Kerala High Court
The South Indian Bank Limited vs Recovery Officer on 6 July, 2022
Author: P Gopinath
Bench: P Gopinath
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
WEDNESDAY, THE 6TH DAY OF JULY 2022 / 15TH ASHADHA, 1944
WP(C) NO. 13975 OF 2022
PETITIONER:
THE SOUTH INDIAN BANK LIMITED
DRT CELL, 2ND FLOOR, SIB BUILDING, MARKET ROAD,
ERNAKULAM, PIN 682 011 REPRESENTED BY ITS CHIEF MANAGER
BY ADVS.
MOHAN JACOB GEORGE
P.V.PARVATHY (P-41)
REENA THOMAS
NIGI GEORGE
RESPONDENTS:
1 RECOVERY OFFICER,
DEBTS RECOVERY TRIBUNAL-2, 2NDFLOOR, KSHB BUILDING,
PANAMPILLY NAGAR, ERNAKULAM 682 036
2 RECOVERY OFFICER,
DEBTS RECOVERY TRIBUNAL-1, 5TH FLOOR, KSHB BUILDING,
PANAMPILLY NAGAR, ERNAKULAM 682 036
BY ADV SRI.S.VAIDYANATHAN, CGC
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
06.07.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P (C) No.13975/2022 -2-
JUDGMENT
Petitioner has approached this Court being aggrieved by the fact that the Recovery officer of the Debts Recovery Tribunal-2, Ernakulam has imposed a condition while issuing Ext.P1 sale proclamation that the confirmation of the sale if held will be subject to outcome of SLP (C) Nos.9931 & 9932/2019 before the Supreme Court of India.
2. Sri. Mohan Jacob George, learned counsel appearing for the petitioners would submit that the condition so imposed by the Recovery officer in Ext.P1 is absolutely untenable and uncalled for. It is submitted that SLP (C) Nos.9931 & 9932/2019 arise from the judgment of a Division Bench of this court in OP (DRT) No.136/2018 where the Division Bench took the view that any sale conducted beyond the period prescribed in Rule 68B of the Second Schedule to the Income Tax Act (as made applicable Recovery of Debts Due to Banks and Financial Institutions Act, 1993) is void and unsustainable. It is pointed out that the very same question was considered by a learnd Single Judge of this court in Kutaguptan K. v. Canara Bank and others ; 2010 (1) KHC 243 where in paragraph 8 this court held as follows.
"8. Adverting to Rule 68B of the Second Schedule, it can be seen that the restriction is on sale and the restriction is made referable to the conclusiveness of the demand and the finality of the case. Such conclusiveness is made on the basis of Section 245-I and Chapter XX of the IT Act. The provisions in Chapter XX of the IT Act are not only not incorporated by reference into the RDB Act, but are not even referred to in Section 29 of the RDB Act as relatable to the proceedings under that Act. Therefore, Rule 68B of the Second Schedule to the IT Act which applies to proceedings covered by Section 245-I or Chapter XX of the IT Act, does not, in any view of the matter, apply to proceedings under the RDB Act."
It is submitted that the judgment of the learned Single Judge in Kutaguptan (supra) was confirmed by a Division Bench of this court in K. Kutaguptan v. W.P (C) No.13975/2022 -3- Canara Bank and others; (MANU/KE/1806/2017) (Ext.P5 judgment). It is submitted that Ext.P5 judgment of this court was affirmed by the Supreme Court by a speaking order, dismissing the Special Leave Petition and reference is made in this regard to Ext.P6 (b) order of the Supreme Court in SLP (C) No.1733/2018. It is submitted that since Ext.P6 (b) order gives reason for dismissal of the special leave petition and therefore the judgment of this court in W.A. No.60/2020 (Ext.P5) stands merged with the judgment of the Supreme Court. It is submitted that a review petition was filed before the Supreme Court which was also dismissed on 26- 04-2022. It is submitted that Ext.P1 sale proclamation has not been challenged by any party including the borrower and therefore there is no reason for the Recovery officer to impose a condition that the sale proclamation will be subject to the orders in the special leave petition filed against Ext.P3 judgment of a Division Bench of this Court. It is further pointed out that operation of Ext.P3 judgment stands stayed vide Ext.P2 order of the Supreme Court in SLP (C) Nos.9931 & 9932/2019 mentioned in Ext.P1 sale proclamation. It is contended further that Ext.P7 sale proclamation is one issued by the Recovery officer attached to the DRT-1, Ernakulam where also the question as to whether the time limit under Rule 68 B would apply is a moot point. It is submitted that the Recovery officer attached to the DRT-1 has not made any condition similar to the condition set out by the Recovery officer attached to DRT-II in Ext.P1 sale proclamation.
3. Sri. S. Vidhyanathan, the learned Central Government Counsel appearing on behalf of the Recovery officer has pointed out the circumstances which compelled the Recovery officer to make a condition that the sale would be W.P (C) No.13975/2022 -4- subject to outcome of SLP (C) Nos.9931 & 9932/2019. It is submitted that the Division Bench of this court in Kutaguptan's case (supra) had come to a factual conclusion that the sale in that case was held within the time limit prescribed in Rule 68B. It is submitted that the stay of operation of Ext.P3 judgment by the Supreme Court does not result in the law laid down there being effaced and therefore there was nothing wrong in the condition imposed in Ext.P1 sale proclamation. Lastly it is pointed out that the petitioner is not aggrieved by the condition imposed by the Recovery officer in Ext.P1 sale proclamation and there was no need for a challenge that condition through a writ petition filed before this court.
4. The learned counsel appearing for the petitioners would submit that the Division Bench of this court in Kutaguptan's case (supra) has referred to the law laid down by the Supreme Court in Paramsivan C.N. v. Sunrise Plaza Tr. Partner; (2013) 9 SCC 460 where it t was held as follows.
"21. Applying the above principles to the case at hand Section 29 of the RDDB Act incorporates the provisions of the Rules found in the Second Schedule to the Income Tax Act for purposes of realisation of the dues by the Recovery Officer under the RDDB Act. The expressions "as far as possible" and "with necessary modifications"
appearing in Section 29 have been used to take care of situations where certain provisions under the Income Tax Rules may have no application on account of the scheme under the RDDB Act being different from that of the Income Tax Act or the Rules framed thereunder. The provisions of the Rules, it is manifest, from a careful reading of Section 29 are attracted only in so far as the same deal with recovery of debts under the Act with the modification that the 'amount of debt' referred to in the Rules is deemed to be one under the RDDB Act. That modification was intended to make the position explicit and to avoid any confusion in the application of the Income Tax Rules to the recovery of debts under the RDDB Act, which confusion could arise from a literal application of the Rules to recoveries under the said Act. Proviso to Section 29 further makes it clear that any reference "to the assessee" under the provisions of the Income Tax Act and the Rules shall be construed as a reference to the defendant under the RDDB Act. It is noteworthy that the Income Tax Rules make provisions that do not strictly deal with recovery of debts under the Act. Such of the rules cannot possibly apply to recovery of debts under the RDDB Act. For instance Rules 86 and 87 under the Income Tax Act do not have any application to the provisions of the RDDB Act, while Rules 57 and 58 of the said Rules in the Second W.P (C) No.13975/2022 -5- Schedule deal with the process of recovery of the amount due and present no difficulty in enforcing them for recoveries under the RDDB Act. Suffice it to say that the use of the words "as far as possible" in Section 29 of RDDB Act simply indicate that the provisions of the Income Tax Rules are applicable except such of them as do not have any role to play in the matter of recovery of debts recoverable under the RDDB Act. The argument that the use of the words "as far as possible" in Section 29 is meant to give discretion to the Recovery Officer to apply the said Rules or not to apply the same in specific fact situations has not impressed us and is accordingly rejected."
It is submitted that the question as to whether the time limit prescribed in Rule 68B would apply is no longer res integra after the authoritative pronouncement of the Supreme Court in Paramsivan (supra).
5. Having heard the learned counsel for the petitioner and the learned Central Government Standing counsel, I am of the opinion view that there is considerable merit in the contention raised by the learned counsel for the petitioner. It is true that the view taken by the learned Single Judge of this court in Kutaguptan (supra) has not been specifically affirmed by the Division Bench while deciding the appeal against that judgment. It is also true that the Division Bench while deciding Kutaguptan's case (supra) has found on facts that the sale in question in that case was within the time limit prescribed in Rule 68B. A Division Bench of this court in Ext.P3 judgment in OP (DRT) No.136/2018 had taken the view that a sale held outside the time prescribed in Rule 68B would be void. However, none of these considerations should detain me in view of the fact that the Supreme Court has already held in Paramsivan (supra) that the words used in Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act clearly indicate that all the provisions contained in the Second Schedule to the Income Tax Act may not apply to recovery proceedings following a final order W.P (C) No.13975/2022 -6- passed by the Debts Recovery Tribunal. I also take note of the fact that the operation of the judgment of this court in OP (DRT) No.136/2018 has been stayed by the Supreme Court. It must also be noted that the legal heirs of the borrower (late C.T. Mathew) have issued Exts.P8 and P8(a) letters indicating that they have no objection whatsoever in bringing any property/assets of late C.T. Mathew to sale.
6. In the result this writ petition is allowed and I direct the Recovery officer, attached to the DRT-II, Ernakulam to execute the sale deed without incorporating any condition that the sale and its confirmation is subject to the orders to be passed by the Supreme Court in SLP (C) Nos.9931 & 9932/2019.
Sd/-
GOPINATH P. JUDGE AMG W.P (C) No.13975/2022 -7- APPENDIX OF WP(C) 13975/2022 PETITIONER EXHIBITS Exhibit P1 COPY OF THE PROCLAMATION FOR SALE DATED 31-08-2021 ISSUED BY THE RECOVERY OFFICER, DRT-2 ALONG WITH THE TERMS AND CONDITIONS OF TENDER CUM E-AUCTION WITH THE E-AUCTION TENDER DOCUMENTS PROCLAIMING THE PROPERTY FOR SALE ON 28-10-2021 BY WAY OF AN ON LINE AUCTION SALE Exhibit P2 COPY OF THE ORDER DATED 17-01-2020 OF THE APPEX COURT IN SLP (C0 NO.S 9931-9932/2019 Exhibit P3 COPY OF JUDGEMENT DATED 19-02-2019 IN W.P(C) NO 30651/2017 Exhibit P4 COPY OF THE JUDGEMENT REPORTED IN 2010(1) KLT PAGE 361 Exhibit P5 COPY OF THE JUDGEMENT OF THE DIVISION BENCH REPORTED IN MANU/KE/1806/2017 Exhibit P6 COPY OF THE ORDER DATED 29-01-2018 OF THE HON'BLE SUPREME COURT IN NO. SLP NO 1733/2018 Exhibit P6A COPY OF THE ORDER DATED M30-07-2018 OF THE HON'BLE SUPREME COURT IN SLP NO 1733/2018 Exhibit P6B COPY OF THE ORDER DATED 14-03-2022 OF THE HON'BLE SUPREME COURT IN SLP NO. 1733/2018 Exhibit P7 COPY OF A PROCLAMATION OF SALE DATED 24-03-2021 ISSUED BY THE 2ND RESPONDENT.