TMI Blog2020 (3) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the BPIL in 2002. The recovery certificate was issued immediately, pursuant to which an attachment order was passed prior to the date on which notice was issued by the Tax Recovery Officer- Respondent No.4 under Rule 2 of Schedule II to the Act. It is true that the sale was conducted after the issuance of the notice as well as the attachment order passed by Respondent No.4 in 2003, but the fact remains that a charge over the property was created much prior to the notice issued by Respondent No.4 on 16.11.2003. The High Court held that Rule 16(2) is applicable to this case on the ground that the actual sale took place after the order of attachment was passed by Respondent No.4. The High Court failed to take into account the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial Area, MIDC, Kalyan along with plant machinery and building was mortgaged as security to Union Bank of India-Respondent No.5 herein. Respondent No.-5 filed OA No.1836 of 2000 before the Debt Recovery Tribunal III, Mumbai (hereinafter referred as the DRT ) for recovery of the loan advanced to BPIL. The DRT allowed the OA filed by Respondent No.5 and directed BPIL to pay a sum of ₹ 4,76,14,943.20/- along with interest at the rate of 17.34% per annum from the date of the application till the date of payment and/or realisation. A recovery certificate in terms of the order passed by the DRT was issued and recovery proceedings were initiated against BPIL. The Recovery Officer, DRT III (Respondent No.2) attached the property on 29.11.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased the property in auction sale as per the order of the DRT is entitled to have the property transferred in its name in spite of the attachment of the said property by the Income Tax Department. Relying upon Rule 16 of Schedule II to the Act, the High Court came to the conclusion that there can be no transfer of a property which is the subject matter of a notice. The High Court was also of the view that after an order of attachment is made under Rule 16(2), no transfer or delivery of the property or any interest in the property can be made, contrary to such attachment. The High Court held that notice under Rule 2 of Schedule II to the Act was issued on 11.02.2003, and the property in dispute was attached under Rule 48 on 17.06.2003, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty arose therefrom, due to which a notice under Rule 2 of Schedule II to the Act was issued on 11.02.2003 by following the prescribed procedure. He submitted that no property which is the subject matter of a notice can be transferred after the issuance of a notice under Rule 2. Mr. Prasad also submitted that the immovable property was attached in accordance with Rule 48 of Schedule II on 17.06.2003. Undisputedly, the sale in favour of the Appellant took place subsequent to the order of attachment dated 17.06.2003. He urged that the Appellants are not entitled to any relief and the High Court was right in dismissing the Writ Petition as the Crown debt is entitled to priority in view of the provisions of Schedule II to the Act and thus an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 SCC 786] 9. Rule 2 of Schedule II to the Act provides for a notice to be issued to the defaulter requiring him to pay the amount specified in the certificate, in default of which steps would be taken to realise them. The crucial provision for adjudication of the dispute in this case is Rule 16. According to Rule 16(1), a defaulter or his representative cannot mortgage, charge, lease or otherwise deal with any property which is subject matter of a notice under Rule 2. Rule 16(1) also stipulates that no civil court can issue any process against such property in execution of a decree for the payment of money. However, the property can be transferred with the permission of the Tax Recovery Officer. According to Rule 16(2), if an attachme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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