2015 (12) TMI 1382 - HC - Indian Laws

Auction sale of properties purchased by the writ petitioner-appellant from Industrial Corporation Private Limited - Held that - With regard to Rule 68B of Schedule-2 to the Recovery Rules under D.R.T. This is nothing but Rule 68 B of the Income Tax Recovery Rule. He states that the steps taken to sell the properties is now barred by limitation is provided under Rule 68B aforesaid. We are not impressed. As per the writ petitioner/appellant before us the attachment was made in the year 2009 when the writ petition was filed. The writ petition had been dismissed there is an appeal pending. It is the attachment order that was challenged before this Court. If we read Rule 68B which was essentially made for recovery of tax assessment then sale had to take place within three years of attachment. This rule is applicable to proceeding before D.R.T. as far as possible. In 2009 the writ petition itself being filed and the attachment being of the year 2009 we see no ground how it could be submitted that the proceedings to sell the properties could be beyond time. It is next submitted that only there was the first attachment which was made on 23.08.2001 soon after the proceedings had been received from Civil Court and the objections were rejected. Again we could not agree. The proceedings would show that one after another objections of different natures were taken objecting to steps being taken for sale of the properties naturally the Recovery Officer had to decide the issue. Validity of attachment was in question. That took the time and this objection was ultimately rejected in 2006 and ultimately fresh attachments were issued in 2009. For the reasons aforesaid we are not inclined to take a different view of the matter from what has been taken by the learned Single Judge or for that matter by the Recovery Officer D.R.T.

Summary

Issues Involved:
Challenge to order of Recovery Officer directing auction sale of properties purchased by appellant from Industrial Corporation Private Limited, interpretation of doctrine of lis pendens under Section 52 of Transfer of Property Act, applicability of Rule 68B of Income Tax Recovery Rules to sale of properties in recovery proceedings.

Analysis:

1. Challenge to Recovery Officer's Order:
The appellant, Bihar Distillery Limited, challenged the Recovery Officer's order directing auction sale of properties purchased from Industrial Corporation Private Limited. The single judge refused to interfere as the appellant did not challenge the Recovery Officer's order in the statutory appeal available before the Presiding Officer of the Debt Recovery Tribunal. The court held that the appellant's delay in challenging the order after three years barred them from seeking relief. The court declined to intervene in the sale of properties.

2. Interpretation of Doctrine of Lis Pendens:
The appellant argued that the sale deed executed after the institution of the Money Suit would not be affected by the doctrine of lis pendens under Section 52 of the Transfer of Property Act. However, the court disagreed, considering the pre-existing charge on the properties. The court noted the history of defaults, mortgage suits, and creation of charges on the properties. The court emphasized that the properties received by the appellant were already mortgaged, and the obligation to sell could not override the pre-existing mortgage and charge. The court upheld the Recovery Officer's steps to realize dues from the properties.

3. Applicability of Rule 68B of Income Tax Recovery Rules:
The appellant raised the issue of Rule 68B of the Income Tax Recovery Rules, arguing that the steps taken to sell the properties were barred by limitation under this rule. However, the court found the argument unconvincing. The court observed that the attachment was made in 2009 when the writ petition was filed, and the proceedings were not beyond the time limit specified in Rule 68B. The court dismissed the appeal, affirming the decisions of the single judge and the Recovery Officer of the Debt Recovery Tribunal.

In conclusion, the High Court of Patna dismissed the appeal, upholding the Recovery Officer's order for auction sale of properties purchased by the appellant. The court emphasized the importance of timely challenges to orders and the significance of pre-existing charges on properties in determining the validity of sales. The court also clarified the applicability of Rule 68B of the Income Tax Recovery Rules to the sale proceedings in this case.