C A GANESAN vs INDIAN BANK on 19 January 2023

ORDER

1. 1. The Appellant has filed this Appeal u/s 30 of the RDB Act, 1993. However, there is no impugned order having passed by the Recovery Officer under the Act and the Appellant only challenged the Sale held by the Recovery Officer in terms of the Recovery Certificate issued by this Tribunal in DRC No.05/2011 and in the R.P. No.07/2011 which is held on 25.03.2013 by the Recovery Officer.

2. 2. It is the contention of the Ld. Counsel for the Appellant that the sale is held by the Recovery Officer is null and void as the sale is vitiated by fraud and collusion and hence, the sale is liable to be set aside by this Tribunal.

3. 3. It is the further contention of the Ld. Counsel for the Appellant that the e-auction sale notice issued by the Recovery Officer is illegal and invalid in the eye of law and no reserve price was fixed while selling the property. Accordingly, the sale held by the Recovery Officer is required to be set aside.

4. 4. It is the contention of the Ld. Counsel for the Respondent Bank that the contentions put forth by the Appellant in the Appeal are untenable and the contention of the Appellant that the sale is vitiated by fraud and collusion is baseless. The property was attached and brought for sale by the Ld. Recovery Officer. Furthermore, the property was already under mortgage with the 1^st Respondent Bank and therefore, even if there is a non-attachment of the property cannot render the sale void as the mortgage right being a bigger right available to the 1^st Respondent Bank and when the property was brought for e-auction, the procedure as contemplated under the law 3Appeal 09/2014

have been followed. Hence, there is no violation of Rule 55 under the Schedule-II of the Income Tax Act.

5. The Ld. Counsel for the Respondent Bank further contended that a proper valuation of the property having obtained by the bank alone, the property was brought for sale by fixing a Reserve Price being a sum of Rs.38,20,000/- and the sale proclamation was also issued by the Ld. Recovery Officer and therefore, the contention of the Appellant that the Reserve Price is not fixed while selling the property has no merit.

6. The Ld. Counsel for the Respondent Bank further contended that this Hon'ble Tribunal having passed the final order and the Recovery Certificate having issued and thereafter, the properties were attached and brought for e-auction sale is strictly in accordance with the law. The Auction has been confirmed and the sale certificate has been issued and equally the Auction purchaser is in possession of the property since 2013. Hence, the present Appeal filed by the Appellant is an abuse of process of court and therefore, the Appeal may be dismissed with costs.

7. The Ld. Counsel for the 3^rd Respondent (Auction Purchaser) contended that the Appellant having failed to file any Application before the Ld. Recovery Officer under Rule 60 & 61 of the Schedule-II of the Income Tax Act and without filing the Application to set aside the auction sale, the Appellant filed the present Appeal before this Tribunal directly under section 30 of the RDB Act, 1993 is not maintainable and hence, the Appeal is liable to be dismissed in limini by this Hon'ble Tribunal.

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8. The Ld. Counsel for the 3^rd Respondent (Auction Purchaser) further contended that it is also necessary that the Appellant is liable to deposit the Auction amount before this Hon'ble Tribunal as mandated under Rule 60 & 61 of the Schedule-II of the Income Tax Act, which is also not complied by the Appellant before filing the Appeal before this Hon'ble Tribunal.

9. The Ld. Counsel for the 3^rd Respondent (Auction Purchaser) further contended that the Ld. Recovery Officer having not passed any impugned order so as to challenge by way of an Appeal u/s 30 of the RDB Act, 1993, the Appeal is liable to be dismissed at threshold as the same is not maintainable before this Hon'ble Tribunal.

10. The Ld. Counsel for the 3^rd Respondent (Auction Purchaser) further contended that the Respondent having participated in the e-auction sale held on 25.03.2013 and having paid the sale consideration within the time as stipulated under the Act and the Sale Confirmation & Sale Certificate having issued and registered the same as Document No.4300 of 2013 before the competent Sub-Registrar, the Respondent has a rights to the Title & Possession of the property and the Respondent is at present in enjoyment of the property.

11. The Ld. Counsel for the 3^rd Respondent (Auction Purchaser) further contended that the Respondent is already put on possession & enjoyment of the property and the revenue record also mutated in favour of the Respondent and equally the Respondent is cultivating the land and also made improvement and development of the land and hence, the interest of the Respondent is required to be protected by this Hon'ble Tribunal in view of the decision of the Hon'ble Apex Court in 2008 (12) SCC 582 in *Janata Textiles & Others Vs. Tax Recovery*

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*Officer*. It is also not necessary that the Ld. Recovery Officer to attach the property before the auction as the property is already under mortgage with the bank. Under such circumstances, the e-auction sale held by the Ld. Recovery Officer is valid in law.

12. The Ld. Counsel for the 3^rd Respondent (Auction Purchaser) further contended that the Ld. Recovery Officer is duly empowered in terms and conditions, as mentioned in clause No.20 of the sale notice that "The Ld. Recovery officer, DRT, Coimbatore has got the absolute right to accept or reject a bid or postpone or cancel the sale without assigning any reason" and therefore, the Ld. Recovery Officer has a power to withdraw the auction sale in r/o item No.6 of the property and hence, there is no illegal or infirmity in the proceeding as alleged by the Appellant. The 3^rd Respondent was the sole bidder of the property and in the auction proceedings, the 3^rd Respondent has been declared as a successful bidder of the property. The minimum increase for each bid will be Rs.10,000/-. However, the 3^rd Respondent being the sole bidder of the property and has no chance to increase the bid by any other person and the 3^rd Respondent having bided the property with an increase from the Reserve price fixed by the Ld. Recovery Officer as the 3^rd Respondent having quoted the amount is the highest bid and the bid is confirmed in favour of the 3^rd Respondent and therefore, there is no illegality or infirmity in the sale proceedings conducted by the Ld. Recovery Officer. The Appeal filed by the Appellant is liable to be dismissed with exemplary costs by this Hon'ble Tribunal.

13. This Tribunal having considered the pleadings & materials placed on record and the arguments advanced by the parties, the following emerged for the consideration by this Tribunal.

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14. The Appellant having filed the Appeal under section 30 of the RDB Act, 1993 and no impugned order having passed by the Ld. Recovery Officer found enclosed in the Appeal and whereas, it is the contention of the Ld. Counsel for the Appellant that the sale held by the Ld. Recovery Officer on 25.03.2013 is equally liable to be challenged by way of an Appeal u/s 30 of the RDB Act, 1993 without getting any impugned order from the Ld. Recovery Officer. In this context, it will be relevant to quote the section 30 of the RDB Act, 1993 which read as follows:

" [30, Appeal against the order of Recovery Officer –

1. (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. (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 enquiry 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).]

The provision under section 30 of the RDB Act, 1993 is well clear that an Appeal can be preferred by a party against only an impugned order passed by the Ld. Recovery Officer. In the present case, there is no impugned order having found passed by the Ld. Recovery officer and as such the present Appeal filed by the Appellant prima-facie is not sustainable under the law. However, the Ld. Counsel for the Appellant further contended that the Appellant is entitled to challenge without passing an impugned order by the Ld. Recovery Office u/s 30 of the RDB Act, 1993, in view of the decision made by the Hon'ble High Court of Madras in the case "*D.Durai srinivasan Vs. The Registrar, Debts Recovery Appellate Tribunal & Others*" CDJ 2009 MHC 5562 and the Ld. Counsel relied upon para 19 & 20 of the decision which read as follows:

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*" 19. Therefore, while we hold that the appeal against the order of confirmation of sale is maintainable, but that will be only in cases when the sale is challenged under Rule 60/61 of Schedule-II to the Income Tax Act and if it is rendered by the Recovery Officer against the applicant, such party, while challenging the sale, may also challenge the confirmation of sale, if any made in the meantime. However, that will not take away the right of a person to challenge the sale originally made on the date of auction by filing appeal under Section 30 of the DRT Act, 1993, challenging the order of sale as may be ordered by the Recovery Officer under Rule 56 of Schedule-II to the Income Tax Act.*

*20. In the present case, apart from the fact that the petitioner had not challenged the upset price as was shown in the second advertisement published in the newspaper "Dina Malar" on 17.11.2006, from the records, it would be evident that the Recovery Officer accepted the offer given by the bidder under Rule 56 of Schedule-II, by this order/date of auction dated 21.12.2006. Thereafter, the total sale consideration amount having been paid by the third respondent-auction purchaser, though it was open for the petitioner to challenge the sale as made on 21.12.2006, but the petitioner did not choose to challenge the same, either under Rule 60 or under Rule 61 of Schedule-II or under Section 30 of the DRT Act, 1993 and having not challenged the same, in the absence of any other infirmity in the order of confirmation of sale, the DRT rightly rejected the petition preferred by the petitioner under Section 30 of the DRT Act, 1993."*

15. This Tribunal having considered the decision laid down by the Hon'ble High Court of Madras in the case as stated *ibid*, the decision and the dictum laid on by the Hon'ble High Court is on a different facts and circumstances of the case, wherein, the issue considered by the Hon'ble High Court of Madras is in relation to that the Recovery Officer or the DRT had no power to reduce the upset price without notice to the defaulter and the auction was conducted without giving notice to the petitioner with regard to the proclamation of sale, whereas, in the present case, there is no such issues involved or raised by the Appellant and as such the decision of the Hon'ble High Court (*supra*) is not relevant to the case in hand. Furthermore, the Hon'ble High Court at para 19 of the order emphasized only to the challenging the order of sale as may be ordered by the Recovery Officer under Rule 56 of Schedule-II to the Income Tax Act. Hence, it is relevant to consider Rule 56 of Schedule-II of the Income Tax Act, which read as follows:

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**"56. Sale to be by auction:-** *The sale shall be by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer:*

*[Provided that no sale under this rule shall be made if the amount bid by the highest bidder is less than the reserve price, if any, specified under clause (cc) of Rule 53.] "*

Therefore, it is clear that the Appellant has no case under Rule 56 of the Schedule-II of the Income Tax Act that the sale is not held by public auction to the highest bidder and the sale is also confirmed by the Tax Recovery Officer and equally the bid is also not less than the Reserve price fixed for the property. Accordingly, there cannot be any violation in conducting the sale by the Ld. Recovery officer so as to apply the decision of the Hon'ble High Court of Madras (supra). Therefore, the Appeal fails on merits. The fraud and collusion as alleged by the Appellant has not proved before this Tribunal in a manner known to the law and as such no relief can be granted on the alleged ground of fraud & collusion raised by the Appellant.

16. The Written Arguments and judgments relied upon by the parties are shall forms part of the record.

17. There are no other points pressed during the course of Arguments by either sides.

18. In the result, this Appeal No.09 of 2014 stands dismissed. The parties shall suffer the respective costs.

A copy of the order be communicated to all the parties concerned by the Registry of this Tribunal.

Dictated to my PA directly on the Computer, corrected and pronounced by me in the Open Tribunal on this the 19^th Day of January, 2023).

[A.V.P. BALASUBRAMANIAN] PRESIDING OFFICER