NAZIMS CONTINENTAL Vs. INDIAN OVERSEAS BANK TRIPLICANE BRANCH

JUDGEMENT

(1.) THERE being common question of law involved in both the cases, though they were heard separately, they are disposed of by this common judgment.

(2.) THE borrower is the petitioner in W.P. No.13210/08. While raising question of upset price of valuation of property, the borrower has raised question of jurisdiction of recovery officer to decide a petition to set aside the sale made pursuant to the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'Act, 1993') under Rule 61 of the 2nd Schedule to the Income Tax Act (hereinafter referred to as 'Rule 61'). According to the petitioner, such a petition to set aside the sale under the Act, 1993, is maintainable u/s 30 of the Act and not under Rule 61.In C.R. P. No,3144/08, Indian Bank has challenged the order of the Debts Recovery Tribunal, Coimbatore, dated 19th Aug., 2008, staying further proceeding and confirmation of sale of schedule properties u/s 30 of the Act, 1993. One of the ground was taken that the requisite amount in terms with Rule 60 of the 2nd Schedule to the Income Tax Act (hereinafter referred to as 'Rule 60') was not deposited.THE borrowers, respondents 1 and 2, took plea that an application for confirmation was made against void sale made under Rule 63 of the 2nd Schedule to the Income Tax Act (hereinafter referred to as 'Rule 63') and a prior stage like Rule 60 and 61 cannot be made applicable for petition under Rule 63. Further, according to them, Section 30 fo the Act, 1993, does not contemplate any deposit of either of the decreetal amount or purchase amount.

(3.) LEARNED counsel for the bank while relied on decision of Supreme Court in Transcore - Vs - Union of India (2006 (5) CTC 756) to show that the NPA Act is a complete code by itself for recovery of debt. It was submitted that a separate provision has been made under the Act, 1993, wherein, Section 30 is the appellate forum against any order passed by recovery officer. He also referred to Supreme Court decision in Union of India and Anr. - Vs - Delhi High Court Bar Association (2002 (3) SCC 275 :: AIR 2002 SC 1479) to show that the jurisdiction of the recovery officer is exclusive for the purpose of execution of adjudication order. Reliance was placed on Supreme Court decision in Allahabad Bank - Vs - Canara Bank (2000 (4) SCC 406).Counsel for the bank submitted that the Act, 1993, provides entertaining a counter claim and set-off on the claim of other secured creditors, as evident from the amended Act No.1 of 2000. U/s 19 (19), Tribunal is empowered to pass an order for distribution of the sale proceeds amongst secured creditors in accordance with Section 529-A of the Companies Act. To set aside a sale, the relevant rule is Rule 61, which differentiates between a defaulter and a third party enabling a defaulter or any person interested to file an application to set aside the sale only on the ground of non-service of notice or irregularity, but sub-rule (b) of Rule 61 makes it clear that in case of defaulter no such application could be entertained unless he deposits the amount recoverable from him in execution of the certificate. In other words, if appeal is filed by third party, pre-deposit is not required. For the purpose of Act, 1993, the Section 17 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (hereinafter referred to as 'NPA Act') cannot be pressed into service for construing the word -any person-. So far as Section 29 is concerned, according to counsel for the Bank, is a non-obstante clause, which does not mean that the whole Act to be made applicable or not applicable and it is for the Court to avoid the conflict for harmonious construction of the provision as per Supreme Court decision in Union of India - Vs - I.C. Lala (AIR 1973 SC 2204). Thus the stand taken by the Bank is that Section 30 do not take away the power of the Recovery Officer to adjudicate application under Rule 61, particularly when Rule 73 of Act, 1993 mandates the Recovery Officer to follow the principles of natural justice.