Dr Ajay Kumar vs Punjab Nation Bank and Ors on 17 July 2025

DEBTS RECOVERY TRIBUNAL, PAlliA Date of order or proceeding Dr. Ajay Kumar Vs. Punjab National Bank & Ors. Order with the Signature of the Court APPEAL 08 of 2024 17.07.2025 Ld. counsels for the parties are present. It has been submitted on behalf of the appellant that the present Appeal has been preferred against the order passed by ld. Recovery Officer on 15.10.2024 in R.P. case no.367 of 2023. Thereafter the IA 353 of 2025 and IA 695 of 2024 have been filed for addition of the relief to set-aside the order dated 20.11.2024 passed in the aforesaid R.P. case no.367 of 2023. The main contention of the applicant is that the applicant has been a bidder in the process of the auction sale. The appellant inadvertently could not deposit the complete amount of Rs.O 1,20,00,000/-. The appellant deposited Rs.Ol,19,91,000/- only within time. Only Rs.9,000/- could not be paid inadvertently. It is not disputed at this stage that Rs.9,000/- was short to deposit out of the rest amount to be deposited as 75% of the auction amount. Ld. counsel for the appellant further submits that the auction sale could not be cancelled for default of very meager amount of Rs.9,000/- out of the sale amount of Rs.Ol,20,00,000/-. The time could have been extended. On the other hand, Id. counsels for the respondent bank and also for the borrowers have submitted that the Id. Recovery Officer had no discretion to extend the time for depositing the short amount and there is no illegality in the order dated 15.10.2024. Ld. counsel for the appellant further submits that the discretion was vested with the Id. Recovery Officer to extend the time and after giving an opportunity of hearing regarding the amount to be forfeited the proper was required but no opportunity of hearing was given by the Id. Recovery Officer to arrive at a conclusion regarding the forfeiture of the 30% of the amount deposited. The Rule 57 of the second scheduleof the Income Tax Act is as under:- Deposit by purchaser and resale in default.

57. (1) on every sale of immovable property, the person declared to be the purchaser shall pay, immediately after such declarat~ a deposit of twenty-five per cent on the amount ~f his purchaponey, to the Office action taken with date Contd.2

authority. On perusal of order dated 20.11.2024, it appears that the ld. Recovery Officer has fixed the amount of forfeiture without affording an opportunity of hearing to the bidder whose money was to be forfeited. When there is exist some discretion with an authority that has to be exercised judiciously in accordance with the principles of natural justice that necessarily requires an opportunity of hearing so that the relevant circumstances can be brought into notice of the ld. Recovery Officer who arrived at a decision for forfeiture of the particular amount. In such circumstances, the aforesaid order dated 20.11.2024 requires re-consideration. In the circumstancfs, Iyrt of t~ opinion that the order Contd.3 officer conducting the sale; and, in default of such deposit, the property shall forthwith be resold.

(2) The full amount of purchase money payable shall be paid by the purchaser to the Tax Recovery Officer on or before the fifteenth day from the date of the sale of the property. Bare reading of the aforesaid provisions which show that there is no discretion of the Recovery Officer or the Tax Officer and in default of such deposit the property shall be sold forthwith. So in view of the aforesaid unequivocal and unambiguous provision, the impugned order dated 15.10.2024 appears to have been passed with exercise of the jurisdiction and there is no factual or legal error or irregularity on the part of the ld. Recovery Officer. So far as the another order against which the relief has been sought to be added by way ofIA 353 of2025 whereby the 30% of the amount was forfeited by the order of ld. Recovery Officer dated 20.11.2024 in exercise of the jurisdiction under Rule 58 of the second schedule of the Income Tax Act which runs as under:- Procedure in default of payment.

58. In default of payment within the period mentioned in the preceding rule, the deposit may, if the Tax Recovery Officer thinks fit, after defraying the expenses of the sale, be forfeited to the Government, and the property shall be resold, and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it any subsequently be sold. The plain reading of the aforesaid Rule provides that the order of forfeiture can be passed exercising the discretion. As the phrase "if the Tax Recovery Officer thinks fit" shows that there was a discretion of the Id. Recovery Officer to fix the amount of forfeiture while passing the order dated 20.11.2024. Where any rule provides discretion of any authority it will proper to afford an opportunity to stakeholders for explaining the relevant factors to arrive at a conclusion under the discretion of that dated 20.11.2024 deserves to be set-aside at this stage with the observation that the fresh order can be passed by Id. Recovery Officer giving an opportunity of hearing to the appellant and the concerned Bank while arriving at a decision for the amount to be forfeited after passing of the order dated 15.10.2024. Accordingly, the Appeal is allowed and the matter is remanded back to the Id. Recovery Officer to decide it afresh with regards to the amount to be forfeited in exercise of the jurisdiction vested under Rule 58 of the second schedule of the Income Tax Act within two months. / Order be uploaded on the Tribunal's website. ~ / V,')\"\: Patna (Kaushalendra Yadav) Presiding Officer