Order
1. Leave granted. The challenge in these appeals is against the order of the High Court dated 11-8-2014 2014 SCC OnLine Mad 5413 by which the orders of the Debts Recovery Tribunal (for short “DRT”) and the Debts Recovery Appellate Tribunal (for short “DRAT”) refusing to set aside the sale of the mortgaged properties have been set aside and the matter remanded to DRT for fresh consideration in terms of the directions contained in the order dated 11-8-2014 2014 SCC OnLine Mad 5413.
2. The facts which will require a notice are as follows: OAs Nos. 994 and 995 of 2001 were instituted by the appellant Icici Bank Ltd. before DRT, Chennai claiming a sum of Rs 57,22,710 and Rs 29,31,235.77 respectively with interest against two separate financial accommodation provided to the respondent borrowers.
3. Sometime in the year 2003, the respondent borrowers came up with a proposal for private sale of the mortgaged properties and accordingly sought and obtained permission of the learned Tribunal. Tenders were invited. However, the aforesaid proposal did not materialise. Hence, DRT directed the Recovery Officer to conduct a public auction after fixing the offset price in both the cases.
4. Thereafter, public notice dated 11-2-2004 was issued with regard to the sale of two properties intimating the offset price which was fixed at Rs 43,00,000 (Rupees forty-three lakhs only) and Rs 33,00,000 (Rupees thirty-three lakhs only) respectively. The auction was to be conducted on 3-3-2004. However, no bidder came forward to purchase the properties. In such circumstances, the Bank itself had offered to purchase the properties at Rs 43,10,000 (Rupees forty-three lakhs ten thousand only) and Rs 33,10,000 (Rupees thirty-three lakhs and ten thousand only) respectively. The Bank's offer was accepted and a total amount of Rs 76,20,000 (Rupees seventy-six lakhs twenty thousand only) was deposited with the Recovery Officer by the Bank. Even at this stage the Bank gave an option to the respondent borrowers to deposit the amount of Rs 76,20,000 (Rupees seventy-six lakhs twenty thousand only) with interest from 3-3-2004. The said offer, however, was not acted upon by the respondent borrowers.
5. Against the aforesaid sale of the two mortgaged properties, the respondent borrowers moved DRT. By order dated 17-5-2004 DRT dismissed the application of the respondent borrowers. The said order of DRT was also upheld by the learned DRAT by order dated 3-1-2005. The following findings of DRAT being relevant would require a specific notice:
“Thus, the defendants failed to bring any prospective buyer. They also failed to produce any documentary proof with respect to their claim about the price of the property. They also declined to accept the offer made by the Bank's counsel. Even while this appeal was being argued, the same offer was repeated by the Bank's counsel, but there was no response from the appellant's side. It is therefore, evident that the appellants just want to put hindrance in the sale proceedings, thus depriving the applicant Bank to recover its dues. It is pertinent to note that the OAs are still pending and the offer to sell the properties came at the behest of the appellants only. Under these circumstances, instead of offering highest cooperation to the Bank, they are just putting spokes in the wheel. This is absolutely unfair and improper.”
6. Thereafter the respondent borrowers filed writ petitions before the Madras High Court challenging the orders dated 17-5-2004 and 3-1-2005 passed by DRT and DRAT respectively. It is in the aforesaid writ petitions that the impugned orders have been passed setting aside the orders of DRT and DRAT and remanding the matter to DRT with the direction to re-decide the matter after giving full opportunity to the respondent borrowers in the matter of fixation of the offset price and also after complying with the provisions of Rule 17 of the Second Schedule to the Income Tax Act. Aggrieved, the Bank has filed the present appeals.
7. We have heard the learned counsel for the parties.
8. Two grounds had prevailed with the High Court to reverse the orders of the forums below. The first was with regard to lack of opportunity/participation of the respondent borrowers in the matter of fixation of the offset price. The second was violation of the provisions of the Second Schedule to the Income Tax Act, 1961, particularly, Rule 17, in permitting the Bank to take part in the public auction and to purchase the property.
9. We have considered the matter, particularly, the grounds which have prevailed upon the High Court to interfere with the orders passed by DRT and DRAT. A consideration of the materials on record would go to show that the offset price was fixed on the basis of a report of the Valuation Officer and in the fixation of the said price the respondents were associated being party to the proceedings before DRT. That apart the said grievance of the respondent borrowers must be considered in the light of the fact that the respondent borrowers had persistently failed either to liquidate the dues or to bring a willing purchaser who could offer a reasonable price for the mortgaged properties.
10. Insofar as the Second Schedule to the Income Tax Act, 1961 is concerned, nothing has been brought to our notice which can be construed as imposing a restriction on the Bank from participating in the bid/auction once the invitation to bid did not result in any response from any interested bidder. Rule 17 of the Second Schedule to the Income Tax Act, 1961 to which reference has been made by the High Court, in our considered view, does not impose such a restriction inasmuch as it is the Recovery Officer on whom such an embargo has been placed. In this regard, the provisions of Rule 59 of the Second Schedule to the Income Tax Act, which permit the assessing officer to take part in the auction would be of a particular significance. In the light of the above, the conclusion of the High Court that the auction-sale in favour of the Bank is vitiated on account of violation of Rule 17 of the Second Schedule to the Income Tax Act, 1961, cannot be accepted.
11. Both the grounds relied upon by the High Court to come to the impugned conclusion not having been found to be acceptable, these appeals have to be allowed. We, accordingly, set aside the order of the High Court dated 11-8-2014 2014 SCC OnLine Mad 5413 and allow these appeals. Necessary and consequential action will now follow.