Vinod Aggarwal And Ors vs State Bank Of Bikaner And Jaipur

P.K. Bhasin, J

One Hans Raj Garg (since deceased) is the villain in this litigation where two Public Sector Banks were left behind by him high and dry after his death to fight legal battles to recover crores of public money. One Bank is Bank of Rajasthan which had advanced some loan to one Company by the name of M/s. V.K. Construction Work Ltd. Re-payment of that Bank's dues was guaranteed by late Shri Hans Raj Garg by creating equitable mortgage of his residential House No. 1142, Sector 15-B, Chandigarh (hereinafter to be referred as 'the property in dispute') and his son Vinod Kumar Garg had also given his personal guarantee. Other Bank is State Bank of Bikaner and Jaipur which now stands merged in State Bank of India and is the respondent in this appeal. This Bank had also extended financial facility to the tune of crores of rupees to M/s. Munak Galva Sheets Ltd. It appears that late Shri Hans Raj Garg had given his personal guarantee for the re-payment of this loan also.

The borrower Companies of both the Banks defaulted in re-payment and that led to filing of two separate petitions for recoveries of their monies under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 in the Debts Recovery Tribunal (DRT). The Original Application (O.A.) No. 107/97 of the respondent-Bank herein came to be decided first in point of time vide order dated 30th January, 2001 in which the DRT issued a recovery certificate for a sum of Rs. 39,12,77,896.03 with interest @ 20.25% p.a. with quarterly rests from the date of filing of the O.A. till realisation.

The O.A. of the Bank of Rajasthan (O.A. No. 69/95), which though was filed prior in came to be decided by the DRT on 9.11.2005 and recovery certificate for a sum of Rs. 3,52,70,977.68 with interest @ 10% p.a. from the date of filing of the O.A. till realisation as against the contractual rate of interest of 18.75% p.a. with quarterly rests plus some other charges which had been prayed for by the Bank in its O.A. In that order the learned DRT had also ordered that in case of default in payment by the defendants in the O.A. within the period of two months the Bank could proceed to sell the mortgaged property in dispute and realise its dues under the recovery certificate.

Bank of Rajasthan had felt aggrieved by the DRT slashing down the rate of interest and, therefore, it filed an appeal in DRAT which was registered as Appeal No. 32/2006. During the pendency of that appeal there was a settlement between the appellant-Bank and the certificate debtors including late Shri Hans Raj Garg and the appeal came to be disposed of vide order dated 31.10.2006 by the then learned Chairperson. That order is re-produced below:

"Miscellaneous Application 331/2006

Present: Mr. Sanjay Karol, Sr. Advocate with Mr. Amit Mishra, Counsel for the appellant.

Mr. Janendra Lal, Counsel for respondent Nos. 1 to 5

Mr. Dincur Bajaj representing Mr. Rajeeve Mehra, Counsel for respondent Nos. 6 to 8.

This application is presented by all the parties praying for closing the matter on the terms of conditions agreed to among the parties, as indicated in the present application.

The terms and conditions on which the parties have agreed to settle the matter, which are reflected in the application, have been examined by this Tribunal. Neither the Counsel representing the parties nor the parties have disputed the settlement terms. The terms and conditions on which parties sought permission to close the matter are as under:

"1. The respondents/CDs admit the claim of the appellant and agree to the modification/amendment of the decree and also the R.C. subject however to terms and conditions mutually, voluntarily, after due though and deliberation without any coercion, pressure or duress arrived at as incorporated in letter of 3.10.2006 and as incorporated herein also.

That vide letter dated 3.10.2006 addressed to the appellant-Bank by the respondents, a compromise has been arrived at between the appellant-Bank and the respondent/CDs herein. That the defendants have agreed to pay the Bank a total sum of Rs. 800.00 lacs along with interest at Benchmark Prime Lending Rate (BPLR) w.e.f. 1.10.2006 till payment to the Bank. That the entire sum would be payable to the Bank by 31st March, 2007. A copy of the said compromise letter is annexed herewith as Annexure-A.

That the parties have also agreed that the mortgaged properties be sold and for this purpose, it has been agreed that this Hon'ble Appellate Tribunal would be pleased to appoint Shri Anil Srivastava, Registrar of this Hon'ble Appellate Tribunal to act as the Receiver with all power of the Tax Recovery Officer/Recovery Officer to sell the properties to the purchaser to be brought or nominated in terms of the compromise letter and to receive the sale proceeds and deposit the same with the appellant-Bank and to issue all necessary certificates in this behalf. The said Receiver will sell the properties in terms of the settlement.

It is agreed that Mrs. Bimla Devi respondent No. 2 and Brig. S.K. Aggarwal respondent No. 4b herein will contribute sums of Rs. 135 lacs and Rs. 20 lacs respectively and despite the payments the personal guarantees and mortgages created by Sh. Bimla Devi and Mr. S.K. Aggarwal will remain effective till repayment of entire dues of the Bank.

The balance amount will be paid by appellants Shri Hans Raj Garg and Shri Vinod Kumar Garg before 31st March, 2007 by the sale of the three properties mortgaged to the Bank as under:

(a) Property bearing No. 10, J/5 Qutab Enclave, Gurgaon will be sold at a price of Rs. 358 lacs to a purchaser to be brought or nominated and agreed to by Shri Vinod Kumar Garg and the said sale proceeds will be delivered to the Bank who will release the title deeds to the purchaser. The Receiver will issue the necessary sale certificate and confirm the sale and Shri Vinod Kumar Garg will execute all necessary documents to effect the transfer of the property when required to do so.

(b) Property situated in Village Munak, District Sangrur in the State of Punjab and Property bearing No. 1142, Sector 15-B, Chandigarh will be sold by the Receiver for the balance dues of the Bank to Shri Vijay Kumar Garg or his nominee and the said sale proceeds will be delivered to the Bank who will release the title deeds to the purchaser. The Receiver will issue the necessary sale certificate and confirm the sale and Shri Hans Raj Garg will execute all necessary documents to effect transfer of the property as and when required to do so.

(c) The sale consideration of the mortgaged properties shall not be less than 80% of the fair market value as per valuation done by the Bank in March, 2006 and any shortfall in comparison to the selling price shall be made good by the party before release of the title deeds of the property sold.

(d) Any short fall in agreed amount of Rs. 800 lacs plus interest Benchmark Prime Lending Rate (BPLR) from 1.10.2006 will be paid by Sh. Hans Raj Garg and Sh. Vinod Kumar Garg before 31st March, 2007.

(e) The Receiver will sell the said property to the nominated buyer within fifteen days of the said purchaser being brought or nominated. Any delay on the part of the Receiver will not be treated as a default on the part of the appellants or respondents.

That vide the above mentioned letter dated 3.10.2006, the defendant has agreed that an application on the consent terms would be filed that in case of default by the defendant or on failure of the defendant to pay the amount by 31st March, 2007, the Bank would be entitled to recover the claims amount with interest @ 18.75%. compounding with quarterly rests.

That the above appeal and other connected appeals be disposed of accordingly and in the meanwhile the Receiver appointed by this Hon'ble Appellate Tribunal be directed to proceed to sell the properties as set out above and as per compromise letter annexed herewith.

That out of the total sum of Rs. 800.00 lacs along with interest at Benchmark Prime Lending Rate (BPLR) w.e.f. 1.10.2006 which is payable. A cheque of Rs. 25 lacs has been tendered by the defendants which has been encashed by the applicant-Bank and shall be treated as part payment. That the securities available to the applicant-Bank including personal guarantees and mortgages created in Bank's favour shall continue to be available and effective to the applicant-Bank till satisfaction of the entire dues.

That credit will be given for the TDR's kept as margin at B/o. Chandigarh for the amount at the stage of final recovery.

That in the event of default or in case of non-payment towards Rs. 800 lacs plus interest at Benchmark Prime Lending Rate (BPLR) w.e.f. 1.10.2006 by the defendants, on or before 31.3.2007, all remission and compromise except for the ones specifically agreed to herein shall stand withdrawn and the applicant-Bank shall be entitled to recover its dues in accordance with the legal recovery proceedings as per the original claim filed in the DRT i.e. contracted rate of interest which is @ 18.75% p.a. compounding with quarterly rests plus legal expenses and the entire O.A. amount after adjusting payments already made shall become due and payable by the defendants together with interest and expense. In such eventuality the respondents also undertake to hand over vacant peaceful possession of an mortgaged properties to the appellant-Bank except those properties which may have been sold upto 31.3.2007 for disposal of applicant-Bank's dues and he appointment of Receiver shall come to an end and the appellant, upon taking possession or otherwise shall be entitled to sell the same in accordance with law.

That in case of default in payment of the sum of Rs. 800 lacs with interest w.e.f. 1.10.2006 at Benchmark Prime Lending Rate (BPLR) the offer of compromise shall not in any manner be constructed as novation and recession of the original terms and conditions of the sanction made to the respondents by the CH Bank will be entitled to enforce the same.

That the present appeal may be disposed of and the impugned order dated 9.11.2005 passed by the learned P.O., DRT-I, Delhi whereby a decree was issued in favour of the appellant-Bank herein for the amount of Rs. 3,52,70,977.68 along with pendente lite and future interest @ 10% p.a. from the date of filing of O.A. may be amended to the extent of awarding the contractual rate of interest @ 18.75% p.a. compounding with quarterly rests and legal expenses to be operational only on default post March, 2007.

In addition to the above terms and conditions the parties have also agreed to by the following terms:

"(a) At the end the decree and recovery certificate to the limited extent of awarding the contractual rate of interest @ 18.75% p.a. compounded with quarterly interest in place of decretal rate of 10% p.a. to be operational only on default post March, 2007

(b) Allow the instant application and take on record the compromise between the parties, appoint Shri Anil Srivastava, Registrar of this Hon'ble Appellate Tribunal as Receiver to dispose of the mortgaged properties mentioned in Para 6 above and dispose the instant appeal.

(c) Direct the payment compromised amount to the CH Bank to be made upto 31.3.2007 in accordance with the compromise as agreed between the parties and in accordance with Paras 4, 5, 6, 9 and 10 of the instant application;

(d) That on default in adherence to the terms and conditions of the compromise the said compromise would stand rescinded/revoked except to the extent specifically agreed therein the recovery proceedings would commence on the amended decree and amended recovery certificate in accordance with law.

Since the parties have desired to settle the matter on agreed terms, application is allowed and the Appeal 32/2006 is closed in the above terms.

Counsel for the parties also represented that as per the agreed terms the properties are to be sold to the willing purchaser who shall be brought by the JDs in the O.A. For that purpose, the Counsel representing the parties have suggested that a competent officer of this Tribunal be appointed as Receiver to sell the properties on agreed terms as reflected in the present miscellaneous application and also to complete such other functions as per the wishes of the parties, which is reflected in the application. Accepting the request made on behalf of the parties Mr. Anil Srivastava, Registrar of this Tribunal is appointed as Receiver to sell the properties as described in para 6 of the present application on the agreed terms. He shall be paid a fee of Rs. 50,000/- tentatively.

Mr. Anil Srivastava, who is appointed as Receiver to sell the properties, shall be entitled to collect all relevant documents relating to R.C. 153/2005 from concerned Recovery Officer and also the entire records relating to O.A. 69/95 including original title deeds from the DRT-I, Delhi enabling him to complete the assigned to him.

As the parties are settling the matter amicably the recovery proceeding pending before the Recovery Officer shall stand adjourned to 5th April, 2007 on which date the parties shall report to the Recovery Officer about the outcome of the settlement. Once the parties report settlement to the Recovery Officer, the Recovery Officer shall close the recovery proceedings. Once the Receiver complete the job assigned to him, he shall return all the records respectively to the concerned DRT and the Recovery Officer. The Receiver shall be entitled to seek such other assistance as is required from any authority for completing the job assigned to him. He shall file his report on completion of the job assigned to him."

After disposal of the said appeal the property mortgaged by late Shri Hans Raj Garg came to be sold in favour his wife Smt. Champa Garg for Rs. 2.57 crores and with that payment Bank of Rajasthan's claim stood satisfied but for the developments which took place thereafter and which will be now onwards noticed its claim even till date appears to be in jeopardy.

Before the said compromise between Bank of Rajasthan and the Certificate Debtors/respondents in Appeal No. 32/2006 was arrived at the Recovery Certificate which had been issued in the O.A. of the State Bank of Bikaner and Jaipur had already reached the Recovery Officer for execution sometime in the year 2001. In those proceedings the Recovery Officer served a statutory demand notice under Rule 2 of the Rules under the Second Schedule to the Income Tax Act upon the certificate debtors of that case including late Shri Hans Raj Garg. It is not in dispute that late Shri Hans Raj Garg had appeared before the Recovery Officer upon receipt of the demand notice and had admitted that he was owner of House No. 1142, Sector 15-B, Chandigarh (property in dispute) which the certificate holder Bank wanted to be attached and sold in the ongoing execution case (being R.C. No. 117/2001). He, however, claimed that since it was his sole residential house could not be attached and sold in execution of recovery certificate. The Recovery Officer finally attached the property in dispute on 26.11.2013. At that time the appellants, who are husband and wife, jumped into those execution proceedings and filed objections claiming that they were bona fide purchaser of the property in dispute having purchased the same from the grandson of Smt. Champa Garg who had purchased the same after the compromise between Bank of Rajasthan and its certificate debtors in the Bank's appeal as has been noticed already. It was claimed by the appellants in their objections that Smt. Champa Garg had gifted the property in dispute to her grandson after purchasing the same after the disposal of the appeal of Bank of Rajasthan and her grandson had then sold the same to the appellants on 20.9.2010 vide registered sale deed.

The objections of the appellants, however, came to be rejected by the Recovery Officer vide order dated 29.6.2015. That order reads as under:

"1. In this file we are required to decide the objections filed by the objectors viz. Vinod Aggarwal and Smt. Veenu Aggarwal, vide Diary No. 1827 dated 4.3.2014. The objectors have submitted that this Forum has attached the property bearing House No. 1142, Sector 15-B, Chandigarh, belonging to the objectors and the notice of attachment and the public auction has been affixed on the above said property belonged to late Sh. Hansraj Garg, who appears to have mortgaged the same to Bank of Rajasthan. In litigation ensuing the DRAT, Delhi, by order dated 31.10.2006 directed its Registrar as a Receiver to sell the mortgaged property including a House No. 1142, Sector 15-B, Chandigarh. The same was sold by the Receiver to Smt. Champa Garg, who purchased the same for Rs. 257 lacs on 30.3.2007. The said sale was confirmed and the sale certificate issued by the Receiver after the sale consideration was deposited with the Bank of Rajasthan.

It is further submitted that Smt. Champa Garg, by a registered gift deed dated 28.6.2007 gifted the said property to her grandson Sh. Bharat Garg, S/o. Sh. Vinod Kumar Garg, thereby, transferring all right, title and interest in the property. Sh. Bharat Garg, who was the sole and exclusive owner of the above said house sold and conveyed his right tile and interest in the said property to the objector vide sale deed dated 20.9.2010 duly registered at Serial No. 3187 document No. 190 in September, 2010, in the office of Sub-Registrar, Chandigarh.

That by virtue of said sale in favour of Smt. Champa Garg, by the DRAT on receipt of full sale consideration and her gift to her grandson Sh. Bharat Garg and his sale in favour of the objectors, the objectors on September, 2010, acquired unfettered and exclusive title to the property and are bona fide purchaser of the property and it is not open to the CH Bank to go behind the sale by the DRAT.

The objectors further submitted that they are the bona fide purchaser for consideration having purchased the property from Sh. Bharat Garg, who is not a CD Sh. Bharat Garg, got the property in question in gift from Smt. Champa Garg, who obtained the title from the DRAT in a sale duly confirmed and she too was not a CD. All the transactions have taken place between the persons not CDs and therefore, not subject to any scrutiny by this Forum. Even otherwise, if the sale in favour of Smt. Champa Garg, is sought to be gone into, which it is submitted it cannot be, the sale in favour of the objectors is protected as they are bona fide purchaser as held by the Apex Court.

It is further submitted that the order of the attachment dated 26.11.2013 have been passed by this Forum only on the statement of the CH Bank that Smt. Champa Garg, was a house wife and a property bearing No. 1142, Sector 15-B, Chandigarh, was purchased by Smt. Champa Garg, from the funds of her husband. This submission is contrary to record. In view of the above since the entire property bearing No. 1142, Sector 15-B, Chandigarh, stands in the name of the objectors having purchased the same from Mr. Bharat Garg, who is not a CD for consideration and same cannot be attached or sold in the present proceedings.

It is therefore, just and proper and in the interest of justice that the attachment notice qua the above said property may be vacated and the present objections be dealt with and disposed of in accordance with law.

The objectors filed the rejoinder in the Registry vide Diary No. 4053 dated 15.5.2015 wherein, they have specifically denied that Smt. Champa Garg, purchased the property from the funds which were due and payable to the CH Bank. It is submitted that the CH Bank misrepresented to this Hon'ble Tribunal that Smt. Champa Garg, purchased the property in question from the funds of her husband and there is no evidence to said false statement and it is denied that CDs have played a fraud upon the objectors and the objectors have not purchased the property from the CDs and therefore, having right no right to sell the property does not arise and the objectors are the bona fide purchaser for consideration.

It is further stated by the objectors that the CH Bank has got no evidence to prove or alleged that the said property was purchased by Smt. Champa Garg, from funds of her husband. It is clear that the property was purchased by Smt. Champa Garg, received the funds from her sons other than the CDs, daughters, relations and friends. Which statement remains unerupted according to their information and it is denied that the gift deed executed to defraud the CH Bank.

The objectors further submitted that on the one hand the CH Bank relies upon the affidavit of Sh. Hansraj Garg, that he was not possessed of any funds and then the household expenses etc. including his medical expenses were borne by his family members and at the time when Sh. Hansraj Garg, filed his affidavit of assets his children were already educated. The source of purchase has been disclosed on record and is deliberately being avoided reference to by the CH Bank and the question of defraud to the CH Bank did not arise as the property stood mortgaged to the Bank of Rajasthan. Despite, having full knowledge that the title in favour of Smt. Champa Garg, was valid have misrepresented by the Bank that the funds must have come from her husband, although the affidavit by him to the facts that he was not possessed of any assets remained unrebutted. In view of the above, the property in question cannot be attached or sold, the since the same belongs to the objectors.

It is further stated by the objector that it is denied that Sh. Bharat Garg in law is liable to pay the debts of his grandfather. A person under law can be held liable to the extent he inherit an estate from his parents, provided the said parents are liable in law. In the instant case, admittedly Sh. Bharat Garg, is not a CD and his father is alive and therefore, the question of his alleged liability does not arise. It is recorded that Smt. Champa Garg, given her property to her grandson by gift instead of paying of dues of her husband. There is no mention of the property having been sold to the objectors and therefore, the question of the principle of res judicata does not apply. It is retreated that the attachment order is liable to be vacated and withdrawn in as much from any of the CDs and the question of objectors recovering its dues and damages from the CDs does not arise.

The CH Bank has filed the reply to the objections in the registry vide Diary No. 3158 dated 22.4.2015 wherein, the CH Bank has submitted that objections filed by the objectors are not maintainable as the provisions of COC are not applicable in the light of RDDBFI Act and the objectors have not placed any proof of affixation of the notice. It is submitted that the objectors came to know only from the CD who are hand in glove with the CDs to avoid the recovery of adjudicated determine lawful dues of the CH Bank. CH Bank is entitled to attach and the CDs brought the objectors only for the sake of objections and the objectors if at all entitled to damages or recovery that can only be recovered from the seller i.e. the CDs.

It is further submitted that the CD's mother has purchased the property from the funds which were due and payable to the CH Bank therefore, the CDs have played a fraud upon the objectors and thus on such property the objectors have no right which is sold to defraud the Bank as well as the objectors. The gift deed was executed only to defraud the Bank as well as the objectors. The gift deed was executed only to defraud the Bank specially when the CD Late Sh. Hansraj Garg, deposed that he does not have any funds how can this property was purchased by his wife and he further deposed that he do not have funds who educates his children including grandchildren how can his wife purchased the property for such exorbitant high price and from where she got the funds to purchase the property in question.

It is submitted that the seller of the property in question on the date of selling was well aware that his father or grandfather had to make the payment to the Bank, this shows the intent of cheating of CDs and seller of the property including late Smt. Champa Garg, and her entire family members. Therefore, the objectors have no right to stop the Bank to execute the certificate issued by the Hon'ble Tribunal. The transactions which are based on the basis of fraud are not tenable in the eyes of law and hence the objections filed by the objectors should not be allowed.

On perusal of the records it reveals that in this matter the RC was issued by the Hon'ble PO, DRT II, Delhi on 31.1.2001 wherein it was held that CDs are held jointly and severally liable to pay the dues of the Bank from the date i.e. 30.1.1997 of filing of this OA till its realization. Late Shri Hansraj Garg filed his affidavit of assets on 11.12.2002 wherein he has submitted that he has owned H. No. 1142. Sector 15-B, Chandigarh where he resides and is only residential house which is exempted from attachment of sale and besides this I have no immovable property. Late Sh. Hansraj Garg further filed the additional affidavit on 2.9.2004 wherein he has submitted that he has purchased the plot No. 1142, Sector 15-B, Chandigarh in or about the year 1976-77 for about Rs. 1,33,000 which amount was paid in installment and I do not have any records of the payment or details of the account available. It is further submitted that the title deeds of the above said property are with the Bank of Rajasthan.

The CH Bank has filed the counter to the affidavit of CD-3 on 21.2.2007 wherein the CH Bank has stated that affidavit filed by the Sh. H.R. Garg is vague and evasive and is trying to suppress his source of income to avoid payment of the dues and further submitted that late Sh. Hansraj Garg has filed to provide source of purchase of Plot No. 1142, Sector 15-B, Chandigarh and has also failed to disclose the amount spent on the construction of the house.

The CD-3 late Sh. Hansraj Garg filed the affidavit in rejoinder on 2.11.2007 wherein he has deposed that the property bearing No. Plot No. 1142, Sector 15-B, Chandigarh in question was purchased by her about 1976-77 for about Rs. 1,33,000/- in installment and further reiterated that he has no records of payment on construction and the details of the Bank accounts from which the payment has been made and have no source of income.

The CD-2 Sh. Vinod Kumar Garg S/o. Late Shri Hansraj Garg filed an affidavit on 4.2.2010 before this Forum wherein he has deposed that I am residing in the H. No. 1142, Sector 15-B, Chandigarh along with my wife as the same belong to my mother who gifted the same to my son Sh. Bharat Kumar Garg vide registered gift deed 28.6.2007 and subsequent to the same the property was mutated in the name of my son and my son Bharat Kumar Garg residing at Singapore.

CD-2 further filed an affidavit in Registry vide Dy. Mo. 3616 dated 6.7.2012 wherein he has deposed that the property in question was sold by the Registrar, DRAT, Delhi to Smt. Champa Garg my mother, who is purchased the same for Rs. 2.57 crores on 30.3.2007 and the purchase amount was paid for and contributed to my mother by my brother and other relatives and friends and after purchasing the same my mother gifted the same to her grandson Sh. Bharat Garg by a Registered Gift Deed in June, 2007.

It is observed that ICICI Bank filed in Registry vide Dy. No. 6614 dated 20.9.2013, the account opening form of Smt. Champa Garg R/o. H. No. 1142, Sector 15-B, Chandigarh having A/c No. 001301547191 and Customer I.D. No. 51590143 wherein Smt. Champa Garg declared herself the housewife.

The Section 128 of the T.P. Act, 1882 states that subject to the provision of Section 127 where a gift consist of the donors whole property, the donee is personally liable for all the debts due by and liabilities of the donor at the time of the gift to the extent of the property comprised therein.

After investigating the matter, it is found that the property bearing No. H. No. 1142, Sector 15-B, Chandigarh purchased by the w/o. CD-3 viz. Smt. Champa Garg in the auction held by the Hon'ble DRAT, Delhi on 30.3.2007 and the RC in this matter has been issued on 30.1.2001. As per the law the CD cannot transfer or create third party interest in his personal assets after the issuance of the demand notice and in this matter the demand notice was issued the CD on 20.5.2001.

It is revealed that the CD-3 viz. late Hansraj Garg deposed in his affidavit dated 11.12.2002 that he owned the H.No. 1142, Sector 15-B, Chandigarh and is the only residential house which is exempted from attachment for sale and on 2.9.2004 the CD-3 further filed the additional affidavit wherein he has deposed that he has purchased the above said property of Rs. 1,33,000/- about the year 1976-77 and do not have record of payment or details of the account and the title deed of the property in question are with the Bank of Rajasthan. The CD-3 late. Sh. Hansraj Garg further reiterated on 2.11.2007 that he has purchased the property in question in 1976-77 for an amount of Rs. 1,33,000/-.

Smt. Champa Garg the wife of CD-3 purchased the property in question on 30.3.2007 but the CD-3 had concealed this fact from this Forum on 2.11.2007 that his wife has already purchased the property in question from the Hon'ble DRAT, Delhi on 30.3.2007. Moreover, the wife of CD-3 viz. Smt. Champa Garg was the housewife this fact reveals from the account opening form filed by the ICICI Bank on 20.9.2013 vide Dy. No. 6614.

It is observed that the Smt. Champa Garg the w/o. CD-3 purchased the property bearing No. H.No. 1142, Sector 15-B, Chandigarh from the funds provided by the CD-3 and the w/o. of the CD-3 had no source of independent income because she was a housewife.

As per Rule 11(5) of the I.T. Act, the property in question was in possession of Smt. Champa Garg w/o. late Sh. Hansraj Garg CD-3 was not on her account or was in possession of her husband i.e. CD-3 in trust for him. Thus, the property bearing H.No. 1142, Sector 15-B, Chandigarh was purchased by the w/o. CD from the funds contributed by her husband therefore, it is beyond doubt that the above said property belong to CD-3. In this matter the w/o. CD-3 has gifted the above said property in question to her grandson i.e. Sh. Bharat Garg on 28.6.2007 and only after purchasing the same within three months. The whole transaction shows the mala fide intention of the CD-3 and her wife and to defraud the CH Bank and to create hindrance in the recovery proceedings.

In this matter it reveals that the property in question has been gifted by the wife of CD after the issuance of the RC and the demand notice to the CDs to the grandson of CD-3 which is not permissible as per law. Moreover, as per the Section 128 of the T.P. Act, where a gift consists of the donor whole property, the done is personally liable for all the debts due by and liabilities of the donor at the time of the gift to the extent of the property comprised therein.

In view of the above Section 128 of the T.P. Act, the done Sh. Bharat Kumar Garg shall be liable for all the debts dues to the CH Bank and hence, Sh. Bharat Kumar Garg cannot sale the property bearing H. No. 1142, Sector 15-B, Chandigarh which he has received in gift from her grandmother which belongs to CD-3 viz. Late Sh. Hansraj Garg without clearing the dues of the CH Bank. Therefore, the objection of the objectors that they have purchased the above said property in question from the Sh. Bharat Kumar Garg on 20.9.2010, who is not the CD in this matter is devoid of merits and hence, not allowed."

This order of the Recovery Officer was challenged in appeal (being Appeal No. 47/2015) by the appellants herein/objectors before the Presiding Officer of DRT under Section 30 of RDDBFI Act, 1993. In that appeal an interim injunction was also sought against the proposed auction of the property by moving I.A. No. 730/2015 but the same was not granted and application for stay was dismissed on 10.11.2015. Then the objectors filed appeal before DRAT (being Appeal No. 47/2015) but the same was also dismissed vide order dated 18.12.2015. That order is re-produced below:-

"The appellants being neither the borrowers nor the guarantors need not make any pre-deposit for maintaining the present appeal which is filed against the denial of interim prayer made in the pending appeal before the Tribunal below. The application is accordingly disposed of.

The appellants herein filed an application in an appeal for staying the operation of the order dated 28.9.2015 passed by the R.O. for sale of the property-House No. 1142, Sector-15B, Chandigarh (UT) in a pending appeal filed to challenge the order dated 28.9.2015. Aggrieved against this order passed by the Tribunal below the appellants have filed the present appeal.

The Bank appeared on caveat when the notice was issued on 18.11.2015. Parties were directed to maintain the status quo in regard to possession of the property.

The plea by the appellants is that they are bona fide purchasers having purchased this property in the year 2010 from the grandson of Smt. Champa Garg who had purchased the same through Court auction in the year 2007. The attachment order in regard to the property was passed in the year 2013. The appellants claimed to be bona fide purchasers prior to the order of attachment thus stated that they would have a priority over attachment order.

In the reply filed by the Bank the correct factual position has now been disclosed. The respondent-Bank herein had filed an O.A. in the year 1997 and a recovery of Rs. 39,12,77,986.03 was ordered against M/s. Munak Galva Sheets Ltd., Mr. Vinod Kumar Garg, Mr. Hans Raj Garg and Smt. Vinita Garg. The recovery was allowed with interest @ 20.25% with quarterly rests. Orders against some of the defendants were kept pending. Thereafter, on 30.1.2001, final order was passed against defendants 3 and 4 as well. Demand notice for a sum of Rs. 90,56,13,256.67 was issued to the CDs and they appeared before the R.O. on 15.10.2001, CD-3, Mr. Hans Raj Garg was the owner in possession of the property in question which was mortgaged in favour of Rajasthan Bank Ltd. CD-3 entered into a settlement with Rajasthan Bank Ltd. and as per the terms of the settlement, this mortgaged property was agreed to be sold/transferred in the name of Mr. Vijay Kumar Garg or his nominee. It is pursuant to this settlement that this property was transferred in the name of Smt. Champa Garg who was none other but wife of CD Mr. Hans Raj Garg.

While entering into this settlement CD Mr. Hans Raj Garg was fully aware of the recovery proceedings pending against him. The further plea by the Bank accordingly is that the money provided for purchase of his property was of the CD as Smt. Champa Garg was only a housewife. Within three months of having purchased this property, Smt. Champa Garg transferred the same in the name of her grandson Mr. Bharat Garg vide registered gift deed dated 28.6.2007. This transfer, according to the respondent-Bank is not genuine transaction and was done to avoid admitted liability of CD Mr. Hans Raj Garg towards the respondent-Bank. Mr. Vinod Kumar Garg, acting as attorney of his son Mr. Bharat Garg sold this property to the appellants which according to the Bank is to avoid their liability towards the respondent-Bank.

By pointing out to the above facts the Counsel for the Bank would say that the appellants cannot claim to be bona fide purchasers as they had purchased this property without exercising due diligence. If the appellants had carried out proper inquiry, they were bound to know of the pending recovery proceeding against the owner of the property. The Counsel for the Bank would urge that the appellants are the persons who have come forward to help the CDs. Counsel would also contend that the attachment order though passed in the year 2013 would relate back to the demand which was made in the year 2001 and thus no advantage can accrue in favour of the appellants on the ground that they had purchased the property prior to the order of attachment.

It will not be appropriate for this Tribunal to make any comment on priority of rights as the appeal is pending adjudication before the Tribunal below. All these issues in regard to the validity of attachment and its relating back to the date of order are to be considered by the Tribunal below. Any expression of opinion on this ground may prejudice the case of either party. What is to be considered at this stage is whether a case is made out for staying the action of the R.O. for sale of the property in question. The Counsel for the appellants would contend that the interim arrangement can be ordered to be continued till the disposal of the appeal so as to avoid further complication. That is not what is to be considered while granting the prayer main relief claimed in the appeal pending before Tribunal below. Even otherwise, it is to be seen if any prima facie case is made out in favour of the party and where the balance of convenience is lie.

The facts as notice would show prima facie that the appellants did not carry out due diligence before purchasing the property. Balance of convenience also may not appear to be in favour of the appellants. Even if the Bank is allowed to go ahead with the action and the appellants are able to show and establish their rights as independent purchasers of the property, then the sale itself can be set aside. The recovery if of a huge amount. The settlement before this Tribunal earlier was for selling the property in the name of Mr. Vijay Kumar Garg or his nominee. The property, however, was sold to Smt. Champa Garg who is the wife of one of the CDs. She has further gifted this property to her grandson. This is after retaining the same for three months. One of the CDs, namely, Mr. Vinod Kumar Garg has sold this property being attorney of his son to the present appellants. To an extent, the order passed by this Tribunal directing the sale of the property in favour of Mr. Vijay Kumar Garg had been violated. All these was done in the year 2007 by the CDs who well knew that recovery ordered against them arising out of the order passed in the present O.A. It can be said that the borrowers had over reached this Tribunal while getting an order for sale of this property way of settlement. This sale cannot be termed as auction sale as is being said by the Counsel for the appellants. Apparently, it seems that the borrowers have not been fair.

In view of above, no case for interference in the impugned order is made out. The appeal is accordingly dismissed."

The appellants/objectors then carried the matter to Hon'ble Punjab and Haryana High Court by filing a writ petition (being CWP No. 3938 of 2016) which was disposed of by a Division Bench on 10.5.2016. That order is also re-produced below:

"1. The petitioners have challenged the refusal by the Debts Recovery Appellate Tribunal, Delhi, to grant injunction restraining the respondents from selling the properties in execution of a recovery certificate pending the hearing of the appeal filed by the petitioners against the order of the Debts Recovery Tribunal, Delhi rejecting their objections. The respondent sought to bring to sale the properties in execution of the recovery certificate dated 9.5.1999 for a sum of about Rs. 39 crores against Hans Raj Garg, Vinod Garg and Smt. Vinita Garg.

The petitioners' case is that the properties in question were mortgaged in favour of the Bank of Rajasthan by the said Hans Raj Garg, who was the partner of V.K. Construction. Bank of Rajasthan filed an O.A. before the Debts Recovery Tribunal, Delhi, for the sum due in respect of the facility granted by it to V.K. Construction Works Limited. Bank of Rajasthan Limited being dis-satisfied by the order of the Debts Recovery Tribunal filed Appeal No. 32/2006. That appeal was disposed of by an order passed by the Debts Recovery Appellate Tribunal, Delhi dated 31.10.2006. The order records that the defendants therein had agreed to pay the Bank of Rajasthan a sum of Rs. 8 crores together with the interest. Clause 5(b) reads as under:

5(b) "Property situated in Village Munak, District Sangrur in the State of Punjab and property bearing No. 1142, Sector 15-B, Chandigarh will be sold by the Receiver for the balance dues of the Bank to Shri Vijay Kumar Garg or his nominee and the said sale proceeds will be delivered to the Bank who will release the title deeds to the purchaser. The Receiver will issue the necessary sale certificate and confirm the sale and Shri Hans Raj Garg will execute all necessary documents to effect transfer of the property as and when required to do so."

Pursuant to the above, one of the properties was sold to Smt. Champa Garg. Champa Garg was the wife of the said Hans Raj Garg and Vinod Kumar Garg is the son of said Hans Raj Garg. Confirmation order of the sale was passed by the Debts Recovery Appellate Tribunal, Delhi on 30.3.2007, and on the same day the sale certificate was also issued. Thereafter, the property was purportedly, sold for Rs. 2.57 crores. Admittedly, the property was sold by private negotiations between the 2 of 4 Receiver and the said Vinod Kumar Garg and Champa Garg and not by public auction.

Subsequently, Champa Garg gifted the property to her grandson one Bharat Garg vide gift deed dated 28.6.2007 and Bharat Garg in turn sold the property to the petitioners on 20.9.2010. The petitioners are not related to the said Garg.

As we mentioned earlier, an O.A. was filed by the respondent against the said Hans Raj Garg, Vinod and Smt. Vinita to recover a sum of Rs. 39 crores. The recovery certificate issued on 9.5.1999 was in the sum of Rs. 99 crores.

The petitioners' claim for interim reliefs in respect of the said property. The respondent, however, contends that the sale pursuant to the order of the Debts Recovery Appellate Tribunal, Delhi dated 31.10.2006, was a sham and the money in fact never belonged to Smt. Champa Devi. They further contend that the property was sold at a gross under valuation only for the purpose of transferring the same from the name of Hans Raj Garg in order to avoid any liability that may be foisted upon them in recovery proceedings by the respondent herein against the said Hans Raj.

We do not suggest that the respondent's contentions are not well founded. They may ultimately be upheld. Further, a serious issue arises in this regard including whether the arrangement recorded in the order dated 31.10.2006, passed by the Debts Recovery Tribunal, Delhi is merely a device to defraud the respondent or whether it was a genuine arrangement between the parties therein. Further, it is necessary to consider whether such a contention is even open so long as the order dated 31.10.2006 remains valid. This issue would be relevant while considering the petitioners' main case that they are bona fide purchasers for value and without notice. The validity of the mortgage is also a substantial issue to be tried.

In the circumstances, the balance of convenience is clearly in favour of the parties maintaining status quo during the pendency of the appeal. If the properties are sold, rights not only of the petitioners but also of third parties would be adversely affected. On the other hand, if the injunction is granted the respondent cannot suffer any prejudice for the properties would still available.

In the event of the appeal being allowed and the properties being sold the petitioners would suffer irreparable harm and injury especially on account of the fact that the properties in question is their residence.

In the facts and circumstances of the case, the impugned order of the Debts Recovery Appellate Tribunal, Delhi is quashed and set aside. All the parties including the petitioner shall maintain status quo in respect of all the properties till the hearing and final disposal of the appeal pending before the DRAT."

(Emphasis supplied)

Thereafter the DRT finally dismissed the Appeal No. 47/2015 of the objectors/appellants vide order dated 4.11.2016 which is now under challenge in the present appeal, and the same is also being re-produced below:

"1. The appellant preferred this appeal under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 against the order of Recovery Officer-II, DRT-II, New Delhi dated 29.6.2015 passed in RC No. 117/2011 and the factual matrix leading to the filing of the appeal is as follows:

The appellants submit that the property bearing No. 1142, Sector 15-B, Chandigarh belongs to late Shri Hans Raj Garg and it appears that late Shri Hans Raj Garg mortgaged the property to Bank of Rajasthan. The appellants further submit that the Hon'ble DRAT, Delhi by order dated 31.10.2006 directed its Registrar as Receiver to sell the mortgaged properties including House No. 1142, Sector 15-B, Chandigarh. The same Receiver sold to Smt. Champa Garg who purchased the property for Rs. 2.57 lacs on 30.3.2007. The said sale was confirmed and sale certificate was issued by the Receiver after sale consideration was deposited with Bank of Rajasthan. The Hon'ble DRAT, Delhi confirmed the sale and they delivered title over the property.

The appellants further submit that Smt. Champa Garg executed registered gift deed dated 28.6.2007 in favour of grandson Sh. Bharat Garg vide registered gift deed dated 28.6.2007. While so Sh. Bharat Garg sold the said property to the appellants vide sale deed dated 20.9.2010 duly registered at Serial No. 3817 document No. 190, in the office of the Sub-Registrar, Chandigarh. The appellants further submit that they preferred objections before the Recovery Officer and the Recovery Officer without considering the objections dismissed the objections.

Aggrieved by the dismissal of the objections by the Recovery Officer-II, DRT-II, Delhi, the appellants challenged the order of the Recovery Officer-II, DRT-II, Delhi, contending that no mortgage property can be sold twice regarding the dues of the Bank. In the present case, the mortgage property bearing House No. 1142, Sector 15-B Chandigarh was put to sale as per the order of Hon'ble DRAT, Delhi, vide order dated 31.10.2006 and the same was sold to Smt. Champa Garg for sale consideration of Rs. 2.57 lacs on 30.3.2007 and as sale was confirmed by the Hon'ble DRAT, Delhi. Again the same property has been illegally attached vide order dated 26.11.2013 and objection filed by the bona fide purchaser were dismissed and as such the orders of the Recovery Officer-II, DRT-II, Delhi dated 26.11.2013 are liable to be set aside and the attachment is liable to be raised hence the appeal.

The respondent SBBJ filed reply contending that the Bank filed OA No. 107/97 titled as SBBJ v. M/s. Munak Galva Sheets Ltd. and Ors., for recovery of Rs. 39,12,77,986.03 against (i) Munak Galva Sheets Ltd., (ii). Sh. Vinod Kumar Garg, (iii). Sh. Hans Raj Garg and (iv) Smt. Vinita Garg and by order dated 9.5.1999 final order was passed against defendant Nos. 1 and 2 and order against defendant Nos. 3 and 4 kept pending as they had denied the execution of documents.

The respondent-Bank further submits that vide order dated 30.10.2001 final order was passed against defendant Nos. 3 and 4 also and Recovery Certificate No. 117/2001 was issued against the four defendants and demand notice dated 9.5.2001 for recovery of Rs. 90,56,13,256.67 was issued four CDs who appeared before Recovery Officer on 15.10.2001. CD-3 Sh. Hans Raj Garg was owner and in possession of the property bearing No. 1142, constructed on plot of land measuring 1001 sq. yards, Sector 15-B, Chandigarh which was mortgaged in favour of Bank of Rajasthan as security to the loan granted by them to V.K. Construction Work Ltd. The respondent-Bank further submits that CD-3 has settled the matter with Bank of Rajasthan as per terms of settlement the aforesaid property was to be sold or transfer to Sh. Vijay Kumar Garg or his nominee. The appellant Tribunal in Misc. Application No. 331/2006 in Appeal No. 32/2006 titled as Bank of Rajasthan v. V.K. Construction Work Ltd. and Ors., held as follows:

"....Property bearing No. 1142, Sector 15-B, Chandigarh will be sold by the Receiver for the balance dues of the Bank to Sh. Vijay Kumar Garg or his nominee..."

The respondent-Bank further submits that aforesaid settlement the property was got transferred in the name of Smt. Champa Garg wife of CD-3 Sh. Hans Raj Garg vide order of confirmation of sale for Rs. 257 lacs. The respondent-Bank further submits that property worth several crores of rupees was got transferred by the CD Sh. Hans Raj Garg who was fully aware of the aforesaid RC proceedings Bank further submits that during investigation by the Recovery Officer, the wife of the aforesaid CD Smt. Champa Garg was house wife with no disclose source of income and after short period of 3 months Smt. Champa Garg transferred the said property to his grandson Sh. Bharat Garg vide gift deed dated 28.6.2007.

The respondent-Bank further submits that sale deed dated 20.9.2010 shows that the appellants are conniving with the CDs to avoid payment and the property sold against the provisions of the Rule 51 of Second Schedule of Income Tax Act is void and Sh. Bharat Garg being the universal done subject to the provisions of liability. Further, the Hon'ble DRAT, Delhi vide order dated 18.12.2015 held that the borrowers had over reached the DRAT while getting the aforesaid order for sale of the property in question by way of settlement and the sale cannot to termed as auction sale. It was further held that the borrowers have not been fair. Therefore, the claim of the appellants over the property cannot be sustained and the appeal is liable to be dismissed on this ground.

Heard both sides.

Now the points for consideration are:

(i) Whether the sale in respect of the property bearing No. 1142, Sector 15-B, Chandigarh dated 30.3.2007 is true and blinding on respondent Bank?

(ii) Whether the impugned order of the Recovery Officer-II, DRT-II, Delhi dated 29.6.2015 is sustainable?

In the present case, the applicants did not dispute the final order dated 30.1.2001 passed by the Tribunal against the defendants or the issue of the Recovery Certificate No. 117/2001 against the four defendants:

(i) Munak Galva Sheets Ltd.

(ii) Sh. Vinod Kumar Garg,

(iii) Sh. Hans Raj Garg, and

(iv) Smt. Vinita Garg.

The appellants further did not dispute the issue of the demand notice dated 29.5.2001 in pursuance of the Recovery Certificate No. 117/2001 against the CDs and the appearance of the CDs before the Recovery Officer on 15.10.2001. It is further not dispute the owner and purchaser of the property bearing No. 1142, Sector 15-B, Chandigarh.

Rule 2 of Second Schedule of Income Tax Act, 1961 provides for issue of demand notice as follows:

"When a certificate has been drawn up by the Tax Recovery Officer for the recovery arrears under this Schedule, the Tax Recovery Officer shall cause to be served upon the defaulter a notice requiring the defaulter to pay the amount specified in the certificate within fifteen days from the date of service of the notice and intimating that in default steps would be taken to realize the amount under this Schedule."

Further the appellants objected the attachment by filing the objections vide Diary No. 1827 dated 4.3.2014. The property was attached by the Recovery Officer on 26.11.2013. The demand notice in this case was issued to the CDs in RC No. 117/01 on 29.5.2001 by virtue of the provisions of Rule 2 and Rule 16(1) of the Rules provides wherein:

"16(1) Where a notice has been served on a defaulter under Rule 2 of the defaulter or his representative in interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any Civil Court issue any process against such property in execution of a decree for the payment of money."

Further Rule 51 of Second Schedule of Income Tax Act, 1961 provides notice as follows:

"51. Attachment to relate back from the date of service of notice--Where any immovable property attached under this. Schedule, the attachment shall relate back to, and take effect from, the date on which this Schedule, was served upon the defaulter."

Thus, the demand notice in the present case was issued to the CDs on 29.5.2001 and the CDs appeared before the Recovery Officer on 15.10.2001 and as such the attachment relate back form 29.5.2001 or 15.10.2001 in the present case. But the properties in the present case which were deemed to be under attachment by virtue of Rule 51 were sold as per the orders of Hon'ble DRAT, Delhi on 30.3.2007 much subsequent to the demand notice as such by virtue of the provisions of Rule 2, Rule 16(1) and Rule 51 of the Second Schedule of Income Tax Act, 1961 the sale is void. When the sale in respect of the vendors of the appellant is void, the appellant cannot get any better title than what the vendors have.

In IA No. 959/2015 in ward No. 704/2015 in Appeal No. 47/2015 (Delhi-II) in Vinod Aggarwal and Anr. v. State Bank of Bikaner and Jaipur the Hon'ble DRAT vide order dated 18.12.2015. The Hon'ble DRAT, Delhi held that "The facts as noticed would show prima facie that the appellants did not carry out due diligence before purchasing the property. Balance of convenience also may not appear to be in favour of the appellants. Even if the Bank is allowed to go ahead with the action and the appellants are able to show and establish their right as independent purchasers of the property, than the sale itself can be set aside. The recovery is of a huge amount. The settlement before this Tribunal earlier was selling the property in the name of Mr. Vijay Kumar Garg or his nominee. The property, however, was sold to Smt. Champa Garg who is the wife of one of the CDs. She has further gifted this property in the name of his grandson. This is after retaining the same for three months. One of the CDs, namely, Mr. Vinod Kumar Garg has sold this property being attorney of his son to the present appellants. To an extent, the order passed by this Tribunal directing the sale of the property in favour of Mr. Vijay Kumar Garg had been violated. All these was done in the year 2007 by the CDs who well knew that recovery ordered against them, arising out of the order passed in the present OA. It can be said that the borrowers had over reached this Tribunal while getting an order for sale of this property way of settlement. This sale cannot be termed as auction sale as is being said by the Counsel for the appellants. Apparently, it seems that the borrowers have not been fair. In view of the above, no case for interference in the impugned order is made out. The appeal is accordingly dismissed.

Thus, the sale conducted by the Hon'ble DRAT, Delhi in pursuance of its orders was obtained by the CDs suppressing the materials facts. Even otherwise the said sale is void in view of the provisions of Rule 2, Rule 16 and Rule 51 of the Second Schedule of Income Tax Act, 1961 and since the sale in favour of Smt. Champa Garg on 30.3.2007 itself being valid. Subsequent purchaser the appellant cannot have a better right then Smt. Champa Garg.

The learned Recovery Officer-II, DRT-II, Delhi after analyzing the facts and circumstances of the present case dismissed the objection preferred by the appellants on sound reasoning. I see no merit in the appeal and the same is hereby dismissed."

This order of the DRT is now under challenge in the present appeal at the instance of the objectors/appellants who feel that they are in this process likely to be thrown out of their house which they had purchased as bona fide purchasers from its lawful owner Bharat Garg, grandson of the deceased Shri Hans Raj Garg.

From the foregoing narration of the facts leading to the filing of this appeal it becomes now evident that even though Bank of Rajasthan's dues running into over eight crores stood cleared in the year 2016 with the passing of a compromise decree by this Tribunal on 31.10.2016 in the appeal which had been filed by this Bank against the final order passed by the DRT in its O.A. for recovery of its dues from M/s. V.K. Construction Work Ltd. and others including late Shri Hans Raj Garg whereby it had been deprived of the benefit of contractual rate of interest but now with the attachment of the house in Chandigarh in the recovery proceedings in arising out of the decision of the DRT in the O.A. of the respondent-Bank herein (now State Bank of India) the whole chapter regarding the dues of Bank of Rajasthan also appears to be re-opening at the instance of the respondent-Bank. This Bank is claiming that the compromise order obtained by the parties in the appeal of Bank of Rajasthan was a collusive and sham order pre-planned to thwart the efforts of the respondent-Bank herein to recover its dues which as of now have shot upto a whopping figure of over hundred crores. The respondent-Bank had also started claiming in its execution proceedings that the money with which the widow of its deceased borrower/mortgagor late Shri Hans Raj Garg had bought the property in dispute pursuant to the private sale permitted by the then learned Chairperson of this Tribunal in fact belonged to its debtor Hans Raj Garg only as she herself was only a simple housewife and therefore the mortgaged house continued to be owned by him even after its alleged sale in favour of his wife and consequently was available for to be legally attached and auctioned in execution of the recovery certificate obtained by it in its OA. It was not disputed from the side of any of the parties in this appeal that in case decision is rendered by this Tribunal that the compromise decree obtained from this Tribunal by the Rajasthan Bank and its borrower, mortgagor (late Hans Raj Garg) and guarantor by concealment of the fact that already late Hans Raj Garg had suffered a decree in the case of Bank of Rajasthan and he had been served with a demand notice as provided under Rule 2 of the Rules under the Second Schedule to Income Tax Act which also admittedly get attracted in the facts of these type of cases then the title of the appellants which they are claiming to have derived as a result of transfer of title from late Hans Raj Garg to his widow Smt. Champa Garg may come under some cloud. Of course it is also the case of the appellants that even in that eventuality their title may still get protected as bona fide purchasers having bought the property in Court sale after paying full consideration and without any knowledge of any legal bar against Hans Raj Garg compromising with Bank of Rajasthan during the pendency of this Bank's appeal before DRAT and his obtaining a compromise decree with a clause of sale of property in dispute by way of private treaty.

From the foregoing the diagnosis of this Tribunal is that the problem centres around the order dated 31.10.2016 passed by this DRAT in the earlier decided appeal of Bank of Rajasthan inasmuch as the dispute which is cropping up is whether there any concealment of any material fact from this Tribunal by the parties in that Appeal No. 32/2006 at the time of passing of consent order dated 31.10.2006. As noticed already, even the Hon'ble High Court of Punjab and Haryana High Court had observed in its order dated 10.5.2016 passed in the Writ Petition No. 3938/2016 of the appellants herein filed when the DRT as well as DRAT had refused to restrain the respondent-Bank in the present appeal from going ahead with the auction of the property in dispute that the contentions of the Bank that the compromise recorded before DRAT on 31.10.2006 in the appeal of Bank of Rajasthan was not a genuine compromise as far was the permission to sell the property in dispute by way of private understanding to a named person or his nominee obtained from DRAT could-not be said to be without substance and "They may ultimately be upheld". Of course, at that time the matter before the High Court had arisen out of refusal of interim relief to the objectors/appellants herein and thus was & prima facie view but that aspect cannot be left without giving it a serious thought as a lot will depend on the result of the inquiry into that aspect. In that regard the submission of all the parties was that exercise could be taken only DRAT and not by the Recovery Officer or for that matter even by the Presiding Officer of DRT and it was the further view of the appellants/objectors that the aggrieved party could be the respondent-Bank (now State Bank of India) which has however chosen so far not to get mat the aspect of compromise decree dated 31.10.2006 not being genuine looked into by this DRAT. However, in my view mere inaction of the respondent-Bank in that regard is not a hurdle at all in the way of this Tribunal for suo motu going into that aspect which is now staring in the face and cannot be allowed to remain buried under the carpet. The question whether the litigants in Appeal No. 32/2006, "Vinod Aggarwal v. M/s. V.K. Construction Work Ltd.," decided by this Tribunal on 31.10.2016 had played any fraud upon this Tribunal or obtained the final compromise order particularly the permission to sell the property in dispute, which now stands attached by the Recovery Officer in the present litigation and is intended to be auctioned publicly, only to a particular person or his nominee, by concealment of some material facts, has to be answered, one way or the other, to clear the air which at present and on a prima facie diagnosis only appears to be polluted with fraud etc. This Tribunal will be failing in its duty if the fraud angle in the facts and circumstances is simply ignored just because the respondent-Bank which is to recover over hundred crores from its defaulting borrowers including the estate of late Hans Raj Garg.

Therefore, I am of the view that before proceeding to decide this appeal it will be appropriate and in the interest of justice to first clear the air surrounding the order dated 31.10.2016 passed by this Appeal in Appeal No. 32/2006 after hearing all the parties concerned including the objector/appellants herein in case they would also desire to be heard as it is their title over property in dispute which is the subject matter of attachment now and is in danger of being auctioned for the recovery of the dues of the respondent-Bank herein and consequently the State Bank of India also becomes entitled to be heard since it has also to recover public money to the tune of over hundred crores from its borrowers including the estate of late Shri Hans Raj Garg now being represented by his legal representatives who also will be given a hearing before any final orders are passed.

It is however, clarified that this Tribunal deciding to first clear the air surrounding the compromise decree passed in Appeal No. 32/2006 by this Tribunal will not be considered by anyone as rejection of any of the pleas which the appellants are agitating the present Appeal including their plea that they are bona fide purchasers of the property in dispute and so their title will remain unaffected even if this Tribunal in the suo motu inquiry being ordered now comes to the conclusion that the compromise arrived at between the parties in Appeal No. 32/2006 was not a genuine compromise and the compromise decree passed suffering from the vice of fraud and concealment of material facts. These submissions of the objectors/appellants will be examined at length at the time of hearing in the suo motu proceedings and also when the present appeal will be decided finally.

Registry is accordingly directed to prepare a separate file in respect of the suo motu proceedings with the title of "In the matter of suo motu proceedings arising out of Appeal No. 32/2006 decided on 31.10.2006". In that file a copy of the present order shall be kept and the file of Appeal No. 32/2006 shall also be tagged. Service of notices regarding initiation of suo motu proceedings upon all concerned parties shall be got done by the officials of respondent State Bank of India by collecting dasti notices for 25.4.2018.

The present appeal shall also be continued to be listed on the dates when hearing in the suo motu proceedings will be fixed. Notice shall be issued to the Bank of Rajasthan.