TMI Blog2005 (4) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, 1961 ("the Act"), made an order under section 269UD(1) of the Act on November 25, 1989. Accordingly, in terms of the provisions of section 269UE of the Act, the property vested in the Central Government and the transferors were directed to surrender the possession within fifteen days of passing of the order. Respondent No.6-State Bank of India preferred Civil Suit No. 3917 of 1990 before the City Civil Court at Ahmedabad against one M/s. Aarvy Power Tools Ltd. and others. It is the say of respondent No.6 that one of the transferors viz., Smt. Jayshreeben Vadilal Mehta was the owner of the property in question and the said property had been placed with the State Bank of India by the said transferor by way of equitable mortgage by deposit of title deeds of the property in question. The State Bank of India appears to have obtained an injunction on August 10, 1990, against the sale of the said property. Thereafter, the Income-tax Department was impleaded in the said civil suit as one of the defendants and the original injunction operating since August 10, 1990, was modified and made operative qua the newly added defendant. It is an admitted position that the said civi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plan owned and held by Smt. Jayshreeben R. Shah'. will be auctioned by the Income-tax Department. The sale proceeds of the property shall be deposited with the applicant-bank in interest-bearing deposit. The amount of sale proceed and interest thereon will be appropriated after and according to the adjudication of claims and rights of the State Bank of India by this Tribunal. Under these circumstances, the application is disposed of with no order as to costs." In pursuance of the aforesaid order, the Income-tax Department conducted public auction as per the terms and conditions of auction sale, more particularly stated in annexure C. The petitioner emerged as the highest bidder at the said auction sale conducted on June 28, 2000, for a sum of Rs. 1,40,00,000. Accordingly on the said day, over and above caution money of Rs. 25,000, the petitioner made payment of Rs. 14,00,000 towards the purchase price. The petitioner made payment of subsequent instalments on July 26, 2000, and September 26, 2000, and thereafter called upon respondent No.3 to issue possession letter/certificate in favour of the petitioner. The letter of September 28, 2000, was followed up by further letters d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y fault of the petitioner. It was submitted that the petitioner had complied with all the requirements as per the terms of the auction sale, paid up the entire sale consideration, was a bona fide third party purchaser and hence, the delay on the part of the Income-tax Department was not only hurting the petitioner financially but also amounted to harassment. It was submitted that the petitioner was in no way concerned with the disputes inter se between respondent Nos. 1 to 5 on the one hand and respondent No.6 on the other hand. In terms of the provisions of section 269UE of the Act, the property had vested in the Central Government, the respondent authorities of the Income-tax Department had conducted the auction, the petitioner had made payment as per the terms and conditions of the auction and in these circumstances, the petitioner was entitled to a writ of mandamus directing the respondent authorities to execute the conveyance deed. Mr. M. R. Bhatt, learned standing counsel appearing on behalf of respondent Nos. 1 to 5, i.e., the Central Government and the Income-tax Department, submitted that the Income-tax Department was ready and willing to execute the conveyance deed but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without prejudice to its right to pursue its remedy in accordance with law. Mr. Anip A. Gandhi, the learned advocate appearing on behalf of newly added respondent No.7 viz., the Asset Reconstruction Company (India) Ltd. (ARCIL) submitted that it had stepped into the shoes of respondent No.6-State Bank of India as per the terms of the deed of assignment dated March 29, 2004, and accordingly, the account of M/s. Aarvy Power Tools was taken over from the State Bank of India. The title deeds in question lying with the State Bank of India are required to be delivered to ARCIL but the same have not been delivered by the State Bank of India. He submitted that ARCIL was ready and willing to deliver the title deeds in question for execution of the deed of conveyance as and when the title deeds are available with ARCIL. This statement was made without prejudice to the right of ARCIL to effect the recovery taking into consideration its the rights in the proceedings pending before the Debts Recovery Tribunal. Further submission was also made that the charge was over the property in question and despite the sale by the Income-tax Department, the charge would go with the property. Lastly it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in the pending civil suit, it was admittedly, much later in point of time. It is not necessary for this court to render any opinion, as to the validity of such injunction order, but at the same time, the court cannot lose sight of the position of law as obtaining on the date when the order under section 269UD(1) of the Act came to be made. It is not necessary to emphasise the legal position effect of statutory provision has to be taken into consideration by a court, regardless of the fact as to whether the attention of the court was invited to the provision or not. The court cannot ignore the consequence of a legal provision. Therefore, at the cost of repetition, it requires to be noted that when the order of preemptive purchase came to be made by the appropriate authority on November 25, 1989, the property in question vested in the Central Government free from all encumbrances, that even otherwise on the said day, no injunction was operating either against the original holders of the property or the Income-tax Department, the Income-tax Department having not even been impleaded in the said proceedings on the said day i.e., November 25, 1989. It is not known as to whether the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntext, it is necessary to note the contention raised on behalf of respondent No.6-State Bank of India, to the effect that the appropriate authority ought to have informed State Bank of India before the appropriate authority initiated any action under the proviso to Chapter XX-C of the Act. This submission proceeds on the presumption that the encumbrance in question (which is in dispute) was mentioned in the agreement for transfer. The State Bank of India is not in a position to show that any such statement was made in the agreement for transfer. It is only in such eventuality that the question of hearing State Bank of India as "interested person" would arise. However, to satisfy itself, the court called upon learned standing counsel for the Revenue to place on record a copy of the declaration made in Form No. 37-I along with a copy of the agreement for transfer and the enclosure thereto, which were produced for the perusal of the court from the record of the Income-tax Department. On going through the said documents, it is apparent that in Form No. 37-I, column No.4 pertaining to persons interested in the property, only the name of the transferor is mentioned and no other interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtain execution of conveyance deed in its favour accompanied by the original title deeds of the property. The contention raised on behalf of respondents Nos. 1 to 5 that the conveyance can be executed only on receipt of sale consideration in the ZAO (CBDT) account requires to be stated only to be rejected. When the Debts Recovery Tribunal passed the order on November 1, 1999, granting application exhibit A/l07, a specific direction has been made that "sale proceeds of the property shall be deposited with the applicant-bank in interest-bearing deposit". In these circumstances, there is no question of modifying the order of the Debts Recovery Tribunal especially when the Debts Recovery Tribunal has further observed that the amount of sale proceeds and interest thereon will be appropriated after and according to the adjudication of claims and rights of the State Bank of India by the Debts Recovery Tribunal. Respondent No.3 is therefore directed to execute the final conveyance deed without insisting on any such condition. A prayer made on behalf of respondent No. 7-ARCIL that it should be impleaded as confirming party requires to be rejected for the simple reason that even if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing been moved before it by the Income-tax Department as well as the petitioner, that the auction sale which the Debts Recovery Tribunal had ordered is fruitfully completed in favour of the highest bidder. It is necessary for Debts Recovery Tribunal to appreciate that it is a quasi-judicial body which is entrusted with various powers under the statute and in exercise of those powers, it must ensure that not only proceedings before it are conducted in a proper and fair manner, but the orders made by it are complied with not only by mere collection of monies but effective completion of the entire transaction resulting in a valid, legal and complete transfer which can be so only when the title to the property passes in favour of the purchaser. It is, therefore, expected that the Debts Recovery Tribunal shall evolve a mode and method so as to regulate the procedure in such circumstances qua all the transactions that may have to be undertaken hereinafter in future. In the result, respondent No. 6-State Bank of India, is hereby directed to handover the original title deeds to ARCIL i.e., respondent No.7 under cover of forwarding letter within a period of seven days from today, i.e., on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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