Allowed

High Rank advisory Pvt. Ltd. v. Rajesh Kr Gupta

DRAT22 Jun 2023REGULAR APPEAL/112/2022

Case brief

AI extract

What is this about?

The DRAT allowed the auction purchaser's appeal, holding that the application to recall the Recovery Officer's order is not maintainable under Section 22 of the RDB Act. Consequently, the valuation objections and improper auction sale issues could not be considered. The impugned DRT order setting aside the sale was set aside.

What did the court decide?

The judgment and order dated 05.10.2020 passed by the DRT were set aside, and the order dated 10.01.2012 passed by the Recovery Officer was restored.

High Rank advisory Pvt. Ltd. versus Rajesh Kr Gupta — Banking and Recovery | DRAT (2023)

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Appeal. No. 112 of 2022-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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(Appeal No. 112 of 2022)

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(Arising out of Appeal No. 01 of 2012 in R.P. No. 44 of 2009 in I.A. No. 1025 of 2019 in DRT -3 Kolkata)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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High Rank Estate Advisory Private Limited, a Company incorporated under the Companies Act, 1956, having its Registered Office at 309, B.B. Ganguly Street, 1^st Floor, Room No. 16, Kolkata – 700012.

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…Appellants

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Sri Rajesh Kumar Gupta, 23/1A, B.T. Road, Police Station- Chitpur, Kolkata -700002.

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Sri Sanjoy Gupta, 23/1A, B.T. Road, Police Station- Chitpur, Kolkata - 700002.

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Smt. Rashmi Gupta, 23/1A, B.T. Road, Police Station- Chitpur, Kolkata -700002.

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Smt. Anita Gupta, 23/1A, B.T. Road, Police Station- Chitpur, Kolkata - 700002.

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Bank of India, 210/212, Jamunalal Bajaj Street, Police Station – Barabazar, Kolkata – 700007

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… Respondent

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Counsel for the Appellants	Mr. Ajit Keshari, Learned Counsel led by Mr. A.K. Dhandhania, Ld. Senior Counsel for the Appellant
Counsel for Respondent	Mr.Prasenjit Pal, Learned
	Counsel, Mr. Someswar Chakrabarty, Learned Counsel for the
	Respondent No. 1 to 4.
	Ms. Poetry Dutta,
	Learned Counsel along
	with Ms. Suparna Biswas, Learned Counsel for the Respondent No. 5

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Appeal. No. 112 of 2022-DRAT-Kolkata

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JUDGMENT : On 22^nd June, 2023

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THE APPELLATE TRIBUNAL :

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Instant Appeal has been preferred by the Appellants (Auction Purchaser) against a judgment and order dated 05.10.2020 passed by Ld. DRT-3 Kolkata in Appeal No. 01 of 2012 (arising out of R.P. case No. 44 of 2009) I.A. No. 1025 of 2019.

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2. As far as facts of the matter are concerned, Appellant herein is the auction purchaser while Respondent Nos. 1 and 2 namely Sri Rajesh Kumar Gupta and Sri Sanjay Gupta are the borrowers of Respondent No. 5 i.e. Bank of India and Respondent Nos. 3 and 4 namely Smt. Ashmini Gupta and Smt. Anita Gupta are the guarantors who are wives of Respondent Nos. 1 and 2.

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3. It is undisputed fact that in March, 2003 a housing loan of Rs. 10.00 lacs was sanctioned by the Respondent No. 5 Bank of India to Respondent Nos. 1 and 2 wherein Respondent Nos. 3 and 4, who are wives of Respondent Nos. 1 and 2, stood as Guarantor. Respondents failed to repay the amount of loan. Accordingly, an O.A. No. 13 of 2006 under Section 19 of the Recovery of Debts and Bankruptcy Act 1993 (hereinafter referred to as the Act) was filed by the Bank against the Respondents for recovery of Rs.12,07,421/- which was allowed exparte against all the Respondents on 20^th April, 2009. Recovery Proceedings were initiated vide R.P. No. 44 of 2009. Reserved price of the property was fixed on the basis of valuation report at Rs.12,65,000/-. Mortgaged property was sold for Rs.23,61,000/-. Pending recovery proceedings Respondent Nos. 1 to 4 appeared before the Recovery officer and sought time to make the payments. Recovery officer adjourned the proceedings and vide order dated 05.05.2010 directed the Certificate Debtors to deposit an amount of Rs. 6.00 lacs on or before the next date of hearing. Auction sale was conducted on 27.10.2010. Appellants deposited the amount on

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Appeal. No. 112 of 2022-DRAT-Kolkata

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12.11.2010 and 26^th November 2010 was fixed for confirmation of sale. On 26.11.2010, Respondent Nos. 3 and 4 filed an application for stay of confirmation of sale on the ground that the property is undervalued. Vide order dated 07.01.2011 application of the Respondent No. 3 and 4 was disposed of by the Recovery Officer and direction for issuance of sale certificate was passed. An application for recall of the order dated 07.01.2011 was filed by the Respondent Nos. 3 & 4 which were dismissed on 10.01.2012.

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4. Appeal No. 01 of 2012 u/s 30 of the Act was filed by the Respondent Nos. 3 and 4 against the order dated 10.01.2012 before the Debt Recovery Tribunal-3 Kolkata which was decided on 10.07.2012 and a direction was issued to the auction purchaser i.e. Appellant herein to pay another sum of Rs. 9,39,000/- with consequential orders. Further, the direction of the Recovery Officer dated 10.01.2012 to the Advocate Receiver to take physical possession was also quashed.

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5. Feeling aggrieved by this Appeal, Appeal No. 111 of 2012 was filed by the Respondent Nos. 3 and 4 herein and Appeal No. 121 of 2012 was also filed by the auction purchaser before the Debt Recovery Appellate Tribunal Kolkata which was decided on 28.04.2014 by a common judgment and matter was remanded back to the Ld. DRT-3 Kolkata to decide the matter afresh in view of the observations made in the body of judgment.

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6. Thereafter, the Ld. DRT-3 Kolkata again decided the matter on 8^th December, 2014 setting aside the sale. 7. Feeling aggrieved by the order of the DRT-3 Kolkata, Appeal No. 72 of 2017 was filed by the Bank while Appeal No. 36 of 2015 was filed by the auction purchaser. Both the Appeals were decided by DRAT Kolkata by common judgment dated 12.05.2017 wherein it was held that the Ld. DRT has not complied the earlier order passed by the DRAT Kolkata. Accordingly, matter was again remanded back to DRT3 Kolkata for deciding it afresh.

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Appeal. No. 112 of 2022-DRAT-Kolkata

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8. DRT-3 Kolkata decided the matter afresh and passed the impugned order setting aside order dated 10.01.2012 passed by the Recovery Officer in RP No. 44 of 2010. It is further directed that the Recovery officer should obtain a fresh valuation report.

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9. Feeling aggrieved Appellant, Auction purchaser has preferred the Appeal.

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10. I have heard the Learned Counsel for the Appellant as well as Respondent Nos. 1 to 4 and Respondent Nos. 5 and perused the record.

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11. At the very outset before entering into the merit of the matter, I would like to observe that it is an unfortunate case which is before this Appellate Tribunal in the third round of litigation. In the two earlier rounds, orders passed by the Ld. DRT were set aside and directions were issued to decide the matter afresh in the light of directions given by the DRAT Kolkata in its judgment. But the Ld. DRT did not comply the directions of this Appellate Tribunal for the reasons best known to him. At this stage, I would like to observe that although under Section 17 A of the Act supervisory control has been given to DRAT over the DRTs. Further, Appeal under Section 18 of the SARFAESI Act or under Section 20 of the RDB Act are filed before the DRAT. Judicial discipline mandates that any direction issued by the Appellate authority is binding upon the DRT. In this case also it should have been followed. But a peculiar situation has arisen wherein on two occasions, directions were issued by DRAT to DRT but the Presiding Officer of the DRT-3 Kolkata did not comply the directions issued by the Appellate Tribunal. 12. Appeal No. 01 of 2012 was preferred against the order dated 10.01.2012 passed by Recovery officer before the Presiding Officer DRT-3 Kolkata by the Respondent Nos. 3 and 4 herein who were the Certificate Debtors along with their husbands namely Sri Rajesh Kumar Gupta and Sri Sanjoy Gupta. Recovery Officer directed the Receiver to take physical possession of the property and to hand over the same to the Auction Purchaser. Appeal No. 01 of 2012 was decided by the Ld. DRT-3 Kolkata vide judgment dated 10^th July, 2012.

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Appeal. No. 112 of 2022-DRAT-Kolkata

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13. Feeling aggrieved by the judgement, Appeal No. 111 of 2012 was filed by the Respondents herein Smt. Reshmi Gupta and Smt. Anita Gupta while Appeal No. 121 of 2012 was filed by the Auction Purchaser. Both the Appeals were decided by a common judgment on 28.04.2014 whereby the matter was remanded to the Ld. DRT-3 to decide the matter afresh in the light of the mandate given in the judgment. It would be pertinent to note that in the Appeal this Appellate Tribunal had issued following directions to the Ld. DRT.

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“The learned Counsel for the Appellant in appeal No. 121 of 2012 has brought to my knowledge, sub clause (b) of Rule 61 of the second schedule appended to the Income Tax Act and argued that the Recovery officer should have insisted upon the appellants in Appeal No. 111 of 2012 to deposit the amounts due payable under the Certificate and that aspect was not even considered by the Presiding Officer. DRT though such a plea was raised by the Appellants in appeal No. 121 of 2012. I am of the considered view that there is considerable force in the submissions of the Learned Counsel for the Appellants in Appeal No. 121 of 2012 that the Presiding Officer ought to have given his findings on the issue pertaining to the nonimplementation of sub-clause (b) of Rule 61 of the second schedule appended to the Income Tax Act and as such the Presiding Officer, DRT-3 is expected to apply his mind on that and give his verdict on that issue after hearing both sides.

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The Presiding Officer in paragraph Nos. 15 and 16 of the impugned order, no doubt expressed his anguish as well as his surprise over the under valuation mainly on the ground that the reserve price of the property to be sold was fixed at Rs.12.65 lakhs so to say at 23.81% of the total value of the land and building excluding 76.19% of the total value of the land and building; simply because 80% of the building was under occupation of the tenants, the gross under valuation, was not tenable. However, the learned Counsel for the Appellants in Appeal No. 121 of 2012 would find fault with such a finding on the ground that a qualified surveyor assessed it based on certain criteria and without having any objective evidence to the contrary the Presiding Officer had wrongly held as though the property was under valued. But, one fact is clear that both the Appellants would find fault with the approach of the Presiding Officer.

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Objective evidence is the hall mark of rendering justice in adversarial proceedings. Here without entertaining any evidence, simply the Presiding Officer on his own assumption gave his finding in paragraph nos. 15 and 16 of his order. I would like to indicate that there is no nard and fast rule that whenever valuation officer files a valuation report, it has to be taken for gospel truth. It is open for the Recovery Officer as well as the Presiding Officer to consider the correctness of the valuation. Because a person is an authorized

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Appeal. No. 112 of 2022-DRAT-Kolkata

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valuer, he cannot base on his subjective satisfaction arrive at a value. He must be able to show objectively on what recognized principle of valuation, he arrived at his assessment. He assessed the land and building at 23.81% of the real value, excluding 76.19% of the total value of the land and building without any solid basis. Over and above, there is another point here to be noted, here is nothing to indicate as to how he arrived at the total value of the land and building in a sum of Rs. 53,13,277/- when the government valuation as given by ARA-1, Calcutta was to a tune of Rs.1,07,88,713/-(Rs.81,25,000/towards land value+Rs.26,63,713/-towards value of the structure). As such in this case even though the Presiding Officer expressed some prima facie doubt about the value, yet he failed to arrive at a conclusion objectively nonetheless which warrants this DRAT to interfere and mandate that the Presiding Officer, DRT-3 shall entertain objective evidence and consider as to what should be the proper valuation. In that regard both sides should be given liberty to put forth their case on being remitted to him. “

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14. Further, the direction regarding redemption issued by the DRT was set aside.

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15. In compliance of the directions of the DRAT, the matter was again decided by the Ld. DRT-3 Kolkata vide judgment dated 08.12.2014 thereby setting aside the sale and with consequential directions. This order was again challenged in Appeal No. 72 of 2017 by the Bank of India and Appeal No. 36 of 2015 by the Auction Purchaser. Both the Appeals were decided by a common judgment dated 12.05.2017 wherein DRAT recorded a finding to the effect that-

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“I am of the view that the order of the Ld. Presiding Officer is cryptic, mechanical and without application of mind inasmuch as without following the direction given by the DRAT in the Appellate Order referred hereinabove. The Appellate Authority has set aside the order of the DRT on the issue of valuation and, therefore, the said order does not exist and should not be adopted. The DRT should have examined the material on record relating to the valuation placed by either side and independently adjudicate the issue relating to the valuation, namely, whether the reserve price fixed in the sale notice fixed at Rs.12,65,000/-was reasonable and justified and the property sold at Rs.23,84,810/- was the fair price of the property on the basis of materials available on record and pleadings and submissions of the parties. The DRT should also consider the law laid down by the Apex Court in this regard including the decision of the Apex Court in the case of Ram Kishun & Ors. Vs. State of U.P. & Ors. Reported in (2012) 11 S.C.C.511.

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So far as the direction of the DRAT relating to the redemption is concerned, the same is not sustainable inasmuch as it is not in

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Appeal. No. 112 of 2022-DRAT-Kolkata

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accordance with law. None of the provisions supports such direction. Learned Counsel for the Respondents is not able to support the said direction. The said direction is liable to be set aside. However, it is open to the Respondents to raise the plea of redemption if it is available to them under any provisions of the Act and if so raised the same may be considered in accordance with law having regard to the findings recorded by the DRAT in its earlier order which has attained finality.

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In the result both the Appeals are allowed. The impugned order dated 8^th December, 2014 is set aside. The matter is relegated to DRT-3 to decide the matter afresh in the light of the observations made above.”

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16. Again, in compliance of the directions of the DRAT, Ld. DRT decided the matter by impugned order dated 05.10.2020 and allowed the appeal and set aside the sale. In the impugned order also Ld. DRT did not comply the directions issued by the DRAT in the aforesaid earlier two judgments.

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17. Before entering into the merits of the matter it would be pertinent to mention that undisputedly certificate was issued against Respondent Nos. 1 to 4 for an amount of Rs. 12,07,421/- on 20^th April, 2009. It is also not in dispute that Recovery proceedings R.P. No. 44 of 2009 were initiated. Reserved price for auction sale was fixed at Rs.12,65,000/- after obtaining the valuation Report. Mortgaged property was sold for Rs. 23,61,000/-. Thereafter, against the order of the Recovery Officer dated 10.01.2012, Appeal No. 01 of 2012 was filed by the Respondent Nos. 3 and 4 before the DRT-3 Kolkata. Since then, the matter is hanging like a pendulum between DRAT and DRT. On every occasion orders passed by the DRT are set aside and the matter was remanded to the DRT by DRAT but DRT did not comply the directions of DRAT and acted against the provisions of Law.

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18 . Now it is to be looked into under what provision of law Appeal was filed before the Ld. DRT by Respondent Nos. 3 and 4? Application under Section 22 (2) (e)(g) of the Act was filed by Respondent Nos. 3 and 4 before the Recovery Officer DRT -3 Kolkata to recall the order dated 07.01.2011 and 01.02.2011 which reads as under:-

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(2) The Tribunal and the Appellant Tribunal shall have, for the purposes of discharging their functions under this Act, the same

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Appeal. No. 112 of 2022-DRAT-Kolkata

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powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the following matters, namely –

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(a) summoning and enforcing the attendance of any person and examining him on oath;

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(b) requiring the discovery and production of documents;

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(c) receiving evidence on affidavits;

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(d) issuing commissions for the examination of witnesses or

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documents;

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(e) reviewing its decisions;

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(f) dismissing an application for default or deciding it ex parte; (g) setting aside any order of dismissal of any application for

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default or any order passed by it ex parte;

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(h) Any other matter which may be prescribed.

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A prayer was made that order dated 7^th January, 2011, 1^st February, 2011 is recalled/ or set aside unconditionally. It was contended that the orders were passed without hearing the Applicants.

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19. Objections against the Application were filed. Initially in the Application main plea was taken that the orders were passed by the Ld. Recovery Officer behind the back of the Appellants. In the reply to the objections filed by the Bank, another plea is taken that the property was under-valued.

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20. Recovery Officer passed an order dated 10.01.2012 holding that sufficient time and opportunity has been given to the CDs to make payment for the debt but they have not utilized the opportunity and repaid the dues till date. Accordingly, plea of CD No. 3 and 4 were rejected. The Receiver and the CHB was directed to act as per order No. 30 of 07.01.2011, Order No. 31 of 17.01.2011 and Order No. 32 of 01.02.2011 and take physical possession of the concerned property and also to transfer the same in favour of the auction purchaser. 21. First order was passed by the DRT on 10^th July, 2012 thereby directing the auction purchaser to pay another sum of Rs. 9,39,000/-

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Appeal. No. 112 of 2022-DRAT-Kolkata towards sale consideration with the Respondent No. 1, Bank and the related poundage fee within four weeks. This order was, as has been mentioned earlier, challenged before the DRAT which Appeal was allowed on 28.04.2014 wherein direction was issued to the DRT regarding non-implementation of Sub clause B of Rule 60(1) of the Second schedule appended to the Income Tax Act. 22. On perusal of the provision will show that Section 22 (2) (e) and (g) of the Act is applicable to the Tribunal and the Appellate Tribunal only.

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Tribunal is defined under Section 2 (0) of the Recovery of Debts and Bankruptcy Act 1993 as under:

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‘Tribunal means the Tribunal established under sub Section (1) of Section 3”

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Section 3 of the Act reads as under:

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3.(1) “The Central Government shall, by notification, establish one or more Tribunals, to be known as the Debts Recovery Tribunal, to exercise the jurisdiction, powers and authority conferred on such Tribunal by or under this Act.”

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Appellate Tribunal is defined under Section 2(a) which reads as under. “Appellate Tribunal” means an Appellate Tribunal established under sub-section (1) of Section 8”.

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Section 8 of the Act reads as under:

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“Section 8.(1) The Central Government shall, by notification, establish one or more Appellate Tribunals, to be known as the Debts Recovery Appellate Tribunal, to exercise the jurisdiction, powers and authority conferred on such Tribunal by or under this Act:” Recovery Officer is defined under Section 2 (k) as under:

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“Recovery Officer means a Recovery Officer appointed by the Central Government for each Tribunal under sub-section (1) of Section 7 “ Section 7 of the Act reads as under:

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“The Central Government shall provide the Tribunal (with one or more Recovery Officers) and such other officers and employees as that government may think fit.”

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Appeal. No. 112 of 2022-DRAT-Kolkata

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23. Definition of Tribunal, Appellate Tribunal will show that Recovery Officer is not included in the definition of Tribunal. At the very outset it can be inferred from the provision of Section 22 (2)(e) (g) of the Act that this provision is not applicable to the Recovery Officer. Recovery Officer has not been empowered by the Statute either to review its decision or to set aside any order of dismissal of any application for default or any order passed by it exparte. This Application itself was moved under this provision which was not maintainable before the Ld. Recovery officer. The application was filed in a wrong forum and is being prosecuted for the last about more than 10 years.

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24. An objection was raised before the Ld. DRT regarding applicability of Section 22 (2) (e) & (g) of the Recovery of Debts and Bankruptcy Act. Further, an objection was raised to the effect that the Recovery Officer should have insisted upon the Respondent Nos. 3 and 4 herein to make a deposit in accordance with the sub Clause (b) Rule 60 (1) of the second schedule attached to the Income Tax Act which reads as under:

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( 2) Where a person makes an application under Rule 60(1) for setting aside the sale of his immovable property, he shall not, unless he withdraws that application, be entitled to make or prosecute an application under this rule.

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Application to set aside sale of immovable property on ground of non-service of notice or irregularity.

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61. 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:

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Provided that –

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(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

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(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.

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25 . This provision was pressed into service in the objection before the Ld. DRT and thereafter a direction was issued by this Appellate Tribunal in its judgment dated 10.07.2012 to the Ld. Presiding Officer DRT-3 Kolkata to apply his mind on it and give his verdict on that issue after hearing of parties. Despite the directions issued by this Appellate Tribunal even in three rounds of the litigation before the DRT this issue is not touched upon by the Ld. Presiding officers which is against the judicial norms and discipline. However, to put the controversy at rest, I propose to deal with the provision.

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26. As has been held earlier, Application moved under Section 22 (2) (e) &(g) of the Recovery of Debts and Bankruptcy Act 1993 before the Ld. Recovery Officer was not legally maintainable. Thereafter the only recourse left with the Respondent Nos. 3 and 4 was to invoke the provisions of Rule 60 (1) of the second schedule of Income Tax Act which are applicable in the proceedings.

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27 . In Hotel Parash Garden versus Central Bank of India 2015 (6) page 152 Mh.L.J a Division Bench of the Hon’ble Bombay High Court has held that the borrower were neither disputing their loan nor the liability to clear the certificate amount. If they had any objection to the auction or then to the determination of the Reserved price, they never voiced it at the earliest possible opportunity. Rather, in the present case, the Respondent Nos. 3 and 4 are the wives of Respondent Nos. 1 and 2. Respondent Nos. 1 and 2 were the owners while their wives were the guarantors. O.A. was decided against them exparte. No Appeal or application for recall was filed. Proclamation of

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Appeal. No. 112 of 2022-DRAT-Kolkata sale was issued. Reserved price was fixed at Rs. 12,65,000/- but no objection was raised. Rather, the borrowers have given a letter to the Receiver on 3^rd October, 2010 with a request to adjourn the sale fixed on 06.10.2010 wherein the borrowers had promised to pay a sum of Rs.6 lacs on 25.10.2010 at 1 p.m, failing which the Recovery Officer shall be entitled to sell the property. Further, another letter was given on 01.10.2010 by the Respondent Nos. 1 and 2 who are the borrowers wherein it is stated that-

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“In spite of my undertaking to pay Rs. 5 (five) lacs by August, 2010, I could not arrange to obtain the amount from the Bank, as such I have failed. However, I hereby undertake to pay Rs. 6 (six) lacs by 25.10.2010 at 1 P.M. The remaining balance shall be paid within 30 days.

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I request you to postpone the sale of my property up to 25.10.2010. Failing which you may proceed with the sale of my house. “

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Vide order dated 04.10.2010 matter was adjourned to 27.10.2010 and sale was deferred till 25.10.2010. Even at this stage no objection was raised regarding under valuation of the property. Auction took place on 27.10.2010. Even on that date no objection regarding under valuation was raised. For the first time on 26.11.2010 objection was filed by the Respondent Nos. 3 and 4 wives of Respondent Nos. 1 and 2 to the effect that the property is under valued. This objection was rejected by the Ld. Recovery officer vide impugned order dated 10.01.2012. Hence, it was well within the knowledge of the Respondent Nos. 1 to 4 from the very beginning that the reserve price was fixed, but no objection was ever raised.

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In Hotel Paras Garden (supra) it was held by the Hon’ble Division Bench of the Bombay High Court in Para No. 32 that-

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“If such an application is by the borrower, he must deposit the amount recoverable from him in execution of the recovery certificate. In either case, applicant has to establish that either (1) notice to pay the arrears was not served upon the defaulter as per the Second Schedule or then, (2) there has been a material irregularity in publishing or conducting the sale. These requirements are made more

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stringent inasmuch as the proviso mandates reaching of a satisfaction by the recovery officer and hence, (3) obliges applicants to demonstrate a “substantial injury” in the case falling under (1) and (2). Most peculiar ingredient is Condition No. (4) which gets attached in this matter, as the debtors here are defaulters i.e. the petitioners before us. In addition to showing compliance with the above three, petitioners must also deposit the amount for recovery of which the entire exercise was undertaken by the Respondent No. 2 recovery officer. Language employed in second proviso and use of word “disallowed” assumes significance. An application which otherwise could have been allowed because the three ingredients noted supra are satisfied, stands rejected i.e. disallowed if the deposit as stipulated in proviso (b) is not made.” 28. Admittedly the amount as required to be deposited under Proviso B of Section 61 was not deposited by the defaulter. Judgment of the Hon’ble Division Bench of Bombay High Court was approved by the Hon’ble Apex Court in R.S. Infra-Transmission Limited versus Saurinindubhai Patel and others 2022 SCC Online Supreme Court 854 where it was held in Para 40 and 41 that“ 40. At this stage, it is required to be noted that the right available to the judgment debtor under Rule 60 is a valuable right and the last resort/ opportunity to the judgment debtor to save his property. It is a right available to the judgment debtor after his property is sold in a court auction. Therefore, such a valuable right available to the judgment debtor to save his property should not be affected on the technical ground and/ or for the mistake and/ or the bona fide mistake for which he was not at all responsible.

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41. The legislative intent of Rule 60 has been dealt with and considered in detail by the Bombay High Court in the case of Hotel Paras Garden, Balapur (supra). In the aforesaid case, it is observed that the legislative intent of Rule 60 is to give the defaulter as much latitude as possible till the end and he can, under Rule 60, without assigning any cause but after depositing the sum therein mentioned as

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mentioned in the sale proclamation within the stipulated time, avoid the auction and protect his property. Thus, the right which is available to the judgment debtor under Rule 60 is a most valuable right available and the same shall not be permitted to be affected on the technical ground and/ or bona fide mistake for which he cannot be said to be at fault.

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In the present case, benefit of the valuable right available to Respondent Nos. 1 to 4 could not be availed by them as no deposit was made in accordance with the provisions of Second Schedule of the Income Tax Act.

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29. Learned Counsel for the Respondent Nos. 1 to 4 submits that no plea of Rule 60(1) of the Second Schedule of Income Tax was raised before the Ld. DRT. Further, it is submitted that in the subsequent Appellate judgment dated 12.05.2017 matter was remanded to the DRT to decide the issue of valuation. There was no direction for dealing with the provision of second schedule of the Income Tax Act. Hence, the Ld. DRT was well within its jurisdiction not to deal with the provisions of Second Schedule of Income Tax Act.

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30. I could not find myself in agreement with the Learned Counsel for the Respondents. In the judgment dated 08.12.2014 this Appellate Tribunal has given a specific direction to the Ld. Presiding Officer DRT to deal with the issue of clause (b) of Rule 61 of the second schedule appended to the Income Tax Act and to record a finding on the issue pertaining to non-implementation. Further, in the judgment dated 12.05.2017 this Appellate Tribunal, at the cost of repetition observed and directed that the order of the Presiding officer is cryptic, mechanical and without application of mind in as much as without following the direction given by the DRAT in the Appeal order referred hereinafter. Order of this Appellate Tribunal passed earlier was in the judgment. Hence, it cannot be accepted that the subsequent remand order dated 12.05.2017 in any manner superseded the earlier order dated 08.12.2014. Accordingly, directions issued in the Appellate order dated 08.12.2014 were binding upon the DRAT.

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31. There is another aspect of the matter. When the Application before the Recovery officer was filed under Section 22 (2)(e) (g) of the Recovery of Debts and Bankruptcy Act wherein the order was passed by Recovery Officer on 10.01.2012 which was assailed before the Ld. DRT in Appeal under Section 30 of the Recovery of Debts and Bankruptcy Act. Legal provisions regarding inherent jurisdiction of the Recovery Officer should have been considered by the DRT at the time of deciding the Appeal. Ld. DRT did not make any effort to look into the legality of the petition filed under Section 22(2) (e) (g) of the Act before the Recovery officer whether it was legally maintainable or not. Hence, the basic issue of maintainability of the Application before the Recovery officer was not considered by the DRT despite directions issued by this Appellate Tribunal.

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However, now on the basis of discussion made above, I am of the view that the Application filed by the Respondent Nos. 3 and 4 before the Recovery Officer was not legally maintainable.

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32. Now, coming to another limb of arguments regarding undervaluation of the property as alleged by the Respondent Nos. 3 and 4 petition was filed under Section 22 (2) (e)(g) of the Recovery of Debts and Bankruptcy Act, I am of the view that since the application itself was not legally maintainable, hence all the grounds taken in the Application could not be considered.

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33. On the basis of discussions made above, I am of the view that the order passed by the Ld. DRT dated 05.10.2020 cannot sustain and is liable to be set aside. Order passed by the Recovery officer in R.P No. 44 of 2010 should be restored.

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ORDER

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Appeal is allowed. Judgment and order dated 05.10.2020 passed by Ld. DRT-3 Kolkata is set aside. Order dated 10.01.2012 passed by Recovery Officer in R.P. No. 44 of 2010 is restored.

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No Order as to costs.

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File be consigned to Record Room.

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Appeal. No. 112 of 2022-DRAT-Kolkata

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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Copy of the Judgment/ Final Order be uploaded in the Tribunal’s Website.

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