Telangana High Court
Vallurupalli Tarakeswar And Another vs Canara Bank And 3 Others on 11 July, 2022
Author: Surepalli Nanda
Bench: Surepalli Nanda
THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
AND
THE HON'BLE MRS JUSTICE SUREPALLI NANDA
WRIT PETITION No.8192 OF 2022
ORDER:(Per the Hon'ble the Chief Justice Ujjal Bhuyan) Heard Mr. K.V.Bhanu Prasad, learned Senior Counsel for the petitioners and Mr. Hemendranath Reddy, learned Senior Counsel for respondent No.4. Also heard Mr. Sunil B. Ganu, learned counsel for respondent No.1, Canara Bank.
2. By filing this petition under Article 226 of the Constitution of India petitioners seek quashing of order dated 22.02.2021 passed by the Debts Recovery Appellate Tribunal at Kolkata in Appeal No.3 of 2021 as well as the consequential Rectification Deed dated 24.02.2021.
3. Case of the petitioners as projected in the affidavit is that they are husband and wife. They together with respondent No.4 - M/s.Laxmi Ganapathi Paper Mills Limited had purchased the subject property in an auction sale at Hyderabad eighteen years ago. Managing Director of respondent No.4 is also a close relation of the petitioners who are non resident Indians residing at Boston, USA. 2
4. It is stated that there are serious disputes within the family. Respondent No.4 has been filing one case after the other to cause loss to the petitioners. It is also stated that petitioners have 2000 square yards of land at Hyderabad. Behind the petitioners' land is the plot of land of respondent No.4 measuring 1557 square yards. On the right side is the plot of land of the brother-in-law of the first petitioner who is the brother of the second petitioner measuring 1000 square yards.
5. It is further stated that in the common sale certificate issued by respondent No.2 i.e., Recovery Officer-I, Debts Recovery Tribunal-I, Hyderabad portion of land earmarked for respondent No.4 was much more than the petitioners. However, because of his greed and to wreak vengeance on the petitioners respondent No.4 has obtained orders prejudicial to the petitioners from municipal and revenue authorities behind the back of the petitioners.
6. Fifteen years after issuance of the sale certificate, respondent No.4 made an application on 17.10.2019 before respondent No.2 for rectification of boundaries stating that there is 30 feet wide road on the southern side; road on the 3 western side is only 80 feet and not 120 feet. In the sale certificate, it was clearly mentioned that it was only a passage to the subject land; not road.
7. Respondent No.2 passed an order rejecting the application of respondent No.4 for rectification of boundaries. According to respondent No.2, he was not vested with powers under the Second Schedule of the Income Tax Act, 1961 (briefly, 'the Act' hereinafter) for rectification of boundaries of sale certificate issued in the year 2004.
8. Aggrieved by the same respondent No.4 filed appeal before the Debts Recovery Tribunal-I, Hyderabad, being R.A.No.5 of 2019. However the same was also dismissed on 16.01.2020.
9. Against the aforesaid order respondent No.4 preferred appeal before the Debts Recovery Appellate Tribunal at Kolkata (briefly, 'Appellate Tribunal' hereinafter) which was registered as Appeal No.3 of 2021. Appellate Tribunal vide the order dated 22.02.2021 allowed the said appeal. Respondent No.4 was directed to obtain a copy of the draft Rectification Deed filed before the Appellate Tribunal and thereafter to submit the same before the Recovery Officer-I, Debts Recovery 4 Tribunal-I, Hyderabad i.e., respondent No.2 who was directed to issue the Rectification Deed as per the copy of draft Rectification Deed filed before Appellate Tribunal.
10. Aggrieved, present writ petition has been filed.
11. This Court by order dated 15.02.2022 had issued notice and in the meanwhile stayed the order dated 22.02.2021 passed by the Appellate Tribunal.
12. Respondent No.4 has filed counter affidavit. It is stated that K.Gowthama Siddhardhudu is the Managing Director of respondent No.4 which is a Private Limited Company incorporated under the Companies Act, 2013.
13. Petitioners and respondent No.4 had jointly purchased the subject property in an auction sale conducted by respondent No.2. Respondent No.4 has contended that Second Schedule of the Act relates only to recovery of tax dues and in the context of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (briefly, '1993 Act' hereinafter) for recovery of the dues under the 1993 Act, the Schedule does not state anywhere that the Recovery Officer may not entertain a Rectification Deed. Therefore the stand taken by 5 the Recovery Officer while rejecting the application of respondent No.4 for rectification is untenable. That apart, in an auction sale the vendor and the vendee are always competent to enter into a Rectification Deed to correct any mistakes that may have occurred in the original deed.
14. Respondent No.4 has contended that just like the petitioners, the Recovery Officer as well as the Debts Recovery Tribunal-I at Hyderabad (Tribunal) did not deal with the principal contention of respondent No.4 that there was a 30 feet wide road abutting the subject land for which the sale certificate was required to be rectified. Merely because petitioners chose not to participate in the proceedings before the Appellate Tribunal, it cannot be construed that the impugned order passed by the Appellate Tribunal was passed behind the back of the petitioners. The errors which had crept-in in the sale certificate could not have been allowed to remain on record for perpetuity.
15. Respondent No.4 therefore seeks dismissal of the writ petition.
16. Petitioners have filed reply affidavit to the counter affidavit filed by respondent No.4. At the outset, it is stated 6 that petitioners were not made parties either before the Tribunal or before the Appellate Tribunal. While refuting the contention of respondent No.4 as to the existence of the 30 feet wide road, petitioners have stated that the electrifying speed at which the Rectification Deed was made on 24.02.2021 following the order of the Appellate Tribunal on 22.02.2021 itself is an indication as to how respondent No.4 is trying to change the schedule of the subject land.
17. Learned counsel for the petitioners submits that the Appellate Tribunal committed a manifest error in directing rectification of the sale deed after 18 long years. The manner in which the order was passed by the Appellate Tribunal raises serious questions. Only Canara Bank was made a respondent in the appeal. Petitioners were not arrayed as respondents despite the fact that petitioners were also auction purchasers along with respondent No.4. Respondent No.4 projected itself as the sole purchaser. There is no provision under Schedule-II of the Act for carrying out such rectification. As a matter of fact, Section 26 of the 1993 Act clearly says that no objection to the sale certificate on any other ground shall be entertained by the Recovery Officer. Recovery Officer as well as the Tribunal were fully justified in 7 rejecting the prayer of respondent No.4 for rectification of the sale deed. That being the position, impugned order dated 22.02.2021 passed by the Appellate Tribunal and the consequential Rectification Deed dated 24.02.2021 should be set aside and quashed.
18. Canara Bank i.e., respondent No.1 has not filed any affidavit. Learned counsel for the Canara Bank submits that the dispute is between the petitioners and respondent No.4 in which Canara Bank has got no role to play. The auction took place on 'as is where is basis'. Post auction, the Sale Certificate was issued which was also registered.
19. Learned Senior Counsel for respondent No.4 submits that when it came to the notice of respondent No.4 that the boundary of the subject land was required to be rectified, it had filed an application for rectification. Unfortunately the Recovery Officer as well as the Tribunal failed to consider the prayer of respondent No.4 in the correct perspective for which respondent No.4 had to approach the Appellate Tribunal. He submits that there is no error or infirmity in the view taken by the Appellate Tribunal.
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20. Rule 21 of the Income Tax (Certificate Proceedings) Rules, 1962 empowers a Recovery Officer to carry out rectification of schedule of auctioned land. He therefore seeks dismissal of the writ petition.
21. Submissions made by learned counsel for the parties have received the due consideration of the Court.
22. From the materials on record, the following facts are discernible.
23. Respondent No.1/Canara Bank had filed an application under Section 19 of the 1993 Act before the Tribunal which was registered as O.A.No.1785 of 1999 for recovery of outstanding dues from the borrowers who had defaulted in repayment of loan. Tribunal allowed O.A.No.1785 of 1999 and a recovery certificate dated 30.04.2002 was issued for recovery of Rs.28,09,174.00 with future interest etc. The recovery certificate was filed before the Recovery Officer for initiating recovery proceedings against the certificate debtors. As the certificate debtors failed to liquidate the certificate amount, the mortgaged schedule property was put to auction sale. The details of the schedule property are as under: 9
Land admeasuring Ac.1.35 guntas forming part of Sy.No.90/2 situated at Gachibowli, under Gram Panchayat, Kondapur, Ranga Reddy District and bounded by:
East : Land and Building of M/s. IAE Co South : Portion of Survey No.90/2 West : Kacha Rasta & Survey No.92 North : Hyderabad - Lingampally Road.
24. In the auction sale held on 21.04.2004, respondent No.4 and the petitioners were declared as successful bidders for an amount of Rs.2,85,00,000.00. Thereafter confirmation of sale was issued on 24.05.2004. Recovery Officer on 23.04.2004 had requested the revenue authorities for demarcation of the schedule property, whereafter the revenue authorities submitted demarcation report along with sketch map on 18.05.2004. Thereafter the Sale Certificate bearing No.5907 of 2004 was registered before the Joint Sub-Registrar-I, Ranga Reddy District.
25. Fifteen years thereafter Miscellaneous Petition No.207 of 2019 was filed by respondent No.4 before respondent No.2 for rectification of the boundary of the schedule property recorded in the Sale Certificate. In the said miscellaneous petition, the following prayer was made:
a) The measurement of length of all plots along with 30 feet road on Western boundary in the plan in the Registered Certificate of Sale No.5907/2004 10 dated 24.05.2004, is to be read as 444 feet instead of 429 feet,
b) The width of the road on Western side of the plots in the Plan is to be read as 80 feet wide road leading to G.P.R.A Quarters instead of 120 feet wide road leading to G.P.R.A Quarters.
26. Respondent No.1 informed the Recovery Officer that the following parties were the joint successful auction purchasers:
a) M/s. Laxmi Ganapathi Paper Mills Limited, Rep. by its M.D. Shri K. S. Gowtham
b) Paladugu Venkata Lakshmi, W/o Nageswara Rao
c) Gottipati Chandrasekhar, S/o Venkateswara Rao
d) Vallurupalli Tarakeswar, S/o late Sri Rama Murthy
27. Respondent No.1 also stated that in the valuation report, the schedule property was mentioned as "the property is situated at Gachibowli and the plot of land reported to be admeasuring Ac.1.35 guntas with western boundary as road and in the paper publication dated 18.03.2004 for auction it was mentioned as Kacha Rastha and Survey No.92". Further respondent No.1 clarified that it had never given the western boundary as 120 feet road and also did not mention the length as 429 feet.
28. Recovery Officer on due consideration declined to rectify the boundary of the schedule property as prayed for by respondent No.4 and rejected the prayer vide the order dated 19.11.2019. It was held as follows:
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10. As seen from the above proceedings/records the RC scheduled property was auctioned on 21st April, 2004 and basing on the demarcation report and sketch of the auctioned property submitted by the Mandal Surveyor, Serilingampally Mandal vide their letter dated 18th May 2004 and also on the basis of the memo filed by the Successful Auction Purchaser i.e., M/s.Laxmi Ganapathi Paper Mills Limited & others, the Certificate of Sale of the said property was issued by the then Recovery Officer vide Certificate dated 24th May 2004 and the said Sale Certificate reflects that the Western boundary is shown as Compound Wall abutting 120' Dambar Road leading to GPRA Quarters (Katcha Rasta & Sy. No.92) and further the said property was also divided into 7 (seven) different schedules with different boundaries and the property was registered as Court Sale Certificate No.5907/2004 in the Joint Sub Registrar-I, Ranga Reddy District, Hyderabad.
11. In view of the above facts and circumstances, I am of the considered opinion that the Recovery Officer is not vested with such power under Second Schedule to the Income Tax Act, for rectification of boundary or dimension on the western side of the petition scheduled property which is auctioned and for which Certificate of Sale was issued in the year 2004 and also on the fact that the said property was already registered as Court Sale Certificate No.5907/2004 in the Joint Sub Registrar-I, Ranga Reddy District, Hyderabad.
28.1. From the above it is evident that both on merit as well as on jurisdiction, Recovery Officer declined to entertain the prayer of respondent No.4. Recovery Officer opined that there is no provision under Second Schedule to the Income Tax Act, 1961 for rectification of boundary of the auctioned property in respect of which Certificate of Sale was issued way back in the year 2004, whereafter the same was registered.
29. Against the aforesaid order dated 19.11.2019 respondent No.4 preferred appeal before the Tribunal which 12 was registered as Recovery Appeal No.5 of 2019. Tribunal vide the order dated 16.01.2020 declined to interfere with the order of the Recovery Officer. It was held as follows:
12. The Certificate of Sale was issued by the then Ld. Recovery Officer in the year 2004. The Appellant kept quiet for more than 15 years. Since the Appellant herein had approached the Ld. Recovery Officer for the execution of the Rectification Deed in respect of the boundary/dimension on the Western side of the subject property, which was sold and for which Certificate of Sale was issued in the year 2004, which is after a lapse of 15 years, Ld. Recovery Officer in the order dated 19.11.2019 in MP No.207/2019 had observed and held that the Recovery Officer is not vested with such power under Second Schedule to the Income Tax Act.
13. Further, as can be seen from the sketches of the subject property, which was sold after bifurcating/ demarcating the entire extent of Ac.1.35 guntas into 7 schedules of properties, 4 properties form part on the Western side out of which schedule 1(a) property comprising 2631 sq. yds., belongs to the Appellant herein and other 3 properties viz., schedule 2(a) comprising of 152 sq. yds., schedule 3 comprising of 1000 sq. yds., and schedule 4 property comprising of 2000 sq. yds., belong to Smt. Paladugu Venkata Laxmi, Sri Gottipati Chandra Sekhar and Sri Vallurupalli Tarakeswar. Only the Appellant, who is the owner of one of the 4 properties in the Western side, has approached the Ld. Recovery Officer for the execution of the Rectification Deed and the owners of other 3 properties in the Western side are not parties to MP No.207/2019. As such the said MP No.207/2019 filed by the Appellant for execution of Rectification Deed in respect of Certificate of Sale dated 24.05.2004, is itself not maintainable.
14. During the course of arguments, the Appellant filed a Memo dated 02.01.2020 stating that the subject property, which is situated at Gachibowli Village, Serilingampalli Mandal, Ranga Reddy District, falls under the jurisdiction of DRT-II, Hyderabad and as such the instant Recovery Appeal may be transferred to DRT-II, Hyderabad.
15. The subject property was sold by the then Recovery Officer and issued the Certificate of Sale on 24.05.2004, at which time there was only one DRT at Hyderabad and DRT-II was not in existence. The DRT-II has been established vide Notification dated 25.01.2017.13
As stated supra, the Appellant herein had earlier filed MP No.45/2017 before the then Ld. Recovery Officer of DRT- I, Hyderabad on 15.05.2017 (after establishment of DRT- II, Hyderabad) for execution of Rectification Deed in respect of Northern boundary of schedule 1(b) property in the Certificate of Sale dated 24.05.2004 and got executed the said Rectification Deed. Thereafter, the appellant herein had filed MP No.207/2019 before the Ld. Recovery Officer of the Tribunal, who had dismissed the said MP vide orders dated 19.11.2019. Aggrieved by the said orders dated 19.11.2019 passed by the Recovery Officer, the Appellant herein filed the present Recovery Appeal before the Tribunal on 20.11.2019. After the matter had been heard at length and at the final stage of the arguments, the Appellant had sought for the transfer of the instant appeal to DRT-II, Hyderabad on the ground of jurisdiction. The Appellant had not chosen to file his earlier application i.e., MP No.45/2017 before DRT-II, Hyderabad and he got favourable orders in the said application from Ld. Recovery Officer of DRT-I, Hyderabad. When the Appellant did not get favourable orders from the Ld. Recovery Officer of this Tribunal in his next application i.e., MP No.207/2019 and sensing that he may not get favourable orders in the instant appeal, the Appellant is seeking for transfer of the appeal to DRT-II, Hyderabad, which is nothing but forum hunting. If at all the Appellant intends to get the matter transferred to DRT-II, Hyderabad, the Appellant has to approach the Hon'ble DRAT, Kolkata, but not this Tribunal.
16. In view of my above discussion, I find that the Appellant has failed to make out any valid grounds to interfere with the orders of the Ld. Recovery Officer dated 19.11.2019 passed in MP No.207/2019 and accordingly I hold that the present Recovery Appeal is liable to be dismissed.
30. It was thereafter that respondent No.4 filed appeal before the Appellate Tribunal.
31. From a perusal of the order dated 22.02.2021 passed by the Appellant Tribunal, it is seen that Appellate Tribunal has not mentioned any of the material dates in the said order. Instead, like a revenue authority it had gone into the issue of 14 rectifying the boundary of the schedule property. It is interesting to note that respondent No.4 is not the only owner of the schedule property, petitioners being co-owners of the said property. This fact came to the notice of the Appellate Tribunal. Instead of adding the petitioners as respondents in the appellate proceedings, Appellate Tribunal issued notice to three persons in whose names the Certificate of Sale was jointly issued. Even here also Appellate Tribunal did not deem it necessary to mention the names of the three persons to whom notices were issued. However it is mentioned that notice was directed to be issued to the "said 3 persons" and in spite of issuance of notices they had chosen not to appear. What the Appellate Tribunal clearly overlooked was that it is not issuance of notice which is relevant but service of notice so issued. There is no finding recorded by the Appellate Tribunal that notice issued by the Appellate Tribunal was served upon "the said three persons" including the petitioners. On this ground itself, order dated 22.02.2021 is liable to be set aside.
32. Without mentioning the source of power to order rectification of Sale Certificate that too after fifteen years, the 15 Appellate Tribunal proceeded to and carried out the rectification.
33. We have carefully gone through provisions of the Second Schedule to the Income Tax Act, 1961 but we do not find any such provision which empowers the Recovery Officer for carrying out rectification of Sale Certificate.
34. That apart, the question of limitation cannot also be overlooked. Rectification is sought for after fifteen years; granted after seventeen years. According to Article 137 of the Schedule to the Limitation Act, 1963, the period of limitation for carrying out such rectification would be three years.
35. It is also worth mentioning that out of the four purchasers who had jointly purchased the schedule property on auction, it is only respondent No.4 who is seeking rectification of the Sale Certificate.
36. Thus on a thorough consideration of all aspects of the matter, we are of the unhesitant view that the order dated 22.02.2021 passed by the Appellate Tribunal is not only in violation of the principles of natural justice but also devoid of any legal sanctity, thus without jurisdiction. 16
37. Further, the lightening speed at which the rectification of the Certificate of Sale was carried out has also drawn our attention. Immediately after the order dated 22.02.2021 was passed by the Appellate Tribunal, Recovery Officer carried out the rectification of Certificate of Sale dated 24.05.2004 within two days i.e., on 24.02.2021.
38. For the reasons discussed above, we set aside the order dated 22.02.2021 passed by the Appellate Tribunal in Appeal No.3 of 2021 and the consequential Rectification of Certificate of Sale dated 26.05.2004 carried out on 24.02.2021.
39. Writ petition is accordingly allowed. However there shall be no order as to costs.
Miscellaneous applications, pending if any, shall stand closed.
______________________________________ UJJAL BHUYAN, CJ ______________________________________ SUREPALLI NANDA, J 11.07.2022 Pln