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Judgment
P.K. Bhasin, J
Respondent No. 5 Shri Kanwal Kapoor had filed objections under Rule 11 of the Rules framed under the Second Schedule to the Income Tax Act, 1961 when the Recovery Officer attached to the Debt Recovery Tribunal-I, Delhi had passed an order of attachment on 8.10.2012 in respect of property No. D-137, Anand Niketan, New Delhi (hereinafter to be referred to as 'the property in question') in order to recover the 'public money' amounting to Rs. 63,31,611/- with interest from respondent Nos. 1 to 4 herein against whom the DRT had earlier on 6.6.2007 issued a recovery certificate in appellant Bank's Original Application (O.A.) No. 260/1995 filed under Section 19 of The Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Bank had initially filed a mortgage suit in the High Court of Delhi sometime in the year 1988 but that suit came to be transferred to the DRT on the establishment of DRTs under the said Act of 1993. The objector had challenged the move of the Recovery Officer to sell the property in question on the ground that he was owner thereof in his independent right having purchased the same from the erstwhile owner Shri Ram Narayan Gogia, respondent No. 4 herein, who was also the guarantor for the repayment of the loan advanced by the appellant Bank to respondent Nos. 1 and 2 herein, and since it was a leasehold property having been leased out to the lessee Ram Narayan Gogia by Delhi Development Authority (DDA), a registered conveyance deed was executed in his favour by DDA on 25.10.1994 after it was converted into a freehold plot. He had also claimed that he was in fact in possession of the plot since the year 1976 pursuant to an agreement to sell executed in his favour by Shri Ram Narayan Gogia on 10.12.1976 after he had paid sale consideration to the said vendor. The objector thus prayed for lifting of attachment of the property in question and for dropping the move to auction the same.
The Recovery Officer allowed the objections of the objector vide his order dated 3.7.2014. Relevant portions from that order are as under:
"The objector namely Kanwal Kapoor, filed the objection against the Order of attachment dated 8.10.2012 with reference to property bearing No. D-137, Anand Niketan, New Delhi in the Registry vide Dy. No. 6162 dated 6.11.2012 wherein it is submitted that the above said property is neither a mortgage property nor the personal assets of the alleged guarantor i.e. Shri Ram Narayan Gogia. The objector is bona fide purchaser of the said property vide agreement to sale dated 10.12.1976 for valuable consideration from Shri Ram Narayan Gogia..... Shri Ram Narayan Gogia being a member of the said society was allotted the said land measuring 236.30 square yards in Anand Niketan out of the land lease to the said Cooperative Housing Building Society and sublease deed dated 11.2.1969 was executed by the President of India through the DDA in favour of Shri Ram Narayan Gogia......
The original sub-lease deed dated 11.2.1969 w.r.t. the said property in favour of Shri Ram Narayan Gogia was duly handed over to the objector on 10.12.1976 and the entire sale consideration of Rs. 23,630/- was paid on the said date by the Objector to Shri Ram Narayan Gogia and duly acknowledged by Shri Ram Narayan Gogia and the actual physical possession of the said plot was duly handed over to the objector. Shri Ram Narayan Gogia has also executed the power of attorney dated 10.12.1976 in favour of Smt. Neetu Kapoor the wife of the objector herein w.r.t the said property and after permission from the lesser i.e. DDA the property converted into free hold and a conveyance deed dated 25.10.1994 was duly executed by the President of India through the DDA in favour of Shri Kanwal of Shri Ram Naryyan Gogia and the said conveyance deed is duly registered in favour of the objector herein.
The objector herein has been actual physical and peaceful possession since 10.12.1976 and has approval of the MCD, duly constructed a four storey building on the said plot. The objector was shocked to see the order of the attachment of dated 8.10.2012 affixed on the said premises.............
It is further stated that no mortgage was created or the title deeds has ever been deposited by the alleged guarantor Shri Ram Narayan Gogia and no original documents of the title have been placed on the record by the Bank in the OA proceeding and no prayer for attached/restrained order or sale of the aforesaid property has been prayed for by the CH Bank in OA it is reiterated that Bank had only declaration with reference to the immovable property mentioned in Schedule 'A' which does not at all mention that property in question.
It is further stated that no mortgage was ever created by Shri Ram Narayan Gogia in favour of the CH Bank and no title deed of the said property were ever deposited by the Bank and the Bank has never been in possession of the title deed of the said property and moreover at the time of the alleged mortgage, the said property was a lease hold property and could not have been mortgage without the permission of the DDA. Hence the alleged mortgage, if any, is not a valid mortgage in the eyes of law. The said property in question is neither mortgage property nor the personal assets of CD.
In view of the above aforesaid the said property cannot be attached or sold for the satisfaction of this RC and the objector is neither the mortgagor nor the guarantor in the said RC and the personal assets of the objector cannot be attached for the satisfaction of the dues of the third person.
The CH Bank has filed the written submission.......wherein they have submitted that.....the property at D-137, Anand Niketan, New Delhi was offered as a security while replacing the properties already kept as a security in the year 1978. Shri Ram Narayan Gogia have deposited the title deeds of the above said property on 7.12.1978 with an intention to create equitable mortgage. The above said property besides other properties mentioned in the OA were kept as Collateral Securities................
The Hon'ble Presiding Officer passed the judgment on 6.6.2007 against the defendants in the OA including Shri Ram Narayan Gogia and the claim of the CH Bank regarding mortgage right over the property at D-137, Anand Niketan, New Delhi was reiterated in the judgment and consequently, a recovery certificate was issued against all the defendants including Shri Ram Narayan Gogia and the CDs were restrained from alienating or creating third party interest in the properties mortgage with the CH Bank and further held that in the event of failure to repay the recovery amount together with interest and cost, the CH Bank will be entitled to sale all the mortgage properties of the defendant Nos. 1 to 4 as detailed in the claim.
It is denied that the Objector is the bona fide purchaser of the property in question. Even otherwise any transaction after a valid mortgaged interest/charge having being created in favour of CH Bank is subject to prior charge of CH Bank. It is further submitted that alleged conversion of property into free hold is done without the consent of the CH Bank as mortgagee or without their knowledge. Therefore, the subsequent transfer based on the purported conveyance deed dated 25.10.1994 is subject to prior valid charge of CH Bank.
It is denied that the objector has been in actual and physical possession of plot since 10.12.1976. The confirmation of deposit of title deed by Shri Ram Narayan Gogia qua the property at Anand Niketan in favour of CH Bank has been proved in evidence. Thus a valid mortgaged or charge has been created in favour of CH Bank with the intention of the mortgagor to mortgage.
It is further submitted by the CH Bank that at the time of creation of the mortgage Shri Ram Narayan Gogia was holding a valid lease hold right and interest in the property in question and such right has been transferred by way of mortgage/charge in favour of CH Bank. It is denied that the mortgage created by Ram Narayan Gogia is not valid in the eyes of law and any further purported transfer of title is subject to prior charge of CH Bank
ORDER
On perusal of the written submission and the argument advanced by both the parties, it is observed that the CD viz namely Ram Nrayyan Gogia offered the property No. D-137, Anand Niketan, New Delhi as a security in the year 1978 and have deposited the title deeds of the above said property on 7.12.1978 with an intention to create equitable mortgage and the CD has also signed the guarantee agreement on 3.1.1979 and has also executed a confirmation of memorandum of deposit of title deeds on 4.1.1979, whereby confirming the deposit of the title deed as a security for the repayment of the amount mentioned with the interest and other charges.
The objector submitted that he is the bona fide purchaser of the said property vide agreement to sale dated 10.12.1976 for valuable consideration from CD and the sub-lease deed dated 11.2.1969 was executed by the President of India through DDA in favour of Shri Ram Narayan Gogia and Shri Ram Narayan Gogia executed power of attorney in favour of Smt. Neetu Kapoor w/o Shri Kanwal Kapoor on 10.12.1976 and agreement to sale was executed in favour of Shri Kanwal Kapoor S/o. Shri Harkishan Lal Kapoor by Shri Ram Narayan Gogia.
It is further stated by the objector that CD has also executed the power of attorney dated 10.12.1976 in favour of Smt. Neetu Kapoor, the wife of the objector herein w.r.t. that said property and after permission from the lessor i.e. DDA got the property converted into free hold and a conveyance deed dated 25.10.1994 duly executed by the DDA in favour of Shri Kanwal Kapoor, the purchaser through Smt. Neetu Kapoor, the attorney of CD and the said conveyance deed is duly registered in favour of the objector.
In view of the above stated facts and circumstances, it is observe that the mortgage qua the property bearing No. D-137, Anand Niketan, New Delhi in favour of CH Bank has been created subsequent to purchase the property in question by the objector. As per Section 48 of the TPA Act, the objector has the priority right in the property in question as the objector has purchased the aforesaid property before the creating of the mortgage in favour of the CH Bank.
Section 47 of the Registration Act, provides that a document executed earlier, though registered later, shall be effective and operative from the date of its execution.
In this matter, although the sale deed of the property in question was made on 25.10.1994 but the sale deed as per the Section 47 of the Registration Act, shall relate back to the date of execution i.e. 10.12.1976 the date when the agreement to sell qua the property in question has been made by the CDs.
In view of the above, the objection of the objector are allowed......"
This order of the Recovery Officer was challenged by CH Bank before the learned Presiding Officer of DRT but that appeal (being M.A. No. 54/2014) was rejected vide order dated 3.3.2015. That order is also re-produced below:
ORDER
This is an appeal under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act challenging the order dated 16.7.2014 passed by the Recovery Officer in RC No. 05/207 in OA No. 260 of 1995.
The appeal related to the property D-137, Anand Niketan, New Delhi. This property belonged to Shri Ram Narayan Gogia who was a guarantor. According to the appellant Bank Shri Ram Narayan Gogia, D4 had deposited title deed of this property on 7.12.1978 and confirmed the mortgage on 4.1.1979. This Tribunal in the final judgment dated 6.6.2007 in OA No. 260/1995 held that the Bank shall be entitled to recover the debt by sale of the mortgage property. The Tribunal has recorded the finding that there is a mortgage in respect of the property by D4 Shri Ram Narayan Gogia.
The Recovery Officer passed an order of attachment of this property on 8.10.2012. Shri Kanwal Kapoor filed a claim petition under Rule 11 of Second Schedule to the Income Tax Act before Recovery Officer when the attachment order was served on the property. The objector stated that the property belongs to him independently, he is a bona fide purchaser of the mortgage property vide agreement sale dated 10.12.1976, the conveyance deed was got executed on 25.10.1994, thereby the sale related back to 10.12.1976, the mortgage is subsequent to the sale and thereby the property is owned by Shri Kanwal Kapoor free from encumbrances of mortgage claimed by Shri Kanwal Kapoor.
The Recovery Officer upheld the contentions of the claim petitioner and hence the appeal by the appellant Bank.
Shri Kanwal Kapoor had purchased the property vide agreement to sell dated 10.12.1976 from DA, Shri Ram Narayan Gogia. Anand Niketan Co-operative Housing Building Society was allotted plot in Basant Nagar, Mohammad Pur vide perpetual lease deed dated 3.2.1967. Shri Ram Narayan Gogia was a member of the society. He was allotted land measuring 236.30 sq. yds. The DDA had executed a sub-lease deed in his favour. Shri Ram Narayan Gogia had executed a Power of Attorney on 10.12.1976 in favour of Smt. Neetu Kapoor and on agreement to sale in favour of Shri Kanwal Kapoor, Shri Kanwal Kapoor had paid the entire sale consideration of Rs. 23,630/-. Physical possession of the property was delivered to Shri Kanwal Kapoor, Shri Kanwal Kapoor after taking permission from DDA converted the property into free hold and the conveyance deed was executed on 25.10.1994 in favour of Shri Kanwal Kapoor. There cannot be any dispute on the above facts because these facts are borne out by records and Shri Kanwal Kapoor has produced sufficient documents to prove possession of the property.
Immediate legal issue that will come up for consideration in this case is whether the mortgage is prior in point of time when the Shri Kanwal Kapoor obtained title over the property. There cannot be any dispute on the settled legal proposition that when a registered sale deed is executed in relation to a property on which there is an agreement to sale, the sale will relate back to the date of agreement. Section 64 of the Code of Civil Procedure' says that a private alienation of the property after attachment shall be void. The exception to this Rule is that it shall not apply to any private transfer of the property attached or of any interest therein, made in pursuance of any contract for such transfer or delivery entered into and registered before the attachment.
In the case on hand the mortgage was created by Shri Ram Narayan Gogia on 7.12.1978 by deposit of title deed and the mortgage was confirmed on 4.1.1979. But even before that Shri Ram Narayan Gogia had executed agreement to sale on 10.12.1976 in favour of Shri Kanwal Kapoor and the title was perfected by conveyance deed registered on 25.10.1994. The sale relates back to 10.12.1976. Thereafter a four storeyed building was also constructed in the land. All these facts are proved by documents. Therefore by operation of Section 48 of the 'Transfer of Property Act' the owner of the property gets preferential right. Shri Ram Narayan Gogia could not have created mortgage in respect of this property.
The Counsel for the appellant submitted that the mortgage has been upheld by this Tribunal in the judgment in O.A. No. 260/1995 but in OA No. 260/1995 Shri Kanwal Kapoor was not a party and the finding is not binding on him. When the claim petition was lodged the Recovery Officer was bound to conduct an investigation on the same and after such investigation the Recovery Officer has come to just finding. Thus, the order dated 16.7.2014 passed by the Recovery Officer does not suffer from any infirmity. The appeal is devoid of merits and the same stands dismissed. Parties are directed to suffer their cost."
From the aforesaid two impugned orders it becomes evident that property in question was equitably mortgaged by its owner in favour of the appellant Bank sometime in 1978-79 to secure the loan advanced by it to respondents 1 and 2 herein. The objector or the borrowers as well as the mortgagor have not challenged these observations of the Recovery Officer as well as of DRT. Though an attempt was made in this appeal on behalf of the successful objector by his learned Counsel to show that there was in fact no proof of mortgaged submitted in the O.A. and in any case no mortgage could be created without prior permission of DDA which was never obtained by the alleged mortgagor but in my considered view now it is too late in the day to reopen that issue in the present proceedings at least. If the objector was of the view that there was no mortgage at all of the property in question and he had already become owner thereof and the alleged mortgagor (respondent No. 4 herein) was left with no right to mortgage the property in question after agreeing to sell the same to the objector he could have approached the DRT itself under Section 19(25) of the RDDBFI Act, 1993 and got the finding about mortgage reversed on the ground of fraud or concealment of fact of objector being already in possession as owner in 1978-79 when the so called mortgage by deposit of title deed. This remedy being available to an objector like the objector of the present case was recognised even by Bombay High Court in a judgment in the case of Dr. Anil Nandkishor Tiberewala v. Jammu and Kashmir Bank, I (2007) BC 6. The Recovery Officer could not have come to a contrary conclusion in the recovery proceedings. The relevant paras of this judgment of Bombay High Court are re-produced below:
"17. The other remedy which is available in respect of an order passed by Recovery Officer, is Section 30 of the Act. By virtue of Section 30 notwithstanding anything contained in Section 29, any person aggrieved by an order of the Recovery Officer made under the Act has to challenge that order within thirty days. Section 26(1) of the Act will also have to be considered, which reads as under:
26(1). It shall not be open to the defendant to dispute before the Recovery Officer the correctness of the amount specified in the certificate, and no objection to the certificate on any other ground shall also be entertained by the Recovery Officer.
In other words, it is not open to the Recovery Officer to go beyond the certificate. The grant of declaration in favour of a financial institution, cannot be gone into by the Recovery Officer. The Recovery Officer having no power to go in that issue, the question of Section 30 being an effective remedy would again be elusive. In our opinion, therefore, the remedy under Section 30 in a case where the Tribunal has given a declaration would again be elusive and non effective, as the Recovery Officer cannot go behind the order or certificate issued by the Tribunal and/or Recovery Officer.
We may now refer to the provisions of Section 29 of the RDB Act. Section 29 makes applicable the provisions of the Second and Third Schedules of the Income-tax Act and the Income-tax (Certificate Proceedings) Rules, 1962, applicable for execution of the recovery certificate under the RDB Act. Under the Second Schedule, proviso, recovery of tax in the instant case for the recovery of amount under the order/certificate various modes of recovery have set out under Rule 4. Under Order 38 Rule 11 of the Code of Civil Procedure, if a claim is preferred or objection is preferred for attachment or sale in execution of the certificate on the ground that such property is not liable for such attachment or sale, it is open to the Investigating Officer to examine the same. Here also, the same difficulty would arise inasmuch as what the Investigating Officer can do is to hear the challenge to the attachment. It will not be open to the Investigating Officer to go behind the order or certificate. If the order and/or the certificate has given a declaration that the property is validly mortgaged in favour of the financial institution, such an exercise cannot be undertaken by the Investigating Officer. It is only in the event, if there been order/certificate for money and pursuant to that certificate, property of the judgment debtor is sought to be recovered in terms of Rule 4 or recovery by attachment or sale of immovable property then only Rule 11 apply. That rule will not apply in a case where the property was mortgaged and where the declaration was given in favour of the financial institution. The remedy, therefore, under Section 29 also is not available to a party like the petitioners. Our attention is invited to the judgment of a learned Judge of the Karnataka High Court in the case of Actia Technologies P. Ltd. v. Canara Bank, (2005) 126 Comp Case 917 : [2006] 2 Bank CLR 169. In that case the property was put for sale by the Recovery Officer. The contention of the petitioners was that the property never belonged to the judgment debtor nor was mortgaged with the Bank as a security of payment of loan amount. The Court after observing the various provisions of the Act, came to the conclusion that a writ petition could not be entertained, as an alternate remedy was available to the petitioners before it. In that case on the facts we may note that there appears to have been no declaration given by the Tribunal that the property was validly mortgaged.
Does the Act provide any remedy to a person like the petitioners. The Court while considering the legislation which has created a special mechanism for recovery of dues of financial institution and bearing in mind the various provisions earlier referred which exclude the jurisdiction of other Courts and Tribunals will have to examine, whether an effective remedy is available under the Act itself. If a remedy is not available under the Act, a party may have a remedy at civil law. If an aggrieved person was not party to the proceedings before the Debts Recovery Tribunal, and a party to the proceedings has secured a decree, based on a fraudulent document, the jurisdiction of the Civil Court in such a case normally should not be ousted. For examining whether there is a provision under the Act, let us consider Section 19(25) of the RDB Act, which reads as under:
19(25). The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.
A reading of this provision would indicate that there is a power in the Tribunal to give orders or directions to prevent abuse of its process or to secure the ends of justice. It is open to the Tribunal to lay down its own procedure and it is not hidebound by the procedural, provisions of the Code of Civil Procedure. At the same time certain provisions of the Code of Civil Procedure have been conferred on the Tribunal. The expression "prevent abuse of its process" "or to secure the ends of justice" in our opinion would be wide enough to cover a case where a financial institution has obtained an order or the certificate pursuant to a mortgage created by the judgment debtor based on a fraudulent document, like for instance the property not belonging to the judgment debtor. If such party comes before the Court and points out to the Court that the mortgage created is sham and/or bogus, the Tribunal to prevent abuse of its process, can assume jurisdiction under Section 19(25) to decide that issue and for that purpose exercise powers conferred under Section 22 of the Act. On aggrieved person being allowed to participate in the proceedings, it will be open to the Tribunal to review the order or pass such other order to secure the ends of justice. We are, therefore, of the clear view that in those cases where the Recovery Officer cannot go beyond the certificate, a party like the petitioners who claims title in the property or interest in the property can move the Tribunal by invoking jurisdiction of the Tribunal under Section 19(25), and in such cases if a prima facie case is disclosed before the Tribunal, the Tribunal is bound to consider the application so moved and dispose it according to law, after giving an opportunity to all parties before it."
Thus, even if the objector were to say that the decision of the DRT that there was a valid mortgage of the property in question in favour of the appellant Bank was not sustainable having been given in absence of all the relevant circumstances/facts being brought to its notice by the parties and the objector in any case was not bound with that decision being not a party in the O.A. the remedy for him was to approach the same DRT which had found that there was a valid mortgage of the property in question in favour of the appellant Bank much before the objector had got the title over that property in 1994. He cannot be permitted to urge even before this Appellate Tribunal that the decision of the DRT in the Bank's O.A. was wrong or as a result of misrepresentation, concealment of facts or any kind of fraud etc.
It was the objection of the objector before the Recovery Officer that he was in possession of the property in question in his independent right as its owner on the date of its attachment by the Recovery Officer. This claim of the objector found favour with the Recovery Officer and then with the learned Presiding Officer of DRT also when the Bank had challenged the order of the Recovery Officer. However, the conveyance deed in favour of the objector was executed by DDA on 25.10.1994 which was undisputedly much after the creation of the equitable mortgage of the property in question.
The Recovery Officer as well as the learned Presiding Officer of DRT have both accepted the contention of the objector that the execution and registration the title document in his favour by DDA will relate back to 1976 when he claimed to have come into possession of the property in question, which at that time was only a plot of land. For this conclusion Section 47 of the Registration Act has been relied upon. Section 47 of Registration Act reads as under:
"47. Time from which registered document operates-A registered document shall operate from the time which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration."
A bare reading of this section shows that registration of any the particular document registered on a date subsequent to the date of its execution will relate back to the date of execution even though the document is registered on a subsequent date. This section does not at all lay down that if a sale deed is executed and registered on a date subsequent to the date of any prior agreement to sell the sale deed will relate back to the date of that agreement to sell (which in the present case was allegedly executed in December, 1976 and sale deed after about eighteen years in October, 1994). If the sale/conveyance deed in favour of the objector by DDA had been executed prior to the creation of mortgage of the property in question in favour of the appellant Bank but was not registered at that time but subsequently after the mortgage then only the sale document in favour of the objector would have related back to the date of execution of the sale/conveyance deed and not otherwise.
The learned Counsel for the objector had argued that the objector being in physical possession of the property in question since the year 1976 pursuant to the agreement to sell executed by the mortgagor of that property in his favour, he is lawfully entitled to protect his possession as well as property despite the fact that conveyance deed was executed in his favour by DDA in the year 1994 and this is what was required to be investigated by the Recovery Officer and he had come to the conclusion that the objector was in possession since 1976 and so requirement of Rule 11 was satisfied. Under Rule 11 the Recovery Officer was to satisfy himself that on the date when demand notice under Rule 2 of the Rules under the second schedule of the Income Tax Act was served upon the certificate debtor (the mortgagor here from whom the objector had purchased the property in question) the objector was in possession in his own right and not on behalf of the certificate debtor and since the objector was in possession on the relevant date as complete owner of the property sought to be auctioned after attachment the Recovery Officer, submitted the learned Counsel, was right in lifting the attachment. In support of the objections, which already stand allowed in his favour by the learned Recovery Officer as well as the learned Presiding Officer of DRT, the learned Counsel for the objector had cited the following judgments before this Tribunal:
(i) Union of India v. Delhi High Court Bar Association, II (2002) BC 194 (SC) : II (2002) SLT 556 : 96 (2002) DLT 726 (SC) : (2002) 4 SCC 275.
(ii) O.P. Dawar v. Sunil Kumar & Anr., 156 (2009) DLT 378 (DB).
(iii) Nahar Industrial Enterprises Ltd. v. Hong Kong and Shanghai Banking Corporation, III (2009) BC 539 (SC) : V (2009) SLT 737 : (2009) 8 SCC 646.
(iv) Suraj Lamp and Industries Private Limited (2) v. State of Haryana, 183 (2011) DLT 1 (SC) : VII (2011) SLT 494 : IV (2011) CLT 8 (SC) : (2012) 1 SCC 656.
(v) State of Haryana & Ors. v. Narvir Singh & Anr. VIII (2013) SLT 690 : (2014) 1 SCC 105.
(vi) Maya Devi v. Lalta Prasad, II (2014) SLT 337, Civil Appeal No. 2458 of 20.14, decided on 10.2.2014.
(vii) Reliance Industries Ltd. v. M/s. Vijay Cable Industries & Ors., 227 (2016) DLT 271 (DB).
(viii) Swaraj Kishore Arora v. Indian Bank & Ors., 230 (2016) DLT 269 (DB).
The learned Counsel for the appellant Bank, on the other hand, had submitted that even though the objector was claiming right and title in respect of the property in question on the basis of conveyance deed executed in October 1994, but that conveyance deed having been executed after creation of equitable mortgage of the property in question in favour of the Bank, all that the objector acquired under the conveyance deed was the right which remained with the mortgagor on the date of creation of the equitable mortgage and nothing beyond that. It was further contended that after creation of equitable mortgage, the mortgagor's interest in the property in question stood transferred in favour of the mortgagee Bank subject, of course, to the right of the mortgagor to redeem the mortgage by clearing the Bank's dues in accordance with the law applicable to redemption of mortgages. Therefore, Counsel further submitted, the objector could only ask for redemption of the mortgage by clearing the Bank's dues and since he had simply stepped into the shoes of the mortgagor Shri Ram Narayan Gogia, he could not have filed any objections under Rule 11 of the Rules under the Second Schedule to the Income Tax Act since under that rule only a third party can file objections for lifting of attachment ordered by the Recovery Officer and for setting aside the sale, if sold already, on the ground that the objector was in possession of the property attached or sold on the date of service of demand notice under Rule 2 upon certificate-debtor/mortgagor on receipt of recovery certificate from the DRT in his own right and not on behalf of the certificate debtor concerned. Here, however, the possession of the objector has to be considered to be that of certificate-debtor/mortgagor only since the right purchased by the objector under the conveyance deed dated 25.10.1994 was only a right to clear the dues of the Bank and to redeem the property since the property in question stood mortgaged in favour of the certificate holder Bank, appellant herein prior to the execution and registration of the conveyance deed in October, 1994 by DDA.
I am in full agreement with the submissions of the learned Counsel for the appellant Bank. Legally speaking, the objector's title over the property in question came into existence only on execution of a registered conveyance deed in his favour and not before that. The conveyance deed in favour of the objector having been executed and registered after the creation of the equitable mortgage in favour of the Bank, the only right which the objector acquired under the conveyance deed was to clear the dues of the Bank and get the mortgage redeemed since he had simply stepped into the shoes of the mortgagor who could not transfer more than what he himself possessed on the date of execution of conveyance deed in favour of the objector through his (mortgagor's) attorney i.e. right to redeem the mortgage upon clearing the mortgagee Bank's (appellant herein) dues as determined by the DRT in the Bank's O.A. for the recovery of which the property in question was being sought to be taken over and auctioned. Till the Bank's entire dues are cleared, the Bank as the certificate-holder is entitled to get the property in question attached and sold also in auction through the Recovery Officer who has to execute the recovery certificate issued in favour of the Bank by the learned DRT. The objector cannot claim that he had become owner of the property in question in the year 1976 under the agreement to sell allegedly executed in his favour by the owner/mortgagor. In view of this conclusion I need not go into the question as to why the objector waited for eighteen long years to have the sale completed in his favour despite the fact that the vendor/mortgagor had also allegedly appointed his (objector's) wife as his attorney. Reliance placed on Section 47 of the Registration Act by the objector and then by the Recovery Officer as well as the DRT was totally misplaced and the objector could not claim himself to be the owner from the year 1976 on the basis of Section 47 of the Registration Act. None of the judgments relied upon by the objector (respondent No. 5 herein) comes to his rescue as far as legal position involved in the present case as noticed already is concerned. In none of the cited judgments the question whether registration of sale deed will make it operative from the date of execution of an agreement to sell and as to the rights which get acquired by a purchaser of a mortgaged property were involved or examined. Consequently, the objections ought to have been rejected as being not maintainable under Rule 11 even going by the objector's own case set up in his objection petition.
This appeal is accordingly allowed. The orders passed by the learned Recovery Officer and then by the learned Presiding Officer on 3.7.2014 and 3.3.2015 respectively are hereby set aside. The Recovery Officer shall now be at liberty to proceed to take physical possession of the property in question and then to sell the same in public auction. However, the objector shall still be at liberty to clear the Bank's dues and to have the mortgage redeemed in accordance with law. In case the objector decides to clear the Bank's dues, the same must be done within a period of two weeks from the date of receipt of copy of this order, failing which the Recovery Officer shall proceed further to take over the possession of the property in question in exercise of his power under Section 25(aa) of the Recovery of Debts and Insolvency Act, 1993 and then to auction the same so that public money is recovered without any further delay. After the expiry of period of fifteen days if the objector does not pay the Bank's dues the Recovery Officer shall submit a report to this Tribunal regarding the status of recovery proceedings considering which would reflect as to why even otherwise also the amount of money recoverable under the Recovery Certificate issued by the DRT more than a decade ago and for which recovery the Bank is fighting for its dues from the year 1988 could not be recovered. A copy of this order shall be supplied to the parties as per the Rules and will also be forwarded to the DRT as well as the Recovery Officer concerned for information and compliance of the direction to him. The learned Presiding Officer will also look into the aspect of non-execution the recovery certificate for such a long time by his Recovery Officer(s) in position from time-to-time and submit his independent report also to this Tribunal immediately after the expiry of period of fifteen days being given to the objector/purchaser to clear the Bank's dues.