Questioning the correctness of the order dated 27.4.2010 passed by the learned single Judge in C.W.J.C No. 16485 of 2009, the present appeal has been preferred under Clause X of the Letters Patent.
2. Filtering unnecessary details, the facts which are requisite to be stated are that the brother of the appellant was a partner in a firm, namely, M/s Amar Timber Works. He has availed a loan from the Allahabad Bank, the respondent herein, by mortgaging certain properties. As there was a default a proceeding was initiated for recovery before the Debts Recovery Tribunal, Patna (for short ‘the Tribunal). When in the said proceeding certain property was sought to be attached and sold, the petitioner filed an objection claiming, inter alia, that he had a right inasmuch as his late brother had entered into an agreement for sale with him. The said objection was duly filed before the Recovery Officer.
3. It was contended before the learned single Judge that without dealing with the objection a publication was made in the newspaper and finally on 28.8.2008 the auction sale was held and the 7th respondent came out to be the successful auction purchaser. When steps were taken to deliver the possession the writ petitioner assailed the said action basically on the ground that right, title and interest was created in his favour; that the property was not mortgaged by his brother while availing the loan; that the objection filed by the petitioner was never considered and rejected; that the Recovery Officer did not have the jurisdiction to pass such an order in an arbitrary manner; that the sale that has been effected was contrary to Section 68-B of the Second Schedule of Debts Recovery Act; that no opportunity was granted to redeem the property; and that appropriate proclamation was not made in the newspaper for sale.
4. The learned single Judge adverted to the aforesaid issues and came to hold that the writ petitioner though had filed objection, did not pursue the same; that the sale had been effected and the auction-purchaser had got the property mutated; that the long silence of the writ petitioner would go against him; that there was no satisfactory explanation for not approaching the Court in time. Being of this view the learned single Judge dismissed the writ petition.
5. When the matter was listed before us on the first occasion, we called for the records of R.P Case No. 167 of 2000 from the Tribunal. On a perusal of the said record it becomes quite clear that though the objection was filed by the petitioner, it was never dealt with. There is an order to show that the petitioner had remained absent but there is nothing to indicate that the objection filed by him was rejected or was not worth considering.
6. In course of hearing of this appeal on earlier occasion Mr. Ambuj Nayan Choubey, learned counsel for the appellant submitted that the property is his ancestral house and the appellant was sanguinely pursuing the remedy before the Recovery Officer, who had adopted a different kind of method, contrary to the mandate of Section 30 of the Act and proceeded to sale the property and that he had always had the willingness to pay the amount. Learned counsel for the appellant has invited our attention to Rule 16 of the Rules, which provides for judgment-debtor to approach the Tribunal to redeem the property.
7. Mr. Ajit Kumar Ojha, learned counsel for the auction-purchaser submitted that the sale was done as per the Rules and, therefore, there was no reason to set it aside. It was contended by him that the appellant could have approached the appellate authority i.e the Debts Recovery Tribunal as this was the order passed by the Recovery Officer under Section 30 of the Act and hence, the concept of alternative remedy would come into play in all fours. It is submitted by him that with efflux of time the auction-purchaser has got the right and the same should not be annulled by this Court. To bolster his submissions, he has commended us to the decisions rendered in Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : AIR 1983 SC 603, Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd., (1985) 1 SCC 260 : AIR 1985 SC 330, State of H.P v. Gujrat Ambuja Cement Ltd., AIR 2005 SC 3936 and Virendra Chaudhary v. Bharat Petroleum Corporation, (2009) 1 SCC 297.
8. At this juncture, we may state that the brother of the appellant had availed a loan of Rs. 14.70 lacs. The said aspect is not disputed by Mr. Ajay Kumar Sinha, learned counsel for the Bank. The Bank had initiated a proceeding before the Tribunal for realization of approximately a sum of Rs. 75.75 lacs. The property has been sold for Rs. 13.20 lacs. It is submitted by Mr. Ojha that the prices have gone up and he is being offered more than 39 lacs for the same. It is not in dispute that the price, the auction-purchaser has tendered, is Rs. 13.20 lacs. On the earlier occasion, a suggestion was given whether the Bank would accept Rs. 45 lacs in toto to settle the dispute. Mr. Sinha, learned counsel for the Bank has obtained instructions that the Bank has no objection to settle the same, if the appellant pays Rs. 15 lacs immediately so that the same can be paid to the auction-purchaser and Rs. 30 lacs should be paid within a period of two years in a phased manner. Mr. Choubey, learned counsel for the appellant submitted that the appellant is agreeable to pay the same. Mr. Ojha submitted that he has instructions not to accept the suggestion.
9. In view of the aforesaid, we have to dwell upon the merits of the case. Chapter-V of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for brevity, ‘the 1993 Act’) deals with recovery of debt determined by Tribunal. Section 29 deals with application of certain provisions of Income-tax Act. The said provision being relevant is reproduced below:—
“29. Application of certain provisions of Income-tax Act.— The provisions of the Second and Third Schedules to the Income-tax Act, 1961 (43 of 1961) and the Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under this Act instead of to the Income-tax:
Provided that any reference under the said provisions and the rules to the “assessee” shall be construed as a reference to the defendant under this Act.”
10. In this context, we may refer with profit to the Rule 11, which deals with investigation by Tax Recovery Officer. The said Rule reads as follows:—
“Investigation by Tax Recovery Officer.
11. (1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection:
Provided that no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed.
(2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the Tax Recovery Officer shall deem fit.
(3) The claimant or objector must adduce evidence to show that-
(a)(in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or
(b)(in the case of movable property) at the date of the attachment, he had some interest in, or was possessed of, the property in question.
(4) Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in the possession of the defaulter or of some person in truest for him or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale.
(5) Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim.
(6) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive.”
11. On a perusal of the sub-rule (2) of the said Rule it is clear as crystal that when an objection is filed it is obligation of the Tax Recovery Officer to postpone the sale pending the investigation of the claim or objection. As per Section 29 of the 1993 Act, the said provision has been made applicable. On a perusal of the order-sheet of the Tribunal, it is patent that the Tribunal entertained the objection application and put up for hearing from time to time. On one date when the counsel for the objector was absent the Tribunal directed the Bank to comply with the earlier order for auction. In this context, learned counsel for the appellant has commended us to a decision rendered in Shyam Swarul Sharma v. Canara Bank, III (2002) BC 535 (DB). The Division Bench of Delhi High Court has opined that when the Recovery Officer has the statutory obligation to investigate the objections of the objector, who has interest in the property on the date of attachment. In the case at hand, the appellant has some semblance of right, title and interest. It is not to be forgotten it is an ancestral property. It is a house and some land is appertained thereto. It was the obligation on the part of the Recovery Officer to deal with the objection. That is the fundamental concept. It cannot be marginalized. It goes to the very root of the matter. The same could not have been sold in auction in flagrant violation of the provisions.
12. Though we have held the same could not have been sold in auction, yet equities are to be worked out. Regard being had to the fact that the respondent-purchaser has deposited Rs. 13.20 lacs between 28.8.2008 to 22.9.2009 and thus the amount is with the Bank for almost more than one year and 10 months and thereafter there had been challenge to the order in the writ petition and after dismissal of the writ petition the present L.P.A has been filed in quite promptitude and that the amount of the respondent-purchaser was blocked, it will be obligatory on the part of the appellant to compensate the respondent-purchaser at least by way of payment of interest at the Bank rate. We are disposed to think that if a sum of Rs. 17 lacs is paid to the auction-purchaser, it would subserve the cause of justice and house of the appellant shall be saved and, accordingly it is directed that the appellant shall deposit a sum of Rs. 17 lacs within a period of four weeks from today in the Bank. After such deposit, the Bank shall hand it over to the purchaser by way of a Bank draft. The same shall be sent by registered post with acknowledgement due. Thereafter the appellant shall deposit a further sum of Rs. 32 lacs within a period of two years; sum of Rs. 16 lacs by 25th March, 2011 and further sum of Rs. 16 lacs by 25th March, 2012. Needless to say pro-rata interest shall accrue in favour of the Bank for the said period.
13. After the amount is paid to the purchaser, it would be the duty of the Recovery Officer to hand over the possession to the appellant.
14. Be it clarified, unless Rs. 17 lacs is paid to the auction-purchaser the Recovery Officer shall not pass any order with regard to delivery of possession and if at any point of time the appellant would commit any kind of default, it is open to the Bank to proceed in accordance with the law.
15. It is hereby made clear that no extension shall be granted under any circumstances for payment of the amount.
16. The appeal is allowed to the extent indicated above and the order passed by the learned single Judge is set aside and the writ petition is allowed on above terms without any order as to costs.
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