The Tribunal allowed an appeal challenging an order of impleadment set aside for being a non-speaking order filed out of time, while dismissing an appeal seeking to overturn a Recovery Officer's attachment of mortgaged property in favor of a legal heir.
MA 59/2014 allowed with costs; MA 83/2014 dismissed; no costs awarded for MA 83/2014.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI
Dated the 13th of February, 2025
PRESENT: Hon’ble Mr. Justice G. Chandrasekharan
CHAIRPERSON
M.A : 59/2014
(M.A. 168 of 2013 in OA 365/2007on the file of DRT- III, Chennai)
and
M.A :83/2014
(Appeal No. 04/2013 in IA Nos. 546 & 547 of 2012 in RP No. 203 of 2008 in DRC No. 179 of 2008 in OA No. 365 of 2007 on the file of DRT- III, Chennai)
M.A : 59/2014
Between
Kotak Mahindra Bank Ltd., Asset Recovery Management Branch, Regional Office, 20, Apex Chambers, Sir Theyagararaya Road, T. Nagar, Chennai – 600 017.
…….. Appellant
And
1
2
………. Respondents
3
M.A :83/2014
Between
Kotak Mahindra Bank Ltd., Asset Recovery Management Branch, Regional Office, 20, Apex Chambers, Sir Theyagararaya Road, T. Nagar, Chennai – 600 017. …….. Appellant And
Counsel for Appellant : M/s. T. S. Gopalan & Co. Counsel for R1 to R4 : Mr. M.L. Ganesh
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COMMON ORDER
1. The Appeal in MA 59/2014 is filed challenging the order passed in MA No. 168/2013 in OA No.365/2007 and the Appeal in MA 83/2014 is filed against the order passed in Appeal No.04/2013 in IA 546/2012 & IA 547/2012 in R.P. No.203/2008 in DRC No.179/2008 in OA No.365/2007 passed by Learned Presiding Officer, DRT-III, Chennai.
2. Respondents in Appeal in MA 83/2014 filed Application in IA 546/2012 and 547/2012 in R.P. No. 203/2008 i) to raise an order of attachment dated 25.10.2012 in respect of the property situated at Old Door No. 96 B, New Door No.383, GST Road, Kadapperi, Tambaram, Chennai-43 forming part of Kadapperi Village, Tambaram Taluk, Kanchipuram District, comprised in Survey No.148/1, measuring an extent of 5 cents and ii) stay all further proceedings in DRC No.179/2008 issued in OA No.365/2007 drawn up by the Hon’ble Presiding Officer, Debts Recovery
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Tribunal-III, Chennai with regard to the schedule mentioned property pending disposal of the above application and pass such further or other order may deem fit and proper and thus render justice.
2.1. These Applications have been allowed by Learned Recovery Officer by order dated 12.03.2013. The main grounds raised in these Applications in respect of raising attachment order and stay, were that the property mortgaged with the Bank originally belonged to one Mr. M. Alagarsamy. The first Respondent namely Mrs. K. Valarmathi is sole surviving legal heir. However, one Mrs. Dhroupathi claiming herself as second wife of Mr. Mr. M. Alagarsamy, mortgaged the schedule property and cheated many Banks. Learned Recovery Officer, accepted the submission of Mrs. K. Valarmathi and allowed IA 546/2012. In view of allowing of IA 546/2012 by raising attachment, he dismissed the stay Application in IA 547/2012 as infructuous . Against this order, the Appellant Bank filed an Appeal No.4/21013 before Learned Presiding Officer. Learned Presiding Officer, DRT-
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III, Chennai, after considering the arguments of both sides, dismissed the Appeal. This is the background of the Appeal No. 04/2013 filed by the Appellant Bank. Against the dismissal of the Appeal No.04/2013, the Appeal in MA 83/2014 is filed by the Bank.
3. Mrs. K. Valarmathi and three others filed MA
168/2013, with a prayer to condone the delay of 326 days in filing the instant application after the receipt of attachment order dated 25.10.2012 from the Recovery Officer and permit the applicants to get themselves impleaded in OA No.365/2007 as proposed defendants for proper adjudication of the case and to set aside the order passed in OA 365/2007 and consequently issue a revised DRC by excluding the schedule mentioned property.
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3.1 Learned Presiding Officer, DRT-III, Chennai, has allowed the Application in MA 168/2013. Challenging the said order, the Appeal in MA 59/2014 is filed.
4. Learned Counsel for Appellant Bank submitted the
following:-
i) The Recovery Officer is a subordinate officer of DRT and his duty is to execute the order of DRT;
ii) Security interest was created in respect of the property in dispute;
iii) The Recovery Officer cannot raise the order of attachment of the property in which security interest has already been created;
v) When there is determination of debt by the Tribunal that cannot be set at naught by the Recovery Officer by raising the attachment;
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vi) When there is a charge on the assets, Rule 11 of II Schedule to the Income Tax Act, will not apply;
vii) The Bank is not a party to the proceedings between Respondents and Mrs. Dhroupathi
viii) MA was contested by some of the Defendants, therefore, it cannot be considered as an ex parte order; and
ix) The impugned order passed by the Learned Presiding Officer is not a reasoned order.
For the aforesaid reasons, the orders passed by Learned Presiding Officer are liable to be set aside.
5. Learned Counsel for Respondents submitted that Bank
had given a criminal complaint alleging that the title documents had been forged. Mrs. Dhroupathi cheated several Banks. Mrs. K. Valarmathi had also given a complaint by filing a criminal complaint. Orders were
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passed by Hon’ble High Court of Madras in Crl. O.P No.4458/2007 and WP No. 18065/2011.
5.1 Rule 11 (1) of II Schedule to the Income Tax Act, empowers the Recovery Officer to enquire about the claim made by the claimants.
5.2 It is not in dispute that Mrs. K. Valarmathi is the
daughter of Mr. M. Alagarsamy. Mrs. K. Valarmathi is not a Certificate Debtor. She was not deliberately impleaded as a
party to the proceedings in OA 365/2007. Learned Presiding Officer, DRT-III, Chennai, had rightly rejected the Appeals filed by the Bank, and thus, he prayed for dismissal of these Appeals.
6. Considered the rival submissions and perused the records.
7. Applications in IA 546/2012 and IA 547/2012 have
been filed in RP No. 203/2008 with the prayers
aforementioned.
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8. From the records produced, the Applicants therein and Respondents 1 to 4 in this Appeal in MA 83/2014, have produced the documents in support of their claim that after the death of the original owner Mr. M. Alagarsamy, the 1st Respondent, Mrs. K. Valarmathi is the sole legal heir, who is entitled to the property mortgaged. It is seen from the death certificate of Mr. M. Alagarsamy that he died on 07.12.1991.
The legal heirship certificate produced shows that Mrs. K. Valarmathi is the only daughter and there is no other legal heir. Mrs. K. Valarmathi filed suit in OS No. 474/1997, on
the file of the District Munsif at Tambaram, against Mrs. Dhroupathi, who claims as a second wife of Mr. M. Alagarsamy and the Sub-Registrar, East Tambaram, claiming permanent injunction from alienation and registering any document through the 2nd Defendant and the 2nd defendant from registering any document concerning the suit property. This suit was decreed in favour of Mrs. K. Valarmathi.
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9. On 29.04.2002, Mrs. K. Valarmathi sent a letter to the
Regional Manager of the Bank informing that she is the sole legal heir of deceased Mr. M. Alagarswamy and some of the documents are misused and that Mrs. Draupathi impersonated herself as legal heir of deceased Mr. M. Alagarsway and obtained loan from the Banks, etc. The acknowledgment card for receipt of the said letter is also produced. Mrs. Draupathi filed a suit in OS No. 694/1997 against Mrs. K. Valarmathi seeking the relief of permanent injunction. The suit was hotly contested and an elaborate judgement was passed by Learned District Munsif, Tambaram, on 18.03.2003. It was held that Mrs. Draupathi’s claim that she is the second wife of Mr. M. Alagarswamy was not proved, and thus, dismissed the suit with costs of defendant. On 25.09.2006, Mrs. K. Valarmathi
had given a complaint to the Commissioner of Police, Chennai, narrating the fraud played by Mrs. Draupathi in connivance with the Bank officials. She filed Crl. O.P No.4458/2007 before Hon’ble High Court of Madras, to register a case and that was ordered to register a case if
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cognizable offence is made out. She has also filed Crl. O.P, No.3114/2008 on the file of Hon’ble High Court of Madras seeking investigation in Crime No.1242/2007 and to file final report. The police was directed to complete the investigation and file final report within the period of two months from the date of receipt of copy of the order. She filed WP No. 18065/2011 on the file of Hon’ble High Court of Madras under Article 226 of the Constitution of India for declaring the proceedings instituted by the Indian Overseas Bank, in respect of the schedule property by invoking Section 14 of SARAFAESI Act, 2002, as null and void . The Writ Petition was ordered by setting the impugned order with a direction to the Learned Judicial Magistrate, Chengalpattu to consider the matter afresh.
10. Based upon the documents produced and proceedings initiated, it is clearly proved by Mrs. K. Valarmathi that she is entitled for the property mortgaged as a sole legal heir of the deceased Mr. M. Alagarswamy and that the property was
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mortgaged in this case without her acknowledgement or consent.
11. Rule 11 of II Schedule to the Income Tax Act, 1961 empowers the Recovery Officer to investigate any claim if referred to, or any objection is made to the attachment or sale of any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale. In terms of this Rule, the Recovery Officer had conducted an enquiry and on the basis of the proof produced, he found that Mrs. K. Valarmathi is the owner of the property, and thus, raised the order of attachment.
12. The order of the Learned Recovery Officer was confirmed by the Learned Presiding Officer by dismissing the Appeal filed by the Bank. This Tribunal is of the view, on the basis of the documents produced and discussions held above, that the confirmation of order of Recovery Officer by Learned Presiding Officer is appropriate and in accordance
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with law. Therefore, this Tribunal finds no reason to interfere with the orders passed by both the authorities below. In this view of the matter, this Appeal is liable to be dismissed. Accordingly, the Appeal in MA 83/2014 is dismissed.
13. In so far as the Appeal filed in MA 59/2014, the Respondents filed MA 168/2013 to condone the delay of 326 days in filing the instant application after receipt of attachment order dated 25.10.2012 from the Recovery Officer and permit the applicants to get impleaded themselves in OA No.365/2007 as proposed defendants for proper adjudication of the case and to set aside the order passed in OA 365/2007 and consequently issue a revised DRC by excluding the schedule mentioned property.
14. Perusal of the order passed in OA 365/2007 shows that all the Defendants had been represented by their Counsel. Defendants 1 to 5, 7, 8 and 10 have not filed their Reply Statement. Defendants 6, 11 and 12 filed their Reply
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Statement. The Bank filed documents marked as Exhibits A1 to A83. The Defendants 6, 11 and 12 have not chosen to summon the deponent of Proof Affidavit for the purpose of confronting them in cross examination. The Defendants 1 to 5, 7, 8 and 10 have not participated in the proceedings. Thus, on the basis of the documents produced, the OA was disposed of on merits. It cannot be considered as an order passed ex parte . Learned Presiding Officer, DRT -III, Chennai, had considered the material produced before him and passed a detailed order on merits. This OA was disposed of on 27.06.2008. But, the MA 168/2013 was filed only on 08.10.2013 after 5 years and 4 months. Now, the Respondents want to condone the delay of 326 days in filing
the instant application, but there is no mention as to how 326 days are calculated. In an order passed on merits, about five years and four months back, the Respondents want to get impleaded themselves. The request of the Appellants cannot be entertained at all. There is also no mention about what for the delay has to be condoned? As to
whether in filing the impleading Application or for setting
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aside the order passed in OA 365/2007. There is no provision either in CPC or in RDB Act, to order impleadment in OA, which was disposed of on merits five years and four months back.
15. Without considering any of these aspects, Learned Presiding Officer passed a cryptic order allowing MA 168/2013. There is no discussion of the rival pleadings and contentions made. It is a non-speaking order. This order is liable to be set aside for the reason that it is a non-speaking order and on merits also.
16. In this view of the matter, the order passed in MA 168/2013 in OA 365/2007 is set aside and MA 168/2013 is dismissed. Consequently, this Appeal in MA 59/2014 is allowed with costs of the Appellant.
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17. In the result, the following orders are passed;
i) Appeal in MA 59/2014 is allowed with costs of the Appellant Bank.
ii) The Appeal in MA 83/2014 is dismissed. Both
parties shall bear their own costs.
iii) All pending IAs, in both the Appeals, if any, stand closed.
[Dictated to Athistamani, PS, in open court, transcribed by her, corrected and signed by me this 13th of February, 2025]
[ Justice G. Chandrasekharan] CHAIRPERSON
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3 issues framed by the court
Whether Rule 11 of II Schedule to the Income Tax Act, 1961 empowers the Recovery Officer to raise an attachment order when security interest was already created.
Whether the order allowing impleadment in MA 168/2013, filed over five years after the underlying OA was disposed of on merits, was sustainable.
Whether the appeal challenging the confirmation of the Recovery Officer's decision to exclude the property from the DRC could be allowed.
1 provisions across 1 enactments
Kotak Mahindra Bank Ltd.
Mrs. K. Valarmathi
Mr. K. Senthil Kumar
Mrs. K. Padmakumari
M/s. Kandan Trading Pvt. Ltd.
G. Chandrasekharan
As recorded by the court registry
19 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
