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 fo 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 pre-deposit 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 passed by recovery officer. He also referred to Supreme Court decision in Union of India and Anr. - Vs Delhi High Court Bar Association (2002 (3) SCC 275 :: AIR 2002 SC 1479) to show that the jurisdiction of the recovery officer is exclusive for the purpose of execution of adjudication order. Reliance was placed on Supreme Court decision in Allahabad Bank Vs Canara Bank (2000 (4) SCC 406).
Counsel for the bank submitted that the Act, 1993, provides entertaining a counter claim and set-off on the claim of other secured creditors, as evident from the amended Act No.1 of 2000. U/s 19 (19), Tribunal is empowered to pass an order for distribution of the sale proceeds amongst secured creditors in accordance with
Section 529-A of the Companies Act. To set aside a sale, the relevant rule is Rule 61, which differentiates between a defaulter and a third party enabling a defaulter or any person interested to file an application to set aside the sale only on the ground of non-service of notice or irregularity, but sub-rule (b) of Rule 61 makes it clear that in case of defaulter no such application could be entertained unless he deposits the amount recoverable from him in execution of the certificate. In other words, if appeal is filed by third party, pre-deposit is not required. For the purpose of Act, 1993, the Section 17 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (hereinafter referred to as 'NPA Act') cannot be pressed into service for construing the word any person. So far as
Section 29 is concerned, according to counsel for the Bank, is a non-obstante clause, which does not mean that the whole Act to be made applicable or not applicable and it is for the Court to avoid the conflict for harmonious construction of the provision as per Supreme Court decision in Union of India Vs I.C. Lala (AIR 1973 SC 2204). Thus the stand taken by the Bank is that
Section 30 do not take away the power of the Recovery Officer to adjudicate application under Rule 61, particularly when Rule 73 of Act, 1993 mandates the Recovery Officer to follow the principles of natural justice.
6. In C.R.P. No.3144 of 2008, Indian Bank is the petitioner, which has challenged the order dated 19th Aug., 2008, passed by the Debts Recovery Tribunal, Coimbatore, staying confirmation of sale of schedule property and the proceeding before the Recovery Officer. In the said case, respondents 1 and 2, borrowers have alleged the confirmation of sale as illegal and void. According to counsel for 1st and 2nd respondent-borrowers, the present case is that of illegal confirmation of sale amounting to void sale. Rule 63 does not provide for any remedy against illegal or void confirmation. Rules 60 and 61 of 2nd Schedule to IT Act, which provides for setting aside the sale are stages prior to Rule 63. Therefore, against the order of confirmation, as distinct from sale, only application u/s 30 of Act, 1993 is applicable. Neither rule 63 of 2nd Schedule nor
Section 30 contemplates pre-deposit of decreetal amount or purchase money. Therefore, an appeal filed without pre-deposit is maintainable.
Learned counsel relied on common judgment dated 10th July, 2008, in W.P. Nos.19833 and 31170 of 2007, which was filed against sale proceed covered under Rules 56, 60 and 61 and not under Rule 63, which pertains to confirmation of sale.
Learned counsel specifically relied on Rule 60 of 2nd Schedule, which stipulates mandatory deposition of sale amount to entertain an appeal. Referring Rule 61 of 2nd Schedule, it was submitted that the deposit of entire amount is not mandatory and he relied on Division Bench decision of this Court in Hanu Reddy Realty India Pvt. Ltd. - Vs Jignesh & Ors. (2008 (3) LW 114 :: 2008 (1) CTC 721), wherein at para-21 the Court observed as follows :-
"There is no condition for pre-deposit for making an application under Section 61 unlike the application under
Section 60, which requires payment of the amount shown in the proclamation of sale along with 5% of the purchase money payable to the auction purchaser."
It was submitted that in the present case of respondents 1 and 2, the sale being a nullity, as distinguished from irregularity, it would be very onerous to expect the defaulter to pay the entire amount before getting the sale set aside on the ground that it is a nullity.
The maintainability of the revision application was also challenged.
7. We have heard the learned counsel for the parties and perused the records.
8. For determination of the issue, it is relevant to notice relevant provisions as discussed hereunder :-
On 27th Aug., 1993, the Act, 1993 was enacted to provide for establishment of Tribunals for expeditious adjudication and recovery of dues due to Banks and Financial Institutions. After about nine years, NPA Act was enacted to regulate securitisation and reconstruction of financial assets and enforcement of security interests to enable the Banks and Financial Institutions to realise long term assets, manage problems of liquidity, asset liability mismatch and improve recovery by exercising powers to take possession of securities, sell them and reduce the non-performing assets by adopting measures for recovery or reconstruction. It provided setting up of Asset Reconstruction Companies, etc. In Transcore Vs Union of India (2006 (5) CTC 753), Supreme Court observed that NPA Act is not inherently or impliedly inconsistent with Act, 1993 in terms of remedy for enforcement of securities. Amendments were brought u/s 19 of Act, 1993 and NPA Act was brought at par with Order XXIII of the Code of Civil Procedure, 1908. Proviso to Section 19 (1) was introduced under Act, 1993, to make it more effective than the provisions, which were akin to Order XXIII. U/s 19, while the Tribunal adjudicates the quantum of amount recoverable in favour of the Bank and Financial Institutions from the defendants, including the borrowers, it has power to recover the same by auction sale of property, but Tribunal is not vested with power u/s 19 to restore the property in favour of the borrower or other defendants by putting the clock back, restoring status quo ante, though such power is vested with the Tribunal u/s 17 of NPA Act if the borrower is dispossessed from the secured asset or action taken for possession or sale of property u/s 13 (4) is not in accordance with NPA Act or the rules framed thereunder.
There is a difference in the manner of sale of property u/s 19 of Act, 1993 and sale of property u/s 13 (4) of NPA Act. U/s 19 of Act, 1993. While Tribunal first adjudicates the quantum of amount recoverable from the defendant in favour of the Banks/Financial Institutions, followed by auction sale of the scheduled property in appropriate case, such determination of recovery of quantum of amount is not made by Tribunal under NPA Act, at the initial stage, but claim is determined by Banks/Financial Institutions u/s 13 (2) r/w
Section 13 (3) and Section 13(3-A) of the NPA Act and if finally it determines that amount is recoverable, action is taken u/s 13 (4) of NPA Act. It is only thereafter the borrower or the aggrieved persons move u/s 17 of NPA Act and not the Banks or the Financial Institution. That is the reason, while application is filed u/s 17 of NPA Act, the Tribunal is vested with power to restore the property in favour of the borrower/aggrieved person by putting the clock back by restoring status quo ante, if action u/s 13 (4) is against the provisions of the NPA Act or the rules framed thereunder, but as quantum of amount recoverable in favour of the Bank/Financial Institution from the defendant, including the borrower is determined by the Tribunal u/s 19 of the Act, 1993, for setting aside the sale, a party is required to file application either u/s 30 of NPA Act or rules under 2nd Schedule of IT Act.
9. U/s 13 (8) of NPA Act, the borrower gets opportunity to sell or transfer of secured asset if all the costs, charges and expenses incurred by the secured creditor is tendered before the date fixed for sale, but no such provision has been made under Act, 1993 except in appropriate cases the Tribunal may defer the sale if any prayer is made u/s 19. Therefore, a special provision was made to challenge the sale under 2nd Schedule of IT Act r/w
Section 29 of Act, 1993 followed by
Section 30 notice by amendment of Act, 1993.
10. 2nd Schedule of IT Act relates to 'Procedure for Recovery'. While Part-I is the general provision; Part-II relates to 'attachment of sale of movable property' and Part-III relates to 'attachment and sale of immovable property'. Rule 48 of Part-III of 2nd Schedule relates to 'attachment'; Rule 49 relates to 'service of notice of attachment'; Rule 50 relates to 'proclamation of attachment'; Rule 51 relates to 'attachment to relate back from the date of notice'; Rule 52 relates to 'sale and proclamation of sale'; Rule 53 relates to 'contents of proclamation'; Rule 54 relates to 'mode of making proclamation', but the aforesaid provisions of Part-III of 2nd Schedule cannot override the specific provisions under Chapter V of Act, 1993, including
Section 25, as it deals with mode of recovery of debt only by way of three modes, namely,
a) Attachment and sale of movable or immovable property of the defendant;
b) Arrest of the defendant and his detention in prison ; and
c) Appointing a received for the management of the movable or immovable properties of the defendant.
Rule 55 (Part-III) of 2nd Schedule relates to 'time of sale', however, u/s 27 of the Act, 1993, even after issuance of certificate of recovery of amount, the Presiding Officer is empowered to grant further time for payment of the amount; the recovery officer is also empowered to stay the proceeding until the expiry of the time so granted. Therefore, it is clear that Rule 55 of 2nd Schedule prescribing a 'time of sale' is not mandatory for recovery of debt under Act, 1993 and we hold accordingly.
11. Rule 56 (Part-III) of 2nd Schedule deals with 'sale to be made by public auction' to the highest bidder, subject to confirmation by the recovery officer; Rule 57 deals with 'deposit by purchaser and re-sale in default'. Rule 58 relates to 'procedure in default of payment'; Rule 59 relates to 'authority to bid'. In absence of any specific provision in this regard made under the Act, 1993, we hold that Rules 56, 57, 58 and 59 is also applicable in a case of sale of immovable property under the Act, 1993.
Rule 60 (Part-III) of 2nd Schedule empowers the Recovery Officer to set aside the sale of immovable property on deposit of requisite amount (emphasis supplied) , which reads as follows :-
"Application to set aside sale of immovable property on deposit.
60. (1) Where immovable property has been sold in execution of a certificate, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing --
(a) the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, with interest thereon at the rate of [fifteen percent per annum], calculated from the date of the proclamation of sale to the date when the deposit is made; and
(b) for payment to the purchaser, as penalty, a sum equal to five per cent of the purchase money, but not less than one rupee.
(2) Where a person makes an application under rule 61 for setting aside the sale of his immovable property, he shall not, unless he withdraws that application, be entitled to make or prosecute an application under this rule."
The other provision to set aside sale of immovable property is Rule 61, which can be made only on the ground of 'non-service of notice' or 'irregularity', as quoted hereunder :-
"Application to set aside sale of immovable property on ground of non-service of notice or irregularity.
61. Where immovable property has been sold in execution of a certificate, [such Income-tax Officer as may be authorised by the Chief Commissioner or Commissioner in this behalf], the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this Schedule or on the ground of a material irregularity in publishing or conducting the sale :
Provided that --
(a) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of the non-service or irregularity; and
(b) an application made by a defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in the execution of the certificate."
12. From Rule 60, it will be evident that application to set aside sale of immovable property on any ground can be made by the defaulter or any person, whose interests are affected by the sale, within 30 days from the date of sale. In such case, the amount specified in the proclamation of sale with interest thereon @ 15% p.a., from the date of proclamation of sale to be deposited apart from payment of penalty @ 5%.
Per contra, under rule 61, any person, whose interests are affected, may, apply within 30 days to set aside the sale of immovable property only on the ground of 'non-service of notice' or 'irregularity' and has to show that notice was not served on the defaulter to pay the arrears as required by the schedule or on the ground of a material irregularity in publishing or conducting the sale. However, no sale can be set aside on any of such ground unless the recovery officer is satisfied that the applicant has sustained "substantial injury" by reasons of non-service or irregularity. Such application made by defaulter under rule 61 is to be disallowed unless the DEFAULTER deposits the amount recoverable from him in the execution of the certificate. (Emphasis added).
13. Therefore, 'in the case of a defaulter', for filing a petition under Rule 61 to set aside the sale of immovable property, the defaulter is required to deposit the 'amount recoverable from him in the execution of the certificate', as distinguished from the 'amount specified in the proclamation of sale' as stipulated under Rule 60. Under Rule 61, only if a person, whose interests is affected by sale, but is not a defaulter, is not liable to make any pre-deposit to set aside the sale of immovable property.
14. Similar matter fell for consideration before a Division Bench of this Court in Sakura Prime Tanning Company - Vs Central Bank of India & Ors. in W.P. No.14581/06, disposed of on 28th Sept., 2007, wherein the Court held as follows :-
"3. The provisions of the Second Schedule to Income Tax Act, 1961 is applicable in this case in view of Section 29 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. Rule 60 to the Second Schedule of Income Tax Act, 1961, while postulates time limit to file application to set aside the sale, under Clause (b) of Proviso to Rule 61 to the Second Schedule of the Income Tax Act, 1961, an application made by the defaulter under the rule cannot be allowed unless the defaulter deposits the amount recoverable from them in the execution of the certificate."
In another case of M/s.Indian Bank Vs Stanfrose Agvet Farms, W.P. No.19833/07 and analogous cases, a Division Bench, by its unreported judgment dated 10th March, 2008, held as follows :-
"13. Under
Section 30 of the RDB Act, 1993, appeal can be preferred against the order of the Recovery Officer within 30 days' from the date on which copy of such order is issued. As the borrowers intended to challenge the auction-sale pursuant to the order passed by the Recovery Officer, it was open for them to prefer such appeal under
Section 30, but such appeal could have been only before the DRT and not before the DRAT.
14. Under Section 29 of the RDB Act, 1993, the provisions of Second and Third Schedule to the Income Tax Act, 1961 are applicable, as far as possible. Under Rule 60 of the Second Schedule to the Income Tax Act, 1961, it is mandatory to deposit the amount specified in the proclamation of sale as that for the recovery of which sale was ordered with interest thereon, at the rate prescribed under the said Rules for setting aside the sale of immovable property."
15. The provisions of rule 60 and 61 fell for consideration before a Division Bench this Court in Hanu Reddy Realty India Pvt. Ltd. - Vs Jignesh & Ors. (2008 (3) LW 114 :: 2008 (1) CTC 721). Having noticed the provision of Rules 60 and 61, the Bench observed --
"There is no condition of pre-deposit for making an application under rule 61 unlike an application under Rule 60, which required payment of the amount shown in the proclamation of sale along with 5% of the purchase money payable to the auction purchaser."
We have already discussed Rules 60 and 61 (Part-III) of 2nd Schedule of the Income Tax Act and the difference between the said rules. It is true that there is no condition of pre-deposit for making an application under Rule 61 unlike an application under Rule 60, but such observation made in Hanu Reddy Realty India Pvt. Ltd. (supra) is applicable only to a person whose interests are affected by sale but is not a defaulter, the observation aforesaid is not applicable to a defaulter. As the aforesaid distinction between any person and a defaulter has not been deliberated nor discussed by Division Bench in Hanu Reddy Realty India Pvt. Ltd. (supra), we hold the said judgment per incurium, not applicable to a defaulter. A defaulter cannot derive advantage of the judgment in Hanu Reddy Realty India Pvt. Ltd. (supra) in an application under Rule 61.
16. Under Rule 62 of 2nd Schedule, the purchaser can apply to recovery officer to set aside the sale on the ground that the defaulter has no saleable interest in the property sold. No pre-deposit condition laid down therein as the purchaser supposed to have paid the amount of sale proceed. Rule 63 relates to confirmation of sale where no application is made for setting aside the sale u/s 60 or 61 or when such application made is disallowed, the sale could be confirmed, which becomes absolute. Rule 64 relates to return of purchase money in certain cases whereas Rule 65 deals with sale certificate of immovable property where sale has become absolute. In absence of any corresponding provision under the Act, 1993 or rules framed thereunder, we hold that Rules 62, 63, 64 and 65 of 2nd Schedule of Income Tax Act, 1961, still holds the field.
17. Rule 66 of of 2nd Schedule empowers the recovery officer to postpone sale to enable defaulter to raise amount due under certificate. The presiding officer of the Tribunal is also empowered to stay proceeding under certificate and amendment or withdrawal thereof of certificate by granting time for payment of the amount, whereupon the recovery officer is to stay the proceeding until expiry of the time so granted. If such order is passed under sub-section (2) of
Section 27 of the Act, 1993, the Presiding Officer to inform such order to the recovery officer. The Presiding Officer of the Tribunal is also liable to modify the certificate of recovery even after receipt of same by recovery officer if the amount of outstanding demand is reduced or enhanced as a result of appeal by Appellate Tribunal in view of sub-sectiuon (4) of
Section 27 of Act, 1993.
Section 28 deals with other modes of recovery by recovery officer, which being not conflicting to the procedure prescribed under Part-III of II Schedule, except to the extent as discussed above, both could be applied simultaneously, but in case of any contradiction, the procedure of recovery prescribed under the DRT Act shall prevail over the procedure of recovery by way of sale of movable or immovable property prescribed under II Schedule of Income Tax Act.
18. By virtue of
Section 29 of Act, 1993, the provisions of 2nd and 3rd Schedule if IT Act, 1961 and Income Tax (Certificate Proceedings) Rules, 1962, were made applicable for realisation of dues by recovery officer. At that stage, there was no other mode of recovery except the under Chapter V (
Sections 25 to 28) and the Rules under 2nd and 3rd Schedule of Income Tax Act, 1961 r/w Income Tax (Certificate Proceedings) Rules, 1962. Subsequently,
Section 30 of Act, 1993, was substituted w.e.f. 17th Jan., 2000. to prefer appeal against order of recovery officer within 30 days before DRT.
19. In the case of Union of India Vs Delhi High Court Bar Association (2002 (4) SCC 275 :: AIR 2002 SC 1479), the Supreme Court noticed
Section 29 and
Section 30 substituted vide Amendment Act 2000 and held as follows :-
30. By virtue of
Section 29 of the Act, the provisions of the Second and Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962, have become applicable for the realisation of the dues by the Recovery Officer. Detailed procedure for recovery is contained in these Schedules to the Income Tax Act, including provisions relating to arrest and detention of the defaulter. It cannot, therefore, be said that the Recovery Officer would act in an arbitrary manner. Furthermore,
Section 30, after amendment by the Amendment Act, 2000, gives a right to any person aggrieved by an order of the Recovery Officer, to prefer an appeal to the Tribunal. Thus now an appellate forum has been provided against any orders of the Recovery Officer which may not be in accordance with law. There is, therefore, sufficient safeguard which has been provided in the event of the Recovery Officer acting in an arbitrary or an unreasonable manner. The provisions of
Sections 25 and
28 are, therefore, not bad in law.
20. In view of the provisions of law and finding of the Court and discussions made above, we hold that the recovery officer has also jurisdiction to entertain an application under rules 60, 61 and 62 of Part-III of 2nd Schedule to the Income Tax Act and in case any person is aggrieved against such order, may prefer appeal u/s 30 of the Act, 1993. As the defaulter or any person whose interests are affected by sale is supposed to pay the pre-deposit amount under Rule 60 and a defaulter required to pay pre-deposit amount under Rule 61 except the person whose interests are affected due to non-service of notice on defaulter to pay the arrerars or material irregularity in publishing or conducting the sale should apply under Rule 61 or the purchaser, who may file application under Rule 62, who are not liable to pre-deposit any amount, in such case, for preferring an appeal u/s 30 of Act, 1993, against an order of recovery officer under Rules 60, 61 or 62, no pre-deposit amount required to be deposited.
21.
Section 30 starts with non obstante clause, as evident from the said provision and quoted hereunder :-
"30. Appeal against the order of Recovery Officer.
(1) Notwithstanding anything contained in
section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.
(2) On receipt of an appeal under sub-section (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such enquiry as it deems fit, confirm, modify or set aside the order made by the Recovery Officer in exercise of his powers under
sections 25 to
28 (both inclusive)."
In the case of Union of India Vs I.C.Lala (AIR 1973 SC 2204), Supreme Court held that non obstante clause does not mean that the whole of the said provision of law has to be made applicable or the whole of the other law has to be made inapplicable. It is the duty of the Court to avoid the conflict and construe the provisions to that they are harmonious.
22. Mode of recovery of debt is prescribed u/s 25 of DRT Act, as quoted hereunder :-
"25. Modes of recovery of debts. - The Recovery Officer shall, on receipt of the copy of the certificate under sub-section (7) of
section 19, proceed to recover the amount of debt specified in the certificate by one or more of the following modes, namely:-
(a) attachment and sale of the movable or immovable property of the defendant;
(b) arrest of the defendant and his detention in prison;
(c) appointing a receiver for the management of the movable or immovable properties of the defendant."
From the aforesaid provision it will be evident that apart from attachment and sale of movable or immovable property of the defendant, the recovery officer, under the said provision, may proceed to recover the amount of debt by arresting the defendant and his detention in prison or by appointing a receiver for the management of the movable or immovable properties of the defendant. Those two provisions made under clauses (b) and (c) of
Section 25 cannot be challenged before the Recovery Officer under II or III Schedule of Income Tax Act. Therefore, except by preferring an application (appeal) u/s 30 against the order of recovery officer, any aggrieved person has no other option. It cannot be said that for sale of movable or immovable property as made under II Schedule to Income Tax Act, including Rules 60 or 61 or 62 of Part-III of II Schedule, then by way of appeal only u/s 30 could be preferred and no such appeal could be preferred directly against the order of attachment and sale of movable or immovable property of the defendant, if recovery officer pass such order u/s 25. Therefore, we hold that against the order of attachment and sale of movable or immovable property of defendant, who are the defendants before the Tribunal, an aggrieved person, instead of moving application under Rule 60 of 61 or 62, may also prefer an application (appeal) u/s 30 of the Act, 1993. Therefore, there being a concurrent jurisdiction, DRT u/s 30 and recovery officer under Rules 60, 61 and 62 of Part-III of II Schedule of Income Tax Act in regard to movable property and jurisdiction of Tribunal under Part-II of II Schedule of Income Tax Act in regard to movable property, application of any defendant cannot be entertained by Tribunal u/s 30 without pre-deposit of the amount in terms with Rules 60 or 61 bypassing the jurisdiction of the recovery officer under the aforesaid provisions of II Schedule of Income Tax Act. Further, the auction purchaser being not a defendant in the original application u/s 19, cannot file an appeal u/s 30 against the order of recovery officer, if it intends to prefer an application, if under the provision of Rule 62 of Part-III of II Schedule to Income Tax Act.
23. So far as W.P. No.13210/08 is concerned, the borrower is the petitioner. He raised the question of upset price of valuation of property and jurisdiction of the recovery officer under Rules 60 and 61 of Part-III of II Schedule to Income Tax Act. They preferred application under Rule 61 of Part-III of II Schedule to Income Tax before the recovery officer to set aside the sale without compliance of pre-deposit amount. For the said reason, amount having not deposited as per Rule 61, the application to set aside was dismissed against which they preferred appeal before the Debts Recovery Appellate Tribunal, which has also been dismissed by the Appellate Tribunal vide impugned order dated 6th May, 2008.
First of all, it is the appellant, who preferred appeal under Rule 61 and, therefore, they cannot say the recovery officer has no jurisdiction to pass order under Rule 61 and the appeal to set aside the sale is only maintainable u/s 30 of the Act, 1993.
We have already held that an application to set aside sale is also maintainable under Rule 61, but we have also held that a defaulter, such as borrower, is required to pre-deposit the amount in view of proviso to Rule 61. The petitioners being the defendant-borrowers, as they failed to comply by pre-depositing the amount, we hold that the recovery officer rightly rejected the application under Rule 61 preferred by borrowers and the Appellate Tribunal rightly affirmed the same.
24. So far as CRP No.3144/08 is concerned, the revision application has been preferred by Indian Bank against interim order of Debts Recovery Tribunal, Coimbatore, passed u/s 19 (25) of Act, 1993. In this case, one time settlement was agreed between the parties and sale, which was fixed was conducted. The matter moved up on appeal before the Appellate Tribunal, wherein certain orders were passed and being aggrieved, the bank moved a petition before the High Court on the ground that the appeal before the Appellate Tribunal was not maintainable, but appeal against sale should have been preferred before the recovery officer. The High Court passed order in favour of the Bank as appeal against sale was not maintainable before the Appellate Tribunal. Thereafter, an appeal was preferred u/s 30 against order of recovery officer, but it was not filed within 30 days because of the pendency of the writ petition and after disposal of the writ petition before preferring the application u/s 30, the recovery officer confirmed the sale. Against the said order, the respondent-borrowers preferred appeal, wherein an application u/s 19 (25) was filed by the borrowers and prayed for staying the proceeding. The Bank appeared and brought to the notice of the Tribunal that sale has been confirmed on 13th Aug., 2008 and time was sought for to file reply and in that view of the matter, the Tribunal passed interim order on 19th Aug., 2008 in I.A. No.2039/08 u/s 19 (25) of the Act, 1993 in Appeal No.7/08, (appears to have been filed u/s 30).
25. There is nothing on the record that for setting aside the sale the borrowers deposited any amount as pre-deposit as required under Rules 60/61 r/w
Section 30 as required under the law and held by us in the preceding paragraph. In absence of such deposition of amount as pre-deposit to set aside the sale or confirmation of sale, the impugned order dated 19th Aug., 2008, cannot be upheld. However, if pre-deposit amount is deposited within 30 days, it will be open to the Tribunal to pass final order in the appeal u/s 30 made to set aside the sale, if found illegal or against law or if perverse.
26. In view of our finding, while we dismiss 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 allow C.R.P. (PD) No.3144/08 preferred by Indian Bank. However, there shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.
GLN