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2003 DIGILAW 339 (AP)

ICICI Bank Limited, Bangalore v. V. T. Prakash

2003-03-03

A.GOPAL REDDY

body2003
A. GOPAL REDDY, J. ( 1 ) ORDER :the revision petitioner- icici Bank invoked the supervisory jurisdiction of this Court under Article 227 of the Constitution of India to revise the order passed by the District Judge, Ranga reddy District dated 29-1-2003 in IA no. 316/2003 in OS No. 14/2003, whereunder the learned District Judge issued ad-interim ex parte injunction restraining the revision petitioner- ICICI Bank and Recovery officer, debt Recovery Tribunal, Hyderabad from selling the suit schedule property in OS no. 14/2003. ( 2 ) THE facts which are not in dispute are as under: The revision petitioner-Bank initiated proceedings for recovery of debt due to it before the Debt Recovery Tribunal under the provisions of the Recovery of debts Due to Banks and Financial Institutions act, 1993 (for short "the Act 51/1993") against the third respondent herein and others and obtained a Recovery Certificate for a sum of Rs. 36,42,211-74 ps. After obtaining recovery certificate, the revision petitioner-Bank initiated proceedings for sale of mortgaged property. When the third respondent herein and others failed to comply with the demand notice dated 8-3-2001 order of attachment of immovable property and notice for settling a sale proclamation dated 12-4-2001 in respect of the mortgaged property of the third respondent herein situate at Gaganpahad village, Rajendra Nagar Mandal, Ranga reddy District have been served. On issuance of Forms 16 and 17 notice, the third respondent others failed to pay the amount, proclamation of sale dated 28-8-2002 has been issued fixing the date of auction on 17-10-2002. At that stage, respondents 1 and 2 herein filed a claim petition No. 3/2000 before the Debts Recovery tribunal, Hyderabad under Rule 11 of the second Schedule to the Income Tax act, 1961 seeking to raise the attachment order dated 12-4-2002 in R. P. No. 487/2001 over the agricultural lands admeasuring ac. 10-31 guntas in S. Nos. 263, 281, 282 and 283 situate at Gaganpahad village. The recovery Officer, Debt Recovery Tribunal, hyderabad after enquiring into the claim by its order dated 1-11-2002 dismissed the aim petition holding that the petition Schedule property is a self acquired property of the third respondent herein and not a joint Hindu Family property, the debt involved is not a "avyavaharika" debt and the Tribunal has rightly attached the property under the provisions contained in Rules 48 and 53 of the Second Schedule of the income Tax Act, 1961. In view of the rejection of the claim, the Recovery Officer issued proclamation of sale dated 11-12-2002 by the Recovery Officer rejecting the claim will be subject to the result of such suit instituted as the said procedure is made applicable in view of Section 29 of Act 51/ ( 3 ) LEARNED Senior Counsel further submits that in view of the alternative remedy available to the revision petitioner, namely moving the civil Court for vacating the injunction order or can file an appeal as contemplated under Order 43, Rule 1 of the Code of Civil Procedure, the petitioner cannot invoke the jurisdiction of this Court under Article 227 of the Constitution and under the guise of suspension of the ad- interim ex parte injunction, the Recovery officer, who earlier cancelled the auction scheduled to be held on 30-1-2003 and returned EMD, called the bidders and conducted auction on 4-2-2003 is in total defiance to the procedure contemplated in this regard and hence, this Court should set- aside the said auction which was proceeded to pursuant to the interim suspension granted by this Court. ( 4 ) IN view of the rival submissions made by the learned Counsel for both parties, it is necessary to have a look at the various provisions of the Act 51/1993, which have direct bearing on the issue involved in the revision petition. ( 5 ) SECTION 17 prescribes jurisdiction, powers and authority of Tribunals to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions and jurisdiction of the Appellate tribunal to entertain appeals against any order made by a Debt Recovery Tribunal. Section 18 bars the jurisdiction of the Civil court in relation to the matters specified in section 17. Section 19 contemplates issuance of certificate by the Tribunal on an application made by the bank or a financial institution and authorizes the Tribunal to order attachment of the whole or any portion of the property as specified in sub-section (14) of Section 19. On conclusion of trial, the Tribunal shall issue a certificate as specified in sub-section (22) of Section 19. Against the orders of issuance of a certificate passed by a Tribunal, appeal lies to an appellate tribunal under Section 20 of the Act 51/1993. On conclusion of trial, the Tribunal shall issue a certificate as specified in sub-section (22) of Section 19. Against the orders of issuance of a certificate passed by a Tribunal, appeal lies to an appellate tribunal under Section 20 of the Act 51/1993. Section 25 prescribes modes of recovery of debts by the Recovery officer on receipt of a copy of the certificate under sub-section (7) of Section 19. Section 28 prescribes other modes of recovery by issuance of Notice under forms 16 and 17 and if any third party objects to the above recovery proceedings, he can move the recovery officer. The provisions of Second and Third Schedules to the Income Tax Act, 1961 and the Income tax (Certificate Proceedings) Rules, 1962 as in force from time to time are made applicable for enquires of claims made by the third parties. It is useful to extract section 29, which is crucial for deciding the issue. "29. Application of certain provisions of income-tax Act :the provisions of the second and Third Schedules to the Income- tax Act, 1961 and the Income- tax (Certificate proceedings) Rules, 1962 as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under this Act instead of to the Income-tax: provided that any reference under the said provisions and the rules to the "assessee" shall be construed as a reference to the defendant under this Act. " ( 6 ) HAVING noticed the various provisions as referred to above, it is also useful to extract the procedure for recovery of tax as provided under Section Schedule to Income-tax Act. "11. Investigation by Tax Recovery Officer : (1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or 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. xxxx; 4. xxx x; 5. Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim; ( 7 ) WHERE a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil Court to establish the right which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive. " ( 8 ) IN view of the provisions as referred to above, the third parties who claim rights over the property, which was attached for due recovery of debt by a financial institution, where the Recovery Officer issued sale proclamation, can file their objections to the attachment or sale of any properly in execution of the certificate. The respondents 1 and 2 who are claiming a share in the property owned and possessed by the third respondent herein, who is Kartha of the family filed their claim petition before the Tax Recovery Officer who by order dated 1-11-2002 dismissed the claim petition. Against every such dismissal of the claim petition, the third party may prefer an appeal as provided under Section 30 of the Act, not withstanding the provision of section 29. If the third parties are aggrieved by the rejection of the claim may institute a suit as per sub-rule (6) of Rule 11 of Second schedule to Income-tax Act, 1961 and can establish their rights in the property, which is in dispute. Any order passed by the recovery Officer rejecting the claim will be subject to the result of such suit, if any, and his order will be conclusive only as per the judgment and decree passed by the Civil court but not otherwise. Any order passed by the recovery Officer rejecting the claim will be subject to the result of such suit, if any, and his order will be conclusive only as per the judgment and decree passed by the Civil court but not otherwise. When once respondents 1 and 2 moved the civil Court for partition of the suit schedule property, it is for the civil Court to decide whether they are entitled to a share in the property or not and any order passed by the Recovery officer, either rejecting the sale or proceeding with the sale pursuant to the notice will be subject to the result of such suit. In view of the same, the contention advanced by the learned Counsel for the revision petitioner that civil Court will not have any jurisdiction do not merit consideration. Once the civil court had jurisdiction to entertain the suit for partition, it is always open for the civil court to pass appropriate orders to safeguard the interest of the parties pending suit. In view of the same, the reliance placed by the learned Counsel for the revision petitioner- bank, namely, Punjab National Bank v. O. C. Krishnan, 2001 (6) SCC 569 , and observation made therein at para 6, are misplaced to the facts of the present case. In fact Section 29 of the Act 51/93 itself recognizes the jurisdiction of the civil Court to entertain the suits filed by the third party claimants. ( 9 ) IN view of the foregoing reasons, prima facie, it is held that civil Court will have a jurisdiction to entertain the suit and if the revision petitioner is aggrieved by the ad-interim injunction granted by the district Judge, it can approach the said Court for vacation of the ad-interim ex parte injunction or can approach the appellate Court under Order 43, Rule 1 CPC by filing an appeal. In view of the same, the revision petitioner cannot invoke the supervisory jurisdiction of this Court under Article 227 as held by the Apex Court in A. Venkata subbaiah Naidu v. S. Chellappan, 2000 (7) scc 695 . In view of the same, the revision petitioner cannot invoke the supervisory jurisdiction of this Court under Article 227 as held by the Apex Court in A. Venkata subbaiah Naidu v. S. Chellappan, 2000 (7) scc 695 . ( 10 ) HAVING to the fact that the petitioner moved this Court under Article 227 and obtained interim suspension of the injunction granted and it is specifically alleged in the counter that Recovery Officer postponed the auction which was scheduled to be held on 30-1-2003 and returned EMD without further notifying the date of auction, under the garb of interim suspension, calling the bidders to participate in the auction and conducting the auction on 4-2-2003 is highly irregular and contrary to the procedure contemplated for such auction. It is well settled that interim order causing injustice to a party must be set right by the Court while making a final order. (See: Prabhodh Verma v. State of up. , ( AIR 1985 SC 167 ). It is also well settled that no one should be allowed to suffer for act of the Court and at the final disposal, High Court can correct the damage caused. (See: State of M. P. v. M. V. Vyavsaya and Co. , ( 1997 (1) SCC 156 ). ( 11 ) IN view of the same, it is held that the sale, which was conducted by the recovery Officer under the grab of interim suspension of the ad-interim ex parte injunction granted by this Court is non est in the eye of law and the same cannot be proceeded with. ( 12 ) THE civil revision petition is accordingly dismissed with costs of Rs. 2,000/- (Rs. Two thousand only) payable by the revision petitioner-Bank to the Court Master s Welfare fund, High Court of Andhra Pradesh.