Allowed

Rahim Panjwani v. Hdfc Bank Limited and Ors.

DRT17 Jul 2025APPEAL/16/2025

Case brief

AI extract

What is this about?

The debt recovery tribunal allowed an appeal where the appellant, a share-owner but not a borrower, contested attachment of shares gifted post-demand notice. The court ruled that such transfers are void under Income Tax Act rules and directed the appellant to deposit the share value to release attachment.

What did the court decide?

The order dated 02.5.2025 is quashed. Appellant must deposit share value with Recovery Officer within 7 days to release attachment.

Rahim Panjwani versus Hdfc Bank Limited and Ors. — Specific Performance | DRT (2025)

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DEBTS RECOVERY TRIBUNAL No.2, MUMBAI

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PRESIDING OFFICER: HARISH KUMAR KAUSHIK

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APPEAL NO.16 OF 2025 IN

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RECOVERY PORCEEDING NO.709 OF 2004

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Date of Presentation: 02.06.2025 Date of Decision: 17.07.2025

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Rahim Panjwani 68/548, Motilal Nagar No.1, H.R. Marg, Goregaon (W), Mumbai 400104

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… Appellant

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Versus

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HDFC Bank Ltd. Sandoz House, Dr. Annie Besant Road, Worli, Mumbai 400018.

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M/s. Beautiful Diamonds Limited Now known as Splendour Gems Ltd. through Official Liquidator, High Court Bombay, having office at 5^th floor, Bank of India Building, Fort, Mumbai 400 023.

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Mr. Kishore K. Mehta Diamond House, 9, Vatcha Gandhi Road, Gamdevi, Mumbai – 400007.

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Mr Rajesh K. Mehta Diamond House 9, Vatcha Gandhi Road, Gamdevi, Mumbai - 400007.

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Mr. Kiran N. Shah Diamond House

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9, Vatcha Gandhi Road, Gamdevi, Mumbai - 400007.

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Mr. Govinbhai J. Patel Diamond House 9, Vatcha Gandhi Road, Gamdevi, Mumbai - 400007.

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Mr. Rajeev K. Mehta Diamond House 9, Vatcha Gandhi Road, Gamdevi, Mumbai - 400007.

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M/s. Beautiful Jewellers Pvt. Ltd. 101-103, Mittal Court, “A” Wing, 10^th Floor, Nariman Point, Mumbai 400021.

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Bank of Baroda Post Box No.327, M.S. Marg, Fort, Mumbai 400001.

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10 State Bank of India, 1^st Floor, Majestic Shopping, 144, JSS Road, Girgaum, Mumbai 400004.

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11 Standard Chartered Grindlays Bank 90, MG Road, Mumbai 40001.

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12 Global Trust Bank Ltd. 101, Shriji Chambers, Opera House, Mumbai 400004.

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13 Dena Bank Having Industrial financial branch at Cuffe Parade, Mumbai 400005.

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14 The Vysya Bank Ltd. Patel

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Chambers, Sandhurst Brigde, Opera House, Mumbai 400007.

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15 UCO Bank Nariman Point, Mafatlal House, Mumbai 400021.

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16 Allahabad Bank T-4, World Trade Centre, Cuffe Parade, Mumbai 400005.

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17 City Union Bank 402, Janus Arcade, 14^th Road, Khar West, Mumbai 400057.

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18 The Fuji Bank Ltd. Makers Chamber III, 1^st Floor, Jamnalal Bajaj, Nariman Point, Mumbai 400021.

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19 Union Bank of India, Bombay Samachar Marg, Fort, Mumbai 400001.

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20 Credit Lyonnais, Cindia House, Ballard Estate, Mumbai 400038.

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21 UTI Bank Ltd. Universal Insurance Building, Sir P.M. Road, Fort, Mumbai 400001.

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22 IDBI Bank Nariman Bhavan, 227, Vinayak Shah Marg, Nariman Point Mumbai 400021.

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…Respondents

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APPEARANCES
For the Appellant	: Mr Chirag Balsara, Ms Minal
	Chandnani, Mr Bhavesh
	Sawant and Mr Mohd. Asim – Advocates
For Respondent No.1	: Mr Kevic Setalvad, Senior
	Counsel, Mr Vikram Kamath, Ms Deeksha Dev Singh and Mr Shubham Dhamnekar i/b M/s. Phoenix Legal – Advocates
For Respondent Nos.2 to	None
22

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Final Order

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(1) The Appellant filed this Appeal to challenge the impugned order dated 02.5.2025 passed by the Ld. Recovery Officer, DRT-2, Mumbai in Recovery Proceeding No.709 of 2004 whereby directed the Appellant to co-operate with the CH Bank in respect of shares legally owned and belonging to the Appellant. The Appellant is neither the borrower, nor a guarantor nor a mortgagor in Recovery Proceeding No.709 of 2004 despite the said, the shares belonging to the Appellant attached by the Ld. Recovery Officer vide order dated 25.10.2023 and thereafter, when the

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Appellant challenged the said order by filing Intervention Application seeking lifting of attachment even the said Application dismissed vide order dated 02.5.2025 against which the Appellant has filed Appeal before this Tribunal. The Appellant further states that upon the dismissal of the Intervention Application filed by the Appellant, the Appellant ceases to be a party to the Recovery Proceedings but, the Ld. Recovery Officer is passing the direction which is not in accordance with the law and void ab-initio. The Ld. Advocate for the Appellant further argued that the Appellant is ready and willing to deposit the value of the shares with the CH Bank. In these circumstances, Appeal should be allowed.

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(2) The Respondent No.1 in reply submits that the present Appeal is not maintainable and deserves to be dismissed in-limine on account of being devoid of merits and being a gross abuse of the process of law and prays that Appeal be dismissed with exemplary cost.

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(3) Heard both Ld. Advocates for the parties at length and perused the material placed on record.

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(4) The Appellant has approached this Tribunal to challenge the order passed by the Ld. Recovery

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Officer on 02.5.2025, which directed the Appellant to co-operate with the CH Bank in respect of shares legally owned the belonging the Appellant. In this matter, the Appellant claimed ownership over 10,000 equity shares of Lilavati Medicare Pvt. Ltd. & 2,000 equity shares of Lilavati Holding Pvt. Ltd. that were gifted to him by Certificate Debtor No.2 on 1st July 2022. In these circumstances, Appeal should be allowed.

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(5) From the perusal of the record, it is clear that the Recovery Certificate in this case was issued way back on 13^th November 2004, and a demand notice followed on 22^nd March 2005. The gift deed in favour of the Appellant came much later in 2022. Later, the shares in question were attached by the Recovery Officer through an order dated 25^th October 2023.

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(6) 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 Office. 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

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transfer is considered void against the claims of the decree holder as far as the recovery process is concerned.

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(7) 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.

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(8) The transfer of the shares in question being later in date that 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 being the claim of the Certificate Holders against the shares, and in that event the transfer of shares may get remedied.

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(9) So, in the interest of fairness and justice, this Tribunal orders that the Appellant must deposit with the Ld. Recovery Officer an amount equal to

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the value of the shares as per the valuation given by the bank within 7 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 Rule 16(2). (10) The Appeal No.16 of 2025 is allowed. The Tribunal quashes and set aside the Recovery Officer’s order dated 02.5.2025. The parties are to bear their respective cost.

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(11) All pending IAs, if any, stands disposed of.

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Sd/-

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(Harish Kumar Kaushik) Presiding Officer, DRT-2, Mumbai

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Radhika-15

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17.07.2025	Exh.	*Roznama-MDRT-II* *Appeal No.16 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.
rst - 15		Final Order in Appeal No.16 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

Rahim Panjwani v. Hdfc Bank Limited and Ors.

Case brief

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Rahim Panjwani v. Hdfc Bank Limited and Ors.

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