Pushpa Builders Ltd. vs Punjab National Bank And Ors.

S.N.H. Zaidi, J

Since Mr. Nabi is present for the respondent/caveator, the caveat is discharged. Heard parties' Counsel on admission. The instant appeal has been directed against the order dated 28.2.2013 passed by DRT-I, Delhi, whereby the interim relief sought by the appellant in Appeal filed vide Dy. No. 1110 dated 26.2.2013 against the order of the RO in RC No. 19/2008 has been declined.

Mr. Gupta points out that O.A. (No. 703/95) filed by the respondent Bank against the appellant and others was allowed by the Tribunal below for the recovery of Rs. 1,59,34,131.61 along with interest and cost and the defendants were allowed two months' time to pay the said amount, failing which the same was ordered to be recovered from the sale of the mortgaged properties, including Plot No. 159, Transport Centre, Rohtak Road, East Punjabi Bagh, New Delhi and RC No. 19/2008 was accordingly issued, that the RO initiated recovery proceedings in accordance with the said RC and without making any order for the attachment of the said property straightaway ordered for the issuance of notice of sale proclamation, that the objections filed by the CD/appellant against the issuance of sale proclamation were rejected by the RO, against which the appeal filed before the DRT had also met with the same fate and the Appeal (No. 37/2011) filed against the order of DRT was also dismissed by this Tribunal on 13.9.2011, that the order dated 13.9.2011 of this Tribunal was assailed by the appellant before the Delhi High Court by way of Writ Petition [W.P (C) No. 7216/2011], but the same was dismissed as withdrawn with liberty to approach the RO for necessary orders, and thereafter the appellant had filed another Writ Petition (No. 2377/2012) for enforcing the OTS, which was also dismissed on 23.4.2012, that the CD/appellant had also approached the Bank for one time settlement and the Bank had agreed to settle the matter for Rs. 120 lacs payable within a time schedule in terms of the OTS letter dated 31.8.2009 but the CD/appellant could not arrange the funds within the given time and the Bank did not agree for the extension of time and insisted upon the RO for the sale of that property which was ultimately sold on 25.1.2011 through auction to respondent No. 2 (Om Trans Logistics Ltd.) for Rs. 4,08,60,000/-, that the CD/appellant challenged the sale under Rule 61 of the Second Schedule to the Income Tax Act by filing application/objections before the RO which is pending.

According to Mr. Gupta, proceedings under Section 19(1) of the RDDBFI Act are only proceedings for the recovery of debt and not for enforcement of mortgage and there is no provision for filing a mortgage suit of immovable property under the said Act, like a suit relating to mortgages of immovable property under Order 34, CPC, therefore, no suit for the recovery of any amount against a mortgaged property can be filed under that Act. He contends that Section 25 of the RDDBFI Act, provides for the recovery of debt, inter alia, by attachment and sale of the movable or immovable property of the CD and not by the sale of the charged or mortgaged property. He also contends that the Second Schedule to the Income Tax Act is the continuation to the provisions of Section 25 and Rules 4, 48 and 52 of the said Schedule mandate the attachment of the property before the sale and since the R.O. had sold the property in question without the attachment, therefore, the sale is a nullity and is liable to be set aside. Mr. Gupta has placed reliance upon the judgments in Amish Jain v. ICICI Bank Ltd., (2012) BC 552, Union of India & Anr. v. Delhi High Court Bar Association & Ors.,  II (2002) BC 194 (SC) : II (2002) SLT 556 : 96 (2002) DLT 726 (SC) : (2002) 4 SCC 275, V. Chakrapani v. State Bank of India,  II (2011) BC 516 : AIR 2011 A.P. 27, Mahakal Automobiles & Anr. v. Kishan Swaroop Sharma,  II (2008) CLT 421 (SC) : (2008) 13 SCC 113, Raghunath Rai Bareja & Anr. v. Punjab National Bank & Ors.,  I (2007) SLT 245 : I (2007) CLT 1 (SC) : (2007) 2 SCC 230 and Swasti Agency & Ors. v. State Bank of India, Bhubaneswar & Ors.,  AIR 2009 Ori 147, in support of his contentions.

The contention of Mr. Gupta is that the learned lower appellate Tribunal has failed to properly appreciate the provisions of law and has committed error in declining to restrain the auction purchaser from selling, transferring or creating any third-party rights in the property in question and changing its nature.

Mr. Hashmat Nabi, on the other hand, contends that it is an admitted case of the appellant that it had challenged the auction sale dated 25.1.2011 by filing an application/objections under Rule 61 of the Second Schedule to the Income Tax Act, which provides that the sale of an immovable property sold in execution of the recovery certificate can be set aside if the CD or any person, whose interests are affected by the sale, applies within 30 days from the date of sale to the Recovery Officer to set aside the sale on the ground of material irregularity or fraud in publishing or conducting the sale and the sale of the property without attachment can only be said to be a material irregularity. He points out that as per the proviso to Rule 61, no sale shall be set aside on any such ground unless the Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of such irregularity and the application shall be disallowed unless the applicant deposits the amount recoverable from him in the execution of the recovery certificate. According to him, as the CD/appellant had neither filed the application for setting aside the sale within 30 days from the date of sale, i.e., 25.1.2011, as it was filed after about 9 months thereof on 19.10.2011, nor the appellant had alleged or shown that it had sustained any substantial injury due to the alleged irregularity and had also not deposited any amount recoverable from it under the recovery certificate and only an application seeking waiver of such deposit was filed after more than a year on or about 17.11.2012, therefore, the objections/application under Rule 61 is liable to be disallowed and the sale cannot be set aside. He, however, submits that there is no provision in the Second Schedule to the Income Tax Act for the waiver of the deposit as required under Clause (b) to the proviso to Rule 61.

Mr. Nabi points out that the appeal (No. 37/2011) filed by the CD/appellant against the order of the PO passed in Appeal No. 1/2011 was dismissed by this Tribunal with a cost of Rs. 50,000/-, which has not been paid by it as yet, that the Writ Petition (No. 7216/2012) filed against the aforesaid order of this Tribunal was withdrawn after making the submissions for some time and was dismissed accordingly by the Delhi High Court on 28.9.2011 and an application for clarification (CM. No. 18007/2011) of the said order was also dismissed as withdrawn on 11.11.2011. Mr. Nabi also pointing out that another Writ Petition (No. 2377/2012) filed thereafter, claiming similar reliefs as were sought in the earlier Writ Petition, by suppressing the facts relating to the earlier writ as well as its dismissal vide order dated 23.4.2012 was also dismissed with a cost of Rs. 50,000/- with the observation that the petitioner was guilty of gross suppression and misstatement of relevant facts, contends that these circumstances show the conduct of the appellant and disentitle it for any equitable relief and the Tribunal below has rightly refused to grant any interim relief in favour of the appellant and this appeal is liable to be dismissed at this stage. Considering the submissions of the parties' Counsel and keeping in view the aforementioned facts and circumstances of the case, I am of the view that since the application filed under Rule 61 of the Second Schedule to Income Tax Act is pending disposal before the RO and the questions raised qua the legality of the auction sale dated 25.1.2011 are yet to be decided upon the RO and the record shows that the parties were in the midst of their arguments on that application, therefore, it would not be proper to express any view either on the pleas raised by the appellant qua the validity of the sale or in respect the objections raised by the C.H. Bank against the maintainability of that application in this appeal. By the interim application (Dy. No. 869/2013) the legality of the auction sale dated 25.1.2011 was challenged on the new ground that the sale of the property was conducted without attachment and it was insisted that the application be disposed of before the disposal of the objection/application filed under Rule 61 of the Second Schedule when the RO was seized with the hearing of that application. In my view, it was an attempt on the part of the CD/appellant to circumvent the mandatory provisions of said Rule 61, which can not be accepted. Since according to the definition of 'debt' as given in Section 2(g) of the RDDBFI Act, a liability secured under a mortgage claimed as due from any person by a Bank shall also be a debt, therefore, it can be recovered under Section 19(1) of the RDDBFI Act. The sale of a property, held in execution of an RC, can be assailed/set aside only in accordance with the provisions of the Second Schedule to the Income Tax Act and, as observed earlier, an application filed by the CD/appellant under Rule 61 of the said Schedule for setting aside the sale is pending disposal before the RO in respect of which the CH Bank has also raised legal objections, therefore, the Tribunal below was right in holding that the appellant had failed to show any prima facie case for the interim relief as claimed by it. In view of the circumstances of the case, it is not necessary to deal with the case laws cited by Mr. Gupta for the purpose of this appeal at this stage. The order impugned, therefore, does not appear to be suffering with any infirmity or illegality and this appeal being devoid of any force is liable to be dismissed in limine at this stage and is dismissed as such.

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