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IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 6TH DAY OF DECEMBER, 2013 PRESENT THE HON'BLE MR. D.H.WAGHELA, CHIEF JUSTICE AND THE HON'BLE MR. JUSTICE S.N.SATYANARAYANA WRIT APPEAL No.3995/2013 (GM-DRT) BETWEEN:
Sri Ramesh Meher, S/o Sri Ghisulal Mehar, Aged about 38 years, Residing at No.34/7, Meharas House, K.R. Road, Davangere – 577 001.
... APPELLANT.
(By Sri : M.B. Nargund, Adv.,)
AND
The Recovery Officer, Debt Recovery Tribunal, Krishi Bhavan, Hudson Circle, Nrupathunga Road, Bangalore-560 001.
UCO Bank Ltd., Davangere Branch, Davangere-577 001, Represented by its Senior Manager.
P. Ravindran, S/o Kanhambu, Aged about 70 years, ®
-: :- 2 R/a Kausalya Sneha Nivas, PO Kakkad Kannur District, Kerala State – 670 005.
... RESPONDENTS
This Writ Appeal is filed under Section 4 of the Karnataka High Court Act praying to set aside the order passed in Writ Petition No.37978/2009 dated 20.03.2013.
This Writ Appeal having been heard and reserved for judgment, this day SATYANARAYANA J., pronounced the following:
C.A.V. JUDGMENT
Appellant, a successful bidder in an auction conducted by first respondent for sale of property belonging to third respondent, pursuant to Recovery Certificate issued in favour of second respondent in OA.No.399/2004 on the file of Debt Recovery Tribunal, Bangalore, has come up in this appeal.
The facts leading to this appeal are that third respondent, borrower from second respondent, owed to the second respondent the sum of Rs.67,72,279/- along with cost and interest accrued thereon, in the aforesaid recovery proceedings. In that behalf, Recovery Certificate was issued in favour of second respondent on 16.1.2007, pursuant to which, property bearing No.347-A, assessment No.114/1A of
-: :- 3 Nittuvalli village was brought to auction through notification dated 11.6.2009; and it was put to public auction on 1.7.2009. The appellant herein deposited 10% of reserve price towards earnest deposit, participated in auction and, being the highest bidder at Rs.1,25,60,001/-, he deposited 25% of total bid, amounting to Rs.31,40,001/- on the very same day. In terms of the conditions of bid, appellant was required to deposit balance amount of Rs.94,19,999/- along with poundage fee of Rs.1,25,610/- within 15 days therefrom.
On 15.7.2009 appellant herein deposited further 25% of balance amount i.e., Rs.31,40,000/- instead of entire balance amount and sought extension of time to deposit balance amount of Rs.62,80,000/- by filing application before the Recovery Officer. On 1.8.2009 appellant herein obtained a D.D. bearing No.742041 for Rs.62,80,000/-, which was equivalent to remaining balance amount. The Recovery Officer rejected the application seeking extension of time and by deducting Rs.3,14,001/- towards the expenses of sale, ordered refund of balance amount of Rs.59,66,000/-.
-: :- 4 Being aggrieved by the same, appellant herein preferred an appeal before the Debt Recovery Tribunal and that appeal came to be dismissed by order dated 23.11.2009. That order was challenged by appellant herein in W.P.No.37978/2009.
The learned Single Judge of this Court, by order dated 1.9.2010, allowed the writ petition and directed the appellant herein to deposit balance amount of Rs.62,80,000/- with interest at 8% p.a. Accordingly, appellant deposited aforesaid amount in compliance with order dated 1.9.2010 in W.P.No.37978/2009. In that proceeding, 30 days’ time was also given to third respondent, pursuant to Rule 60 of the Income Tax Act, 1961, Schedule II, to provide him statutory opportunity of safe-guarding his interest. However, third respondent, by filing objection on 22.11.2010 before Debt Recovery Tribunal, prayed for refusal to confirm the auction sale held on 1.7.2009. Thereafter, third respondent also filed petition in W.P.No.10683/2011 seeking permission to deposit debt due to second respondent. This Court, by order dated 19.4.2011, permitted third respondent to deposit entire amount due as on that day. It is stated that third
-: :- 5 respondent did not deposit the amount and instead, filed another writ petition in W.P.No.41059/2010, which came to be rejected on 5.1.2011.
It is stated that subsequently writ appeal in W.A.No.4801/2011 was filed by third respondent challenging the order dated 1.9.2010 of learned Single Judge in W.P.No.37978/2009, which appeal came to be allowed on 5.6.2012 by the Division Bench of this court and writ petition was remanded for fresh consideration. In the remanded proceedings, the learned Single Judge, relying on the judgment rendered by the Apex Court in C.N.Paramsivam & Another vs. Sunrise Plaza Tr. Partner and Others, (2013 AIR SCW 1036), dismissed the writ petition confirming the order dated 24.7.2009 of the Debt Recovery Tribunal, rejecting the appellant’s application for extension of time. Being aggrieved by the same, this writ appeal is filed by the appellant.
The main ground of appeal is that the learned Single Judge erred in following the judgment of the Apex Court in
-: :- 6 C.N.Paramsivam’s case, (supra), which does not have a bearing on the present case, inasmuch as, in the facts and circumstances of this case while considering Rules 57 and 58 in Schedule-II of the Income Tax Act, 1961, the learned Single Judge ought to have considered the provisions of Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The phrase ‘as far as possible’, used in that provision, should have been liberally construed as it was held in S.Narayanaswamy vs. G.Panneerselvam & Others, (AIR 1972 SC 2284), Union of India & another vs. Deoki Nandan Aggarwal, (AIR 1992 SC 96) and also in Girnar Traders (3) vs. State of Maharashtra & Others, [(2011) 3 SCC 1], according to the submission of the appellant.
On going through the impugned order, with reference to the grounds of appeal and the ratio laid down in the aforesaid judgments of the Apex Court, it is clear that the grounds urged in this appeal are not sustainable in view of the fact that Rule 57 and 58 to Schedule-II to Income Tax Act, 1961, are mandatory in nature and there is no flexibility
-: :- 7 in application of said Rule to auction proceedings, inasmuch as, successful bidder is bound to follow the directives of said provisions in strict compliance and there is no scope for liberal construction of said Rules. In fact, application of Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, with the phrase, ‘as far as possible’, is also discussed by the Apex Court in C.N.Paramsivam (supra) with a finding thereon as under:-
“21. ………… The expressions “as far as possible” and “with necessary modifications” appearing in Section 29 have been used to take care of situations where certain provisions under the Income Tax Rules may have no application on account of the scheme under the RDDB Act being different from that of the Income Tax Act or the Rules framed thereunder. The provisions of the Rules, it is manifest, from a careful reading of Section 29 are attracted only in so far as the same deal with recovery of debts under the Act with the modification that the ‘amount of debt’ referred to in the Rules is deemed to be one under the RDDB Act. That modification was intended to make the position explicit and to avoid any confusion in the application of the
-: :- 8 Income Tax Rules to the recovery of debts under the RDDB Act, which confusion could arise from a literal application of the Rules to recoveries under the said Act. Proviso to Section 29 further makes it clear that any reference “to the assessee” under the provisions of the Income Tax Act and the Rules shall be construed as a reference to the defendant under the RDDB Act. It is noteworthy that the Income Tax Rules make provisions that do not strictly deal with recovery of debts under the Act. Such of the rules cannot possibly apply to recovery of debts under the RDDB Act. For instance Rules 86 and 87 under the Income Tax Act do not have any application to the provisions of the RDDB Act, while Rules 57 and 58 of the said Rules in the Second Schedule deal with the process of recovery of the amount due and present no difficulty in enforcing them for recoveries under the RDDB Act. Suffice it to say that the use of the words “as far as possible” in Section 29 of RDDB Act simply indicate that the provisions of the Income Tax Rules are applicable except such of them as do not have any role to play in the matter of recovery of debts recoverable under the RDDB Act. The argument that the use of the words “as far as possible” in Section 29 is meant to give
-: :- 9 discretion to the Recovery Officer to apply the said Rules or not to apply the same in specific fact situations has not impressed us and is accordingly rejected.”
In the light of aforesaid discussion, it is manifestly clear that there is an attempt to misquote the expression ‘as far as possible’ to suit the requirement of the appellant, while, under similar circumstances, the Apex Court has conclusively decided in the aforesaid judgment that the phrase ‘as far as possible’ is meant to only exclude the part of the incorporated provision which is wholly inapplicable in the context of the RDDB Act. In that view of the matter, no cause for interfering with the impugned order arises. Accordingly, the appeal filed by the petitioner in W.P.No.37978/2009 is dismissed in limine, with no order as to cost.
Sd/- CHIEF JUSTICE
Sd/-
JUDGE nd.