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2016 Supreme(Del) 4539
IN THE HIGH COURT OF DELHI
S. Muralidhar, Najmi Waziri, JJ.
Suresh Kumar Goyal - Petitioner
Versus
Chief Commissioner Income Tax-2 and others - Respondents
W.P.(C) 3430 of 2016 and CM No. 14665 of 2016
Decided On : 13-07-2016
For the Petitioner:Mr. Prasouk Jain, Advocate
For the Respondent:Mr. Ashok K. Manchanda, Senior Standing Counsel with Lakshmi Gurung, Advocate, Mr. Sanjay Bhatt and Mr. Abhishek Anand, Advocates, Mr. Satyakam, Additional Standing Counsel with Mr. Naveen Jakhar, Advocate
The main legal point established in the judgment is the precedence of notice under Section 13(2) of the SARFAESI Act over the attachment order of the ITD, emphasizing the non-obstante provision of Section 35 of the SARFAESI Act.
Headnote:
SARFAESI Act - Property Attachment - Section 13(2), Section 35 of SARFAESI Act, Section 281 of IT Act - The court discussed the precedence of notice under Section 13(2) of the SARFAESI Act over the attachment order of the Income Tax Department (ITD) under Section 281 of the IT Act. It held that the notice under Section 13(2) of the SARFAESI Act tantamounted to an attachment and would get precedence over the attachment of the property by the ITD. The court set aside the attachment order issued by the ITD and directed the registration of the sale deed executed by IDBI in favor of the Petitioner.
Fact of the Case:
The case involved a dispute over the attachment of a property by the Tax Recovery Officer (TRO) and the subsequent sale of the property by IDBI through public auction. The Petitioner sought registration of the sale deed in his favor, which was declined due to the attachment order issued by the TRO.
Finding of the Court:
The court found that the notice issued under Section 13(2) of the SARFAESI Act by IDBI had precedence over the attachment order of the ITD. It set aside the attachment order and directed the registration of the sale deed in favor of the Petitioner.
Issues: The main issue was the precedence of the notice under Section 13(2) of the SARFAESI Act over the attachment order of the ITD under Section 281 of the IT Act.
Ratio Decidendi: The court held that the notice under Section 13(2) of the SARFAESI Act tantamounted to an attachment and would get precedence over the attachment of the property by the ITD. It also emphasized the non-obstante provision of Section 35 of the SARFAESI Act, which overrides other laws.
Final Decision: The court set aside the attachment order issued by the ITD and directed the registration of the sale deed executed by IDBI in favor of the Petitioner.
Dr. S. Muralidhar, J.
1. The principal challenge in this writ petition, filed by Mr. Suresh Kumar Goyal, is to an order dated 25th November 2013 passed by Tax Recovery Officer (‘TRO’), Respondent No. 4 to the extent it attachés the ground floor of the property at Plot No. 84, Ground Floor, HU Block, Pitampura, New Delhi - 110088 measuring 207 square meters (‘the property in question’). The other prayer is for a direction to the Sub-Registrar VI-A (‘Sub-Registrar’), Government of National Capital Territory of Delhi (Respondent No. 3) to register the sale deed executed by the IDBI Bank Ltd. (‘IDBI’) (Respondent No. 2) in favour of the Petitioner transferring title of the ground floor of the property in question. In the alternative, the Petitioner has prayed for a direction to IDBI to refund the entire amount paid by the Petitioner as consideration for the ground floor of the property in question.
2. The background to the present petition is that one Mr. Shiv Sareen purchased the property in question on 25th January 2008. On 2nd March 2009, Mr. Sareen, through his proprietary concern M/s Krishna Designers, mortgaged the ground floor of the property in question to IDBI and sought a cash credit limit of Rs. 4.95 crores. Further on 28th May 2010, a credit limit enhancement was sought by additionally mortgaging the basement of the property in question, thereby taking the total loan exposure to Rs. 7.5 crores.
3. On the default of loan payments by M/s Krishna Designers, IDBI issued a notice dated 24th May 2012 to Mr. Sareen under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’).
4. On 25th November 2013, the TRO issued the impugned order attaching the property in question in respect of arrears of income tax dues owed by Mr. Sareen. Consequently, the TRO also wrote a letter dated 3rd December 2013 intimating the Sub-Registrar about the attachment. The Sub-Registrar was asked to not undertake any transaction qua the property in question.
5. On 30th May 2014, IDBI took possession of the property in question for initiation of recovery proceedings under the SARFAESI Act. On receiving information about the attachment of the property by the Income Tax authorities from Mr. Sareen, IDBI wrote a letter dated 10th September 2014 to the TRO seeking authentication of the impugned order. IDBI also apprised the TRO about the mortgage, the pending proceedings under the SARFESI Act and the fact of IDBI having taken possession of the property in question. IDBI sent further reminder letters dated 15th October 2014, 3rd January 2015 to the TRO.
6. On 24th January 2015 the IDBI issued an advertisement in the newspaper offering for sale by public auction, both the ground floor and the entire basement of the property in question. While the reserve price for the ground floor was fixed at Rs. 1.50 crores, the reserve price for the entire basement was at Rs. 61 lakhs. A bidder had to deposit 10% of the bid amount together with the bid. The last date for submission of the bids was 25th February 2015.
7. Meanwhile, a further reminder was sent by the IDBI to the TRO, CIT-VII on 11th February 2015 pointing out that despite several reminders no response regarding the authenticity of the attachment order dated 25th November 2013 was received.
8. On 25th February 2015 the Petitioner submitted his bid for the ground floor of the property in question in the sum of Rs. 1.54 crores. He simultaneously deposited earnest money in the sum of Rs. 15.40 lakhs, i.e. 10% of the bid amount offered by him. On 26th February 2015 the Petitioner was declared as the successful bidder.
9. On 3rd March 2015 the IDBI wrote to the TRO, CIT-VII intimating them about the ground floor of the property in question having been sold to the Petitioner on 26th February 2015 by way of public auction. On the same date the Petitioner paid an additional 15% of the bid amount, i.e., Rs. 23.10 lakhs by demand draft.
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