Sanmati Rice Ltd. And Ors. vs S.S. Kochhar And Ors.

S.N.H. Zaidi, J

Misc. Appeal No. 245/2007 has been filed for the modification of order dated 17.4.2007 passed by DRT-I, Chandigarh in Appeal No. 3/2007 whereby the interim relief seeking stay of the recovery proceedings as well as appointment of the Local Commissioner/Receiver was refused and for issuing direction for holding appropriate inquiry against respondent No. 1 in relation to the incidents of R.C. No. 89/2005. Appeal No. 324/2009 has been directed against the final order dated 19.11.2008 of the said DRT whereby Appeal No. 3/2007 though allowed in terms of the directions given therein, but has been disallowed qua the reliefs claimed in Paragraph 6(b), (c), (d) and (e) of the appeal memo and for issuing direction for holding appropriate inquiry against respondent Nos. 1, 5 and its officers qua the incidents of R.C. No. 89/2005.

Since both these appeals have arisen out of the same matter, therefore, they have been heard together and are being disposed of by a common order.

The facts giving rise to these appeals, in brief, are that O.A. No. 955/2001 filed by Punjab National Bank was allowed by DRT-I Chandigarh against the appellants and recovery certificate(RC No. 89/2005) for a sum of Rs. 9,50,92,609.47 along with pendente lite and future interest was issued. In the execution proceedings of the R.C., some of the mortgaged properties, hereinafter referred to as the property in question, were put on sale by the Recovery Officer-I of the DRT-I, Chandigarh (for short the R.O.) in an open auction held on 5.12.2006. The CD/appellants challenged the auction by filing objections under Rule 61 of the Second Schedule to the Income Tax Act before the R.O. on 4.1.2007. During the course of hearing on those objections, on 1.3.2007, the Counsel for the CD/objectors intimated the R.O. that as an application for transfer of the matter to some other Recovery Officer had been moved before the Presiding Officer, therefore, he should not continue with the hearing, but since no stay/transfer order was received and the R.O. (respondent No. 1 herein) had satisfied him self that till 1.00 p.m. no transfer application was filed in the Registry of the DRT, therefore, he proceeded with the hearing and disposed of those objections by dismissing them, vide order dated 2.3.2007. Thereafter, on the same day, the RO, confirming the sale in favour of the auction purchaser by a separate order, directed for the issuance of the sale certificate and the CH Bank was directed to take steps for handing over the possession to the auction purchaser. The Sale Certificate was presented by the Recovery Inspector to the R.O. who signed it on the same day. The CH Bank allegedly took forcible possession over the property in question on 3.3.2007 with the help of the local police and handed over the same to the auction purchaser.

On 5.3.2007, one of the CDs, Mr. Mahabir Prasad Jain filed a complaint with the Presiding Officer assailing the conduct of the R.O. that despite filing of transfer application and the same being pending before the Presiding Officer, the R.O. did not accede to the request for adjournment and passed the order dated 2.3.2007 in the evening. It was also complained that he was also not supplied with the copy of that order till date. It was alleged that the Bank officials and the auction purchaser had taken the possession over the property in question forcibly with the assistance of anti-social elements.

The Presiding Officer, after calling for the comments of the R.O. and hearing the parties, observed in the order dated 6.3.2007 that there was no reason to disbelieve that the order dated 2.3.2007 was not passed at 11 a.m., as stated by the R.O. and was passed in the evening on that date. He did not find any substance in any of the allegations levelled against the R.O. and observing that he did not find any ground to allow the transfer application (M.A. No. 5/2007) but in order to avoid any controversy and to upkeep the confidence of the complainant/applicant in the system, allowed that application and transferred the Recovery Certificate to R.O.II for further proceedings. The Presiding Officer also ordered for the registration of a non-judicial inquiry against the then Recovery Inspector and appointed the Assistant Registrar as the Inquiry Officer.

The appellants preferred Appeal No. 3/2007 against the order dated 2.3.2007 of the R.O. and sought a restraint order against him from proceeding with the recovery case as an interim measure. The Presiding Officer, however, rejected the interim prayer by the order dated 17.4.2007, qua which Misc. Appeal No. 245/2007 has been filed with a prayer that direction be issued for holding appropriate inquiry against respondent No. 1 in relation to the incidents of R.C. No. 89/2005.

The learned Presiding Officer after hearing the parties allowed Appeal No. 3/2007, vide order dated 19.11.2008, and set aside the order impugned dated 2.3.2007 of the R.O. as well as the auction sale of the property in question, but disallowed the following reliefs claimed in Paragraph 6(b), (c), (d) and (e) of the relief clause:

(b) Set aside the process of auction sale issued by respondent No. 1 and declare the whole of the recovery process as biased.

(c) Direct the auction purchaser to indemnify the loss caused to the appellants.

(d) Direct the auction purchaser to indemnity and replace the articles taken away by them on 3rd March, 2007.

(e) Summon and punish the guilty officials, the auction purchaser and ail the persons involved in the matter for the loss caused to the appellants.

Feeling aggrieved with the dismissal of the above reliefs, the appellants have filed Appeal No. 324/2009 and have again prayed for issuing direction for holding an appropriate inquiry against respondent Nos. 1 and 5 in relation to the incidents of R.C. No. 89/2005.

It is pertinent to note that, as appears from above, the appellants, besides assailing the orders of the Tribunal below, have also prayed for issuance of a direction for holding an appropriate inquiry against respondent Nos. 1 and 5 and its officers in relation to the incidents of R.C. No. 89/2005, in both the appeals.

I have heard Mr. Sanjeev Bhandari for the appellants and Mr. S.S. Kochhar, the respondent No. 1, in person qua these appeals. Mr. Bhandari has stated that these appeals have been restricted only qua the relief for holding the appropriate enquiry as claimed. Mr. Kochhar has also filed the synopsis of his written submissions.

A perusal of the record shows that the appellants had settled the matter with the respondent Bank and auction purchaser and this Tribunal, vide order dated 19.10.2010, had directed the Bank to return the auction money with interest to the auction purchaser by 25.10.2010 and the auction purchaser was directed to hand over the possession of the property in question to the Bank after receiving the money by that date and, on 25.10.2010, the appellants' Counsel Mr. Bhandari had made a statement that these appeals in so far as they relate to the Bank and its officials, were not pressed and accordingly these appeals were dismissed against the respondent Bank and its officials (respondent Nos. 2 to 4) and continued against the other respondents.

So far as Misc. Appeal No. 245/2007 is concerned, it has been filed against an interim order whereby the Tribunal below had refused to stay the recovery proceedings qua the property in question, but since the auction sale of the property has already been set aside by the order impugned dated 19.11.2008 finally passed in Appeal No. 3/2007 and pursuant to the settlement of the matter between the concerned parties and the order dated 19.10.2010 of this Tribunal, the appellants are in possession the property in question, therefore, in my opinion, this appeal has become infructuous and is liable to be dismissed on this count alone.

Mr. Kochhar has contended that Appeal No. 324/2009 has been filed qua the dismissal of the reliefs claimed in Paragraph 6(b), (c), (d) and (e) of Appeal No. 3/2007 which mainly relate to the respondent Bank, its officers and the auction purchaser with whom the appellants have come to terms and after the delivery of possession of the property in question by the auction purchaser, which is now with the appellants, the grievance of the appellants/cause of action for the said appeal has ceased to exist and this appeal has also become infructuous. In my opinion, this contention has force as after the settlement of the matter between the concerned parties qua the property in question, this appeal, in respect of dismissal of relief claimed in Paragraph 6(b), (c), (d) and (e) of Appeal No. 3/2007, also appears to have become infructuous.

Mr. Kochhar has contended further that since in Appeal No. 3/2007 the appellants had not sought any relief qua the holding of any inquiry against him in relation to the incidents of the R.C. No. 89/2005, therefore, the said relief cannot be claimed in these appeals, which have now been confined only to that relief only, as such these appeals are not maintainable and liable to be dismissed. The contention is also acceptable because if a relief, though available, was not sought in the first appeal before the Tribunal below, it cannot be claimed for the first time in the second appeal before this Tribunal.

It is pertinent to note that, vide order dated 6.3.2007, the learned Presiding Officer of the Tribunal below while appointing Mr. R.L. Gupta, the then Assistant Registrar, as the Inquiry Officer had ordered for holding a non-judicial inquiry qua the complaint dated 5.3.2007 of Mr. Mahabir Prasad Jain and the Inquiry Officer in his report dated 26.3.2007 filed qua Non-Judicial Inquiry No. 1/2007 did not find any fault on the part of the Recovery Officer, respondent No. 1, and had found the then Recovery Inspector at fault for not supplying the copy of the order of the R.O. dated 2.3.2007 to the CD/complainant and for showing undue haste in preparation of the sale certificate. It is also worth mentioning that an application (I.A. No. 792/2011) was filed by some of the appellants in Misc. Appeal No. 245/2007 for directing to hold inquiry and investigation by the CBI/Crime Branch of Chandigarh Police in respect of the loss of records pertaining to the said complaint of Mr. Mahabir Prasad and the non-judicial inquiry and this Tribunal, while disposing of that application, vide order dated 28.3.2012, had directed the Tribunal below to make appropriate order for conducting a departmental inquiry in respect thereof. The Presiding Officer of DRT-I Chandigarh has informed, vide letter dated 29.11.2012, that as per the report dated 26.11.2012 of the departmental inquiry conducted by Mr. K.A.K. Devasar, the Registrar of the Tribunal, no accountability qua the loss of said records could be fixed on any person. In view of the circumstances, as aforesaid, I do not find any necessity for holding the inquiry qua the alleged incident of R.C. No. 89/2007, as claimed.

According to Mr. Kochhar, though he was arrayed as respondent Nos. 1 and 2 in Appeal No. 3/2007 in his official as well as personal capacity, yet since no notice of that appeal was issued to him by the DRT in any capacity and the order impugned in none of the appeals has not been assailed on this ground, therefore, he is neither a necessary party to these appeals nor any relief can be claimed against him. He has also contended that the order impugned dated 2.3.2007 was passed by him in the discharge of his official functions and since no act done by him in his personal capacity has been assailed in these appeals, therefore, he could not be made a party therein in his personal capacity. It has also been contended by him that these appeals are not maintainable against him in his official capacity as well, in view of the bar of Section 33 of the RDDBFI Act, as the said section provides that no suit, prosecution or other legal proceeding shall lie inter alia against the R.O. for anything done or intended to be done in good faith in pursuance of this Act, rule or order made thereunder.

Mr. Bhandari has, however, submitted that the appellants have neither instituted any suit nor a prosecution against respondent No. 1 and only a direction for holding an inquiry qua his actions is being sought, for which no protection of law is available to him. He has also submitted that the Chairperson of this Tribunal, in exercise of his general power of superintendence and control over the Tribunal below may, under Section 17A(1) of the RDDBFI Act as well as under Rule 22 of the DRAT (Procedure) Rules, 1994, direct/order for holding the inquiry prevent the abuse of its powers and to secure the ends of justice.

Looking to the facts and circumstances of the case. I am of the considered view that though the R.O. Mr. Kochhar was arraigned both in his official and personal capacity as respondent Nos. 1 and 2 in Appeal No. 3/2007, but since no notice of that appeal was issued by the Tribunal below to him in any capacity, therefore, the prayer for holding an inquiry against him qua his alleged conduct relating to the R.C. No. 69/2005 in these appeals is hit by Section 33 of the RDDBFI Act. The R.O. had heard and disposed of the objections of the CD/objector in the discharge of his functions under the RDDBFI Act for which no legal proceedings could lie against him, as such institution of these appeals seeking the relief of direction for holding an inquiry in respect of his conduct qua that discharge of his functions, being legal proceedings, are not maintainable in law. The contention of Mr. Bhandari is, therefore, not acceptable that protection of law is not available to him as there is nothing on record which could show any mala fide on his part in the discharge of his functions as a Recovery Officer under the said Act. The appeals filed against respondent No. 1 are, therefore, liable to be dismissed on this count also. I am also of the view that the facts and circumstances of the case do not warrant the exercise of general power of superintendence under Section 17A of the RDDBFI Act or to make any order or direction under Rule 22 of the DRAT (Procedure) Rules for holding any inquiry in the matter.

So far as the merit of the appeal is concerned, the gist of averments made in Paragraphs (v) to (xiii) of the appeal memo is that respondent No. 1 had held the proceedings in a hasty manner and acting arbitrarily and injudiciously proceeded to hear the objections even on being informed that application for transfer of the matter had been filed before the learned Presiding Officer and after dismissing the objection passed the sale confirmation order. It is noteworthy that similar allegations were levelled against the R.O. Mr. Kochhar by Mr. Mahabir Prasad Jain in his complaint dated 5.3.2007 before the Presiding Officer as well as in the transfer application (M.A. No. 5/2007) and the Learned Presiding Officer, while disposing of the transfer application, has observed in Paragraphs 7 and 8 of his order dated 20.3.2007 that:

Before proceeding to decide this application, I would like to mention that an administrative complaint was also moved on behalf of the applicants/JDs making similar allegations against the learned R.O., the comments of learned R.O. were obtained, on which administrative order was passed. I therefore feel that no further comments are required from the learned R.O. From the perusal of record, it is evident that the learned R.O. dismissed the objections and confirmed the sale and directed the Bank to take steps for delivery of possession on 2.3.2007. However, the learned R.O. did not appoint any local commissioner to visit the spot and to hand over the possession, nor issued any warrant of possession. No order regarding police assistance was given to deliver the possession to the auction purchaser. Without adopting due procedure, if someone takes over the physical possession of the property, the tribunal or its officers cannot be blamed. It is the duty of the local administration to ensure that no such incident, to dispossess any person from any property, takes place without any order of the Court. It has been brought to the knowledge of this Tribunal that F.I.R. has been registered against the culprits and police has taken over the possession of the property in question.

So far allegations against Mr. S.S. Kochar, Recovery Officer are concerned; there is nothing on record to establish Mr. Kochar was in any manner biased with the JDs. The only allegation against him is that he expressed his opinion during the course of hearing and, therefore, case may be transferred. This allegation has no substance. Next allegation that Mr. Kochar acted hastily in the disposal of the case is concerned, is also baseless. This Tribunal has been established for speedy disposal of cases pertaining to recovery of dues due to the Banks and financial institutions. We cannot ignore this fact that delay in the Courts/tribunals enables the parties including Banks to seek the help of musclemen and unsocial elements which proves to be cost effective and less cumbersome. If an officer within the time frame given in the law, makes endeavour to decide the case expeditiously, there should be no grievance to anybody. Moreover, I have also gone through the record of learned R.O. There is nothing on record to show that the learned R.O. has acted in arbitrary and unjudicial manner. However, in order to avoid any further controversy and to upkeep the confidence of the deponent in the system and further in view of the statement made by the non-applicant/CH Bank, I hereby allow this application.

The above order, which was not challenged by the appellants and had attained finality, clearly indicates that the respondent R.O. had neither acted in haste nor his actions could be said to be arbitrary or non-judicious. After the rejection of the objections filed by the CD/objector qua the sale, the next step for the R.O. was to confirm the sale and the respondent No. 1 had done the same, as such no motive could be imputed on his action as the record shows that he had neither appointed any local commissioner for taking the possession nor did he issue any warrant of arrest or made any order for providing police assistance to the Bank or auction purchaser and if the possession was taken by the Bank with the assistance of anti-social elements, the R.O. cannot be held liable for the same. It appears that the RO's order confirming the sale and directing the CH Bank to take steps for handing over possession to the auction purchaser was not unusual or contrary to law and he cannot be held to have acted in derogation of any provisions of law.

In view of the above discussion, I have come to the conclusion that these appeals have no merit and are liable to be dismissed. I am also of the considered view that filing of these appeals against Mr. S.S. Kochhar, the then R.O. who has since superannuated, in respect of the discharge of his functions under the law is a glaring example of the abuse of the process of law whereby an officer of the DRT has not only been unnecessarily harassed for being arraigned as a party to the appeals and compelled to defend himself by attending the proceedings of appeals at Delhi, while based at Chandigarh, but has also wasted the precious time of this Tribunal. After the settlement of the matter with the concerned parties and getting back the possession of the property sometime in September/October 2010, further continuation of these appeals against Mr. Kochhar was a deliberate act on the part of the appellants to harass and put him to inconvenience and financial loss. Both the appeals are accordingly dismissed with a cost of Rs. 50,000/-, which shall be payable to Mr. Kochhar within four weeks. Record of the lower Court be sent back to it.

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