Debt Recovery Appellate Tribunal - Allahabad
Kamal Kishore Gupta vs State Bank Of India on 20 July, 2005
Equivalent citations: II(2006)BC177
JUDGMENT
P.K. Deb, J. (Chairperson)
1. This appeal has been preferred against the judgment/order dated 23rd July, 2004 passed by Mr. K.D. Khan, Presiding Officer, D.R.T., Jabalpur in appeal No. 9/2004, where by and where under the order dated 23rd March, 2004 passed by the Recovery Officer in T.A. Execution No. 49/ 2000 has been set aside by exercising jurisdiction under Section 30(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter shall be called as the RDDBFI Act). By the impugned order the learned Presiding Officer, D.R.T., Jabalpur as an Appellate Court has held that the order of the Recovery Officer setting aside the auction sale is illegal and inoperative in the eye of law.
The brief facts of the case are as follows:
The respondent-State Bank of India filed a suit in the District Court at Sahjahanpur for realizing of Rs. 12,59,5897- against the appellant and others. On setting up of the Tribunal as per the RDDBFI Act the said civil suit was transferred to the Tribunal at Jabalpur and registered at T.A. No. 160/98. The said claim of the Bank was allowed by the judgment/order dated 20th September, 1999 and a certificate for the recovery of the amount decreed have been issued. It was held that if the defendants i.e. appellants fail to pay the outstanding dues within a period of one month, the respondent-Bank shall be entitled to realize the outstanding dues by sale of hypothecated and mortgaged property. On the basis of the certificate issued T.A. Execution case No. 49/2000 was registered before the Recovery Officer and in pursuance of the certificate granted, the immovable property of certificate debtor No. 5 Kamal Kishore Gupta was attached and the same was sold in auction. The said certificate-debtor filed various objections before the Recovery Officer regarding the auction sale. The main objection raised by the appellant-Kamal Kishore Gupta was with regard to the order passed by the Indore Bench of Madhya Pradesh High Court on 1st April, 2003 which was subsequently vacated vide order dated 6th December, 2003. In that way such objection regarding stay of the sale and confirmation thereof had no legal impediment. The main objection was with regard to delay in deposit of the balance amount by the auction purchaser. Admittedly, auction was held on 13th March, 2003 and on the date of auction itself 25% of the bid amount was deposited and the balance amount of the sale consideration was deposited on 31st March, 2003 and recorded by the Recovery Officer on 10th April, 2003. It was the contention of the respondents in the objection filed that Sub-rule (2) of Rule 57 of the Schedule II of the Income-tax 1961 was not complied with in its proper perspective inasmuch as the balance consideration amount with poundage fees have not been deposited within 15 days from the date of the sale. The Bankers cheque/balance sale consideration was prepared within 15 days by the auction purchaser on 2th March, 2005, but the same was submitted before the Recovery Officer on 31st March, 2003 and in that way as there was delay in deposit of the balance sale consideration within 15 days and the same has caused the auction purchase null and void. Other objections filed from time-to-time by the certificate debtor have been rejected by the Recovery Officer vide impugned order dated 23rd March, 2004, but as delay was there in depositing the balance sale proceeds, the auction sale was set aside. Learned Recovery Officer had only considered regarding non-deposit in time without considering the provisions of Section 29 of the RDDBFI Act in its proper perspective, when the applicability of Rule 57 of the Income-tax Act was with some discretionary power such as "as far as practicable" and "with necessary modifications", The order of the Recovery Officer was set aside by the impugned order in appeal by the Presiding Officer, D.R.T., Jabalpur on the following grounds:
(a) That objection/application for setting aside the sale was filed very belatedly on 12th June, 2003, when as per Rule 61, such application can be filed only within one month from the date of sale and that no deposit have been made as required mandatorily under Rule 61(b) of Schedule II to the Income-tax Act.
(b) That the provisions of Rules 57(1) and 57(2) of the Schedule II of the Income-tax Act are not being made mandatory regarding their applicability under the RDDBFI Act as some discretionary power has been provided under Section 29 of the RDDBFI Act.
2. In the present appeal, the contention of the C.D. appellant is that the appeal was not maintainable, when Bank was not an aggrieved party before the D.R.T., Jabalpur. The real aggrieved party auction purchaser has not come up for appeal. Secondly it is the contention of the appellant that when Rules 57(1) and 57(2) of Schedule II to the Income-tax Act is a mandatory one, then there was no scope for the learned Presiding Officer, D.R.T. to make it directory by applying the provisions of Section 29 of the RDDBFI Act and giving go-bye to the judgment of the Apex Court as which is the law of the land.
3. On the other hand it is the submission of the learned Counsel for the respondent-Bank that the impugned judgment is a well written judgment deciphering the provisions of law in their proper perspective and the judgment of the Apex Court as reported in AIR 1954 SC 343 and the subsequent decisions relying on that judgment were based only on the mandatory provisions of Rules 84 and 85 of the Order 21 of the C.P.C. which might be para materia the same as that of Rules 57 and 58 of Schedule II to the Income-tax Act, but their applicability is definitely restricted to the wide power of discretion being granted to the Recovery Officer as per provisions of Section 29 of the RDDBFI Act.
4. On hearing the learned Counsel for both the parties on the legal points raised, I have perused the records of the case in the light of such submission. Regarding the first point of maintainability of the application which is regarding setting aside of sale without making deposit as provided under Rule 61 of Schedule II to the Income-tax Act. With regard to Rule 61 itself for filing of application beyond the period of 30 days no answer could be given by the learned Counsel for the appellant, rather he had to admit that the application for setting aside of sale was filed on 12th June, 2003 which is much beyond the period of limitation of 30 days when the sale was conducted on 13th March, 2003. He had also admitted that no deposit has been made as mandatory required under Rule 61(b) of Schedule II to the Income-tax Act. In that way, such application for setting aside of sale is not maintainable and should be thrown out at the very outset when the mandatory provisions have not been complied with. The feeble submission has been made that when some discretion is there under Section 29 of the RDDBFI Act then such application filed belatedly without any deposit might be accepted by the Recovery Officer applying such discretion but such discretion even if applicable, then also reasons must be there as to why such discretion has been made, but in the present case the Recovery Officer has not at all considered regarding the maintainability of the application filed for setting aside of sale beyond the mandatory provisions. In that way, it has rightly been held in the impugned appellate order by the learned Presiding Officer, D.R.T., Jabalpur that the Recovery Officer erred in accepting the application for adjudication. In that way, practically the order of the Recovery Officer becomes nullity.
5. Now coming to the merit regarding delay in payments of the balance amount, some factual aspect is required to be considered. From the records it is clear that the auction purchaser had prepared the Demand Draft on 27th March, 2003 ahead of one day of expiry of 15 days and submitted the same to the concerned branch for tendering to the Recovery Officer, but unfortunately the tendering was made before the Recovery Officer on 1 st April, 2003 along with the copies of the demand draft and the same was recorded in the order sheet by the Recovery Officer on 1 Oth April, 2003, so it becomes clear that the auction purchaser had bona fidely made all attempts to pay the balance amount within 15 days of the auction sale and he had admittedly parted with the amount before the expiry of the limitation period. It was technically defective because the amount was not paid with the Recovery Officer but was made with the Bank who is the ultimate beneficiary. In that way, if it is considered in proper perspective, it cannot be said that the auction purchaser had wilfully delayed in making payment of the balance amount within the prescribed period. Some technical defects remain, but the Legislature wanted the adjudication under the RDDBFI Act and its Rules to be made on the basis of the principle of natural justice and in the present case, definitely natural justice was done when the auction purchaser with bona fide intention had paid the amount with the ultimate beneficiary. In that way, considering the principle of natural justice, even if some technical defect is there, the same should not construe the auction sale to be void.
6. Regarding the legal provisions, I find that the learned Presiding Officer, D.R.T., Jabalpur has taken much pain in construing the provisions of Rule 57 of the Schedule II to the Income-tax Act and also the provisions of Rules 84 and 85 of Order 21 of the C.P.C. As per those provisions, there is different language regarding payment of 25% of the purchase amount and payment of balance amount. At the first stage the word 'deposit' has been used regarding payment of 25% of the purchase amount and regarding the balance amount the word is 'payment' and it has rightly been construed by the learned Presiding Officer that Legislature has with definite intention used the words 'deposit' and 'payment' regarding the two phases of payment of the purchase money. Under the C.P.C., mandatory provisions have been used in Rules 84 and 85 of Order 21, C.P.C. purposely as the actions are being made within the area of District and Tehsil, when the jurisdiction under RDDBFI is vast one, as the area covers the whole of the two States of Madhya Pradesh and Chhattisgarh and for that reason some discretion has been provided to the Recovery Officer in accepting bid money and the balance money with modification of the rules and also with discretion of as far as practicable. The recent judgment of Andhra Pradesh High Court as reported in I (2004) BC 288 (DB): 2004(2) D.R.T.C. 82 has rightly been referred to by the learned Presiding Officer, D.R.T., Jabalpur in deciphering the provision of Rules 84 and 85 of Order 21 of the C.P.C. read with Section 29 of the RDDBFI Act and in that way (supra) has rightly been differentiated in its applicability in the present case.
7. Learned Counsel for the appellant has much stressed on the working of the sale proclamation wherein it was mentioned that the balance amount shall have to be deposited within 15 days from the date of the sale. That provision is definitely there but deviating from that provision lies with the discretionary power of the Recovery Officer. But in the present case Recovery Officer has not applied his discretion which was rightly being corrected by the learned Presiding Officer, D.R.T., Jabalpur in the impugned appellate Order, in the circumstances of the present case basing on the principle of natural justice and discretionary power as provided under Section 19 of the RDDBFI Act.
8. Thus on the above discussions I find no error in the impugned judgment of the learned Presiding Officer, D.R.T., Jabalpur. The order of the Recovery Officer becomes nullity when without giving any appropriate reason he had entertained a barred application for setting aside of sale not only time-barred, but without any deposit. The Recovery Officer has also not considered the principle of natural justice in the circumstances of the present case and completely ignored his discretionary power as provided under Section 29 of the RDDBFI Act, though bona fide intention of the auction purchaser is vital issue for consideration, while applying the discretionary power on the principle of natural justice. By the discretionary power as has been provided under Section 29 of the RDDBFI Act, provisions of Rule 57(2) of Schedule II to the Income-tax Act makes the same directory one and not mandatory. Thus I find that the present appeal has no merit and the same is liable to be dismissed.
9. In the result, the appeal is dismissed and the impugned judgment/order of the D.R.T., Jablapur passed on 23rd January, 2004 in appeal No. 9/04 is hereby upheld and confirmed. Before parting with the records. I must note a word of appreciation that the learned Presiding Officer Mr. K.D. Khan has very ably considered the legal points in their proper perspective and then came to the right finding.