GOBINDA CHANDRA PATTNAIK Vs. PRESIDING OFFICER DEBT RECOVERY

JUDGEMENT

(1.) IN the writ application under Articles 226 and 227 of the Constitution of India, the petitioner -Shri Gobinda Chandra Pattnaik who was a guarantor for a loan granted to one M/s. Barkha Industries has sought to challenge the action of the opposite party No. 3 -State Bank of Hyderabad and opposite party No. 2 - Recovery Officer, Debts Recovery Tribunal, Cuttack, in effecting sale of the only residential property belonging to the petitioner, even though, the petitioner had offered to pay the highest bid amount raised at the auction conducted by the opposite party No. 2 and further the petitioner seeks to challenge the rejection of his petition, under Rule 60 and 62 of the Income Tax Act, 1961 and also further seeks to challenge the consequential confirmation of sale, made in favour of the opposite party No. 4 -Birendra Kumar Pattnaik.

(2.) THE petitioner submits that he is the owner of the property under the District Khurda, SRO/PS Jatani, Mouza Ramachandrapur, Khata No. 257/11, Plot No. 143/706, area Ac O.120 decimals and the building standing thereon. It is further submitted that the petitioner, aged about 86 years, along with his wife are residing over the said property by constructing a dwelling house thereon and lives in the said dwelling house with his son, daughter -in -law as well as grand children. It is further asserted that the petitioner has spent his entire life's income as well as income of his children for the construction of the dwelling house in the said property. It is stated by the petitioner that he learnt from an advertisement, published in the Daily News Paper 'The Samaj' dated 4.10.2008 that his property had come to be attached, through notice for settling a Sale Proclamation under Rule 53 of the Second Schedule, referred to, in Section 29 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred as 'RDDBFI Act, 1993'). It is asserted that the sale proclamation was published in the paper in English language. It is further averred that in the same month of October, 2008, the petitioner has come across a further notice of proclamation of sale in R.P. No. 215/2006/CTC, arising out of O.A. No. 59 of 2002 before the Debts Recovery Tribunal, Orissa, Cuttack and he learnt that opposite party No. 2 was going to put his property into auction on 22.12.2008, apart from the various other properties said to have been mortgaged with the Bank (Annexure -3). The petitioner submits that on learning of the aforesaid facts, since O.A. No. 59 of 2002 have been decreed ex -parte against the petitioner, he filed M.A. No. 488 of 2008 along with a petition for condonation of delay vide M.A. No. 565 of 2008 and sought for to stay of the recovery proceeding in M.A. No. 497 of 2008. But since the petitioner's conducting lawyer failed to take steps on the date fixed, the opposite party No. 1 dismissed the said petitions for default. Subsequently, the petitioner immediately filed petitions for restoration of the above miscellaneous applications. The Debt Recovery Tribunal, Cuttack was pleased to issue notice to the bank for their appearance and reply, and the case was posted to 2.2.2009 for further order regarding setting aside the ex -parte judgment. While the above petitions for setting aside the judgment/restoration of the miscellaneous applications were pending before the Debt Recovery Tribunal, Cuttack, the Recovery Officer, opposite party No. 2, without taking into consideration the fact of the pendency of the restoration applications for setting aside the ex -parte judgment, went ahead and conducted the auction of various mortgage of assets, including property of the present petitioner on 22.12.2008.

(3.) IN the background of the aforesaid circumstances, the petitioner has filed the present petition seeking exercise of the writ jurisdiction, since implementation of the aforesaid order confirming the sale/effectively took away the only shelter on the hand of the petitioner without awaiting the outcome of the pending appeal. Since the recovery officer did not accept the draft of Rs. 1,00,000/ - on the ground that the petitioner had not complied with the Rule 60 of the Second Schedule, the petitioner on 27.1.2009 made out a further draft for the balance amount of Rs. 7,51,000/ - totalling a sum of Rs. 8,50,000/ - equal to the highest bid by the opposite party No. 4. Once again the petitioner approached the recovery officer to accept the said payment and to release the property of the petitioner from the proceeding. Such an offer of the petitioner was also not accepted by the recovery officer. A copy of the impugned order passed by the recovery officer has been annexed as Annexure -8 to the writ application, passed by the Recovery Officer in R.P. No. 215 of 2006 dated 23.1.2009. The property of the petitioner has been dealt with as Lot No. 3 of the said order and for convenience, the relevant portion is quoted below: In respect of the Lot No. 3 property the auction purchaser had paid the total purchased money in time. However, on the 30th day i.e. 21.1.2009 C. Debtor No. 8 filed an application under Rule -60 of the second schedule of I.T. Act to set -aside the sale of immovable property. Heard learned Counsel for the CHB and learned Counsel for the C. Debtor No. 8. The application under Rule -60 requires deposit of the proclamation amount with interest and penalty of 5% of the purchased money. The application filed by the C. Debtor No. 8 is bereft of the required amount of deposit. Considering that an application under Rule -60 was filed in time, two days time was allowed to C. Debtor on request to deposit the required amount for consideration of his application under Rule -60. Today the learned Counsel for the C. Debtor No. 8 failed to deposit required amount and instead files a petition seeking 30 days time to make the deposit. In view of this the application filed by C. Debtor No. 8 being an incomplete one having devoid of the required amount of deposit is dismissed. No application was filed by C. Debtor No. 8 under Rule -61. Today C. Debtor No. 8 however has filed an application and prayed for its consideration under Rule -61 along with the application for condonation of delay. Since the Auction Purchaser has paid the total purchased money in time and 30 days time stands completed on 21.1.2009, there being no application under Rule -61 by then and by dismissal of the application filed under Rule -60 vide today's order, the sale in respect of the lot three property is to be confirmed by operation of Rule -63 of the second schedule of IT Act. The application now filed by C. Debtor No. 8 for consideration under Rule -61 being a belated one is not available for consideration under the said provision and therefore cannot stay put operation of Rule -63. As a consequence a confirmation of sale and sale certificate becomes due in terms of Rule -63 and Rule -65 of second schedule of IT Act. Issue confirmation of sale and sale certificate to the auction purchaser Apart from the aforesaid contentions, another ground has been taken by the petitioner to the effect that the petitioner's property in question has not been validly mortgaged in favour of the petitioner and hence could not have been sold by the auction of the recovery officer in such letter of the Branch Manager under Annexure -1 to the writ application dated 8.5.2000 whereby, the Branch Manager advised the Barkha Industries to provide the original title deed pertaining to the petitioner's property since the submission of original deed should have been submitted by the Bank. Under Annexure -1 to the writ petition, the Branch Manger further called upon the loanee to either submit the original deed i.e. property of the petitioner, or to replace the same by giving some other property immediately failing which, the limit extended to the loanee shall stand cancelled.