Gujarat High Court
Ritesh Oil Mills P Ltd & vs Dena Bank & 2 on 17 February, 2016
Equivalent citations: AIR 2016 GUJARAT 158, 2017 ACD 186 (GUJ), (2016) 4 BANKCAS 579, (2017) 1 NIJ 683
Author: Akil Kureshi
Bench: Akil Kureshi
C/SCA/18446/2013 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 18446 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE Z.K.SAIYED
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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RITESH OIL MILLS P LTD & 1....Petitioner(s)
Versus
DENA BANK & 2....Respondent(s)
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Appearance:
MR MASOOM K SHAH, ADVOCATE for the Petitioner(s) No. 1 - 2
MR VISHWAS K SHAH, ADVOCATE for the Petitioner(s) No. 1 - 2
MR DEVANG VYAS, ADVOCATE for the Respondent(s) No. 3
MR MAULIK N SHAH, ADVOCATE for the Respondent(s) No. 2
MR SS PANESAR, ADVOCATE for the Respondent(s) No. 1
MR. PARTH H BHATT, ADVOCATE for the Respondent(s) No. 3
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
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C/SCA/18446/2013 JUDGMENT
HONOURABLE MR.JUSTICE Z.K.SAIYED
Date : 17/02/2016
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The petitioners have challenged the judgment dated 29.11.2013 passed by the Debts Recovery Appellate Tribunal, Mumbai ('DRAT' for short) in following background;
2. The petitioners are borrowers. Having taken loan from the respondent No.1 Dena Bank, they failed to repay the same. Dena Bank therefore filed Original Application No.319 of 1998 before he Debt Recovery Tribunal, Ahmedabad ('DRT' for short) for recovery of such unpaid dues with interest. In such Original Application the DRT passed a decree for a sum of Rs.56,39,015.51 ps. On the basis of such decree a recovery certificate was also issued by DRT in favour of the bank. The Recovery Officer thereupon initiated recovery proceedings against the petitioners. One of the properties of the petitioner, namely, land bearing block No.278paiki admeasuring 3631 sq.mtrs., of Village : Gadhoda, Taluka :
Himmatnagar, alongwith factory building thereon came to be attached by the Recovery Officer on 9.9.2003. The Recovery Officer thereafter put the property to auction.
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C/SCA/18446/2013 JUDGMENT
Earlier auction attempts having failed, a fresh attempt was made in September, 2009. On 22.9.2009, the Recovery Officer noted that the auction was fixed on that day, only one bidder, namely, one Shri Gopalkrishnan Dahyabhai Patel, the respondent No.2 herein had submitted his bid for an amount of Rs.21 lacs against the reserved price of Rs.21 lacs. He had also attached the demand draft for a sum of Rs.5.25 lacs. He was persuaded to raise his bid to Rs.21.05 lacs. In view of such developments the Recovery Officer on 22.9.2009 passed the following order : "In view of the above the following order is passed :
1. The offer received for the above mentioned immovable property from Shri Gopalkrishna D. Patel for an amount of Rs.21.05 lacs against the reserve price of Rs.21.00 lacs is hereby accepted.
2. Successful auction purchaser is hereby directed to deposit the balance amount of 25% on or before 23.09.09 by Demand Draft/Pay Order in favour of the Recovery Officer, DRTI, Ahmedabad.
3. The successful bidder is further directed to deposit the remaining 75% of the offered amount on or before 06.10.09 by Demand Draft/Pay Order in favour of the Recovery Officer, DRTI, Ahmedabad. The sale shall be confirmed in due course in accordance with the prescribed terms & Page 3 of 32 HC-NIC Page 3 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT conditions.
4. Further, the successful purchaser is directed to deposit the Poundage Fee 1% of the bid amount plus Rs.10) as per subrule (1) of the Income Tax (Certificate Proceedings) Rules, 1962, Appendix 28 in favour of the Registrar, Debts Recovery Tribunal, Ahmedabad.
5. CH Bank is hereby directed to file FIR regarding the theft of the movable property. Further CH Bank is also directed to depute security with immediate effect and ensure that no further theft takes place till confirmation of sale.
The matter is adjourned till 23.09.09. Copy of this order be given to all concerned free of cost."
3. On 23.9.2009, the Recovery Officer passed following order : "Present proxy advocate for the CH Bank and the successful auction purchaser.
The successful purchaser has deposited a DD No.640500 dated 23.9.2009 an amount of Rs.5000 towards 25% of the bid amount for the immoveable property at Lot no.1. Successful auction purchaser is directed to deposit the remaining amount of Rs.15,75,000 towards 75% of the bid amount and amount of Rs.21,060 towards the Poundage fees auctioned by 22.9.2009.
The matter is adjourned to 6.10.2009."
4. The said order dated 22.9.2009 was challenged by the petitioners before the DRT, Ahmedabad, by filing appeal under Section 30 Page 4 of 32 HC-NIC Page 4 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 ( 'RDDB Act' for short). The petitioners raised three contentions before DRT in such appeal, (1) that the proclamation notice for auction was affixed on 2.9.2009 and the auction was conducted on 22.9.2009 which was less than 30 days of statutory period provided under the rules; (2) that the valuation report was not served on the petitioners and the property was sold on the basis of stale valuation report; (3) that the life of an attachment order would be three years. The attachment which was effected on 9.9.2003 therefore would not survive beyond a period of three years. The said auction of the property therefore could not have been effected on the basis of such attachment order. The respondents i.e. the Dena Bank and the sole auction participant opposed the appeal on the ground of maintainability. It was argued that the Recovery Officer had not carried out any adjudication of rival disputes, such order was therefore not appealable under Section 30 of the RDDB Act.
5. The DRT, Ahmedabad by an order dated 29.3.2010 dismissed the appeal of the petitioners. It was held that the issues Page 5 of 32 HC-NIC Page 5 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT sought to be raised before the Tribunal were not raised before the Recovery Officer. In the opinion of the Tribunal unless such matters were adjudicated before the Recovery Officer by filing objections and were adjudicated by the Recovery Officer, the parties cannot straightaway come to the Tribunal by filing appeal under Section 30 of the RDDB Act. Despite the above conclusion the Tribunal proceeded to consider the contentions of the petitioners on merits as well. With respect to not maintaining time gap of 30 days between proclamation and auction, the Tribunal observed that such issue was not raised before the Recovery Officer and further in order to set aside the sale on the ground of irregularity the petitioners had to demonstrate substantial injury, which was not done. Regarding the life of the attachment order the Tribunal observed that the provisions of 2nd Schedule to the Incometax Act, 1961 are made applicable under Section 29 of the RDDB Act, but the same have to be applied as far as possible. The Tribunal found it debatable whether any formal attachment would be necessary in case of a mortgaged property. With respect to the stale valuation report, the Tribunal observed that such issue was Page 6 of 32 HC-NIC Page 6 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT never raised before the Recovery Officer, this was the fourth attempt to conduct the public auction and the petitioners were given opportunities to settle the matter, they however could not repay the amount as per the settlement. On such grounds the Tribunal dismissed the appeal of the petitioners.
6. Against such order of the Tribunal the petitioners preferred further appeal before the DRAT. The DRAT by impugned order dated 29.11.2013 dismissed the appeal solely on the ground that against the order passed by the Recovery Officer on 22.9.2009 appeal under Section 30 of the RDDB Act was not maintainable before the DRT. The Appellate Tribunal was of the opinion that the Recovery Officer had not passed any adjudicatory order. Such order did not decide the rights and liability of the parties and, therefore, the same cannot be treated as an order in strict sense of the term for the purpose of Section 30 of the RDDB Act. It is this order of the Appellate Tribunal that the petitioners have challenged in this petition.
7. Appearing for the petitioners, learned advocate Shri Vishwas Shah contended that the DRAT committed serious error in rejecting the Page 7 of 32 HC-NIC Page 7 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT appeal of the petitioners on the ground that against the order of Recovery Officer no appeal was maintainable. He submitted that in terms of Section 30 of the RDDB Act, against any order passed by the Recovery Officer an appeal would be available before the DRT. The term 'order' has not been defined under the Act and must therefore be appreciated in the context of the provisions contained in the RDDB Act. He submitted that in the process of accepting the sole offer of the respondent No.2 the Recovery Officer took decision which would adversely affect the petitioners. Acceptance of the offer was based on highly irregular procedure and on a valuation report which had lost its relevance. Unless and until such issues are allowed to be raised, the petitioners would suffer irreparable injury.
8. In support of his contention that appeal against any order of the Recovery Officer is maintainable under Section 30 of the RDDB Act, counsel relied on the following decisions : (1) Union of India and another v. Delhi High Court Bar Association and others, AIR 2002 SC 1479 Page 8 of 32 HC-NIC Page 8 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT (2) Unreported judgment of learned Single Judge dated 25.4.2008 passed in Special Civil Application No.28784 of 2007 in case of Panchmahal Steel Ltd., vs. The Bank of Baroda, (3) The decision of Division Bench of this Court in the case of Bank of Baroda vs. Balbir Kumar Paul and ors., reported in 2010 (2) GLH 790, (4) Official Liquidator, Uttar Pradesh and Uttarakhand vs. Allahabad Bank and ors., reported in (2013) 4 SCC 381, (5) Sanjay Singh and another vs. U.P.Public Service Commission, Allahabad and another, reported in (2007) 3 SCC 720, Sadashiv Prasad Singh vs. Harendar Singh and others, reported in (2015) 5 SCC 574,
1. In order to further his contention that the decision of the Recovery Officer dated 22.9.2009 is an appealable order the counsel relied on the following decisions : (1) Divisional Forest Officer, Eluru vs. District Judge, West Godavari Dist. And ors., reported in AIR 2002 Andhra Pradesh 224, Page 9 of 32 HC-NIC Page 9 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT (2) Gangadhar Lalliram vs. Nirvachan Adhakari Markiting Society, Vijayapur and ors., reported in AIR 1971 Madhya Pradesh 16, (3) Kanhikkamthoppu Parambil Radha vs. Kondarappatt Velayudhan, reported in AIR 1994 Kerala 412,
2. On the other hand, learned counsel for the respondent No.1 Dena Bank opposed the petition contending that the petitioners have not repaid the dues of the bank since long. The properties of the petitioners were put to auction four times before finally the offer was received by the respondent No.2. He relied on the decision of the Madras High Court dated 29.4.2009 in case of Nazims Continental vs. The Indian Overseas Bank and Ors., to contend that even in appeal under Section 30 of the RDDB Act, requirement of predeposit flowing from Rule 61 of the 2nd Schedule of the Income Tax, 1961 should be followed.
3. Learned Counsel Mr.Shalin Mehta appearing for respondent No.2 successful bidder also opposed the petition contending that Section 30 of the RDDB Act does not refer to any order passed by the Recovery Officer and uses Page 10 of 32 HC-NIC Page 10 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT the expression 'an order', thus the legislature has consciously limited the expression under Section 30 of the RDDB Act. In the present case, the order passed by the Recovery Officer did not decide any lis between the parties and was therefore not appealable as rightly held by the DRAT. He lastly contended that even if the appeal is held to be maintainable, in view of the fact that the DRT has examined the contentions of the petitioners on merits, the matter may be remanded before the DRAT for decision on merits since the DRAT has not gone into such aspects.
4. Having thus heard learned counsel for the parties and having perused documents on record the sole and short controversy needed to be resolved in this petition is whether against the order dated 22.9.2009 passed by the Recovery Officer an appeal under Section 30 of the RDDB Act was maintainable before the DRT. Under such order, the Recovery Officer accepted the offer of the respondent No.2 of purchase price of Rs.21.05 lacs for the immovable property of the petitioners for which upset price of Rs.21 lacs was fixed. He was the sole bidder. The Recovery Officer while accepting such offer required him to Page 11 of 32 HC-NIC Page 11 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT deposit the remaining amount of sale consideration within specified time.
5. From the statement of objects and reasons for enactment of the RDDB Act, one can notice that legislature realized that the banks and financial institutions were experiencing considerable difficulties in recovering loans and enforcement of security and the existing procedure for recovery of debts due to the banks and financial institutions required modifications. It was therefore, felt that speedy recovery had to be enabled. The Act was therefore enacted to establish Tribunals and Appellate Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions. With these objects in mind RDDB Act came to be enacted. Section 3 of the Act pertains to establishment of the Tribunal. Section 8 pertains to establishment of Appellate Tribunal. Section 17 of the RDDB Act pertains to jurisdiction, powers and authority of Tribunals. Section 18 of the RDDB Act provides that on and from the appointed day, no court or other authority shall have, or be entitled to exercise any jurisdiction, powers or authority, except the Supreme Court, and a High Court exercising jurisdiction under Page 12 of 32 HC-NIC Page 12 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT Articles 226 and 227 of the Constitution, in relation to the matters specified in Section
17.
6. Chapter V of the RDDB pertains to recovery of debt determined by Tribunal. Section 25 contained therein pertains to modes of recovery of debts which reads as under : "25. Modes of recovery of debts The Recovery Officer shall, on receipt of the copy of the certificate under subsection (7) of section 19, proceed to recover the amount of debt "specified in the certificate by one or more of the following modes, namely :
(a) attachment and sale of the movable or immovable property of the defendant;
(b) arrest of the defendant and his detention in prison;
(c) appointing a receiver for the management of the movable or immovable properties of the defendant."
7. Section 28 contained in Chapter V pertains to other modes of recovery and provides, inter alia, under Subsection (2) that, if any amount is due from any person to the defendant, the Recovery Officer may require such person to deduct from the said amount, the amount of debt due from the defendant under the Act and such person shall comply with any such requisition and shall pay the sum so deducted to the credit of the Recovery Page 13 of 32 HC-NIC Page 13 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT Officer.
8. Section 29 of the RDDB Act pertains to application of certain provisions of the Incometax Act which reads as under : "29. Application of certain provisions of Incometax Act The provisions of the Second and Third Schedules to the Income tax Act, 1961 and the Incometax (Certificate Proceedings) Rules, 1962, as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under this Act instead of to the incometax.
Provided that any reference under the said provisions and the rules to the "assessee" shall be construed as a reference to the defendant under this Act."
9. Section 30 pertains to appeal against the order of Recovery Officer which reads as under : "30. Appeal against the order of Recovery Officer (1) Notwithstanding anything contained in Section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.
(2) On receipt of an appeal under sub section (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such inquiry as it deems fit, confirm, modify or set aside Page 14 of 32 HC-NIC Page 14 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT the order made by the Recovery Officer in exercise of his powers under Sections 25 to 28 (both inclusive)."
10. Section 31 which falls in Chapter VI containing miscellaneous provisions, provides that every suit or other proceeding pending before any court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action where on it is based is such that it would have been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal.
11. It can thus be seen that to provide mechanism for speedy recoveries of unpaid dues of banks and financial institutions the RDDB Act was enacted. By virtue of Section 17 pertaining to jurisdiction of the Tribunal, Section 18 pertaining to bar of jurisdiction of the Civil Court and Section 31 providing for transfer of pending cases before the Tribunal, the Tribunal is given exclusive jurisdiction over such matters and ordinary jurisdiction of the Civil Court would be ousted.
12. We have also noticed that in terms of Section 29 of the RDDB Act the provisions of Page 15 of 32 HC-NIC Page 15 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT 2nd and 3rd Schedules to the Incometax Act as in force from time to time would apply with necessary modifications to amount of debt due under the RDDB Act as far as possible. As is well known, ScheduleII to the Incometax Act provides the procedure for recovery of tax. Detailed provisions have been made in the said Schedule for recovery of unpaid taxes. Rule 56 thereof pertains to sale by public auction and provides that any sale of immovable property for recovery of the dues shall be by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer.
13. Rule 60 enables the defaulter to pay the dues and apply to the Recovery Officer to set aside the sale. Rule 60 reads as under : "Application to set aside sale of immovable property on deposit.
60. (1) Where immovable property has been sold in execution of a certificate, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing
(a) [***] the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, with interest thereon at the rate of [fifteen] per cent per annum, calculated from the date of the proclamation of sale Page 16 of 32 HC-NIC Page 16 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT to the date when the deposit is made; and
(b) for payment to the purchaser, as penalty, a sum equal to five per cent of the purchase money, but not less than one rupee.
(2) Where a person makes an application under rule 61 for setting aside the sale of his immovable property, he shall not, unless he withdraws that application, be entitled to make or prosecute an application under this rule."
14. Rule 61 pertains to an application to set aside the sale of the immovable property on the ground of nonservice of notice or irregularity and reads as under : "Application to set aside sale of immovable property on ground of non service of notice or irregularity.
61. Where immovable property has been sold in execution of a certificate, [such Incometax Officer as may be authorised by the Chief Commissioner or Commissioner in this behalf], the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this Schedule or on the ground of a material irregularity in publishing or conducting the sale:
Provided that
(a) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of the non service or irregularity; and Page 17 of 32 HC-NIC Page 17 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT
(b) an application made by a defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in the execution of the certificate."
15. Rule 63 pertains to confirmation of sale. Subrule (1) thereof provides that, where no application is made for setting aside the sale under the earlier rules or where an application is made but disallowed by the Tax Recovery Officer and if the full amount of purchase money has been paid, he shall make an order confirming the sale upon which the sale shall become absolute. Sub rule (2) of Section 63 provides that where such application is allowed and where in case of an application made to set aside the sale on deposit of the amount and penalty and charges such deposit is made within 30 days from the date of the sale, the Tax Recovery shall make an order setting aside the sale.
16. It can thus be seen that the Recovery Officer carrying out recovery pursuant to certificate issued by the Debt Recovery Tribunal would be as far as possible following the procedure contained in 2nd Schedule to the Incometax Act. In such a case, therefore, the defaulter would have an opportunity to pay the entire amount and Page 18 of 32 HC-NIC Page 18 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT approach the Recovery Officer for setting aside the sale in terms of Rule 60. Rule 61, on the other hand, would apply in a case where the defaulter seeks setting aside of the sale on the ground that the notice was not served to the defaulter to pay the arrears or on the ground of material irregularity in publishing or conducting the sale. On the other hand, Section 30 of the RDDB Act provides for an appeal to the Tribunal at the hands of the person aggrieved by an order of Recovery Officer made under the said Act. This provision contained in Subsection (1) of Section 30 starts with non obstante clause and provides that such right of appeal would accrue, notwithstanding anything contained in Section 29. Thus, irrespective of any remedy available to a defaulter in terms of Rules 60 and 61 of the 2nd Schedule to the Incometax Act, he would also have a remedy of appeal to the DRT against an order passed by the Recovery Officer under the Act. Subsection (2) of Section 30 lays down the scope of the Tribunal while entertaining such an appeal and provides that the Tribunal may, after giving an opportunity to the appellant to be heard and after making such an inquiry as it deems fit, confirm, modify or set aside the Page 19 of 32 HC-NIC Page 19 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT order made by the Recovery Officer in exercise of his powers under Sections 25 to 28 of the Act. This specific reference to an order passed by the Recovery Officer in exercise of his powers under Sections 25 to 28 of the Act would emphasis that the Debt Recovery Tribunal would entertain an appeal against an order passed by the Recovery Officer in the process of carrying out the recoveries in terms of Sections 25 to 28 of the RDDB Act. We may recall that Section 25 of the RDDB Act pertaining to modes of recovery envisages the recovery in three modes, namely, (1) attachment and sale of the movable or immovable property, (2) arrest of the defendant and his detention in prison and (3) appointing a receiver for the management of the movable or immovable properties of the defaulter. Section 28 on the other hand, is in the nature of garnishee powers and envisages recovery by the officer directly from the creditor of the defaulter.
17. Thus the scope of appeal under Section 30 of the RDDB Act against an order passed by the Recovery Officer is sufficiently wide and would take within its sweep, any order that the Recovery Officer may pass which would have a bearing on the rights of the appellant Page 20 of 32 HC-NIC Page 20 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT before the Tribunal. It is true that the law recognizes certain orders, which are not appealable. Nevertheless where an order that the Recovery Officer may pass has a substantial potential to adversely affect a party or injure his rights, it would certainly be one which would be appealable under Section 30 of the RDDB Act.
18. To contend that only remedy to a defaulter would be under Rule 61 of the 2nd Schedule to the Incometax Act is wholly erroneous. First and foremost immediately after providing in Section 29 of the RDDB Act that the provisions contained in 2nd Schedule to the Incometax Act, will apply to the recoveries made by the Recovery Officer under RDDB Act, in Subsection (1) of Section 30 it is provided that notwithstanding such provisions, an appeal would be available to an aggrieved person against an order passed by the Recovery Officer made under the RDDB Act. Clearly therefore the statute provides for concurrent remedies. Remedy under Rule 61 of the 2nd Schedule to the Incometax Act is not exclusive of appeal under Section 30 of the RDDB Act. Further, if the order of the Recovery Officer in the present case is amenable to scrutiny under Section 61 of the Page 21 of 32 HC-NIC Page 21 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT 2nd Schedule to the Incometax Act and if so demonstrated, liable to be set aside, we do not see how such order for the purpose of Section 30 of the RDDB Act becomes so innocuous as to render itself nonappealable. We may recall that under Rule 61 of the 2nd Schedule, a defaulter can request for setting aside a sale either on the ground of non service of notice or on the ground of material irregularity in publishing or conducting the sale. Yet another aspect which immediately springs from the record is that Section 25 of the RDDB Act permits the Recovery Officer three modes of recoveries including attachment and sale of movable and immovable property of the defaulter. Publication and proclamation of the conducting auction which would include obtaining valuation and fixing upset price, some of the important stages of sale by auction of any movable or immovable property. If the defaulter has fundamental objection to any of these aspects which would go to the root of the matter his right to question the very auction on such basis would certainly arise when the Recovery Officer proceeds on such defective foundation. For all these reasons, we are of the opinion that the DRAT committed serious error in holding that the Page 22 of 32 HC-NIC Page 22 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT petitioners' appeal under Section 30 of the Act was not maintainable.
19. We may refer to the decisions cited by the counsel. In case of Delhi High Court Bar Association (Supra) the Supreme Court while upholding the vires of the RDDB Act and reversing the decision of the Delhi High Court noticed that, Section 30 of the RDDB Act by virtue of Amendment Act in the year 2000, gives a right to any person aggrieved by an order of the Recovery Officer, to prefer an appeal to the Tribunal. The Supreme Court observed that, this would provide safeguard in the event of Recovery Officer acting in any arbitrary or an unreasonable manner. Though the Supreme Court in the said case was not directly concerned about the maintainability of the appeal under Section 30 of the RDDB Act, these are relevant observations for our purpose.
20. The learned Single Judge in case of Panchmahal Steel Ltd., (Supra), however, was not directly concerned with the issue at hand. It was the case where against the order of the Recovery Officer the DRT and thereafter of DRAT who refused to grant complete stay to the petitioner against Page 23 of 32 HC-NIC Page 23 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT attachment of Nickel which was the stock of the petitioner used in the industry. The petitioner had approached the High Court. It was in this background the learned Single Judge noticed the provisions of Section 30 of the RDDB Act.
21. The Division Bench of High Court in case of Bank of Baroda (Supra), did not have the occasion to decide the present issue, as can be seen from recording in paragraph6 of the judgment that, it is not in dispute that orders passed by the Recovery Officer were appealable under Section 30 of the said Act. It was in this background of this unopposed position that the Court observed that, when statutory appeal is available, ordinarily the Court would not entertain a writ petition without insisting on the person aggrieved to avail such alternative remedy.
22. In case of Official Liquidator, Uttar Pradesh and Uttarakhand (Supra), the issue was substantially different. The question was whether Official Liquidator of a Company under liquidation can have a choice either to approach DRT or the Company Court against an order passed by the Recovery Officer. The Supreme Court was of the opinion that the Page 24 of 32 HC-NIC Page 24 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT language of the RDB Act, being clear, it provides an appeal by the aggrieved person. The Official Liquidator would undoubtedly be a person aggrieved relating to an action taken by the Recovery Officer which would include the manner in which the auction is conducted or the sale is confirmed. This later observation though may not lay down the ratio of the decision since the central controversy was which would be the correct forum for the Official Liquidator to approach, nevertheless would provide strong indication that an order passed by the Recovery Officer including the manner in which the auction is conducted and the sale is confirmed would also be appealable in terms of Section 30 of the RDDB Act.
23. In case of Sadashiv Prasad Singh (Supra) in para 23.3 on which heavy reliance is placed by the counsel for the petitioners the Supreme Court observed that, a remedy of appeal was available to Harender Singh in respect of the order of the Recovery Officer assailed by him before the High Court under Section 30. However, such order was final confirmation of sale and not any interlocutory order for action taken by the Recovery Officer during the process of Page 25 of 32 HC-NIC Page 25 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT conducting the auction sale. Availability of remedy and nonavailing of such remedy by the defaulter were some of the grounds pressed by the Supreme Court for reversing of the judgment of the High Court.
24. In case of Sanjay Singh and another (Supra), in para9 in the context of Civil Procedure Code, the Supreme Court highlighted the distinction between the decree and order. However, these are not the issues in the present petition.
25. In the case of Divisional Forest Officer, Eluru (Supra), the Division Bench of Andhra Pradesh High Court in the context of term 'order' made certain significant observations which reads as under : "7. An appeal lies under subsection (1) by the claimants whereas an appeal lies under subsection (2) on behalf of the Government by the Forest Officer or other person, generally or specially empowered by the Government in that behalf. In the instant case, the appeal was preferred by the Divisional Forest Officer under sub section (2) of S. 13 of the Act. It is true that only against an order, an appeal lies under S. 13 of the Act, whether such appeal is filed by the claimant or by the State Government, as the case may be.Before dealing with the question whether the letter of the Forest Page 26 of 32 HC-NIC Page 26 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT Settlement Officer dated 18121984 is an order or not, it is necessary to know how the term "order" is understood in legal parlance. The term "order" occurring in S. 13 of the Act is comprehensive enough to include every decision, award or order, made under Ss. 10 and 11 of the Act. The term "order" is not a term of art. It has no fixed legal meaning. The term "order" has not been defined in the Andhra Pradesh Forest Act like the Code of Civil Procedure which gives it a special meaning in order to distinguish from a decree. Therefore, it becomes necessary how the term "order" is understood in ordinary legal parlance. The term "order" in legal parlance, would always indicate some expression of opinion which is to be carried out or enforced. In other words, an "order" is a conclusion of a Court or an Authority or a Tribunal upon any motion. The term "order," "decision" and "judgment" are commonly used interchangeably."
26. In case of Gangadhar Lalliram (Supra), the Division Bench of Madhya Pradesh observed as under : "14. In our opinion, the word "order" as used in Section 77 of the Act is comprehensive enough to include every decision award or order made under the Act. The word "order" is not a term of Article It has no fixed legal meaning. In 67 CJS 520, the following statement occurs: " 'Order', as a noun, has been held equivalent to or synonymous with 'decision', See 26 CJS 38 Note 68, 'finding' See 36 CJS 767 Note 72, 'regulation', 'rule', 'resolution', Page 27 of 32 HC-NIC Page 27 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT 'shipment' and 'warrant' and has been compared with, or distinguished from, 'regulation' and warrant'." The word "order" has not been defined in the Act like the Code of Civil Procedure, which gives it a special meaning in order to distinguish it from a decree."
27. In case of Kanhikkamthoppu Parambil Radha (Supra), the learned Single Judge rejected the contention of the counsel that the order mentioned in Section 19(5) of the Guardians and Wards Act would be only one which is a final order.
28. It can thus be seen that various Courts have referred to the term 'order' as being one which need not necessarily finally decide the rights and liabilities of the parties. In the context of the Civil Procedure Code term 'order' is used in juxtaposition to a decree, however, in common parlance often times the terms order, decision and judgment are used interchangeably. As rightly pointed out by the counsel for respondent No.2, in case of Ashutosh Shrotriya (Supra) Full Bench of Allahbad High Court noticed the distinction made by the Supreme Court between various kinds of orders in Midnapore Peoples' Coop. Bank Ltd., vs. Chunilal Nanda (2006) 5 SCC 399 which as under : Page 28 of 32 HC-NIC Page 28 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT "(i) Where the High Court in a contempt proceedings renders a decision on the merits of a dispute between the parties, either by an interlocutory order or final judgment, whether that would be appealable under Section 19 of the Contempt of Courts Act, 1971 and if not, what would be the remedy to the person aggrieved; and
(ii) Where such a decision on merits is rendered by an interlocutory order of a learned Single Judge, whether an intracourt appeal would be maintainable under Clause 15 of the Letters Patent of the High Court of Calcutta.
The Supreme Court observed that interlocutory or interim orders which are passed during the pendency of a case would fall under one or the other of the following categories:
"(i) Orders which finally decide a question or issue in controversy in the main case;
(ii) Orders which finally decide an issue which materially and directly affects the final decision in the main case;
(iii) Orders which finally decide a collateral issue or question which is not the subject matter of the main case;
(iv) Routine orders which are passed to facilitate the progress of the case till its culmination in the final judgment;
(v) Orders which may cause some inconvenience or some prejudice to a party, but which do not finally determine the rights and obligations of the parties."
29. It can thus be recognized that there may be some kinds of orders, which do not undertake any adjudication process or decide even momentary rights and liabilities of the parties and such orders therefore may not be appealable. This was the view of the Full Page 29 of 32 HC-NIC Page 29 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT Bench of Allahbad High Court in case of Ashutosh Shrotriya (Supra). It was the case where on a reference the Larger Bench was deciding whether when a learned Single Judge merely adjourns a petition and calls for reply or response from the respondent without granting injunction, could it be stated to be an appealable order against which Letters Patent Appeal would be maintainable. The Full Bench opined that a purely procedural direction of calling for a counter affidavit and rejoinder would not be amenable to special appeal since he decides no rights and does not affect the vital and substantive rights of the parties. The rider was however provided that the appellate court has the unquestioned jurisdiction to decide whether the direction is of a procedural nature against which a special appeal is not maintainable or whether the interlocutory order decides matters of moment or affects vital and valuable rights of the parties and cause serious injustice to the party concerned.
30. Seen from such context, undoubtedly the order passed by the Recovery Officer on 22.9.2009 has vital bearing on the rights of the petitioners. As long as the order that Page 30 of 32 HC-NIC Page 30 of 32 Created On Sun Feb 28 02:45:18 IST 2016 C/SCA/18446/2013 JUDGMENT Recovery Officer may pass in exercise of powers under Sections 25 to 28 of the RDDB Act and which acts prejudicially or is injurious to a person, such person would be a person aggrieved. An appeal at the hands of such person would be maintainable under Section 30 of the Act.
31. As noticed earlier, DRT had dismissed the appeal after taking into account the objections of the petitioners also. Since it is pointed out that the bank is attempting to recover the dues of the defaulters since long without success, we would instead of relegating the proceedings to the DRT, place it before the DRAT for decision on the appeal of the petitioners on merits. We would request the DRAT to give priority consideration to such appeal and dispose of the same preferably before 31.8.2016. The interim formula granted by this Court earlier shall inure till 31.8.2016. If thereafter the appeal is not disposed of, it would be open to the petitioners to apply before the DRAT for further relief.
32. The petition is disposed of.
(AKIL KURESHI, J.)
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(Z.K.SAIYED, J.)
KKS
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