Dismissed

Punjab National Bank (Oriental Bank of Commerce) v. Anita and Ors.

DRT29 Dec 2025APPEAL/14/2022

Case brief

AI extract

What is this about?

In this appeal, the bank challenged the Recovery Officer's order allowing third-party objections to the sale of mortgaged property under Rule 11 of the Second Schedule of the Income Tax Act, 1961. The court held that the Recovery Officer has jurisdiction to investigate such possession claims and release the property if justified, upholding the officer's decision.

What did the court decide?

Appeal dismissed; impugned order of the Recovery Officer upholding objections and releasing property from sale stand affirmed.

Punjab National Bank (Oriental Bank of Commerce) versus… — Execution and Attachment | DRT (2025)

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Debts Recovery Tribunal-Il, Delhi

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APPEAL NO. 14 OF 2022 In RC no.328/2O13

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PUNJAB NATIONAL BANK (ERSTWHILE ORIENTAL BANK OF COMMERCE) VS. ANITA AND ORS

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Reserved on: 05.12.2025 Pronounced on : 29.12.2025

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Present:

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Shri D.C.Tripathi, counsel for appellant bank. Shri S.K.Sharma, counsel along with Shri Suryansh, counselfor respondent no. I & 2. None for respondent no. 3 to 5.

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Matter is taken through V.C./Hybrid mode.

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This Appeal has been filed on behalf of the appellant bank for setting aside the order dated 75.03.2022 passed by the Ld. Recovery Officer in RC no. 328/2013.

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The l-d. counsel of the appellant bank has submitted that the appellant bank is the Certificate Holder before the Ld. Recovery Officer-Il, DRT-II, Delhi and aggrieved by the order dated t5.03.2022 whereby the Ld. Recovery Officer has allowed the objection filed by third party objectors Mrs. Anita and Smt.^parul Kapoor under Rule 11 of the Second Schedule of Income Tax Act, 1961 filed on 03.03.2014 in respect of the moftgaged property i.e. ground floor of the propefi bearing No. 478, Sainik Vihar, Pitam^pura, Delhi and the Ld. Recovery Officer has withdrawn the setHing sale proclamation dated 30.01.20t4 in respect of the above said propefi. It is submitted that the appellant bank had sanctioned a Housing Loan of Rs.13.27 Lakhs to Sh. Praveen Jain and Smt. Pallavee Jain against the equitable moftgage of the above said property. On 29.03.2004, the R-3 and 4 reated equitable moftgage

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'SDⁱ

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Appeal no.1412022 2

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by depositing original tiile deeds with the appellant bank. Since the respondent no. 3-5 had defaulted in repayment of loan, hence the appellant bank had filed the original application bearing TA no.16/2012 before this Hon'ble Tribunal which was allowed by this Hon,ble Tribunal vide final order dated 17.09.2013 and thereby RC was issued in favour of the appellant/CH Bank entitling appellant bank to recover an amount of Rs.13,15,310/- with simple interest @ 9.25olo per annum from 29.06.2009 until recovery from the respondent No.1-3lCDs jointly or severally. It is submitted that the Ld. Predecessor Presiding Officer was pleased to upheld the mortgage in favour of the appellant bank while allowing the O.A.,.hence the Ld. Recovery Officer has no power to go beyond the final order passed by the Ld. Predecessor Presiding Officer. It is submitted that the property in dispute was initially allotted to Mr.Ranjit Singh Gill S/O Lt..S. Sarmukh Singh vide perpetual lease deed dated 12.04.1990 registered in the office of Sub Registrar Delhi. Further Mr. Ranjit Singh Gill transferred the said property in favour of Mr. Arun Kumar Walia S/O Lt. Mr. Manmohan Chand vide Conveyance Deed dated 15.03.2004 registered in the office of Sub Registrar Delhi. Further Mr. Arun Kumar Walia signed an Agreement to sell with Mr. Praveen Jain S/o Sh. Roshan Lal Jain and later Mr. Arun Kumar Walia transferred the said property in favour of Mr. Praveen Jain and Mrs. Pallavi Jain Wo Mr. Praveen Jain vide Sale deed dated 29.03.2004 registered in the office of Sub Registrar Delhi. Mr. Praveen Jain and Ms. Pallavi Jain had taken Housing Loan agqi4st equitable mortgage of the subject property created. by the borrowers on 29.03.2004. It is submitted that.the appellant bank is a public sector bank and it has to recover pullic money from its Y

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Apppal no.14i2022

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borrowers/CD's but the objactors have filed the false and frivolous objections before the Ld. Recovery Officer claiming to be the owner of the property in question and the Ld. Recovery Officer has allowed the objection vide order dated 15.03.2022, therefore, the appellant has filed the pre-sent Appeal. It is submitted that the Ld. Recovery Officer has no power to go beyond the RC issued by this Hon'ble Tribunal as this Hon,ble Tribunal has already upheld the mortgage in favour of the appellant bank. It is submitted that as per Secrtion 26 of the RDB Act, no party can dispute the Recwery Certificate Qfore the Recovery Officer on any ground. It is submitted that the propefi in question is mortgaged property and in case of mortgagd property upheld by the Hon'ble Tribunal, it cannot be further challenged before the Ld. Recovery Officer. It is subrnitted that the only recourse available with the Respondent No.1-2l Objectors to approach this Hon'ble Tribunal by way of M.A. for redressal of their alleged grievance in respect of the moftgaged propefi. It is submitted that Rule 11 of the Second Schedule of the Income Tax Act, is not applicable in respect of the mortgaged property. The Ld. Counsel for the appellant bank has relied upon the judgements Dr. Anil Nandkishor nbrewala Vs Jammu and Kashmir Bank Ltd. dated 11.07.2006 1 (2007) BC6 and Ram Laxman Hotels M. Vs. Induslnd Bank Ltd. and Anr. dt.26.04.2019 WP-997120067 of Hontte Bombay High Court. It is submitted that because of the principle of equitable moftgage, "once mortgage always moflgage until redeemed'. It is submitted that the objector was a subsequent purchaser of the property in question whereas the property was mortgaged prior to the purchase, with CH bank in the year 2004. It is submitted that the appellant bank is oly_lg4ng originat titte deeds

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Appeal no.1412012 4

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in its possession and the objectors has no right and title in the said property. It is submitted that the order dated 15.03.2022wou\d cause a great loss to the public funds stored with the appellant bank as its custodian and that would cause a great loss to its goodwill and presUge. It is further submitted that Ld. RO was duty bound to call the concerned SR staff to confirm the genuineness of the title deeds before passing the impugned order dated 75.03.2022. Accordingly, it is prayed to allow the present appeal and set aside the order dated L5.03.2022 passed by Ld.RO and direct the Ld. Recovery Officer to proceed further for sale of the above said property to recover the dues of the appellant bank and also stay the order dated 15.03.2022 passed by the Ld. Recovery Officer till the disposal of the present Appeal. It is further prayed to pass order for status quo in respect of the moftgaged propefi.

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The Ld. Counsel of the respondent no. 1 & 2 has filed reply to the appeal. It is submitted that the respondent no. 1 & 2 are the owners of the property in question and received a notice dated 30.01.2014 issued by the Hon'ble Court. It is submitted that the respondents no. 1 & 2 are the joint owners and are in possession of the entire ground floor of the property bearing No. 478, Sainik Vihar, Pitam Pura Delhi vide registered sale deed dated 23.05.2008. It is submitted that the entire property in dispute was initially allotted by DDA in favour of one Sh. Ranjit Singh Gill S/o Late Sh. S. Sarmukh Singh vide perpetual lease dated 12.04.1990. It is submitted that one Sh. R.K. Jain being the lawful attorney of the above said Sh. Ranjit Singh from lease hold to free hold. The DDA thus execute.d a conveyance deed in favour of Sh. R.K. Jain vide sg

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Appeal no.l4/2022

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registered Conveyance Deed dated 22.11.2000..The said Sh. R.K. Jain sold the entire ground floor without roof righb to Sh. Praveen Kumar Jain vide registered sale deed dated 29.05.2003. It is submitted that the photographs affixed of Sh. R.K. Jain on the Conveyance Deed dated 22.11.2000 and on the sale deed dated 29.05.2003 are similar and of the same person as is clear from the photograph itself. It is submitted that on the direction of this Hon'ble Tribunal the bank has filed copy of the sale deed dated 29.05.2003 aileging it to be executed by Sh. R.K. Jain in favour of Sh.^praveen Kumar Jain would reveal that the photograph of Sh. R.K. Jain affixed on the aforesaid sale deed is not of the person whose photograph is affixed on the documents submitted particularly the authentic document i.e. Conveyance Deed executed by the DDA in favour of Sh. R.K. Jain. The photograph of Sh. R.K. Jain on the alleged Sale Deed dated 29.05.2003 filed by the bank is not of Sh. R.K. Jain. It is submitted that the respondents no. 1 & 2 with a view to ascertain the genuineness of the document obtained the certified copy of the Conveyance Deed dated 22.tt.2000 containing the photograph of Sh. R.K. Jain, which fufther substantiated the stand of the applicant that the alleged sale deed dated 29.05.2003 filed by the bank is a forged document and as such the bank has no right over the property in question and the bank has no legal right to take any action under SARFAESI Act or any other act to recover its dues from the said property on the basis of such forged document. It is submitted that Shri Praveen Jain played fraud with the bank by submitting forged tiUe deeds. Since the alleged moftgage is based on the forged documents the bank cannot initiate any action under the SARFAESI Act and the only option left with the bank in respect to the

Appeal no.l4/2022

property in question is criminal prosecution, not only against the borrower but also against its officials as well as the advocate concerned who has given search repoft. It is submitted that that similar fraud was played by Shri Praveen Jain with State Bank of India and State Bank of Bikaner and Jaipur on the basis of the forged title deeds, and both the bank iniUated proceedings under SARFAESI Act before the Ld. DRT-III, which was disposed of with the direction to the objectors to deposit a sum of Rs.10 lacs with SBI, which was to be appropriate equally by both the banks. It is submitted that the respondents no. 1 & 2 preferred appeals before the Hon'ble DRAT in appeal No.424l10t0 and 425120L0 against the orders dated 14.09.2010 passed by DRT-III, Delhi in SA No.291 and 29212010 wherein the Hon'ble DRAT observed that the appellants i.e. the respondents no. 1 & 2 in the instant case are the bonafide purchasers of the property in question for value without notice, and the alleged equitable mortgage of that property with both the Bank i.e. State Bank of India and State Bank of Bikaner and Jaipur is invalid being vitiated by fraud and cannot be enforce under the provisions of the SARFAESI Act. The Hon'ble DRAT further observed that the measures taken by both the bank for enforcement of its security interest qua the property in question on the basis of its alleged mortgage with them were therefore not in accordance with the provisions of the SARFAESI Act and were bad in law. It is submitted that the RC is only questioned qua the execution of the property of respondents no. 1 & 2 and the Ld. RO has the power to decide in terms of the law laid down in Tax Recovery Officer II Sadar Nagpur Vs. Gangadhar Vishwanath Ranade (1998). It is further submitted that the original of the title documents are in possession of the

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Appeal no.1412022 7

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respondents no. 1 & 2 and therefore, the property cannot be mortgaged with the bank. It is denied that the objector was a subsequent purchaser of the property and the property was already moftgaged with the CH bank in the year 2004. It is submitted that the documents with the concerned bank are forged and fabricated documents and the respondents no. 1 & 2 are the original bonafide owner of the property. It is submitted that the Appellant Bank has no original tifle deeds with them and that is the reason they failed to produce the same before the Ld. Recovery Officer even after getting number of opportunities. Therefore, it is submitted that the present appeal is liable to be dismissed with heavy cost.

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Heard the Ld. Counsels of both the parties and perused the record.

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The main contenUon of the appellant is that the Ld. Recovery Officer has no authority to change the recovery certificate and discharge the subject property against which the recovery ceftificate has been issued. It is submitted.that the appellant has flled the TA no.t6l20l2 which was allowed by this Tribunal vide final order dated L7.09.2013 and a recovery certificate was issued in favour of applicant bank for amount of Rs.13,15,310/- with simple interest @9.25% p.a. from 29.06.2009 until recovery of the dues from respondent no.1 to 3. The rrOj"A property was mortgaged by Shri Praveen Jain and Pallavi Jain on 29.03.2004 by moftgaging the property ground floor without roof rights no.478, Sainik Vihar, Pitam Pura, Delhi admeasuring 125 Sq.yds. It is submitted that respondent no.1 and 2 filed objections under Rule 11 of the Second Schedule of

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gOr

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Appeal no.1412022 8

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Income Tax Act before the Ld. Recovery Officer and.the Ld. Recovery fficer has allowed the objections of the objector. It is submitted that as per Section 26 of the RDB Act no party can dispute the recovery certificate before the Ld.Recovery Officer on any ground. It is submitted that if any pafi is aggrieved by the recovery certificate, he may file an application under Section 19(25) of the RDB Act for the modification of the recovery certificate. The Ld. counsel for the appellant has relied upon the judgement Dr. Anil Nand Kishore T'ibrewala and Ors. Vs. Jammu and Kashmir Bank Ltd. and Ors. 1(2007) BC 6 and Ram Laxman Hotels tut.Vs. Indusind Bank Ltd. WP 99712007 dated 26.04.20L9 Hontle Bombay High Court and submitted that the order passed by the Ld. Recovery Officer is against the provisions of the Act. On the other hand the Ld. counsel for the rgspondent has submitted that the Ld. Recovery Officer is well within its jurisdiction to decide the objections raised by the third pafi under Rule 11 of the Second Schedule of Income Tax Act and the order passed by the Ld. Recovery Officer does not suffer from any illegality.

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In this regard I have perused the record. From perusal of the record it is clear that this Tribunal has allowed the TA no. t6l20l2 and directed the Ld. Recovery Officgr to recover the amount of Rs.13,15,310i/- from the CDs jointly and severally along with simple interest @9.25olo p.a. The Ld. Recovery Officer proceeded to recover the amount and during the recovery proceedings the objectors Smt. Anita and Smt. Parul Kapoor has filed objections under Rule 11 of the Second Schedule of Income Tgx Act. The objectors alleged that they are joint ovvner and in physical

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Appeal no.1412022 9

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possession of. the entire ground floor of the property bearing no. 478, Sainik Vihar, pitam pura by means of registered sale deed dated 23.05.2009. They have also given the chain of title claiming to be the owner and in possession of the subject property. They also ctaimed that the documents which were mortgaged with the bank are forged and fabricated documents and does not bear the photograph of seller Shri R.K.Jain. Therefore, they prayed that the notice for sale proclamation against the property may be recalled. On the other hand the respondent bank has claimed that the property has been duly mortgaged by Shri Pravin Kumar Jain and pallavi Jain by depositing the title deeds of the property. The respondent bank has also claimed that the Ld. Recovery Officer has no authority to set aside the recovery certificate and the objectors has to go before the Ld. Tribunal under Section 19(25) of the Act for setting aside the recovery certificate. The Ld. Recovery Officer considered the contentions of both the parties and has came to the conclusion that the respondent bank has failed to file the certified copies of tre original title deeds which has been deposited by the borrower with the bank for taking loan. On the other hand the objectors has filed the entire chain of the title deeds by which it was proved that they were in owner and in possession of the subject property. The appellant has not challenged this aspect of the decision reached by the Ld. Recovery Officer and has not claimed that the finding of the Ld. Recovery Officer on this point is against the evidence. They have only challenged the order of the Ld. Recovery Officer on the ground that the Ld. Recovery Officer has no authority to set aside the order passed by lhe Ld. DRT under provisions of Rule 11 of the Second Schedule of Income Tax Act. In this r"g"r-d ry: perused the Second

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Appeal no.1412022 l0

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Schedule of Income Tax Act. From perusal of Second Schedule of Income Tax Act it is clear that where any objection is made to attachment or sale of any propefi in execution of a certificate on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection. The sub rule 4 of the Rule 11 provides that if upon such investigation the Tax Recovery Officer comes to the conclusion that such property was not in possession of the defrulter but in possession of the other person, the Tax Recovery Officer shall make an order releasing the property. The provisions of Rule 11 of the Second Schedule of Income Tax Act are as below:-

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Investigahbn by Tax Recovery Officer - (l) where any claim is preferred to, or any oblixtion s made to the attachment or sle of, any proryfty in execution of a ceftifrcatq on the ground that such proprty is not h?ble to such attachment or sle, the Tax Reovery Officer shall proced to investi,gate the claim or objution : Prouidd that no srch investigation shall be made where the Tax Ranuery Officer considerc that the claim or objution was designedly or unnuessarily delayed.

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(2) Where the proprty to which the claim or objection applies has been advertised for alg the Tax Recovery Officer ordering the sale may postpone it pending the investigatbn of the claim or objxtion, upon such terms as to security or other wrfu as the Tax Ruovery Offier shall dem fit

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(3) The claimant or objxtor must adduce evidence to show that_A*_,

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A*,

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Appealno.l4/2022' ll

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(a) (in the ase of immouable prorerty,) at the date of the eruice of the notice issud under thrs fthdule to pay the arr@O or

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(b) (in the care of mouable proprty) at the date of the attachmenl

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he had some interest rO or was ps*sed of the prorerty in

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(4) Where, upon the aid investigabbn, the Tax Reovery Officer is satistid that, for the reason statd in the claim or objection, such property was not, at the sard date, in the posession of the defaulter or of some pernn in trust for him or in the occupancy of a tenant or other Frsn^{paying rent} to him, or that, fuing in the possusion of the defaulter at the said date, it was so in his possusio4 not on hs own aqcount or as hts own prorerty; but on account of or in trust for some other FtsoO^{or paftly} on his own acaunt and paftly on acount of sme other perso4 the Tax Recovery Officer shall make an order relasing the property, whoily or to such esrtent as he think fit, from atbchment or sale.

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(5) Where the Tax Ruovery Offier is satisfied that the prorerty was, at the sid date, in the possession of the defaulter as his own property and not on account of any other pern4 or was h the possesion of sme other rerson^{in trust for him,} or in the occupancy of a tenant or other pe$on @ying rent to him, the Tax Ruovery Officershall disllow the claim.

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(6) Where as claim or an objation is prefened, the party agdinst whom an order is made may institute a suit in a civil coutt to *tablish the right which he claims to the property in dispute; but, subjxt to the result of such suit (il'any) the order of the Tax Rmvery Officer shall be cgnclusive;'

Appeal no.l4l2Ql2

. From perusal of the above provision it is clear that if any party files any objection claiming to be in possession of the property when the recovery certificate was issued, the Ld. Recovery fficer will decide the same and if he finds that the defaulter was not in possession of the propefi at the relevant time, he may release the property. Therefore, the order passed by the Ld. Recovery Officer is in accordance with the Rule 1t of the Second Schedule of Income Tax Act. It cannot be said that the Ld. Recovery Officer has exceeded his jurisdiction. So far as the judgement referred by the appellant are concerned, I have gone through the judgements. From perusal of the judgement Dr. Anil Nand Kishore Tibrewala and Ors. Vs. Jannmu and Kashmir Bank Ltd. and Ors. 1(2007) BC 6 and Ram Laxman Hotels M.Vs. Indusind Bank Ltd. Wp 997|ZOO7 dated 25.04.2019 Honble Bombay High Couft, it is clear that the Honble High Court in these judgements has held that any third pafi can file a Misc. application under Section 19(25) of the RDB Act for setting aside or modification of the recovery certificate. Hon,ble High Couft has not discussed in these judgements the aspect of Rule 11 of the Second Schedule of Income T9x Act. Therefore, it is clear that the objector has two remedies. He may either move an application before the Tribunal for setting aside the recovery certificate under Section 19(25) of the RDB Act or may file objections under Rule 11 of the Second Schedule of Income Tax Act claiming that he was in possession of the property at the time when the recovery certificate was issued. Therefore, on the basis of these judgements it cannot be said that the Ld. Recovery Officer has no jurisdiction to decide the objections filed by the third party under Rule 11 of the Second Schedule of Income Tax Act.

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sgi

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Appeal no.1412022 t3 In the light of the above, the Appeal no.t4l1022 is

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liable to be dismissed.,

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ORDER

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Appeal no.7412022 is dismissed.