Failure to deposit balance purchase money within the prescribed period renders an auction sale void.

Mahanagar Co-operative Bank obtained an ex-parte award against a partnership firm, M/s. Borse Brothers, for unpaid dues.

To recover the debt, the Special Recovery and Sale Officer (SRO) auctioned a plot belonging to the deceased partner, Panditrao Borse, on 29.01.2005.

M/s. Adishakti Developers was the highest bidder at Rs. 1.51 Crores.

The purchaser did not deposit the full amount within the 15-day window prescribed by law; the final installment was paid on 17.03.2005.

The sale was confirmed, and a conveyance deed was executed.

The legal heirs of Borse challenged the auction via a revision under Section 154 of the Maharashtra Co-operative Societies Act, 1960.

The Divisional Joint Registrar set aside the sale because the deposit timing violated Rule 107(11)(h) of the 1961 Rules.

The High Court upheld the cancellation of the sale but allowed the heirs to settle the Bank's dues directly.

1. Whether the revision under Section 154 of the 1960 Act was maintainable against a sale confirmation when alternative remedies under Rule 107(13) and (14) were available?

2. Whether the requirement to deposit the balance purchase money within 15 days under Rule 107(11)(h) is mandatory, making a failure to do so a nullity?

3. Whether the mandatory deposit period can be waived by the creditor bank if the borrower does not object?

The court applied Section 154 of the Maharashtra Co-operative Societies (MCS) Act, 1960, which grants broad revisional powers to the State or Registrar to ensure the legality of proceedings.

It interpreted Rule 107(11)(g) and (h) of the MCS Rules, 1961, which requires a 15% deposit at the time of purchase and the remainder within 15 days.

The court relied on Shilpa Shares & Securities v. National Co-operative Bank Ltd. (2007) 12 SCC 165, which established that non-compliance with these deposit timelines renders an auction sale a nullity.

It distinguished General Manager, Sri Siddheshwara Co-operative Bank Ltd. v. Ikbal (2013) 10 SCC 83, noting that waiver of mandatory rules is only permissible where the statute specifically allows for "agreed extensions" (as in SARFAESI Rules) and where the party for whose benefit the rule exists (the borrower) consents.

The Court found that the revisional power under Section 154 is "extremely wide" and is not denuded by the existence of specific remedies like Rule 107(13) or (14).

Regarding the auction, the Court observed that M/s. Adishakti Developers failed to pay the balance within 15 days, completing payment only after nearly two months.

Applying Shilpa Shares, the Court reasoned that since the Recovery Officer has no statutory discretion to extend the time for the "remainder of the purchase money" (unlike the cost of stamps), the infraction was not a mere irregularity but rendered the sale void ab initio.

The Court rejected the "waiver" argument, holding that Rule 107(11)(h) serves a public purpose of maintaining auction sanctity and preventing manipulation by non-serious bidders.

Furthermore, there was no evidence that the borrower (the heirs) had waived their rights; their delayed awareness of the specific payment default did not constitute consent.

However, it modified the High Court's relief: rather than simply allowing the heirs to pay a fixed sum, the Court ordered a fresh auction in accordance with Rule 107(11)(j) to ensure the debt is fully realized.

The Bank was directed to refund the auction purchaser's deposit with 6% interest.

The appeals were disposed of with a direction that the parties remain free to reach a settlement before the fresh auction is concluded.