Statutory recovery objections over mortgaged property must be decided by the Recovery Officer and DRT, not writ courts.

Under the statutory recovery framework, objections by claimants or third parties to mortgaged property must be examined by the Recovery Officer, following the Second and Third Schedules to the Income-tax Act, 1961, before any sale proceeds. Disputed claims based on an agreement to sell, an exchange deed, or the extent of unencumbered land require adjudication by the designated statutory forum, and SARFAESI-related challenges must be pursued through the DRT remedy under Section 17. Writ jurisdiction is not to be used to decide contested inter se property rights or bypass the statutory mechanism. Amendment of objections may be allowed where subsequent events are relevant to the inquiry.

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Issues: Whether the objections concerning Property No. 6 and the claim of unencumbered 21 acres were required to be adjudicated by the Recovery Officer and the DRT under the statutory recovery framework, and whether the orders rejecting amendment and adjourned consideration of those objections were sustainable.

Analysis: The debt had already been quantified and reduced into a recovery certificate under the recovery statute. The Recovery Officer was bound to follow the procedure in the Second and Third Schedules to the Income-tax Act, 1961 and to decide objections raised by claimants or objectors before proceeding with sale. The Court held that the builder's claim based on the agreement to sell and the alleged effect of the exchange deed raised matters that required adjudication by the Recovery Officer and, so far as the SARFAESI proceedings were concerned, by the DRT under the statutory remedy under Section 17. The impugned refusal to permit amendment of objections was held to be unjustified because the subsequent events and the claim regarding 21 acres were relevant to the inquiry. The Court also held that the writ court would not determine disputed inter se property rights or displace the statutory adjudicatory mechanism.

Conclusion: The objections and the amendment application were required to be considered on merits by the statutory authorities, and the orders rejecting them were set aside.

Final Conclusion: The disputes relating to the mortgaged property were relegated to the Recovery Officer and the DRT for adjudication in accordance with law, the interim restraints were vacated, and the connected matters were disposed of with consequential directions.

Ratio Decidendi: Where a statutory recovery regime provides a specific mechanism for adjudicating third-party objections and security-enforcement challenges, disputed claims over mortgaged property must be decided by the designated authority and not in writ jurisdiction.

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