M/S SRI VEERA VENAKTA SATYA TRADERS vs STATE BANK OF INDIA on 29 April 2022

ORDER

In the present AOR the appellant had sought the following reliefs:

(a) To set aside the auction proceedings conducted on 08.04.2019 by cancelling the Sale Certificate vide Regd. Sale Deed bearing No. 1225/2020 dt. 23.03.2020 and No. 3160/2020 dt. 04.09.2020 in respect of Schedule "D" and Schedule "C" properties respectively.

(b) To direct the Bank to consider the OTS for Rs. 29.00 lakhs and allow to deposit the amount as full and final settlement in view of the acknowledgment by the Branch Manager and the memo filed before the Recovery Officer-1 of this Tribunal as the applicants are ready to deposit the amount which was returned by the Bank which is against to the principles of natural justice as the OTS proposal is within the frame work of the RBI revised guidelines which is mandatory and statutory.

(c) To pass such other order or orders as this Tribunal deems fit just and proper in the circumstances of the case.

(d) To direct the respondent bank or the 4h respondent to redeliver the possession of the schedule "A" movable property back to the appellants. In the counter filed by the Branch Manager, State Bank of India, Draksharamam Branch, East Godavari District had requested to dismiss the appeal with costs in the interest of Justice. The appellant as filed this petition u/s 30(1) of The Recovery of Debts and Bankruptcy Act, 1993. Sec 29, 30 and 30(a) of the Recovery of Debts and Bankruptcy Act, 1993 are as follows:

29. Application of certain provisions of Income-tax Act. The pr Third Schedules to the Income-tax Act, 1961 (43 of 1961) and the Income-tax isions of the Second and (Certificate Proceedings) Rules, 1962, as in force from time to time shall, as far as possible, apply with necessary modifications as ii the said provisions and the rules referred to the amount of debt due under this Act instead of to the Income-tax: Provided that any reference under the said provisions and the rules to the "assessee" shall be construed as a reference to the defendant under this Act.

30. Appeal against the order of Recovery Officer.- (1) Notwithstanding anything contained in section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.

(2) On receipt of an appeal under sub-section (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such inquiry as it deems fit, confirm, modify or set aside the order made by the Recovery Officer in exercise of his powers under sections 25 to 28 (both inclusive) 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 deposiled with the Tribunal fifty percent. of the amount of debt due as determined by the Tribunal.

In this regard I would like to quote Rules 66 of the 2" schedule of the Income Tax Act provision which is as follovws

66. (1) Where an order for the sale of immovable property has been made, if the defaulter can satisfy the Tax Recovery Officer that. there is reason to believe that the amount of the certificate may be raised by the mortgage or ease or private sale of such property, or some part thereof, or of any ther immovable property of the defaulter, the Tax Recovery Officer may, on his application, postpone the sale of the property comprised in the order for sale, on such terms and for such period as he thinks proper, to enable him to raise the amount.

(2) In such case, the Tax Recovery Officer shall grant a certificate to the defaulter, authorising him, within a period to be mentioned therein, and notwithstanding anything contained in this Schedule, to make the proposed mortgage, lease or sale: Provided that all moneys payable under such mortgage, lease or sale shall be paid, not to the defaulter, but to the Tax Recovery Officer Provided also that no mortgage, lease or sale under this rule shall become absolute until it has been confirmed by the Tax Recovery Officer. I would also like to describe Sec. 11 of 2d schedule of the Income Tax Act which is as follows:

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: Provided that no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed.

(2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the Tax Recovery Officer shalli deem .

(3) The claimant or objector must adduce evidence to show that (a) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or (b) (in the case of movable property) at the dalte of the attachment, he had some interest in, or was possessed of, the property in question

(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 the 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.

(5) Where the Tax Rocovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his owrn property and not on accounl 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 lo him, the Tax Recovery Officer shall disallow the claim

(6) Where a claim or an objection is preferred, the party against whom an order is tmade may instilute 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 Recover Officer shall be conclusive In the present case appellant had filed W.P.No.6420 of 2019 before Hon'ble High Court of Andhra Pradesh in which Hon'ble High Court have ordered as follows: "In the result, the Writ Petition is disposed of reserving liberty to the petitioners to approach the Tribunal or any other appropriate forum, within three weeks from the date of receipt of a copy of this order and initiate appropriate proceedings seeking the remedies, which the law permits, in regard to the issues, which are left open in this order without going into the merits of the same. Til such time, the interim order, which is granted in this writ petition and which is in force till today, shall continue to operate. It is made clear that in case the petitioners fail to approach the Tribunal or a forum and obtain any interim orders within the time stipulated supra, the respondents 1 to 3/bank shall be at liberty to proceed further in the matter, however, in strict accordance with the procedure established by law" In this case as per law, the appellant may file application as per 2nd Schedule of Income Tax Rules 11 and 66 before Recovery Officer and if the appellant does not agree with the order of the Recovery officer, he may file appeal u/s 30 after depositing 50% of the amount due as described by the Tribunal which is in force since 10.09.2016 but the appellant has not filed any petition before the Recovery Officer as per procedure of 2" Schedule of Income Tax and he has directly filed on the grounds mentioned in the AOR 01/2020 and OP bank has also filed its counter. But in my view since any order is not passed by the Recovery Officer, due to non filing any petition by the appellant. Hence this appeal which is directly filed in this Tribunal is not maintainable and I dismiss this appeal without going into the merits of the appeal but without cost. Since applicant has not filed this petition before proper forum, so he may file the petition before Recovery Officer as per rules and if he wil dissatisfy by the order of Recovery Officer, then he may file the appeal before this Tribunal. [Typed to the dictation corrected and pronounced by me in the open court on this 29t April, 2022] 22 PRESIDING OFFICER

DEBTS RECOVERY TRIBUNAL VISAKHAPATNAM