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1999 DIGILAW 62 (CAL)

ALLAHABAD BANK v. S. K. BHATTACHARJEE

1999-02-24

BHASKAR BHATTACHARYA

body1999
B. BHATTACHARYA, J. ( 1 ) -ORDER dated November 3, 1998 passed by the Recovery Officer, Employees Provident Fund Organisation, West Bengal in Certificate Case No. R. Ex 1267 (W. B.) of 1998 is the subject matter of challenge in both the aforesaid revisional applications under Article 227 of the Constitution of India. ( 2 ) C. O. No. 3247 of 1998 has been filed by four Nationalised Banks viz. Allahabad Bank, Bank of Baroda, Canara Bank and Punjab National Bank, while the other revisional application being C. O. No. 2903 of 1998 has been filed by United Bank of India, who is also a proforma respondent in the other revisional application filed by the four Nationalised Banks. ( 3 ) ON July 15, 1998, the Recovery Officer, Employees' Provident Fund Organisation had issued a public notice in "asian Age" for sale of the entire premises No. 41/a, A. J. C. Bose Road, Calcutta-700 017 for the purpose of realisation of certificate dues of Rs. 1. 56 crores and Rs. 65 lakhs from two companies in execution of certificates stated to have been issued by the competent authority under Employees' Provident Fund and Miscellaneous Provision Act. From the said notice it further appeared that the said premises were attached by the Recovery Officer although no date of such attachment was mentioned in the said notice. ( 4 ) THERE is no dispute that the United Bank of India has already obtained a decree against the owners of the said building viz. Amrita Bazar Patrika Pvt. Ltd. and Jugantar Limited for payment of Rs. 10,54,34,870. 37 and Rs. 10,48,05,727. 69 respectively and in execution of those decrees, United Bank of India has already started proceedings before Debt Recovery Tribunal, Calcutta and those proceedings are pending. ( 5 ) THE claim of the other four nationalised banks is that said building is mortgaged in favour of those banks and they being the mortgagees in respect of the said property were entitled to get notice of the purported attachment of the said property. ( 6 ) AFTER the aforesaid advertisement was given, the petitioners herein filed objections before the respondent No. 1 questioning his jurisdiction or authority to sell the said property and their further objection was that they being the secured creditors, of the aforesaid two companies against whom proceedings have been initiated should be heard before sale of the said property. ( 6 ) AFTER the aforesaid advertisement was given, the petitioners herein filed objections before the respondent No. 1 questioning his jurisdiction or authority to sell the said property and their further objection was that they being the secured creditors, of the aforesaid two companies against whom proceedings have been initiated should be heard before sale of the said property. They also contended that Debt Recovery Tribunal is the appropriate forum for sale of the said property. ( 7 ) BY the order impugned in these two applications, the respondent No. 1 rejected the objections of the petitioners on the ground of maintainability and passed a final order that the attached property at 41/a, A. J. C. Bose Road, Calcutta would be put to sale by public auction by R. P. F. C. within a very short time. ( 8 ) BEING dissatisfied, the banks have come up by filing these two applications. ( 9 ) MR. Roychowdhury, the learned senior advocate appearing on behalf of the petitioners in C. O. No. 3247 of 1998 contended that in view of the fact that a proceeding is pending before the Debt Recovery Tribunal, the respondent No. 1 had no authority to proceed any further for sale of the property. Mr. Roychowdhury contends that in view of sections 2 (g), 17, 29 and 34 of the Recovery of Debts due to Banks and Financial Institution Act, 1993 ("act"), the authority under Employees' Provident and Miscellaneous Provisions Act ("e. M. P. Act") cannot proceed with the sale of the said property as the Act has the overriding effect upon E. M. P. Act. ( 10 ) MR. Roy, the learned senior advocate appearing on behalf of United Bank of India in C. O. No. 2903 of 1998 has adopted the aforesaid contention of Mr. Roychowdhury and has further contended that in view of section 8g of the E. M. P. Act, the provision contained in second and third schedule of the Indian Income Tax Act is applicable for realisation of the dues under E. M. P. Act. According to Mr. Roy in view of the aforesaid provision, second schedule to Income Tax Act, 1961 will be applicable in the instant case and according to Rule 11 thereof it is the duty of the Tax Recovery officer to investigate the claim of the petitioners before passing an order of sale. Mr. According to Mr. Roy in view of the aforesaid provision, second schedule to Income Tax Act, 1961 will be applicable in the instant case and according to Rule 11 thereof it is the duty of the Tax Recovery officer to investigate the claim of the petitioners before passing an order of sale. Mr. Roy thus contends that by summarily rejecting the objections raised by the petitioners, the respondent No. 1 refused to exercise jurisdiction vested in him by law. ( 11 ) MR. Mishra, the learned advocate appearing on behalf of the respondent No. 1 has on the other hand contended that in view of section 11 of the E. M. P. Act, if any amount is due from an employer whether in respect of the employees' contribution or employers' contribution, the amount shown to be due shall be deemed to be the first charge on the asset of the establishment and shall notwithstanding contained in any other law for the time being in force to be paid in priority to all other dues. Thus, according to Mr. Mishra the certificate holder had the first priority created by statute and as such there was no illegality on the part of the respondent No. 1 in passing the order impugned. ( 12 ) AFTER hearing learned advocates for the parties and after going through the materials on record 1 find that the respondent No. 1 by not entertaining and investigating the objections raised by the petitioners refused to exercise jurisdiction vested in him by law. ( 13 ) THERE is no dispute that in view of section 11 of the E. M. P. Act, the certificate holder has the first priority but that priority does not authorise the respondent No. 1 to sell the property of the certificate debtor without hearing the objection of the other persons who have already obtained a money decree or who have got prior attachments by way of mortgage. In view of the huge amount of decreetal dues in favour of United Bank of India and in view of the fact that the property is already mortgaged with the other nationalised banks, in my opinion, they have right to be heard before sale of the property. In view of the huge amount of decreetal dues in favour of United Bank of India and in view of the fact that the property is already mortgaged with the other nationalised banks, in my opinion, they have right to be heard before sale of the property. It appears from the record that the claim of the opposite party No. 1 is a negligible amount in comparison to the decreetal dues and the amount payable to the other banks. Therefore, they have right to see that the property in auction sold at an appropriate price. Even second schedule to the Income Tax Act, 1961 which is applicable for sale of the property in realisation of dues under E. M. P. Act authorises the respondent No. 1 to adjudicate the claim of the objector in terms of Rule 11 thereof. ( 14 ) AS regards the contention of Mr. Roychowdhury that the respondent No. 1 cannot make advertisement of sale of the property and it is for the Debt Recovery Tribunal to do so, I find no substance. In this case decree has been passed by the Original Side of this court prior to the coming into operation of the Act. Therefore, in view of the Division Bench decision of this court in the case of Bank of India v. Kajoria Coal Co. Ltd. and Ors. dated August 12, 1998 in G. A. No. 1161 of 1997, execution case should be initiated before this court and not before the Debt Recovery Tribunal. Moreover, the Act authorises bank and other financial institutions to have their claim adjudicated before the Debt Recovery Tribunal but by virtue of the provision contained in the Act, the authority of respondent No. 1 in proceeding against a property for realisation of its due under E. M. P. Act has not been taken away. Therefore, there is no substance in the aforesaid contention of Mr. Roychowdhury. Under the aforesaid circumstances, I set aside the order impugned in these two revisional applications and direct the respondent No. 1 to investigate the objection filed by the petitioners herein in terms of Rule 11 of second schedule of the Indian Income Tax Act, 1961 read with section 8g of the E. M. P. Act. Till the objections of the petitioners have been investigated and adjudicated, there will be no sale of the disputed property. Till the objections of the petitioners have been investigated and adjudicated, there will be no sale of the disputed property. With the aforesaid observation, the revisional applications are allowed. In the facts and circumstances there will be however no order as to costs. Application allowed.