AIMS CHEMICALS P LTD vs ICICI BANK LIMITED on 12 July 2023

**ORDER**

1. 1. The final hearing of the present Chamber Appeal was conducted on 21/06/2023 and the same is being disposed of by this order today.

2. 2. The present Chamber Appeal is directed against the order dated 28/03/2023 passed by Ld. Registrar, DRT-II, Ahmedabad declining to register Appeal on the ground that the Appellant has not deposited 50% of the amount due as per the Recovery Certificate and has also not paid the requisite Court fees for filing Appeal.

3. 3. I have heard Ld. Counsel for the Appellant at length, who has also filed his written submissions and has relied on the following judgments in support of his submissions:

- ➤ Gobinda Chandra Pattnaik V/s Debt Recovery Tribunal. [2009 SCC OnLine Ori 37]

- ➤ Siddaveerappa and Anr. V/s Jalal Khan and Anr. [AIR 1953 Mys 87]

- ➤ P. Shuyjaath Raheed V/s State Bank of India decided on 5 June, 2012 in C.R.P. (PD) Nos.936 and 937 of 2012. (Madras High Court)

- ➤ M/s R.S. Infra Transmission Ltd. V/s Saurinindubhai Patel [Civil Appeal No.3469 of 2022], 2022 SCC OnLine SC 854.

- ➤ Vinosri V/s The Authorized Officer decided on 30 October, 2018 in C.M.P. No.9510 of 2018. (Madras High Court)

4. It is averred by the Appellant that it is the Certificate Debtor and guarantor in the proceedings before Recovery Officer i.e. R.P. No.88, 89, 90 and 91 of 2010. It is further averred by the Appellant that the Recovery Officer had put the following property for Auction for which the Auction was held on 05/12/2022:

*"All that piece and land as Plot No.4719 in the Ankleshwar Industrial Area/Estate consisting of revenue Survey No.326 paiki and 356/3 paiki within the village limits of Pirman, Opp. SPC Life Science & BSNL Bhavan Ficom Chokdi, Taluka Ankleshwar, GIDC Ankleshwar, Dist. Bharuch (Gujarat) admeasuring 2035 Sq. mtrs."*

5. The Fair Market Value and Reserve Price was fixed at Rs.289.00 Lakhs. The Auction was conducted on 05/12/2022 and H1 bidder Hari Om Publicity has been declared as successful highest bidder for Rs.3,19,00,000/-.

6. The Appellant has further stated that the Auction was conducted on 05/12/2022 and the judgment debtor had exercised his right under Rule 60 of the Second Schedule of the Income Tax Act and preferred application being I.A No.478 of 2022 on 10/12/2022 offering a sum of Rs.3,37,00,000/- including 5% penalty amount as well as interest at the rate of 15% from the sale proclamation i.e. 05/12/2022. The same was submitted to the Ld. Recovery Officer alongwith a Demand Draft No.058401 dated 09/12/2022 for Rs.3,37,00,000/- (Rupees Three Crores Thirty Seven Lakhs Only). The said application has been rejected by the Ld. Recovery Officer vide order dated 16/02/2023, which gives rise to the present Appeal.

1. 7. Ld. Counsel for the Appellant herein submitted that the Appellant is a guarantor and has the constitutional right to protect his property from being sold. As such, the Appellant had approached the Ld. Recovery Officer for a direction to accept the amount of Rs.3,37,00,000/- for release and return of the above mentioned property under Rule 60 of the Second Schedule of the Income Tax Act, 1961. He further submitted that the Ld. Recovery Officer failed to consider the very object of the legislature for providing Rule 60. He further submitted that the meaning of the phrase "Proclamation of Sale" used in Rule 60(a) of the Second Schedule of the IT Act is the price at which the Recovery Officer has put the property for Auction to Sale. In the present case, the reserved price for the property to be sold was Rs.2,89,00,000/-. The Auction was held on 05/12/2022 and the highest bid was Rs.3,19,00,000/-. Thus, the maximum recovery by the Recovery Officer has been fixed at Rs.3.19 Crore. The property in question is the sole earning commercial property of the Appellant herein. The Recovery Officer has held that the total outstanding, as per the Recovery Certificate, is Rs.90 Crores. Therefore, Ld. Registrar of this Tribunal has erred in arriving at a conclusion that the Appellant herein is liable to pre-deposit 50% of the entire outstanding dues as per Section 30-A of RDB Act. If the conclusion of the Ld. Registrar is accepted, the remedy of Appeal provided under the RDB Act would be illusory for the Appellant as the

Appellant would be required to pre-deposit a huge amount of Rs.45 Crores. In that case, the Appellant would be remediless and the very object of Rule 60 of the Second Schedule of the IT Act would be frustrated.

1. 8. Considering the facts of the present case and submissions of the Ld. Counsel for the Appellant, it would be worthwhile to refer to Section 30-A of the Recovery of Debts & Bankruptcy Act, 1993, which reads as under:

***"30A. Deposit of amount of debt due for filing appeal against orders of the Recovery Officer. –***

*Where an appeal is preferred against any order of the Recovery Officer, under Section 30, by any person from whom the amount of debt is due to a bank or financial institution or consortium of banks or financial institutions, such appeal shall not be entertained by the Tribunal unless such person has deposited with the Tribunal fifty per cent of the amount of debt due as determined by the Tribunal."*

1. 9. In view of the aforesaid provision contained in 30-A of the said Act, the Appellant was required to deposit with the Tribunal 50% of the amount of debt due as determined by the Tribunal. The title of the memo of proposed Appeal lodged by the Appellant shows that the Appellant seeks to prefer an Appeal u/s 30 of the said Act against the aforesaid order dated 16/02/2023 passed by Ld. R. O. in I.A. No. 478 of 2022. The Appellant herein is admittedly a guarantor and a Certificate Debtor, who is jointly and severely liable to pay the entire dues of the Certificate Holder under the Recovery Certificate. Ld. Counsel for the Appellant has not shown any provision of law by which the Appellant can be segregated from other Certificate Debtors for the purpose of claiming release/return of the property by exercising his right under Rule 60 of the Second Schedule of the IT Act. As such, the Appellant herein is required to follow the procedure and requirement of pre-deposit of 50% of the debt due at the time of preferring an Appeal. The provisions of

Section 30-A of the said Act are mandatory and the Appellant is bound to follow the same. In this context, a reference deserves to be made to the judgment of the Hon'ble Rajasthan High Court in the case of **XLO India Ltd. Vs. Union Bank of India in D. B. Civil Writ Petition No.25734/2018.**

1. 10. In the present case, when the Ld. Registrar drew attention of the Ld. Counsel for the Appellant to the fact that the Appellant is required to deposit amount as per Section 30-A of the said Act, the Appellant refused to do so.

2. 11. In view of above, this Tribunal does not find any substance in the argument of the Ld. Counsel for the Appellant to interfere with the impugned order dated 28/03/2023 passed by Ld. Registrar.

3. 12. In view of the aforesaid discussion, the present Chamber Appeal is devoid of merits and the same is hereby dismissed with no order as to cost.

File be consigned to records.

Pronounced in open Court on this 12^th day of July, 2023.

(Laxman Madnani) Presiding Officer DRT-II, Ahmedabad

\*sruthi\*