STATE BANK OF INDIA Vs. TAX RECOVERY OFFICER

JUDGEMENT

(1.) THESE two writ petitions between the same parties involving the same point have been heard together and are disposed of by this common order.

(2.) THE facts of the case may be noticed from the writ petition in CWJC No. 1367 of 1998(R). THE petitioner, State Bank of India, granted cash credit facility to the extent of Rs. 28.77 lakhs to respondent No. 2, Jai Steel Industry, on June 12, 1989, against equitable mortgage of the immovable properties including the factory premises. As the said respondent defaulted in repaying the dues, the petitioner-bank instituted Mortgage Suit No. 76 of 1996 seeking a money decree in the court of the first Subordinate Judge, Dhanbad. THE said suit on transfer under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, is now pending before the Debts Recovery Tribunal at Patna. It appears that the income-tax liability of the proprietor of Jai Steel Industry, Shri T.N. Malhotra, was assessed by the income-tax authorities at Rs. 89,48,174 for recovery of which Certificate No. 82 of 1994-95 and Certificates Nos. 4, 5, 6 and 7 of 1997-98 were instituted before the Tax Recovery Officer, Dhanbad, THE Tax Recovery Officer after attachment of the properties in question belonging to Jai Steel Industry issued sale proclamation on March 27, 1998, fixing April 14, 1998, as the date of sale. THE petitioner-bank filed its claim/objection before the Tax Recovery Officer on April 9, 1998. According to the petitioner, a preliminary hearing took place on May 1, 1998, when the Tax Recovery Officer solicited the opinion of Standing Counsel, Income-tax Department. No hearing on the claim/objection, according to the petitioner, took place thereafter. However, the petitioner's representative was informed on May 14, 1998, that the claim/objection had been rejected. From the copy of the order which was made available on May 15, 1998, it transpired that the claim/objection had been rejected on May 1, 1998, itself. From the order, copy whereof has been marked annexure-3 to the writ petition, it further appears that the claim/objection was summarily rejected on the grounds that the property in question was in the possession of the defaulter, i.e., Sri T.N. Malhotra, representing Jai Steel Industry, and that the claim/objection had been filed unnecessarily to delay the proceeding. THE petitioner has approached this court challenging the aforesaid order.

(3.) THE provision for the recovery of the income-tax from a defaulter-assessee is contained in Section 222 of the Income-tax Act, which provides that when an assessee is in default or is deemed to be in default in making payment of tax, the Income-tax Officer may forward to the Tax Recovery Officer a certificate under his signature specifying the amount of arrears due from the assessee, and the Tax Recovery Officer on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein in accordance with the rules laid down in the Second Schedule by (a) attachment and sale of the assessee's movable property, (b) attachment and sale of the assessee's immovable property, (c) arrest of the assessee and his detention in prison, and (d) appointing a receiver for the management of the assessee's movable and immovable properties.