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RITESH OIL MILLS P LTD AND 1 Versus DENA BANK AND 2

2016 (3) TMI 333 - GUJARAT HIGH COURT

Maintainability of appeal - whether against the order dated 22.9.2009 passed by the Recovery Officer an appeal under Section 30 of the RDDB Act was maintainable before the DRT? - Recovery of Debts Due to Banks and Financial Institution - Held that:- Undoubtedly the order passed by the Recovery Officer on 22.9.2009 has vital bearing on the rights of the petitioners. As long as the order that Recovery Officer may pass in exercise of powers under Sections 25 to 28 of the RDDB Act and which acts pre .....

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r decision on the appeal of the petitioners on merits. We would request the DRAT to give priority consideration to such appeal and dispose of the same preferably before 31.8.2016. The interim formula granted by this Court earlier shall inure till 31.8.2016. If thereafter the appeal is not disposed of, it would be open to the petitioners to apply before the DRAT for further relief. - SPECIAL CIVIL APPLICATION NO. 18446 of 2013 - Dated:- 17-2-2016 - MR. AKIL KURESHI AND MR. Z.K.SAIYED, JJ. FOR THE .....

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Bank, they failed to repay the same. Dena Bank therefore filed Original Application No.319 of 1998 before he Debt Recovery Tribunal, Ahmedabad ( DRT for short) for recovery of such unpaid dues with interest. In such Original Application the DRT passed a decree for a sum of ₹ 56,39,015.51 ps. On the basis of such decree a recovery certificate was also issued by DRT in favour of the bank. The Recovery Officer thereupon initiated recovery proceedings against the petitioners. One of the proper .....

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Dahyabhai Patel, the respondent No.2 herein had submitted his bid for an amount of ₹ 21 lacs against the reserved price of ₹ 21 lacs. He had also attached the demand draft for a sum of ₹ 5.25 lacs. He was persuaded to raise his bid to ₹ 21.05 lacs. In view of such developments the Recovery Officer on 22.9.2009 passed the following order : In view of the above the following order is passed : 1. The offer received for the above mentioned immovable property from Shri Gopalk .....

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ad. The sale shall be confirmed in due course in accordance with the prescribed terms & conditions. 4. Further, the successful purchaser is directed to deposit the Poundage Fee 1% of the bid amount plus ₹ 10) as per subrule (1) of the Income Tax (Certificate Proceedings) Rules, 1962, Appendix 28 in favour of the Registrar, Debts Recovery Tribunal, Ahmedabad. 5. CH Bank is hereby directed to file FIR regarding the theft of the movable property. Further CH Bank is also directed to depute .....

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ot no.1. Successful auction purchaser is directed to deposit the remaining amount of ₹ 15,75,000 towards 75% of the bid amount and amount of ₹ 21,060 towards the Poundage fees auctioned by 22.9.2009. The matter is adjourned to 6.10.2009. 4. The said order dated 22.9.2009 was challenged by the petitioners before the DRT, Ahmedabad, by filing appeal under Section 30 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 ( RDDB Act for short). The petitioners raised t .....

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ond a period of three years. The said auction of the property therefore could not have been effected on the basis of such attachment order. The respondents i.e. the Dena Bank and the sole auction participant opposed the appeal on the ground of maintainability. It was argued that the Recovery Officer had not carried out any adjudication of rival disputes, such order was therefore not appealable under Section 30 of the RDDB Act. 5. The DRT, Ahmedabad by an order dated 29.3.2010 dismissed the appea .....

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on merits as well. With respect to not maintaining timegap of 30 days between proclamation and auction, the Tribunal observed that such issue was not raised before the Recovery Officer and further in order to set aside the sale on the ground of irregularity the petitioners had to demonstrate substantial injury, which was not done. Regarding the life of the attachment order the Tribunal observed that the provisions of 2nd Schedule to the Incometax Act, 1961 are made applicable under Section 29 o .....

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such grounds the Tribunal dismissed the appeal of the petitioners. 6. Against such order of the Tribunal the petitioners preferred further appeal before the DRAT. The DRAT by impugned order dated 29.11.2013 dismissed the appeal solely on the ground that against the order passed by the Recovery Officer on 22.9.2009 appeal under Section 30 of the RDDB Act was not maintainable before the DRT. The Appellate Tribunal was of the opinion that the Recovery Officer had not passed any adjudicatory order. .....

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ery Officer no appeal was maintainable. He submitted that in terms of Section 30 of the RDDB Act, against any order passed by the Recovery Officer an appeal would be available before the DRT. The term order has not been defined under the Act and must therefore be appreciated in the context of the provisions contained in the RDDB Act. He submitted that in the process of accepting the sole offer of the respondent No.2 the Recovery Officer took decision which would adversely affect the petitioners. .....

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(2) Unreported judgment of learned Single Judge dated 25.4.2008 passed in Special Civil Application No.28784 of 2007 in case of Panchmahal Steel Ltd., vs. The Bank of Baroda, (3) The decision of Division Bench of this Court in the case of Bank of Baroda vs. Balbir Kumar Paul and ors., reported in 2010 (2) GLH 790, (4) Official Liquidator, Uttar Pradesh and Uttarakhand vs. Allahabad Bank and ors., reported in (2013) 4 SCC 381, (5) Sanjay Singh and another vs. U.P.Public Service Commission, Allah .....

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and ors., reported in AIR 1971 Madhya Pradesh 16, (3) Kanhikkamthoppu Parambil Radha vs. Kondarappatt Velayudhan, reported in AIR 1994 Kerala 412, 2. On the other hand, learned counsel for the respondent No.1 Dena Bank opposed the petition contending that the petitioners have not repaid the dues of the bank since long. The properties of the petitioners were put to auction four times before finally the offer was received by the respondent No.2. He relied on the decision of the Madras High Court .....

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rder , thus the legislature has consciously limited the expression under Section 30 of the RDDB Act. In the present case, the order passed by the Recovery Officer did not decide any lis between the parties and was therefore not appealable as rightly held by the DRAT. He lastly contended that even if the appeal is held to be maintainable, in view of the fact that the DRT has examined the contentions of the petitioners on merits, the matter may be remanded before the DRAT for decision on merits si .....

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operty of the petitioners for which upset price of ₹ 21 lacs was fixed. He was the sole bidder. The Recovery Officer while accepting such offer required him to deposit the remaining amount of sale consideration within specified time. 5. From the statement of objects and reasons for enactment of the RDDB Act, one can notice that legislature realized that the banks and financial institutions were experiencing considerable difficulties in recovering loans and enforcement of security and the e .....

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ppellate Tribunal. Section 17 of the RDDB Act pertains to jurisdiction, powers and authority of Tribunals. Section 18 of the RDDB Act provides that on and from the appointed day, no court or other authority shall have, or be entitled to exercise any jurisdiction, powers or authority, except the Supreme Court, and a High Court exercising jurisdiction under Articles 226 and 227 of the Constitution, in relation to the matters specified in Section 17. 6. Chapter V of the RDDB pertains to recovery of .....

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ion in prison; (c) appointing a receiver for the management of the movable or immovable properties of the defendant. 7. Section 28 contained in Chapter V pertains to other modes of recovery and provides, inter alia, under Subsection (2) that, if any amount is due from any person to the defendant, the Recovery Officer may require such person to deduct from the said amount, the amount of debt due from the defendant under the Act and such person shall comply with any such requisition and shall pay .....

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eferred to the amount of debt due under this Act instead of to the incometax. Provided that any reference under the said provisions and the rules to the "assessee" shall be construed as a reference to the defendant under this Act. 9. Section 30 pertains to appeal against the order of Recovery Officer which reads as under : 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 .....

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llaneous provisions, provides that every suit or other proceeding pending before any court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action where on it is based is such that it would have been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal. 11. It can thus be seen that to provide mechanism for speedy recoveries of unpaid dues of ban .....

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the Incometax Act as in force from time to time would apply with necessary modifications to amount of debt due under the RDDB Act as far as possible. As is well known, ScheduleII to the Incometax Act provides the procedure for recovery of tax. Detailed provisions have been made in the said Schedule for recovery of unpaid taxes. Rule 56 thereof pertains to sale by public auction and provides that any sale of immovable property for recovery of the dues shall be by public auction to the highest bi .....

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very 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] per cent 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 un .....

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ion of a certificate, [such Incometax 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 publi .....

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no application is made for setting aside the sale under the earlier rules or where an application is made but disallowed by the Tax Recovery Officer and if the full amount of purchase money has been paid, he shall make an order confirming the sale upon which the sale shall become absolute. Subrule (2) of Section 63 provides that where such application is allowed and where in case of an application made to set aside the sale on deposit of the amount and penalty and charges such deposit is made w .....

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Rule 60. Rule 61, on the other hand, would apply in a case where the defaulter seeks setting aside of the sale on the ground that the notice was not served to the defaulter to pay the arrears or on the ground of material irregularity in publishing or conducting the sale. On the other hand, Section 30 of the RDDB Act provides for an appeal to the Tribunal at the hands of the person aggrieved by an order of Recovery Officer made under the said Act. This provision contained in Subsection (1) of Sec .....

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the Tribunal may, after giving an opportunity to the appellant to be heard and after making such an inquiry 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 of the Act. This specific reference to an order passed by the Recovery Officer in exercise of his powers under Sections 25 to 28 of the Act would emphasis that the Debt Recovery Tribunal would entertain an appeal against an order passed by the Recovery Offi .....

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ishee powers and envisages recovery by the officer directly from the creditor of the defaulter. 17. Thus the scope of appeal under Section 30 of the RDDB Act against an order passed by the Recovery Officer is sufficiently wide and would take within its sweep, any order that the Recovery Officer may pass which would have a bearing on the rights of the appellant before the Tribunal. It is true that the law recognizes certain orders, which are not appealable. Nevertheless where an order that the Re .....

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y the Recovery Officer under RDDB Act, in Subsection (1) of Section 30 it is provided that notwithstanding such provisions, an appeal would be available to an aggrieved person against an order passed by the Recovery Officer made under the RDDB Act. Clearly therefore the statute provides for concurrent remedies. Remedy under Rule 61 of the 2nd Schedule to the Incometax Act is not exclusive of appeal under Section 30 of the RDDB Act. Further, if the order of the Recovery Officer in the present cas .....

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er aspect which immediately springs from the record is that Section 25 of the RDDB Act permits the Recovery Officer three modes of recoveries including attachment and sale of movable and immovable property of the defaulter. Publication and proclamation of the conducting auction which would include obtaining valuation and fixing upset price, some of the important stages of sale by auction of any movable or immovable property. If the defaulter has fundamental objection to any of these aspects whic .....

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of the RDDB Act and reversing the decision of the Delhi High Court noticed that, Section 30 of the RDDB Act by virtue of Amendment Act in the year 2000, gives a right to any person aggrieved by an order of the Recovery Officer, to prefer an appeal to the Tribunal. The Supreme Court observed that, this would provide safeguard in the event of Recovery Officer acting in any arbitrary or an unreasonable manner. Though the Supreme Court in the said case was not directly concerned about the maintaina .....

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ed the High Court. It was in this background the learned Single Judge noticed the provisions of Section 30 of the RDDB Act. 21. The Division Bench of High Court in case of Bank of Baroda (Supra), did not have the occasion to decide the present issue, as can be seen from recording in paragraph6 of the judgment that, it is not in dispute that orders passed by the Recovery Officer were appealable under Section 30 of the said Act. It was in this background of this unopposed position that the Court o .....

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t was of the opinion that the language of the RDB Act, being clear, it provides an appeal by the aggrieved person. The Official Liquidator would undoubtedly be a person aggrieved relating to an action taken by the Recovery Officer which would include the manner in which the auction is conducted or the sale is confirmed. This later observation though may not lay down the ratio of the decision since the central controversy was which would be the correct forum for the Official Liquidator to approac .....

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sailed by him before the High Court under Section 30. However, such order was final confirmation of sale and not any interlocutory order for action taken by the Recovery Officer during the process of conducting the auction sale. Availability of remedy and nonavailing of such remedy by the defaulter were some of the grounds pressed by the Supreme Court for reversing of the judgment of the High Court. 24. In case of Sanjay Singh and another (Supra), in para9 in the context of Civil Procedure Code, .....

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, generally or specially empowered by the Government in that behalf. In the instant case, the appeal was preferred by the Divisional Forest Officer under subsection (2) of S. 13 of the Act. It is true that only against an order, an appeal lies under S. 13 of the Act, whether such appeal is filed by the claimant or by the State Government, as the case may be.Before dealing with the question whether the letter of the Forest Settlement Officer dated 18121984 is an order or not, it is necessary to k .....

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fore, it becomes necessary how the term "order" is understood in ordinary legal parlance. The term "order" in legal parlance, would always indicate some expression of opinion which is to be carried out or enforced. In other words, an "order" is a conclusion of a Court or an Authority or a Tribunal upon any motion. The term "order," "decision" and "judgment" are commonly used interchangeably. 26. In case of Gangadhar Lalliram (Supra), th .....

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7 Note 72, 'regulation', 'rule', 'resolution', 'shipment' and 'warrant' and has been compared with, or distinguished from, 'regulation' and warrant'." The word "order" has not been defined in the Act like the Code of Civil Procedure, which gives it a special meaning in order to distinguish it from a decree. 27. In case of Kanhikkamthoppu Parambil Radha (Supra), the learned Single Judge rejected the contention of the counsel that .....

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out by the counsel for respondent No.2, in case of Ashutosh Shrotriya (Supra) Full Bench of Allahbad High Court noticed the distinction made by the Supreme Court between various kinds of orders in Midnapore Peoples Coop. Bank Ltd., vs. Chunilal Nanda (2006) 5 SCC 399 which as under : (i) Where the High Court in a contempt proceedings renders a decision on the merits of a dispute between the parties, either by an interlocutory order or final judgment, whether that would be appealable under Sectio .....

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s: "(i) Orders which finally decide a question or issue in controversy in the main case; (ii) Orders which finally decide an issue which materially and directly affects the final decision in the main case; (iii) Orders which finally decide a collateral issue or question which is not the subjectmatter of the main case; (iv) Routine orders which are passed to facilitate the progress of the case till its culmination in the final judgment; (v) Orders which may cause some inconvenience or some p .....

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whether when a learned Single Judge merely adjourns a petition and calls for reply or response from the respondent without granting injunction, could it be stated to be an appealable order against which Letters Patent Appeal would be maintainable. The Full Bench opined that a purely procedural direction of calling for a counter affidavit and rejoinder would not be amenable to special appeal since he decides no rights and does not affect the vital and substantive rights of the parties. The rider .....

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