RDDB recovery sale challenge failed as Rule 68B was held inapplicable and belated writ claims were barred.

Rule 68B of the Second Schedule to the Income-tax Act was held not to mandatorily apply to recovery proceedings under the RDDB Act, because that Act operates as a self-contained recovery code and imports the tax schedules only with necessary modifications. On that basis, an alleged breach of the time limit did not invalidate the sale. The court also held that the proclamation, auction and related steps were not void or non est merely because they were said to be time-barred, since any irregularity did not destroy jurisdiction. The writ challenge was further rejected for delay, laches and constructive res judicata.

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Issues: (i) Whether Rule 68B of the Second Schedule to the Income-tax Act, 1961 applies to recovery proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 so as to invalidate the sale for want of compliance with the prescribed time limit; (ii) Whether the sale proclamation, auction and consequential actions were void or non est merely because the sale was said to be beyond time; (iii) Whether the writ petition was liable to be declined on the grounds of delay and laches and constructive res judicata.

Issue (i): Whether Rule 68B of the Second Schedule to the Income-tax Act, 1961 applies to recovery proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 so as to invalidate the sale for want of compliance with the prescribed time limit?

Analysis: The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is treated as a self-contained recovery code, and Section 29 incorporates the Second and Third Schedules of the Income-tax Act only with necessary modifications and only to the extent they aid recovery. The text of Rule 68B is rooted in tax recovery concepts such as the financial year, finality under Section 245-I and Chapter XX of the Income-tax Act, which are alien to recovery under the RDDB regime. The scheme of Sections 19(22), 24 and 25 of the RDDB Act does not create a separate limitation for sale of attached property, and the time bar in Rule 68B was held to be non-mandatory for RDDB proceedings.

Conclusion: Rule 68B was held not to mandatorily apply to RDDB recovery proceedings, and the challenge to the sale on that basis failed.

Issue (ii): Whether the sale proclamation, auction and consequential actions were void or non est merely because the sale was said to be beyond time?

Analysis: A distinction was drawn between acts done without inherent jurisdiction and acts that are merely illegal or procedurally irregular. The principle applied is that only an order or decree passed by a forum lacking subject-matter or personal jurisdiction is a nullity; an erroneous exercise of jurisdiction does not make the action void. Since the Recovery Officer acted within the statutory recovery framework, any alleged breach of limitation could at best give rise to an illegality requiring challenge in proper proceedings, not a collateral declaration that the entire process was void.

Conclusion: The plea that the proclamation, auction and consequential actions were void or non est was rejected.

Issue (iii): Whether the writ petition was liable to be declined on the grounds of delay and laches and constructive res judicata?

Analysis: The challenge was brought after many years from the auction and after the parties had already litigated connected issues before the DRT, DRAT and the Court on earlier occasions. The principles of delay and laches were applied because writ relief is discretionary and is ordinarily declined where third-party rights have crystallised and the petitioners have slept over their rights. The doctrine of constructive res judicata was also applied to prevent re-agitation of matters that could and ought to have been raised earlier.

Conclusion: The writ petition was held to be barred by delay, laches and constructive res judicata.

Final Conclusion: The challenge to the recovery sale failed on merits and on discretionary grounds, and the writ petition was dismissed.

Ratio Decidendi: Rule 68B of the Second Schedule to the Income-tax Act is not mandatorily imported into RDDB recovery proceedings, and a sale in alleged breach of such a time provision is not automatically void where the recovery authority otherwise had jurisdiction; belated writ challenges are also liable to be refused on delay, laches and constructive res judicata.

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