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Upholds DRT Despite Lack Of Notice Under Order XXI Rule 22
The has ruled that failure to serve notice under before executing a decree does not invalidate an conducted by the under the . A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe allowed appeals by Sheela Gehlot and , setting aside a order that had remitted the matter for fresh inquiry. The Court also held that the from of a residential house under is personal to the and cannot be claimed by .
A and a Defaulted Loan
The case originates from credit facilities availed by from , secured by personal guarantees of its directors, including Hardayal Singh. After the company defaulted, the bank obtained a in from the . The decree required the newly inducted investor, , to pay ₹1.80 crores in instalments. The compromise recorded that title deeds of Hardayal Singh's Delhi property—furnished as —would be released, but his personal liability remained.
When the Trust defaulted after paying about ₹82 lakh, the bank filed an in , impleading Hardayal Singh's widow Mohini Hardayal Singh and her children as judgment-debtors. The execution case was transferred to following the establishment of the tribunal. In , the DRT ordered auction of the Delhi property. Despite objections by Mohini Hardayal Singh that she had not received notice and that the property was her only residence, the auction proceeded. The sale was confirmed in , and a issued.
Arguments Over Notice and
Senior counsel for the and the bank contended that the sale could not be challenged without filing an application under . They argued that Section 60(1)(ccc) was personal to the and not available to his . On the other hand, counsel for Mohini Hardayal Singh submitted that non-compliance with Order XXI Rule 22 was mandatory and rendered the sale void, and that the Delhi property being the family's main residence was exempt from .
Procedure Superseded by Regime
The Court first examined the statutory framework. It noted that under , are governed by the Second Schedule to the Income Tax Act, which supersedes the procedure under the . The judgment authored by Justice Alok Aradhe stated:
"The transfer of from to the DRT, effected under , did not merely change the forum of execution, it clothed the Recovery Officer, with the power to recover the amount in accordance with the procedure prescribed under read with Second Schedule to the 1961 Act, in supersession of procedure under the Code before the … Therefore, Order XXI Rule 22 of the Code has no impact on the validity of the ."
The Court also pointed out that even under the , the applicable to Delhi treats failure to record reasons for not issuing notice as a mere , not a .
Remedy Under Not Availed
On the second issue, the Court observed that requires service of notice on the , but provides a remedy for non-service. An application to set aside the sale on this ground must be made within 30 days and must demonstrate . Here, the respondent had knowledge of proceedings—she had earlier filed a miscellaneous application seeking release of title deeds—and filed detailed objections before the Recovery Officer. She did not, however, apply under after the sale. Hence, did not render the execution or sale void.
Under Section 60(1)(ccc) Is Personal
The Court then dealt with the claim that the Delhi property was exempt under , which protects one main residential house of a from . The bench held that this protection is personal to the and cannot be extended to . It relied on longstanding decisions of the . The judgment noted:
"The plea of under is personal to the and is not available to be raised by his ."
Additionally, the Court held that this was a . Since the respondent had not raised the plea before the Recovery Officer or led any evidence, it could not be agitated for the first time in a .
Appeals Allowed, Upheld
In the result, the allowed Civil Appeal No. 182 of 2016 filed by Sheela Gehlot and Civil Appeal No. 190 of 2016 filed by . It dismissed Civil Appeal No. 191 of 2016 filed by Jagminder Singh, son of the . The impugned judgment of the was . was made.
The ruling reaffirms that DRT auction sales conducted under the regime are not vitiated by procedural lapses under the and clarifies the limited scope of the residential house .
