Md Irshad Tahoor And Another vs STATE BANK OF INDIA on 22 July 2022

**ORDER SHEET**

**KOLKATA DEBTS RECOVERY TRIBUNAL NO.2**

**Case No. Appeal 01 of 2021**

**Md. Irshad Tahoor & Anr.**

**Appellant**

**Vs.**

**State Bank of India & others**

**Respondents**

<table border="1"><thead><tr><th data-bbox="156 166 248 246">Date<br/>Of<br/>Order</th><th data-bbox="248 166 774 246">Order with<br/>Signature</th><th data-bbox="774 166 906 246">Office action<br/>with date and<br/>dated signature<br/>of parties when<br/>necessary</th></tr></thead></table>

Order No.17 22.07.2022

Counsel for the parties:

- For the Appellants : None

- For the Respondent No.1 : Ms. Suparna Biswas on behalf of Ms. P. Dutta

- For the Respondents No.2 to 5 : Mr. Gourav Singh Appeal/ 01 of 2021 is allowed and disposed of..

Order is in separate sheet.

By Order Presiding Officer DRT-2, Kolkata

1

Appl./01/2021 – DRT-2/Kol

**DEBTS RECOVERY TRIBUNAL - 2, KOLKATA**

Jeevan Sudha Bldg., 07^th Floor, 42/C, J.L. Nehru Road, Kolkata – 700 071

**Before Shri Makena Srinivasa Rao, Presiding Officer**

**Appeal No. 01 of 2021**

In the matter of -

- 1. **Md. Irshad Tahoor**, son of Late Tahoor Ali, residing at 13, Hakim Hassan Lane, Tatarpur in the District of Bhagalpur, Bihar, Pin : 812 002.

- 2. **Md. Sadique Tahoor**, son of Late Tahoor Ali, residing at 13, Hakim Amin Hassan Lane, Tatarpur in the District of Bhagalpur, Bihar, Pin : 812002.

.....Appellants

-Versus-

- 1. **State Bank of India**, Commercial Branch, Ballygunge, 50A, Gariahat Road, P. S. Gariahat, Kolkata-700 019

- 2. **ROB Exporters Pvt. Ltd.**

- 3. **Md. Atiur Rahaman Omani**

- 4. **Md. Azizur Rahaman Omani**

- 5. **Md. Mazizur Rahaman Omani**

Serial Nos. 2 to 5 all at 12, Nil Madhav Sen Lane, Suit no. 22, Kolkata – 700073, and also at Tatarpur Road, District – Bhagalpur, Pin – 812002, Bihar.

..... Respondents

Counsel for parties:

- For the Appellants : Mr. A. K. Dhandhania & Mr. Prabhat Sil.

- For Respondent No. 1 : Ms. Poetry Dutta.

- For Respondents No 2 to 5 : Mr. Nimish Mishra & Mr. D. Mukherjee.

**FINAL ORDER / JUDGMENT**

Delivered on 22.07.2022

The Appellant tendered the present appeal being the Appeal No. 01 of 2021 on 13.04.2021 against five Respondents under Section 30 of the Recovery of Debts & Bankruptcy, 1993 against the order of the Ld. Recovery Officer No. 11, DRT 2 Kolkata passed on 17.03.2021

2. The brief facts of the case as set out by the Appellant in the appeal are as under:-

(i) That in the month of February, 2021 one Mr. Pranabashis Mitra, identified himself as appointed Receiver by the Ld. Recovery Officer of Kolkata Debts Recovery Tribunal II visited the intervener's property situated at Mahalla – Lalkuti Tatarpur, Thana Koloati Hall, Tatarpur, zilla Bhagalpur Ward No. 14, and intimated that an attachment order dated 17.01.2020 was passed in the said property and also informed that the said property was allegedly lying in the name of Md. Atiur Rahaman Omani, who is the Certificate Debtor in connection with R.C. No. 50 of 200

arising out of O.A. No. 70 of 2002. A copy of the said attachment order dated 17.01.2020 along with a copy of the order dated 16.01.2020 and a copy of the report dated 27.02.2020 are annexed and marked with **letter "A"**.

(ii) Thereafter on 9^th October, 2020 the appellant immediately appeared before the Ld. Recovery Officer and filed one application under Rule 11 of the Second Schedule of the Income Tax Act read with Section 29 of the Recovery of Debts and Bankruptcy Act, 1993 for investigation of Title on the property under recovery by the Ld. Recovery Officer. It is submitted that in the said application the interveners disclosed title to the property and how the interveners have purchased the said property from the Vendors Dr. Sanjay Kumar and Nilam Kumar who were the legal owners of the said property and the same was purchased through a registered Deed of Sale bearing No. 4908 of 2013 registered before the Bhagalpur Sub Registry Office. A copy of the said application under Rule 11 of the Second Schedule of Income Tax Act is annexed and marked with **letter "B"**.

(iii) That it is submitted that though the application was filed on 9^th October, 2020 but due to COVID-19 situation the same was not taken up for hearing and accordingly the applicant compelled to move an application before the Ld. Presiding Officer and upon hearing on 23.11.2020 directed the Ld. Recovery Officer to hear the matter on 02.12.2020 and pass necessary orders within two weeks. A copy of the said order dated 23.11.2020 is annexed and marked with **letter "C"**. On 2^nd December, 2020 when the matter was taken up for hearing, the Certificate Holder Bank prayed for time to file written objection. The same was granted and directed to file written objection by 18^th December, 2020 and the matter was fixed on 22.12.2020. Copy of the said order dated 2.12.2020 is annexed and marked with **letter "D"**.

(iv) . That on 17^th December, 2020 the Certificate Holder bank served a copy of the affidavit-in-opposition along with annexures to the Affidavit of the Intervenors/Petitioners where it disclosed the document on the basis of which Bank claimed the creation of mortgage by deposit of title deed. It is relevant to consider that the document produced along with the affidavit-in-opposition does not support legal contention of the Certificate Holder Bank relating to creation of mortgage. A copy of the said affidavit-in-opposition is annexed and marked with **letter "E"**. Subsequently the case was taken up on 8^th January, 2021 and the case was fixed for final hearing on 29.02.2021 before the Ld. Registrar. Copy of the said order dated 08.01.2021 is annexed and marked with **letter "F"**.

(v) Thereafter on 11.01.2021 the Intervenors/petitioners filed affidavit-in-reply disclosing information gathered from the concerned Registry Office wherefrom it reveals that the alleged mortgage deed which was registered before the Registrar of Assurance at Bombay with an ulterior motive knowing fully well that the subject property is situated at Bhagalpur, Bihar and the concerned Registry Office reported that there is no authenticated deed of sale bearing No. 2285 of 2020 registered at Bombay is preserved in the record of this Registry Office at Bombay. A copy of the said affidavit-in-reply is annexed and marked with **letter "G"**.

3App/J01/2021 – DRT-2/Kol

(vi) That on 04.02.2021 the Certificate Debtors filed affidavit-in-opposition and submitted that the construction of building is going on in the said immovable property in question. It is further submitted that after purchase of the property in the year 2013 the Intervenors mutated the said property in their name upon payment of statutory taxes and dues. In the year 2016 the interveners obtained the sanction plan and constructed the building in accordance with law and invested huge amount in the said property for commercial purpose. Copy of affidavit-in-opposition of the Certificate Debtor is annexed and marked with **letter "H"**.

(vii) That on 05.03.2021 the case was taken up and was fixed for hearing on 12.02.2021 and liberty was given to file affidavit-in-reply. Copy of the said order dated 05.03.2021 is annexed and marked with **letter "I"**. On 12.02.2021 the case was taken up by the Recovery Officer when Affidavit-on-Reply to the Affidavit-in-Opposition of the Certificate Debtor was filed. Copy of the said affidavit-in-reply is annexed and marked with **letter "J"**. That affidavit-in-reply of the Certificate Holder was served on 11.02.2021 against the Affidavit in Opposition to the Certificate Debtor. Copy of the said affidavit in reply is annexed and marked with **letter "K"**. Ultimately the case was taken up for hearing on 12.02.2021 when necessary submission was made on behalf of interveners/applicants. The matter was part-heard and further date is fixed on 19.02.2021.

(viii) From the aforesaid facts it is revealed that the Certificate Holder Bank without any document of title in favour of the Certificate Debtor obtained the order of attachment to the said property which is situated outside the jurisdiction of the Ld. Tribunal. On behalf of Certificate Debtors, submission was made to stop the construction of the building and also for removal of the commercial board affixed in the property before the Recovery Officer who has no territorial jurisdiction to pass any order relating to the property which is outside the jurisdiction of this Tribunal.

(ix) It is submitted that a lawful owner who invested huge amount on the said property for commercial purpose and for construction of the building and if in the meantime without ascertaining the Title of the property any obstruction to the construction is passed by the Ld. Recovery Officer, who has no territorial jurisdiction over the property in question, it will cause irreparable loss and damages to the applicants which cannot be compensated by money value. It is further submitted that Section 19(23) proviso clearly provides that where the Tribunal which has issued a Certificate of Recovery is satisfied that the property is situated out of the limit of jurisdiction or two or more Tribunal, it may send the copy of the certificate for recovery of execution to such other Tribunal where the property is situated. Provided that in case where the Tribunal to which the certificate of recovery is sent for execution finds that it has no jurisdiction to comply with the certificate of recovery, it shall return the same to the Tribunal which has issued it.

(x) That in the aforesaid circumstances, the Intervenors/petitioners submit that necessary direction be given to the Recovery Officer to ascertain the title of the property in terms of Rule 11 of the Second Schedule of Income Tax Rules read with Section 29 of the RDB&FI Act and not to pass any order disturbing and/or causing damage to the commercial project of the applicants.

(xi) That an application was filed before the Ld. Presiding Officer, DRT-2 Kolkata and the same was numbered as IA No. 25 of 2021. A copy of the said application is annexed and marked with letter "L". On 19.02.2021 the Ld. Presiding Officer heard the matter and reserved the order. Copy of the said order is annexed and marked with letter "M". That on 19.02.2021 the matter was taken up for hearing by the Ld. Recovery Officer on the application of the intervener/appellants, but, on the submission and persuasion of the Certificate Debtors, the Ld. Recovery Officer further passed a direction to the Regional Manager, State Bank of India, Bhagalpur for removal of hoarding and other things beyond his territorial jurisdiction. The Appellant already submitted before the Ld. Recovery Officer that the property is outside the territorial jurisdiction of the Tribunal. Accordingly, decision is to take first to decide the title of the property and then take appropriate steps in accordance with law, but the Ld. Recovery Officer did not pass the order in open court, but subsequently upheld the same in website on 22.02.2021. Copy of order dated 12.02.2021 and 19.02.2021 are annexed and marked with letter "N" and "O".

(xii) The appellant states that in this connection it is relevant to consider that as the Ld. Presiding Officer reserved his order in connection with IA/25 of 2021 and the Ld. Recovery Officer taking advantage of the same passed arbitrary and illegal orders from time to time. For protection of the interest of the Appellant, the Appellant, moved an application before the DRAT under Section 17A for transfer of the Certificate to the DRT at Patna as the property is situated therein. The same was registered as Diary No. 137 of 2021. Copy of the said application is annexed and marked with letter "P". The said application was heard on 25.02.2021 by the Hon'ble Chairperson, DRAT, Kolkata when it was directed that the Ld. Recovery Officer, DRT-2 Kolkata should dispose of the application by 19^th March, 2021 and the application was fixed for hearing on 22.03.2021. A copy of the said order is annexed and marked with letter "Q".

(xiii) That on 17.03.2021 the Ld. Recovery Officer-II, DRT-2 Kolkata disposed of the applicant as per direction of the Hon'ble Chairperson DRAT, Kolkata in connection with R.C. No. 50 of 2009. The certified copy of the said order is annexed and marked with letter "R".

(xiv) It is submitted that any order passed without jurisdiction is non-est in the eye of law as observed by the Hon'ble Supreme Court of India in connection with Chief Engineer, Hydrol Project & Others. Vs. Ravindra Nath & Others reported in Manu/SC/057C/2008. In connection with the appeal before the Hon'ble Presiding Officer against the impugned order dated 17.03.2021 passed by the Ld. Registrar of this Tribunal the Appellant states that the alleged Sale deed dated 30.06.2000 allegedly executed by one Umesh Chand Yadav in favour of Md. A.R. Omani, the borrower and mortgagor. According to the said deed the Vendor Umesh Chand Yadav is a resident of Mohalla tilka Manjhi, P.S. Kotwali, Dist-Bhagalpur and the Purchaser Md. A.R. Omani is a resident of Mohalla Tatarpur, P.S. Kotwali, District-Bhagalpur. The sale deed had been registered on 09.07.2022. The sale deed dated 30^th June, 2000 does not either clearly mention that Umesh Chand Yadav is the owner of the property nor does it mention how Umesh Chand Yadav became the Owner of the property nor does it mention how Umesh Chand Yadav had the power to sell the said property. In the affidavit filed by the Bank affirmed by Md. A. R. Omani in 5App/J/01/2021 – DRT-2/Kol Bhagalpur on 8^th July, 2000 the said Md. Omani had stated that he is the owner of the property in question on the basis of a registered Sale Deed executed on 30.06.2000.

(xv) It is submitted that the Bank created mortgage on the basis of the said Sale Deed without any title investigation without any query whether Umesh Chand Yadav was owner of the property or whether he had the authority to execute the sale deed. In the entire affidavit in opposition bank has not annexed a single document to show when and how the property in question was mortgaged in favour of the bank. As per the Appellants the Registration of the Bihar property outside Bihar had been prohibited by the Govt. of Bihar before 30^th June, 2000. As per law prevalent in Bihar, the sale deed of a Bihar property, if registered outside Bihar has to be recorded in the concerned relevant office in Bihar on payment of required stamp duty. It is submitted that on the basis of the alleged Sale deed no further steps have been taken by Md. A. R. Omani except getting loan from the Bank. Further the property has never been mutated in the name of Md. A. R. Omani in the Municipal Record or with B.L. & L.R.O.

(xvi) It is submitted that in the pleadings before the Ld. Recovery Officer it had been admitted by the Respondent that Umesh Chand Yadav was not the owner of the property. In the Affidavit in-Opposition Md. A. R. Omani has clearly stated that he purchased the property from Dr. Sanjay Kumar and Smt. Nilam Kumar through their power of attorney holder, namely, Umesh Chand Yadav. However, the alleged sale deed dated 30.06.2000 does not mention the names of Dr. Sanjay Kumar and Smt. Nilam Kumar and also not mentioned that Umesh Chand Yadav is executing the Sale deed as Power of Attorney holder of Dr. Sanjay Kumar and Smt. Nilam Kumar. It is an admitted fact that the property in question belong to Dr. Sanjay Kumar and Smt. Nilam Kumar and the Appellants have purchased the property directly from Dr. Sanjay Kumar and Smt. Nilam Kumar by two separate sale deeds dated 22.03.2013 and 22.04.2013. In the affidavit in reply against the affidavit-in-opposition affirmed by Md. A. R. Omani, the Bank had not denied the statement made in the affidavit-in-opposition that the property belongs to Dr. Sanjay Kumar and Smt. Nilam Kumar and not to Umesh Chand Yadav.

(xvii) It is submitted that neither the Bank nor Md. Omani had produced any document to show that the property was ever in the possession of Md. A. R. Omani. The property in question was mutated in the names of the Appellant. It is submitted that in the present appeal fraud vitiates everything and as such the alleged mortgage in favour of the bank and the finding of the Hon'ble Tribunal are null and void and it is also well established that in the case of fraud, the executing court can go beyond the decree. It is submitted that jurisdiction demands to set aside the order passed by the Ld. Recovery Officer on 17.03.2021.

3. In the instant case the Respondent No.1, i.e. State Bank of India filed its affidavit in opposition on 7^th January, 2022 wherein it was inter alia, stated that –

(a) That the Respondent No.1 filed Original Application on 24.10.2022 before this Ld. Tribunal for issuance of a Certificate of Rs.96,52,165.44ps. The said case was contested and the Ld. Tribunal had pleased to pass a decree for Rs.96,52,165.44 ps in favour of Respondent No.1 Bank and the Ld. Receiver was appointed to take steps over the mortgaged properties in the recovery proceedings. It is submitted that Respondent No. 1 Bank has every right to take action as per order of the Ld. Tribunal to recover the dues from M/s. R.O.B. Exporters Pvt. Ltd., the Respondent No.2 herein. The Appellant in the instant case are the Intervenors and not at all parties to the recovery proceedings so they have no right to pray for stay of operation of the recovery proceedings. By preferring the appeal, the Appellants have virtually perpetrated a fraud upon this Ld. Tribunal.

(b) It is submitted that till date no appeal has been preferred on behalf of the Certificate Debtors (Respondent Nos. 2 to 5) herein or on behalf of them impugning the order passed by this Ld. Tribunal. It is submitted that on the basis of a specific submission, the recovery proceedings cannot be stayed because huge public money is involved. It is submitted that the provisions laid down under the Recovery of Debts and Bankruptcy Act, 1993 and the Rules framed there under do not confer any jurisdiction or authority upon this Ld. Tribunal to recall any order earlier passed by it and on this score the appeal deserves to be dismissed in limine. It is submitted that the Respondent No. 1 Bank is well and sufficiently entitled to proceed and take action in recovery proceedings which does not warrant any interference.

(c) It is submitted that the present appeal has been preferred only to delay recovery of the legal dues of the Respondent No.1 bank and such dilatory tactics adopted by the appellants/intervenors should not be encouraged. It is submitted that the subject property belongs to Respondent No. 2 herein. By preferring the said appeal, the intervenors who is not a party in the above proceeding have now made a futile attempt to come up with a new case altogether. The intervenors/appellants have unnecessarily dragged the matter for an indefinite period of time and thereby delayed the recovery of the legal dues of the Respondent No. 1 bank. In O.A. No. 70 of 2002, R.C. No. 50 of 2009, the Respondent No. 2 Md. Atiur Rahman Omani has mortgaged property to the bank only for securing loan. The appellants purchased the property in the year 2013. The Appellants have not done proper search while purchasing the subject property. The mortgagee, Respondent No. 2 took steps to establish the ownership of the subject property by filing Title Suit before the Court of Civil Judge No. 1 (Senior Division) at Bhagalpur being Title Suit No. 88 of 2019. However, by preferring the appeal the Appellants have now made a futile attempt to come up with a new case altogether. The Respondent No. 1 bank does all acts legally, knowing fully well that the appellants purchased the mortgaged property and invested huge amount for construction of commercial project, which is illegal.

(d) It is submitted that this Ld. Tribunal has jurisdiction to entertain the matter. The Tribunal also had the jurisdiction to entertain the present appeal. The appellants/intervenors made all sorts of endeavours to mislead the Ld. Tribunal and to take undue advantage. The Appellants took all types of legal practice to establish their legal rights over the disputed property, but they failed as the subject property is exclusively charged/mortgaged with the Respondent No. 1 bank. The appellants also preferred an appeal before the DRAT, Kolkata but as huge public money is involved, the Hon'ble DRAT, Kolkata disposed of the matter. Moreover none of the Certificate Debtors have filed any appeal before the Ld. Tribunal. The Respondent No. 1 Bank 7AppLJ01/2021 – DRT-2/Kol denies that the appellants/intervenors are the owner of the subject property. It is denied that appellants have been able to establish any case that may warrant grant of any of the reliefs prayed for in the appeal. It is highly preposterous to suggest that balance of convenience and inconvenience may lie in favour of a litigant who itself had perpetrated a fraud upon this Ld. Tribunal. It is submitted that the appeal is *mala fide* and has been preferred to frustrate the ends of justice.

O R D E R

1. 1. I have heard the Ld. Counsel for the Appellant and Ld. Counsel for the Respondent Bank, though the Ld. Counsel for the CD sought time for filing objections to the Appeal, has not filed any objections /pleadings on behalf of secured debtors. No arguments were also advanced on behalf of CD.

2. 2. This is an appeal preferred by interveners who are the claim petitioners before the Learned Recovery Officer claiming title and possession over the property which is the secured asset and upon which a Certificate for Recovery has already been passed by the Ld. Tribunal vide Order dt. 23.10.2009 and the same has been put in for execution for recovery of Certificate amount.

3. 3. Recovery of debt under the Certificate issued by the Tribunal is to be done by the Recovery Officer by resorting to the provision contained in Chapter V of RDDB Act. Certain Provisions of Income-tax Act, 1961 and Income-tax (Certificate Proceedings) Rules, 1962 have been made applicable to Recovery proceedings under Section 29 of RDDB Act. Thereby the Legislature, instead of formulating the procedure to deal with various contingencies arising during the process of recovery had made applicable certain provisions of Income-tax Act and the certificate proceedings Rules. If any third party has any claim over secured asset or Certificate mentioned asset the only course open for such a party is to prefer a claim petition before the Recovery Officer under Rule 11 of Income-tax (Certificate of Proceedings) Rules, 1962. In the present case the Intervenors Md. Irshad Tahoor and another have come up with a claim petition before the Ld. Recovery Officer claiming that the secured asset belonging to them, they having purchased from rightful owners directly from Dr. Sanjay Kumar and Smt. Nilam Kumar by two separate sale deeds dated 22.03.2013 and 22.04.2013 who were the owners of the property situated at Bhagalpur of Bihar state and they have since been in the absolute possession and enjoyment of the property and have also obtained necessary permissions from authorities to develop the same. It is their further contention that the secured debtors have no right, title or possession over the property and the conveyance deeds produced by them and which were the subject matter of mortgage property were fraudulently brought up, inasmuch as the property which is situated in Bhagalpur state was conveyed under a registered deed said to have been executed and registered in Bombay during the years 2000, and such a transaction is not permissible in the State of Bihar at the relevant time and further, the documents of title do not establish that the seller or power of attorney hold has any right over the property and the documents are fictitious in nature and the Certificate bank-creditor was grossly negligent while 8Appl/J01/2021 – DRT-2/Kol the loan was sanctioned and disbursed and hence the certificate creditor cannot take advantage of his own wrong and bask under the Recovery Certificate issued by the Tribunal and contend that since public money is involved the Recovery officer shall not consider any objection when once certificate of recovery is issued. It has further been contended by the claimants that the Recovery officer at Calcutta had no Territorial Jurisdiction to decide the matter since admittedly the property under Certificate is situated in Bhagalpur of Bihar state, which is beyond the Territorial limits of the Tribunal and Recovery Officer.

4. The claim petitioner brought to the notice of Tribunal the Judgment of the Hon'ble Supreme Court, reported in **AIR 1999 SC 427 The Tax Recovery Officer II, ... Vs Gangadhar Vishwanath Ranade ... on 10 September, 1998** which specifically and exhaustively dealt with the issues now arise for consideration here in this appeal:

7. *The question which is now required to be answered is whether in a proceeding under Rule 11 of the Second Schedule to the Income-tax Act, the Tax Recovery Officer can declare a transfer as void under Section 281, Section 281, as it stood at the relevant time provided as follows :-*

*"Section 281: Where, during the pendency of any proceeding under this Act, any assessee creates a charge on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer whatsoever, of any of his assets in favour of any other person with the intention to defraud the revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding;*

*Provided that such charge or transfer shall not be void if made for valuable consideration and without notice of the pendency of the proceeding under this Act."*

8. *Section 281 declares as void any transfer made by the assessee during the pendency of proceedings under the Act, with the intention to defraud the Revenue. The powers of the Tax Recovery Officer, however, under Rule 11 of the Second Schedule to the Income-tax Act are somewhat different. Under Rule 11(1) where any claim is preferred to or any objection is made to the attachment or sale of any property 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. Under Rule 11(4), (5) and (6) it is provided as follows :-*

*Rule 11(4) : Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in possession of the defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale.*

*Rule 11(5) : Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim.*

*Rule 11(6) : Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute; but subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive."*

9ApplJ01/2021 – DRT-2/Kol

9. The Tax Recovery Officer, therefore, has to examine who is in possession of the property and in what capacity. He can only attach property in possession of the assessee in his own right, or in possession of a tenant or a third party on behalf of/for the benefit of the assessee. He cannot declare any transfer made by the assessee in favour of a third party as void. If the Department finds that a property of the assessee is transferred by him to a third party with the intention to defraud the Revenue, it will have to file a suit under Rule 11(6) to have the transfer declared void under Section 281.

10. The provisions, therefore, of Rule 11 are analogous to those of Order XXI Rules 58 to 61 and 63 of the CPC as they stood prior to the amendment of the Civil Procedure Code in 1976. In fact, the language of Order XXI Rules 60 and 61 is similar to the language of Rule 11(4) and Rule 11(5) of the Second Schedule to the Income-tax Act. Similarly, the language of Order XXI Rule 63 is similar to the language of Rule 11(6). Rules 59 to 62 of Order XXI, prior to the amendment of 1976, provide for a summary investigation into possession as distinct from a thorough trial of ultimate right. No doubt, it is impossible to separate altogether the question of possession and of title. Thus, if the judgment-debtor was in possession, he may have been in possession as agent or trustee for another; and this has to be enquired into. To that extent title may be a part of the inquiry. Similarly, if the property attached is claimed by a third party who adduces evidence to show that he was possessed of the property under some kind of a title, the property will have to be released from attachment. The procedure is not meant to decide intricate questions of law as to title to the property. Therefore, where a claim is made to the property attached, by someone claiming to be a transferee from the judgment-debtor and the claim is disallowed, the claimant can institute a suit under Order XXI Rule 63 to establish his title to the property. In such a suit it would be open to the attaching creditor to plead in defense that the transfer was in fraud of the general body of creditors and was void under Section 53 of the Transfer of Property Act. Similarly, if the claim of the transferee is allowed, the attaching creditor may sue on behalf of himself and all other creditors under Section 53 of the Transfer of Property Act for a declaration that the transfer was void as it was in fraud of the creditors.

11. In the case of C. Abdul Shukoor Saheb v. Arji Papa Rao (deceased) by his heirs and Lrs. & Ors., this Court considered, inter alia, the nature of proceedings under Order XXI Rules 58 to 61 prior to the amendment of the Civil Procedure Code in 1976. This Court observed, "In the summary proceedings under Order XXI Rule 58 to 61, having regard to the terms of Rule 61, the Court is concerned only with the question as to whether the transferee is in possession of the property in his own right and not on behalf of the judgment-debtor. When a transfer is real, though it is liable to be impeached as a fraud on creditors, and the transferee has entered possession, he would succeed in the summary proceedings, with the result that it is defeated attacking creditor who would have to figure as a plaintiff. In every case, therefore, where a transfer is real, but it is liable to set aside under Section 53(1) of the Transfer of Property Act, on the provisions of Order XXI Rules 58 to 61 Civil Procedure Code, the transferee is bound to succeed in the summary proceedings and the attacking decree-holder would have to figure as a plaintiff....." This Court also held that where the suit is filed by the transferee if the decision in the summary proceedings goes against him, it is open to the attacking creditor to plead in his defense that the transaction is vitiated by fraud and is void under section 53 of the Transfer of Property Act.

12. In the light of this discussion about the provisions of Order XXI Rules 58 to 63, if we examine Rule 11(4) of the Second Schedule to the Income-tax Act, it is clear that the Tax Recovery Officer is required to examine whether the possession of the third party is of a claimant in his own right or in trust for the assessee or on account of the assessee. If he comes to a conclusion that the transferee is in possession in his or her own right, he will have to raise the attachment. If the Department desires to have the transaction of transfer declared void under Section 281, the Department being in the position of a creditor, will have to file a suit for a declaration that the transaction of transfer is void under Section 281 of the Income-tax Act.

A reading of the above Judgment of the Hon'ble Supreme Court clearly manifests that the Recovery Officer under Income-tax Act is invested with the power to investigate title to the property which is the subject matter of secured asset, in the event of any dispute is raised over 10Appl/J01/2021 – DRT-2/Kol

the same or if there is transfer of the property during pendency of proceedings. For the said position the Hon'ble Supreme Court referred to Rule 11 (4) IT Certificate Rules and held that these proceedings are akin to a claim under Rule 58 to 60 under 21 of Civil Procedure Code, which deal with claim petitions during execution proceedings. A claim petition under Rule 58 of Order 21 of CPC has to be dealt with as if the same is a suit. Though, the Recovery Officer under Rule 11 (4) of IT Certificate Rules is not to follow the procedure as vast and varied as being followed while trying a suit, yet the Recovery Officer is bound to investigate the title to the secured asset by following the requisite procedure.

5. In this connection the claim petitioner had also cited a Patna High Court Judgment between **State Bank Of India vs Tax Recovery Officer And Ors. Dt. 16 November, 1998** wherein the Hon'ble High Court of Patna held that:

*Tax Recovery Officer is under legal obligation under rule 11(1) and (2) of Second Schedule to the Income Tax Act to consider and investigate bona fide claim of mortgagee in relation to attachment and sale of immovable property provided that the claim was not made to delay proceeding under the Act.*

6. Hence, it is clear that the Recovery Officer has the Jurisdiction to investigate the title to the property mortgaged to the bank when a third party claim is made during recovery proceedings. Therefore, in view of the Law on this subject quite clear the objection of the secured creditor bank as well as the secured debtor as to the maintainability of claim petition is misconceived and not maintainable and hence their objection is hereby rejected.

7. Then the next question that fall for consideration is, whether the Order of the Recovery Officer contained vide (f) of his observations to the effect that recovery officer is not empowered to decide the title of a property and only civil court is to investigate the same is sustainable in view of the facts emerging in this case:

8. It is curious to note that the secured debtor had filed a Title Suit before the Bhagalpur Civil Court bearing No.88/2019 for declaration of his title to the property and the same is pending. The Recovery officer also opined that in view of pendency of Title suit this issue has to be kept in abeyance till the resolution of title by the Civil Court. However, the Rules under IT Certificate clearly mandate that the Recovery Officer is obliged to 'investigate' on the title to the property and give his findings on it. In fact, the Recovery Officer has given his opinion on the Title to the property but ultimately, backed off without declaring the entitlement of claim petitioner to the same or/and disentanglement of right in the property in favour of secured debtor.

9. The claim petitioner in no uncertain terms contended that the information gathered from the concerned Registry Office discloses and reveals that the alleged mortgage deed which was registered before the Registrar of Assurance at Bombay was done with an ulterior motive knowing fully well that the subject property is situated at Bhagalpur, Bihar and the concerned Registry Office reported that there is no authenticated deed of sale bearing No. 2285 of 2020 registered at Bombay is preserved in the record of this Registry Office at Bombay. A copy of the said affidavit-in-reply is annexed and marked with letter "G". When such a serious allegation is levelled against the secured debtor gathering cloud over the genuineness of the title documents presented by the secured debtor to obtain it is his bounden duty to have filed the required documents of title to clear the cloud. Equally, the secured creditor bank, which has given loan on the secured asset is bound to file the required documents and clear the doubts. In addition, and as well as the bank ought to have properly and thoroughly investigated the title before sanctioning loan and should have produced the relevant material to dispel the doubts raised by the third party claimant since, the cloud over the title to the property as pointed out by the third party was not cleared by secured debtor or the secured creditor bank.

The finding of the Ld.Recovery Officer that – *"the mortgage deeds on record is admeasuring 20 Cottahs of land, more or less, whereas the title deeds produced by the applicants/interveners are measuring 13.19 Cottahs and 1.99 Cottahs, more or less respectively totaling approximately 15.18 Cottahs of land, more or less. The measurements of land do not tally. Moreover, the butts and bounds of the property are also different".*

It was further found out by the Recovery Officer, during the course of investigation of title by him that *"neither the original power of attorney dated 12-02-1994 nor a copy of the said power of attorney has been produced by the CDs or CHB on the basis of which the mortgage deeds were executed casting cloud on the said transfer".*

10. Neither the secured debtor nor the secured creditor bank have dispelled the cloud over the property even though serious doubts as to the veracity of the very documents produced by the secured debtor have been raised. The proceedings before Recovery Officer are not mere secretarial or preliminary in nature but under Certificate Rules, he is bound to give a finding at least prima facie as to the title of the secured asset and in case he is satisfied that the third party claimant has been able to prove his title and has had a better title over the secured asset than the secured debtor, he is bound to raise attachment. In this case, the secured debtor as well as the secured creditor bank have utterly failed to dispel the cloud over the title to the mortgaged property and on the other hand the claim petitioners were able to show that they purchased the property covered by the secured asset was purchased by them from the rightful owners and title is clear and the alleged title said to have been acquired by the secured debtors is based on documents which appears to be not genuine. Under these circumstances, this Tribunal has no option but to direct raising of attachment over one item of immovable property which is part of mortgaged property, i.e. property situated at Bhagalpur, Bihar state and which is sought to be put to sale for recovery of debt.

11. The objection of the secured creditor bank that by entertaining the appeal this Tribunal is recalling its earlier order granting Decree is misplaced and cannot be countenance. The scope of OA proceedings is limited to the extent of deciding the lis between the secured creditor and secured debtor which includes a guarantor. But the rights of third parties normally do not fall for determination in O.A proceedings. There is no scope for the presence of a third party or determination of his rights/interest in the secured asset. The stage for resolving such claims and questions is specifically reserved for Execution proceedings. Hence, the application filed by the intervener by way of claim petition is not barred by the law. In fact, Rule 11 of Income-Tax (Certificate of proceedings) Rules, 1961, which are specifically made applicable for recovery proceedings under Section 29 of RDDB Act, permits such a course. Hence, the contention of Learned Counsel for the Bank in this regard is not tenable in any way.

12. Hence, the Order of the Recovery Officer is modified to the extent by directing that the attachment made over the property situated at Bhagalpur, Bihar state is hereby raised and the Appeal is allowed to that extent.

13. However, Recovery proceedings shall continue against remaining three immovable properties i.e., Serial Number 2 to 4 of the specification of property mentioned in the order of attachment of immovable property dated 17^th January 2020 regarding remaining three mortgaged properties and the Order of the recovery officer in this regard is upheld.

**Accordingly, the Appeal being Appeal No. 01 of 2021 is allowed and disposed of.**

File be consigned to Record room.

This order is dictated and corrected by the undersigned and pronounced on this the 22^nd day of July, 2022 in the presence of Ld. Advocate for the respondent No.1, Ms. Suparna Biswas on behalf of Ms. Poetry Dutta; and in the presence of Ld. Advocate for the Respondents No.2 to 5, Mr. Gourav Singh.

Copy of the Final Order be uploaded in the Tribunal's Website.

Sd/-

(Makena Srinivasa Rao) Presiding Officer DRT-2, Kolkata