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Judgment
Ashok Menon, Chairperson
The Appellant, a charitable trust named, “Shri Jain Swetamber Murtipujak Boarding” impugns the judgment and order dated 12/08/2008 of the Debts Recovery Tribunal-I, Ahmedabad (D.R.T.) in Appeal No. 39 of 2007.
The facts can be summarised thus:
The 1st Respondent Bank of Maharashtra had lent money to Respondent Nos. 2 to 5 and a property named ‘Chinubhai Towers’ was mortgaged as security for the debt. On defaulting repayment, the 1st Respondent bank filed a Civil Suit No. 2985/1994 in the court of the City Civil Judge, Ahmedabad against Respondents Nos. 2 to 5 for recovery of ₹2,31,73,142.50. Consequent to the establishment of the D.R.T., the civil suit was transferred to the Tribunal for adjudication under the provisions of the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 (‘RDDB & FI Act’, for short). The Transfer Original Application (O.A.) No. 878/1995 was allowed on 26.05.2000 directing Respondents Nos. 2 to 5 to pay a sum of ₹23,173,142.50 together with further interest at the rate of 15% per annum with effect from the date of application till realisation. Recovery Proceedings No. 445 of 2000 was filed based on the Recovery Certificate that was issued. The mortgaged properties were proceeded against for realisation of the debt before the Recovery Officer.
The Appellant Trust contends that final plot No. 501 (part) of Ellis Bridge town planning scheme No. 3 situated in village Changispur, Taluka and District Ahmedabad admeasuring 95,697 ft² had once belonged to the Trust. Under a registered sale deed dated 12/09/1980, the Trust sold the property to Avinash Estate Owners Association, a non-trading Association (the 5th Respondent borrower), for a sale consideration of ₹1.25 crores. Though physical possession of the property was handed over to the 5th Respondent, a sum of ₹24,45,300/- from out of the above sale consideration remained unpaid to the Appellant. On 18/06/1987, the 5th Respondent agreed to sell and recover the office premises S-1 and S-2 measuring 418 0 ft² of carpet area to the Appellant towards discharge of the unpaid sale price. The value of the office premises was assessed at ₹19,82,000/-and adjusted towards the unpaid sale consideration and possession was also handed back to the Trust. After the sale of the said premises, there remained a balance sum of ₹4,63,300/- more to be paid to the Appellant. Towards payment of that amount, the 5th Respondent issued a cheque in favour of the Appellant. Thus, the Appellant became the exclusive owner of the office premises as mentioned earlier, with effect from 18/06/1987. However, the Appellant was not aware of the loan transaction and the mortgage in favour of the 1st Respondent. When the Ld. The Recovery Officer attached the entire mortgaged property including the office premises purportedly reconveyed to the Appellant, in the execution of the debt, the Appellant filed an objection as T/24 claiming exclusive right over the office premises which formed part of the alleged mortgaged properties. The Ld. Recovery Officer however rejected the claim of the Appellant vide order dated 19.12.2006.
Aggrieved by the dismissal of the claim by the Ld. Recovery Officer, Appeal No. 39/2007 was preferred under section 30 of the RDDB & FI Act before the Presiding Officer, D.R.T. Vide the impugned order, the Ld. Presiding Officer dismissed the appeal. The Appellant is aggrieved and hence in appeal.
The only question that arises for consideration in this appeal is whether the Appellant has any existing and sustainable claim over the office premises identified as S-1 and S-2 which admittedly were sold to the borrower and also forms part of the mortgaged property.
The Ld. Presiding Officer observed that an equitable mortgage was created by the 5th Respondent in favour of the 1st Respondent by deposit of title deeds of the mortgaged properties on 25/05/1987. The memorandum of deposit of title deeds was registered on 25/08/1987 and 03/10/1991. The Ld. Presiding Officer held that the mortgage came into effect from the date of execution of the documents and not from the date of registration and therefore, the mortgage had come into effect on 25/05/1987. It is further held that the purported reconveyance of the office premises in favour of the Appellant vide an unregistered document dated 18/06/1987 does not create any right title or interest over the property in favour of the Appellant. The Ld. Presiding Officer concluded that the Recovery Officer was bound by the Recovery Certificate issued by the D.R.T. The Ld. Presiding Officer points out that under Rule 11 (6) of the 2nd Schedule to the Income Tax Act, the remedy of the Appellant lies in preferring a civil suit.
The claim petition filed by the Appellant was dismissed by the Ld. Recovery Officer vide order dated 19.12.2006 considering the claim raised by the Appellant vide Ext. T/24 and several other claimants. It was observed that under the provision of Sec. 26(1) of the RDDB & FI Act the Recovery Officer has to execute the Recovery Certificate and cannot go behind that.
Being aggrieved by that order, the Appellant preferred the Appeal No. 39/2007 before the Presiding Officer, D.R.T. reiterating the claim over the office premises stating that it has been reconveyed to the trust by the borrowers. The Appellant states that the order dated 19.12.2006 was passed without giving any individual notice or hearing to the Appellant. It is submitted that the predecessor-in-office of the Ld. Recovery Officer who had passed the impugned order dated 19.12.2006 had before that, on 25.04.2006 passed an order to the effect that effort should be made to recover the debt from the sale of those properties of the Certified Debtors which had not yet been sold and are still lying vacant. The direction was also given to the Certificate Holder Bank to submit a report of valuation of such properties which were lying vacant. The Recovery Proceedings were adjourned from time to time till the Ld. Recovery Officer who had passed that order was transferred and succeeded by another Recovery Officer who passed the impugned order without setting aside the earlier orders dated 25/04/2006. According to the Appellant, this was a grave violation.
The Presiding Officer did not however go into the objection regarding the impropriety of the order of the Ld. Recovery Officer, considered the merits of the claim raised by the Appellant and found the claim to be unsustainable.
The Ld. Counsel appearing for the Appellant relies on the decision reported in Jamnagar Rajkot Gramin Bank Officers Association & Anr. vs. Jamnagar Rajkot Gramin Bank through its Chairman & Anr. 1997 SCC OnLine Guj 647, to argue that judicial propriety requires that if in the earlier proceedings, a particular view is taken by the court, in similar facts, it is not proper for another single judge to take a different view unless it is found that the earlier order is per incuriam. The Ld. Counsel submits that the order passed by the transferred Recovery Officer could not have been disregarded by his successor by putting the entire property on sale. The Ld. Counsel also relies on a decision of the Madras High Court in M.R. Prakasam & Ors vs. Tahsildar Vandavasi 1972 SCC OnLine Mad 403 wherein the function of a Tax Recovery Officer exercising jurisdiction under Rule 11 of the Second Schedule to the Income Tax Act has been discussed and it is observed that the principle of natural justice would have to be followed while considering a claim. The decision of the Bombay High Court Nagpur Bench in Gangadhar Vishwanath Ranade & Ano. vs. Tax Recovery Officer 1982 SCC OnLine Bom 385 also considers the power of a Tax Recovery Officer under Rule 11 of the Second Schedule to the Income Tax Act. It is observed that complicated questions of title are not to be gone into such proceedings. The Bombay High Court decision was confirmed by the Hon’ble Supreme Court in the appeal that was preferred. The decision is reported in Tax Recovery Officer II, Sadar, Nagpur vs. Gangadhar Vishwanath Ranade (1998) 6 SCC 658, it was held that the Recovery Officer cannot himself declare a transfer of property made by an assessee in favour of a third party, to be void and that a suit will have to be filed under Rule 11(6) to have the transfer declared void under Sec. 281 of the I. T. Act. The jurisdiction of the Tax Officer extends to examining possession and only incidentally any question of right to possession claimed by the objectors. Under the circumstances, the Ld. Counsel appearing for the Appellant submits that the matter has to go back to the Recovery Officer for reconsideration.
Per contra, the Ld. Counsel Respondent bank indicates that the Appellant Trust had admittedly executed a registered sale deed transferring the entire property in favour of the fifth Respondent on 12. 09.1980 for a sale consideration of ₹1.25 crores and possession was also admittedly handed over. The property was mortgaged to the first Respondent bank on sanctioning a project loan of ₹90 lakhs to the second Respondent on 24/03/1987. On 25/05/1987, an equitable mortgage was created of land admeasuring 95,697 sq. ft. along with the construction made thereon. A memorandum of deposit of title deeds was created and lodged for registration on the aforesaid date. The registration was reflected in the index register with effect from 03/10/1991. It is pointed out that the Appellant has admitted the fact of registration of the mortgage. The Ld. Counsel of the Respondent points out that under Sec. 47 of the Registration Act, the registration of a deed relates back to the date of execution. The sale in favour of the Appellant concerning office premises S-1 and S-2 in Tower A of Chinubhai Towers was by way of an unregistered agreement. The Ld. Counsel points out that as per the report prepared by the receiver on 01/05/2006 there were no unsold offices/shops and the said report as well as the corresponding panchnama does not mention the existence of the alleged premises S-1 and S-2 nor the Appellant’s alleged possession mentioned about. The Ld. Counsel for the Respondent bank relies on the decision of the Hon’ble Bombay High Court in Anil Nandkishor Tibrewala & Ano. vs. Jammu and Kashmir Bank Ltd. & Ors. 2006 SCC OnLine Bom 686 wherein it is held thus:
“It will not be open to the Investigating Officer to go behind the order or certificate. In 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 has been an order/certificate for money in 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 applies. 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.”
The argument of the Ld. Counsel appearing for the Appellant is that the Recovery Officer has, while considering a claim petition, has all the trappings of a civil court, and will have to act judicially and follow the guidelines set out for processing the procedure and rules under the Second Schedule of the Income Tax Act. It is pointed out that the word ‘investigate’ contained in Rule 11 (1) read in conjunction with the nature of the powers conferred upon the Recovery Officer reflects the power of a Civil Court. It is, not, therefore, an empty formality and enquiry as required under Order 21 Rule 58 of CPC is what is contemplated.
The Hon’ble Supreme Court has in C. N. Paramasivam & Ano. vs. Sunrise Plaza & Ors. (2013) 9 SCC 460 held thus:
“A bare reading of the Sec. 29 of the Recovery of Debts Duet to Banks and Financial Institutions Act, 1993 (RDDB Act) leaves no manner of doubt that the Rules under the Income Tax Act are applicable only “as far as possible” and with the modification as if the said provisions and the Rules referred to the amount of debt due under the RDDB Act instead of the Income Tax Act. The said two expressions do not render the provisions of Rule 57 directory no matter the same is couched in a language that is manifestly mandatory in nature.”
Under the circumstances, the Income Tax Rules make provisions that do not strictly deal with the recovery of the debt under the RDDB Act. For instance, Rules 86 & 87 of the Income Tax Act do not have any provisions of the RDDB Act.
It is also pertinent to note that the appeal under Sec. 30 of the RDDB & FI Act was filed before the Presiding Officer with a delay of 137 days and the said delay was also condoned by the Ld. Presiding Officer which appears to be erroneous as there is no provision under the RDDB & FI Act to condone the delay in filing the appeal under Sec. 30. This has been settled by the Hon’ble Supreme Court in International Asset Reconstruction Company of India Ltd. vs. Official Liquidator of Aldrich Pharmaceuticals Ltd. & Ors. (2017) 16 SCC 137 wherein it is held thus:
“13. The RDB Act is a special law. The proceedings are before a statutory Tribunal. The scheme of the Act manifestly provides that the legislature has provided for the application of the Limitation Act to original proceedings before the Tribunal under Sec. 19 only. The Appellate Tribunal has been conferred the power to condone delay beyond 45 days under Sec. 20(3) of the Act. The proceedings before the Recovery Officer are not before a Tribunal. Sec. 24 is limited to its application to proceedings before the Tribunal originating under Sec. 19 only. The exclusion of any provision for extension of time by the Tribunal in preferring an appeal under Sec. 30 of the Act makes it manifest that the legislative intent for exclusion was express. The application of Sec. 5 of the Limitation Act by resort to Sec. 29(23) of the Limitation Act, 1963 therefore, does not arise. The prescribed period of 30 days under Sec. 30 (1) of the RDB Act for preferring the appeal against the order of Recovery Officer, therefore cannot be condoned by application of Sec. 5 of the Limitation Act.”
A question would arise as to whether prospective overruling is applicable in this case. In P.V. George & Ors vs. State of Kerala & Ors. (2007 )3 SCC 557 the Hon’ble Supreme Court held that law declared by a court will have a retrospective effect if not otherwise stated to be so specifically. Hence, this Tribunal is of the opinion that the delay in filing the appeal could not have been condoned. Regarding the binding nature of the order passed by the Ld. R.O. on his predecessor in office, I do not find any binding order to be complied. The Ld. R.O. had put forth a suggestion that the unsold and vacant properties could be sold in the first instance and had also directed the bank to come up with details. There is a report that there are no such properties. Hence the order has no binding nature.
Under Sec. 54 of the Transfer of Property Act, any transfer of tangible immovable property of the value of ₹ 100/- and upwards, or in case of a reversion or tangible thing, can only be made by a registered instrument. The Hon’ble Supreme Court has in Suraj Lamp & Industries Pvt. Ltd. vs. State of Haryana & Ors AIR 2012 SC 206, held that a transfer of immovable property by way of sale can only be by a deed of conveyance(sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right title or interest in an immovable property can be transferred. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of Sections 54 and 55 of the Transfer of Property Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53A of the Transfer of Property Act). Hence the unregistered deed of conveyance purportedly executed in favour of the Appellant does not confer any title on the Appellant.
Given the discussions made above, the appeal is without any merits and is, therefore, dismissed.