TaxTMI 
TaxTMI 
2022 (12) TMI 148
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....raj Meena waives service of notice of rule on behalf of respondent nos. 2 to 10 and learned advocate Mr. Taruna Makwana waives service of notice of rule on behalf of respondent no.11. 3. By this petition under Articles 226 and 227 of the Constitution of India, the petitioners have challenged order dated 28.11.2019 passed by the Recovery Officer-II, DRT-I, Ahmedabad in Recovery Proceedings No. 694/2018 in Original Application No.184/2017 as well as pre-intimation notice dated 3.12.2019 for taking physical possession of the assets/properties of the petitioners. The petitioners have also prayed for quashing the entire process of recovery proceedings initiated by the respondent banks in the aforesaid Recovery Proceedings No. 694/2018 in Original Application No.184/2017. 4. Facts of the case are summarised as under: 4.1) The petitioners are the Directors of respondent no.1 M/s. Varia Engineering Works Private Limited. Respondent no.1 company availed financial assistance from respondent no.4 to respondent no.10 consortium of banks. On failure of respondent no.1 company to pay the outstanding dues of the consortium of banks, seven banks filed Original Application No.184/2017 befo....
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.... of the IBC by further ordering moratorium under section 13(1)(a) along with prohibitory order under section 14 of the IBC. 4.6) NCLT thereafter by order dated 22.07.2019 passed under section 33 of the IBC, allowed the interim application being IA No. 362 of 2018 in CP No.(IB) 149/7/NCLT/AHM/ 2017 filed by RP of respondent no.1 company and appointed liquidator for respondent no.1 company in absence of any Resolution Plan received by the RP. 4.7) Pursuant to the order dated 13.12.2018 passed by the DRT, the Recovery Proceeding being RP no. 694/2018 was registered as per the Recovery Certificate issued by the DRT. The Recovery Officer of DRT-I issued Demand Notice dated 6.03.2019 under sections 25 to 29 of the RDB Act read with Rule 2 of the Second Schedule of the Income Tax Act, 1961 upon the petitioners, respondent no.1 and other defendants for recovery of Rs.5,07,36,75,508.93. The Recovery Officer also issued show cause notice dated 27.03.2019 under section 25A of the RDB Act upon the petitioners to appear in person before him to show cause as to why immovable properties of the petitioners mentioned in the said notice should not to be attached and sold subsequently to recove....
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.... Dharmesh Gujjar, Advocate who is also a Court Commissioner in the matter along with ex-officio of the Bank submits that he has given a notice of 7 days only qua the property at Lot No. 3. Records reveal that order for physical possession is for all the 03 lots of properties. 3. In view of the fact of the case and in the Interest of Justice and without going into the merits of the case as brought out in their applications, following orders are being passed: (a) The Court Commissioner would further give a notice of two weeks in writing to concerned CDs to be served by authorised modes of service before taking physical possession of the properties as ordered. The same be also affixed at conspicuous part of all the three properties (Lot Nos. 1-3). Before expiry of these two weeks, both the parties are directed to complete the hearing. (b) CH Bank is directed to file its replies to all the objections as filed by CDs positively by next date with advance copy to CDs. Thereafter, arguments be completed. List the matter for filing compliance of above order on 09.10.2019." 4.12) The State Bank of India filed reply to the objections filed by the petitio....
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....his order of today. 2. Now, coming to the main issue for which the matter is on today's board. The matter was kept for today specifically on the request of the Ld. Counsel for CD No. 2 requesting that his client may be heard on her pending objection before proceeding further in the matter including the action to take physical possession of the attached mortgaged properties. However, the Ld. Counsel for CD No. 2 today files a 'Purshish' stating that he has got no instructions from his client after filing the 'Vakalatnama" and, therefore, he requests that appropriate order may be passed considering the said facts. On the other hand, Ld. Counsel for CH Bank submits that it is only a ploy to delay & derail the recovery process. Filing of objections and not pursuing the same is nothing but gross misuse of process of law by the CDs. It is his demand that heavy cost be imposed on them for their misadventure with the process of law. 3. The case file has been perused. Recovery Certificate in the matter was issued in Dec 2018 for more than 507.36 Crores in favour of 07 nos. of CH Banks. Not a single penny has been paid to the banks till date. After service o....
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....admeasuring about 24000 Sq. Meter of Mouje Bhayala, Taluka Bavla, Registration District Ahmedabad and Sub-District Dholka (The said property is in the name of Petitioner No.1) 2. Property No. 2: Flat no. D-802, 8th Floor, Block-D, Admeasuring about 347 Sq. Yds. i.e. 290.14 Sq. Mtr. in the scheme known as "Asavari Towers" of Democratic Co-Operative Housing Society Limited Part-2, Situation upon Non-Agricultural Land hearing Final Plot No. 161/1, 161/3, 161/4 and 163 in the Town Planning Scheme No. 6 of Mouje Jodhpur, Taluka Ahmedabad City-West, District Ahemdabad. (The said Property is jointly in the name of Petitioner No. 1 and 3)." 4.16) The Recovery Officer also appointed respondent nos. 2 and 3 officers of State Bank of India and Bank of Maharashtra as Joint Court Commissioners in view of application being I.A. No.2660 of 2019 filed by the Certificate Holder Banks i.e., respondent nos. 4 and 10. 4.17) The petitioners have come out with a case that the aforesaid property no.1 was sold to one Mr. Bhagwatsinh Gohil for Rs.1,00,40,000/- and property no.2 was sold to one Ms. Geeta Udaykant Pandya for Rs. 1,36,90,000/- at a price much less than the actual market value o....
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.... the recovery proceedings are challenged before this Court as the same are without jurisdiction. It was also submitted that the respondent banks -Certificate Holders did not submit the interest certificate and, therefore, the amount for which the recovery is proceeded is not ascertained and in absence of interest certificate and lack of documents, sale of properties is illegal and liable to be quashed and set aside. 5.5) Learned advocate Ms. Sutaria submitted that the DRT passed the order dated 13.12.2018 in O.A.No.184/2017 after the NCLT passed the order dated 21.12.2017 admitting the application under section 7 of the IBC and appointing RP. It was submitted that as per the provisions of section 14 of the IBC, moratorium period of six months was also ordered and continuation of the pending proceedings against respondent no.1 company including execution of any judgment, decree, or order in any Court of law, tribunal, arbitration panel or other authority was restrained. It was therefore, submitted that till the order of appointment of liquidator is passed by the NCLT on 22.07.2019, moratorium continued and therefore, the DRT could not have passed judgment and award on 13.12.2018 ....
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.... remedies available in private law. As observed by this Court in Nilabati Behera @ Babita Behera vs. State of Orissa (1993) 2 SCC 746, public law proceedings serve a different purpose than private law proceedings. 15. One of the well recognized-exceptions to the self-imposed restraint of the High Courts, in cases where a statutory alternative remedy of appeal is available, is the lack of jurisdiction on the part of the statutory/quasi-judicial authority, against whose order a judicial review is sought. Traditionally, English courts maintained a distinction between cases where a statutory/quasijudicial authority exercised a jurisdiction not vested in it in law and cases where there was a wrongful exercise of the available jurisdiction. An "error of jurisdiction" was always distinguished from "in excess of jurisdiction", until the advent of the decision rendered by the House of Lords, by a majority of 3:2 in Anisminic Ltd. vs. Foreign Compensation Commission. (1969) 2 WLR 163 .After acknowledging that a confusion had been created by the observations made in Reg. vs. Governor of Brixton Prison, Ex parte Armah to the effect that if a Tribunal has jurisdiction to go right....
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....m for prohibiting all of the following, namely: (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (3) The provisions of subsection (1) shall not apply to - (a) such transaction as may be notified by the Central Government in co....
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....Court was not justified in passing the Orders dated 14.08.2019 and 05.09.2019 for carrying out auction of the assets of the Respondent No. 4-Company i.e. the Corporate Debtor before the NCLT. The subject matter of the auction proceedings before the High Court is a vast chunk of land admeasuring about 330 acres, including Railway lines and buildings. If the assets of the Respondent No. 4 - Company are alienated during the pendency of the proceedings under the IBC, it will seriously jeopardise the interest of all the stakeholders. As a consequence, we set aside the impugned Interim Orders dated 14.08.2019 and 05.09.2019 passed by the Odisha High Court, as parallel proceedings with respect to the main issue cannot take place in the High Court. The sale or liquidation of the assets of Respondent No. 4 will now be governed by the provisions of the IBC." 4) Indian Overseas Bank v. RCM Infrastructure Ltd. and ors. reported in AIR 2022 SC 2687, wherein it is held as under : "23. For appreciating the rival submissions, it will be apposite to refer to Section 14(1)(c) of the IBC: "14. Moratorium.- (1) ...... (a) ......; (b) .......; ....
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.... appellant Bank that the sale in question was complete on its confirmation on 13th December 2018 and as such, the admission of the petition on 3rd January 2019 by the learned NCLT would not affect the said sale. Relying on the provisions of Section 54 of the TP Act, the learned Solicitor General submitted that merely because a part of the payment was received subsequently after initiation of CIRP, it will not deprive the appellant Bank from receiving the said money in pursuance to the sale which has already been completed. A reliance in this respect is placed on various judgments of this Court. 29. Insofar as the judgment of this Court in the case of Vidhyadhar (supra) is concerned, no doubt that it has been held that even if the full price of the property has not been paid, the transaction of the sale will take effect and the title would pass on that transaction. This Court has further held that the real test is the intention of the parties. It has been held that the parties must intend to transfer ownership of the property and that they must also intend that the price would be paid either in praesenti or in future. However, it is to be noted that in the said case, the de....
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....ice the act of confirmation of the sale would not be a proper exercise of judicial discretion. (See also: M/s. Kayjay Industries (P) Ltd. V/s. M/s. Asnew Drums (P) Ltd. & Ors., AIR 1974 SC 1331; Union Bank of India V/s. Official Liquidator High Court of Calcutta & Ors., AIR 2000 SC 3642; B. Arvind Kumar V/s. Govt. of India & Ors., (2007) 5 SCC 745 : (AIR 2007 SC (Supp) 1306); and M/s. Transcore V/s. Union of India & Anr., AIR 2007 SC 712). 21.) In Divya Manufacturing Co. (P) Ltd. & Anr. V/s. Union Bank of India & Ors., AIR 2000 SC 2346, this Court held that a confirmed sale can be set aside on the ground of material irregularity or fraud. The court does not become functus officio after the sale is confirmed. In Valji Khimji and Company V/s. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & Ors.. (2008) 9 SCC 299 : (AIR 2009 SC (Supp) 776) the Court held that auction sale should be set aside only if there is a fundamental error in the procedure of auction e.g. not giving wide publication or on evidence that property could have fetched more value or there is somebody to offer substantially increased amount and not only a little over the auction price. Involveme....
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....r not to entertain the petition depending upon various facts and circumstances special to individual cases. [5] The High Court having imposed upon itself certain restrictive fetters one of which is availability of alternative and efficacious remedy, would not normally exercise jurisdiction. [6] However, availability of alternative remedy per se does not operate as a bar in all contingencies. [7] Rule requiring exercise of alternative remedy is a rule of policy, convenience and discretion. [8] The Court should exercise jurisdiction under Article 226/Article 32 taking note of legislative intent manifested by the provisions so as to be consistent with such provisions and not to frustrate them. [9] The Court should exercise jurisdiction to effectuate the regime of law as the power under Article 226 is meant to serve the ends of law and not to trangress the same." 6. On the other hand, learned advocate Mr. Rituraj Meena for the respondent nos. 2 to 10 consortium of banks referred to and relied upon the averments made in the affidavit in reply filed on behalf of the banks and submitted that this petition is not maintainable as the impugned ....
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.... the contention of the petitioners that they were not represented before the DRT is not tenable as it cannot be said that the petitioners were not provided with opportunity to represent the case before the DRT. 6.4) Learned advocate Mr. Meena further submitted that the Recovery Officer was in knowledge of the fact about appointment of RP in view of letter dated 11.03.2019 as observed in the order dated 17.06.2019 that respondent no.1 company was under Corporate Insolvency Resolution Process (CIRP) by virtue of order dated 21.12.2017. It was also intimated by RP that the Committee of Creditors (CoC)in the meeting held on 12.09.2018 had decided for liquidation of the company and application in that regard was filed before the NCLT but order for liquidation was awaited at that time. In such circumstances, though the properties were mortgaged with Certificate Holder Banks have been attached in the recovery proceedings, the Recovery Officer did not deem it proper to order sale of properties belonging to the Corporate Debtors-the respondent no.1 company and sale order was issued for e-auction of the properties belonging to the petitioners mortgaged with the respondent banks other than....
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....elief granted by this Hon'ble Court. 8. It is submitted that thereafter on 12/12/2019, the Joint Court Commissioner wrote a letter to the deponent for remaining present at the place of the property on 16/12/2019 at 3.30 p.m for taking possession. Copy of letter dated 12/12/2019 is annexed herewith and marked as Annexure-R2. 9. It is submitted that demand notice was served upon the present petitioners, and If they have any objection regarding the demand, then the same should be presented before the Ld. DRT, the petitioner never raised any objection for the demand notice at any point of time before the Ld. DRT. 10. It is respectfully submitted that the deponent herein had paid the entire amount of purchase of the auction property, still didn't get peaceful possession of the property till date, therefore it is required to vacate the interim relief granted by this Hon'ble Court by order dated 26/12/2019 and continue till then by order dated 08/01/2020. The Deponent herein has wrote a letter to the bank for handing over possession of the property. Copy of letter dated 15/11/2020 is annexed herewith and marked as Annexure-R3. 11. The depone....
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....der is issued to him, prefer an appeal to the Tribunal. (2) On receipt of an appeal under subsection (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such inquiry as it deems fit, confirm, modify or set aside the order made by the Recovery Officer in exercise of his powers under sections 25 to 28 (both inclusive)." 10. As per the aforesaid provisions, notwithstanding anything contained in section 29 of the RDB Act, any person aggrieved by an order of the Recovery Officer has to prefer an appeal before DRT within 30 days from the date on which a copy of the order is issued to him. Therefore, if the petitioners are aggrieved by the impugned order dated 28.11.2019 and consequential notice for possession dated 3.12.2019, are required to challenge the same before the presiding officer of the DRT as per the aforesaid provision of section 30 of the RDB Act. 11. Decisions relied upon by the petitioners are not applicable in facts of the case inasmuch as in decision of the Apex Court in case of Embassy Property Developments Pvt. Ltd.(supra) the Apex Court dealt with the question as to whether the High Court ought to interfere u....
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....on the ground for want of jurisdiction. In the opinion of this Court, the petitioners are trying to overreach the process of law by challenging the order of Recovery Officer without challenging the order passed by the DRT on the ground of want of jurisdiction which is nothing but an abuse of process of law. 14. Similarly the decision of Apex Court in case of Indian Overseas Bank(supra), was in relation to section 14 of the IBC vis-a-vis the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (For short "SARFAESI")after CIRP was initiated and moratorium was ordered. The Apex Court in facts of the case before it held that the provisions of Section 14(1)(c) of the IBC, which have an overriding effect over any other law, any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the SARFAESI Act is prohibited. However, in facts of the present case, as per the provisions of section 14 of the IBC, NCLT did not pass any order for extension of moratorium period and in absence of challenge to the order of the DRT relying upon ....