P.Shuyjaath Raheed & Ors. v. The State Bank of India & Ors

For Petitioners:Mr.T.M.HariharanFor Respondents:Mr.E.Om Prakashfor M/s.Ramalingam Associatesfor 1st respondent Mr.K.A.Ramakrishnanfor 4th respondent Mr.R.Thiagarajanfor respondents 5 and 6O R D E RP.JYOTHIMANI,J.The revision in C.R.P. (PD) No.936 of 2012 has been filed againstthe order of the Debts Recovery Appellate Tribunal dated 21.12.2011in R.A.No.881 of 2010, by which the Appellate Tribunal whiledismissing the appeal filed against the order of the Debts RecoveryTribunal-III, Chennai in O.A.No.368 of 2007 as withdrawn, has grantedliberty to the petitioners to seek relief before the Recovery Officerwith respect to the proceedings under Second Schedule of the IncomeTax Act, with a direction to the Recovery Officer to dispose of thesame by following the procedure and giving opportunity to the partiesand the revision in C.R.P. (PD) No.937 of 2012 has been filed againstthe earlier order of the Debts Recovery Appellate Tribunal dated29.8.2011, wherein the Appellate Tribunal based on the representationof the learned counsel for the first respondent/bank that auction hasbeen held and full consideration is yet to be paid by the auctionpurchasers, has directed the Recovery Officer to confirm the sale,while restraining him from issuing the sale certificate.2.1. Let us get down to brass tacks. The second respondent(M/s.P.Khaleelur Rahman & Co., Bangalore) is a partnership firm,which primitively had six partners. The revision petitioners 1 to 3and the third respondent were four partners. One partner –P.Khaleelur Rahman passed away prior to the proceedings on 8.10.1994itself and petitioners 4 to 9 and the third respondent are his legalrepresentatives. One other partner of the firm C.Jameelur Rahman,who was the fifth defendant before the Debts Recovery Tribunal in theOriginal Application, passed away pending the said proceedings andhis legal representatives are petitioners 10 to 12.2.2. Apropos of the availing of financial assistance by thesecond respondent/partnership firm from the first respondent/bank,four immovable properties were mortgaged in favour of the firstrespondent/bank, namely:(i)An extent of 33250 Sq.Ft. of land in T.S.No.16, https://hcservices.ecourts.gov.in/hcservices/ Pandit Jawaharlal Nehru Road, Vaniyambadi with abuilding constructed thereon in the name of "WaleTannery" situated in New Door No.1507 – 'A' ScheduleProperty – stated to belong to Late P.Khaleelur Rahman;(ii)An extent of 0.86 Acres and 0.26 Acres of land inT.S.Nos.16/4 and 16/3, Katchery Road, Vaniyambadi – 'B'Schedule Property – stated to belong to LateP.Khaleelur Rahman;(iii)An extent of 0.36 Acres of land in R.S.No.14,Katchery Road, Amburpet, Vaniyambadi – 'D' ScheduleProperty – stated to belong to the third respondent;and (iv)An extent of 25870 Sq.Ft. of land in T.S.No.21/2C,an extent of 331 Sq.Ft. in T.S.No.24 and an extent of 4Sq.Ft. in T.S.No.23, in all measuring 26205 Sq.Ft. inC.L.Hajee Abdul Subhan Street, Vaniyambadi withbuilding thereon bearing Door No.1507-A – 'C' ScheduleProperty – stated to belong to the third respondent andC.Jameelur Rahman, who was the fifth defendant in theoriginal application.2.3. It appears that in the year 1996, the first respondent/bankhas filed a suit in O.S. (SR) No.6042 of 1996 before the Sub Court,Thirupathur for recovery of ` 2,76,00,824/- with future interest andfor sale of the mortgaged properties and hypothecated movables. Afterthe Debts Recovery Tribunal came into existence, it appears thatfirst respondent/ bank has re-presented the papers before the DebtsRecovery Tribunal-I, Chennai and the same was numbered as O.A.No.1001of 1998.2.4. The question of maintainability was raised by thepetitioners 1, 3 and Jameelur Rahman (5th defendant in the OriginalApplication) as a preliminary issue. The interlocutory applicationcame to be disposed of stating that the preliminary issue can bedecided along with the Original Application and that order came to beconfirmed by the Debts Recovery Appellate Tribunal, Chennai andthereafter by this Court in C.R.P. (PD) No.733 of 2007 andultimately, the Special Leave Petition filed against the order in therevision came to be dismissed by the Supreme Court.2.5. It was thereafter the Original Application re-presented bythe first respondent/bank came to be transferred to the DebtsRecovery Tribunal-III, Chennai and was re-numbered as O.A.No.368 of2007 and the Tribunal has passed a decree on 15.9.2009 for a sum of `2,67,43,091/- with interest at 9% per annum from the date of theoriginal application and also ordered for sale of mortgagedproperties, namely Schedules 'A' to 'D', stated above, apart from themovables stated in Schedules 'E' and 'F' to the original application. https://hcservices.ecourts.gov.in/hcservices/

2.6. It was against the decree passed by the Debts RecoveryTribunal dated 15.9.2009, an appeal was filed in R.A.No.88 of 2010before the Debts Recovery Appellate Tribunal, Chennai, which hasallowed the application filed by the petitioners for waiver of pre-deposit.2.7. While the appeal was pending, the Recovery Officer issued arecovery certificate in DRC No.159 of 2009 in O.A.No.368 of 2007 forrecovery of ` 5,46,73,245.77 on 26.11.2009. Pursuant to that, theRecovery Officer, Debts Recovery Tribunal-III, Chennai has issued apublic notice for auction in R.P.No.186 of 2009 in DRC No.159 of 2009for sale of four items of properties on 14.7.2011 in two lots – Lot-Iconsisting of immovable properties mentioned in Schedules A, B and D,for which the upset price was fixed at ` 2,33,00,000/-, and Lot-IIconsisting of immovable properties mentioned in Schedule 'C', forwhich the upset price was fixed at ` 2,45,00,000/-. On 13.7.2011,there was a direction issued by the Debts Recovery Appellate Tribunalto the Recovery Officer to proceed with the proposed auction, but notto confirm such sale till 29.8.2011.2.8. In the auction, respondents 5 and 6 participated, who infact have submitted a letter to the Recovery Officer dated 14.7.2011stating that they are aware of the pending case and specificallydeclaring that the auction is subject to the cases pending in thecompetent court. Respondents 5 and 6 were declared as successfulbidders in respect of Lot-I (Schedules – A, B and D) for `2,35,00,000/- and in respect of Lot-II (Schedule – C) for `2,85,50,000/-. It appears that respondents 5 and 6, apart from makingthe initial deposit, have also deposited the balance saleconsideration of ` 3,95,58,020/- on 29.7.2011.2.9. However, on 29.8.2011, on the basis of a representation madeby the learned counsel for the first respondent/bank that full saleconsideration has not been paid by respondents 5 and 6, the DebtsRecovery Appellate Tribunal has directed the appeal to be posted on14.10.2011, while directing the Recovery Officer to confirm the salebut not to issue the sale certificate. The said order dated29.8.2011 is the subject matter of challenge in C.R.P.(PD) No.937 of2012.2.10. Pursuant to the said order dated 29.8.2011, it appears thatthe Recovery Officer has confirmed the sale in respect of Lot-Irelating to Schedules A, B and D. However, the sale in respect ofLot-II relating to Schedule C was not confirmed owing to the reasonthat the fourth respondent (R.R.Vasu @ Vijayashankar) claiminghimself to be the purchaser from the original partnership firm,namely the second respondent, moved the Recovery Officer to set asidethe sale. That application filed by the fourth respondent came to berejected, against which the fourth respondent has moved the Debts https://hcservices.ecourts.gov.in/hcservices/ Recovery Tribunal-III, Chennai and the Debts Recovery Tribunal-III,Chennai, by an order dated 18.8.2011, has directed the fourthrespondent to deposit the highest bid amount of ` 2,85,55,000/- andfurther sum of ` 8,44,770/- and ` 14,27,500/- in respect of Lot-II(Schedule C).2.11. Respondents 5 and 6, whose sale in respect of Lot-I(Schedules A, B and D) stood confirmed by the Recovery Officer, havefiled an impleading petition in the appeal filed by the petitionersin R.A.No.88 of 2010 before the Debts Recovery Appellate Tribunal. 2.12. Meanwhile, on 8.10.2011, the petitioners have addressed tothe first respondent/bank offering to pay an amount of ` 5.50 Crores,being ` 19.50 Lakhs over and above the auction bid amount in respectof Lot-I and Lot-II, in order to save the properties. The firstrespondent/bank has replied on 19.10.2011 stating that since thematter is pending before the Debts Recovery Appellate Tribunal, suchrequest cannot be entertained and also stated that, in fact, the saleproclamation made by the Recovery Officer was sent to the petitionersalso and it was open to them to partake in the auction and,therefore, requested the petitioners to approach the appropriateforum.2.13. Based on the said letter, the petitioners filed a memobefore the Debts Recovery Appellate Tribunal, Chennai on 22.11.2011stating that in respect of Lot-I (Schedules A, B and D) even thoughrespondents 5 and 6 have deposited the payment, by dint of the orderof the Debts Recovery Appellate Tribunal dated 29.8.2011, wherein theAppellate Tribunal has directed the Recovery Officer to confirm thesale but not to issue sale certificate, the sale is not completed.In respect of Lot-II (Schedule C) claimed to have been purchased bythe fourth respondent from the second respondent/partnership firm, itwas stated that such sale is not valid since the property belonged tothe third respondent in his individual capacity and even though thefourth respondent was directed to deposit the amount, as statedabove, no such deposit was made and therefore, in respect of both thelots, the sale has not been confirmed. It was further stated thatthe petitioners are offering ` 5.50 Crores, namely ` 30 Lakhs overand above the bid amount, and on such representation the firstrespondent/bank has directed the petitioners to approach theappropriate forum and, therefore, the memo has been filed to put aquietus to the litigation and they prayed for dismissal of the appealas not pressed in the event of redressal of their grievances. Therelevant portion of the memo is as follows:"11) Hence this Memo for this Hon'ble Appellate Tribunalto consider and pass appropriate orders taking intoconsideration of giving a quietus to the aforesaidAppeal on being withdrawn as 'Not Pressed' in the event https://hcservices.ecourts.gov.in/hcservices/ of the Appellants' grievances are redressed as above."2.14. Apart from filing such memo, the learned counsel for thepetitioners has specifically stated before the Debts RecoveryAppellate Tribunal that the petitioners will settle the entire duesto the first respondent/bank and the appeal may be dismissed aswithdrawn, and sought permission to move the Recovery Officer byfiling proper application. It was in those circumstances, the DebtsRecovery Appellate Tribunal has passed the impugned order on21.12.2011, which is challenged in C.R.P. (PD) No.936 of 2012, givingdirection to the Recovery Officer to consider the case of thepetitioners. The operative portion of the said order is as follows:"In view of the facts and circumstances of the case thisRA is dismissed as withdrawn. The appellants are atliberty to file the necessary applications for seekingreliefs before the Ld. Recovery Officer with respect tothe proceedings under II Schedule of the Income Tax Actand equally they shall stand entitled for being properlyheard by the said Authority. The Ld. Recovery Officershall upon filing of the said applications by theappellants take them on file and dispose of the same inaccordance with law after due notice to partiesconcerned. Needless to say that the appellants wouldalso be entitled to move necessary applications forseeking of interim reliefs before the Ld. RecoveryOfficer."2.15. It is these two orders which are challenged by thepetitioners on the following grounds:(i)that the Recovery Officer has no jurisdiction todecide about the receipt of the entire amount therebyclosing the decree passed by the Debts RecoveryTribunal;(ii)that the memo filed by the petitioners is pursuantto the letter of the first respondent/bank dated19.10.2011 and even as per the said memo seekingpermission to withdraw the appeal, it was only subjectto the redressal of the grievances of the petitionersand such grievances cannot be redressed by the RecoveryOfficer and therefore, even if the counsel has made arepresentation seeking opportunity to enforce theirrights before the Recovery Officer, that cannot givejurisdiction to the Recovery Officer to decide aboutthe decree passed by the Debts Recovery Tribunal; (iii)that the payment or deposit stated to have beenmade by respondents 5 and 6 in respect of Lot-I and theownership claimed by 4th respondent in respect of Lot-II, are all unbeknownst to the petitioners and thefirst respondent is in cahoots with the said purchasers https://hcservices.ecourts.gov.in/hcservices/ and that cannot be put against the petitioners and,hence, the impugned orders passed by the Debts RecoveryAppellate Tribunal are on the misstatement of facts andcannot be pressed into service against the petitioners;(iv)that respondents 5 and 6 are not bona fidepurchasers without notice of the proceedings and,therefore, they cannot claim to have any better title;and (v)that while the memo consists of two portions, theDebts Recovery Appellate Tribunal has accepted only oneportion of withdrawal of appeal and not decided aboutthe other portion in respect of the offer made forpayment of an amount ` 5.50 Crores and the DebtsRecovery Appellate Tribunal having known that theRecovery Officer has no jurisdiction to decide thesame, ought to have decided by itself.3.1. Mr.T.M.Hariharan, learned counsel appearing for thepetitioners would vehemently contend that inasmuch as the RecoveryOfficer has no jurisdiction to decide about the acceptance of theoffer made by the petitioners for the purpose of full settlement ofthe decree passed by the Debts Recovery Tribunal, the orders of theDebts Recovery Appellate Tribunal are without jurisdiction, byrelying upon the judgments in Megmala v. G.Narasimha Reddy, (2010) 8SCC 383, S.P. Chengalvaraya Naidu v. Jagannath, (1994) 1 SCC 1,Muthavalli of Sha Madhari Diwan Wakf, S.J. Syed Zakrudeen v. SyedZindasha, (2009) 12 SCC 280, and Hasham Abbas Sayyad v. Usman AbbasSayyad, (2007) 2 SCC 355.3.2. By referring to Section 22 of the Recovery of Debts Due toBanks and Financial Institutions Act, 1993 and Rule 22 of the DebtsRecovery Appellate Tribunal (Procedure) Rules, 1994, he would contendthat the said provisions confer power on the Debts Recovery AppellateTribunal to give appropriate direction. In this regard, he wouldrely upon the decision in Chinnammal v. P. Arumugham, (1990) 1 SCC513.3.3. He has also referred to Section 29 of the Recovery of DebtsDue to Banks and Financial Institutions Act, 1993 which contemplatesthe adherence to the procedure enshrined in the Second and ThirdSchedules to the Income Tax Act, 1961 and the Income Tax (CertificateProceedings) Rules, 1962 with necessary modifications. In thisregard, he would rely upon the decisions in J.N.Krishnan v. TheBranch Manager, Canara Bank and others, 2011 (4) CTC 698 andPhilomina Jose v. Federal Bank Ltd., (2006) 2 SCC 608.3.4. It is his further submission that even assuming that theCode of Civil Procedure is not applicable to the proceedings beforethe Debts Recovery Appellate Tribunal or Debts Recovery Tribunal, the https://hcservices.ecourts.gov.in/hcservices/ well established principles of Transfer of Property Act, 1882regarding mortgage, as stipulated under Section 60 of the Transfer ofProperty Act, cannot be ignored.4.1. Per contra, it is the submission of Mr.R.Thiagarajan,learned counsel appearing for respondents 5 and 6 andMr.K.A.Ramakrishnan, learned counsel appearing for the 4th respondentthat the Debts Recovery Appellate Tribunal has acted only as per thememo filed by the petitioners. It is their submission that thepetitioners have not sought any opportunity to file a fresh case andthere was no application filed and it was only a memo for withdrawal,which was allowed by the Debts Recovery Appellate Tribunal.4.2. The learned counsel have also brought to the notice of thisCourt the fact that pursuant to the impugned order passed by theDebts Recovery Appellate Tribunal, the petitioners have already movedthe Recovery Officer by filing interlocutory applications and whilesuch applications are pending, the present revisions have been filedand on that score these revisions are liable to be dismissed.4.3. The learned counsel further submitted that as per theprovisions of the Schedule to the Income Tax Act, 1961 and theIncome Tax (Certificate Proceedings) Rules, 1962, the petitionersought to have deposited the amount if they really intend to avoid thesale and inasmuch as such deposit has not been made, the petitionersare not acting bona fide. They would also rely upon the decision inNazims Continental & Others v. The Indian Overseas Bank, TriplicaneBranch and others, 2009-3-LW-792.4.4. To substantiate the contention regarding the rights of theauction purchasers, they would rely upon the decision in JanathaTextiles & Others v. Tax Recovery Officer and another, 2009-2-LW-108.4.5. According to them, the filing of the revisions is playingfraud on the court and while the petitioners have taken a specificstand before the Debts Recovery Appellate Tribunal to withdraw theappeal, they have chosen to challenge the order passed by theAppellate Tribunal dismissing the appeal as withdrawn.4.6. They would also submit that redemption as claimed by thepetitioners under Section 60 of the Transfer of Property Act ispossible only before the sale is confirmed, by relying upon thedecision in Mhadagonda Ramgonda Patil v. Shripal Balwant Rainade,(1988) 3 SCC 298.4.7. To substantiate their contention that co-mortgagee is liableto pay the entire amount due, he would rely upon the decision inChhaganlal Keshavlal Mehta v. Patel Narandas Haribhai, (1982) 1 SCC223. https://hcservices.ecourts.gov.in/hcservices/

5. We have heard the learned counsel on both sides, referred tothe orders passed by the Debts Recovery Appellate Tribunal which arechallenged in these revisions and given our anxious thought to theissue involved in this case.6. The decree passed by the Debts Recovery Tribunal in O.A.No.368of 2007 is not in question. It is on fact clear that at request ofthe petitioners, who have filed memo before the Debts RecoveryAppellate Tribunal, the Appellate Tribunal while permitting thepetitioners to withdraw the appeal has directed the petitioners toapproach the Recovery Officer for redressal of their grievances. Itis also on record that pursuant to such direction as sought by thepetitioners, they have in fact moved the Recovery Officer-III atDebts Recovery Tribunal-III, Chennai by filing I.A.Nos.594 and 595 of2011 in D.R.C.No.159 of 2009 in R.P.No.186 of 2009 in O.A.No.368 of2007 seeking grant of certificate to enable them to deposit theproposed mortgage amount of ` 5.50 Crores directly to the credit ofD.R.C.No.159 of 2009 in R.P.No.186 of 2009 in O.A.No.368 of 2007.The said interlocutory applications were filed in December, 2011 andthe same are pending. The petitioners having filed applications asper the impugned orders passed by the Debts Recovery AppellateTribunal, have now challenged the impugned orders by way of revisionsmuch after filing of the necessary applications before the RecoveryOfficer. These revisions have been filed in the end of February,2012.7. As stated above, it is no doubt true that the petitioners havefiled a memo on 22.11.2011 the contents of which show that they areprepared to offer ` 5.50 Crores in full settlement of the entiredecree amount passed by the Debts Recovery Tribunal and subject tothe said grievance they wanted to withdraw the appeal. It is not indispute that the petitioners have not deposited the said offeredamount of ` 5.50 Crores. Even in the interlocutory applications filedbefore the Recovery Officer pursuant to the impugned order of theDebts Recovery Appellate Tribunal, they have only sought permissionto pay the amount of ` 5.50 Crores and as on date such amount has notbeen deposited. On the other hand, the purchasers, namelyrespondents 5 and 6, who are no doubt aware of the pendinglitigation, have paid the entire amount of sale consideration, butsale certificate was not issued because of the interim order passedby the Debts Recovery Appellate Tribunal.8. On a reference to the order passed by the Debts RecoveryAppellate Tribunal dated 21.12.2011 challenged in C.R.P. (PD) No.936of 2012, it is clear that it is on the representation made by thelearned counsel appearing for the petitioners seeking an opportunityto enforce the rights of the petitioners before the Recovery Officer,the Appellate Tribunal passed the order. Inasmuch as the order https://hcservices.ecourts.gov.in/hcservices/ itself is very comprehensive and permitted the petitioners towithdraw the appeal as dismissed with a direction as prayed for, itis relevant to extract the impugned order dated 21.12.2011, which isas follows:"Ld. Counsel Shri C.P.Shivamohan appearing on behalf ofthe appellants stated that the appellants are ready andwilling to settle the matter with the respondent bankand that he has filed a memo enclosing a representationmade by the appellants to the bank and added that theappellants will settle the entire dues of the bank if anopportunity is given to them and that this appeal isbeing withdrawn. Ld. Counsel prayed that the appellantsmay be given an opportunity to enforce their rightsbefore the Ld. Recovery Officer through filing of properapplications as may be required and further prayed thatthe Ld. Recovery Officer may be directed to dispose ofthe said applications as warranted under law.Heard the Ld. Counsel for the appellants.In view of the facts and circumstances of the case thisRA is dismissed as withdrawn. The appellants are atliberty to file the necessary applications for seekingreliefs before the Ld. Recovery Officer with respect tothe proceedings under II Schedule of the Income Tax Actand equally they shall stand entitled for being properlyheard by the said Authority. The Ld. Recovery Officershall upon filing of the said applications by theappellants take them on file and dispose of the same inaccordance with law after due notice to partiesconcerned. Needless to say that the appellants wouldalso be entitled to move necessary applications forseeking of interim reliefs before the Ld. RecoveryOfficer."9. The Debts Recovery Appellate Tribunal has only directed thepetitioners to approach the Recovery Officer, pursuant to which, infact, the petitioners have approached the Recovery Officer forredressal of their grievances and thereafter, it is not open, in ourconsidered view, for the petitioners to turn around to say that theRecovery Officer has no jurisdiction. It is not as if against theorder of the Recovery Officer there is no relief available to thepetitioners. 10. Section 29 of the Recovery of Debts Due to Banks andFinancial Institutions Act, 1993, which is as follows:"Section 29. Application of certain provisions ofIncome-tax Act.— The provisions of the Second and ThirdSchedules to the Income-tax Act, 1961 and the Income- https://hcservices.ecourts.gov.in/hcservices/ tax (Certificate Proceedings) Rules, 1962, as in forcefrom time to time shall, as far as possible, apply withnecessary modifications as if the said provisions andthe rules referred to the amount of debt due under thisAct instead of to the income-tax: Provided that any reference under the said provisionsand the rules to the “assessee” shall be construed as areference to the defendant under this Act."contemplates the applicability of the Income Tax (CertificateProceedings) Rules, 1962 and the Second and Third Schedules to theIncome Tax Act, 1961, which relate to the sale of the properties.Rule 60 of the Rules in the Second Schedule to the Income Tax Act,1961, which relates to recovery, the procedure of which is directedto be applied as per Section 29 of the Recovery of Debts Due toBanks and Financial Institutions Act, 1993 is as follows:"Application to set aside sale of immovable property ondeposit.60. (1) Where immovable property has been sold inexecution of a certificate, the defaulter, or any personwhose interests are affected by the sale, may, at anytime within thirty days from the date of the sale, applyto the Tax Recovery Officer to set aside the sale, onhis depositing—(a) the amount specified in the proclamation ofsale as that for the recovery of which the salewas ordered, with interest thereon at the rate offifteen per cent per annum, calculated from thedate of the proclamation of sale to the date whenthe deposit is made; and(b) for payment to the purchaser, as penalty, asum equal to five per cent of the purchase money,but not less than one rupee.(2) Where a person makes an application underRule 61 for setting aside the sale of hisimmovable property, he shall not, unless hewithdraws that application, be entitled to makeor prosecute an application under this rule.”A reading of the said Rule makes it abundantly clear that any personwho seeks to set aside the sale of immovable property, being adefaulter in repayment, has to necessarily deposit the amountspecified in the proclamation of sale and unless and until hedeposits the said amount, there is no possibility for the authorityunder the Act to decide the appeal. Therefore, the contention ofthe learned counsel for the petitioners that even without deposit ofthe amount the Appellate Tribunal should have decided in their favouris totally fallacious. https://hcservices.ecourts.gov.in/hcservices/

11. The applicability of the provisions of Second Schedule to theIncome Tax Act, 1961 in accordance with Section 29 of the Recoveryof Debts Due to Banks and Financial Institutions Act, 1993,particularly with reference to Rules 60 and 61 came up forconsideration before a Division Bench of this Court in NazimsContinental & Others v. The Indian Overseas Bank, Triplicane Branchand others, 2009-3-LW-792. S.J.Mukhopadhaya,J. (as His Lordship thenwas) while narrating the relevant provisions of the Recovery ofDebts Due to Banks and Financial Institutions Act, 1993, the IncomeTax Act and the Income Tax (Certificate Proceedings) Rules, 1962 inthe context of the Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest Act, 2002, has held asfollows:"12. From Rule 60, it will be evident that applicationto set aside sale of immovable property on any groundcan be made by the defaulter or any person, whoseinterests are affected by the sale, within 30 days fromthe date of sale. In such case, the amount specified inthe proclamation of sale with interest thereon @ 15%p.a., from the date of proclamation of sale to bedeposited apart from payment of penalty @ 5%.Per contra, under rule 61, any person, whose interestsare affected, may, apply within 30 days to set aside thesale of immovable property only on the ground of 'non-service of notice' or 'irregularity' and has to showthat notice was not served on the defaulter to pay thearrears as required by the schedule or on the ground ofa material irregularity in publishing or conducting thesale. However, no sale can be set aside on any of suchground unless the recovery officer is satisfied that theapplicant has sustained "substantial injury" by reasonsof non-service or irregularity. Such application made bydefaulter under rule 61 is to be disallowed unless theDEFAULTER deposits the amount recoverable from him inthe execution of the certificate. (Emphasis added).13. Therefore, 'in the case of a defaulter', for filinga petition under Rule 61 to set aside the sale ofimmovable property, the defaulter is required to depositthe 'amount recoverable from him in the execution of thecertificate', as distinguished from the 'amountspecified in the proclamation of sale' as stipulatedunder Rule 60. Under Rule 61, only if a person, whoseinterests is affected by sale, but is not a defaulter,is not liable to make any pre-deposit to set aside thesale of immovable property.14. Similar matter fell for consideration before a https://hcservices.ecourts.gov.in/hcservices/ Division Bench of this Court in Sakura Prime TanningCompany v. Central Bank of India & Ors. inW.P.No.14581/06, disposed of on 28th Sept., 2007,wherein the Court held as follows:'3. The provisions of the Second Schedule toIncome Tax Act, 1961 is applicable in this casein view of Section 29 of the Recovery of Debtsdue to Banks and Financial Institutions Act,1993. Rule 60 to the Second Schedule of IncomeTax Act, 1961, while postulates time limit tofile application to set aside the sale, underClause (b) of Proviso to Rule 61 to the SecondSchedule of the Income Tax Act, 1961, anapplication made by the defaulter under the rulecannot be allowed unless the defaulter depositsthe amount recoverable from them in the executionof the certificate.'In another case of M/s.Indian Bank v. Stanfrose AgvetFarms, W.P. No.19833/07 and analogous cases, a DivisionBench, by its unreported judgment dated 10th March,2008, held as follows:'13. Under Section 30 of the RDB Act, 1993,appeal can be preferred against the order of theRecovery Officer within 30 days' from the date onwhich copy of such order is issued. As theborrowers intended to challenge the auction-salepursuant to the order passed by the RecoveryOfficer, it was open for them to prefer suchappeal under Section 30, but such appeal couldhave been only before the DRT and not before theDRAT. 14. Under Section 29 of the RDB Act, 1993, theprovisions of Second and Third Schedule to theIncome Tax Act, 1961 are applicable, as far aspossible. Under Rule 60 of the Second Schedule tothe Income Tax Act, 1961, it is mandatory todeposit the amount specified in the proclamationof sale as that for the recovery of which salewas ordered with interest thereon, at the rateprescribed under the said Rules for setting asidethe sale of immovable property.'"The Division Bench has also relied upon a plethora of decisions andhas ultimately held that the deposit of amount is a mandatoryrequirement in the following words:"20. In view of the provisions of law and finding of the https://hcservices.ecourts.gov.in/hcservices/ Court and discussions made above, we hold that therecovery officer has also jurisdiction to entertain anapplication under rules 60, 61 and 62 of Part-III of 2ndSchedule to the Income Tax Act and in case any person isaggrieved against such order, may prefer appeal u/s 30of the Act, 1993. As the defaulter or any person whoseinterests are affected by sale is supposed to pay thepre-deposit amount under Rule 60 and a defaulterrequired to pay pre-deposit amount under Rule 61 exceptthe person whose interests are affected due to non-service of notice on defaulter to pay the arrears ormaterial irregularity in publishing or conducting thesale should apply under Rule 61 or the purchaser, whomay file application under Rule 62, who are not liableto pre-deposit any amount, in such case, for preferringan appeal u/s 30 of Act, 1993, against an order ofrecovery officer under Rules 60, 61 or 62, no pre-deposit amount required to be deposited."12. In yet another decision in D.Duraisrinivasan v. TheRegistrar, Debts Recovery Appellate Tribunal and others (W.P.No.5485of 2009, dated 3.12.2009), S.J.Mukhopadhaya,J. (as His Lordship thenwas) has followed the earlier decision and held as follows:"14. There is no allegation made that the purchaserdefaulted in making payment within time. It is also notin dispute that no person including the petitioner filedany application to set aside the sale under Rule 60 orRule 61 of Schedule-II to the Income Tax Act. Therefore,waiting for the prescribed period of 30 days, under Rule62 of Schedule-II, as it was open for the RecoveryOfficer to confirm the sale under Rule 63 of Schedule-II, the said Officer rightly confirmed the sale on30.8.2007."13. Inasmuch as the petitioners have not availed the provisionsof Rules 60 and 61 in the Second Schedule to the Income Tax Act,1961, which includes the mandatory provision of deposit of amount, weare of the considered view that de hors the memo filed by thepetitioners, inasmuch as the mandatory requirement of deposit has notbeen fulfilled and even as on date the amount has not been depositedby the petitioners, they are not entitled to claim any protectionunder any law. That was also the view expressed by the Supreme Courtin Janatha Textiles & Others v. Tax Recovery Officer and another,2009-2-LW-108, wherein the Supreme Court has held as follows:"16. The respondent Department in the counter-affidavitstated that the appellant Firm had alternate efficaciousremedy by way of filing a petition under Rules 60 and 61of the Second Schedule to the 1961 Act. The appellant https://hcservices.ecourts.gov.in/hcservices/ ought to have availed of the statutory remedy forventilating its grievances instead of filing a petitionbefore the High Court."14. The reliance placed by the learned counsel for thepetitioners on various judgments, including Megmala v. G.NarasimhaReddy, (2010) 8 SCC 383 wherein it was held that no judgment of acourt or no order of a Minister can be allowed to stand if it hasbeen obtained by fraud, in the following words:"28. It is settled proposition of law that where anapplicant gets an order/office by makingmisrepresentation or playing fraud upon the competentauthority, such order cannot be sustained in the eye ofthe law. 'Fraud avoids all judicial acts, ecclesiasticalor temporal.' (Vide S.P. Chengalvaraya Naidu v.Jagannath, (1994) 1 SCC 1.) In Lazarus Estates Ltd. v.Beasley, (1956) 1 QB 702 the Court observed withoutequivocation that: 'No judgment of a court, no order ofa Minister, can be allowed to stand if it has beenobtained by fraud. Fraud unravels everything.'"in the absence of any allegation of fraud on the facts andcircumstances of the present case, cannot be made applicable to thefacts of the present case by this Court.15. The further reference to the judgment in Muthavalli of ShaMadhari Diwan Wakf, S.J. Syed Zakrudeen v. Syed Zindasha, (2009) 12SCC 280, particularly with reference to paragraphs (12) and (13)relied upon by the learned counsel for the petitioners, which are asfollows:"12. The reference was made only in respect of theamount of compensation. No reference has been made inregard to the right of persons to whom it was payable orapportionment of compensation amongst the personsinterested. The claim of the first respondent has beennoticed by us. He has laid his claim on the title of theproperty. He has prayed for proper and effectiveimplementation of the decree passed by a civil court. Healleged mismanagement of the wakf property by the firstappellant.13. A Reference Court is not a court of originaljurisdiction. It derives jurisdiction only in terms ofthe order of reference. The Act being a self-containedcode, the manner in which the reference is to be madeand the statement required to be made by the Collectorhas been specified in Section 19 of the Act. The lisbetween the parties to the reference meaning thereby a https://hcservices.ecourts.gov.in/hcservices/ person interested and the State is with regard to thequantum of compensation. No other question can be raisedtherein. The Reference Court exercises a limitedjurisdiction. It derives its jurisdiction from the termsof reference."has also no relevance to the facts of the present case. That was acase where the Supreme Court has held that the Reference Court underSection 18 of the Land Acquisition Act, 1894 derives jurisdictiononly in terms of the order of reference.16. The next judgment relied on by the learned counsel for thepetitioners in Hasham Abbas Sayyad v. Usman Abbas Sayyad, (2007) 2SCC 355 relates to the jurisdictional error. It was held that theprinciples of estoppel, waiver and acquiescence or even res judicata,being procedural in nature, would not confer jurisdiction on anauthority which has no jurisdiction at all. On the facts of thepresent case, when it is admitted that the procedure contemplatedunder the Income Tax (Certificate Proceedings) Rules, 1962, statedabove, are applicable to the Recovery Officer as well as the Tribunaland inasmuch as the petitioners have already approached the RecoveryOfficer and the Debts Recovery Appellate Tribunal itself has passedorders withdrawing the appeal on the specific request made by way ofa memo by the petitioners, we do not think that the said judgmentwould give succour to the petitioners.17. The reliance placed on a Division Bench judgment inJ.N.Krishnan v. The Branch Manager, Canara Bank and others, 2011 (4)CTC 698 relates to a case of attachment stated to have been effectedas per Rule 68-B of the Second Schedule to the Income Tax Act, 1961on the face of Section 25(a) of the Recovery of Debts Due to Banksand Financial Institutions Act, 1993 which also confers power on theRecovery Officer to attach and it was under such circumstances heldthat when the Act provides the power, there was no question ofviolation of the Rules. The operative portion being as under:"22. The DRT does not contain any provision regardinglimitation in the matter of sale of attached property.The provisions of Second and Third Schedule to theIncome Tax Act and the Income Tax CertificateProceeding, 1963, were made applicable to the Recoveryproceeding under DRT Act only for the purpose of a fairand transparent procedure to be adopted by the RecoveryOfficer in the matter of Recovery of the Debts due tobanks and Financial Institutions. In case the RecoveryOfficer is give a free hand without any kind ofestablished procedure governing the Recoveryproceedings, it would result in arbitrariness. It wasonly to regulate the proceedings the relevance Recovery https://hcservices.ecourts.gov.in/hcservices/ Rules under the Income Tax Act were made applicable to aRecovery proceeding under the Debts Recovery TribunalAct. The various other provisions of the Income Tax Actand the Recovery Rules cannot be imported to nullify theaction taken by the Recovery Officer. Therefore, we areof the view that Rule 68-B dealing with time limit forsale of immovable property after the expiry of threeyears from the end of the financial year in which theorder giving rise to a demand for recovery of which, theproperty has been attached by the Recovery Officer hasno application to an attachment made by the RecoveryOfficer under Section 25 of the DRT Act. Accordingly,we reject the principal contention regarding the allegedviolation of Rule 68-B."We see no reason as to how the said judgment is applicable to thefacts of the present case.18. The further reliance placed by the learned counsel for thepetitioners on the judgment of the Supreme Court in Chinnammal v. P.Arumugham, (1990) 1 SCC 513 is again of no help to the case of thepetitioners. That was a case where the Supreme Court hasdistinguished between the decree holder, who is himself an auctionpurchaser, and the third party auction purchaser and in thosecircumstances, the Supreme Court has held that the third partyauction purchaser is unaffected and he does not lose the property bysubsequent reversal or modification of the decree. It is true thatin this case respondents 5 and 6 are third parties and the recordsshow that they are purchasers having known about the litigation. Buttheir rights cannot be said to be affected, especially when theconfirmation of the sale itself is yet to be made and petitionershave not acted as per the Rule, as elicited above, especially theRules in the Second Schedule to the Income Tax Act, 1961,particularly Rule 60, which contemplates the mandatory requirement ofdeposit. Therefore, the third party purchasers' right in the presentcase will be affected only in cases where the defaulter performs hisconduct in accordance with law. There is absolutely nothing topresume the abuse as repeatedly contended by the learned counsel forthe petitioners by relying upon Section 22 of the Recovery of DebtsDue to Banks and Financial Institutions Act, 1993, inasmuch as in thepublic auction respondents 5 and 6 having been the highest biddershave not only paid the initial payment, but also the subsequentlypaid the balance amount in full. Unless and until it is shown withconcrete evidence that the first respondent/bank is in cahoots withrespondents 5 and 6 or in any event the property has been sold belowthe upset price, one cannot come to a conclusion that there is a malafide intention. Therefore, the judgments which are relied upon bythe learned counsel for the petitioners cannot be pressed intoservice on the facts and circumstances of the present case. https://hcservices.ecourts.gov.in/hcservices/

19. At the risk of repetition it has to be reiterated that whatthe learned counsel for the petitioners sought before the DebtsRecovery Appellate Tribunal has been granted and in accordance withthat the proceedings before the Recovery Officer is pending and it isalways open to the petitioners to challenge the order to be passed bythe Recovery Officer, if so advised.In such view of the matter, we hold that the impugned orders areneither perverse nor without jurisdiction and we see no earthlyreason to interfere with the same. Accordingly, the revisions aredismissed. However, it is always open to the petitioners toworkout their remedy after the Recovery Officer passes orders. Nocosts. Consequently, M.P.Nos.1 and 2 of 2012 in C.R.P. (PD) No.936of 2012 and M.P.No.1 of 2012 in C.R.P. (PD) No.937 of 2012 are closed.sd/- Assistant Registrar /True Copy/ Sub Assistant RegistrarsasiTo:1. The RegistrarDebts Recovery Appellate Tribunal Chennai.2.The Debt Recovery Tribunal III,Chennai.3. The Chief ManagerState Bank of India Vaniyambadi BranchVaniyambadi, Vellore District.2 CCs to Mr.Ramalingam Associates, Advocate, SR.30659 3 CCs to M/s.R.Thiagarajan, Advocate, SR.30523C.R.P. (PD) Nos.936 and 937 of 2012RK(CO)SRA(05/06/2012)