TMI Blog2004 (4) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 22-4-2004 - Judge(s) : A. P. SHAH., DHARMADHIKARI. JUDGMENT The judgment of the court was delivered by S.C. Dharmadhikari J.-Rule. Respondent No. 1 waives service. Respondents Nos. 2 to 5 have been served. However, they have not appeared in the courts below as well. Therefore, in our view, the petition can be disposed of at this stage. Rule is made returnable forthwith by consent. Two questions arise for consideration in this petition under article 226 of the Constitution of India, challenging an order dated February 9, 2004, in Miscellaneous Appeal No. 396 of 2003 passed by the learned chairperson of the Debt Recovery Appellate Tribunal (for short "Tribunal"). The questions are: (i) Is transfer of an immovable property in contravention of a prohibitory or injunction order of a court illegal or void? (ii) Whether and to what extent, the procedure under rule 11 of the Second Schedule to the Income-tax Act, 1961, is applicable in execution of a recovery certificate issued under section 19(7) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993? (for short "RDB Act"). To answer these questions, it is necessary to set out the facts. Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation being exhibit 15 to the plaint and/or from recovering or realising the book debts or any part thereof." On the establishment of the Debt Recovery Tribunal, Mumbai, the suit was transferred to its file and was numbered as O.A. No. 1277 of 1999. O.A. No. 1277 of 1999, was decreed ex parte by DRT II, Mumbai, on July 6, 2001. In pursuance of the same, recovery certificate was issued by the Tribunal. It appears that during the pendency of injunction order passed by this court, respondent No. 2 transferred and assigned its leasehold rights in the said property in favour of petitioner No. 2. This document was registered on August 29, 2000. Prior thereto, it appears that a lease deed was executed by the CIDCO in favour of respondent No. 2 on July 28, 2000. On August 2, 2000, lease was registered with Sub-Registrar, Panvel. On August 4, 2000, it appears that the CIDCO granted permission to respondent No. 2 to transfer its rights, title and interest in the said property in favour of petitioner No. 2 with a condition to register the lease deed on or before November 3, 2000. It is the case of the petitioners that on October 8, 2002, they came to know that the said property was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners as void. Shri Naphade, learned senior counsel appearing for the petitioners contended before us that the courts below erred in holding that the transfer during the pendency of the restraint/prohibitory/injunction order is void. He contended that there is no provision either in the Civil Procedure Code or elsewhere which makes transfer of immovable property in violation of an injunction order/prohibitory order null and void. After inviting our attention to Order 39, rules 1, 2, 2(a) of the Civil Procedure Code and the Bombay Amendment, i.e., rule 11 it is contended by Shri Naphade that the law visits parties acting in violation of orders of court with serious penalties but does not render the transaction itself null and void or of no legal effect. Once the law does not make such provision, then it is not permissible for the courts below to hold that transfer in favour of the petitioners is void. The next contention of Shri Naphade is that the right, title and interest in the immovable property does not come to an end merely because a restraint is placed by a court of law on its alienation or disposal. If this being the legal position, then there was no impediment in respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in or was possessed of the property in question. Even if the Tax Recovery Officer is satisfied that the claim or objection is not substantiated even then his conclusion is not final and is subject to a civil suit as contemplated by rule 11(6). Shri Naphade submits that in the instant case, the Recovery Officer has failed to abide by the mandate of the aforesaid rule and, therefore, the conclusion reached by him that the objection or claim of the petitioners is meritless, is not tenable in law. Even otherwise, no finality could be attached to such a conclusion it being subject to civil suit. Therefore, the said property cannot be auctioned in execution of a recovery certificate. He submits that it is pertinent to note that what is granted by the decree is nothing but a money claim and the relief of declaration that respondent No. 2 was bound to specifically perform the agreement to create mortgage in favour of respondent No. 1 has not been granted. If this relief is expressly denied, then in execution of a money decree, the said property could not have been auctioned at all. These are issues which could not have been conclusively decided in proceedings before the Recovery Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applied as far as possible with necessary modifications by the Recovery Officer, exercising powers under article 29 of the RDB Act. That being the position, there is no substance in the contention of Shri Naphade that impugned orders are vitiated by an error apparent on the face of record. He submits that the Recovery Officer, DRT and DRAT are well within their jurisdiction and have rightly considered the claim/objection of the petitioners to the auction sale. He submits that this is not a case involving any complex issue of facts requiring oral and documentary evidence. Therefore, the investigation conducted by the Recovery Officer was consistent with the object and purpose for which the RDB Act has been enacted. If the conclusions of the Recovery Officer, which are subject to appeals before the DRT and DRAT are not given finality then the very purpose of establishing Tribunals under the RDB Act would be frustrated and defeated. If parties are allowed to agitate such issues again in a suit, then recovery of bank dues, which are also public monies, would be unduly delayed resulting in virtual break-down of the economy. Therefore, he submits that this is a fit case where we shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usive. Now a procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by sections 25 to 30. It is not the intendment of the Act that while the basic liability of the defendant is to be decided by the Tribunal under section 17, the banks/financial institutions should go to the civil court or the company court or some other authority outside the Act for the actual realisation of the amount. The certificates granted under section 19(22) has, in our opinion, to be executed only by the Recovery Officer. No dual jurisdictions at different stages are contemplated. Further, section 34 of the Act gives overriding effect to the provisions of the RDB Act. There is one more reason as to why it must be held that the jurisdiction of the Recovery Officer is exclusive. The Tiwari Committee which recommended the constitution of a Special Tribunal in 1981 for recovery of debts due to banks and financial institutions stated in its report that the exclusive jurisdiction of the Tribunal must relate not only in regard to the adjudication of the liability but also in regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale, the Tax Recovery Officer shall proceed to investigate the claim or objection: Provided that no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed. (2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the Tax Recovery Officer shall deem fit. (3) The claimant or objector must adduce evidence to show that- (a) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or (b) (in the case of movable property) at the date of the attachment, he had some interest in, or was possessed of, the property in question. (4) Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in the possession of the defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be maintained, but it is presumed to exist till the court orders otherwise. The court, in these circumstances, has the duty, as also the right, to treat the alienation/assignment as having not taken place at all for its purposes. Once that is so, Pritam Singh and his assignees, respondents herein, cannot claim to be impleaded as parties on the basis of assignment. Therefore, the assignees-respondents could not have been impleaded by the trial court as parties to the suit, in disobedience of its orders. The principles of lis pendens are altogether on a different footing. We do not propose to examine their involvement presently. All what is emphasised is that the assignees in the present facts and circumstances had no cause to be impleaded as parties to the suit. On that basis, there was no cause for going into the question of interpretation of paragraphs 13 and 14 of the settlement deed. The path treaded by the courts below was, in our view, out of their bounds. Unhesitatingly, we upset all the three orders of the courts below and reject the application of the assignees for impleadment under Order 22, rule 10 of the Civil Procedure Code." We cannot be unmindful and ignorant of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar to such a sub-lease under the terms of the status quo order. It has the effect of violating the preservation of status of the property. This will all the more be so when this was done without the leave of the court to disturb the state of things as they then stood. It would amount to violation of the order. The principle contained in the maxim: 'actus curiae neminem gravabit' has no application at all to the facts of this case when in violation of status quo order a sub-tenancy has been created. Equally, the contention that even a trespasser cannot be evicted without recourse to law is without merit, because the state of affairs in relation to property as on September 15, 1988, is what the court is concerned with. Such an order cannot be circumvented by parties with impunity and expect the court to confer its blessings. It does not matter that to the contempt proceedings Somani Builders was not a party. It cannot gain an advantage in derogation of the rights of the parties, who were litigating originally. If the right of sub-tenancy is recognised, how is status quo as of September 15, 1988, maintained? Hence, the grant of sub-lease is contrary to the order of status quo. Any act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the proceedings in which the order of injunction or other prohibitory direction or restraint came to be issued. It is enough that the transferor is a party and the order was in force. These two conditions being satisfied, the transfer must not be upheld. If this course is not adopted then the tendency to flout orders of courts which is increasing day-by-day can never be curbed. The court exercises its powers on the foundation of respect and regard for its authority by the litigating public. People would lose faith and respect completely if the court does not curb and prevent this tendency. The note of caution of the Supreme Court must be consistently at the back of everybody's mind. Therefore, Shri Naphade is not right in the distinction which he is trying to make. Equally untenable is the contention of Shri Naphade that an order of injunction will bind only the transferor in this case. It is his submission that the said order does not bind the world at large. He submits that ownership rights are neither taken away nor restricted in any manner by orders of injunction or other preventive directions. He submits that the transfer in favour of his client was thus neither invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he courts below, the petitioners have not taken any steps to verify whether the title of transferor was clear and valid. They have not pleaded anywhere as to what steps were taken by them, as a prudent transferee, to ascertain the facts about pendency of proceedings or encumbrance on the said property. Admittedly, the land belongs to CIDCO and it is the subject matter of lease in favour of respondent No. 2. On the date when respondent No. 2 entered into a lease deed with CIDCO and on the date when the lease deed was registered by it, the injunction order was in force. Yet, respondent No. 2 obtained permission from CIDCO to transfer the right, title and interest in favour of petitioner No. 2. Admittedly, respondent No. 2 was aware of the pendency of proceedings as well as the injunction order. Therefore, it cannot be said that the conclusion of the courts below is based on no material or is perverse. A prohibitory order has the effect of placing a restriction on powers of disposition and respondent No. 2 could not have legally created a sublease in favour of the petitioners. That apart, the learned chairperson of the DRAT has observed that the petitioners produced no evidence in sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if, the said provisions and Rules refer to the amount of debt due under this Act instead of the Income-tax Act. Whenever the Legislature uses words such as "as far as possible", "as far as practicable", etc., the intent is not to apply the provisions in their entirety. The provisions do not get themselves incorporated completely. They have to be read into as far as possible and subject to such modifications, as the context as well as the object and purpose of the Act, require. The setting in which the words occur, the statute in which they appear, the object and purpose for which the statute has been enacted and the mischief that is sought to be taken care of and remedied, are factors which would be extremely relevant in determining such issues. In the case of N.K. Chauhan v. State of Gujarat, AIR 1977 SC 251, the Supreme Court has held that these words are to be assigned one and the same meaning. Whenever, the Legislature says as far as practicable, as far as possible it conveys one and the same meaning. If the purpose of the RDB Act is to expediently recover public monies in a summary manner then an interpretation which would advance this purpose should be placed on section 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defeating and frustrating the legislative intent completely. Investigation and adjudication cannot be endless. That apart, the remedy to approach this court in appropriate cases by invoking its jurisdiction under articles 226 and 227 of the Constitution of India is always available. Hence, question No. 2 is answered in these terms that it is not obligatory to apply the Second and Third Schedules to the Income-tax Act and the 1962 Rules while investigating a claim or objection to attachment and sale during the course of execution of a recovery certificate under the RDB Act. We are supported in these conclusions by a Division Bench decision of the Andhra Pradesh High Court reported in P. Mohan Reddy v. Debts Recovery Appellate Tribunal, AIR 2004 AP 94. In the view we have taken, it is not necessary to consider the effect of the decision of the Supreme Court in the case of Tax Recovery Officer v. Gangadhar Vishwanath Ranade [1998] 234 ITR 188; [1998] 6 SCC 658. Even otherwise, that decision was rendered in the context of the proceedings before the Tax Recovery Officer, where the Tax Recovery Officer could not have ignored the mandate of rule 11. He was exercising powers under the I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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