R.S. Tripathi, J. (Chairperson)
(1.) THIS appeal has been preferred against an order dated 27th November, 2007 passed by Presiding Officer, D.R.T., Allahabad in Appeal. No. 03/2006 upholding the order passed in D.R.C. No. 602/2001. The crux of the matter is that in connection with the decree passed in transfer application No. 119/2001 dated 21st February, 2001, the proceedings for recovery in the form of D.R.C. case No. 602/2001 were taken up against the borrowers and guarantors and in connection with that recovery, house No. 603, Khalasi Lane, Kydganj, Allahabad shown in lot No. 8 which is in dispute in this appeal, was to be put to auction along with other properties which have nothing to do with the present appellant. During the course of the recovery proceedings the present appellant preferred an objection dated 6th January, 2004 in respect of the auction proceedings of above house on various grounds including non -service of order dated 22nd January, 2003 passed by the Recovery Officer, non -affixation of copy of the proclamation on the conspicuous part of his house and also on the Notice Board of D.R.T. which is required under the law, non -service of proclamation on J.D. and non -preparation of papers of proclamation as required under the law. Also it was pleaded from the side of the objector -appellant that the learned Recovery Officer in his order dated 22nd January, 2003 did not fix any further date leaving the column for the next date blank, thus the appellant was deprived of proper opportunity. Another objection was taken that instead of fixing any further date in the order sheet the date was given on the Form 13 causing prejudice to the appellant. The other objection taken was that conducting of the sale much before the expiry of the period of 30 days in contravention of Rules was also taken along with the fact that the reserved price of the property to be auctioned was not properly fixed because the circle rate of the area where the property is situated was not considered. Last objection was for non -acceptance of bid amount by the D.R.T. just after the sale allowing the purchaser to deposit later on was also taken.
The Recovery Officer rejected the above objection by passing the order on the aforesaid objection against which the appellant had preferred an appeal No. 03/ 2006 before the D.R.T., Allahabad which has been disposed of by learned D.R.T., Allahabad by passing the impugned order which is under challenge in this appeal.
(2.) I have heard the Counsel for the appellant and Counsel for the respondent Bank and have also gone through the records including the Original File. The learned Counsel for the appellant has argued before this Tribunal that for the auction of the property in question the proceedings dated 24th February, 2003 were all fake and in collusion with the purchaser and other officials of Bank, etc. connected with the auction. He has drawn the attention of this Tribunal towards the order dated 22nd January, 2003 passed by the Recovery Officer and has specifically pointed out that in the aforesaid order the Recovery Officer has left the column for the next date blank and thus the appellant was deprived of the opportunity to raise his appropriate objection at the relevant time. He has also pointed out that for the lot No. 8 that is the house in question the valuation assessed by Recovery Officer was rupees ten lacs whereas the property in question was worth Rs. forty lacs and for that valuation of Rs. forty lacs he has pointed out towards the report filed in this appeal on behalf of the appellant with regard to valuation by a qualified valuer (assessor). According to him the fixation of price of Rs. ten lacs by the Recovery Officer was totally unjust and inadequate. In this connection he has drawn the attention of this Tribunal towards the papers filed along with supplementary affidavit brought before this Tribunal. According to him the valuation report of the Bank itself available on record is enclosed with the supplementary affidavit filed on behalf of the appellant in this appeal, is of a subsequent date the order dated 22nd January, 2003 and this valuation was not at all taken into account while passing the order dated 22nd January, 2003 by Recovery Officer who had failed to appreciate that as per the record of the Bank the above house was worth Rs. 17.23 lacs. Drawing the attention of this - Tribunal towards the Rules provided in Second Schedule of the Procedure for Recovery of Tax of the Income -tax Act, it is argued from the side of the appellant that the proclamation has not been issued as required under the said Rules rather the date has been fixed on the Form No. 13 of the said Rules without taking the signature of any witness for affixation/service of the proclamation making an endorsement that the J.D. was not found. The Counsel for the appellant has vehemently argued before this Tribunal that the Rules 52, 53 and 54 have not been considered for compliance in the instant case and as per Rule 55 the sale cannot take place until the expiry of period of 30 days calculated from the date on which the copy of the proclamation of sale has been affixed on the property or in the office of the Tax Officer whichever is earlier. Drawing the attention of this Tribunal it is pointed out that the sale is dated 24th February, 2003 that is just after the period of nine days from the date of so -called issuance/affixation of the proclamation in violation of above Rule 55 of Second Schedule of the Procedure for the Recovery of Tax. Another argument from the side of the appellant is that 25% of the amount of auctioned bid was required to be deposited by the purchaser at once as per the Rule 57 of the Procedure for Recovery of Tax provided in Rule Second Appendix -4 of the Income -tax Act but this was not done as the purchaser failed to deposit 25% of the amount of bid forthwith after declaration of his being purchaser. He has also argued that the above recovery case was not fixed before Recovery Officer on 26th October, 2006 as the cause list of the case listed before the Recovery Officer for that day does not disclose the details of any such case even then his objection has not been considered. The learned Counsel for the appellant in support of his arguments has cited following rulings:
Prakash Kumar Sachdeva v. State of U.P. 2006(4) A.D.J. 34 (All.); Union Bank of India v. Official Liquidator High Court of Calcutta , Nadungadi Bank Ltd. v. Ezhimala Agricultural Products , T. Ramachandra Nadar v. Official Receiver, Madurai II (1998) BC 191, Hotel Nataraj v. Karnataka State Financial Corporation AIR 1989 Knt. 90, Manilal Mohanlal Shah v. Sardar Sayed Ahmed Sayed Mohamad , Canry's & Canry's Colour Studio & Laboratory (P) Ltd. v. J. Sikile (I) Ltd. Madras I (2004) BC 288 (AP) (DB); Balram son of Bhasa Ram v. Ram Singh , Desh Bandhu Gupta v. N.L. Anand and Rajinder Singh I (1994) BC 45 (SC), and Pappasani Narayana Reddy v. Mandem Reddappa Reddy .
Against this the submission from the side of the respondent Bank is that the huge amount of loan was payable by the borrower and the guarantors after passing of the decree but nothing was paid and for some or other reason and at each and every step of the case objections were being preferred to create obstruction in the recovery. The learned Counsel for the Bank has argued that the entire amount of bid for the sale of the house in question conducted on 24th February, 2003 was deposited by the purchaser and the auction has been confirmed and the sale certificate was issued handing over the possession of the house in question in favour of the auction purchaser. Further it is pointed out that the Recovery Officer as well as learned D.R.T. has rightly held that for the non -compliance of the mandatory provisions of Rules 60 and 61 of the Second Schedule of the Procedure for Recovery of Tax as provided in the Income -tax Act makes the objection raised by the appellant worth rejection and that is why the appellant's objections have not been considered. It is argued from the side of the Bank that the appellant on one hand claims that column for date in order dated 22nd January, 2003 has been left blank and that the appellant was deprived of proper opportunity prior to this date and also after the order dated 22nd January, 2003 the appellant himself appeared before the Recovery Officer agitating several things including attempt to obstruct the continuance of proceedings without any payment of the amount due. His submission is that the period of 30 days from the date of proclamation is only a provision to enable the J.Ds. to come forward to point out anything which is being done illegal or to make the payment of the amount due but in the instant case no such thing has been done and shown by the appellant and with a view to delay the proceedings of recovery hurdles have been created. His submission is that the minor discrepancies, if any, pointed out by appellant are not very material and do not cause any prejudice to the appellant. Learned Counsel for the respondent Bank points out that the objections which have been raised are frivolous therefore as per the provisions of the Rule 61 of the Second Schedule of the Income -tax Act, 1961 the non -deposit of any amount by the appellant disentitles her to raise any objection. In support of his arguments that minor discrepancies and irregularities cannot come in the way of recovery and for this he has cited District Co -operative Federation Ltd. Nadeshar, Varanasi v. State of U.P. 2005 (60) A.L.R. 428 (All.) and Satyam Prakashan v. Canara Bank I (2007) BC 58 (DRAT/DRT) of this very Tribunal in support of his above argument.
(3.) AFTER hearing the learned Counsel for both the parties this Tribunal is of the -opinion that when we go through the provisions of Rule 61 of the Second Schedule Appendix -6 of the Procedure for Recovery of Tax, Income -tax Act we find that Rule 61 lays down as under:
61. Application to set aside sale of immovable property on ground of non -service of notice or irregularity -Where immovable property has been sold in execution of a certificate, such Income -tax Officer as may be authorized by the Chief Commissioner or Commissioner in this behalf, the defaulter, or any person whose interests are affected by the sale, may, at any time, within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this Schedule or on the ground of a material irregularity in publishing or conducting the sale:
Provided that -
A. no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of the non -service or irregularity; and
B. an application made by a defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in the execution of the certificate.
By virtue of above rule and considering the provisions A and B added to this rule firstly the objector has to satisfy that there is the substantial injury by reason of non -service or irregularities and also that he has deposited the amount recoverable in the execution of the certificate. In the instant case we find that there is no such deposit from the side of the appellant for the reasons best known to her. Learned Counsel for the appellant has not been able to show as to how the non -compliance of the Rule 61 in respect of the necessary/mandatory deposit can be overlooked. In the light of the above rule the Recovery Officer and the learned D.R.T. have committed no error in observing that for non -deposit of the mandatory amount under above rule question of considering any objection of the appellant does not arise. Now coming to the other irregularities and discrepancies which have been pointed out in the instant case from the side of the appellant we find that the Ruling in Satyam Prakashan v. Canara Bank (supra), of this Tribunal cited from the side of the respondent Bank before this Tribunal is an appropriate reply to all the questions raised from the side of the appellant in the instant appeal. The non -mentioning of the date on the order dated 22nd January, 2003 of the Recovery Officer is of no consequence for the appellant herself appeared before the passing of above order, took notice of each and every proceeding of case and did nothing at least to file any objection with regard to assessed valuation or made any effort to deposit any amount said to be due. As observed by Recovery Officer and D.R.T., appellant himself has admitted knowledge and service of proclamation. Discrepancies and irregularities pointed out from the side of the appellant with regard to valuation of the property in question cannot be raised at this stage when as observed by the Recovery Officer as well as by D.R.T. after coming to know of issuance of the proclamation the appellant did not do anything to challenge value or to bring any prospective purchaser for appropriate price or to make any effort to deposit the amount found due. The judgment cited as I (2007) BC 58 (DRAT/DRT) (supra) deals with several citations and reasons/grounds which need not be repeated in this judgment to make it lengthy for the reasons to ignore such discrepancies. The Ruling in District Co -operative Federation Ltd. Nadeshar, Varanasi v. State of U.P. (supra) cited from the side of the respondent supports to overlook the above irregularities and discrepancies.
So far as the Rulings cited from the side of the appellant are concerned firstly they deal with cases which relate to either Revenue Law or to Code of Civil Procedure and none of them relates to provisions of RDDBFI Act or Income -tax Act Second Schedule.
The Ruling 2006 (4) A.D.J. 34 (All.) (supra) of Hon'ble Allahabad High Court deals with collusion and conspiracy of the State authorities with auction purchaser, similarly Ruling (supra), Ganry's & Canry's Colour Studio & Laboratory (P) Ltd. v. J. Sikile (I) Ltd. Madras (supra) relate to the cases of fraud in the auction. There is no such allegation of collusion or fraud in the objection filed by the appellant before the Recovery Officer. The Ruling (supra) relates to non -application of mind on account of non -disclosure of creditors in the valuation report and non -fixation of reserve price. No such case has been taken or brought in the objection before the Tribunal. Ruling II (1998) B.C. 191 of Hon'ble Madras High Court (supra) deals with a case of Madras Provincial Insolvency Rules, 1922 and not with the provisions which are applicable to this recovery. The Ruling AIR 1989 Knt. 90 (supra) deals with the provisions of State Financial Corporations Act and has nothing to do with the provisions applicable to present case and rest of the Rulings cited from the side of the appellant deal with various provisions of Order 21 of CPC, whereas that CPC is not applicable for the purposes of proceedings of recovery by the D.R.T., moreover, in the instant case the amount of 25% has not been deposited as required under the law and the report of valuation filed by the appellant is her own private document filed at a very late stage to which no authenticity can be given. The valuation report of the Bank coupled with the amount of bid of the above property finalized do not make out any serious case of adequacy of price.
The result of the above discussions is that in the instant case the appellant has failed to make out any case for consideration of her objection and the learned D.R.T. has committed no error in confirming the order passed by the Recovery Officer, therefore this appeal has no force and it deserves dismissal with costs.