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Judgment
P.K. Bhasin, J
The appellant had filed objections before the Recovery Officer attached to Debt Recovery Tribunal (DRT) when property No. EG-3/14, Garden Estate, Gurgaon-122002, Haryana (hereinafter to be referred as 'the property in dispute') which she claimed to be owned by her since the year 2001, was attached for being auctioned in execution of Recovery Certificate which had been issued by the learned Presiding Officer of DRT in respondent No. 1 Bank's Original Application No. 81/2005 filed under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (now rechristened as The Recovery of Debts and Insolvency Act, 1993 and which shall hereinafter be referred as 'the Act of 1993') for recovery of Rs. 89,86,140.45 with interest against respondent Nos. 2 to 5 herein out whom respondent No. 5 happens to be the husband of the appellant and respondents 3 and 4 are their sons.
The O.A. of respondent No. 1 Bank (hereinafter to be referred as 'the Bank') was filed when the respondent Nos. 2 to 5 herein had failed to clear the Bank's outstanding dues in the loan account of respondent No. 2, a partnership Firm of respondents 3 and 4. The loan was granted to respondent No. 2 Atwal & Associates to enable the said borrower Firm to purchase three Volvo Tippers. The O.A. came to be decreed in favour of the applicant Bank vide order dated 7.2.2011 of the DRT for a sum of Rs. 87,17,676.54 with pendente lite and future interest @ 15% p.a. Thereafter, recovery proceedings started (RC No. 23/2011) and on the request of the Bank and property in dispute was attached by the Recovery Officer on 12.5.2011. At that stage the appellant-objector filed objections before the Recovery Officer for lifting the attachment and prayed that the same should not be auctioned. She claimed that the property in dispute had been agreed to be sold to her husband, respondent No. 5 herein, in the year 2001 for a sum of Rs. 15 lacs by executing agreement to sell and power of attorneys in her favour. She had then approached HUDA for execution of conveyance deed in her favour. However, due to some issues between HUDA and the coloniser the formal conveyance deed which shows the sale consideration as one crore sixteen lacs of rupees, could be executed in her favour by HUDA only on 16.5.2011 and earlier to that the property stood in the name of her husband.
However, the Recovery Officer rejected her objections, which were undisputedly under Rule of the Rules under the Second Schedule to the Income Tax Act and such like objections at the instance of third party objectors claiming some kind of rights or interest including possessory rights can be agitated under this Rule 11, against attachment or sale, vide order dated 2.7.2014. Relevant part of that order concerning the present appellant-objector are re-produced below:
".......The objector stated that she is the absolute owner of the above said property and the same has been purchased by her in 2011 on the basis of agreement to sell and GPA dated 1.9.2001 and registered special power of attorney dated 20.8.2002. It is further stated that the petitioner had submitted the GPA/SPA, agreement to sale and other relevant document to the Competent Authority in HUDA and had become the owner of the property for all intents and purpose in 2011. It is further stated that the property in question is the sole residential property of the objector.
It is further stated that objector is the holder of the British passport and before purchasing the said property the objector vide letter dated 4.5.2001 sought permission from the RBI for purchasing the said property and the RBI has given the permission to the objector to purchase the immovable property. The letter dated 27.6.2001 issued by the RBI bears the reference letter dated 4.5.2001 issued by the objector.
It is further intimated that the objector has purchased the property in question for an amount of Rs. 15 lacs from Sh. Prem Jeet Singh Atwal, and further submits that the property in question was never mortgaged to the CH Bank and at the time of purchasing the property by the petitioner there was no injunction order passed by any Court of Law.
It is further stated that the property in question has been purchased by her from Mr. P.S. Atwal, for the purpose of getting a separate accommodation on account of her irreconcilable difference with her husband. It is further intimated that after the purchase of the property the objector had submitted the document before the Competent Authority HUDA for the purpose of the execution of the conveyance deed and the conveyance deed could not take place for a long time on account of reason completely beyond her control. In the year 2009 the objector once again went to the HUDA office, in order to enquire about the status as regards the registration of her property situated in Garden Estate.
It is further slated that as per the information provided by the HUDA office, the issue regarding the registration of the property is still under process but the objector was shocked and surprised when the officer disclosed about the issue of the injunction order which has been passed in the name of her husband in relation to the said property. It is relevant to mention here that neither the property was mortgaged to the CH Bank nor at the time when the injunction order was passed the property belongs to Mr. Premjeet Singh Atwal.
It is further stated that the approached the DRT and preferred intervener application for seeking the vacation of the restrained order dated 31.10.2005 passed in the O.A. bearing No. 81/2005 against the said property. Thereafter the Hon'ble Tribunal in the absence of the petitioner and her Counsel passed the order dated 16.12.2009.
It is further stated that the applicant preferred an appeal bearing No. 131/2010 before the Hon'ble DRAT, and the same was dismissed on 25.3.2010. Thereafter, the objector preferred a writ petition bearing No. 6484/2010 before the Hon'ble High Court. The Hon'ble High Court, in its order dated 24.9.2010 has given its finding that the order dated 16.12.2009 passed by the DRT and the order dated 25.3.2010 passed by the Hon'ble DRAT would not prejudice the objector petitioner in any way. It is further mentioned in the order dated 24.9.2010 passed by the Hon'ble High Court, that any eventuality of recovery certificate being issued and any endeavour to seek sale of the property, the applicant herein would have liberty to file objections before the Recovery Officer and the R.O. would clear the dispose of the objections on merits and in accordance with law without being prejudice by the order dated 16.12.2009 passed by the DRT and 26.3.2010 passed by the Hon'ble DRAT.
That there is no privity of contract between the applicant and the CH Bank and thus, in law the CH Bank is neither contractually nor legally entitled to sell a property of the person who is stranger to the entire dealing. It is further stated that satisfaction of the debt does not provide the Bank and unfettered power to an arbitrarily and legally in order to attach personal property of a person which was never related to the dealing held between CH Bank and the CDs.
It is further submitted that on account of the resolution of dispute between Gulmohar Estate Ltd., and HUDA, the registration of the properties situated in the areas where the said property is situated has been opened by the Government of Haryana, after the commencement of the registration process, the HUDA on the basis of documents as furnished by the applicant in the year 2001-02 executed the conveyance deed in the name of the objector. It is relevant to mention the execution of the conveyance deed on the basis of the documents submitted by the applicant in the year 2001-02 to the HUDA clearly shows that the documents as executed in favour of the objector by Mr. P.S. Atwal, in 2001-02 were sufficient documents for the purpose of transfer at that relevant period of time i.e. 2001-02.
It is further stated that the property in question is the sole residential property and the objector is residing therefrom the day when she has purchased the same for Mr. P.S. Atwal. Thus, the above said facts clearly shows that the objector is the bona fide purchaser of the property in question and there is no privity of contract between the applicant and the CH Bank and when the property was sold by Mr. P.A. Atwal to the objector the property was not mortgaged with the CH Bank. It is prayed that to set aside the attachment order dated 12.5.2011 in respect of the property bearing No. EG-3/14, Garden Estate, Gurgaon, in terms of the facts and circumstances mentioned herein above.
CH Bank has submitted in the written submission filed by them that the 3rd party objector admittedly is the wife of Mr. P.S. Atwal and the objector have concocted a false story and fabricated all the documents which are not sustainable under the eyes of law hence, the objections require dismissal on this ground alone..................................
The objectors have manufactured all these documents subsequently. On perusal of the alleged registered power of attorney it reveals the one stamp paper was purchased from Parliament Street, New Delhi, and the other stamp was purchased from Tis Hazari Court, Delhi. This clearly shows that the documents are subsequently manufactured by the CD 4 in connivance with his wife i.e. the present objector in this matter.
It is further stated that the transaction is a sham one and it is between husband and wife which is not sustainable under the eyes of law and the objector' is not the owner of the property bearing No. EX-3/4, Garden Estate, Gurgaon, Haryana and the property is owned by Mr. P.S. Atwal. It is further submitted that the alleged sale deed is executed by HUDA/Distt. Town Planner is obtained by the objector by fraud and any document which is procured by fraud is null and void ab initio.
It is also pertinent to mention that on the one hand the 3rd party objector is claiming that she has no relation with Mr. P.S. Atwal, whereas in the alleged sale deed she is claiming the wife of Mr. P.S. Atwal. It is vehemently denied that the objector has paid a consideration amount of Rs. 15 lacs in purchasing the said property to Mr. P.S. Atwal. It is further submitted that the 3rd party objector has not paid any amount either in cash or by way of cheque or has not sold any documentary evidence which can substantiate the claim of the objector. Hence, there is no consideration whatsoever, has been passed between the objector and the CD 4 and the alleged documents are manufactured by her in connivance of her husband.
It is stated that the alleged transaction is nothing but a mere accommodation between the husband and wife which is made just to defeat the legitimate recovery of public dues.
ORDER
On perusal of the written submission filed by both the parties it is observed that the objector has purchased the property bearing No. EG-3/14, Garden Estate, Gurgaon after the restrained order had been passed by the Hon'ble Presiding Officer vide order dated 31.10.2005 and as per the provision of Section 64 of CPC the private alienation of the property after attachment shall be void.
In the Section 64 of CPC it is stated that wherein an attachment has been made any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment.
In this matter the CD has transferred the property bearing No. EG-3/14, Garden Estate, Gurgaon despite the restrained order of the Hon'ble Presiding Officer, DRT-II, Delhi hence, the Section 64 of the CPC will be applicable and the transfer of the above said property by the CD 4 in favour of his wife is null and void. In view of the above the objection of the Objector are not allowed."
The appellant challenged this order of the Recovery Officer before the learned Presiding Officer of the DRT but that appeal also was dismissed by the Presiding Officer vide his Order dated 3.2.2015 which is also re-produced below:
"1. This is an appeal under Section 30 of RDDB & FI Act challenging the order dated 2.7.2014 passed by the Recovery Officer No. II of this Tribunal in RC No. 23/2011.
The challenge in this appeal is against the order in respect of property No. EG3/14, Garden Estate, Garden Estate, Gurgaon, Haryana. The Recovery Officer attached the property against which appellant filed her objections. The appellant has stated that she is the absolute owner of the property. This property was purchased by her in 2011 on the basis of agreement to sell and general power of attorney dated 1.9.2001 and registered special power of attorney dated 20.8.2002. The Competent Authority of HUDA conveyed the property in her name on the basis of the above documents in 2011. The appellant is the holder of British passport and before purchasing the property. The appellant vide letter dated 4.5.2011 had sought permission from the Reserve Bank of India for purchasing the properties and the Reserve Bank of India had given permission to the objector to purchase the property. She had purchased the property for a consideration of Rs. 15 lacs from the previous owner Sh. Premjit Singh Atwal. The appellant has also stated that Mr. P.S. Atwal is her husband and she had demanded for a separate accommodation on account of her irreconcilable difference with her husband. Thus the appellant would say that the property never belonged to the judgment debtor as on the date of attachment the property is not under change or mortgage with the respondent Bank and therefore the property is not liable to be proceeded in execution and therefore, the impugned order of the Recovery Officer rejecting her objections are untenable. The property has now been kept for sale which is fixed on 16.2.2015.
The respondent Bank would say that husband of the appellant Mr. P.S. Atwal is CD No. 4 in RC No. 23/2011. The respondent Bank filed OA and R.C. was drawn. The appellant had filed I.A. No. 698/09 before this Tribunal seeking vacation of the restraint order dated 31.10.2005 passed by this Tribunal in OA. No. 81/05 against the property. That application was dismissed by this Tribunal vide order dated 16.12.2009. Aggrieved by that order the appellant preferred Appeal No. 131/2010 before the Hon'ble DRAT. The Hon'ble DRAT dismissed the appeal. The appellant challenged the judgment and order dated 25.3.2010 passed by the Appellant Tribunal before the Hon'ble High Court of Delhi in WP(C) 6484/2010. The appellant sought permission to withdraw IA No. 698/09 filed before this Tribunal and she would take recourse before the Recovery Officer at the appropriate time after the recovery certificate was issued. The Hon'ble High Court of Delhi vide order dated 24.9.2010 permitted the applicant to withdraw IA No. 698/09 with liberty to move fresh proceeding before the Recovery Officer.
It is to be borne in mind that in IA No. 698/09 this Tribunal vide order dated 16.12.2009 found that there is an unregistered agreement to sell in favour of the petitioner and the power of attorneys and all the documents showed a sham transfer. Thereafter, the Hon'ble DRAT confirmed the order of this Tribunal vide order dated 25.3.2010, It is to be borne in mind that the conveyance deed was executed in favour of the appellant only on 16.5.2011. The appellant was very much aware that the mere agreement to sell did not confer any right on her in the property. When this Tribunal pointed out the draw back in the documentation disentitling her to claim any right over the property when the proceedings were pending she got the conveyance deed executed on 16.5.2011. So the doctrine of lis pendens applies. A conveyance deed was got executed after knowing that the appellant does not possess proper title documents.
It is true that when a conveyance deed is executed in pursuance of an agreement to self-executed prior in time the sale will relate back to the date of execution of the agreement to sell. When the matter was sub-judice before this Tribunal the appellant wanted to make use of this legal provision and the conveyance deed has been got executed.
Ordinarily, if it was a third party transaction there would have been nothing to doubt the genuineness of these transactions. The Counsel for the respondent Bank has pointed out that this is a transaction between the husband and wife. There is no reason why the husband transferred the property in the name of his wife. And the Counsel for the Bank submits that it is definitely to see that the Bank never proceeds against the property as he has been a debtor to the Bank and it is known to the defendants. On the other hand the appellant has pleaded that the relationship become strange and she wanted a permanent accommodation and that is the reason why the property was assigned to her name. The Recovery Officer had issued a show cause how the property was transferred when there was a restraint order passed by this Tribunal. The Town Planner has stated in his reply that the husband of the appellant has submitted an application in September 2002 for transfer of the property in favour of the appellant on the basis of the general power of attorney dated 22.8.2002. The transfer was kept in abeyance to honour the interim order dated 31.1.2005 passed by this Tribunal. The transfer was permitted after the final order was passed and he has stated that there was no intention to disobey the order of the Court. So it is clear that the Town Planner. HUDA was also intimated about the interim order passed by this Tribunal and in order to overcome the restraint order passed against the husband of the appellant, the conveyance deed was got executed through HUDA. The Counsel for the Bank has also pointed out that the stamp paper for the power of attorney has been purchased from different vendors. There is no explanation of her why the stamp paper was purchased from different vendor. The appellant has produced documents to prove that she was having the consideration amount with her for payment. To prove this fact the agreement to sell dated 19.2.2000 in between her and one Mr. R.S. Bajaj which is prepared on mere 2 rupees stamp paper is produced. That agreement shows that the purchaser paid Rs. 12,50,000/- and the receipt dated 19.2.2009 is-produced. On the other hand the case of the appellant is that she wanted a separate accommodation since she had an irreconcilable relation with her husband. If that be so the accommodation would have been demanded from her husband and not obtaining by purchase on payment of cash consideration. The agreement to sell is dated 1.9.2001 but the power of attorney is of a different date i.e. 28.8.2002. Ordinarily, the general power of attorney, will, letter of possession and agreement to sell are executed on the same date. The Counsel for the Bank has also pointed out to certain discrepancies in the registration number noted in the special power of attorney. The special power of attorney is seen registered on 20.8.2002 with Registration No. 1726. But in the certificate Registration No. is given as 6135. There is no explanation offered for this discrepancy. The general power of attorney is registered as No. 1726. The certificate shows Registration No. 6135. If two documents are registered how could the same be with the same Register No. 1726? The Counsel for the respondent Bank stated that the Bank could not obtain certified copy of these documents and it probably shows that there has been no proper registration as contended by the appellant These circumstances will clearly go to show that sham document has been got executed to see that the Bank never proceed against the property of CD No. 4. The conveyance deed executed after the restraint order passed by this Tribunal is only to be treated as void. The CD No. 4 who had executed the conveyance deed and therefore the restraint order will not stand in their way. When there is a conveyance even by HUDA permission of the previous owner is required and everything has been done in a doubtful and suspicious manner. Therefore, the document relied upon by the appellant to prove her title and ownership can never be believed.
The Recovery Officer had legitimately passed an order of attachment in respect of the property 3/14, Garden Estate, Gurgaon, Haryana. As on that date the CD No. 4 was the owner of the property. The document executed in 2011 is found to be sham document executed in violation of order passed by this Tribunal restraining CD No. 4 from creating any alienation in respect of property and that document is treated to be null and void. The appellant cannot claim any right, title and possession of the basis of the document executed on 16.5.2011. That takes back the appellant to a position where she is only a person claiming right over the property on the basis of an agreement to sell. An agreement to sell does not confer any title on the conveyance deed executed on 16.8.2011 is hit by Section 64, CPC but the Recovery Officer has failed to take note of these developments that transpire behind execution of documents. Though not for the reason stated by the Recovery Officer in his order the Recovery Officer was entitled to proceed against the property and therefore the order does not require any correction at the hands of the Appellant Authority. The decision taken by the Recovery Officer to proceed against the property is valid. The appeal is without merit and same is dismissed. The parties are directed to suffer their respective cost."
The appellant-objector then filed this second appeal.
The principal grievance raised in this appeal on behalf of the appellant at the time of oral arguments as well as in the written submissions also filed was that the Recovery Officer had no authority to declare the title documents being relied upon by the appellant-objector were forged and sham while investigating the objections, which even according to the learned Counsel for the appellant-were objector were under Rule 11 of the Rules framed under Second Schedule to the Income Tax Act. In this respect reliance was placed on a judgment of the Hon'ble Supreme Court in the case of "The Tax Recovery Officer "The Tax Recovery Officer v. Gangadhar Vishwanath Ranade", VII (1998) SLT 466 : AIR 1999 SC 427.
Learned Counsel for the Bank while supporting the orders of the Recovery Officer as also of the learned Presiding Officer submitted that there is no merit in this appeal and the appellant-objector has been acting in collusion with her husband who owes to the Bank crores of rupees. It was pointed out that the appellant-objector as per her own case got a conveyance deed in her favour from HUDA on 16.5.2011 which was definitely after attachment order dated 12.5.2011 passed by the Recovery Officer and further that the sale consideration in the said conveyance deed shown is over one crore of rupees while the so called agreement to sell between the appellant and her husband was for Rs. 15 lacs only. That shows the alleged conveyance deed dated 16.5.2001 executed between HUDA and the appellant was neither in pursuance of the earlier agreement to sell nor it could be so as the conveyance deed does not refer to any such prior agreement so the conveyance deed of 2011 cannot relate back to the year 2001.
Before proceeding further to consider the rival submission I deem it appropriate to first notice judgment of the Hon'ble Supreme Court cited by the learned Counsel for the appellant-objector wherein the scope of investigation of objections by third parties against attachment or sale of properties which they claim to be theirs and not of judgment debtor(s) concerned and so not attachable in execution proceedings against judgment debtors was considered. The views expressed by the Apex Court on this aspect of the matter in "The Tax Recovery Officer v. Gangadhar Vishwanath Ranade " (supra), cited by Counsel for the appellant, are being re-produced below:
"The powers of the Tax Recovery Officer, however, under Rule 11 of the Second Schedule to the Income-tax Act are somewhat different. Under Rule 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. Under Rule 11(4), (5) and (6) it is provided as follows:
Rule 11(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 possession of the defaulter or of some person in trust 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.
Rule 11(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.
Rule 11(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."
(Emphasis ours)
The Tax Recovery Officer, therefore, has to examine who is in possession of the property and in what capacity. He can only attach property in possession of the assessee in his own right, or in possession of a tenant or a third party on behalf of/for the benefit of the assessee.......The provisions, therefore, of Rule 11 are analogous to those of Order XXI Rules 58 to 61 and 63 of the CPC as they stood prior to the amendment of the Civil Procedure Code in 1976. In fact, the language of Order XXI Rules 60 and 61 is similar to the language of Rule 11(4) and Rule 11(5) of the Second Schedule to the Income-tax Act. Similarly, the language of Order XXI Rule 63 is similar to the language of Rule 11(6). Rules 59 to 62 of Order XXI, prior to the amendment of 1976, provide for a summary investigation into possession as distinct from a thorough trial of ultimate right. No doubt, it is impossible to separate altogether the question of possession and of title. Thus, if the judgment-debtor was in possession, he may have been in possession as agent or trustee for another; and this has to be enquired into. To that extent title may be apart of the inquiry. Similarly, if the property attached is claimed by a third party who adduces evidence to show that he was possessed of the property under some kind of a title, the property will have to be released from attachment. The procedure is not meant to decide intricate questions of law as to title to the property. Therefore, where a claim is made to the property attached, by someone claiming to be a transferee from the judgment-debtor and the claim is disallowed, the claimant can institute a suit under Order XXI Rule 63 to establish his title to the property. In such a suit it would be open to the attaching creditor to plead in defence that the transfer was in fraud of the general body of creditors and was void under Section 53 of the Transfer of Property Act. Similarly, if the claim of the transferee is allowed, the attaching creditor may sue on behalf of himself and all other creditors under Section 53 of the Transfer of Property Act for a declaration that the transfer was void as it was in fraud of the creditors.
In the case of C. Abdul Shukoor Saheb v. Arji Papa Rao (deceased) by his heirs and LRs. & Ors., this Court considered, inter alia, the nature of proceedings under Order XXI Rules 58 to 61 prior to the amendment of the Civil Procedure Code in 1976. This Court observed, "In the summary proceedings under Order XXI Rules 58 to 61, having regard to the terms of Rule 61, the Court is concerned only with the question as to whether the transferee is in possession of the property in his own right and not on behalf of the judgment-debtor. When a transfer is real, though it is liable to be impeached as a fraud on creditors, and the transferee has entered possession, he would succeed in the summary proceedings, with the result that it is defeated attaching creditor who would have to figure as a plaintiff. In every case, therefore, where a transfer is real, but it is liable to set aside under Section 53(1) of the Transfer of Property Act, on the provisions of Order XXI Rules 58 to 61, Civil Procedure Code, the transferee is bound to succeed in the summary proceedings and the attaching decree-holder would have to figure as a plaintiff........". This Court also held that where the suit is filed by the transferee if the decision in the summary proceedings goes against him, it is open to the attaching creditor to plead in his defence that the transaction is vitiated by fraud and is void under Section 53 of the Transfer of Property Act.
In the light of this discussion about the provisions of Order XXI Rules 58 to 63, if we examine Rule 11(4) of the Second Schedule to the Income-tax Act, it is clear that the Tax Recovery Officer is required to examine whether the possession of the third party is of a claimant in his own right or in trust for the assessee or on account of the assessee. If he comes to a conclusion that the transferee is in possession in his or her own right, he will have to raise the attachment...........
In the present case the Tax Recovery Officer could not have examined whether the transfer was void under Section 281 of the Income-tax Act. His adjudication of the transfer as void under Section 281 is without jurisdiction....nor can the Tax Recovery Officer, white proceeding under Rule 11, declare a transaction of transfer as void......His jurisdiction relates to examining possession, and only incidentally, any question of right to possession as claimed by the Objector........."
(Emphasis supplied)
The following observations made by Bombay High Court in "Ganpati Ram Bhande & Ors. v. Baliram Raghunath Jadhav and Ors., AIR 1974 Bom. 155 may also be noticed:
"(7) The lower Court has committed an error of jurisdiction in not trying the issue which arises under Order XXI Rule 58 of the Code of Civil Procedure, that is, who is in possession of the property liable to attachment on the property liable to attachment on the date of attachment, i.e. 12th of February 1969, and whether the petitioners had some interest in the property on the date of the attachment.
On the basis of the facts which have been set out and the rival contentions which have been raised by the Advocates for the parties, two questions arise for consideration: (1) Has the lower Court properly exercised its jurisdiction under Order XXI, Rule 58 and investigated the claim or objection according to law? and (2) whether the civil revision application is maintainable against such an order?
It is appropriate to first appreciate the scope and content of the inquiry under Order XXI Rule 58, which is admittedly of a summary nature. It is therefore necessary to set out in extensor the provisions of Order XXI, Rules 58 to 61 as to notice that Rule 63 enables the aggrieved party to file a substantive suit after an order under Order XXI, Rule 58 has been made. Rules 58 to 61 of Order XXI are as follows:
"58.(1) Where any claim is preferred to or any objection is made to the attachment of any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to investigate the claim or objection with the like power as regards the examination of the claimant or objector, and in all other respects as if he was a party to the suit:
Provided that no such investigation shall be made where the Court 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 Court ordering the sale may postpone it pending the investigation of the claim or objection."
The claimant or objector must adduce evidence to show that at the date of the attachment he had some interest in, or was possessed of the property attached."
"60. Where upon the said investigation the Court is satisfied that for the reason stated in the claim or objection such property was not, when attached, in the possession of the judgment-debtor or of some person in trust for him, or in the occupancy of a tenant or other person paying rent to him or that, being in the possession of the judgment-debtor at such time, 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 Court shall make an order releasing the property, wholly or to such extent as it thinks fit, from attachment."
"61. Where the Court is satisfied that the property was, at the time it was attached, in the possession of the judgment-debtor 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 Court shall disallow the claim."
Now while considering the scope of Order 21 Rule 58, C.P. Code the Supreme Court in Sawai Singhal v. Union of India, had occasion to observe as follows:
"In this connection, we ought to bear in mind that the scope of the inquiry under Order 21 Rule 58, is very limited and is confined to question of possession as therein indicated while suit brought under Order 21 Rule 63 would be concerned not only with the question of possession, but also with the question of title. Thus the scope of the suit is very different from and wider than that of the investigation under Order 21 Rule 58. In fact, it is the order made in the said investigation that is the cause of action of the suit under Order 21 Rule 63........".
Apart from the observations of the Supreme Court in the aforementioned case, where the question at issue was as to whether a notice under Section 80 of the Civil Procedure Code was necessary before a suit under Order XXI Rule 63 could be filed, there is considerable authority to show that in an investigation under Order XXI Rule 58, the most important fact to be noticed is with regard to possession.
The words in Rule 58 are: "the Court shall proceed to investigate the claim or objection ". It is, therefore, the duty of the Court to investigate a claim preferred to it under this Rule, unless it sees reason to reject it on the ground of delay. It is not in dispute that question of delay does no arise in the case before me.
As to the extent of the investigation, it was pointed out by Lord Hobhouse in Sardhari Lal v. Ambika Prasad, (1888) 15 Ind App 123 (PC):-
"The Code does not prescribe the extent to which the investigation should go; and though in some cases it may be very proper that there should be as full an investigation as if a suit were instituted for the very purpose of trying the question, in other cases it may also be the most prudent and proper course to deliver an opinion on such facts as are before the Subordinate Judge at the time, leaving the aggrieved party to bring the suit which the law allows to him."
It is of course possible to define the extent of the inquiry which would constitute such an investigation as that would depend on the facts of each case. But the next aspect which requires to be noticed is as to what is to be investigated. This is indicated by the Rules 58, 59, 60 and 61, reproduced above. As Rule 58 says, first of all the investigation is of the claim or objection and Rule 59 enjoins the claimant or objector to adduce evidence to show that he had either some interest in, or was possessed of, the property attached on the date of the attachment. Rule 60 provides for release of the property from attachment, if the Court by reason of having made the investigation is satisfied, (a) that the property, when attached, was not in the possession of the judgment-debtor or some person in trust for him, or in the occupancy of a tenant or other person paying rent to him, that is to say, the judgment-debtor or (b) that if it is found that the judgment-debtor was at the time of the attachment in possession of the property, then such possession was not on his own account or as his own property but on account of someone else, and if these conditions are Satisfied, then it would be the duty of the Court to make an order releasing the property. Conversely Rule 61 provides as to when the claim to the property attachment shall be disallowed. This happens when the Court is satisfied that the property at the time of the attachment was in the possession of the judgment-debtor as his own property and not on account of any other person, or was in the possession of some other person who was holding the property in trust for the judgment-debtor, or that the property was in physical possession of a tenant or other person who was paying rent to other person who was paying rent to him, that is to say, the judgment-debtor. In that event, the Court is enjoined to disallow the claim.
In my view, these Rules clearly set out the matters requiring investigation and it is the duty of the Court to apply its mind to these points or factors in order to come to a determination whether the objection petition should be allowed or disallowed.
It is substantially clear that on a proper construction of these Rules the question to be decided is whether on the date of the attachment it was the judgment-debtor who was in possession or it was the objector who was in possession and further when the Court comes to a finding that the property was in the possession of the objector, then the Court must proceed further to find whether that possession of the objector was on his own account for himself or as trustee or on account of the judgment-debtor. It requires to be emphasised that the direction of the investigation, which the Court has to carry out, points to possession being the criteria. It is, of course, possible that in the course of such an investigation as to who is in possession of the property subjected to attachment, the question of some legal right or interest or title may also arise and if such legal right affects the determination of the question as to who is the real person in possession in fact or in law, then such a legal right or interest will naturally have to be taken into account. But it is also settled law that complicated questions as to titled are not to be gone into under the summary procedure of the investigation under Order XXI Rule 58.
It is to be noticed that in the case before me, the learned Civil Judge seems to have been oblivious of what in fact the provisions of Order XXI, Rules 58 to 61 required from him with regard to the investigation of the claim or objection. It is obvious that the learned Civil Judge instead of directing his enquiry into finding out as to who was in possession has concerned himself with a some what collateral question as to who had a superior claim. Now, it is, of course, possible that in a substantive suit under Order XXI Rule 63 that may be a material question, because that would revolve on the question of title. But whether the petitioners or the decree-holders had superior claim over the property was a question which really did not fall for consideration in the proceedings under Order 21 Rule 58, C.P. Code.
The record before the learned Civil Judge, including the averments of the decree-holders in the plaint in Special Civil Suit No. 58 of 1967, clearly showed that there were tenants who were in possession on the land. We are not concerned in this civil revision petition with Survey No. 2 but only with Survey No. 10. But it cannot be disputed that Survey No. 10 was also in the possession of tenants who had certain statutory rights under the various tenancy enactments and it is also on record that is was because Gopalrao, the judgment-debtor, was unable to obtain a surrender from these very tenants that the transaction between him and the decree-holders Baliram and Jaiwant fell through, resulting in the suit being filed and thereafter the consent decree being obtained.
If, therefore, it was obvious or should have been obvious to the learned Civil Judge that there was tenants on the land, then taking into accounts the fact that the objection petitioners had in their claim or objection clearly set out their interest in the land by reasons of the three registered sale deeds executed in their favour by Gopalrao, the previous owner of the land, the learned Civil Judge should have proceeded to direct his inquiry into finding out as to on whose behalf these tenants were in possession and to whom these tenants were paying rent. In other words, if due regard had been paid to the provisions of Rules 59, 60 and 61 the learned Civil Judge had to investigate the claim on the footing that the petitioners were bona fide purchasers for value under registered sale deed. It is not clear as to whether the decree-holders Baliram and Jaiwant ever challenged the validity of these sale deeds, but assuming that they had, then that would have still been a question of title. But it could not be gainsaid that on the basis of the registered sale deed, the petitioners "had some interest in the property attached" within the meaning of Rule 59. The question which was required to be investigated was if the possession of the tenants who were admittedly on the land was on account of Gopalrao, the judgment-debtor or on account of the petitioners as the purchasers of the property from Gopalrao.
Instead of directing himself to such a kind of inquiry, which is clearly contemplated and enjoined by Rules 58, 59, 60 and 61, the learned Civil Judge misdirected himself by proceeding to determine a collateral question as to whose claim was superior.
In the result, it appears to me that the learned Civil Judge failed to carry on the investigation enjoined by Order XXI Rule 58 of the Code of Civil Procedure, he failed to enquire as to who was in possession and on whose account. I am, therefore, satisfied that the essential question which had to be decided by the learned Civil Judge has not at all been decided by him and the conclusion is, therefore, inescapable that the learned Civil Judge failed to exercise jurisdiction vested in him under Order XXI Rule 58 and otherwise acted with material irregularity and that, therefore, the order dated 24th December, 1970 is liable to be set aside.
...............In this connection it may not be out of place to refer to an observation of the House of Lords in Bench (H.M. Inspector of Taxes) v. Doncaster Amalgamated Colliery Ltd., (1946) 27 Tax Cas 296, which is as follows:
"Unless the Commissioners, having found the relevant facts and put to themselves the proper questions having proceeded to give the right answer, they may be said on this view to have erred in point of law."
There can be no disagreement with this said proposition of law and applying it to the facts of the present case one can only come to the conclusion that the learned Civil Judge did not at all ask himself the proper question. He thus failed to exercise the jurisdiction vested in him under Order XXI Rule 58 read with Rules 59, 60 and 61 of the Civil Procedure Code. The error committed by the learned Civil Judge was clearly in relation to the jurisdiction of the Court. On this finding this revision petition is not only maintainable but ought to be allowed.
In the circumstances I allow the revision petition and set aside the order of the trial Court and remand the matter back to it to be tried in accordance with law."
In the present case, recovery certificate was issued against the borrower Firm as well as against the three guarantors including the husband of the appellant-objector for the amount which had been claimed by the respondent No. 1 Bank Thereafter recovery certificate was forwarded to the concerned Recovery Officer for execution. The Recovery Officer was then supposed to issue a demand notice upon the certificate debtors as provided under Rule 2 of the Rules under the Second Schedule to the Income Tax Act. Rule 4 refers to the date of service of demand notice under Rule 2 only. Rule 4 has been noticed by the Apex Court in its above referred judgment referred to in the preceding para. The Recovery Officer while investigating third party objections was required to notice in the order disposing of the objections as to when the said demand notice was served on the certificate debtor(s) and whether on that date the concerned certificate debtor whose property stood attached was in possession of that property or someone else, like the appellant who was claiming to be in actual possession right from the year 2001, was in occupation on behalf of the certificate debtor concerned or as to whether any third party was in occupation in his/her independent legal right like in the present case the appellant-objector was claiming to in occupation of the property in dispute as its full owner from September, 2001 onwards. However, the learned Recovery Officer in the present case did not even refer to Rule 11 nor did he examine the matter in the light of the law laid down by the Hon'ble Supreme Court in Ranade's judgment (supra). He had focussed his attention only on one point that the certificate debtor No. 4, husband of the objector (appellant herein) had transferred the property in her favour when there was an order of injunction passed during the pendency of the O.A. in operation inasmuch as the conveyance deed in favour of the objector was executed by HUDA on 16.5.2011 in defiance of the order of injunction passed on 31.10.2005 in the Bank's O.A. and consequently the sale was void.
As far as the 'investigation' into the bona fides of the title which the appellant-objector was claiming the learned Recovery Officer no doubt had returned a finding that all the documents including the alleged agreement to sell and power of attorneys allegedly executed in her favour by her husband in the years 2001-2002 but in my view that finding was given by adopting correct procedure of 'investigation'. When the appellant-objector had lodged a complaint with the Recovery Officer that her husband, with whom she had strained relations, had sold the property in dispute to her and so that property was not attachable or saleable in execution of the recovery certificate issued by the DRT against her husband, the Recovery Officer should have started the investigation by requiring her husband, judgment debtor who undisputedly was the owner of the property in dispute, to appear before him and to admit or deny the claim of his wife that way back in the year 2001 he had divested himself of all right and interest in the property in dispute by entering into an agreement to sell with his wife and by accepting the sale consideration of Rs. 15,00,000/- and delivering possession also of the property to her. If he had been served with a notice of demand under Rule 2 of the Rules under the Second Schedule of Income Tax Act it was for him to come forward to object to the contemplated move of the certificate holder Bank to have his property attached and auctioned for recovery of the decretal money or part thereof. Since he had not appeared even in O.A. proceedings and did not even come forward to raise any objections against recovery proceedings it can be safely presumed that he did that because he knew that he had to pay the decretal amount and that money could be recovered from the sale proceeds of the property in dispute in case the Recovery Officer would decide to recover the money by selling his property. Now, in case the objections of his wife had been upheld the consequence would have been that he would have become to pay the entire decretal amount of over a crore of rupees from his other assets. In case notice of the objections had been given to him, which was not given, he could have denied having executed any documents in favour of his wife, as was being claimed by her and that denial could have changed the entire complexion of the game. And in this appeal also if this Tribunal were to reverse the decision of the DRT and Recovery Officer the effect would be that there will be finding against the husband of the appellant that he had ceased to be the owner of the property in dispute in the year 2001-2002. In my view, it would not be appropriate to return any such finding against him in his absence and, therefore, even the Recovery Officer ought not to have gone ahead with the investigation into the bona fides of the title claim of the appellant-objector without intimating him of the objections having been filed by his wife.
Even the learned DRT did not take all these aspects into consideration while maintaining the decision of its Recovery Officer and so the appellate order also was not correctly passed and needs to be set aside.
For the foregoing reasons, the matter will have to be remanded back to the Recovery Officer with a direction to conduct proper 'investigation' into the claim/objections of the appellant herein under Rule 11 of the Rules framed under the Second Schedule to the Income Tax Act and also keeping in mind the judgment of the Hon'ble Supreme Court in Ranade's case (supra) and of Bombay High Court made in its judgment referred to already as well as the observations made by this Tribunal in this order of remand. All this shall be done after giving notice to the husband of the appellant-objector. Fresh decision shall be taken by the Recovery Officer uninfluenced by the observations made by him in his earlier impugned order and the DRT's impugned order which now stand set aside.
The Recovery Officer shall now take up the matter on 14.9.2018 at 2 p.m. for issuing appropriate orders and all efforts should be made to complete the investigation within a period of four months. In case the investigation is not completed within the said period a report shall be submitted to this Tribunal. The learned Presiding Officer of DRT shall also monitor the proceedings conducted by his Recovery Officer in compliance of this order and he shall also submit a report to this Tribunal after the expiry of four months period. Copies of this order will be forwarded by the Registry to the Presiding Officer of DRT along with its records and to the Recovery Officer also.