Breach of injunction voids property transfer; income-tax recovery procedure under RDB Act applies only with necessary modifications.

A transfer of immovable property made in breach of a subsisting injunction or prohibitory order is ineffective and cannot confer any right, title or interest on the transferee, even if the transferee was not a party to the restraint order. Under section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Second Schedule to the Income-tax Act applies only so far as possible and with necessary modifications; rule 11 is therefore not mandatorily attracted in full when investigating claims or objections in execution of a recovery certificate. The challenge to the recovery proceedings accordingly failed, and attachment and sale were sustained.

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Issues: (i) Whether a transfer of immovable property made in breach of an injunction or prohibitory order of court is illegal, void, and incapable of conferring any right, title or interest on the transferee; (ii) Whether the procedure under rule 11 of the Second Schedule to the Income-tax Act, 1961 is mandatorily applicable while investigating a claim or objection in execution of a recovery certificate under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Issue (i): Whether a transfer of immovable property made in breach of an injunction or prohibitory order of court is illegal, void, and incapable of conferring any right, title or interest on the transferee.

Analysis: An interlocutory injunction preserves the status quo and restrains dealings with the property during the pendency of the proceedings. A transfer made in defiance of such an order defeats the administration of justice and the rule of law. The court treated the transfer as an act done on the teeth of the restraint order and held that the transferee cannot claim benefit from a transaction entered into in violation of a subsisting judicial order, even if the transferee was not a party to the original proceedings. The transferor having been bound by the order, the prohibited alienation could not be upheld.

Conclusion: The transfer was illegal and could not be recognised. The transferee acquired no valid right, title or interest in the immovable property.

Issue (ii): Whether the procedure under rule 11 of the Second Schedule to the Income-tax Act, 1961 is mandatorily applicable while investigating a claim or objection in execution of a recovery certificate under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Analysis: Section 29 applies the Second and Third Schedules to the Income-tax Act, 1961 and the Income-tax (Certificate Proceedings) Rules, 1962 only as far as possible and with necessary modifications. The court held that this language does not incorporate the entire income-tax recovery procedure as an inflexible mandate. In the context of the RDB Act, which is designed for speedy and summary recovery of bank dues, rule 11 cannot be treated as compulsorily applicable in every respect so as to prolong execution by further civil litigation.

Conclusion: It was not obligatory to apply rule 11 of the Second Schedule to the Income-tax Act, 1961 in its entirety while investigating a claim or objection in execution under the RDB Act.

Final Conclusion: The challenge to the recovery proceedings failed, and the orders below sustaining attachment and sale were upheld.

Ratio Decidendi: A transfer made in breach of a subsisting injunction order confers no enforceable title, and the incorporated income-tax recovery procedure under section 29 of the RDB Act applies only to the extent possible and with necessary modifications, not as a rigid mandate.

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