The statutory limitations under Rule 68B of the Income Tax Act are not applicable to recovery proceedings under the RDDB Act, affirming that such sales are valid and within legal parameters.

JUDGMENT :

MOHAMMED NIAS C.P., J.

The petitioners contend that the 1^st petitioner, as principal borrower, had availed a loan of Rs. 5,00,000/- (Rupees five lakhs only) from the 1^st respondent bank, which was later enhanced to Rs. 20,00,000/- (Rupees Twenty Lakhs only) under an OD-CC (Over Draft-Cash Credit) account, with the 2^nd petitioner and M.A. Vincent, Lincy Binu and T.S. Joseph as co-obligants. T.S.Joseph again availed an Agricultural Medium Term Loan (AMTL) of Rs. 2,75,000/- (Rupees Two Lakhs Seventy-Five Thousand Only) and the Federal Kisan Credit (FKC) of Rs. 85,000/- (Rupees Eighty-Five Thousand Only).

1.1. Apart from the two items of property (27 cents & 28 cents of land) extended by the 1^st petitioner as collateral security, property (3 acres) belonging to T.S. Joseph was also mortgaged to cover the 1^st petitioner’s liability. The liability under the account fell into arrears by January 2005, and, upon proceedings initiated before the Debt Recovery Tribunal, Ernakulam, in O.A. No. 31 of 2006, Ext. P1 Recovery Certificate dated 11.01.2012 was issued for the recovery of Rs. 76,90,252.22/- (Rupees Seventy-Six Lakh Ninety Thousand Two Hundred Fifty-Two Only) from the properties described in Schedules A to C therein.

1.2. The petitioners submit that the Recovery Officer issued Ext.P2 sale proclamation only on 24.05.2016, and the sale proclamation contained one more additional item of property which is a parcel of land having an extent of 5 Acre 2 cents and this property was not included in the Recovery certificate, which was challenged before the DRT in Appeal No. 5/2016 and before DRAT in M.A.24/2019 and before this court in W.P(C) No. 16681/2022 and W.A. No. 1352/2024, raising the issue on different grounds and they failed to obtain any favourable orders.

1.3. Thereafter, an auction sale was conducted on 25.07.2016, wherein respondents 3 and 4 purchased items 3 and 2, for an amount of Rs. 75.6 lakhs and Rs. 30.2 lakhs, respectively. Advocate Commissioner was appointed by Ext. P3 order dated 27.03.2025, and the property was handed over to the auction purchasers on 11.04.2025. It is contended that the proclamation and auction were issued and conducted long after the expiry of the statutory limitation under Rule 68B of the Second Schedule to the INCOME TAX ACT , 1961, (hereinafter “IT Act”) which, by virtue of Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, (hereinafter “the RDDB Act”) applies to recovery proceedings under the said Act. The said provision mandates that no sale of immovable property shall be made after the expiry of three years from the end of the financial year in which the order giving rise to the demand became conclusive.

1.4. The petitioners point out that the Recovery Certificate, having been issued on 11.01.2012, the financial year ended on 31.03.2012, and the three-year period expired on 31.03.2015. The proclamation of sale issued on 24.05.2016 and the auction conducted on 25.07.2016 were therefore more than one year beyond the statutory limit, rendering them illegal and void. The petitioners contend that the filing of Appeal No. 5/2016 before the DRT under Section 30 of the RDDB Act on 11.07.2016 would not have the effect of extending or excluding the limitation, since it was filed after the expiry of the period prescribed in Rule 68B.

1.5. It is further urged that the provision is mandatory in nature, as held by the Division Bench of this Court in Ratheesh M. N. & Anr. v. Debt Recovery Tribunal (Kerala & Lakshadweep) and Others [2019 (2) KHC 134] , wherein it was categorically declared t