Hitesh Kumar vs Oriental Bank Of Commerce And Ors.

Ranjit Singh, J

This appeal is filed against the order dated September 30, 2011 passed by DRT-II, Chandigarh. The Tribunal below has dismissed the appeal filed by the appellant against the order passed by the Recovery Officer, who did not accept the prayer of the appellant and declined to set aside the auction held in favour of the appellant on 15th March, 2004. The appellant is the highest bidder for the property No. 99-P, Mahavir Colony, Ferozepur Road, Ludhiana where he has given bid for Rs. 8,65,000/-. The appellant deposited 25% of the bid amount immediately and the remaining 75% of the amount within fifteen days. It is stated that the Bank allegedly compromised with the JD and on the basis of compromise the proposal was accepted for payment of the amount by way of monthly installments of Rs. 3.75 lacs. The Bank had received the compromise amount.

The appellant would plead that the JD did not file any application for setting aside the sale as was required under the law. The appellant accordingly moved an application on 22nd September, 2004 for confirmation of the sale. One application was filed by objector Ms. Neena Garg which has got no relevance otherwise.

The Recovery Officer after hearing the parties on 13th August, 2004 observed that the Bank had apprised the R.O. that it had received the compromise amount and sale of the property conducted on 15th March, 2004 may not be confirmed. On this, the appellant stated before the Recovery Officer that he be compensated as per law. The appellant still impugned the order passed by the Recovery Officer whereby he had set aside the auction with a direction to the JD to pay 5% of the auction money as penalty to the auction purchaser within seven days. As per the appellant, this order passed by the Recovery Officer was wrong and accordingly, he had impugned the same before the Tribunal below. On rejection of his appeal by the Tribunal below, the appellant has filed the present appeal.

The main grievance raised by the Counsel for the appellant is that the Tribunal below has failed to consider the legal submission made by the appellant that the auction sale held in favour of the appellant could only be set aside when application, if any, is made under Rule 60 of the Second Schedule of the Income Tax Rules. The Counsel for the appellant has also based his arguments on the strength of Rules 63, 64 and 65 of the said Rules.

The issue in the present case is very simple and straight. No doubt, there was auction in favour of the appellant, but the same was yet to be confirmed in his favour. When the appellant approached the Recovery Officer for confirmation of the sale, an application came to be filed before the Recovery Officer by the borrower that the entire amount of the loan amount stood paid and accordingly the sale be not confirmed. As can be made out, there was no challenge raised to the auction held in favour of the appellant. Application was simply made to the Tribunal with a request by the JD for not going ahead with the further proceeding to confirm the auction held in favour of the appellant as the entire amount due had been paid. It is also noticed that even intimation was sent to the Court Auctioneer that the JD had deposited the entire amount and that there was compromise between the Bank and the JD and so the auction of the property be not held. The auction was still carried out. Still the Counsel for the appellant insists that the provisions of the Rules of the Second Schedule of Income Tax Rules would apply. The Counsel has referred to that the said Rules which as per him would be relevant and ought to have been considered by the Tribunal below. Rule 60 of the Second Schedule of Income Tax Rules talks of an application to set aside sale of immovable property on deposit of amount etc. This rule gives a right to the defaulter or any person whose interests are affected by the sale to move such an application if any immovable property is sold in execution, for applying to the Tax Officer for setting aside the sale. Such an application is to be moved within thirty days. Rule 63 talks for confirmation of sale, whereas Rule 64 regulates return of purchase money in certain cases. Where such application is made for setting aside the sale and is disallowed by the Recovery Officer then he can make an order of confirmation of sale and only thereafter the sale becomes absolute. As I have already held, in my view, these rules would not strictly apply in this case. No application was filed for setting aside the auction held in favour of the appellant. It was an application moved before the Recovery Officer for not holding auction, but the auction had already taken place. Incidentally, it may need notice here that before the Recovery Officer the appellant had made prayer for compensation and had not raised any challenge on the grounds as he has now made in the appeal. Even in the appeal before the Tribunal below the case was that neither the decree has been set aside till date nor 5% of the compensation as ordered by the Recovery Officer was paid by the JD. Different line of submission now made in this background would not wait for any further adjudication by this Tribunal. In my view, the Recovery Officer as well as the Debts Recovery Tribunal below passed fair and just order. The judgment debtor, who was owner of this property would have right to save his property especially when the sale was yet to be confirmed. The Tribunal below was also justified in observing that the auction purchaser, who had just made the highest bid and deposited the amount, would not have any right except to seek confirmation of the same. I find no infirmity in the impugned order passed by the Tribunal below. As per order passed by this Tribunal on 16.4.2014, an amount of Rs. 8,65,000/- deposited by the appellant is traced and is statedly lying deposited in two FDRs No. 0550548 and No. 0550549 with the Oriental Bank of Commerce Branch at Chandigarh in the name of the Recovery Officer, DRT-II, Chandigarh. The appellant would be at liberty to move an appropriate application for release of this amount along with interest accrued thereon. The appellant would also be entitled to recover 5% of the auction money as compensation from the JDs and would be at liberty to recover this amount. The appeal is, however, dismissed.