Anila Peeyus vs Recovery Officer on 14 July 2026

O R D E R

1. This Appeal was filed on 27.01.2018 seeking to set aside the order dated 29.11.2017 passed in IA No.1765/2017 in DRC 3947 in OA. No.47 of 2013.

2. The appellant is not a credit debtor but she is a third party/claimant to the proceedings initiated by the learned Recovery Officer in DRC 3947 in O.A. 47/2013. She claims that she is the tenant in occupation of the shop room situated in Sheeba Square, Kalamassery under a lease agreement entered into between her and the landlords Mr. Muhammed Iqbal and Mr.Muhammad Anas. According to the appellant, the Recovery Officer has issued garnishee order dated 25.05.2017 to the appellant, recognizing her tenancy in the property. Since she came across the sale proclamation in respect of the rented property issued in DRC 3947 dated 13.06.2017 in OA No.47/2013, she filed IA No.1765/2017 before the Recovery Officer of the DRT-1, Ernakulam. The Ld. Recovery Officer after having heard both sides’ counsels dismissed the above petition on 29.11.2017. The appellant having aggrieved against the above order have preferred this appeal before this Tribunal.

3. The counsel appearing for the appellant submitted that the petitioner is a tenant of the appeal subject matter of the property by virtue of the garnishee order issued by the Recovery Officer and that IA No.1765/2017 was dismissed on the ground that the appellant failed to appear before the Recovery Officer and that hence the above order is not a speaking order and that the sale proclamation for sale of 12.30 Ares of property without specifying and demarcating the property of the claimant as tenant is illegal and that the operation of the final order passed in OA No.47/2013 and issuance of recovery certificate took effect from 31.3.2014 and expired on 31.03.2017 and that therefore, by virtue of the judgment of the Hon’ble Supreme Court in Nahar Industries as well as in Sunrise Plaza cases, the entire DRC proceedings ought to have been closed as time barred on the date of passing the impugned order as per Rule 68 (B) of the Income Tax (Certificate Proceedings) Rules 1961 and also in the light of the judgment dated 06.12.2017 of the Division Bench of the Hon'ble High Court of Kerala delivered in W.A. No.60/2010 and that therefore appeal may be allowed setting aside the order passed in IA No.1765/2017.

4. The counsel appearing for the 2nd respondent submitted that this appeal is not at all maintainable and that the appellant has no right to challenge the sale proceedings initiated in DRC 3947 in OA No.47/2013 since the final order passed by this Tribunal has become final and that the Recovery Officer of this Tribunal has considered the issue of claim of tenancy in the order dated 29.11.2017 passed in IA No.1765/2017 and that the appellant failed to appear before the Recovery Officer in response to the garnishee order dated 25.05.2017 and that the alleged tenancy of the appellant over the property cannot be considered as an encumbrance over the property which is to be sold and that Rule 68 (B) of Income Tax (Certificate Proceedings) Rules 1961 has no application to apply the limitation aspect in respect of the recovery proceedings in DRC 3947 and that petition in IA No.1765/2017 and this appeal has been filed by the appellant in collusion with the credit debtors and that therefore, appeal may be dismissed.

5. It is not in dispute that the learned Recovery Officer of this Tribunal issued garnishee order dated 25.05.2017 to the appellant and other tenants calling upon them to remit the monthly rent which was being paid to the owners, Muhammed Iqbal and Muhammed Anas, who are the respondents 4 and 5 herein by means of demand draft drawn in favour of the Recovery Officer, DRT-I, Ernakulam. The issue which arises for consideration is as to whether a tenant in occupation of the rental premises has locus standi or is entitled to challenge the sale of the rented premises by its owner who is the landlord to a third party. The answer will be in the negative for the reason that, the tenant has no such right to challenge the sale of the property. If at all, he can contend that he cannot be evicted except under due process of law, if the property is sold to the third party. Occupation of the tenanted premises by the tenant cannot be considered as an encumbrance over the property. Hence, the tenancy over the property need not be disclosed in the sale proclamation. Since the appellant has no locus standi to challenge the sale proceedings, his contention that sale proclamation is liable to be set aside on the ground that the rented premises has been included in the sale proclamation, is liable to be rejected.

6. Once it is established that a tenant is not entitled to raise the aforesaid issue, the contentions raised by the appellant in the present appeal that the proceedings initiated by the learned Recovery Officer is barred by limitation as per Rule 68 (B) of the Income Tax (Certificate Proceedings) Rues 1961.

7. Even assuming for argument’s sake that the appellant as tenant is entitled to raise the above plea of limitation, his contention is not sustainable in view of the judgment dated 16.12.2024 rendered by the Hon'ble High Court of Kerala in OP (DRT) No.446/2023 (Geevarghese P. John & others Vs. The Federal Bank Ltd & anr.). The Hon'ble High Court of Kerala after having referred to the judgment of the Hon’ble Supreme Court delivered in Paramsivam C.N. Vs. Sunrise Plaza and the judgments of the Hon'ble High Court of Kerala delivered in Ratheesh M.N. Vs. Debt Recovery Tribunal-2 Ernakulam, and M/s Bio Research Pharmaceuticals Vs. State Bank of Travancore and Kutaguptan Vs. Canara Bank has categorically held as follows:

“24. The decisions in Bio Research Pharmaceuticals (Supra) and Paramsivam (supra) only establish that the phrase “as far as possible” in Section 29 of the RDDB Act does not mean that the provisions of the Second Schedule to the income Tax Act need not be followed at all or can be deviated from at the whims and fancies of the Recovery Officer . In other words, both decisions only hold that where such provisions are in tune with the Scheme of the RDDB Act, they must be followed without departure.

24.1 - It is held that the period of limitation for recovery of the dues of the Banks/Financial Institutions under Section 19 of the RDDB Act will be the period of limitation prescribed in Article 136 of the Schedule to the Limitation Act 1963. 24.2 – The provisions of Rule 68B of the Second Schedule to the Income Tax Act 1961 is not applicable to proceedings for recovery of amounts determined as payable to a Bank/Financial Institution under the provisions of the RDDB Act.

24.3 – In light of the aforementioned discussions and reasoning, the petition filed by the Bank/Financial Institution is allowed, and the petitions filed by the borrows/guarantors are dismissed.”

8. In yet another judgment dated 08.04.2025 rendered by the Hon'ble High Court of Kerala in George Joseph and anr. Vs. State Bank of India [OP (DRT) No.183/2024] similar view has been taken. It will be pertinent to reproduce the extract of paragraph 4 of the judgment hereunder:

“The issue agitated in this OP (DRT) takes in the question whether Rule 68B, which provides a time limit for the sale of attached immovable property (the second schedule to the Income Tax Act) applies to proceedings for recovery of amount determined as payable to Banks/Financial Institutions under the RDDB Act. This Court held that the provisions of Rule 68B of the second schedule to the Income Tax are not applicable to the proceedings to a Bank/Financial Institution under the provisions of the RDDB Act, in the judgment in Geevarghese P. John Vs. The Federal Bank Limited [2024 KLT Online 2981].”

9. In the light of the dictum laid down in the afore cited judgments it is clearly established that the provisions of Rule 68B of the Second schedule to Rule 68 (B) of the Income Tax (Certificate Proceedings) Rules 1961 is not applicable to the proceedings initiated by the Recovery Officer of the DRT for recovery of the amounts from the credit debtors. Therefore, the submission of the counsel for the appellant that the entire DRC proceedings is liable to be closed as time barred is absolutely unsustainable and untenable.

10. The order dated 29.11.2017 passed by the learned Recovery Officer of this Tribunal in IA No.1765/2017 in DRC 3947 in O.A. No.47/2013 does not suffer from any infirmity or illegality. Therefore, the above order is not liable to be interfered with by this Tribunal.

11. A perusal of the pleadings of the Appeal and the averments of the 2nd respondent bank in its statement shows that petition IA No.1765/2017 and this Appeal was filed by the appellant with ulterior intention of protracting the recovery measures initiated by the learned Recovery Officer of this Tribunal.

12. In view of the foregoing reasons and discussions, this Tribunal holds that there are no valid grounds or merits to allow this Appeal which deserves to be dismissed.

Resultantly, Appeal No.5 of 2018 stands dismissed with exemplary cost of Rs.25,000/- payable to the 2nd respondent bank.

Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 14th day of July, 2026.

(Su. WILLYAHM) PRESIDING OFFICER

Mj/