STATE BANK OF INDIA vs GURU TRADERS on 5 August 2022

: - O R D E R - :

1. This appeal under Section 30 of Recovery of Debts and Bankruptcy Act, 1993, challenges the common order dated 03.11.2018 passed by the Recovery Officer in CP No.8 & 9 of 2017 arising out of DRC No.371 of 2016 in OA No.150 of 2010.

2. The appellants (The Certificate Debtors) approached the Recovery Officer to amend the DRC and also prayed for lifting the attachment passed in the course of recovery proceedings. The Recovery Officer had dismissed the same. Aggrieved by the said order, this appeal is filed.

3. The grounds urged are that the DRC is against law, the demand notice was not served and that the attachment made for a sum of Rs.1,82,33,634/- is bad in law since the subsequent remittances were not taken note of and that the Recovery Officer had not followed the RDB Act and the Income Tax Rules. The non service of DRC is against the principles of natural justice.

4. Notices were ordered by my Ld. Predecessor to the Respondent herein. The Respondent Bank had filed the copy of the proof affidavit filed in OA No.150/2010. The matter was argued at length.

5. The Ld. Counsel for the appellant submitted that if OA was allowed on 18.11.2016 and was decreed for a sum of Rs.1,02,13,723.16p along with interest @12% p.a. from the date of filing of the OA till the date of realization, after deducting the payments made by the defendants during the pendency of OA and other reliefs.

6. It is his contention that between 12.11.2010 to 08.02.2011, the defendants in the OA had remitted a sum of Rs.68,42,000/-. This sum was not adjusted and the property attached is for Rs.1.82 Crores, which is illegal and hence the amendments were sought to the DRC before the Recovery Officer and a prayer was also made to lift the attachment. The Recovery Officer had dismissed such claims made by them and hence the appeal.

7. The Ld. Counsel for the Appellant had also filed the written submissions today which are carefully perused, which gives the chronology of events of the payments and also the facts. It also argued that the appeal is maintainable sans the statutory deposit.

8. The Ld. Counsel for the Respondent Bank submitted that the appeal itself is not maintainable since the certificate debtor cannot question the amount in the Recovery Certificate before the Recovery Officer as per Section 26(1) of the RDB Act 1993. It is also argued that this appeal cannot be entertained for non compliance of Section 30-A of the Act. The certificate has become final and is not questioned by the Certificate Debtors. It is also submitted by the Respondent Bank that the appellants are mandated to deposit the amounts of the sale as required under Rules 60 and 61 of the Second Schedule of Income Tax Act. They were mandated to deposit the full amount from the defaulter.

9. Having heard the Ld. Counsel and after taking note of the contentions, the two points arise for determination in this appeal as under:- (a) Whether the appeal is maintainable without deposit of the dues under the DRC?

(b) Whether the impugned order is opposed to the law governing the subject?

10. To answer the first point arising for consideration, the provisions of the Recovery of Debts and Bankruptcy Act 1993 is to be looked into. Section 30 & 30A of the Act reads as under: [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 deposited with the Tribunal fifty per cent. of the amount of debt due as determined by the Tribunal.] It is seen from the records that the appellant had not deposited the mandatory requirement of law in entertaining this appeal. It is argued in the written submissions of the appellant that the amount due itself is disputed and that the amount claimed in terms of the final order. Therefore the appellant argues that the compliance of deposit of the due amount will not arise in the present case. This argument of the appellant cannot be accepted for the following reasons.

(a) That the final order in the OA is not appealed and it is become final.

(b) The record shows that all the amounts paid by the appellants herein is duly taken note of while issuing the sale notice by the Recovery Officer.

(c) That the applications before the Recovery Officer itself were not maintainable.

(d) The borrower being the appellant herein, in order to question any actions of the Recovery Officer is bound under law to deposit the amounts determined.

(e) That the Section 30 or 30-A does not have any provision to dispense the mandatory deposit whatever may be situations / allegations.

11. Therefore the appeal sans deposit required under the statute is not maintainable. This Tribunal cannot sail with the written arguments of the Appellant since the same is opposed to the spirit of the Act and the Law.

12. The second point that arises for consideration is, whether the order passed by the Recovery Officer is opposed to law and rules governing the subject.

13. The Section 26(1) of the Act makes it clear that it shall not be open to the defendant to dispute before the Recovery Officer the correctness of the amount specified in the certificate, and no objection to the certificate on any other ground shall also be entertained by the Recovery Officer. In the instant case, the application before the Recovery Officer is filed by the Defendant who had become Certificate Debtor. The applications before the Recovery Officer itself were not maintainable.

14. However, the only contention is that certain sums were paid by the certificate debtor. The Ld. Counsel for the appellant submits that his clients have paid a sum of Rs.68,42,000/-. This was taken note of by the Recovery Officer in Para-5 of the order which reads as under:- 5(a) The Certificate Holder bank had affirmed that subsequent to filing of OA, the Certificate Debtor had paid a sum of Rs.68,42,000/- (Rupees Sixty Eight Lakhs and Forty Two Thousand Only) and the outstanding as on 08.01.2018 is recorded as Rs.73,26,105.44p (Rupees Seventy Three Lakhs Twenty Six Thousand One Hundred and Five and Paise Forty Four only). However, it is to be noted that the Certificate Holder Bank had not filed the cost memo before issuance of DRC as directed in the final order. 5(b) The restraint order was made on 020.03.2017, whereas the paper publication of demand notice was published on 30.11.2017. It is to be noted that the restraint order was made only on RC Scheduled property.

Having considered the payments, the Recovery Certificate proceedings were conducted and there is no impropriety in the proceedings of the Recovery Officer. The grounds urged are untenable in the peculiar facts of the case to accept that the Recovery Officer had not followed the law on the subject.

15. The Ld. Counsel during the course of proceedings in this appeal were present on 30.11.2021 and this Tribunal noted in the appeal that sale was conducted on that day and the confirmation of sale was deferred till next week and the matter was posted to

08.12.2021. On 21.03.2022, it was clarified that “Going by the proceedings, it is seen that by the proceedings dated 30.11.2022, this Tribunal had only recorded on submission of respondent counsel that confirmation of sale will be deferred till next week and as such there is no interim order.”

16. It is also to be noted that by an order dated 21.06.2022, this Tribunal had directed that the documents sought to be returned by the bank be kept in abeyance. In the memo filed by the bank dated 08.06.2022 in OA No.150/2010 pertaining to this case, it is intimated that one of the properties were sold during the Recovery Proceedings on 30.11.2021. The sale certificate is also issued on 21.04.2022. The bank is obligated to return the original documents to the auction purchaser. In view of the above, the documents are hereby ordered to be released.

17. For the aforesaid reasons, the appeal is disposed of by the following:

: - O R D E R - :

The appeal stands dismissed. The documents sought by the bank be released. All the IAs stands disposed of as merging into this final order and documents be released to the bank. Sd/-

(A.S.JAYACHANDRA)

PRESIDING OFFICER

DRT-I, CHENNAI

(Dictated to PS, transcribed by him, corrected, signed and pronounced by me on this 5th day of August, 2022)