2024 (7) TMI 450 - HC - Indian Laws

Maintainability of appeal before DRT - non-compliance with mandatory requirement of pre-deposit or not - judgement debtor failed to challenge the order of attachment, proclamation of sale, auction proceedings and sale of immovable properties - HELD THAT - It is admitted that loan was taken, which was enhanced from time to time with a limit of Rs. 12 lacs as on 22.01.1992. It is also not in dispute that in lieu of loan and its enhancement facility, various documents were executed in favour of the respondent Bank. The guarantees were also executed by the respondents defendants. It is also not in dispute that the property was also mortgaged in favour of the Bank. Due to default in repayment of loan, the Bank proceeded to recover its amount. In the said process, an appeal was preferred before the DRT, Jabalpur, which was decided in favour of the Bank and thereafter, consequent proceedings were initiated for attachment, proclamation, sale and confirmation. The record further reveals that neither compliance of the mandatory pre-deposit as required under Rules 60 61 of Schedule II to the Income Tax Act has been made, nor any material has been brought on record to show that the mandatory requirement of pre-deposit was made good. Once the mandatory condition was not fulfilled, the DRT ought not to have entertained the appeal and passed the impugned order - In Bishan Paul 1965 (3) TMI 112 - SUPREME COURT , the Apex Court has held that the sale certificate, though issued later, mentioned the date of confirmation of sale and the title, does not remain in abeyance till the certificate is issued and title, therefore, was not in abeyance till the certificate was issued but passed on the confirmation of sale. The intention behind the rules appears to be that title shall pass when the full price is realised. Once the effect and operation of the interim order wipes out on final order being passed thereon, all consequential proceeding goes. This vital aspect of the matter was brought to the notice of the Tribunal, but in stead of taking note of the said fact, the appeal of the petitioner was dismissed on that ground, which cannot be permissible in law. The impugned judgment order passed by the Debt Recovery Appellate Tribunal, Allahabad as well as the impugned order dated 29.04.2005 passed by the Presiding Officer of D.R.T., Lucknow cannot be sustained - Petition allowed.

Issues Involved:

1. Maintainability of the appeal before the DRT.
2. Compliance with mandatory pre-deposit requirements.
3. Jurisdiction of the DRT to grant relief beyond the pleadings and prayer.
4. Validity of the auction and confirmation of sale.
5. Effect of interim orders and their subsequent withdrawal.
6. Legality of the compromise between the Bank and judgment-debtor post-auction.

Detailed Analysis:

1. Maintainability of the Appeal Before the DRT:

The petitioner argued that the appeal before the DRT was not maintainable as the judgment-debtor failed to challenge the order of attachment, proclamation of sale, auction proceedings, and sale of immovable properties. The appeal was confined to challenging the confirmation of sale of immovable properties and the certificate of sale issued by the Recovery Officer, DRT. The petitioner contended that the judgment-debtor did not seek relief for setting aside the auction proceedings and the sale of properties, and thus, the DRT had no jurisdiction to entertain the appeal.

2. Compliance with Mandatory Pre-Deposit Requirements:

The petitioner emphasized that the judgment-debtor did not comply with the mandatory pre-deposit requirements under Rules 60 and 61 of Schedule II to the Income Tax Act. The petitioner argued that unless these rules were complied with, the appeal should not have been entertained. The court noted that no material was brought on record to show that the mandatory pre-deposit was made, and thus, the DRT erred in overlooking this requirement.

3. Jurisdiction of the DRT to Grant Relief Beyond the Pleadings and Prayer:

The petitioner argued that the DRT granted relief that was not prayed for by the judgment-debtor. The court referred to the principle that a court cannot grant relief beyond what is specifically prayed for in the pleadings. The court cited the Apex Court's judgments in Bharat Amratlal Kothari vs. Dosukhan Samadkhan Sindhi and Rm. N.N. Nagappa Chettiar, which held that relief cannot be granted beyond the pleadings and prayer.

4. Validity of the Auction and Confirmation of Sale:

The petitioner contended that the auction proceedings and the confirmation of sale were conducted in accordance with the law. The respondent, however, argued that the auction sale and confirmation were beyond the mortgaged properties and pointed out various irregularities, including the publication of the auction notice in a newspaper in English, which was against the provisions of the Act. The court noted that the judgment-debtor did not object to the proceedings at the appropriate time and only challenged the sale at a later stage.

5. Effect of Interim Orders and Their Subsequent Withdrawal:

The court noted that an interim order dated 23.12.2003 was passed in Appeal No. R-366/2003, staying the proceedings before the DRT. However, the appeal was subsequently dismissed as withdrawn. The court referred to the principle that once an appeal is dismissed as withdrawn, any interim order passed therein automatically merges with the final order and ceases to exist. The court cited the Apex Court's judgment in State of U.P. vs. Prem Chopra, which held that interim orders merge with the final order upon dismissal of the proceedings.

6. Legality of the Compromise Between the Bank and Judgment-Debtor Post-Auction:

The petitioner argued that the compromise entered between the Bank and the judgment-debtor after the auction and confirmation of sale was a nullity. The court noted that the Bank entered into a settlement with the judgment-debtor only after the DRT set aside the auction and confirmation of sale. The court held that once the action of the DRT was not in accordance with the law, the subsequent compromise and consequential actions also could not stand.

Conclusion:

The court quashed the impugned judgment and order dated 19.10.2005 passed by the Debt Recovery Appellate Tribunal, Allahabad, in Appeal No. R-525 of 2005, as well as the order dated 29.04.2005 passed by the Presiding Officer of DRT, Lucknow, in Appeal No. 01 of 2004. The writ petition was allowed with all consequential benefits.

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