M s Suma Oil Agencies vs IDBI BANK on 31 October 2019

**: FINAL ORDER :**

1. 1. The present Appeal is filed by the appellants seeking to set aside the entire proceedings initiated against the schedule property and order for restoration of the 3D.No.586/2019 in possession, restraining the Recovery Officer-II, DRT, Bengaluru not to conduct auction or initiate further course of recovery measures against the schedule property, till the disposal of the application.

2. The brief facts narrated by the appellants in the application are that, they got the schedule property through their mother by virtue of a Gift deed dated 18.05.2017 executed in their favour and got the khatha transferred in their names. It is submitted that on verification of the records and encumbrance created over the property by the respondent bank, the appellants preferred a suit before the City Civil Court in OS.No.540/2019. It is further submitted that appellants availed loan of Rs.74,00,000/- from Citi Bank in the year 2006 subsequent to Gift deed executed by their mother. Unfortunately, the respondent bank got entered their charge in the encumbrance on 19.05.2018 for a total consideration of Rs.12,22,26,076/-. It is submitted that 4D.No.586/2019 in

O.A.1158/2012 was allowed on 28.11.2014 and the Recovery Certificate was issued as on 16.11.2016, therefore after lapse of more than three years the Certificate Holder is executing the order, which is barred by limitation. It is further submitted that loan is availed as on 16.06.2007 and the supplementary agreement is executed on 23.08.2008. Subsequently the Certificate debtors have not executed any documents acknowledging the debt nor revival letters, nor made any payments, merely on issuing the recall notice recalling a sum of Rs.6,02,52,427/- outstanding as on 21.08.2010, that too without serving/issuing notice to the mortgager. It is submitted that the appellants are in possession of the title deeds which was deposited with the Citibank in the year 2006 itself. The appellants on verification of O.A proceedings intend to place the question of law involved in the proceedings against the identified property, since the personal guarantees when it is barred by limitation, in the O.A proceedings, the respondent bank 5D.No.586/2019 in cannot proceed against the identified property, which is already mortgaged to the other bank based on the deposit of title deeds and is gifted to the appellants. It is further submitted that when the personal guarantee itself is barred by limitation question of proceedings against the identified purchaser, which also do not belong to certified debtors, the recovery certificate holder cannot seize the property, hence the appellants filed this petition to set aside the entire recovery proceedings initiated against the schedule property and for restoration of the possession.

3. The respondent bank has filed statement of objections to the application, *inter alia* contending that M/s Suma Oil Agencies (respondent No.1) represented by its Proprietrix Smt.Suma Umashankar (respondent No.2) as borrower and Sri Umashankar (respondent No.3) and Sri E.Balan (respondent No.4) as guarantors availed working capital facility by way of Cash Credit of Rs.300 lakh on 18.04.2007

6D.No.586/2019 in and again renewed and enhanced from Rs.300 lakh to 450 lakh during August 2008 on the terms and conditions contained in the sanction letters and in consideration of the loan availed Sri E.Balan (respondent No.4) mortgaged the property situated at Chennai as security. It is further submitted that M/s Suma Oil Agencies failed to repay the dues, even after several request/ reminders sent to the respondents, finally called upon respondents 1 to 4 by recall notice dt.23.08.2010 to make payment of Rs.6,02,52,427/- as on 21.08.2010 with interest within 15 days from the date of notice, but there was no response, hence the respondent bank filed O.A.No.1158/2012 and same came to be allowed on 28.11.2014 and Recovery Certificate was issued. On transfer of the RC to DRT-II, the same was numbered as TRC No.2238/2017. It is further submitted that after issuance of the Recovery Certificate, M/s. Suma Oil Agencies failed to pay the dues of the respondent bank and thereafter the Recovery Officer of DRT-II issued demand notices and 7D.No.586/2019 in subsequently warrant of arrest to respondent No.3 and 4 was also issued as they failed to appear before the Recovery Officer of DRT-II, thereafter the Recovery Officer of DRT-II has visited the mortgaged property situated at Poonamallee, Chennai and advised the Tahsildar to submit report on the ownership of the said property, accordingly, the Tahsildar submitted his report that certificate No.LIS 14854/2006/C3 dated 05.04.2006 of the mortgaged property and Legal Heirship certificate bearing No.G.K.1154/01 dated 05.03.2011 submitted by Mr.E.Balan is also not a genuine one and it was not issued by the Tahsildar office. It is further submitted that the respondent bank identified the immovable property situated at Malleshwaram belonging to Smt.Suma Umashankar and sought the attachment of the same for recovery of the dues to the respondent bank. The Recovery officer, DRT-II issued notice under section 25(aa) of Recovery of Debts and Bankruptcy Act 1993 along with appointment of Advocate Commissioner for identified 8D.No.586/2019 in immovable property accordingly, Advocate commissioner filed an interim report along with the photographs of the schedule property. It is submitted that the applicants reported to be the daughters of the respondent Nos.2 and 3 as Objectors filed application/objection before DRT-II seeking the schedule property be omitted from the sale proclamation, after hearing same was dismissed and directed the respondent bank to take physical possession of the identified property and sale forthwith for recovery of dues of the respondent bank. Accordingly, the respondent bank took the possession of the schedule identified property on 27.02.2019 aggrieved by the same; daughters of respondents 2 and 3 have filed the present AOR. The appellants have not made any ground for allowing the application and same is liable to be dismissed. Hence, prays for dismissal of the application.

9D.No.586/2019 in

4. On the above background, I have gone through the records and heard the arguments advanced by Ld. Counsels appearing for both sides; and the following points arise for my consideration:

- a) Whether the appellants have made out the case to allow the application? and

- b) To what relief, the parties are entitled?

**: REASONS :**

5. The Appellants have filed this appeal against the order of Recovery Officer – II dated 08.02.2019 dismissing the objections filed by the Appellants before the Recovery Officer. The Appeal has been filed on 25.03.2019.

6. The Appellants are daughters of Certificate Debtor No.2 in TRC No.2238/2017 who is also Proprietrix of Certificate Debtor No.1. The Recovery Officer in execution of Recovery Certificate dated 16.11.2016 in OA No.1158/2012 for recovery of a sum of Rs.6,02,52,427/- together with interest @18% p.a., issued notice under 10D.No.586/2019 in

Section 25(aa) of The Recovery of Debts and Bankruptcy Act, 1993 on 08.01.2019 and appointed Advocate Commissioner for identified immovable property situated at Malleswaram, Bengaluru. Appellants filed objection under Section 11(1) of Second Schedule of Income Tax Act before the Recovery Officer, which was considered and dismissed by the Recovery Officer by impugned order dated 08.02.2019. Certificate Debtor No.2 who is Proprietrix of Certificate Debtor No.1 has filed written statement and contested in OA No.1158/2012 filed before this Tribunal, in which final order was passed by this Tribunal on 28.11.2014 and Recovery Certificate was subsequently issued on 16.11.2016, in which execution was levied by the Recovery Officer as stated supra.

7. It is not in dispute that Certificate Debtor No.2 who is also Proprietrix of Certificate Debtor No.1 owned the schedule property and was aware of passing of final order as 11D.No.586/2019 in she had contested the said OA, in which the above Recovery Certificate was issued on 16.11.2016. The alleged gift deed under which the appellants are claiming their rights is executed by Certificate Debtor No.2 on 18.05.2012 after passing of final order as well as Recovery Certificate by this Tribunal. Such transfer by the Certificate Debtor after passing of final order in OA proceedings, which was contested by her and also after passing of Recovery Certificate, will attract the provisions of Section 53 of Transfer of Property Act, which deals with fraudulent transfer. "Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed." In the instant case the creditor has already obtained a decree and is a certificate holder bank who is respondent in this case, and has taken further steps for execution of Recovery Certificate for recovery of very large sum of Rs.6,02,52,427/- together with interest. Thus the 12D.No.586/2019 in transfer effected by Certificate Debtor No.2, who is also Proprietrix of Certificate Debtor No.1 subsequent to passing of final order and issuance of Recovery Certificate cannot be regarded as a bonafide transfer, but will come under the provisions of Section 53 of Transfer of Property Act, to defeat or delay the recovery of the dues under Recovery Certificate proceedings.

8. The Appellants have also in the appeal memo urged various grounds including that the title deeds/original documents in respect of the schedule property are deposited in the year 2006 with M/s.Citi Bank and therefore the action of the Recovery Officer in attaching the schedule property through the Recovery Officer is arbitrary, illegal and unlawful. The Appellants have also produced a copy of letter dated 29.07.2006 of Citi Bank vide Annexure "K" addressed to Certificate Debtor No.2 and has contended that the said loan is taken for a period of 180 months and 13D.No.586/2019 in

the property stood mortgaged with Citi Bank, and therefore the Recovery Officer ought not to have proceeded against the said property. The Appellants vide para v(x) on page 12 of the appeal memo has stated that the Appellants/ objectors are in possession of the title deeds (originals), which was deposited with M/s.Citi Bank, where mortgage loan is availed in the year 2006 itself. Thus the Appellants have contradicted in the appeal memo that they have deposited the title deeds with Citi Bank and at the same time stated that they are holding the title deeds and they are in possession of the same. Both these cannot happen at the same time. If the title deeds are deposited with the Citi Bank for the loan availed by Certificate Debtor No.2 in 2006, and the mortgage/charge created in respect of the loan availed by Certificate Debtor No.2 is subsisting, then Citi Bank would have raised objections against the said execution proceedings levied against the said property.

14D.No.586/2019 in

9. In the instant case Citi Bank has not chosen to challenge the execution of recovery proceedings, as the loan availed by Certificate Debtor No.2 from Citi Bank is either pre-closed or paid off, without which the appellants cannot be holding the title deeds through the donor who is Certificate Debtor No.2 and Proprietrix of Certificate Debtor No.1. As the appellants are claiming under the alleged gift deed executed by Certificate Debtor No.2 after passing of the final order and issuance of Recovery Certificate, such claim by the appellants cannot be considered as bonafide for the reasons stated supra. The Appellants who are party before the Recovery Officer having filed objections in the execution proceedings under Rule 11(1) of Second Schedule of Income Tax Act, in which the impugned order was passed has not come before this Tribunal in filing the present appeal within the prescribed period of thirty days from the date of passing the order and has come with a delay of 21 days. Any such appeal will have to be filed within a period 15D.No.586/2019 in of thirty days; therefore the present appeal is liable to be dismissed on the issue of limitation itself. Reliance is placed on the judgement of the Hon'ble Apex Court in the matter between International Asset Reconstruction Company of India Ltd., Vs. The Official Liquidator of Aldrich Pharmaceuticals Ltd. and Ors., and Iridium India Telecom Ltd. Vs. Doha Bank QSC and Another reported in (2017) 16 SCC 137 and (2017) SCC Online SC 1253, wherein it was held that the exclusion of any provision for extension of time by the Tribunal in preferring an appeal under Section 30 of the Act makes it manifest that the legislative intent for exclusion was express and therefore the prescribed period of thirty days for preferring an appeal against the order of Recovery Officer under Section 25 to 28 cannot be condoned by an application under Section 5 of Limitation Act. In the instant case the Appellants have not even filed an application for condonation of delay of 21 days and in any case the delay 16D.No.586/2019 in cannot be condoned as held by the Hon'ble Apex court in the above judgement.

10. The Appellants in the appeal memo have stated that the application is filed within a period of thirty days from the date of obtaining the certified copy of the entire order sheet along with objections filed, etc., and this cannot be accepted for the delay in filing the appeal. The appeal is therefore liable to be dismissed as barred by limitation and is dismissed. I therefore pass the following:-

**: O R D E R :**

In the result D.No.586/2019 is dismissed.

Pending IAs, if any, stand closed as infructuous.

Parties to bear their own cost.

(Dictated to the Stenographer, after its transcription and necessary corrections, signed and pronounced by me in the Open Court on this 31^st day of October, 2019)

**(K. RAVINDRAN NAIR)** **Presiding Officer** (i/c)DRT-II, Bengaluru

✻PJ✻