The petitioner challenges the order of the Debt Recovery Appellate Tribunal at Chennai (DRAT) which confirmed the order of the Debt Recovery Tribunal (DRT) in Appeal No.9/2009 dated 25.6.2009, produced herein as ExtsP11 and P4 respectively.
2. The brief admitted facts necessary for the consideration of this OP is that the petitioner availed of a housing loan of Rs.6,75,000/- in the year 1999. Consistent default having been committed in re-payment, the respondent Bank was constrained to proceed against the petitioner by filing O.A.22/2005 before the DRT, Ernakulam (Kerala & Lakshadweep). The petitioner herein who was the respondent in the O.A remained ex parte and a certificate of recovery was issued on 20.7.2005. Execution of the Certificate of Recovery was proceeded before the Recovery Officer and the property mortgaged, being the residential house of the petitioner, was brought to sale. The 3rd respondent herein successfully bid in auction and purchased the property for an amount of Rs.15,60,000/-. Sale was conducted on 31.10.2008 and the same stood confirmed in the name of the 3rd respondent on 12.1.2009.
3. The petitioner approached the DRT with an appeal numbered as Appeal No.9/2009 wherein the petitioner took up a contention that the upset price fixed was very low, since according to the petitioner, the property would normally fetch an amount of Rs.36,00,000/-. An Interlocutory Application was filed for interdiction of dispossession of the property which was allowed as per Ext.P1 on condition of the petitioner remitting the amounts as specified under Rule 60 of the Second Schedule to the Income Tax Act, 1961 on or before 27.2.2009. Said amounts were deposited as is evidenced by Ext.P2. However, subsequently the Tribunal, after consideration of the contentions put forward by the petitioner, rejected the appeal by Ext.P4 order. The rejection made by the Tribunal was challenged before the DRAT which also went against the petitioner as is evidenced by Ext.P11.
4. The learned counsel for the petitioner would contend that, in fact, the petitioner had complied with Ext.P1 and made the entire deposit as provided under Rule 60 of the Second Schedule to the Income Tax Act and in such circumstances it was incumbent upon the Tribunal to have set aside the sale and paid the amounts deposited by the petitioner to the 3rd respondent and released the property to the petitioner. The petitioner also raises a ground that even otherwise there is material irregularity, insofar as fixation of the upset price, which is far below the actual price of the property and for that reason also the DRT as also the DRAT ought to have considered favourably the contentions put forward by the petitioner. The petitioner relies on a decision of the Division Bench of the Madhya Pradesh High Court in Savitri Patel v. Bank of Baroda and Others (2012 KHC 2850) to contend that when there is substantial compliance by a defaulter in depositing the amounts as directed in a writ petition then, strict interpretation of Rule 60 need not be resorted to especially in the circumstances of Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, providing that resort to the Second Schedule of the Income Tax Act shall be only 'so far as possible'; making the provision directory and not mandatory.
5. The learned counsel for the 3rd respondent however relies on a decision of this Court reported in Valliyamma v. The Recovery Officer, Debt Recovery Tribunal & Others (2008 (1) KLJ 371) wherein a learned single Judge had found that the deposit to be made under Rule 60 is mandatory and no such application can be prosecuted without such deposit being made. The learned counsel for the respondent Bank seeks to sustain the orders impugned herein. The 3rd respondent would point out that what becomes crucial in the adjudication of the above dispute is whether the petitioner has made the deposit at the proper time. Rule 60 mandates deposit of amounts along with the application filed and in the present case, two applications filed earlier, one of which was under Rule 60, were rejected; one for reason of it being defective and the other for reason of the deposit under Rule 60 not being made. The present appeal filed before the DRT was a challenge against the proceedings dated 12.1.2009, of the Recovery Officer, confirming the sale of the immovable property under DRC 1995 in O.A.22/2005. The order passed Ext.P1, according to the learned counsel for the 3rd respondent, is not one under Rule 60 and by no stretch of imagination, could the deposit made pursuant to the order Ext.P1, be construed as one made under Rule 60 or Rule 61 of the Second schedule to the Income Tax Act.
6. The proceedings before the DRT as was noticed earlier, in the O.A ended ex parte and a recovery certificate was issued in the year 2005. A reading of Ext.P4 would show that in fact, after the issuance of recovery certificate, many an attempt was made to serve notice on the respondent and after such notice was served, when the recovery proceedings were proceeded with; many a time there was interdiction in writ petitions filed before this Court. At the earliest point of time, one Abdul Salam filed W.P.(C).25265/2008 before this Court wherein an interim order of stay was granted on condition; which condition was not complied with'. Eventually, the said writ petition stood dismissed. Subsequently, the petitioner herself filed W.P.(C).32123/2008 against the sale conducted. The directions issued to keep the proceedings in abeyance did not fructify for reason of the petitioner also having not complied with the conditions imposed. This Court eventually by judgment dated 15.12.2008, dismissed the writ petition relegating the petitioner or any person aggrieved by the sale, to the available statutory remedies.
7. The Tribunal in Ext.P4, also specifically took note of two earlier applications, filed by the petitioner to set aside the sale conducted by the Recovery Officer, before the Recovery Officer himself. I.A.1615/2005 was an application filed on 9.10.2008 seeking stay of the sale proceedings so as to enable the debtor to settle the entire amounts with the certificate holder Bank. However, no amounts were deposited and the said application stood rejected on 17.11.2008 for non appearance of the petitioner. In the meanwhile, the sale was also conducted and the property purchased by the 3rd respondent in the auction held on 31.10.2008.
8. The petitioner then moved an application under Rule 60 of the Second Schedule to the Income Tax Act numbered as I.A.1887/2008 which was presented on 22.12.2008 with a delay of 22 days. However, but for the prayer seeking an opportunity to settle the account, no amounts were deposited as stipulated in Rule 60. The I.A stood dismissed on 26.12.2008 which, as of now, has attained finality, since the petitioner has not chosen to file any appeal from the above proceedings.
9. Subsequent to the dismissal of the application made under Rule 60, the petitioner challenged the sale proceedings conducted on 31.10.2008 on the ground that the upset price fixed is grossly low. In this context the procedure adopted for fixation of the upset price, as has been noticed by the Tribunal, is relevant. In paragraph 19.1 of Ext.P4, the Tribunal has, after looking at the records, found that the Recovery Officer had obtained an expert opinion on the feasibility of even division of the property and sale to be proceeded with excluding the residential building. Such feasibility of a division of the property having been presumably negatived, on inspection, the expert has fixed the upset price at Rs.15,00,000/-, as against the market value of Rs.12.33 Lakhs. Sale itself was effected for an amount of Rs.15,60,000/- which evidently is above the upset price fixed.
10. The petitioner, though asserts that the upset price fixed is grossly low, does not however, produce anything reliable either before the Tribunal or before the DRAT or even before this Court to substantiate such contentions. Though before the Tribunal, a valuation certificate was referred to and produced as Annexure-A1, it is not clear as to the sanctity or legality of such certificate and the Tribunal has rejected the same. The allegation levelled on the ground of fraud, was half hearted and unsubstantiated and the same was also rejected by the Tribunal.
11. What is to be specifically observed is that though the petitioner's case is built upon the deposit made pursuant to Ext.P1 order, the same cannot be construed as a deposit made under Rule 60. Rule 60 provides a defaulter, an escape value, insofar as providing for setting aside of is to satisfy the recovery certificate as also marginally compensate the purchaser, who has
any illegality or irregularity pointed out in the sale proceedings; to merely enable the defaulters to save their property from distress. However, on no deposit being made as provided, no such application can be entertained by the Recovery Officer. Admittedly, in the present case, an application, though was filed under Rule 60, which was numbered as I.A.1887/2008, no deposit was made. The application stood rejected and the petitioner has not attempted to challenge the same in any manner.
12. As is specifically pointed out by the learned counsel appearing for the 3rd respondent, if at all the petitioner's claim was with respect to any irregularity in the fixation of upset price, then the petitioner ought to have invoked Rule 61 of the Second schedule to the Income Tax Act and not Rule 60. Even then there is definitely a mandate that the deposit of amounts should be made as provided under clause (b) of the proviso. Rule 61 does not contemplate any compensation to the auction purchaser, since the material irregularity alleged; if proved, would vitiate the sale itself. If the petitioner had a contention against the fixation of upset price, then necessarily the petitioner ought to have moved an application under Rule 61 and not under Rule 60.
13. Further application made under Rule 60 having been rejected, petitioner chose to turn around and challenge the sale conducted on 31.10.2008, on the ground of material irregularity, insofar as fixation of upset price. It is reiterated that there was absolutely no material placed on record to substantiate the contention that the upset price fixed was low. The petitioner also did not choose to invoke Rule 61, which provides any defaulter to challenge the material irregularities, which would vitiate a sale conducted by the Recovery Officer. Having suffered rejection under Rule 60 and having not invoked Rule 61, the petitioner challenged the confirmation of sale proceedings dated 12.01.2009, in the appeal filed before the DRT.
14. It is also to be recalled that after the sale proceedings, before approaching the DRT with the appeal, the petitioner was also before this Court in a writ petition filed under Article 226 of the Constitution of India, wherein the sale was challenged; which stood rejected relegating the parties to available statutory remedies. The petitioner hence, could not have taken up a contention in the appeal, filed that there was a material irregularity in the sale, insofar as fixation of the upset price was concerned. The statutory remedy was available only under Rule 61 and that by reason of the limitation provided in the Rule, was no more available.
15. In any event, the fixation of upset price has been found to be proper by the DRT, on a verification of the records and the same stands confirmed by Ext.P11 order of the DRAT. This Court, invoking its extra ordinary jurisdiction under Article 226, will not be justified in making a roving enquiry into the facts which, as revealed from the records, were considered by the lower authorities. There is nothing revealed, which would persuade this Court to invoke its extraordinary jurisdiction under Article 226 to interfere with the well considered fact findings entered into by the lower Tribunals. No illegality or irregularity vitiates the impugned orders nor does principles of equity commend intervention, since on facts, the petitioner was at default in not invoking the statutory remedies in the manner provided and has by clear and deliberate omissions foreclosed the rights available to her.
16. In any event, the contention of the petitioner that Ext.P1 is an order directing deposit of amounts under Rule 60 has to be negatived. As was noticed by the DRAT, the Tribunal had absolutely no authority to direct deposit of money as per Rule 60 of the Second Schedule to the Income Tax Act. An application under Rule 60 has to be filed before the Recovery Officer and not before the DRT. If deposit is made as provided in Rule 60, necessarily, the sale has to be set aside. The said application having been filed without the mandatory deposit and the same having been rejected, it cannot be gainsaid that Ext.P1 interim order is one passed under Rule 60. Ext.P1, directing deposit of the amounts under Rule 60, at best, is an order imposing a condition of deposit of the entire amounts as provided under Rule 60, so as to reveal the bona fides of the petitioner; who had sought for stay of dispossession from the properties which were sold earlier.
17. Having gone through the decision of the Division Bench of the Madhya Pradesh High Court cited by the learned counsel for the petitioner, it is to be noticed that the same has only a persuasive effect on this Court and the declaration made thereof, is only on the strength of the facts revealed therein. The defaulters in the said case had also not moved application either under Rule 60 or Rule 61; but for the sole reason that the lawyers were abstaining from appearing before the Tribunal.
The High Court hence invoked its extra ordinary jurisdiction under Article 226 to direct deposit of amounts; which though was not made as per the initial order, was later regularized. The High Court also permitted the defaulters to file an appeal against the sale conducted and in the judgment cited was concerned “whether the Recovery Officer has been fair in discharging his duties”(sic)(paragraph 8). These facts clearly distinguish the instant case. Herein, petitioner made an application under Rule 60 and failed to make the mandatory deposit; resulting in rejection of the same. Valliyamma (supra) puts the mandatory nature of deposit, away from any pale of doubt or uncertainty. The appeal filed, alleging irregularity, remained a mere allegation without being substantiated.
18. The petitioner cannot also claim equity on the facts disclosed as has already been found. This Court is of the definite opinion that no interference is possible in the sale proceedings conducted on 31.10.2008 and the order of the DRT, confirmed by the DRAT is not liable to be interfered with.
The writ petition hence is dismissed, leaving the parties to suffer their costs.
Sd/- K.VINOD CHANDRAN,
Judge
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