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2009 Supreme(Mad) 1491
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S.J. MUKHOPADHAYA & THE HONOURABLE MR. JUSTICE V. DHANAPALAN
Nazims Continental rep. by its partners & Others
Versus
The Indian Overseas Bank Triplicane Branch & Others
W.P.No.13210 of 2008 and C.R.P.No.3144 of 2008 & M.P.Nos.1 of 2008
Decided on: 29-04-2009
For the Petitioners:V. Ragavachari, for M/s. A. Ramakrishnan, Krishna Srinivasan for M/s. Ramasubramaniam Associates, Advocates.
For the Respondents:R1, F.B. Benjamin George, R2, P. Sreenivasalu, R1 & R2, M.S. Krishnan, SC for M/s. Sarvabhauman, Associates, R3, Ananda Gomathy Sivakumar, Advocates.
The main legal point established in the judgment is the jurisdiction of the recovery officer to entertain applications under Rule 60, 61, and 62, and the requirement of pre-deposit for setting aside a sale deed under Rule 61 of the 2nd Schedule to the Income Tax Act.
Headnote:
Recovery of Debts due to Banks and Financial Institutions Act - Jurisdiction of Recovery Officer - Rules 60, 61, and Section 30 - Summary of Acts and Sections
Fact of the Case:
The case involved the jurisdiction of the recovery officer to decide petitions to set aside the sale made pursuant to the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (Act, 1993) under Rule 61 of the 2nd Schedule to the Income Tax Act. The borrowers and Indian Bank raised questions regarding the upset price of property valuation, jurisdiction of the recovery officer, and the applicability of Rule 60 and 61 in setting aside a sale deed under Section 30 of the Act, 1993.
Finding of the Court:
The court analyzed the relevant provisions of the Act, 1993, and the Income Tax Act, along with previous court decisions, to determine the maintainability of applications under Rule 60, 61, and Section 30. The court found that the recovery officer had jurisdiction to entertain applications under Rule 60, 61, and 62, and that an appeal could be preferred against the recovery officer's order under Section 30 of the Act, 1993. The court also held that a defaulter was required to pre-deposit the amount specified in the proclamation of sale under Rule 61.
Issues: The issues involved determining the maintainability of applications under Rule 60, 61, and Section 30 of the Act, 1993, and the requirement of pre-deposit for setting aside a sale deed.
Ratio Decidendi: The court's decision was based on the interpretation of relevant provisions of the Act, 1993, and the Income Tax Act, along with the distinction between applications by defaulters and other interested parties, and the requirement of pre-deposit under Rule 61.
Final Decision: The court dismissed W.P. No.13210/08 but set aside the order dated 19th Aug., 2008, in I.A. No.2039/08 in Appeal No.7/08 and allowed C.R.P. (PD) No.3144/08 preferred by Indian Bank. The court held that the recovery officer had jurisdiction to entertain applications under Rule 60, 61, and 62, and that an appeal could be preferred against the recovery officer's order under Section 30 of the Act, 1993.
Common Order: (S.J. Mukhopadhaya, J.)
1. There being common question of law involved in both the cases, though they were heard separately, they are disposed of by this common judgment.
2. The borrower is the petitioner in W.P. No.13210/08. While raising question of upset price of valuation of property, the borrower has raised question of jurisdiction of recovery officer to decide a petition to set aside the sale made pursuant to the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as Act, 1993) under Rule 61 of the 2nd Schedule to the Income Tax Act (hereinafter referred to as Rule 61). According to the petitioner, such a petition to set aside the sale under the Act, 1993, is maintainable u/s 30 of the Act and not under Rule 61.
In C.R. P. No.3144/08, Indian Bank has challenged the order of the Debts Recovery Tribunal, Coimbatore, dated 19th Aug., 2008, staying further proceeding and confirmation of sale of schedule properties u/s 30 of the Act, 1993. One of the ground was taken that the requisite amount in terms with Rule 60 of the 2nd Schedule to the Income Tax Act (hereinafter referred to as Rule 60) was not deposited.
The borrowers, respondents 1 and 2, took plea that an application for confirmation was made against void sale made under Rule 63 of the 2nd Schedule to the Income Tax Act (hereinafter referred to as Rule 63) and a prior stage like Rule 60 and 61 cannot be made applicable for petition under Rule 63. Further, according to them, Section 30 of the Act, 1993, does not contemplate any deposit of either of the decreetal amount or purchase amount.
3. The questions involved for determination in these cases are:-
a) Whether to set aside a sale deed issued pursuant to Act, 1993, application under Rule 60 or 61 are maintainable or both under the aforesaid rules and Section 30 of the Act, 1993.
b) Whether pre-deposit of proclamation of sale amount with interest thereon, as stipulated under Rule 60, is also applicable for setting aside a sale deed under rule 61 or Section 30 of the Act, 1993.
4. Learned counsel for the petitioner in W.P. No.13210/08 submitted that the recovery officer draws power to execute the decree, including power to sale u/s 25 of the Act, 1993 under the supervision of the Tribunal, which is empowered to issue suitable directions under Rules 26 and 27 of the DRT Rules. According to the borrower, the petitioner of W.P. No.13210/08, in view of non obstante clause contained u/s 30 of the Act, 1993, brought into force by the Recovery of Debts due to Financial Institutions Amendment Act, 2001, which makes Section 29 and most of the rule under the 2nd Schedule to the Income Tax Act redundant or otiose. Even a sale certificate issued by the recovery officer is an order of the recovery officer and, hence, only a petition u/s 30 of the Act is maintainable and not under Rules 60 or 61. Therefore, the question of predeposit under Rule 61 does not arise nor for filing a petition u/s 30 of the Act, 1993.
Per contra, according to the Bank, if such interpretation is given, it would defeat the very object of the enactment of the Act, 1993. The amended Section 30 does not make Section 29 otiose. Section 25 is a substantial provision empowering the recovery officer to execute the recovery certificate and make the provisions of 2nd and 3rd Schedule of the Income Tax Act applicable to the proceeding before the recovery officer. The procedure followed under the 2nd Schedule to be followed by the recovery officer in addition to the procedure laid down under the Act and the Rules framed thereunder to the extent it is not contrary.
5. Learned counsel for the bank while relied on decision of Supreme Court in Transcore
- Vs - Union of India (2006 (5) CTC 756) to show that the NPA Act is a complete code by itself for recovery of debt. It was submitted that a separate provision has been made under the Act, 1993, wherein, Section 30 is the appellate forum against any order passe
