Decided on April 26,2004



A. Subbulakshmy, Chairperson - (1.) ORIGINAL Suit (OS-295/1980) was filed in the Civil Court, Bangalore and the Civil Court passed the decree and final decree was also passed by the Civil Court. When Execution Petition (E.P. No. 60/1994) was filed before the Civil Court, the RDDB & FI Act, 1993 came into force and the case was transferred to DRT, Bangalore, and all further proceedings in pursuance of the Execution Petition were taken before the DRT in OA-547/1995.
(2.) Counsel for the respondent borrower submits that no attachment of the movable property was effected and in the Sale proclamation, only immovable property is mentioned and there is no mention of any machineries in the sale proclamation and so the sale of the machineries is not proper and the sale is liable to be set aside. Counsel for the Bank submits that with regard to the sale of the machinery, the machineries are already hypothecated to the Bank and all those machineries have been seized by the Bank and they were kept with the Bank and since those machineries were hypothecated to the Bank and Bank has got every right to deal with movable hypothecated machineries. He further pointed out that even in the Auction Sale notice in paper publication all the properties to be sold have been specifically mentioned i.e. land and building, machineries and fixtures and what all things to be sold including machineries have been mentioned in the paper publication. So, nothing is vitiated and as movable properties have already been hypothecated with the Bank and Bank has seized those movable property and it is specifically mentioned in the paper publication, the sale of machineries along with the land and building is perfectly valid and there is nothing to interfere to that matter. The sale proclamation was passed by the Recovery Officer and the respondent borrower challenged the same before the DRT, Mumbai, in Appeal No. 74/1997 initially and then finally in the High Court of Karnataka in W.P.No. 11621/1997 and W.A. No. 4621/1997 and upto the High Court the matter was considered and it was dismissed. So the matter was set right upto the level or the High Court with regard to the sale. Ultimately, the matter was taken to the Hon'ble Supreme Court in SLP (Civil) No. 467/1998 and the Supreme Court has passed Order on 23.1.1998 stating that since the matter of auction sale is under consideration before the appellate Tribunal the question as to whether the machinery could be sold at the auction can be agitated by the petitioner in the said appeal and the Supreme Court does not propose to go into that question and leave it to the petitioner to agitate before the Appellate Tribunal in the pending appeal and thus disposed of the Special Leave Petition. So, the crux of the Supreme Court order is that the question with regard to the sale of machinery has to be agitated by the petitioner before the appellate Tribunal.
(3.) THE matter was heard by the DRAT, Mumbai and the Appellate Tribunal passed order on 28.4.1998 in Appeal No 226/1998 stating that the entire property including the machinery was mortgaged with the Bank, the description in the execution potion, preliminary decree and the Recovery Certificate comprised the plots as well as machinery and there was, therefore, no question of issuing separate attachment notice in respect of machineries and it was held that the auction was quite legal and valid and it was never challenged within 30 days as contemplated under Rules 60 and 61 of the Second Schedule of Income-tax Act and there was no prejudice to the judgment debtors and the confirmation of sale cannot be called in question and the appeal is devoid of any substance and thus dismissed the appeal. THE DRAT, Mumbai, has found that the auction is quite legal and there is no question of issuing separate attachment notice in respect of the machineries also.;

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