.html

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