2019 (5) TMI 920 - HC - Insolvency and Bankruptcy

Recovery proceedings - attachment orders - notices to the petitioner under Section 226(3) - in second writ petition the applicant-petitioner prayed for a mandamus directing the respondent nos.3 and 4 to revive the financial facility provided to the petitioner in terms of a housing loan for purchasing a flat and to withdraw the letter of cancellation of allotment of the said flat. The respondent nos.3 and 4 were officers of Housing Development Financial Corporation Limited (HDFC) - HELD THAT - Admittedly, the opposite party nos.1, 2, 3, 4 and 5 were not parties in the first writ petition. The second writ petition discloses that HDFC was arrayed as respondent nos.3 and 4 in the second petition. The builder was also arrayed as respondent no.5 in the second writ petition. The second writ petition was disposed of finally permitting the petitioner to submit a detailed representation before the respondent no.4, who was directed to look into the grievance of the petitioner and take appropriate action in accordance with law. As pursuant to the order of this Court dated 27 September 2013 passed in this contempt application, the order dated 13 October 2012 was recalled by HDFC and the request of the applicant for instruction to the builder to restore allotment of the flat was considered afresh on the basis of his representation dated 1 October 2013 submitted to HDFC. In the decision, as communicated by letter dated 22 October 2013, HDFC categorically opined not to restore the housing loan facility granted to the applicant and expressed that it is not inclined to request or instruct the builder to restore his flat. A perusal of the decisions, as communicated by the HDFC pursuant to the representations filed by the applicant in compliance of the order of the writ Court/in this contempt application, reveal that in view of the business decision taken by the HDFC, the request for restoration of the housing loan facility was declined. The direction of the writ Court in the second writ petition has been complied with by HDFC. The disinclination expressed by the HDFC to direct the builder to restore allotment of the flat is apparently based on its business decision. Thus, the decisions of the HDFC, as communicated by its letters dated 13 October 2012 and 22 October 2013, cannot be said to be contumacious. Reliance placed by the learned counsel for the applicant on the statement of account that has been filed by the HDFC in its affidavit of compliance in an effort to demonstrate that there was no default of the loan account and that, therefore, the decision of the HDFC is mala fide, cannot be a cause for proceeding against the opposite parties for contempt.

Summary

Issues Involved:
1. Allegation of wilful disobedience of court orders dated 2 April 2012.
2. Legality of notices and attachment orders issued by the Tax Recovery Officer.
3. Compliance with court orders by HDFC regarding the revival of financial facilities and cancellation of allotment.
4. Alleged non-compliance by HDFC and the builder in restoring the flat allotment and housing loan.

Detailed Analysis:

1. Allegation of Wilful Disobedience of Court Orders Dated 2 April 2012:
The contempt application was filed alleging wilful disobedience of the orders dated 2 April 2012 by a Division Bench of the High Court in Writ Tax No.1767 of 2011 and Writ Tax No.216 of 2012. It was claimed that the respondents failed to comply with the court's directive to restore the financial facilities and the allotment of the flat.

2. Legality of Notices and Attachment Orders Issued by the Tax Recovery Officer:
The first writ petition (Writ Tax No.1767 of 2011) sought to quash the notice dated 15 February 2011 and subsequent notices and summons, as well as the attachment order dated 25 April 2011. The court held that the Tax Recovery Officer issued notices under Section 226(3) of the Income Tax Act without jurisdiction, setting aside these notices and restraining further proceedings against the petitioner for recovery of any amount due to Ms. Vejenti Gupta.

3. Compliance with Court Orders by HDFC Regarding the Revival of Financial Facilities and Cancellation of Allotment:
In the second writ petition (Writ Tax No.216 of 2012), the petitioner sought a mandamus directing HDFC to revive the financial facility and withdraw the cancellation of allotment. The court permitted the petitioner to submit a detailed representation to HDFC, which was directed to take appropriate action. HDFC communicated its decision on 13 October 2012, maintaining the cancellation of the allotment and declining the restoration of the loan based on the applicant's irregular loan payments.

4. Alleged Non-Compliance by HDFC and the Builder in Restoring the Flat Allotment and Housing Loan:
The petitioner contended that despite the court's orders, HDFC and the builder did not revive the allotment of the flat. HDFC, in its compliance affidavit, stated that the cancellation was maintained due to the applicant's poor financial discipline. The court noted that HDFC's decision was based on commercial parameters and business interests, and thus, the decisions communicated by HDFC on 13 October 2012 and 22 October 2013 were not contumacious.

Conclusion:
The court concluded that HDFC had complied with the court's directive by considering the applicant's representation and making a business decision not to restore the housing loan or the flat allotment. The court dismissed the contempt application, stating that the decisions of HDFC were not contumacious and were based on valid business reasons. The court also noted that the dispute primarily lay between the applicant and HDFC, with the Income Tax Department having complied with the court's orders by revoking the attachment.