STATE BANK OF INDIA Vs. INDUSIND BANK LTD.
DEBTS RECOVERY APPELLATE TRIBUNAL
STATE BANK OF INDIA
Indusind Bank Ltd. And Ors.
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K. Gnanaprakasam, J. -
(1.) THE 2nd respondent, which is a company, had availed loan facilities from the appellant Bank against movable securities by way of hypothecation of current assets on the guarantee given by the respondents 3 and 4. As the respondents 2 to 4 committed default in repayment, the appellant Bank filed OA -392/2000 and also obtained a Recovery Certificate on 20.1.2004 and filed Recovery Proceedings RP -32/2004. Other consortium of Banks have also taken legal proceedings against the respondents 2 to 4 among whom the 1st respondent viz., Indusind Bank Ltd. filed OA -455/2000 and recovery certificate was issued on 1.10.2003 and pursuant to the same, it had also filed RP -512/2003 praying for attachment of the properties also appears that the 1st respondent Bank filed another OA -407/2000 against M/s. Somkan Marine Foods Ltd. in which account also, the 4th respondent was a guarantor, and obtained recovery certificate in RP -10672003 dated 7, 2.2003. The properties were attached on 14.6.2005 and it was noted that the said properties were the properties involved in M.P. No. 2672005 in. RP -106/2003. There is an observation by the Recovery Officer on 14.6.2005 in RP -512/2003 proceedings that, "Property attached on 14.6.2005. Inspected the same. It relates to R.P. 106/2003 (Relatable to Indusind Bank) and R.P. 32/2004 (Relatable to State Bank of India)." The properties were brought to sale and it was sold in the auction held on 18.10.2005. In the said RP -512/2003, the appellant -Bank filed a claim petition dated 20.10.2005, claiming that the OA -398/2000 filed by them against the respondents was decreed in their favour and recovery certificate was also issued and recovery proceedings were also taken and at that time they came to know that these properties were put up for auction in RP -512/2003. The appellant Bank also claimed that they are entitled to ratable distribution of the amount as slated in Section 73 of the CPC. The said claim petition came to be dismissed by the Recovery Officer and the same was challenged by the appellant before the PO in RA -14/2005 and the said RA was also dismissed and thereby affirming the order passed by the Recovery Officer. As against the same, this appeal has been filed.
I have the learned Advocate for the appellant and the 1st respondent.
(2.) ON the face of the records, it is made out that the appellant Bank and the 1st respondent Bank were having parallel claim against the properties, which were attached and brought to sale by the 1st respondent. The appellant also filed OA 398/ 2000 and got a decree on 9.12.2003 and pursuant to the same, recovery certificate was issued on 20.1.2004, proceedings were taken in RP -32/2004, and the same is pending. The very same properties have already been attached by the 1st respondent Bank viz. Indusind Bank in RP -10672003 in OA -407/2000 apart from their claim in RP -512/2003 in OA -455/2000. As the 1st respondent Bank got an order of attachment and also brought the property for sale and it was also sold, the Recovery Officer was of the view that though the appellant Bank had attached the property in RP -32/2004, which property had already been attached by the Indusind Bank, the State Bank of India having attached the properties, had kept quite without taking further steps and, therefore, the claim of the appellant Bank is not sustainable. The claim of the appellant that they are entitled to ratable distribution as provided under Section 73, CPC is not maintainable on the ground that as far as recovery in DRT is concerned, the CPC is not applicable and the execution of the recovery certificate is done as provided under Sections 25, 28 and 29 of the Act 51 of 1993 and also under the rules of the second schedule to the Income -tax Act, 1961, and ITCP Rules, 1962. The Recovery Officer relied upon Rule 8(1) of the Second Schedule to the Income -tax Act, which states - -
(a) the sale proceeds shall first be adjusted towards the amount due under the certificate in execution of which the assets were realised and the costs incurred in the course of such execution;
(b) if there remains a balance after the adjustment referred to in Clause (a), the same shall be utilised for satisfaction of any other amount recoverable from the assessee under this Act which may be due on the date on which the assets were released; and
(c) the balance, if any, remaining after the adjustments under Clauses (a) and
(b) shall be paid to the defaulter.
Sub -clauses (b) and (c) are not relevant for this case.
By placing reliance upon Rule 8(1 )(a) referred to above, the Recovery Officer was of the view that the 1st respondent Bank alone had identified the property and had taken action to attach the properties and also to bring the same for sale and it was sold and, therefore, the sale proceeds shall first be adjusted only towards the amount due to the 1st respondent and the appellant has no right to claim ratable distribution. If at all there is any balance, after making adjustment as provided under Clause (b), the balance, if any, alone shall be paid to the defaulter. As there is no balance or surplus amount, the appellant is not entitled to claim any amount from the sale proceeds of the properties, which were brought to sale by the 1st respondent.
The learned Presiding Officer was also of the view that the appellant Bank after having obtained recovery certificate in their favour in RP 32/2004, the appellant has not taken out any attachment of the property and Section 73 of the CPC would be applicable only when the property got attached by the appellant and here it has not been done so and, therefore, the appellant is not entitled to the benefit of Section 73, CPC and justified the order passed by the Recovery Officer.
(3.) NOW the question is whether the appellant is entitled to ratable distribution as provided under Section 73 of the CPC or under any other Act.;
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