Appeal against Recovery Officer's order rejecting intervention application. Tribunal quashed rejection allowing appellant to deposit share valuation to release attachment under Income Tax Act rules.
Appellant directed to deposit share valuation within seven days to release attachment from attachment; failure to do so leaves attachment intact.
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.
DEBTS RECOVERY TRIBUNAL No.2, MUMBAI
PRESIDING OFFICER: HARISH KUMAR KAUSHIK
APPEAL NO.14 OF 2025 IN
RECOVERY PORCEEDING NO.709 OF 2004
Date of Presentation: 30.04.2025
Date of Decision: 17.07.2025
Rahim Panjwani 68/548, Motilal Nagar No.1, H.R. Marg, Goregaon (W), Mumbai 400104
… Appellant
Versus
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Mumbai - 400007.
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Final Order
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not directly address the Appellant’s claim over the said 13,000 shares. Instead, the reply refers to shares of two entirely unrelated companies - Lilavati Medicare Pvt. Ltd. and Lilavati Holding Pvt. Ltd. with distinct folio and certificate numbers. This mismatch appears to be a result of an inadvertent error, likely due to content bearing copied from Appeal No.16 of 2025, which pertains to different shares and facts.
(7) That said, considering the similarity in the underlying legal issue and timeline between Appeal Nos.14 and 16 of 2025 where the only point of variation is the number and entity of the shares. This Tribunal finds it appropriate to adopt the same legal view as was taken in Appeal No.16 of 2025.
(8) As per Rule 16(1) of the Second Schedule of the Income Tax Act, 1961 once a demand notice is served, the defaulter cannot transfer or deal with their property without permission from the Recovery Officer. In this case, there is no record that such permission was ever obtained. On the other hand, Rule 16(2) says that if a property is transferred after it has been attached, that transfer is considered void against the claims of
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the decree holder as far as the recovery process is concerned.
(9) The provision of Rule 16(2) which is akin to similar provisions under the CPC implies that such transfer shall not bar the right of the decree holder to have the property sold to satisfy its debt or a part of the debt.
(10) The transfer of shares in question being later in date than the date of issue of demand notice in the case, is grossly hit by the provisions of Rule 16 of the Second Schedule of the Income Tax Act, 1961. The decree holder has all the right to get the shares attached and sold in execution of their recovery certificate. The only equitable legal recourse the Appellant can have in the case is to deposit the amount of the valuation of the shares that may be presented by the certificate holder bank before the Recovery Officer, that beirng the claim of the Certificate Holders against the shares, and in that event, the transfer of shares may get remedied.
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Radhika-14
the bank within seven days. If he does so, the shares will be released from attachment and he will have no further liability in respect of those shares in this recovery case. However, if he fails to deposit the amount in time, the attachment will remain, and the Appellant cannot claim any rights over the shares that go against the Rule 16(2).
(12) The Appeal No.14 of 2025 is allowed. The Tribunal quashes and set aside the Recovery Officer’s order dated 10.03.2025. The parties are to bear their respective cost.
(13) All pending IAs, if any, stands disposed of.
Sd/-
(Harish Kumar Kaushik) Presiding Officer, DRT-2, Mumbai
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| 17.07.2025 | Exh. | Roznama-MDRT-II Appeal No.14 of 2025 |
Next date |
|---|---|---|---|
| Mr Chirag Balsara, Ms Minal Chandnani, Mr Bhavesh Sawant and Mr Mohd. Asim, Advocates for the Appellant. Mr Kevic Setalvad, Senior Counsel, Mr Vikram Kamath, Ms Deeksha Devsingh and Mr Shubham Dhamnekar i/b M/s. Phoenix Legal, Advocates for Respondent. |
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| rst - 14 | Final Order in Appeal No.14 of 2025 passed separately. Recovery Proceeding No.709 of 2004 be returned to the concerned Recovery Officer. File be consigned to the Record Room after due compliance. Sd/- P.O. DRT-II |
Closed |
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2 issues framed by the court
Whether an assets attached before a gift deed came into existence can be released on deposit of valuation despite the defect in title.
Whether the transfer of property after a demand notice is void against a decree holder under the Income Tax Act.
2 provisions across 1 enactments
RAHIM PANJWANI
HDFC BANK LTD.
HARISH KUMAR KAUSHIK
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
