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Tax Recovery Officer-47 Kolkata & Others Versus State Bank of India & Another

Sale of property by the bank under SARFAESI Act of 2002 - Right of the Income Tax department over the property - Attachment order by IT department since 1976 - challenge to the sale conducted by the bank - Held that:- The same has not been produced from any of the pleadings before any of the forai before which the parties are litigating. As noted above, there are at least two writ petitions pending which does not enclose the order of attachment dated February 23, 1976. When the writ petition was .....

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write the letter on the basis of an order of attachment dated February 23, 1976 as late in 2016 is unable to produce the same when required at the time of hearing. - The order of attachment dated February 23, 1976 is required for the purpose of understanding the scope, ambit and extent thereof. It may or may not relate to an immovable property. It may relate to the rent receivable in respect of the immovable property or anything otherwise. Without the order of attachment being actually plac .....

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allenge in a proceeding pending before the Debts Recovery Tribunal, Kolkata. The borrower has raised various valid points which impinge upon the validity of the sale conducted by the bank. They are however to be looked at by the Debts Recovery Tribunal, in accordance with law. - WP No. 297 of 2014, WP No. 456 of 1993 - Dated:- 3-8-2017 - Debangsu Basak, J. Mrs. Smita Das De, Adv. For the Petitioners Mr. S. C. Shrivastava, Adv. Mr. Debashis Karmakar, Adv. Mr. Arya Nandi, Adv. Mr. Jishnu Saha, Sr. .....

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23, 1976 as well as another order of attachment dated March 23, 2007. Although the order of attachment dated March 23, 2007 was subsequently lifted the order of attachment dated March 23, 1976 remained on the date of the confirmation of sale on March 24, 2007. Therefore, the State Bank of India could not have put up the property for sale. Assuming that the sale conducted by the State Bank of India is valid, then the entire sale proceeds should be made over to the Income Tax Department inasmuch a .....

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December 26, 1986, which according to her, refers to the order of attachment dated February 23, 1976. She submits that, the State Bank of India had knowledge of the order of attachment, since the State Bank of India is one of the petitioners in WP No. 456 of 1993. She also refers to the summons issued by the Tax Recovery Officer. She further submits that, the proclamation of sale was under challenge in WP No. 456 of 1993. Learned Advocate for the petitioners relies upon (2013) 4 CHN 694 (GBM Ma .....

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9, 2010. Such letters, according to her, establishes that, the State Bank of India was well aware of the order of attachment prior to putting up the property for sale. Learned Advocate appearing for the State Bank of India submits that, the Income Tax Authorities had dropped the acquisition proceedings in respect of the property. He refers to an application made under Section 230A(1) of the Income Tax Act, 1961 and submits that, the permission was granted therein. He also refers to the grant of .....

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thdrawn. He draws the attention of the Court to the order dated August 19, 2010 passed by the Division Bench in a proceeding arising out of WP No. 100 of 2010. He submits that, the borrower has already invoked the provisions under Section 17 of the Act of 2002. The issues raised in the present proceedings are under challenge there. The Income Tax Department has appeared in those proceedings. Therefore, the Writ Court need not enter into such disputes. The Income Tax Department should be asked to .....

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of the present case, the Income Tax Department has already participated in the proceedings under Section 17 of the Act of 2002. In support of the contention that, the petitioners ought to approach the Debts Recovery Tribunal for reliefs, learned Advocate for the State Bank of India relies upon AIR 2010 Supreme Court 3413(1) [United Bank of India-Versus- Satyawati Tondon & Ors.]. The provisions of the Act of 2002 has overriding the effect and in support of such contentions the learned Advocat .....

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withdrawn much prior to such transaction. He submits that, in view of the conduct of the parties, the Writ Court need not intervene, in this case, at this stage. Learned Advocate appearing for the respondent no.3 submits that, the sale ought to be set aside. The respondent no.3 is supporting the petitioners in having the sale dated March 24, 2010 set aside. He contends that, there is an unholy nexus between the bank and the respondent nos. 4 and 5. The other respondents are the brothers of the r .....

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nk. He submits that, the son of the respondent no.3 has questioned the sale by the bank under Section 17 of the Act of 2002. There is an order dated May 21, 2013 directing the maintenance of status quo with regard to the property. He submits that, the sale stands vitiated by reason of breach of Rules 8 and 9 of the Security Interest Rules, 2002. He draws the attention of the Court to the fact that, the sale notice is dated February 21, 2010 and that the contents of the sale notice are contrary t .....

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ice to the borrower had not been issued. Therefore, the property could not have been validly sold. He points out the fact that, the property put up for sale is 1/9th undivided share of immovable property. The bank could not have taken possession of such 1/9th share inasmuch as the property was not partitioned and demarcated. Consequently, the bank could not take actual physical possession of the property and could not have put up the same for sale under the Act of 2002 without taking actual phys .....

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e Bank Ltd. & Anr. vs. Ikbal & Ors.), learned advocate for respondent no. 3 submits that, the bank had extended the period to make the deposit during the sale process without reference to the borrower, being the respondent no. 3. Such unilateral action on the part of the bank is, therefore, invalid and not binding upon the borrower. The sale stands vitiated. I have considered the rival contentions of the parties and the materials made available on record. The foundational basis of the ch .....

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petition was taken up for hearing noticing such fact, a request was made to the department to produce such order of attachment. The department had filed a supplementary affidavit. However, the order of attachment dated February 23, 1976 has not seen the light of the day. The order of attachment dated February 23, 1976 is however referred to in the diverse correspondence issued on behalf of the Income Tax Authorities and as late as in 2016. It is not understood how an Income Tax Authority is in .....

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ly placed for consideration any exercise in trying to understand the scope, extent and ambit of the order of attachment would be an exercise in futility. It would be in the rem of speculation. The foundational basis therefore is not available to the Income Tax Department. The bank had proceeded to put up an immovable property for sale under the provisions of Act of 2002. The bank had sold 1/9th share in an immovable property without taking actual physical possession thereof. The act of sale is u .....

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ate Bank of India. Similarly, on the parity of the same reasoning, the Authorities cited on behalf of the bank relating to the sale namely, Satyawati Tondon (supra), M/s. Ashok Saw Mill (supra) and Krishna Lifestyle Technologies (supra) need not be dealt with herein. The parties are at liberty to avail of their respective remedies, in accordance with law, in such proceedings. The observations made here will not prejudice any of the parties before the Debts Recovery Tribunal. GBM Manufacturing Pv .....

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