Dismissed

Ms U Lisha Ors. v. M s Suma Oil Agencies

DRAT12 Jul 2024MISC APPEAL/33/2023

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal dismissed the appeal filed by the daughters of borrowers challenging the Recovery Officer's order. They sought release of schedule property based on a post-recovery certificate gift deed. The Tribunal held that under Rule 11 of II Schedule to IT Act, objectors must adduce evidence proving interest in property, which appellants failed to provide, leading to dism

What did the court decide?

Appeal dismissed with no order as to costs.

Ms U Lisha Ors. versus M s Suma Oil Agencies — Banking and Recovery | DRAT (2024)

¶1

MA 33/2023

¶2

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

¶3

Dated the 12^th of July, 2024

¶4

PRESENT: Hon’ble Mr. Justice S. Ravi Kumar CHAIRPERSON

¶5

MA 33/2023

¶6

[Appeal No.2/2020 in OA 1158/2012 on the file of DRT-II, Bengaluru)

¶7

Between

¶8

Ms. U.Lisha D/o A.S.Shankar

¶9

2.Ms.U.Manisha D/o A.S.Shankar

¶10

3.Ms.U.Sushmitha D/o A.S.Shankar

¶11

4.Ms.U.Rakshitha D/o A.S.Shankar

¶12

All residing at No.29,’B’, East Lind Road, Malleshwaram, Bengaluru-560 003.

¶13

…. Appellants

¶14

And

¶15

M/s. Suma Oil Agencies, Rep. by its Proprietrix, Suma Umashankar, No.507, Pillanna Garden, 3^rd Stage, Near Bilal Masjid Complex, Nagavara Main Road, Bengaluru- 560 045.

¶16

¶17

MA 33/2023

¶18

Smt. Suma Umashankar W/o Sri.Umashankar

¶19

Sri.Umashankar, S/o Sri.A.N. Sadashivaiah, Both 2 and 3 are residing at No. 29, III Cross ’B’, East Lind Road, Malleshwaram, Bengaluru- 560 003.

¶20

4.Sri.E.Balan, No. 9, Senneer Kuppam Village, Poonamallee Taluk, ThiruvallurDistrict, Tamil Nadu. 5. The Manager, IDBI Bank Ltd., No.102, Shakhi Comfort Towers, KH Road, Bengaluru-560 027.

¶21

--- Respondents

¶22

Counsel for Appellants : Mr. B. Mohan Counsel for Respondent No.5 : Learned Sr. Advocate Mr. P.L. Narayanan

MA 33/2023

O R D E R

This Appeal is against Order dated 16.03.2022 in Appeal

¶27

No.2/2020 in OA 1158/2012 on the file of DRT-II, Bengaluru.

¶28

Brief facts leading to this Appeal are as follows:-

¶29

Respondent No.5 Bank herein filed OA for recovery of

¶30

Rs.6,02,52,427/- from Respondents 1 to 4 herein. Said OA is allowed and Recovery Certificate is issued through Final Order dated 28.11.2014. Thereafter, Recovery Officer initiated proceedings for recovery of money in terms of Recovery Certificate and issued Demand Notice.

¶31

Appellants herein filed objection under Rule 11 of II Schedule to Income Tax Act, 1961, before Recovery Officer, contending that Schedule property is neither mortgaged property nor secured asset, and Bank has no right to proceed

¶32

¶33

MA 33/2023

¶34

against the Schedule property and raised objection for Sale of Schedule property.

¶35

Recovery Officer, on a consideration of objections raised by Appellants herein and reply objections of Certificate Holder, dismissed the Application of Appellants herein holding that objections raised by Appellants herein are devoid of merits.

¶36

Aggrieved by said Order, Appellants herein preferred an Appeal to DRT under Section 30 of Recovery of Debts and Bankruptcy Act, 1993 (RDB Act, 1993), and Tribunal below, on a consideration of contentions and rival contentions of both parties, upheld the Oder of Recovery Officer and dismissed the Appeal. Aggrieved by the same, present Appeal is preferred.

3. Heard both sides.

MA 33/2023

4. Advocate for Appellants contended that Appellants are

¶41

3^rd parties, and they got Schedule property through a registered Gift Deed dated 18.05.2017, which is much prior to Demand Notice issued by Recovery Officer. He further submitted, this property is not mortgaged property and there is a separate property given as mortgage and security for the loan. He submitted, according to Bank, property given by Respondent No.4 is of defective title, but that cannot be a ground to proceed against property of 3^rd parties. He submitted that as gift in favour of Appellants is much prior to Demand Notice, Recovery Officer ought to have accepted objections of Appellants herein and released the Schedule property, and proceeded against other properties, particularly, mortgaged property.

¶42

5. On the other hand, Advocate for Respondent No.5 Bank

¶43

submitted that Rule 11 of II Schedule to Income Tax Act, 1961, is akin to Order XXI of Rule 58 of CPC. He submitted,

¶44

¶45

MA 33/2023

¶46

Recovery Certificate came to be issued on 16.11.2016, and Gift Deed, on which, Appellants placed reliance, is subsequent to Recovery Certificate i.e. dated 18.05.2017, and both Recovery Officer and Tribunal below rightly discarded objections of Appellants. He submitted that Appellants are children of Borrower and this Gift Deed is only to defraud the Creditor which aspect is rightly accepted by Recovery Officer. He further submitted, once Recovery Certificate is issued, Borrower has no right to alienate the other properties. He further submitted that when Bank made a request to Borrower in OA, Borrower refused to disclose the other assets. He further submitted, except filing Application under Rule 11 of II Schedule to Income Tax Act, 1961, Appellants have not produced any evidence, therefore, for all these reasons, there are no grounds to interfere with concurrent findings of Recovery Officer and DRT.

¶47

6. In reply, Advocate for Appellants herein submitted, there

¶48

is no pleading that the Borrower refused to disclose the

¶49

¶50

MA 33/2023

¶51

assets, and it is raised for the first time during course of

¶52

arguments.

¶53

7. I have perused the material papers including the Order

¶54

of Recovery Officer dated 08.02.2019 and impugned Order dated 16.03.2022, together with material papers.

¶55

8. From the submissions of both sides, it is not in dispute

¶56

that Appellants have approached Civil Court claiming the rights over the very same property, and Civil Suit is still pending. It is also not in dispute that II Schedule to Income Tax Act, 1961, is followed by Recovery Officers in executing Recovery Certificates. As per Section 29 of RDB Act, 1993, provisions of II and III Schedules to Income Tax Act, 1961, shall apply, as far as possible, with necessary modifications. As per provisions of RDB Act, 1993, modes of recovery of debts, is indicated in Section 25 of RBD Act, 1993, and Sections 28 and Section 29 of RDB Act, 1993, are addition to these two Sections, enabling Recovery Officer to apply those

¶57

¶58

MA 33/2023

¶59

sections also. As per Rule 11 (1) of II Schedule to Income Tax Act, 1961, Recovery Officer has to investigate and enquire as to the claim or objection made to attachment or sale of any property in execution of a Recovery Certificate. So, Appellants availed this Rule and raised objection. Rule 11 (3) of II Schedule to Income Tax Act, 1961, mandates that the claimant or objector must adduce evidence to show that in case of immovable property, at the date of the service of the Notice issued under this Schedule to pay arrears; he had some inertest in, or was possessed of, the property in question. So, it is mandatory for Claimant or Objector to adduce evidence regarding their interest or possession over the property; and only on evidence, if Recovery Officer is satisfied that the claim of Objector is genuine and not intended to delay the recovery process, he can raise attachment or release that property from further process.

¶60

9. Admittedly, no evidence is adduced on behalf of Appellants in respect of their claim over Schedule property; so, entire case rests on arguments only, and not on evidence.

¶61

¶62

MA 33/2023

¶63

It is well settled law that any amount of argument, without pleadings and evidence, is of no use. It is also well settled law that every pleading is to be proved by acceptable evidence, and only accepted and admitted facts need not be proved. Here, Bank is not admitting the claim, and on the other hand, it contends that this document of Gift Deed is brought into existence to defraud Creditor. When such an objection is raised, burden is on Appellants to substantiate their claim with acceptable evidence. It is also not in dispute that the Gift Deed relied on by Appellants is after passing of Recovery Certificate. It is also not in dispute that the Appellants are none other than the children of Borrower. Considering all these facts both Recovery Officer and Tribunal below overruled the objections of Appellants, which in my view, is perfectly right. Tribunal below in its Order dated 1 6.03.2022, elaborately considered every aspect and answered every objection and I do not find any wrong in the Order of Tribunal below. Advocate for Appellants mainly focused on Rule 2 and Rule 16 of II Schedule to Income Tax Act, 1961, but these

¶64

two Rules would no way come to the rescue of Appellants

¶65

¶66

MA 33/2023

¶67

when they have not placed any evidence to substantiate their claim.

¶68

10. On a scrutiny of entire material, I am of the considered view that Tribunal below rightly dismissed the Appeal upholding Order of Recovery Officer and that present Appeal is devoid of merits.

¶69

11. For these reasons, it is held that Appeal is liable to be dismissed. Accordingly, Appeal M A 33/2023 is dismissed with no order as to costs. All pending IAs, if any, stand closed.

¶70

[Dictated to Athistamani, PS, in open court, transcribed by her, corrected and signed by me, this 12^th of July, 2024]

¶71

[ Justice S. Ravi Kumar] CHAIRPERSON

¶72

Ms U Lisha Ors. v. M s Suma Oil Agencies

Case brief

What is this about?

What did the court decide?

Ms U Lisha Ors. v. M s Suma Oil Agencies

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

K N Nanjundaradhya versus SBI and Ors.

Ao Kotak Mahindra Bank Ltd. versus M s Ipac paper boards India Pvt. Ltd. and Anr.

Dinesh Mangalassery and Anr. versus Syndicate Bank and Anr.

Mr Murugesan versus Hdb Financial Services Ltd.

Tek Wizard versus Catholic Syrian Bank Limited

Anbarasi versus Axis Bank