KIRTI OVERSEAS Vs. DEBT RECOVERY APPELLATE TRIBUNAL ALLAHABAD

JUDGEMENT

(1.) THIS petition under Article 226 of the Constitution has been filed praying that a writ of mandamusbe issued restraining the Debt Recovery Tribunal, Allahabad from taking any action for recovery of Rs. 93,88,386 with interest from the petitioner in any manner whatsoever including by coercive measures in pursuance of the orders dated 15 -10 -1999, 19 -6 -2001 and 6 -9 -2001. A further prayer has been made that Rules 48 to 51 of the Income -Tax Rules be declared as nulland void.

(2.) THE petitioners were granted Packing Credit Limit of Rs. 25 lacs and Foreign Bill Purchase Limit of the same amount by Union Bank of India. Dayal Bagh Marg Agra (respondent No. 4) and an agreement was executed in that regard on 27 -5 -1996. In order to ensure repayment of the loan, the petitioners created an equitable mortgage of three houses situated in Mathura City in favour of the respondent -Bank. Subsequently the petitioners were sanctioned additional Packing Credit Limit of Rs. 19 lacs and additional Foreign Bill Purchase Limit of Rs. 25 lacs. It appears that the petitioners did not repay the amount to the Bank (respondent No. 4) and consequently it filed Original Application No. 3 of 1999 against the petitioners for the recovery of the amount before the Debt Recovery Tribunal, Jabalpur. They did not file their written statement and consequently the Tribunal proceeded ex -parteagainst them. Ultimately by its order dated 15 - 10 -1999 decreed the claim of the Bank for a sum of Rs. 93,88,386 together with interest at the rate of 20% per annum with quarterly rests with effect from 6 -1 -1999 till the realisation of the outstanding dues. The order further provided that the Bank may press into service its independent right for the sale of the hypothecated property without waiting for any order from the Tribunal and the defendants were debarred from transferring, alienating or otherwise dealing with or disposing of the hypothecated/mortgaged properties without prior permission from the Tribunal. The petitioners challenged the aforesaid order of the Tribunal by filing a writ petition in the Jabalpur High Court but the same was dismissed as withdrawn by the order dated 30 -7 - 2001 with liberty to file an appeal. The petitioners claim to have filed an appeal before the Debt Recovery Appellate Tribunal, Allahabad on 7 -9 -2001 which has not yet been formally registered. The Bank applied for issue of the recovery certificate and the Recovery Officer issued a certificate for attachment of the three houses which were mortgaged with the Bank on 19 -6 -2001. Thereafter, an order has been passed on 6 -9 -2001 sanctioning sale of the properties and issuance of sale proclamation. By the same order, the Recovery Officer has fixed reserved price for the three houses which had been mortgaged and thereafter, has issued certain procedural direction regarding affixation of copy of proclamation order. The sale proclamation has been published in some local newspapers and has also been announced by beat of drums on or near the property. The grievance of the petitioners is that the Recovery Officer, who is taking steps to recover the decretal amount, has not complied with the requirement of law and as such proceedings initiated by him and consequential orders passed in that regard are illegal.

(3.) SRI Ravi Kant, learned Senior Counsel has submitted that the petitioners have also sought declaration that the Rules 48 to 51 of the Income -Tax Rules, which lay down procedures for attachment and sale, are unconstitutional and as this relief cannot be granted by the Tribunal, the writ petition cannot be dismissed on the ground of alternative remedy and the same is maintainable. The attack to the validity of the aforesaid rules may, therefore, be briefly examined. Sub -section (5) of Section 28 of the RDB Act provides that the Recovery Officer may recover any amount of debt due from the defendant by distraint and sale of his movable property in the manner laid down in the Third Schedule to the Income -Tax Act. Section 29 of the RDB Act provides that the provisions of Second and Third Schedules to the Income -Tax Act, 1961 and the Income -Tax (Certificate Proceedings) Rules, 1962 as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under this Act instead of to the Income -Tax Act. The proviso to the section lays down that any reference under the said provisions and the rules to the ”assesee”shall be construed as a reference to the defendant under this Act, Rules 53 and 54 of the Income -Tax Rules read as follows :