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N. Prakash Versus The Registrar, Debts Recovery Appellate Tribunal

2014 (12) TMI 1295 - MADRAS HIGH COURT

Auction procedure - Held that:- The procedure contemplated under Rule 60 and 61 of Schedule-II of Income Tax Act, 1961 and the petitioner having not exercised his right to set aside the sale of the property under Section 30 of the Act within the stipulated time, we are of the view that the Auction Purchaser is entitled to have the sale certificate of Schedule-II property and the petitioner is entitled to get refund of the amounts deposited with accrued interest, if any. There is no merit in the .....

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of 2014 is filed to quash the order made in M.A. No. 130 of 2013 against Appeal No. 16 of 2012 dated 6.5.2014 on the file of the Debt Recovery Appellate Tribunal, Chennai/first respondent herein. (2) THE case of the petitioner in both the writ petitions are as follows: (a) The property comprised in Survey No. 7/2A, 110 Kulathur Village, Pollachi Taluk, Coimbatore District, belonged to one Kuttiammal. Petitioner is her son and he is the Cultivating Tenant in respect of the property to an extent .....

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f a sum of ₹ 7,14,653.99 with interest at the rate of 12% per annum and in the said suit an exparte preliminary decree was passed against the said Kuttiammal on 18.7.1994. Thereafter, final decree application was filed in I.A. No. 358 of 2002, which was also decreed on 20.10.2003. In the said final decree application, petitioner herein was impleaded as one of the legal heir of the deceased Kuttiammal, who died during pendency of the suit. (c) For realisation of the decree amount, Bank file .....

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roperty from auction. The Recovery Officer dismissed the said application on 13.3.2009, against which the petitioner preferred Appeal No. 1 of 2009 before the Debt Recovery Tribunal, Coimbatore. In the said appeal, I.A. No. 522 of 2009 was filed for grant of stay of all further proceedings pending disposal of the appeal. DRT dismissed the said interim application on 24.4.2009. Aggrieved over the said order petitioner preferred appeal in M.A. No. 278 of 2010 before the DRAT, Chennai and challenge .....

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d on 13.3.2012 by DRT, Coimbatore directing the petitioner to pay a sum of ₹ 5 lakhs on or before 31.3.2012 and the remaining outstanding amount within 60 days for redeeming the property. (f) The Auction Purchaser viz., the 4th respondent filed I.A. No. 278 of 2012 for impleading herself and also filed I.A. No. 285 of 2012 for reviewing the order dated 13.3.2012. The impleading petition was allowed on 3.4.2012. (g) Petitioner filed application for issuing the certified copy of the proceedi .....

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T-II, Chennai and re-numbered as Appeal No. 16 of 2012 and thereafter petitioner obtained certified copy of the order dated 3.4.2012. (h) On 21.12.2012 petitioner filed appeal before DRAT against the order in I.A. No. 278 of 2012 dated 3.4.2012. Petitioner also preferred I.A. No. 34 of 2013 to defer hearing of Appeal 16 of 2012. (i) It is the contention of the petitioner that on 19.3.2013 petitioner filed I.A. No. 82 of 2013 for permitting the petitioner to redeem the mortgaged properties. DRT-I .....

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Chennai to dispose of I.A. No. 34 and 82 of 2013 along with Appeal No. 16 of 2012. DRT dismissed the said appeal as well as interim applications by order dated 28.7.2013 and the said orders were challenged by filing appeals before the DRAT. The same were disposed of on 6.5.2014. The said orders are challenged in these writ petitions. (k) The contention raised by the petitioners are that the Recovery Officer failed to appreciate Rule 52(1) of Schedule-II of Income Tax Act, 1961 which states that .....

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hedule-II of Income Tax Act, and in the absence of confirming the sale, sale does not become absolute and sale certificate cannot be issued. The sale certificate already issued having been cancelled on 21.7.2009, the sale has not become absolute creating any right on 4th respondent. Therefore, Tribunal ought to have allowed the application filed by the petitioner seeking to redeem the mortgaged properties. (m) The Appellate Tribunal having allowed the petitioner to deposit a sum of ₹ 5 lak .....

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re liable to be set aside. (3.) THE third respondent Bank filed common counter affidavit contending as follows: (i) M/s. Sabari Paper Products, a proprietory concern belonging to one Durairaj, father of the petitioner, availed credit facilities from the Bank, for which petitioner's mother Kuttiammal stood as Guarantor. She had mortgaged the properties stated under sale proclamation dated 18.3.2009 and the said mortgage was created in the year 1981. (ii) The borrower committed default, pursua .....

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8377; 10 lakhs, third respondent applied for recovery certificate by filing O.A. No. 43 of 2005 and DRT issued recovery certificate on 13.3.2008 for recovery of ₹ 17,15,633/- together with interest at the rate of 12% per annum from 4.2.2005. Based on the recovery certificate, a demand notice was issued by the Recovery Officer on 9.4.2008 for recovery of a sum of ₹ 20,35,823.72 together with subsequent interest. In spite of receiving notice, the petitioner failed to pay the amount. (i .....

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₹ 20 lakhs, did not accept the said prayer and dismissed the interim application, pursuant to which the Recovery Officer issued sale proclamation on 18.3.2009 for the sale of mortgaged property fixing last date for receiving tenders on 21.4.2009 to conduct auction on 22.4.2009. The said sale was postponed to 24.4.2009. (v) Due to pendency of I.A. No. 522 of 2009 filed by petitioner, which was dismissed on 24.4.2009, Recovery Officer conducted the sale and fourth respondent became successfu .....

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ontention of the Bank that the property having been sold pursuant to sale proclamation issued on 18.3.2009, remedy open to the petitioner is to challenge the said proclamation of sale and exercise right of redemption under Rules 60 and 61 of Schedule-II of Income Tax Act, 1961 within the time provided in the rule to set aside the sale stating irregularities, etc. Petitioner though filed application before the Recovery Officer seeking the right of redemption, after dismissal of the same, the proc .....

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rted the contention of the petitioner. According to the 4th respondent, notice of proclamation of sale was issued on 31.7.2008 pertaining to total extent of 4.9 acres of land and called upon the petitioner and legal heirs of Durairaj and Kuttiammal to repay a sum of ₹ 20,35,823/- as ordered by the DRT, Coimbatore. The said amount having not been paid, proclamation of sale of the entire extent of scheduled property measuring 4.9 acres was issued on behalf of the Bank by the Recovery Officer .....

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r on the ground that the 4th respondent filed implead petition. It is also the contention of the 4th respondent that the sale having been completed and the sale proceeds having been deposited by the 4th respondent, the remedy open to the petitioner is only to file an application seeking redemption of the property under Rule 60 of Schedule-II of Income Tax Rules by depositing the entire dues and the petitioner having not chosen to avail the said remedy, petitioner is not entitled to get any relie .....

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entioned in Schedule-II in view of the earlier order passed in I.A. No. 887 of 2009 on condition to deposit ₹ 4 lakhs in two installments on or before 26.6.2009 and 27.7.2009 and the petitioner having deposited first installment on 24.6.2009, right of the petitioner to redeem the property by paying the sale amount is not lost, and therefore the respondents are not justified in contending that the petitioner has not deposited the sale amount at the time of filing application to redeem the p .....

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a sum of ₹ 4 lakhs in two installments after remitting a sum of ₹ 2 lakhs petitioner himself insisted to suspend the order merely because implead petition was ordered impleading the auction purchaser as a party. The learned Senior Counsel further submitted that once the auction sale is conducted, the remedy open to the borrower/guarantor to redeem the property is to follow the mandatory conditions contained in Rule 60 and 61 of the Income Tax Act, 1961. The deposit of entire amount .....

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as the value of the entire property was only ₹ 19.50 lakhs. The learned counsel also supported the stand of the Auction Purchaser and submitted that though I.A. No. 82 of 2013 is filed on 19.2.2013, no amount was deposited by the petitioner and the interim application itself was filed after the period of limitation and therefore the petitioner's right to redeem the property no longer survives. (8.) WE have considered the rival submissions made by the learned counsel for the respective .....

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mal died on 7.1.2003 and the petitioner got himself impleaded as legal heir along with other legal heirs in I.A. No. 358 of 2002 in O.S. No. 123 of 1989. Final decree was passed on 20.10.2003 and for issuing recovery certificate, application was filed under Section 31A of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as RDDB & FI Act) in O.A. No. 43 of 2005 on 24.1.2005. Recovery certificate was ordered by the DRT, Coimbatore on 10.5.2007, b .....

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ecovery Officer on 13.3.2009 on the ground that the valuation of the entire property was only ₹ 19.50 lakhs. Sale notice was issued and auction sale was conducted on 22.4.2009. Auction purchaser deposited auction sale amount of ₹ 20.20 lakhs by demand draft before the DRT, Coimbatore. The said deposit was made on 7.5.2009. (11.) THE petitioner ought to have filed an application for redemption under Rule 61 of Schedule-II of Income Tax Act, 1961, under which, if an immovable property .....

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he Income Tax Act read with Section 30 of RDDB & FI Act, 1993 is not in dispute and in fact the Division Bench of this Court in the decision Maan Saravoar Properties Development Pvt. Ltd. v. Union of India, 2014 5 LW 381 upheld the constitutional validity of Rule 60 of Income Tax Act, 1961. In the said judgment it is held that Auction Purchaser does not make a bid for fun of it and it has financial consequences. The said rules are applicable to the RDDB & FI Act, 1993, by virtue of Secti .....

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isions and the rules to the "Assessee" shall be construed as a reference to the defendant under this Act." From the above referred statutory provision it is evident that Schedule-II to Rule 60 or 61 of the Income Tax Act, 1961 is bound to be complied with by the judgment debtor, whose property was sold in exercise of powers conferred under the RDDB & FI Act, 1993. (12.) IN this case, admittedly the petitioner has not filed the application for redemption within 30 days from the .....

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B & FI Act, 1993 was considered by the Supreme Court in the decision Sadashiv Prasad Singh v. Harendar Singh, 2014 1 SCALE 230nd recognised the right of the Auction Purchaser to retain the property for which sale was confirmed. In the said judgment the Supreme Court relied its earlier judgment Janata Textiles v. Tax Recovery Officer, 2008 12 SCC 582herein it is held that unless it is proved that some fraud was played while conducting the auction, the same cannot be set aside. In paragraph 13 .....

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ecovery Tribunal or before the Recovery Officer. By an order dated 5.5.2008, the Recovery Officer ordered the sale of the property by way of public auction. On 4.7.2008, the Recovery Officer fixed ₹ 12.92 lacs as the reserve price, and also fixed 28.8.2008 as the date of auction. At the public auction held on 28.8.2008, Sadashiv Prasad Sinha was the highest bidder, and accordingly, the Recovery officer ordered the sale of the property in his favour on 28.8.2008. In the absence of any objec .....

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