Misc. Appeal No.427 of 2002

12th August, 2003

JUDGMENT

JUDGMENT :- This Misc. Appeal is filed by the appellant original applicant Punjab & Sind Bank, being aggrieved by the order dated 19/8/2002 passed by the learned Presiding Officer of Debts Recovery Tribunal-II, Mumbai in Appeal No.8/2002. The said appeal was filed by the appellant/obstructionist Mr. Pankaj Mehta being aggrieved by the order passed by the Recovery Officer of Debts Recovery Tribunal-II, Mumbai on 13/4/2002, whereby application in R.P. No.77/2001 for lifting the attachment over Plot No.22-A, Shri Bhakti Nagar Co-operative Housing Society, Mathani Road, Rang Bhavan, Rajkot, Gujarat State, came to be rejected. Those recovery proceedings has arisen from recovery certificate issued by DRT-II in Original Application No.2405 of 1999 against respondent nos.2 to 8. By the impugned order dated 19/8/2002, the learned Presiding Officer allowed the said appeal filed by the obstructionist Mr. Pankaj Mehta and the order passed by Recovery Officer on 13/4/2002 rejecting his claim/objection was set aside and the attachment of the property described above, came to be vacated. Hence appeal by the bank.

2. Few facts, which are required to be stated, are as follows :

In the course of recovery proceedings before the Recovery Officer, the obstructionist Mr. Pankaj Mehta, who was appellant before the learned Presiding Officer contended that he had absolute rights, title and interest in the property described above, which was in his exclusive possession. It was his contention that he had purchased the said premises from one Mr. Madhukar V. Gokarn under agreement dated 18/9/1994 and subsequent agreement dated 9/7/1996. It was contended that one Mrs. Mangala Arun Gokarn by her power of attorney dated 18/8/1994 had given powers to Mr. Madhukar V. Gokarn for the purpose of sale/transfer and executing necessary documents and by virtue of this power of attorney Mr. Madhukar Gokarn had executed aforesaid registered deeds in favour of the appellant/obstructionist Mr. Pankaj Mehta.

It appears that there was suit being Suit No.122/1997 filed by Mrs. Mangala Arun Gokarn against Mr. Madhukar Gokarn and others, which was pending in the court of Civil Judge, Senior Division, Rajkot. It also appears that in those proceedings, the said Mrs. Mangala Arun Gokarn had taken out application for interim relief contending inter-alia, that the power of attorney in favour of Mr. Madhukar Gokarn was forged, but the learned Civil Judge refused to grant any interim relief in the said application. The appellant/obstructionist Mr. Pankaj Mehta had contended in the recovery proceedings that he was thus, the owner in possession and, therefore, the property was not liable for attachment. According to him, Recovery Officer committed error in rejecting his application for lifting the stay. It was also contended that Recovery Officer erred in giving undue importance to the fact that the society had not given NOC to him, that one of the joint owners viz. Minor Ms. Urvi Arun Gokarn's share could not have been sold without permission of the competent court and that agreement was subject to the conveyance being executed. It was therefore prayed by the obstructionist that the Recovery Officer's order was not in accordance with law and was based on wrong premises and hence be quashed.

In response to the recovery proceedings Mr. Madhukar Gokarn opposed the application of the obstructionist contending that alleged power of attorney on the basis of which agreements in question were said to have been executed by Mr. Madhukar Gokarn were having forged signatures and therefore, those documents did not convey any right, title or interest in the appellant/obstructionist. It was also stated that by order dated 2/9/1998 passed by Justice Mr. S.H. Kapadia when the suit was still in the High Court, Mr. Madhukar Gokarn had been restrained from alienating the plot.

The bank also opposed the appeal before the learned Presiding Officer but did not file any formal reply.

3. The learned Presiding Officer after hearing arguments of the parties concerned came to the conclusion that at that stage, Mr. Madhukar Gokarn had executed agreement for sale in favour of the appellant/obstructionist on 18/9/1994 agreeing to sell property in question for Rs.11 Lacs and odd. The learned Presiding Officer also observed that supplementary agreement, which was also a registered agreement, was executed by said Mr. Madhukar Gokarn in favour of the appellant/obstructionist on 9/7/1996 under which the executor acknowledged to have received entire consideration and parted with possession of the property in favour of the appellant Mr. Pankaj Mehta. Both these documents were executed on the basis of power of attorney in favour of Mr. Madhukar Gokarn executed in August, 1994 by Mrs. Mangala Arun Gokarn for herself and for her the then minor daughter Ms. Urvi. Mrs. Mangala Gokarn, however, subsequently had challenged in the Civil Court the very execution of power of attorney and her case was that the same was having forged signatures. This controversy was the subject matter of Regular Civil Suit No.122 of 1997 and was pending in the Court of Civil Judge, Senior Division, Rajkot. The learned Presiding Officer therefore took the view that the Tribunal could not look into that question, but the property was indisputably in the possession of the appellant and that this fact was fortified by averments in the application made by Mrs. Mangala Arun Gokarn for interim relief in RCS No.122 of 1997 in the Court of Civil Judge, Senior Division, Rajkot. The learned Presiding Officer took note of the fact that the reliefs sought by the obstructionist in the instant application were on the premises that the property was in his possession. After hearing both the sides and having considered the scope of Rule 11 of 2nd Schedule of Income Tax Act, which is applicable to the execution proceedings before DRT, came to the conclusion that the Recovery Officer could not decide the question of title and thus, went beyond the scope of investigation to be made by the Recovery Officer under Rule 11 (supra) while deciding the claim/objection of the appellant.

4. I have heard Mr. Balsara for the appellant and Mr. Parihar for the respondent bank. I have also gone through the proceedings and in my view, the impugned order is correctly passed and no interference is called for.

4. Where upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in the possession of the defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale.

5. Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession to the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim.

6. Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a Civil Court to establish the right, which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive".

The appellant bank and the respondent no.1 Mr. Pankaj Mehta/original obstructionist are both relying on this rule but the interpretation given by each of them is different. Mr. Balsara has submitted that Recovery Officer's order was correctly passed and that the obstructionists have to approach the Civil Court to establish their claim while Mr. Parihar, advocate appearing for respondent no.1 Mr. Pankaj Mehta, submitted that the language of Rule 11 was very clear. He supported the learned Presiding Officer's order upholding the claim of the obstructionist.

Rule 11 states that the obstructionist has to adduce evidence to show that he has some interest in the property or that he was possessed of the property on the date of service of notice issued under said schedule. In the present case at hand, it is very clear from the record that the obstructionist was in possession of the property. It appears that the Recovery Officer has lost sight of the scope of investigation, which is to be made by the Recovery Officer. The question whether the obstructionist is owner of the property or whether he could be owner of the property by seeking specific performance of the agreement is not relevant at all in these proceedings. It was erroneous on the part of the Recovery officer to come to the conclusion or to even consider that minor Ms. Urvi Arun Gokarn had 25% share in the said property and therefore, the said property could not have been sold without permission from the District Court, that there was no NOC from the Society and also under ULC Act and the fact that appellant was not owner of the said property. Instead of deciding this question, it should have been left for the consideration of the competent Civil Court. Therefore, the entire exercise made by the Recovery Officer was unnecessary and beyond the scope of his power of investigation as contemplated by Rule 11 of IInd schedule of the Income Tax Act, which is applicable to the proceedings before the Recovery Officer under Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The learned Presiding Officer therefore correctly set aside the order of the Recovery Officer. No interference is therefore called for. Hence, following order in passed :

:- O R D E R :-

Misc. Appeal No.427 of 2002 is dismissed.

Appeal dismissed.