G.G. Arora And Ors. vs Union Bank Of India

S.N.H. Zaidi, J

This application has been filed by the appellants seeking stay of the recovery proceedings qua the sale of property No. 58/601, Sahyog Building, Nehru Place. New Delhi, until the disposal of this appeal. No reply to this application has been filed by the respondent Bank.

Briefly stated, the facts of the case are that office flat No. 601, Sahyog Building, 58 Nehru Place, New Delhi, hereinafter referred to as the property in question, was jointly owned by Mr. D.V. Sachdeva and Mr. B.R. Dougall by virtue of a purchase agreement dated 21.7.1978 executed with M/s. Vikas Builders and Engineers, the promoters and builders of the building, that Mr. Dougall and others had suffered an R.C. for the recovery of Rs. 1,32,27,641.99 together with future interest @ 17.25, vide final order dated 10.1.2002 passed in O.A. No. 653/2000, that Mr. Dougall had filed an affidavit dated 27.9.2004 before the Recovery Officer (R.O.) disclosing his half share in the properly in question, that the property in question was not mortgaged in respect of the loan qua which the R.C. was issued, that the rights in the property in question were purchased by the appellants from Mr. Dougall and Smt. Champa Sachdeva, the widow of D.V. Sachdeva through an agreement to sell dated 9.5.2006 for a consideration of Rs. 26,50,000/- and their names were mutated in the relevant records, that the property in question is under the tenancy and occupation of M/s. Consulting Engineering Service India Pvt. Ltd. as per lease agreement dated 1.1.2000, that the CH Bank filed an application for the attachment of the property in question and the R.O., vide order dated 22.2.2007, attached the same and thereafter on 15.3.2007 issued a proclamation for the sale of undivided half share of CD No. 3 (Mr. B.R. Dougall), that the appellants filed objections qua the said proclamation which were dismissed on 3.1.2008 by the R.O. accepting the contention of the CH Bank that as the demand notice was issued to CD No. 3 on 15.3.2002, the attachment would relate back to 15.3.2002, that the appellants assailed the order of the R.O. by filing Appeal No. 1/2008 before the DRT, which has dismissed the same vide order dated 17.8.2012 Feeling aggrieved with the order of dismissal of appeal, the appellants have filed an appeal against the said order and have also filed the instant I.A. seeking stay of the recovery proceedings qua the sale of the property in question till the disposal of the appeal.

I have heard Mr. Sanjeev Bhandari on behalf of the appellant/applicants and Mr. Ketan Aggarwal for The respondent Bank and perused the record.

There is no dispute in respect of the fact that Mr. B.R. Dougall was the joint owner of the property in question along with Mr. D.V. Sachdeva to the extent of half share in it. It is also not in dispute that an R.C. for the recovery of more than Rs. one crores was issued against Mr. Dougall and others in O.A. No. 653/2000 and he had disclosed about his share in the property in question by filing affidavit dated 27.9.2004 before the R.O. but at that time no order qua that property was made by the R.O. and on 2007 an order for attachment of the same was made by him. The contention of Mr. Bhandari is that as the CH Bank had neither taken any step for the attachment of the said share of Mr. Dougall at that time nor the MCD or the DDA were intimated about its claim and since no encumbrance over that property was recorded anywhere, therefore, it was purchased by the appellants under the bona fide belief that it was free from all encumbrances for Rs. 26,50,000/- from Mr. Dougall and Smt. Sachdeva on 9.5.2006 and the property was also mutated in their names in the relevant records. According to him, since the appellants had bona fide purchased the property in question in 2006 for value without notice of any charge or encumbrance thereon and Mr. Dougall had ceased to have any title or interest in the property in question when it was attached on 22.2.2007, therefore, the attachment thereof is not valid and the sale proclamation is not sustainable.

Mr. Aggarwal, however, contended that as the demand notice dated 15.3.2002 issued to Mr. Dougall under Rule 2 of the Second Schedule to the Income Tax Act was admittedly served upon him on 17.4.2002, the attachment of the property in question, as per Rule 51 of the said Schedule, would relate back to the date of service of notice and since on such date Mr. Dougall was the owner of the said property to the extent of his half share, therefore, the attachment of his share is valid and the proclamation of sale is legally maintainable. He also pointed out that pursuant to the service of the demand notice upon him Mr. Dougall had appeared before the R.O. and had tiled the affidavit dated 27.9.2004 disclosing about the ownership of his half share in the property in question.

In view of the contentions of the parties the main issue involved herein is whether the attachment of the C.D's share in the property in question is legally sustainable, as has also been framed by the Tribunal below in the order impugned. Rule 51 of the Second Schedule to the Income Tax Act reads as under:-

Attachment to relate back from the date of service of notice--Where any immovable property is attached under the Schedule, the attachment shall relate back to and take effect from, the date on which the notice to pay the arrears, issued under the Schedule was served upon the defaulter.

The above rule clearly shows that the attachment made under the said Schedule would relate back to the date of service of demand notice upon the defaulter. In the instant case the demand notice issued under Rule 2 of the Second Schedule was served upon Mr. Dougall on 17.4.2002. Thus, in view of the aforesaid provision, the attachment of his share in the property in question on 22.2.2007 would relate back to 17.4.2002 and since on that date he was the joint owner of the property in question, as disclosed by him in the affidavit filed before the R.O. on 27.9.2004, therefore, the attachment does not appear to be prima facie invalid.

Mr. Bhandari, in support of the appellants' title over the property in question, has relied upon the judgment of the Delhi High Court in Asha M. Jain v. Canara Bank and Ors., 94 (2001) DLT 841 (DB) wherein the Hon'ble Court has held that the concept of power of attorney sales have been recognized as a mode of transaction which are different from mere agreement to sell since such transactions are accompanied with other documents including General Power of Attorney, Special Power of Attorney, Will and affidavits and full consideration is paid. Since in this case the sale of the properly in question in favour of the appellants has been challenged under Rule 16 of the Second Schedule to the Income Tax Act, therefore, the said judicial authority does not help the appellant/applicants.

Rule 16 of the Second Schedule to the Income Tax Act, provides that:

Private alienation to be void in certain cases--(1) Where a notice has been served on a defaulter under Rule 2, the defaulter or his representative-in-interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any civil Court issue any process against such property in execution of a decree for the payment of the money.

(2) Where an attachment has been made under the Schedule, any private transfer or delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or any other moneys contrary to such attachment shall be void as against all claims enforceable under the attachment.

The Tribunal below appears to have rightly observed that since no permission was obtained by Mr. Dougall for alienating his interest in the property in question to the appellants, therefore, the alleged transfer of his title in favour of the appellants is hit by the aforesaid Rule 16.

In view of above, the appellants do not appear to have any prima facie case for the interim relief as claimed by them. The application is therefore, devoid of any merit and is accordingly dismissed.

List on 30.7.2013 for hearing on admission.

Copy of the order be furnished to the parties as per law.