TMI Blog2016 (2) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ount specified in the sale proclamation would come to the amount specified as payable till 30th June, 2006 plus interest at the rate of 12% per annum on the sum of ₹ 71,88,819.87 paise from 30th June, 2006 till 28th November, 2006 namely, the date of publication of the proclamation of sale. In view of the provisions of rule 60 of the Second Schedule to the Income Tax Act, with effect from 28th November, 2006, that is, the date of the sale proclamation, the interest has to be calculated at the rate of 15% per annum. In the present case, it appears that due to oversight, or may be, due to a misreading of rule 60 of the Second Schedule to the Act, the certified debtor paid the amount specified in the proclamation of sale payable as on 30th June, 2006 with interest at the rate of 15% per annum from the date of the proclamation of the sale. Nonetheless, the fact remains that the total amount as specified in the proclamation of sale was not deposited within the prescribed period. In the opinion of this court, while equity may favour the certified debtor, the case cannot be decided on the basis of equities when the statutory provision is clear and unambiguous. As contemplated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed in the Schedule thereto for recovery of the sum recoverable from the respondents No.1 to 3 pursuant to certificate No.R.P. No.153/2006 in O.A. No.424/1999 forwarded by the Presiding Officer, Debts Recovery Tribunal. Accordingly, the land bearing Survey No.188/P admeasuring 36735 square metres owned by the first respondent and land bearing Survey No.187/P admeasuring 8280.51 square metres owned by the third respondent both situated at mauje Karannagar, taluka Kadi, district Mehsana were put to public auction on 8th January, 2007. 2.1 In the said public auction, twelve bidders participated and the highest offer of ₹ 1.35 crores of the petitioners came to be accepted by the Recovery Officer by an order dated 8th January, 2007. As per the terms and condition of auction, the petitioners deposited the entire bid amount before the Recovery Officer by 22nd January, 2007. Subsequently, the first respondent filed an application dated 25th January, 2007 under rule 60 of the Second Schedule to the Income Tax Act, 1961 (hereinafter referred to as the Act ) read with sections 25 to 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, such application came to be rejected on 15th February, 2007. That on 19th February, 2007, the Recovery Officer pursuant to an application filed by the fourth respondent Bank inter alia stated that as per the order dated 15th February, 2007, the documents of the property are required to be handed over to Shri Rashmibhai Shah, Power-of- Attorney holder of the second respondent and requested to release the amount deposited by the second respondent with the Tribunal. The said request came to be allowed by an order dated 19th February, 2007 holding that the Recovery Certificate is fully satisfied. 2.2 The petitioners carried the matter in appeal before the Debts Recovery Tribunal at Ahmedabad under section 30 of the RDDBFI Act being Appeal No.11/2007. By an order dated 18th May, 2007, the appeal came to be allowed and the order dated 15th February, 2007 passed by the Recovery Officer came to be set aside and the sale came to be confirmed in favour of the petitioners. The said order, however, was stayed for a period of one month on an application made by the respondents No.1 to 3. The respondents No.1 to 3 preferred an appeal before the Debts Recovery Appellate Tribunal at Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed out to the certified debtors that the interest for the period between 30th June, 2006 till the date of the sale proclamation had not been paid, that the differential amount came to paid after the period of thirty days from the date of the sale proclamation had expired. Referring to the order passed by the Recovery Officer, it was pointed out that the Recovery Officer has placed reliance upon the provisions of Order XXI rule 89 sub-rule (1) which is an amendment of the Code of Civil Procedure, 1908 (hereinafter referred to as the Code ) as applicable to the State of Maharashtra and would not apply to a sale under the provisions of the Income Tax Act. It was pointed out that there is no such statutory provision available in the present case. Reliance was placed upon the decision of the Supreme Court in the case of Ram Karan Gupta v. J.S. Exim Limited and others, (2012) 13 SCC 568, wherein the court in the context of rule 89 of Order XXI of the Code of Civil Procedure has held that deposit of the requisite amount in the court is a condition precedent or a sine qua non to an application for setting aside the execution of sale and such amount must be paid within the period speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r decision in the case of Manaji Kaverji v. Aramita (supra) and held that what is to be deposited for payment to the decree-holder is the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, less any amount which may, since the date of such proclamation of sale, have been received by the decreeholder. The court observed that the amount mentioned in the proclamation of sale was ₹ 1,334/- and nothing was admitted to have been received by the decree-holder since the date of the proclamation. 3.1 As regards the question as to whether such issue regarding non-deposit of the entire amount as envisaged under rule 60 of the Second Schedule to the Income Tax Act was raised by the petitioners before the lower authorities, the attention of the court was invited to the judgment and order dated 18th May, 2007 of the Presiding Officer, Debts Recovery Tribunal to point out that such contention was specifically raised before the Presiding Officer. Reference was made to paragraph 11 of the said decision to submit that it was categorically pointed out that there was no jurisdiction to extend the period from thirty days to sixty days. It was ur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule (3) thereof which provides that nothing in the rule shall relieve the judgment-debtor from any liability he may be under in respect of costs and interest not covered by the proclamation of sale. It was submitted that, therefore, the certified debtors were not relieved of the interest for the period between 30th June, 2006 to the date of the sale proclamation which was not covered by the sale proclamation and hence, deposited such amount upon the bank raising a claim. However, the interest for the above period not having been covered by the proclamation of sale, the respondents No.1 to 3 were not liable to deposit the same under rule 60 of the Second Schedule to the Act. 4.1 Next, it was contended that when the legislature speaks of a specified amount, it is specific, clear and precise. Therefore, the proclamation has to be precise in respect of the amount for which the sale is ordered. It was submitted that rule 60 of the Second Schedule to the Act being mandatory in nature, even the provision contained therein regarding mentioning the specified amount is mandatory and has to be construed strictly. It was submitted that the deposit of the amount specified in the sale proclam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... likely to assist the achievement of the policy, then the court would prefer to adopt the latter construction. The decision of the Andhra Pradesh High Court in the case of Sannidhanam Lakshmi Kantayya v. Ghatam Suryanarayana and another, AIR 1963 Andhra Pradesh 198, was cited wherein the court was of the opinion that there could be little doubt on the language of Order XXI rule 89 Civil Procedure Code and the relevant rules of the Civil Rules of Practice that in order to entitle the judgment-debtor to have the sale set aside under Order XXI rule 89 CPC only two payments have to be made namely, (1) compensation to the auction-purchaser equivalent to five per cent of the purchase money and (2) the decretal amount as indicated in the proclamation of sale for the recovery of which the sale was ordered for being paid to the decree-holder. The court held that it cannot import into this provision of law, the payment of poundage which should only follow the setting aside of the sale as is clear from rule 203 of the Civil Rules of Practice which postulates that the court may make an order for payment by the judgment-debtor of the poundage and other costs and interest, if any, not covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The decision of the Supreme Court in the case of Sukumar De v. Bimala Auddy and others, AIR 2014 Supreme Court 1000, was cited wherein the High Court held that the Executing Court was in error by not disclosing the amount which was to be deposited and the judgment-debtors should not suffer because of the mistake of the court. The Supreme Court upheld the course of action adopted by the High Court. 4.4 Referring to rule 60 of the Second Schedule to the Act, Mr. Shelat submitted that under the sale proclamation what was due was ₹ 1,27,30,527/- which complies with rule 53(c). It was submitted that the application for setting aside the sale was drawn accordingly and that the respondents No.1 to 3 went by the proclamation and deposited the amounts specified therein. It was submitted that the Recovery Officer and all the other authorities had gone into the issue and had accepted that rule 60 has been complied with. Reference was made to the affidavit-in-reply filed on behalf of the respondent Bank to submit that the Bank is not disputing that the amount in terms of rule 60 has been deposited. It was submitted that the rule does not contemplate deposit of the interest for the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was an admitted position that at no point of time the judgment-debtor made any deposit as required by Order XXI rule 89 of the Code before the executing court whereas in the facts of the present case, the entire amount as envisaged under rule 60 has been deposited within the prescribed period. It was submitted that the decision of the Bombay High Court in the case of Manaji Kaverji v. Aramita (supra) would not be applicable to the facts of the present case, inasmuch as, in that case, the entire amount under the sale proclamation has not been paid whereas in the facts of the present case, the respondents No.1 to 3 have paid the full amount as specified in the proclamation. It was submitted that the decision of the Bombay High Court in the case of Dattatraya Krishna v. Jagannath Shamrao (supra) also would not be applicable in the facts of the present case, inasmuch as, the judgmentdebtor in the facts of that case had not deposited the total amount as specified in the proclamation of sale. 4.7 It was, accordingly, urged that the impugned order passed by the Debts Recovery Appellate Tribunal being just, legal and proper, there is no warrant for interference by this court and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion raised in the present case is that the provisions of rule 60 of the Second Schedule to the Income Tax Act have not been satisfied by the respondents No.1 to 3 and hence, the sale in favour of the petitioners could not have been set aside. On behalf of the respondents, it has been contended that such contention has not been raised before the lower authorities. Under the circumstances, at the outset, it would be necessary to ascertain as to whether such contention was, in fact, raised before the lower authorities. 9. The record of the case reveals that by an application dated 25th January, 2007, Karnavati Steel Industries Limited (the applicant) prayed that the sale be set aside in view of the fact that the applicant was asserting its right under rule 60 of the Second Schedule of the Income Tax Act by submitting a Demand Draft dated 25th January, 2007 for an amount of ₹ 1,27,30,527/- as specified in the sale proclamation for the recovery of which the sale was ordered as well as a Demand Draft for a sum of ₹ 6,75,000/- for payment to the purchaser as penalty a sum equal to 5% of the purchase money and a Demand Draft for the sum of ₹ 3,01,290/- towards interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the certified holder Bank and an amount of ₹ 6,75,000/- under rule 60(1) (b) of the Second Schedule of the Income Tax Act, 1961 as payment to the successful auction purchaser, as penalty, a sum equal to five per cent of the purchase money. The Recovery Officer has placed reliance upon the decision of the Calcutta High Court in the case of Shyama Charan Auddy v. Bimala Bala Sen, AIR 1993 Cal 14, as well as the provisions of sub-rule (1) of rule 89 of Order XXI as applicable to the State of Maharashtra as well as on the provisions of rule 92(2) of Order XXI of the Code for the purpose of holding that the deficiency can be made good within such time as may be fixed by the court and the court can make an order setting aside the sale. He has, accordingly, recorded a finding to the effect that the requisite amount for setting aside the sale under rule 60 was deposited. Therefore, it is clear that the contention with regard to non-compliance of rule 60 of the Second Schedule of the Act had been specifically raised before the Recovery Officer. A perusal of the order dated 18th May, 2007 made by the Presiding Officer, Debts Recovery Tribunal in Appeal No.11/2007 reveals that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Act being in the nature of statutory concession, requires strict compliance and delay whatsoever cannot be condoned and in fact no application was filed to condone the delay as it is not tenable. Moreover, the application has to be supported by the requisite amount as specified in the proclamation of sale for the recovery of which the sale is ordered. It is further contended therein that the words for the recovery of which the sale is ordered has to be given effect to and that the respondent No.2 to 4 therein (respondents No.1 to 3 herein) failed to move an application along with the requisite amount and could not capitalize on the statutory concession conferred by rule 60 of the Second Schedule to the Income Tax Act, 1961. It is further contended that rule 60 is a statutory concession and in order to avail the benefit of the same the requirements thereof need to be strictly complied with which the respondents have failed to do; that according to the petitioners, Order XXI rule 89 of the Code is not applicable as the Income Tax Rules are directly applicable without any defect and ambiguity and that in rule 60 the period for filing such application and for making deposit is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 27 provides for Stay of proceedings under certificate and amendment or withdrawal thereof . Section 29 provides for Application of certain provisions of Income Tax Act and provides that the provisions of the Second and Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962 as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under that Act instead of to the Income Tax Act. Thus, by incorporation, the provisions of the Second and Third Schedules to the Income Tax Act, 1961 have been made applicable for recovery of the amount of debt due under the RDDBFI Act. 12. Rule 60 of the Second Schedule to the Income Tax Act which falls for interpretation in the present case reads thus:- 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole, it is not possible to state that the same specifies the sum of ₹ 1,27,30,527/- as the amount for the recovery of which the sale is ordered, inasmuch as, the same clearly says that such amount was due as on 30th June, 2006. The proclamation also refers to the contents of the certificate issued by the Presiding Officer, DRT which says that the sale is for the recovery of a sum of ₹ 71,88,819.87 ps. with further interest payable at the rate of 12% per annum from 27th December, 1999 till realization and the costs, charges and expenses of the proceedings for recovery thereof and says that the sale is for satisfaction of such certificate. Therefore, the amount specified in the sale proclamation would come to the amount specified as payable till 30th June, 2006 plus interest at the rate of 12% per annum on the sum of ₹ 71,88,819.87 paise from 30th June, 2006 till 28th November, 2006 namely, the date of publication of the proclamation of sale. In view of the provisions of rule 60 of the Second Schedule to the Income Tax Act, with effect from 28th November, 2006, that is, the date of the sale proclamation, the interest has to be calculated at the rate of 15% per ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of rule 60 of the Second Schedule to the Act, for the period subsequent thereto, the interest would be at the rate of 15% per annum. As rightly submitted by the learned counsel for the petitioners, the respondents No.1 to 3 failed to deposit the interest payable for the period from 1st July, 2006 till the date of the proclamation of sale, within a period of thirty days from the date of the sale as prescribed under rule 60 of the Second Schedule to the Act, and thereby clearly missed the bus. The Supreme Court in Ram Karan Gupta v. J.S. Exim Limited (supra), has, in the context of rule 89 of Order XXI of the Code, held that deposit of the requisite amount in the court is a condition precedent or a sine qua non to an application for setting aside the execution of the sale and such amount must be paid within the period specified in the rule and if the deposit is made after the time limit, the application must be dismissed. The court held that the deposit made under rule 89 of Order XXI CPC should be unconditional and unqualified and the decree-holder or the auction-purchaser should be able to get the amount at once. The court indicated that the rule is in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of Dattatraya Krishna v. Jagannath Shamrao (supra). 18. In the light of the law laid down in the above decisions, it is evident that the entire amount as contemplated under rule 60 of the Second Schedule to the Act was required to be deposited within a period of thirty days from the date of the sale. Albeit the shortfall is very small, nonetheless, the respondents No.1 to 3 have failed to deposit the entire amount within the prescribed period of thirty days. Under the circumstances, the certified debtor is not entitled to the benefit of rule 60 of the Second Schedule to the Act as the requirements thereof have not been strictly complied with. 19. As noticed earlier the Debts Recovery Appellate Tribunal has decided the matter only on the issue of source of funds without entering into the merits of the contention raised by the petitioners with regard to non-compliance of the provisions of rule 60 of the Second Schedule to the Income Tax Act, 1961. However, the Presiding Officer has dealt with the issue and answered it against the petitioners by placing reliance upon the decision of the Supreme Court in Dadi Jagganadham v. Jammulu Ramulu (supra) and holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the court would have no discretion but to set aside the sale. That does not mean that if the deposit is made after 30 days the court could not entertain the application. If the deposit is made beyond the period of 30 days, but within the period of 60 days, then it will be within the discretion of the court whether or not to grant the application. Thus, an application can be made within the period prescribed under Article 127 of the Limitation Act. As an application can be made within 60 days and, as stated above, no period for making a deposit is prescribed under Order 21 Rule 92(2) the deposit can also be made within 60 days. Subsequently, rule 92(2) of Order XXI of the Code came to be amended with effect from 1st July, 2002 whereby the words thirty days came to be substituted by the words sixty days . Having regard to the scheme of the RDDBFI Act read with the rules contained in the Second Schedule to the Income Tax Act, 1961, which is a complete code in itself, there is no necessity to resort to the provisions of the Code. Under the circumstances, the above decision would not in any manner be applicable to the facts of the present case. Therefore, the finding of the Presi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount as indicated in the proclamation of sale for the recovery of which the sale was ordered was already deposited. The court had observed that the payment of poundage could not be imported into the said provision of law. In the facts of the present case, the amount stated in the proclamation of sale for the recovery of which the sale was ordered has not been fully deposited within the prescribed period. The decision of the Allahabad High Court in the case of Firm Birohichand Badri Vishal v. Firm Gangadhar Baijnath (supra) would not, in any manner, be applicable to the facts of the present case, inasmuch as, the issue involved therein was as to whether a second application for execution was maintainable for recovery of interest. 20.4 The decision of the Supreme Court in Balram son of Bhasa Ram v. Ilam Singh (supra) also does not carry the case of the respondents any further. In the facts of the said case the appellant decree holder with the permission of the court had bid at the auction. The appellant s bid for the amount of ₹ 23,500/- was accepted. The appellant did not make any deposit on the date of the auction and claimed adjustment of the decretal amount against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inabove, in the present case, there is no mistake in the sale proclamation in indicating the figure of the amount for the recovery of which the sale has been ordered. 20.5 Insofar as the decision of the Supreme Court in the case of Sukumar De v. Bimala Auddy (supra) is concerned, the same was rendered in a totally different set of facts and circumstances and would, in no manner, be applicable in the facts of the present case. 21. Insofar as the objection raised by the petitioners before the authorities below with regard to the source of the funds deposited by the certified debtor under rule 60 of the Second Schedule to the Act is concerned, the Supreme Court in the case of K. Basavarajappa v. Tax recovery Commissioner, Bangalore, (1996) 11 SCC 632, has held that once an appropriate application is moved by the defaulter or his power of attorney holder under rule 60, the further question as to from which source he gets money for being deposited or through whom he gets the money deposited would pale into insignificance and that even a peon of the defaulter can carry out the ministerial act of depositing the money on his behalf. 22. In the light of the above discussion, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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