Andhra HC (Pre-Telangana)
R. Advaiah vs Union Of India, Ministry Of Finance, New ... on 30 December, 1998
Equivalent citations: 1999(1)ALD464, 1999(1)ALT449
Author: J. Chelameswar
Bench: J. Chelameswar
ORDER
Motilal B. Naik, J
1. Petitioner seeks a writ of Mandamus declaring the Recovery of Debts Due to Bankers and Financial Institutions Act, 1993 (Central Act, 1961) as ultra vires under the provisions of the Constitution of India and a further declaration, declaring the order of attachment of immovable property (Form No.16) and notice for settling a sale proclamation (Form No. 17) issued by the second respondent in respect of the property situated in Sy. Nos.86/1, 86(b) admeasuring Ac.9.16 guntas and in Sy.No.87 admeasuring Ac.12.12 guntas of Ghatkesar village, Ranga Reddy District as illegal and unconstitutional and pass such other order or orders.
2. Petitioner states that he purchased an extent of Ac.21.18 guntas in Sy. No.86/B and Sy. No.87 in Ghatkesar village, Ranga Reddy District for a valuable consideration from Smt. Sayeedunnissa Begum @ Sayeeda Begum and her four sons. Petitioner also obtained registered sale-deeds in the names of his wife, two children, besides in his name. Petitioner also states that since the dates of purchase i.e., 21-6-1991, 11-5-1992 and on 12-1-1993 of the said property through separate registered sale-deeds, they are in uninterrupted possession of the same by cultivating the said property. According to the petitioner, they are paying necessary land-revenue in respect of the schedule property and title pass-books were also issued to them by the MRO, Ghatkesar Mandal.
3. According to the petitioner, before purchasing the schedule property, her vendor Smt. Sayeedunnissa Begum obtained an encumbrance certificate and certified sale-deed copy from the authorities in the year 1989 which showed that there were no encumbrances. Petitioner states that her vendor purchased the said property from one A. V. Jcigan Mohan Rao who purchased the same from one K. Ratnulu who was a pattadar.
4. According to the petitioner, when he went to his land on 30-10-1998, he found that the second respondent has affixed two notices on the wall of the fencing gate. One notice purports to be in Form No.16 under Rule 48 of Schedule-II of Income Tax Act and another in Form No.17 under Rule 53 of the same legal provision. As per Form No. 16, he noticed that it was addressed to M/s. Vinayaka Bore Wells represented by A.V. Jagan Mohan Rao, A. Sashi Kiran and Smt. Lakshmi Bai and as the said persons failed to pay an amount of Rs.30,12,196.30 ps. in respect of certificate in OA No.DRT/DCP/ 167/98-99, dated 4-6-198, the said property is being attached. Form No.17 advises the above persons that the said property is ordered to be sold.
5. Petitioner claims that he contacted the 2nd respondent over telephone who infonned that the third respondent filed a suit in the Court of the Principal Sub-Judge, Kothapet, Ranga Reddy District at Saroornagar in OS No.58 of 1988 for recovery of Rs.10,83,125/- and pursuant to the constitution of the Debt Recovery Tribunal, the said suit stood transferred to the said Tribunal and an order was passed in favour of the third respondent for an amount of Rs.30,12,196.30 ps., pursuant to which the Presiding Officer of Debt Recovery Tribunal issued a certificate to the second respondent advising to recover the amount from the above persons.
6. Petitioner further claims that immediately he along with his son-in-law approached the third respondent and furnished all the details of his purchase and produced all the registered sale-deeds. However, petitioner complains that the third respondent refused to negotiate with him unless he deposits an amount of Rs.10 lakhs. Thereafter, petitioner also filed a claim petition before the second respondent on 11-11-1998 praying not to press for attachment and sale of the property, but the said prayer was rejected by the second respondent. Being left with no alternative, petitioner states that he has filed the present writ petition invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India for a direction as indicated above.
7. On behalf of the third respondent-Bank, a detailed counter has been filed, inter-alia, pointing out that the third respondent-Bank filed originally a suit in OS No.58 of 1988 for recovery of an amount of Rs.10,83,125.30 ps. and also prayed for a decree against the mortgaged schedule properties of the plaint lands against M/s. Vinayaka Borewells, A. V. Jaganmohan Rao and Sml. A. Lakshmi Bai who are defendants 1 to 3 respectively in the said suit. Defendant No.2 is the proprietor of Defendant No.1 and defendant No.3 is the guarantor. It is indicated in the counter that though the defendants filed their written statements in the said suit, they never denied the debt or the creation of the mortgage relating to properties situated in Sy. No.86/1 and 87 admeasuring 21.28 guntas. In the counter at para 6, the third respondent stated that the schedule property was purchased by one A. V. Jagan Mohan Rao from K. Ramulu and 4 others vide sale-deed dated 31-12-1980 and he offered the said immovable property as a security for the loan sanctioned to M/s. Vinayaka Borewells and created an equitable mortgage by deposit of title deeds including the original registered sale-deed dated 31-12-1989 which was also confirmed by his letter dated 30-1-1982. It is further averred in the counter that the Tribunal taking into consideration the documents and other material evidence has passed the final orders for the debt amount against the defendants and also in respect of the mortgaged property in favour of the third respondent-Bank. It is further categorically averred that though the petitioner obtained sale-deeds in respect of the schedule land, they are subsequent to the mortgage in favour of the bank and as such, the petitioner cannot get a better title in the property. It is further stated in the counter that after following the procedure, the second respondent has initiated the proceedings by issuing notices under Form No. 16 and 17 according to law and pleaded for the dismissal of the writ petition.
8. In the wake of these averments, the short point that arises for consideration in this writ petition is whether the petitioner is entitled to agitate against the action of the second respondent in issuing Form No.16 seeking to attach the immovable property and Form No.17-notice for settling a sale proclamation in respect of the schedule property, before this Court under Article 226 of the Constitution of India?
9. Sri V.V.S. Rao, learned senior Counsel appearing for the Counsel for the petitioner Sri K. Lakshman, has contended that the action contemplated by the second respondent is contrary to the procedure contemplated under Section 16 of the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 (for short 'the Act') read with Sections 2, 3 and 11 of the II Schedule of the Income Tax Act. Learned senior Counsel further contended that when the petitioner filed his claim petition before the second respondent, the second respondent ought to have enquired into the genuineness of the claim of the petitioner and ought not to have rejected the same. Learned senior Counsel has contended that when the petitioner and his family members are in possession of the schedule property having been purchased the same after paying valuable consideration, the third respondent-Bank ought to have filed a suit against the petitioner in a competent civil Court for his eviction. He further contended that the third respondent-Bank is aware of the fact of the petitioner purchasing the properties in question from Smt. Sayeediamissa Begum and therefore, the petitioner's name ought to have been impleaded in the said suit. Learned senior Counsel nextly contended that when substantial property rights are involved, this Court under Article 226 of the Constitution of India is entitled to examine the correctness of the procedure followed by the second respondent. In support of his contentions, learned senior Counsel has drawn our attention to the decisions reported in Gangadhar Vishwanath Ranade v. Tax Recovery Officer, 177 ITR 176, and in Tax Recovery Officer II, Sadar, Nagpur v. Gangadhar Vishwanath Remade, . Placing heavy reliance of these two decisions, learned senior Counsel contented that as the proposed action of the second respondent is in gross violation of the principles of natural justice, the procedure contemplated by the second respondent in this regard be declared as untenable and consequently to set aside the sale notice. This apart, learned senior Counsel has also submitted that when once the vires of the "Recovery of Debts Due to Banks & Financial Institutions Act, 1993" is questioned on the ground that the said Act and its provisions are contrary to the Constitution of India, this Court is bound to entertain the writ petition and examine the contentions raised therein.
10. We have also heard Sri D. Gopala Krishna, learned Counsel for third respondent-Bank who has justified issuance of Form Nos.16 and 17 as the same were issued after following the prescribed procedure. Counsel further contended that as the petitioner has purchased the schedule property in question much after its mortgage to the third respondent-Bank by one A. V. Jaganmohan Rao he cannot have any valid title to agitate before this Court and therefore, the writ petition is liable to be dismissed.
11. We have heard both the learned Counsel at length.
12. During the course of hearing of this writ petition it is brought to our notice that several writ petitions have been filed in various High Courts assailing the vires of the "Recovery of Debts Due to Banks & Financial Institutions Act, 1993" and a Division Bench of the Delhi High Court has also held that the Parliament is not competent to enact the said Act as it is violative of Article 14 of the Constitution of India. However, it is stated that the Supreme Court has suspended the order of the Delhi High Court. That apart, it is also brought to our notice that number of writ petitions which were filed in various High Courts questioning the constitutional validity of the said Act, a few of them have been transferred to the Supreme Court and the matter is pending adjudication before the Supreme Court. In this view of the matter, though the petitioner has sought a declaration to declare the said Act as ultra-vires the provisions of the Constitution of India, having regard to the pendency of writ petitions in the Supreme Court in respect of the same relief, we desist from examining the constitutional validity or otherwise of the said Act.
13. Coming to the merits of the case, it is seen that the petitioner himself has admitted in his affidavit that his predecessor-in-title Smt. Sayeeduimissa Begum has purchased the property in question from one A. V. Jaganmohan Rao, who is turn purchased the same from one K. Rammulu and four others who were pattadars, in the year 1980 itself. Admittedly, the petitioner has purchased different extents of the schedules lands in question on 21-6-1991, 11-5-1992 and on 12-1-1993 through various sale-deeds. It is seen from the counter filed on behalf of the third respondent that said A. V. Jaganmohan Rao who was the vendor's vendor of the petitioner, is the second defendant in the suit OS No.58 of 1988 which is filed by the third respondent and he has offered the immovable property in question as a security for the loan sanctioned to M/s. Vinayaka Borewells, which is a proprietorship firm represented by said A. V. Jaganmohan Rao and has also created an equitable mortgage by depositing the title deeds including the original registered sale-deed dated 31-12-1980. The same was also confirmed by his letter dated 30-1-1982. It is also admitted that the Tribunal has passed the final orders for the debt amount against the defendants in OS No.58 of 1988 and also in respect of the mortgaged property in favour of the third respondent-Bank. It is apparent that the sale-deeds which were obtained by the petitioner on 21-6-1991, 11-5-1992 and 12-1-1993 are much subsequent to the mortgage of the schedule property in favour of the Bank and therefore, the petitioner cannot get a better title in the property as the rights of the petitioner in the property are subject to the mortgage since the mortgage by deposit of title deeds was created on 29-1-1982 itself which was also confirmed on 30-1-1982 by said A.V. Jagantmohan Rao.
14. When the Bank obtains a decree in a suit, the procedure contemplated under Section 19(7) of the Act is that the Presiding Officer shall issue a certificate under his signature on the basis of the order of the Tribunal to the Recovery Officer for recovery of amount of debts specified in the certificate. Once this procedure is followed by the Presiding Officer in issuing a recovery certificate, the only course left to the second respondent is to proceed according to law to recover the debt.
15. Chapter V of the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 deals with Recovery of Debt determined by Tribunal. Section 25 of the said Act which is incorporated under the said chapter deals with the modes of recovery of debts, envisages as under:
25, Modes of Recovery of Debts :-- The Recovery Officer shall, on receipt of the copy of the certificate under sub-section (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.
Section 26 of the said Act further provides as under:
26. Validity of certificate and amendment thereof: (1) It shall not be open to the defendant to dispute before the Recovery Officer the correctness of the amount specified in the certificate, and no objection to the certificate on any other ground shall also be entertained by the Recovery Officer.
Thus, sub-section (1) of Section 26 of the Act makes it clear that when once a certificate is issued by the Presiding Officer to the Recovery Officer - second respondent herein, it is not open to the defendant to dispute the correctness of the said certificate. Sub-sections (2) and (3) of Section 26 give sufficient powers to the Presiding Officer to withdraw the certificate or correct any clerical or arithmetical mistake in the certificate under due intimation to the Recovery Officer.
16. In the instant case, it may be true that the petitioner must have approached the second respondent by presenting a claim petition. However, petitioner complains that the second respondent refused to act upon such claim. Mere refusal to entertain such claim petition by the second respondent, in our view, does not amount to failure of exercise of jurisdiction or the refusal order cannot be construed as a nullity, in view of the provisions contemplated under Section 30 of the Act, which postulates as under :
30. Orders of Recovery Officer to be deemed as orders of Tribunal :--Notwithstanding anything contained in Section 29, an order made by the Recovery Officer in exercise of his powers under Sections 25 to 28 (both inclusive), shall be deemed to have been made by the Tribunal and an appeal against such order shall lie to the Appellate Tribunal."
17. A reading of this provision makes it clear that even if an order is passed by the Recovery Officer, such an order shall be deemed to have been passed by the Tribunal and an appeal against such order shall lie to the Appellate Tribunal as provided under Section 20 of the Act. Therefore, even against the order of refusal passed by the second respondent, it was open to the petitioner to file an appeal before the Appellate Tribunal. But for the reasons best known to him, the petitioner has not chosen to do so and instead moved this Court under Article 226 of the Constitution of India. We may say that in order to creating a cause of action, petitioner has questioned the vires of the said Act. We are of the view, on this ground atone, this writ petition is liable to be dismissed. We must also say that few writ petitions have came up for consideration before us on the question of constitutional validity of the said Act and we have consistently dismissed the same on the ground that constitutional validity of the said Act is pending adjudication before the Supreme Court. Therefore, even on this ground also, the writ petition is liable to be dismissed.
18. Though the learned senior Counsel appearing on behalf of the petitioner has cited the decisions (177 ITR 176 and supra), we are afraid, we cannot import the principle laid down in these decisions to the facts and circumstances of the instant case as they are not akin to the facts of the present case.
19. For the above reasons, we do not see any merits in this writ petition and the same is accordingly dismissed. However, no costs.