MANU/DR/0059/2016

BEFORE THE DEBTS RECOVERY TRIBUNAL

ERNAKULAM
Appeal No. 2 of 2012 in DRC No. 3253 under O.A No. 134/2009
Decided On: 30.07.2016
Appellants: George Joseph and Ors.
Vs.
Respondent: The Recovery Officer, Debts Recovery Tribunal and Ors.
Hon'ble Judges/Coram:
N. Somasundaar, (Presiding Officer)
Counsels:
For Appellant/Petitioner/Plaintiff: C.S. Ullas, Advocate
ORDER
N. Somasundaar, (Presiding Officer)
1 . The appeal was filed on 30.01.2012 seeking to set aside Annexure - A12
proclamation of sale dated 02.01.2012 issued by the Ld. Recovery Officer, notifying the
property for sale on 15.02.2012.
2.1 The appellants are the certificate debtors in DRC 3253 as borne out by Annexure -
A2 Recovery Certificate dated 30.06.2010 which has come to be issued by the Tribunal
pursuant to Annexure-A1 final order of even date passed in OA 134/2009. It is the case
and contention of the appellants that they came to understand about the pendency of
DRC only on receipt of certified copy of the judgment, that on entering appearance
before the Recovery Officer they had objected as regards non-service of the demand
notice, that on receipt of the certified copy of the demand notice on 05.12.2011 when
the matter was posted on 28.12.2011 before the Recovery Officer V.K. Pillai it was
reposted to 02.01.2012 as per A' Diary without mentioning anything more, that due to
the Recovery Officer's absence on account of his sick leave the appellant's counsel had
in good faith that nothing adverse would occur had chosen not to visit the Recovery
Officer on 02.01.2012 but unfortunately was shocked to find in the A' Diary a
proceeding to the effect of putting the appeal subject property for sale on 15.02.2012
consequent to proclaiming, publishing and affixing of the sale notice.
2.2 That on the appellants' obtaining of the certified copy of the proceedings dated
02.01.2012 they noticed something different from what was written on the A' Diary, that
the proceedings would reveal there occurred no valid settlement of proclamation of any
property rather something non-transparent and illegal had occurred in proclaiming the
sale of the residential property belonging to the appellants wherein the registered office
of the certificate debtor No. 1 company was functioning on lease, that the physical
possession of the stock, valuables/movables belonging to the said company was
illegally taken by the Authorised Officer of the bank on 06.12.2008 in respect of which
the appellants had filed SA 295/2009 and a stranger M/s. Rajesh Exports Pvt. Ltd. had
filed SA 543/2009, that as per the encumbrance certificate produced by the certificate
holder bank the said M/s. Rajesh Exports Ltd. appears to be the alleged title holder of
the property proclaimed for sale, that the valuation report divulging the property's value

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to be Rs. 5,91,61,000/- as against Rs. 12,64,76,900/- which was the valuation arrived
by the same valuer at appellants' request in the year 2008 goes to show that it is a
dishonest and unreliable one, that had the appellants been given an opportunity to
peruse the said report and take part in the said proceedings the Recovery Officer
probably would not have fixed the upset price at a throw away price of Rs. 7 Crores as
against its present liberal valuation of Rs. 20 Crores, that the said valuer claiming to be
the 'approved valuer' is only to be blacklisted and that it was illegal for the Recovery
Officer to settle the proclamation of sale by fixing its upset price at Rs. 7 Crores without
calling for a fresh valuation report by affording an opportunity of hearing to the
appellants.
2.3 It is further contended that the appellants were not afforded any opportunity to file
objections either to the demand notice nor to the notice for settling proclamation which
was not served on the appellants for the reason of the registered office and the
residence of the appellants been under illegal possession of the Authorised Officer, that
the Recovery Officer overlooked and ignored the encumbrance over the property and
had fraudulently and dishonestly mentioned in the sale proclamation about his
ignorance of any encumbrance on the property, that the certificate holder bank acting
and performing as national treasury unit of the nation had acted irresponsibly by
suppressing the material facts and misled the Recovery Officer to ignore the
encumbrance which they are much aware from the encumbrance certificate produced by
them as well as from SA 295/2009 and SA 543/2009, that the bank is responsible and
accountable to the appellants for the loss or sale of non-entitled movables of the
appellants worth more than Rs. 1 crore which had then been stored in the property, that
the Recovery Officer has no authority to proclaim sale of the property along with the
movable in the unauthorized custody of the Authorised Officer, that the Recovery Officer
has illegally proclaimed the appellants' property for sale without making attachment as
per the provisions of RDDBFI Act and the Second Schedule to the Income Tax Act
rendering the entire proceedings vitiated, that the hastiness and suo motu withdrawal of
DRC from the file of Recovery Officer V.K. Pillai without prior intimation to the
appellants smack of malafides and non transparency which is not expected of a public
officer who is bestowed with jurisdiction to recover the certificate debt only by
following the procedures established by law and observance of the principles of natural
justice and that in the light of the aforesaid facts and circumstances Annexure-A12
proclamation of sale which has come to be issued by the Recovery Officer illegally and
in violation of the principles of natural justice is to be set aside.
2 .4 Mr. C.S. Ullas, Ld. counsel for the appellants in the course of his submissions
contended that Annexure-A12 proclamation of sale dated 02.01.2012 is to be quashed
holding it to be illegal for the reason of it having been issued in the absence of the
appellants and non-service of demand notice or ordering publication of demand notice
by substituted service of the same. Ld. counsel emphatically contended that as the
Authorised Officer of a certificate holder bank had assumed physical possession of the
appeal subject property along with the movable properties of the appellants' worth more
than Rs. 1 Crore, the act of Recovery Officer in bringing such properties for sale (both
immovable and the movable properties) and allowing the public to inspect the said
properties which are in illegal custody of the bank is per se illegal. On the side of the
appellants it was vehemently argued that Annexure-A12 sale notice which has come to
be issued in the absence of attachment as contemplated under the Second Schedule to
the Income Tax Act, 1961 has to be set aside since the Recovery Officer deriving
authority and powers under S. 25 of RDDBFI Act ought to have ordered for sale only
consequent to attaching the subject property in terms of S. 29 of the said Act making
Second Schedule to the Income Tax Act applicable for the recovery proceedings. Ld.

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counsel for the appellants submitted that as the Tribunal cannot pass a charged decree
as per the judgment rendered by the Apex Court in the case titled "Nahar Industrial
Enterprises Ltd. v. Hong Kong and Shanghai Banking Corporation
(MANU/SC/1330/2009)" attachment of the property is a mandatory legal requirement
and the property could be brought for sale only within three years from the date of said
attachment in accordance with the relevant Rule in the Second Schedule to the Income
Tax Act.
2 . 5 That apart, the Ld. counsel did submit that as the certificate holder bank had
initiated SARFAESIA measures prior to filing of the OA, S. 13(10) of the SARFAESI Act
alone ought to have been invoked and the possession taken by the Authorised Officer
under SARFAESI Act cannot be made available/accessible to the Recovery Officer to
inspect and value the property. Ld. counsel vehemently argued that the SARFAESI Act
overrides RDDBFI Act and the Ld. Recovery Officer ought to have shown restraint in the
matter of proceeding with the sale of the appeal subject property vide Annexure-A12
sale proclamation as the Hon'ble Apex Court in the Transcore case had indicated about
the myriad circumstances in which the OA proceedings ought to have been withdrawn.
Ld. counsel vociferously contended that Annexure-A12 sale proclamation has to be set
aside for the reason of gross undervaluation of a property worth Rs. 20 Crores at Rs. 7
Crores, as also for non-disclosure of the encumbrances to the general public regarding
the title alleged to be transferred to M/s. Rajesh Exports Ltd. which is nothing short of a
fraudulent act perpetrated on the public by the certificate holder bank and the Recovery
Officer. For the forgoing reasons the Ld. counsel for the appellants sought the appeal to
be allowed with costs.
3.1 Mr. Easwaran, Ld. counsel for the 2nd respondent bank submitted that the relief
sought for in the appeal have been long back virtually rendered 'infructuous' in view of
the deferment of said sale ordered by the Tribunal in its proceedings dated 10.02.2012
observing therein as to the then pendency of the petition filed by the appellants to set
aside the ex parte final order passed in the OA. It was submitted that as this Tribunal
had in the proceedings dated 10.02.2012 then directed the Ld. Recovery Officer to defer
the auction sale awaiting its further directives, the recovery process had come to a halt.
In these circumstances the 2nd respondent bank had on 23.07.2015 filed an IA No.
1901/2015 seeking to vacate the aforesaid interim order dated 10.02.2013 by allowing
the bank to proceed with the recovery proceedings, as the IA Nos. 329 & 331/2012 in
OA 134/2009 filed by the appellants seeking to set aside the ex parte final order and to
stay the operation of the said order were disallowed by this Tribunal vide its order
dated 15.05.2015.
3.2. Ld. counsel for the certificate holder bank submitted that the proceedings and
records available in DRC would show as to the effecting of due publication of demand
notice issued under Rule 2 of the Second Schedule to the Income Tax Act and service of
other mandatory notices on the appellants by the Ld. Recovery Officer in terms of Rules
52 & 53. Adverting to Nahar Industrial Enterprises Ltd. case of the Hon'ble Supreme
Court relied by the Ld. counsel for appellants, Advocate Mr. Easwaran appearing for 2nd
respondent would submit that he could not see any specific finding therein to the effect
that the Debts Recovery Tribunal cannot pass a charged decree as submitted on the side
of the appellants. He submitted that there is no requirement for attaching a mortgaged
property as contended in vain by the Ld. counsel for the appellants, as the Recovery
Officer deriving powers by virtue of the Recovery Certificate issued by the Tribunal is
competent to sell the mortgaged property without any requirement for attachment of the
same. On the side of the bank it was forcefully contended that the stipulation contained
in Rule 68-B of the Second Schedule to the Income Tax Act for putting forth the

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property for sale within a period of 3 years from the date of attachment, would not
apply for a recovery proceedings initiated by the Recovery Officer under RDDBFI Act
and adverted to the Apex Court judgment in C.N. Paramasivan & another v. Sunrise
Plaza & others (MANU/SC/0961/2014) case wherein it is found and held that the
expression 'as far as possible' contained in S. 29 of RDDBFI Act has to be construed and
read 'as far as may be practicable'.
3.3. Mr. Easwaran, Advocate appearing for 2nd respondent bank urged the Tribunal to
appreciate that it is only futile on the part of the appellants to contend that SARFAESI
Act overrides RDDBFI Act, such a submission coming forth from them in total ignorance
of S. 37 of the posterior Act which makes it clear that the remedies provided in
SARFAESI Act is in addition to and not in derogation of the provisions contained in
RDDBFI Act. On the side of the bank it was submitted that the contentions raised by the
appellants as regard undervaluation would not enure to their benefit in so far as
Annexure-A12 notice had been long back rendered 'infructuous' and the Recovery
Officer would in any way be proceeding afresh from the stage of Rule 53 sale
proclamation by calling for a fresh valuation. Ld. counsel concluded his argument
stating that as the appellants had come out with a case as if M/s. Rajesh Exports is now
the title holder and non-mentioning of the said encumbrance in the Annexure-A12 sale
notice is illegal and fatal, it is for the alleged title holder M/s. Rajesh Exports to come
out with any claim petition before the Ld. Recovery Officer by invoking Rule 11 of the
Second Schedule to the Income Tax Act. Ld. counsel expressed his doubt as regards the
competency and locus of the appellants to sustain the present appeal for the reason of
they alleging to have no saleable interest in the appeal subject property.
4.1 Annexure-A12 proclamation of sale dated 02.01.2012 is impugned by the appellants
stating it to be suffering from many illegalities which includes among other grounds-
non service of demand notice and notice for settling of sale proclamation, improper
valuation, putting the property for sale without attachment of the immovable property,
non-executability of the recovery certificate beyond 3 years etc. The points thus
emerging for consideration by the Tribunal are as follows:-
(i) Whether Annexure A12 proclamation of sale notice dated 02.01.2012 is
vitiated for material irregularity in service of demand notice or the notice for
settlement of sale proclamation or publication thereof?
(ii) Whether Annexure A12 proclamation of sale notice dated 02.01.2012 is
vitiated for the reason of 'improper valuation' as alleged by the appellants?
(iii) Whether Annexure A12 proclamation of sale notice dated 02.01.2012 is
vitiated for the reason of non attachment of appeal subject property as alleged
by the appellants?
(iv) Whether the Recovery Officer has committed any illegality in issuance of
Annexure A12 proclamation of sale notice dated 02.01.2012 in negation of the
provisions of the SARFAESI Act as alleged by the appellant?
(v) Whether the action of the Recovery Officer resulting in issuance of
Annexure-A12 sale proclamation notice suffers from any illegality and smacks
of malafides as alleged by the appellants?
(vi) Whether the appellants are entitled to the relief sought for in the appeal?
4.2 For proper consideration and appreciation of the above points in issue, it would be

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fruitful to cull out and reproduce the relevant portions of RDDBFI Act 1993, Debts
Recovery Tribunal, Ernakulam (Kerala and Lakshadweep) Regulations of Practice 2005,
the Second Schedule to the Income tax Act 1961 and the relevant provisions of the
SARFAESI Act 2002. Accordingly they are extracted out below:
RDDBFI Act
2(g) "debt" means any liability (inclusive of interest) which is claimed as due
from any person by a bank of a financial institution or by a consortium of banks
or financial institutions during the course of any business activity undertaken by
the bank or the financial institution or the consortium under any law for the
time being in force, in cash or otherwise, whether secured or unsecured, or
assigned, or whether payable under a decree or order of any civil court or any
arbitration award or otherwise or under a mortgage and subsisting on, and
legally recoverable on, the date of the application;
19. Application to the Tribunal.-
(1) Where a bank or a financial institution has to recover any debt from any
person, it may make an application to the Tribunal within the local limits of
whose jurisdiction-
(a) the defendant, or each of the defendants where there are more than
one, at the time of making the application, actually and voluntarily
resides or carries on business or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time
of making the application, actually and voluntarily resides or carries on
business or personally works for gain; or
(c) the cause of action, wholly or in party, arises.
[Provided that the bank or financial institution may, with the
permission of the Debts Recovery Tribunal, on an application made by
it, withdraw the application, whether made before or after the
Enforcement of Security Interest and Recovery of Debts Laws
(Amendment) Act, 2004 for the purpose of taking action under the
Securitisation and reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (54 of 2002), if no such action had been
taken earlier under that Act:
(12) The Tribunal may make an interim order (whether by way of injunction or
stay or attachment) against the defendant to debar him from transferring,
alienating or otherwise dealing with, or disposing of, any property and assets
belonging to him without the prior permission of the Tribunal.
(22) The Presiding Officer shall issue a certificate under his signature on the
basis of the order of the Tribunal to the Recovery Officer for recovery of the
amount of debt specified in the certificate.
(23) Where the Tribunal, which has issued a certificate of recovery, is satisfied
that the property is situated within the local limits of the jurisdiction of two or
more Tribunals, it may send the copies of the certificate of recovery for
execution to such other Tribunals where the property is situated:

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 Provided that in a case where the Tribunal to which the certificate of
recovery is sent for execution finds that it has no jurisdiction to comply
with the certificate of recovery, it shall return the same to the Tribunal
which has issued it.
24. Limitation.-The provisions of the Limitation Act, 1963 (36 of 1963), shall,
as far as may be, apply to an application made to a Tribunal.
25. Modes of recovery of debts.-The Recovery Officer shall, on receipt of the
copy of the certificate under sub-section (7) of section 19, proceed to recover
the amount of debt specified in the certificate by one or more of the following
modes, namely:--
(a) attachment and sale of the movable or immovable property of the
defendant;
29. Application of certain provisions of Income-tax Act.-The provisions of the
Second and Third Schedules to the Income-tax Act, 1961 and the Income-tax
(Certificate Proceedings) Rules, 1962, as in force from time to time shall, as far
as possible, apply with necessary modifications as if the said provisions and the
rules referred to the amount of debt due under this Act instead of to the
Income-tax:
Provided that any reference under the said provisions and the rules to
the "assessee" shall be construed as a reference to the defendant under
this Act.
30. Appeal against the order of Recovery Officer.-
(1) Notwithstanding anything contained in section 29, any person aggrieved by
an order of the Recovery Officer made under this Act may, within thirty days
from the date on which a copy of the order is issued to him, prefer an appeal to
the Tribunal.
(2) On receipt of an appeal under sub-section (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).
Debts Recovery Tribunal, Ernakulam (Kerala and Lakshadweep) Regulations of
Practice, 2005 : Chapter IX : Proceedings before Recovery Officers
41. Proceeding sheet : The Recovery Officers shall maintain proceeding sheet
in respect of each Recovery Certificate showing the proceedings, in brief.
42. 'A' diary : The Recovery Officers shall also maintain separate "A" Diary in
Form No. 11 showing the proceedings mentioned in regulation 41 and the date
of next posting.
Second Schedule to the Income Tax Act
2. Issue of notice.
When a certificate has been drawn up by the Tax Recovery Officer for the

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recovery of arrears under this Schedule, the Tax Recovery Officer shall cause to
be served upon the defaulter a notice requiring the defaulter to pay the amount
specified in the certificate within fifteen days from the date of service of the
notice and intimating that in default steps would be taken to realise the amount
under this Schedule.
4. Mode of recovery.
If the amount mentioned in the notice is not paid within the time specified
therein or within such further time as the Tax Recovery Officer may grant in his
discretion, the Tax Recovery Officer shall proceed to realise the amount by one
or more of the following modes:
(a) ******
(b) by attachment and sale of the defaulters immovable property;
48. Attachment.
Attachment of the immovable property of the defaulter shall be made by an
order prohibiting the defaulter from transferring or charging the property in any
way and prohibiting all persons from taking any benefit under such transfer or
charge.
52. Sale and proclamation of sale - (1) The Tax Recovery Officer may direct
that any immovable property which has been attached, or such portion thereof
as may seem necessary to satisfy the certificate, shall be sold.
(2) Where any immovable property is ordered to be sold, the Tax Recovery
Officer shall cause a proclamation of the intended sale to be made in the
language of the district.
53. Contents of proclamation - A proclamation of sale of immovable property
shall be drawn up after notice to the defaulter, and shall state the time and
place of sale, and shall specify, as fairly and accurately as possible,
(a) the property to be sold;
(b) the revenue, if any, assessed upon the property or any part thereof;
(c) the amount for the recovery of which the sale is ordered;
(cc) the reserve price, if any, below which the property may not be
sold; and
(d) any other thing which the Tax Recovery Officer considers it material
for a purchaser to know, in order to judge the nature and value of the
property.
54. (1) Every proclamation for the sale of immovable property shall be made at
some place on or near such property by beat of drum or other customary mode,
and a copy of the proclamation shall be affixed on a conspicuous part of the
property and also upon a conspicuous part of the office of the Tax Recovery
Officer.

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(2) Where the Tax Recovery Officer so directs, such proclamation shall also be
published in the Official Gazette or in a local newspaper, or in both; and the
cost of such publication shall be deemed to be costs of the sale.
(3) Where the property is divided into lots for the purpose of being sold
separately, it shall not be necessary to make a separate proclamation for each
lot, unless proper notice of the sale cannot, in the opinion of the Tax Recovery
Officer, otherwise be given.
68B. (1) No sale of immovable property shall be made under this Part after the
expiry of three years from the end of the financial year in which the order
giving rise to a demand of any tax, interest, fine, penalty or any other sum, for
the recovery of which the immovable property has been attached, has become
conclusive under the provisions of section 245-I or, as the case may be, final in
terms of the provisions of Chapter XX : Provided that where the immovable
property is required to be re-sold due to the amount of highest bid being less
than the reserve price or under the circumstances mentioned in rule 57 or rule
58 or where the sale is set aside under rule 61, the aforesaid period of
limitation for the sale of the immovable property shall stand extended by one
year.
(2) In computing the period of limitation under sub-rule (1), the period (i)
during which the levy of the aforesaid tax, interest, fine, penalty or any other
sum is stayed by an order or injunction of any court; or (ii) during which the
proceedings of attachment or sale of the immovable property are stayed by an
order or injunction of any court; or (iii) commencing from the date of the
presentation of any appeal against the order passed by the Tax Recovery Officer
under this Schedule and ending on the day the appeal is decided, shall be
excluded:
Provided that where immediately after the exclusion of the aforesaid
period, the period of limitation for the sale of the immovable property
is less than 180 days, such remaining period shall be extended to 180
days and the aforesaid period of limitation shall be deemed to be
extended accordingly.
(3) Where any immovable property has been attached under this Part before the
1st day of June, 1992, and the order giving rise to a demand of any tax,
interest, fine, penalty or any other sum, for the recovery of which the
immovable property has been attached, has also become conclusive or final
before the said date, that date shall be deemed to be the date on which the said
order has become conclusive or, as the case may be, final.
(4) Where the sale of immovable property is not made in accordance with the
provisions of sub-rule (1), the attachment order in relation to the said property
shall be deemed to have been vacated on the expiry of the time of limitation
specified under this rule.]
SARFAESI Act, 2002
*S. 13(10) Where dues of the secured creditor are not fully satisfied with the
sale proceeds of the secured assets, the secured creditor may file an application
in the form and manner as may be prescribed to the Debts Recovery Tribunal
having jurisdiction or a competent court, as the case may be, for recovery of

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 the balance amount from the borrower.
*35. The provisions of this Act to override other laws
The provisions of this Act shall have effect, notwithstanding anything
inconsistent therewith contained in any other law for the time being in force or
any instrument having effect by virtue of any such law.
*36. Limitation
No secured creditor shall be entitled to take all or any of the measures under
sub-section (4) of section 13, unless his claim in respect of financial asset is
made within the period of limitation prescribed under the Limitation Act, 1963
(36 of 1963).
*37. Application of other laws not barred
The provisions of this Act or the rules made thereunder shall be in addition to,
and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities
Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange
Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being
in force.
Security Interest (Enforcement) Rules, 2002
R.8(6). The authorized office shall serve to the borrower a notice of thirty days
for sale of the immovable secured assets, under Sub-rule (5);
Provided that if the sale of such secured asset is being effected by either
inviting tenders from the public or by holding public auction, the secured
creditor shall cause a public notice in two leading newspapers one in vernacular
language having sufficient circulation in the locality by setting out the terms of
sale, which shall include-
(a) The description of the immovable property to be sold, including the
details of the encumbrances known to the secured creditor;
(b) the secured debt for recovery of which the property is to be sold;
(c) reserve price, below which the property may not be sold;
(d) time and place of public auction or the time after which sale by any
other mode shall be completed;
(e) depositing earnest money as may be stipulated by the secured
creditor;
(f) any other thing which the authorized officer considers it material for
a purchaser to know in order to judge the nature and value of the
property.
5. Point No. (i) for consideration:
(i) The appellants had raised a definite contention as regards the non-service of demand

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notice on them in the above recovery proceedings, as also the non-publication of such
notice by way of substituted service despite the bank being fully aware about the
dispossession of the appellants from the address shown in the Recovery Certificate. It is
the appellants' further case that they had not been served with Notice for Settlement of
Sale Proclamation in terms of Rule 53 of the Second Schedule to the Income Tax Act
and therefore the issuance of Annexure-A12 proclamation of sale without serving the
said notices and without giving any opportunity to the appellants for filing of their
objections to the demand notice as also to the Notice for Settling the Sale Proclamation
is sought to be held as illegal and unsustainable.
(ii) Mr. Eswaran, Ld. counsel for 2nd respondent bank adverted to the copy of the
Tribunal's order dated 15.05.2015 passed in IA Nos. 329/2012 and 331/2012 in OA No.
134/2009 and pointed out to the observations and findings recorded by the Tribunal in
the said IAs as regards due and proper service of notices on the appellants herein,
going by the fact that the notices came to be issued to the appellants' address as set out
by them in IA Nos. 329/2012 and 331/2012 filed on 30.01.2012, Annexure-B1 Crl.M.P.
filed by them on 10.03.2010 before Ld. CJM Court, Ernakulam and Annexure-B5
lawyer's notice dated 16.05.2011 issued by the appellants to M/s. Rajesh Exports Ltd.
The relevant portion of the said order dated 15.05.2015 as read out by the Ld. counsel
for 2nd respondent, is extracted out below:
"10. The copy of final order was sent to the petitioners 1 to 3 by this Tribunal
on 15.7.2010 under R.16 of the Debts Recovery Tribunal (Procedure) Rules,
which came to be returned unserved with the postal endorsement 'left without
instructions'. This Tribunal finds that Annexure-B1 which is a Crl.M.P filed by
petitioners 2 and 3 on 10.03.2010 before the Ld. CJM Court, Ernakulam and
Annexure-B5 lawyers notice dated 16.05.2011 issued on behalf of petitioners 2
and 3 to M/s. Rajesh Exports Ltd. divulges the petitioners' address as
follows........ "Thaliyath House, Pallimukku, Church Landing Road, Ernakulam"
and the final order in OA has been sent by this Tribunal to petitioners 2 and 3 by
giving the very same address of "Thaliyath House, Pallimukku, Church Landing
Road, Ernakulam" and to petitioner No. 1 company to the following address
............ "39/5039-A, Church Landing Road, Pallimukku, Kochi" as provided by
the applicant in their OA filed on 08.04.2009. In the above I.A Nos. 329/2012
and 331/2012 filed on 30.01.2012, the petitioners had given their address as
"39/5039, Thaliyath House, Church Landing Road, Kochi". Therefore this
Tribunal finds that between 2009 and 2012, admittedly the petitioners 1 to 3
themselves have a case as to the above address being their proper address
made known to the applicant bank as well as this Tribunal and even if the
petitioners 1 to 3 had left from the said address for reasons whatsoever, the
petitioners who had contracted loan with the respondent bank were enjoined
with a duty to intimate the bank with regard to any change of their address and
had a duty to leave instruction with the postal authorities as well with regard to
their change of address for enabling the letters addressed to them to be re-
directed to their other addresses if any. In respect of the notices or registered
articles which are returned unserved with the postal endorsement 'addressee left
without instruction', the well settled legal proposition is that it is a 'deemed
service' of such notices in the eye of law which is fortified by the dictum laid
down by Hon'ble Apex Court in the case titled M/s. Madan and Company v.
Wazir Jaivir Chand, reported in MANU/SC/0313/1988 : AIR 1989 SC 630
which reads as follows:-
"All that a landlord can do to comply with this provision is to post a

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 prepaid registered letter (acknowledgment due or otherwise) containing
the tenant's correct address. Once he does this and the letter is
delivered to the Post Office, he has no control over it. It is then
presumed to have been delivered to the addressee under S. 27 of
General Clauses Act. ....... An addressee can easily avoid receiving the
letter addressed to him without specifically refusing to receive it. He can
so manipulate matters that it gets returned to the sender with vague
endorsements such as 'not found', 'not in station', 'addressee has left',
and so on. ............... if a registered letter addressed to a person at his
residential address does not get served in the normal course and is
returned, it can only be attributed to the addressee's own conduct. If he
is staying in the premises, there is no reason why it should not be
served on him. If he is compelled to be away for some time all that he
has to do is to leave necessary instructions with the postal authorities
either to detain the letters addressed to him for some time until he
returns or to forward them to the address where he has gone or to
deliver them to some other person authorised by him. In this situation,
we have to choose the more reasonable, effective, equitable and
practical interpretation and that would be to read the word 'served' as
'send by post' correctly and properly addressed to the tenant."
(Emphasis is mine)"
(iii) The Tribunal gave an anxious consideration as to whether Annexure-A12 sale
proclamation notice is illegal and suffers from any material irregularity for the reason of
alleged non-service of demand notice or the notice for settling of sale proclamation on
the appellants for the reason of their dispossession by the bank under SARFAESI Act
from the addresses set out in the Recovery Certificate?
(iv) In the instant case, on a conspectus of the file pertaining to DRC 3253 that has
been called for and obtained from the Recovery Section of the Tribunal, the following
facts came to the fore. The demand notices dated 01.09.2010 issued by the Ld.
Recovery Officer Vijay Kumar Pillai under Rule 2 of the Second Schedule to the Income
Tax Act to the Certificate debtor No. 1, Door No. 39/5039-A, Church landing road,
Pallimukku, Cochin-682 016, Ernakulam District and to the CDs 2 & 3/appellants'
address-Thaliyath House, Church landing road, Pallimukku, Cochin-682 016, Ernakulam
District were returned unserved on 29.09.2010 with the postal endorsement 'left without
instruction'. Thereupon the demand notice dated 24.02.2011 came to be published by
the Ld. Recovery Officer in Mathrubhumi Malayalam daily dated 06.03.2011. The notice
for settling of sale proclamation dated 13.09.2011 that came to be issued to the
certificate debtors by the Ld. Recovery Officer P. Balasubramanian as contemplated
under Rule 53, also returned unserved with the postal endorsement 'house locked,
intimation slip dropped in the letter box, gate locked, unclaimed'. Consequently, the
notice dated 18.10.2011 for settling of sale proclamation is seen published in
Mathrubhumi dated 05.11.2011 for the appearance of the certificate debtors before the
Recovery Officer for drawing of sale proclamation on 09.11.2011.
(v) The Tribunal or its Recovery Officer is expected to send its order or the notices as
the case may be only to the last known, available correct address of the parties
concerned and on doing so, there is a deemed constructive service of notice as also
presumption of such service in the eye of law. The following judgments fortify the said
well settled legal proposition:
(a) The Hon'ble High Court of Kerala in the case titled South Indian Bank Ltd. v.

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 Union of India & others, reported in MANU/KE/2314/2010 held as follows:-
"6. It is settled law that, when a notice sent by registered post is
returned 'unclaimed', it could very well be treated as 'valid and proper'
service....."
(b) The Hon'ble Apex Court in the case titled P.T. Thomas v. Thomas Job
reported in MANU/SC/0454/2005 held as follows:-
"14......... Though the notice was correctly addressed and despite the
intimation by the post office, the notice was not accepted by the
Respondent and was returned unserved. In such circumstances, the
presumption of law is that the notice has been served on the
Respondent.
(Emphasis is mine)
(vi) The appellants who had notice and evident knowledge of the above recovery
proceedings, entered appearance before the Ld. Recovery Officer by causing their Adv.
Mrs. Divya to file Vakalath exactly on 09.11.2011 which was notified to be the date for
drawing the sale proclamation. On 09.11.2011, the recovery proceedings stood reposted
to 18.11.2011 and then to 25.11.2011. The appellants' advocate had on 25.11.2011 and
30.11.2011 appeared before the Ld. Recovery Officer P. Balasubramanian and got to
know about the publication of notice for settling of sale proclamation and the demand
notice as also the factum of the completion of service of such notices and the contents
of the demand notice on it been read out to her by the Ld. Recovery Officer in the
proceedings dated 25.11.2011.
(vii) The Tribunal could find two vakalaths dated 09.11.2011 given by the appellants as
also the certificate debtor No. 1 company to Adv. Mrs. Divya vide ID Nos. 13083 &
13084 by setting out therein the very same addresses contained in the recovery
certificate to be the address of the appellants. In the additional two vakalaths which
came to be filed in the above DRC proceedings before the Ld. Recovery Officer by Adv.
Mr. Ullas and Mrs. Divya on 10.03.2014, the address of the appellants as disclosed
therein is found to be the very same address as mentioned in the recovery certificate.
(viii) The appellants had proceeded with the mentioning of the very same address as
found in Recovery Certificate, to be their address in the cause title set out by them in
the above appeal. The Tribunal did not fail to notice that the appellants had in the
verification para of the above appeal dated 30.01.2012 and in a counter affidavit dated
24.03.2014 filed before the Ld. Recovery Officer in IA No. 408/2014 mentioned to be
now residing at A-4, Shanti River Dale, OEN bus stop, Vytila, while in IA 695/2014 filed
by them on 19.03.2014 they continue to assert the address found in the Recovery
Certificate to be their present address. Even if the appellants have been dispossessed
from the Recovery Certificate mentioned address by 2nd respondent bank by virtue of
the authority conferred on them under the provisions of SARFAESI Act, they having
contracted the loan with the 2nd respondent bank and been arraigned as the party
defendants in the above OA proceedings that had culminated in issuance of Recovery
Certificate are enjoined with a duty and legal obligation to keep the authority concerned
duly informed about their new address for ensuring the receipt of all consequential
notices thereof. The appellants have no case or contention of having intimated the
Tribunal, its Recovery Officer or the 2nd respondent bank as regards their change of
address for reasons whatsoever nor had they left any instructions to the postal authority
to redirect their letters/notices to their new addresses whatever it be.

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(ix) From the proceeding sheet of the Recovery Officer dated 02.01.2012 and the DRC
file it could be discerned that an order settling terms of proclamation of sale has come
to be issued separately on the same day fixing auction to be held on 15.02.2012 at 2.30
p.m. and the proceedings in respect of DRC 3253 found in the A' Diary admittedly
revealed the factum of ordering of proclamation of sale for auction of 24 Cents (9.72
Ares) in Sy. No. 865/7 & 8 of Ernakulam Village along with 3 storied office-cum-
residential building on 15.02.2012 at 2.30 p.m. by fixing the reserve price at Rs. 7
Crores. The Ld. Recovery Officer had thus ordered to proclaim, affix and publish the
sale notice accordingly. The appellants would besides admitting their knowledge of the
aforestated A' Diary proceedings, urge the Tribunal to see and hold the A' Diary
proceedings dated 02.01.2012 to be containing something different from the certified
copy of proceedings of the Recovery Officer obtained and filed by them as Annexure-A5.
The Tribunal would proceed to arrive at a finding as regards the discrepancy pointed out
by the appellants in relation to the A' Diary proceedings from that of the proceedings of
Recovery Officer while answering point No. (v) under consideration.
(x) The DRC records also reveal as regards the filing of an affidavit dated 09.01.2012
by the manager of the 2nd respondent bank enclosing the affixture report evidencing
affixing of the sale proclamation notice dated 02.01.2012 accompanied by beat of
drums, as also effecting publication of sale notice dated 02.01.2012 in Mathrubhumi
Malayalam daily dated 09.01.2012 in terms of Rule 54. The appellants therefore cannot
be heard to say that they were not aware of the contents of the demand notice and sale
proclamation notice as the case may be nor could they be permitted to contend that the
sale proclamation came to be drawn in their absence and without serving demand notice
or notice for settling of sale proclamation.
(xi) Going by the aforestated factual position, the Tribunal is convinced as to there
being due and proper service of mandatory notices whether it be a demand notice as
contemplated under Rule 2, notice for settling of sale proclamation or
publication/affixing of sale proclamation notices in terms of Rules 53 & 54 of Second
Schedule to the Income Tax Act and the case put forth by the appellants to the contrary
is only to be discarded and disbelieved.
6. Point No. (ii) for consideration:
(i) Mr. C.S. Ullas urged the Tribunal to hold Annexure-A12 sale proclamation notice to
be illegal for the reason of it attempting to put the property for sale at a throw away
reserve price of Rs. 7 crores as against the present liberal valuation of the said property
being Rs. 20 crores. The Ld. Counsel had produced Annexure-A6 valuation report dated
07.10.2008 purported to be issued by the same valuer S. Rajendraprasad divulging
therein the value of appeal subject property to be Rs. 12.64 crores, to contradict
Annexure-A7 valuation report dated 18.03.2011 obtained and produced by the bank
before the Ld. Recovery Officer for the said property at Rs. 5.91 crores, which according
to the appellants is apparently a gross under valuation. Ld. counsel for the appellants
also submitted that the sale proclamation has been drawn without affording an
opportunity to the appellants to object to Annexure-A7 valuation report and added that
the concerned valuer has to be black listed for having given a dishonest, unreliable
valuation.
(ii) Mr. Eswaran Ld. counsel for 2nd respondent bank would submit that the Ld.
Recovery Officer had put the property for sale by fixing the reserve price at Rs. 7 crores
which appeared to be proper valuation for the property at the relevant time and
Annexure-A12 sale proclamation however did not culminate in sale for the reason of the

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deferment of sale ordered by the Tribunal on 10.02.2012. Ld. counsel submitted that as
4 years had elapsed by now, Ld. Recovery Officer would in any respects be proceeding
with the sale afresh only pursuant to issuing a fresh notice for settling of sale
proclamation and obtention of fresh valuation report. Ld. counsel sought the issue of
valuation to be left open to be decided by the Ld. Recovery Officer at the time of
drawing of sale proclamation and settling the terms thereof on issuance of NSSP afresh.
(iii) The Tribunal is convinced that Annexure-A12 sale proclamation notice dated
02.01.2012 fixing the reserve price at Rs. 7 crores has been rendered infructuous and is
irrelevant now for the reason that the Ld. Recovery Officer would anyway proceed for
sale afresh only pursuant to the issuance of NSSP upon calling for a fresh valuation
report from the 'approved valuer' and ascertaining its present valuation. Further to that,
unlike in court auction sale that is held in terms of O.21 R.66 of Code of Civil
Procedure, the Ld. Recovery Officer who is to issue sale proclamation notice under S. 29
of RDDBFI Act r/w Rules 52 and 53 of the Second Schedule to the Income Tax Act, is
not required to seek the valuation of the judgment debtors as contended and claimed by
the appellants. The Tribunal is reminded of the judgment rendered by the Hon'ble
Supreme Court of India in Samir. K. Shah & another v. Union of India & others,
reported in MANU/SC/1269/2004 which reads as follows:-
"9. The Rules do not require the grant of any opportunity to the debtor of being
heard before the valuation is made and the reserve price fixed. The debtor is
entitled to notice only for the drawing up of the proclamation sale. Presumably,
the intention is to keep the debtor informed of the steps taken by the creditor to
realize a fair value of the debtor's property. There is no requirement for the
creditor to consider any alternative valuation filed at the instance of the debtor.
The reference to the decision of this Court in Desh Bandhu Gupta v. N.L. Anand
& Rajinder Singh reported in MANU/SC/0562/1994 : 1994 (1) SCC 121 : 1993
AIR SCW 3458, by the Appellant, is inapt. The decision relates to a sale in
execution of a decree under Order 21, Rule 66 of the Code of Civil Procedure
which expressly requires that the sale proclamation shall include the estimate of
the value of the property if any given by either or both of the parties. It was in
that context that this Court had said:
It is very salutary that a person's property cannot be sold without his
being told that it is being so sold and given an opportunity to offer his
estimate as he is the person who intimately knew the value of his
property and prevailing in the locality though exaggeration may at time
be possible.
10. There is no corresponding provision in Rule 52 or 53 of the Schedule to the
Income-tax Act, 1961 or in any other provision which have been incorporated
into the Act by Section 29."
(Emphasis is mine)
(iv) With regard to the difference in valuation pointed out by the appellants in
Annexure-A6 valuation report dated 07.10.2008 and Annexure-A7 valuation report dated
18.03.2011 purported to be issued by the same valuer, the person competent to explain
regarding the variation in the said valuation is the concerned valuer himself which is
unnecessary for the purpose of this appeal in so far as Annexure-A12 sale notice had
been rendered ineffectual. However, in view of such disparities in valuation pointed out
by the appellants, the learned Recovery Officer shall prior to issuance of NSSP afresh
obtain a fresh valuation from some other 'approved valuer' to ascertain about the

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prevalent market value for the purpose of avoiding future controversies on the point of
valuation.
(v) That apart, the Tribunal is unable to hold the reserve price fixed at Rs. 7 crores to
be in anyway unreasonable going by the fact that the Ld. Recovery Officer had as
against Rs. 5.91 crores, Rs. 4.73 crores and Rs. 3.74 crores shown to be the market
value, realisable value and auction/distress sale value respectively by the valuer in his
Annexure-A7 report dated 18.03.2011, fixed the reserve price at Rs. 7 crores pursuant
to the inspection of appeal subject property made by the Recovery Inspector. Annexure-
A6 valuation report dated 07.10.2008 is found to have been obtained by the appellants
at their request, by stating to the valuer as to the requirement of such report for audit
purpose.
(vi) The appellants had filed Annexure-A9 copy of SA 295/2009 filed by them
impugning therein Annexure-A10 sale notice dated 30.04.2009 issued by Authorised
Officer of 2nd respondent bank, with no challenge made whatsoever in respect of the
appeal subject property then valued at Rs. 2.50 crores. The appellants had produced
along with Annexure-A10 copy of SA 543/2009 alleged to be filed by a stranger M/s.
Rajesh Exports Ltd., copy of sale deed dated 01.10.2009 Doc. No. 2817/2009 in respect
of appeal subject property purported to be executed by the appellants to M/s. Rajesh
Exports Ltd. for Rs. 1.05 crores. The appellants who would rely on Annexures A9 and
A10 with no quarrel or disputes as regards the valuation arrived at Rs. 2.50 crores by
the Authorised Officer and at Rs. 1.05 crores inter se the appellants and M/s. Rajesh
Exports Ltd., have no justification or explanation in the present appeal as to how the
present liberal valuation of it would be Rs. 20 crores as contended by them in vain in
the absence of any acceptable evidence. The Tribunal is therefore negating the
appellants' plea of 'under valuation'.
7. Point No. (iii) for consideration:
(i) Mr. C.S. Ullas, the Ld. counsel for appellants sought Annexure-A12 sale proclamation
notice to be quashed on the context of it having come to be issued in the absence of
attachment of the appeal subject property which is a mandatory prerequisite for putting
forth the property for sale by the Ld. Recovery Officer. He submitted that S. 25 of
RDDBFI Act requires the Recovery Officer to recover the amount specified in the
certificate only by attachment and sale of movable or immovable properties of the
defendant and not by any other mode. He submitted further that going by the Apex
Court judgment in Nahar Industrial Enterprises Ltd. case, the Tribunal is not entitled to
pass a charged decree and for that reason as well, the Recovery Officer is only entitled
to follow the Rules in the Second Schedule to the Income Tax Act in terms of S. 25 & S.
29 of RDDBFI Act which necessarily mandates attachment of the appellants' property
before proceeding to sell the same vide Annexure-A12 sale proclamation notice. That
apart, the Ld. counsel for appellants would contend that Rule 68B of the Second
Schedule to the Income Tax Act requires the sale of immovable property to be effected
within three years from attachment of the immovable properties and not beyond that.
(ii) Mr. Easwaran S, Ld. counsel for a 2nd respondent bank did submit that the power
and authority to sell the mortgaged property vests with the Recovery Officer by virtue of
the Recovery Certificate issued by the Tribunal and it is only futile on the part of the
appellants to contend that the mortgaged property which is ordered to be sold in the
Recovery Certificate has to undergo the process of further attachment. Adverting to S.
29 of the RDDBFI Act, the Ld. counsel for the bank contended that the law requires
adaptation of the provisions of Second Schedule and Third Schedule to the Income Tax

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Act 'as far as possible' and 'with necessary modifications' and therefore, the appellants
cannot be heard to say that the mortgage property could be brought for sale only
pursuant to attachment of it and that too within three years from such attachment. Ld.
counsel urged to appreciate that Rule 68B could not be pressed into service in the
proceedings under RDDBFI Act. On the side of the 2nd respondent bank, strong reliance
was placed on the following judgments of the Hon'ble High Court of Kerala to buttress
their contention as regards the non-requirement of attachment for putting forth of the
mortgaged property for sale and non-applicability of Rule 68B of the Second Schedule
to the Income Tax Act, 1961:
(a) In the case titled Bhat v. Anugraha Charitable Trust, reported in 2008 (1)
KLT 617 : 2008 KHC 4616 it is held as follows:-
"12. Now, the pivotal question that has been argued is as to whether
there should be an attachment as a prelude to sale in the case of the
debt in question, which is admittedly a secured debt. Going by
undisputed facts, the petitioners had mortgaged an item of property to
the creditor bank by depositing title deeds in a notified area and
thereby created a simple mortgage by such deposit, in terms of the
Transfer of Property Act, 1882, the "T.P. Act", for short. The quality of
mortgage that is created under S. 96 of the T.P. Act is that of a simple
mortgage because by such deposit of title deeds, there is a transfer of
an interest under S. 58(a) of the T.P. Act in specified immovable
property for the purpose of securing the payment of money advanced
or to be advanced by way of loan, an existing or future debt, or the
performance of an engagement which may give rise to a pecuniary
liability. S. 2(g) of the R.D/B/Act defines a debt to mean, among other
things, any liability which is secured. S. 17(1) of that Act provides that
the Tribunal shall exercise, on and from the appointed day, the
jurisdiction, powers and authority to entertain and decide applications
from the banks and financial institutions for recovery of debts due to
such banks and financial institutions. S. 19 provides the procedure of
Tribunals. Sub-s. 20 thereof provides that the Tribunal may, after
giving the applicant and the defendant an opportunity of being heard,
pass such interim or final order on the application as it thinks fit, to
meet the ends of justice. S. 22 provides for issuance of an certificate to
the recovery officer for the recovery of the amount of debt specified in
the certificate. S. 25 provides modes of recovery of debts which
include, among other thins, attachment and sale of the immovable
property of the defendant. S. 29 provides that the provisions of the
Second and Third Schedules to the Income Tax Act, 1961 and the
Income Tax (Certificate Proceedings) Rules, 1962, as in force from time
to time shall, as far as possible, apply with necessary modifications as
if the said provisions and Rules referred to the amount of debts due
under the Act instead of to the Income tax. I may also notice that S.
34(1) of the Act provides that subject to prescriptions in Sub-s. 2
thereof, the provisions of the Act shall have effect notwithstanding
anything inconsistent therewith contained in any other law for the time
being in force or in any instrument having effect by virtue of any law
other than the Act. Sub-s. 2 of S. 34 provides that the R.D.B. Act shall
be in addition to and not in derogation of the Industrial Finance
Corporation Act, 1948, the State Financial Corporations Act, 1951, the
Unit Trust of India Act, 1963, the Industrial Reconstruction Bank of

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 India Act, 1984, the Sick Industrial Companies (Special Provisions) Act,
1985 and the Small Industries Development Bank of India Act, 1989.
14. In terms of the RDB Act, any provision of the TP Act, if inconsistent
with the provisions of the RDB Act, would not continue to run against
the banks. The mortgage creates a right of immovable property. That
saleable interest is what the bank or the financial institution has. In
terms of the TP Act, that right can be enforced only through a Court. By
the exclusion of the jurisdiction of the civil court and the exclusive
empowerment of the Tribunal, the intention was to expedite the
recovery and not to put a further spoke in the wheel. When the bank
moves the Tribunal on the strength of a mortgage in its favour, the
sweep of Sub-s. 1 of S. 17(1), which empowers the Tribunal to pass
such orders as may be necessary in the ends of justice, confers
sufficient authority on the Tribunal to pass an order for sale. That
power is inherent and unbridled by any provisions of any of the law for
the time being in force. This is the net effect of S. 34(1) of the R.D.B.
Act. ON this short reason, the argument of the petitioners on this
ground also fails. That apart, Ext. P1 recovery order, which has become
final, as quoted above, contains clear terms by which the mode of
recovery is regulated by the Tribunal, which procedure can also stand
within the sweep of jurisdiction available under S. 17(1) to pass such
orders as are necessary to secure the needs of justice. The purposive
manner in which the construction of the legislation requires to be done
advises me to hold unless there is any express inhibition which would
result in showing a different course to be the ends of justice. The
Tribunal has very wide powers in terms of S. 17(1), including the
power to order sale and such an order would run without any
requirement to make an order of attachment."
(b) In the case titled Kutaguptan v. Canara Bank reported in
MANU/KE/0834/2009 : 2010 (1) KLT 361 it is held as follows:-
6 . Section 25 of the RDB Act provides attachment and sale of
immovable property as one of the modes of recovery of debt, in the
enforcement of the recovery certificate. The concept of attachment and
sale of immovable property in Clause (a) of Section 25 of the RDB Act
does not, necessarily, mean that only a property which is attached,
could be sold. Nor does it mean that notwithstanding the quality of any
encumbrance created by the debtor in favour of the creditor on an item
of property, it has to be, necessarily, attached as a prelude to sale.
When security is created by way of mortgage and other transactions
which result in encumbrance, no attachment is required, to enforce the
liability that is already fastened on such property. The sale of the
mortgaged property by the enforcement of the certificate against the
mortgaged property is nothing but enforcement of the mortgagee's
right for recovery by sale. The question of attachment does not arise in
such cases. Rights under mortgages and the like, as in case in hand; on
the strength of which recovery proceedings could be had without any
further "attachment", cannot be rapped off in favour of debtors by
making reference to Rule 68B of the Second Schedule to the I.T. Act.
That will only frustrate the very purpose of the RDB Act.

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 8 . Adverting to Rule 68B of the Second Schedule, it can be seen that
the restriction is on sale and the restriction is made referable to the
conclusiveness of the demand and the finality of the case. Such
conclusiveness is made on the basis of Section 245-I and Chap. XX of
the I.T. Act. The provisions in Chap. XX of the I.T. Act are not only not
incorporated by reference into the RDB Act, but are not even referred to
in Section 29 of the RDB Act as relatable to the proceedings under that
Act. Therefore, Rule 68B of the Second Schedule to the I.T. Act which
applies to proceedings covered by Section 245-I or Chap. XX of the I.T.
Act, does not, in any view of the matter, apply to proceedings under
the RDB Act.
(iii) Going by the definition of 'debt' contained in S. 2(g) of RDDBFI Act, it is
discernible without any room for doubt that the definition 'debt' includes secured debt
as well which is payable under a mortgage. S. 19(12) of the Act entitles the Tribunal to
make an interim order whether by way of injunction or stay or attachment against the
defendant from transferring, alienating or otherwise dealing with or disposing of any
property and assets belonging to him. S. 19(22) empowers the Presiding Officer to
issue a certificate to the Recovery Officer for recovery of the amount of debt specified in
the certificate and if the Tribunal would be satisfied that the property is situated within
the local limits of the jurisdiction of two or more Tribunals, it may as provided under S.
19(23) send copies of the Recovery Certificate for execution to such other Tribunals
where the property is situated. S. 19 (25) of the RDDBFI Act read with Rule 18 of the
Debts Recovery Tribunal Procedure Rules empowers the Tribunal to make such orders
and give such directions as may be necessary or expedient to give effect to its orders or
to secure the ends of justice. S. 25 entitles the Recovery Officer to recover the amount
of debts specified in the Recovery Certificate by different modes set out therein which
includes attachment and sale of movable or immovable property of the defendant. S. 29
of RDDBFI Act has made certain provisions of Income Tax Act contained in its Second
and Third schedules as also Income Tax (Certificate Proceedings) Rules applicable for
recovery of debt due under the RDDBFI Act 'as far as possible' and 'with necessary
modifications'. S. 31 provides for transfer of all cases pending before any court
immediately before the date of establishment of Tribunal the cause of action of which
would have fallen within the jurisdiction of the Tribunal if it had arisen after such
establishment.
(iv) The Tribunal is conscious that the powers conferred on the Tax Recovery Officer
under Second Schedule to the Income Tax Act, 1961 and the procedures laid therein for
recovery of public taxes had been made applicable as far as possible, with necessary
modifications as may be required for recovering the dues under RDDBFI Act, 1993 since
the monies recoverable under the RDDBFI Act is also public money payable to banks
and public financial institutions who are custodians of public wealth. Therefore going by
the Rules of purposive interpretation, only such liberal interpretation which would
ensure recovery of public dues are to be appreciated to do justice to the avowed object
and intendment of the RDDBFI Act, 1993 which has been legislated for ensuring
expeditious recovery of public dues.
(v) S. 17 confers power on the Tribunal on and from the date of its establishment, the
jurisdiction, powers and authority to entertain and decide applications for recovery of
'debts' due to Banks and Financial Institutions, which of course without any shadow of
doubt encompass the power and authority to recover the secured debt by sale of
mortgaged properties. It is no doubt true that the Tribunal constituted under RDDBFI
Act can only issue Recovery Certificate and cannot pass a decree or grant declaratory

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relief as pointed out by the Ld. counsel for appellants by placing advertence to the
judgment of Apex Court in Nahar Industrial Enterprises Ltd. v. Hong Kong and Shanghai
Banking Corporation case. But that however does not preclude or impede the Tribunal
constituted under the RDDBFI Act for the specific purpose of expediting recovery of
dues exceeding Rs. 10 lakhs payable to Bank and Financial Institutions from recovering
its secured debts by sale of the mortgaged properties. The aforesaid provisions of
RDDBFI Act cumulatively vouch for the competence, power and authority of the Debts
Recovery Tribunal to entertain application for recovery of a 'secured debt' arising from
mortgage of immovable properties and to issue Recovery Certificate for ordering sale of
such properties.
(vi) Pertinently, in so far as S. 2(g) of RDDBFI Act defining the term 'debt' means and
includes a 'secured debt' payable under a mortgage and S. 24 of RDDBFI Act makes the
provisions of Limitation Act, 1963 applicable as far as may be to an application made to
a Tribunal under S. 19(1) of the Act, the period of three years contemplated under Rule
68B of the Second Schedule to Income Tax Act cannot in any respects be held to be
applicable while bringing a mortgage property for sale which would be governed only
by the period of limitation provided under S. 24 of the RDDBFI Act.
(vii) The Hon'ble High Court of Kerala in its judgments rendered in the cases titled Bhat
v. Anugraha Charitable Trust and Kutaguptan v. Canara Bank extracted out supra,
besides upholding the Tribunal's wide powers in terms of S. 17(1) to order sale of
mortgaged properties authoritatively declared the law that there is no requirement on
the part of the Recovery Officer to make an order of attachment to effectuate sale of
mortgaged properties. The Hon'ble High Court of Kerala had in the Kutaguptan's case
also held as to the inapplicability of Rule 68B of Second Schedule to the Income Tax Act
to the proceedings under RDDBFI Act.
(viii) The Hon'ble High Court of Delhi in the case titled State Bank of India v. Samneel
Engineering Company & ors. reported in MANU/DE/0462/1995 had deliberated at length
about the powers vested with the Debts Recovery Tribunal to recover a debt due and
payable on mortgage. The relevant portion of the said judgment is reproduced herein
below:
15.8 It is, therefore, clear that debt is an essential ingredient of a mortgage.
There may be a debt without a mortgage but there can be no mortgage without
a debt. Properties are offered as security only for securing recovery of debt. If
debt is repaid the mortgage ceases to be a mortgage. Even if the term debt
would not have been defined in Act No. 51 of 1993 the mortgage would have
been included within the meaning of debt. This is the general law and settled
trend of judicial opinion. However, Act 51 of 1993 incorporates the definition of
debt in its interpretation clause by way of abundant caution and gives it out a
very wide meaning. The quint essence of the definition is the existence of any
liability founded on an allegation as due from any person; the creditor being a
bank or a financial institute or a consortium of the two. The liability may be in
cash or otherwise. It may be secured or unsecured. A decree or order of any
civil court or otherwise may intervene or not; the only rider being that the
liability must be legally recoverable. The definition would cover all the cases
where the liability is secured by a mortgage, charge, hypothecation or in any
other manner known to law. An effort at carving out a mortgage away and out
of the definition of debt is futile.
15.9 Therefore a suit based on a mortgage is a suit for recovery of a debt

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 without regard to the nature of the mortgage and the nature of the relief sought
for by the plaintiff.
(16) It is widely known and even a judicially noticeable fact that banks and
financial institutions usually secure a loan advanced by them or credit facilities
extended by them by securing mortgage of property. The most commonly
resorted to form of mortgage by the banks is an equitable mortgage by deposit
of title deeds. The Statement of Objects and Reasons in the Act reveals the
experience of the Parliament to considerable difficulties being faced by the
banks and financial institutions in recovering loans and enforcement of
securities. In spite of the banks and financial institutions trying to play as safe
as possible the outstandings recoverable to them had mounted to more than Rs.
5622 crores in the field of public sector banks alone. This was virtually causing
an economic crisis preventing economic development of the country by blocking
the funds. The Act was enacted with the object of ameliorating banks and
financial institutions from such crisis.
(18) Though I have held that the term 'debt' as defined by clause (g) of Section
2 of the Act includes mortgage of every type within its meaning; I have also
held that even if the term debt would not have been defined in the Act, it would
have included mortgage within it. Having regard to the historical background of
enactment, the Statements of Objects and Reasons the preamble, spelling out
the mischief which is sought to be cured and prevented by the Act, the object
with which the Act has been enacted, the Act has to be so interpreted as "to
give the laws its claws". So has to be assigned the term debt its meaning.
Having already noticed that most of the loans advanced by the banks are
secured by mortgages, the Act would be reduced to a futility if mortgage was to
be excluded from the definition of debt.
(19)......................... Be that as it may, so far as the question of jurisdictional
competence of the Tribunal to try a claim for recovery of debt based on a
mortgage is concerned, I am clearly of the opinion that a mortgage debt is
included within the meaning of the debt as defined under section 2(g) of the
Act. A claim for recovery of such a debt lies within the jurisdictional
competence of the Tribunal. As a necessary corollary the same is excluded from
the jurisdiction of civil court.
(ix) In view of the foregoing discussion and reasonings, the Tribunal returns its finding
that there is no requirement for attachment of the mortgaged property and Rule 68B of
the Second Schedule to the Income Tax Act as well would not apply to the proceedings
before the Ld. Recovery Officer.
8. Point No. (iv) for consideration:
(i) The Ld. counsel for appellants vehemently argued that as the Authorised Officer had
taken the physical possession of the appeal subject property on 06.12.2008 and
proclaimed it for sale vide sale notice dated 30.04.2009 under the auspices of
SARFAESI Act as evidenced by Annexure-A9 copy of SA No. 295/2009 and Annexure-
A10 copy of SA 543/2009, it is not within the competence of the Recovery Officer to
proceed with the sale of the property which is already in the custody of the Authorised
Officer appointed by 2nd respondent bank. Ld. counsel submitted that the 2nd
respondent bank is responsible and accountable to the appellants for the loss or sale of
non-entitled movables of the appellants worth more than Rs. 1 Crore which had then

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been stored in the property and that being the state of affairs, the Recovery Officer had
no authority to proclaim sale of appeal subject property along with the movables which
is in the unauthorized custody of the Authorised Officer of the bank. Ld. counsel also
submitted that Recovery Officer could not allow inspection of the property which is in
the possession of Authorised Officer and cannot proceed with the sale under RDDBFI
Act. He also contended that as SARFAESI Act overrides all other Acts, and the
SARFAESIA measures in the present case were taken prior to institution of the OA, S.
13(10) alone ought to have been invoked and the Recovery Officer is definitely
precluded from proceeding to sell the property seized of by the Authorised Officer of the
2nd respondent bank.
(ii) The Tribunal sitting on an appeal under S. 30 of RDDBFI Act is required to delve at
and give its findings only on the legality or otherwise of the 'order' of the Ld. Recovery
Officer impugned in the appeal proceedings, which in the present case is Annexure-A12
sale proclamation notice dated 02.01.2012. The scope of enquiry in the present appeal
cannot be stretched too far to consider and give any findings as regards the alleged
illegal physical possession and custody of the secured assets assumed by the
Authorised Officer of the 2nd respondent bank under the SARFAESI Act. The Tribunal
sitting on an appeal under RDDBFI Act cannot look into the allegations made against the
exercise of the powers and rights by the Authorised Officer of the 2nd respondent bank
under the provisions of SARFAESI Act which would be an independent, distinct enquiry
in the appellants' application or appeal under S. 17 of SARFAESI Act.
(iii) The appellants' contention as to whether the Ld. Recovery Officer has no authority
to order inspection of the appeal subject property stated to be in the custody and
physical possession of the 2nd respondent bank and as to whether the Ld. Recovery
Officer had proclaimed sale of appeal subject property along with the non-entitled
movable assets alone requires to be considered by the Tribunal. The other contentions
raised by the appellants stating to be legal contentions on the lines that the provisions
of SARFAESI Act shall prevail over the RDDBFI Act, S. 13(10) of the SARFAESI Act
alone ought to have been invoked by the 2nd respondent bank after exhausting the
remedies available under SARFAESI Act and the recovery proceedings ought not to have
been proceeded with by the Recovery Officer in the backdrop of the Authorized Officer
proclaiming the secured asset for sale on 30.04.2009 which is the subject matter of
Anenxure-A9 copy of SA 295/2009, however received the incidental further
consideration of this Tribunal.
(iv) Concededly, the 2nd respondent bank had initially proceeded with their recovery
measures under SARFAESI Act by issuance of S. 13(2) notice and S. 13(4) possession
notice dated 06.12.2008, followed by sale notice dated 30.04.2009 notifying the
property for sale on 12.06.2009 which did not culminate in sale as SA 295/2009 have
come to be filed by the appellants on 09.06.2009 impugning the same. In the
meantime, the respondent bank had filed OA 134/2009 on 08.04.2009 under S. 19(1) of
RDDBFI Act for recovery of Rs. 5,96,12,048.02/- with subsequent interest and cost from
the defendants jointly and severally and by sale of A to E Schedule properties, in which
Annexure-A2 Recovery Certificate dated 30.06.2010 have come to be issued. The 2nd
respondent bank submits that it could not proceed with the sale of secured assets under
SARFAESI Act due to the pendency of SA 295/2009 and another SA 543/2009 that came
to be filed subsequently by one M/s. Rajesh Exports Ltd. claiming to be the alleged
owner of subject secured assets which stood dismissed only on 14.03.2016.
(v) Pursuant to the law expounded by the Apex Court in Transcore v. Union of India
case as regards the non-application of doctrine of election while seeking simultaneous

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remedies under RDDBFI Act and SARFAESI Act, the law is no more res integra that the
secured creditor bank is entitled to proceed simultaneously under both the said Acts
and/or any other similar enactments as long as the remedy sought for is complementary
to each other and there is no repugnancy nor inconsistency between the remedies
sought for by the Bank. The Tribunal is of the definite view that in so far as the
measures initiated under SARFAESI Act stood forestalled due to the pendency of SA No.
295/2009 and SA 543/2009 on some pretext or the other, the appellants cannot be
permitted to contend that the recovery proceedings pending before the Recovery Officer
in DRC 3253 also should be restrained due to pendency of SARFAESIA proceedings.
(vi) Certainly, there is no legal embargo or impediment for the Ld. Recovery Officer to
proceed with sale of the appeal subject property in terms of Annexure-A2 Recovery
Certificate dated 30.06.2010 issued to him, notwithstanding the fact that the 2nd
respondent bank is now in legal possession of the secured asset under SARFAESI Act as
the bank is entitled to invoke the said remedies simultaneously it being complementary,
additional remedy recognized under law. It is within the competence of the Ld.
Recovery Officer to permit for inspection of the appeal subject property and to proceed
with the sale in the above stated circumstances. The appellants' allegation that the Ld.
Recovery Officer has proceeded to sell the appeal subject property along with the
movables stored/stocked therein only appears to be farce going by the fact Annexure-
A12 sale notice is proclaimed only for putting forth the immovable property for sale.
(vii) Ld. counsel for the appellants submitted that as per S. 35 of SARFAESI Act, its
provisions has overriding effect and recourse to RDDBFI Act could be resorted to only in
terms of S. 13 (10) after exhausting all remedies under SARFAESI Act. Going by S. 37
of SARFAESI Act it could be discerned without any room for doubt that the remedy
contemplated therein is an additional remedy apart from the ones which the bank/FIs
could pursue and avail of under any other enactments. Giving such an interpretation
would only render S. 37 of SARFAESI Act otiose and nugatory. S. 35 of SARFAESI Act of
course gives overriding effect to its provisions notwithstanding anything inconsistent
therewith contained in any other law for the time being in force. The appellants however
could not point out any inconsistency in provisions contained in RDDBFI Act with that of
SARFAESI Act to canvass for a proposition that the SARFAESI Act would prevail over
RDDBFI Act or would in any respects preclude the 2nd respondent bank from invoking
the provisions of RDDBFI Act unless the measures or actions initiated under SARFAESI
Act is wholly or thoroughly exhausted.
(viii) The appellants' contention that Transcore case of the Apex Court is indicative
about the need for withdrawal of OA under myriad circumstances received the further
consideration of the Tribunal. In view of the preceding factual narrative and the
attendant circumstances of the present case, the need for discussion on withdrawal of
OA by the Bank does not arise at all, more so as the OA proceedings had culminated in
issuance of Recovery Certificate which is now put to execution by the Ld. Recovery
Officer in terms of the said certificate. However to lay the controversy to rest, it is found
desirable to point out here that the judgment of Hon'ble Supreme Court rendered in the
case titled Transcore v. Union of India & another reported in MANU/SC/5319/2006 is
not on the lines as submitted by the appellants. The relevant portion of the said
judgment is extracted out below:
"40. For the above reasons, we hold that withdrawal of the O.A. pending before
the DRT under the DRT Act is not a pre-condition for taking recourse to NPA
Act. It is for the bank/FI to exercise its discretion as to cases in which it may
apply for leave and in cases where they may not apply for leave to withdraw.

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 We do not wish to spell out those circumstances because the said first proviso
to Section 19(1) is an enabling provision, which provision may deal with
myriad circumstances which we do not wish to spell out herein."
(ix) It remains a fact that the 2nd respondent bank has not realized its 'secured debt' by
sale of the 'secured assets' till now. Obviously, the present case has not reached a stage
warranting the appellants' advertence or reliance on S. 13(10) of the SARFAESI Act
which would come into play only when the sale proceeds of the secured assets are
inadequate for discharge of the dues of the secured creditor and a need arises
consequently for filing of an application to the Debts Recovery Tribunal having
jurisdiction over the matter for recovery of the balance amount from the borrower. In
the present case, the SARFAESIA action had preceded the filing of an application under
S. 19 of the RDDBFI Act by the respondent bank and therefore there arises no question
of invoking the said proviso to S. 19 requiring the bank to withdraw an application
which has evidently come to be filed only subsequently to save the limitation
prescribed/made applicable under S. 24 of the RDDBFI Act. S. 24 of RDDBFI Act
mandates the banks/FIs to make an application to the Tribunal under S. 19 in terms of
the provisions contained in Limitation Act, 1963 as far as it may apply to it. The Ld.
counsel for the appellants could not show any provision of law which would extend or
enlarge the period of limitation for the bank to pursue its remedies under RDDBFI Act
due to the reason of its prior initiation of action under SARFAESI Act.
(x) The recourses provided under SARFAESI Act being an independent, additional
remedy and right conferred on the secured creditor bank, if we resort to giving a
narrower interpretation to S. 13(10) as if it mandates filing of an application before DRT
to recover the balance dues only after sale of the secured assets, the applications by
banks under S. 19 of RDDBFI Act could be hopelessly time barred rendering the banks
remediless under the said Act. Giving such an interpretation to S. 13 (10) of the
SARFAESI Act would only result in drastic, adverse legal consequences prejudicing the
interest of the banks/FIs besides tending to operate in derogation of the provisions
contained in RDDBFI Act resulting in deprivation of the rights of banks/financial
institutions otherwise available to it under the said Act. The Division Bench of the
Hon'ble High Court of Delhi in the case titled Mayur Coirs (P) Ltd. & others v.
Development Credit Bank Ltd. reported in MANU/DE/0672/2008 held as follows:
"6. The Tribunal further held that the remedy under the Securitisation Act was
an additional remedy to the one provided by RDDFBI Act and that the doctrine
of election had no application. The secured creditor could chose one or more of
the remedies available to him under the law as the object underlying both the
RDDFBI Act as well as the SARFAESI Act is to ensure quick recovery of debts
due to the banks and financial institutions. The present writ petition assails the
correctness of the above order as already noticed earlier.
9. Equally untenable is the second submission made by Mr. Choudhary that the
pendency of proceedings under the Securitisation Act would debar the bank
from instituting proceedings for recovery of the debt by obtaining a decree from
the DRT under the RDDBFI Act. There is no gainsaying that both the enactments
are intended to ensure speedy recovery of the outstanding debts due to banks
and financial institutions. There is nothing in either the provisions of the
Securitisation Act or in the RDDBFI Act to suggest that invocation of one would
forbid the invocation of the provisions contained in the other. That position has
been, in our opinion, sufficiently explained by the Supreme Court in Transcore's
case (supra) where the issue was whether the bank could, without withdrawing

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 the proceedings instituted before the DRT, take resort to the Securitisation Act.
Answering the question in the negative, the Court held that withdrawal of the OA
before the DRT was not a condition precedent for invoking the Securitisation
Act. We see no reason why the converse also cannot be true. If
securitisation proceedings are permissible during the pendency of the
recovery proceedings under the RDDBFI Act, there is no reason why
the recovery proceedings would become legally bad just because the
bank had taken resort to Securitisation Act. What is important is that
both the proceedings can be instituted and maintained
simultaneously. If that be so, just because the proceedings under the
Securitisation Act had been instituted earlier would not render the
proceedings before the DRT bad. The Appellate Tribunal was, in our opinion,
perfectly justified in holding that the scheme of the two enactments did not
debar simultaneous resort to the provisions thereof. The fact that there is a
period of limitation prescribed for filing of the suits before the DRT
also makes it necessary for the banks and financial institutions to
institute such suits within the period of limitation stipulated for the
same. Any delay in doing so would jeopardize the maintainability of
such suits which no banking institution can afford to risk especially
where the amounts outstanding against the borrowers are huge. In
that view, the application made by the petitioners was an effort to somehow
delay the proceedings in the OA pending before the Tribunal."
(Emphasis is mine)
(xi) The Hon'ble High Court of Kerala in the case titled Lakshmi Enterprises v. State of
Kerala & others (MANU/KE/0613/2008) by citing reference to the Transcore case held
that the secured creditor bank could notwithstanding the invocation of DRT Act or the
Securitisation Act take recourse to the provisions of the Revenue Recovery Act as well
and the relevant portion of the said judgment is culled out and given below:-
"12. The applicability of the doctrine of election to a simultaneous prosecution
of remedies available to the creditor under more than one enactment has been
considered by the Supreme Court in Transcore v. Union of India
MANU/SC/5319/2006 : 2007 S.C. 712. The argument on the question of
doctrine of election was rejected by the Supreme Court in the following terms:
In any event, there is no repugnancy nor inconsistency between the two
remedies, therefore, the doctrine of election has no application.
1 3 . The question is whether the principle is different in a case where the
provisions of the RR Act are also invoked, at a point of time when a creditor has
already invoked the provisions of the two enactments mentioned therein.
14. As noted above, there is no express bar in the provisions of the RR Act
referable to the prosecution of any proceedings under the DRT Act or the
Securitisation Act. Does, any provision under the RR Act spell out a case of
mutual exclusion of the remedy under the RR Act and the remedy available to
the bank under the DRT Act and Securitisation Act? Are there any provisions in
the three enactments which contemplate a collision between any one or more of
the provisions at the stage of invocation of the same or at the stage of
enforcement of the same? Whether any right available to a defaulter, vis-Ã -vis
his personal assets or the mortgaged properties get detrimentally affected. If a
creditor takes recourse to the provisions of the RR Act, notwithstanding the

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 invocation of the provisions of the DRT Act or the Securitisation Act? Is a
creditor obliged to abandon his remedy under the above-mentioned enactments
seeking recourse to the provisions of the RR Act? In my view, if the answer to
the above questions are in the affirmative, then, the contention of the
Petitioners requires to be accepted. But, in my view, there is nothing in the
three enactments aforementioned, which could spell out the case of mutual
exclusion in the operation of the three enactments thereby necessitating the
creditor to express his intention to abandon the remedy under any one of the
enactments before proceeding under the other two enactments.
1 5 . In the circumstances, the doctrine of election is not available to the
Petitioners with a view to deter the 3rd Respondent from invoking the
provisions of the RR Act merely for the reason that the 3rd Respondent has
exercised his right as a mortgagee under the Securitisation Act and as a bank
under the provisions of the DRT Act. I am unable to accept the contentions of
the Petitioners in this regard."
(xii) In the light of the above, the Tribunal returns its findings that there is no illegality
in issuance of Annexure-A12 sale proclamation in negation of the provisions of
SARFAESI Act as alleged by the appellants.
9. Point No. (v) for consideration:
(i) Mr. C.S. Ullas, Ld. counsel for appellants vociferously argued that the action of Ld.
Recovery Officer in issuing Annexure-A12 sale proclamation notice is totally illegal and
smacks of malafides for the reason of drawing such proclamation in the absence of the
appellants by suo motu withdrawal of the DRC file from the Ld. Recovery Officer
Vijaykumar Pillai and publishing a different proceedings in the A' Diary dated
02.01.2012 from that of the actual proceedings of the Recovery Officer as evidenced by
Annexure-A5 copy of proceedings dated 02.01.2012 applied and obtained by the
appellants. Ld. counsel submitted that the 2nd respondent bank had indulged in bench
hunting gimmicks by getting Annexure-A12 sale notice proclaimed by the Recovery
Officer other than the concerned Recovery Officer namely Vijaykumar Pillai.
(ii) The Tribunal anxiously perused the DRC file, A' Diaries maintained by both the
Recovery Officers at the relevant time as also the service file of Ld. Recovery Officer
Vijaykumar Pillai called for and received from the recovery section and admin section to
ascertain as to what had truly transpired in the present case in the wake of such
allegations forthcoming from the side of the appellants. On a conspectus of the
aforesaid records, it is discernible that after the demand notice stage, the recovery
proceedings since 13.09.2011 onwards had been held only before the Ld. Recovery
Officer P. Balasubramanian pursuant to a request which came forth from the Ld. counsel
for certificate holder bank vide his memo dated 12.08.2011 wherein he had pleaded for
posting the recovery proceedings before the available Recovery Officer for continuation
and its logical conclusion on account of the serious prejudice caused to the certificate
holder bank for want of sitting of the concerned Recovery Officer Mr. Vijaykumar Pillai
and the resultant adjournment of the said case from time to time.
(iii) On perusal of the 'A' diaries maintained by the both the Recovery Officers at the
relevant time as also the service file connected to Recovery Officer Mr. Vijay Kumar
Pillai, it has come to light that the Ld. Recovery Officer Mr. Vijay Kumar Pillai had been
on continuous 'earned leave' or 'medical leave' from 02.05.2011 to 01.07.2011 and
from 21.07.2011 till his death on 30.05.2012. It is thus noticeable therefrom that

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except the issuance of demand notice and requiring the publication of the same in the
proceedings dated 24.02.2011 lastly, Ld. Recovery Officer Vijaykumar Pillai had no
occasion to sit over the proceedings pertaining to the DRC 3253 due to his continuous
'earned leave' as also 'sick leave' from 02.05.2011 to 01.07.2011 and from 21.07.2011
till his unfortunate death on 30.05.2012 on account of his prolonged illness. Therefore,
the appellants' could not have rendered appearance in person or through their counsel
any time before him going by the fact that their counsel had entered appearance in the
above recovery proceedings only on 09.11.2011.
(iv) The appellants' allegation that the 2nd respondent bank had indulged in bench
hunting gimmicks is only found to be ill-conceived. Further to that, the fact remains that
the Recovery Certificate issued by the Tribunal is proceeded to be executed by either of
the Recovery Officers available at the relevant time going by the exigency of the case
and the stage of recovery proceedings. It is pertinent to mention here that the Ld.
Recovery Officers are not vested with any exclusive jurisdiction over the recovery
certificate subject matter except the division of work effected among themselves
mutually going by odd and even numbers of the Recovery Certificates for sake of
practical convenience. In the above narrated circumstances of the prolonged illness and
continuous absence of the Ld. Recovery Officer Vijaykumar Pillai, it is rather
uncharitable on the part of the appellants to allege that the Ld. Recovery Officer
indulged in suo motu withdrawal of DRC file concerning Vijaykumar Pillai and
proceeded to proclaim the sale in the absence of the appellants.
(v) After the appellants' entering of appearance through their counsel Ms. Divya in the
above DRC proceedings on 09.11.2011, the recovery proceedings stood reposted
without any hearing to 18.11.2011 and then again to 25.11.2011. On 25.11.2011, when
the appellants appeared through their counsel before the Ld. Recovery Officer P.
Balasubramanian they had got to know about the contents of the demand notice that
was published as also regards the publication of the NSSP and the adjournment of the
above proceedings to 30.11.2011 for issuance of proclamation of sale notice. The
appellants had appeared before the same Recovery Officer on 30.11.2011 and was thus
aware of the subsequent date of hearing as also the fact that the sale proclamation
notice is likely to be drawn and issued on the subsequent date or hearing. From
30.11.2011, the proceeding stood reposted to 02.01.2012 as could be discerned from
the A' Diary proceedings of Ld. Recovery Officer Vijaykumar Pillai due to his absence on
that day as well and on 02.01.2012 the recovery proceedings was conducted by the Ld.
Recovery Officer P. Balasubramanian.
(vi) The proceeding sheet of the Ld. Recovery Officer P. Balasubramanian pertaining to
the hearing dates 25.11.2011, 30.11.2011 and 02.01.2012 as also the order settling the
terms of proclamation of sale that came to be issued separately on 02.01.2012 are
extracted out and reproduced hereunder:
"25/11/11
Adv. Varghese for CHB. Adv. Divya Krishnan for CD1 & 2. NSSP published. The
Counsel for CD submitted that they were not in receipt of demand notice.
Demand notice published. The service complete. Contents of demand notice
read out to the Counsel. She can apply for a certified copy of DN and NSSP.
POS to be issued on 30/11/2011.
30/11/11
Adv. Sandeep for CHB. Adv. Divya Krishnan for CD1 & 2. The property located

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at Malayatoor where L.S is not received. Notice to V.O for submission of sketch
immediately. Bank may follow up the matter. Call on 28/12/11.
2/1/2012
Adv. Varghese for CHB. None for CD. For receipt of L.S. Notice to be sent again.
Except C Schedule P.O.S to be issued for other properties. Settling sale
proclamation to be drawn for auction to be held on 15/2/2012 at 2.30 p.m.
Order settling terms of proclamation of sale is issued separately.
2/1/2012
V.O., Malayattur Village, Mr. Unnikrishnan appeared and presented a report
regarding the C Schedule properties wherein he mentioned that the boundaries
are not clear and he could not fix the boundaries of the property which is not
tallying with title deeds. In this regard he preferred a request to Taluk surveyor
and sought his assistance. Notice may be issued to Taluk surveyor to demarcate
the boundaries.
Order settling the terms of proclamation of sale
Adv. Varghese for Certificate holder Bank. No representation for Certificate
Debtors. Notice for settling the terms of a sale proclamation in respect of the
schedule properties was served on the Certificate Debtors on 05.11.2011 by
publication in the Mathrubhumi daily newspaper, as the NSSP sent by registered
post was returned undelivered. By the said notice the Certificate Debtors were
informed that 10.30 A.M. on 09.11.2011 has been fixed for drawing up the
proclamation of sale and settling the terms thereof with regard to the schedule
properties and they were further directed to bring to the notice of the
undersigned any encumbrances, charges, claims or liabilities attaching to the
said properties or any portion thereof and also the revenue, if any, assessed
upon the properties or any part thereof. Even after the service of the said notice
on the Certificate Debtors no statement whatsoever has been filed by the
certificate debtors, nor anything material has been brought on record.
The certificate amount of debt as on 01.01.2012 is Rs. 7,96,03,009.21.
Following are the immovable properties available for sale:
'B' Schedule part: [36.70 Ares in Re-Sy. No. 111/1 in Block No. 24 of
Malayattoor Village, Sreemoolanagaram Sub-District, Aluva Taluk,
Ernakulam District]
'B' Schedule part: [40.47 Ares in Re-Sy. No. 33/1-3 in Block No. 24 of
Malayattoor Village, Sreemoolanagaram Sub-District, Aluva Taluk,
Ernakulam District]
'C' Schedule: [41.83 Ares in Re-Sy. No. 33/1 in Block No. 24 of
Malayattoor Village, Sreemoolanagaram Sub-District, Aluva Taluk,
Ernakulam District]
'D' Schedule: [20.25 Ares in Re-Sy. No. 33/1 in Block No. 24 of
Malayattoor Village, Sreemoolanagaram Sub-District, Aluva Taluk,
Ernakulam District]

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 'E' Sch., Item 1: [4.86 Ares in Sy. No. 865/7 of Ernakulam Village,
Sub-District and District, Kanayannur Taluk]
'E' Sch., Item 2: [4.86 Ares in Sy. No. 865/7 & 8 of Ernakulam Village,
Sub-District and District, Kanayannur Taluk]
The Village Officer, Malayattoor has reported that he could not properly
demarcate some of the properties and sought for demarcation by the Taluk
Surveyor. Hence it is decided to proceed with sale of the single lot of 'E'
schedule properties, admeasuring 9.72 Ares (24 Cents), at Ernakulam, at the
end of the private road leading from the eastern side of Rudra Vilasom School.
The Recovery Inspector had inspected the properties on my instruction. As
reported by him, there is a 3-storeyed office-cum-residential building, car shed
and a toilet block in the property; that the property, though located in the heart
of the City, can only be accessed by medium 4-wheel vehicles. The property
has been valued by the expert at Rs. 5,91,61,000/-, i.e. at Rs. 4,80,00,000/-
for the land and Rs. 1,11,61,000/- for the buildings. Guideline value fixed by
the Government is Rs. 10,97,250/- per Are, i.e. approx. Rs. 4,44,000/- per
cent. The Recovery Inspector has suggested to fix a reserve price of Rs.
7,00,00,000/- for the entire 'E' schedule property. Hence I order sale of 'E'
schedule properties as a single lot, fixing the reserve price at Rs. 7,00,00,000/-
, fixing the date of sale as 15th February 2012. Proclaim, affix and publish
accordingly."
(vii) As rightly pointed out by the Ld. counsel for the appellants the proceedings dated
02.01.2012 as found in the A' Diary maintained by Ld. Recovery Officer P.
Balasubramanian revealed the following:
"1. DRC 3253
Adv. Varghese Cheriyan for CHB. VR/EC filed. Property inspected. POS is
ordered for auction of 24 cents (9.72 ares) in Sy. No. 865/7, 8 of Ernakulam
Village, Sub-District and District, Kanayannur Taluk, along with 3-storeyed
office-cum-residential bldg, car shed and a toilet block located at the end of the
private road for an amount of Rs. 7/crores to be held on 15/2/2012 at 2.30
p.m. Proclaim, publish and affix accordingly."
(viii) As pointed out by the Ld. counsel for appellants, Annexure-A5 certified copy of the
proceedings of the Ld. Recovery Officer dated 02.01.2012 and the A' Diary proceedings
extracted out supra are not appearing to be similar word by word. Be as it may, from A'
Diary proceedings dated 02.01.2012 which is extracted out by the appellants
themselves in the above appeal, they had come to know about the proclamation of sale
ordered for auction of the appeal subject property for Rs. 7 crores to be held on
15.02.2012 at 2.30 p.m. and also regards the proclamation publication and affixture of
it ordered by the Ld. Recovery Officer on that day. In Annexure-A5 proceedings dated
02.01.2012, the first part of it divulges the Recovery Officer's ordering of sale
proclamation to be drawn for auction to be held on 15.02.2012 at 2.30 p.m. of the
other properties except 'C Schedule' properties and in addition to that, it divulges about
the order settling proclamation of sale issued separately. The order of settling of sale
proclamation that came to be issued separately is extracted out and given supra beneath
the proceedings of the Recovery Officer dated 02.01.2012 and therefrom it could be
discerned as to the manner in which the sale proclamation notice came to be drawn.
The appellants who had applied and obtained Annexure-A5 proceedings from the

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Recovery Officer could have applied and verified the order of settling of sale
proclamation that is stated to be issued separately as well.
(ix) The Tribunal finds the A' Diary proceedings dated 02.01.2012 to be a condensed
version of the proceedings of Recovery Officer dated 02.01.2012 and the order settling
the sale proclamation issued separately and could find no variation or difference in the
contents that came to be revealed in the A' Diary although it is not verbatim similar. As
per Regulation No. 42 of the Debts Recovery Tribunal Regulations of Practice, 2005, the
Recovery Officers shall maintain A' Diary in form No. 11 showing the proceedings
mentioned in Regulation 41 and the date of next posting. Form No. 11 requires 4
particulars to be divulged namely the date, serial number, case number/DRC number,
proceedings in brief and the date to which adjourned. The A' Diary proceeding dated
02.01.2012 appears to be the condensed contents of the proceedings dated 02.01.2012
and the order settling the sale proclamation and in as much it does not contain anything
contrastly dissimilar and different from that of the proceedings dated 02.01.2012, the
Tribunal could not appreciate the appellants' allegation that the action of the Ld.
Recovery Officer in issuing Annexure-A12 sale proclamation in the absence of the
appellants and publishing of A' Diary proceedings containing contents different from
that of the Recovery Officer's proceedings dated 02.01.2012 in any respects smacks of
malafides.
(x) Even if the Tribunal is to hold that A' Diary proceedings is incorrect and irregular,
that by itself would not invalidate the order dated 02.01.2012 issued by Ld. Recovery
Officer in settlement of the sale proclamation and the proceedings recorded by him in
the proceeding sheets. In coming to such a conclusion, the Tribunal stands fortified by
the judgment of the Hon'ble High Court of Kerala rendered in the case titled Vasudevan
Nair & another v. Muraleedharan reported in MANU/KE/1259/2011 wherein it is held as
follows:
"8.......... There is no mention of any order in I.A. No. 2310 of 2009 in the A
Diary. The counsel pointed out that in the Civil Register No. 22, namely, Diary
Register (A), three columns are to be filled up. They are (1) date, (2) number
of suit, appeal or petition, and (3) purport of proceedings. Going by the A
Diary, on 10-9-2009, no order was passed on I.A. No. 2310 of 2009. According
to the learned Counsel for the Petitioners, since the A Diary does not show the
existence of the order of status quo, the order passed on the Interlocutory
Application for injunction would not be of any avail.
9........... Even if the order is wrongly mentioned or not mentioned in the A
Diary, the effect of the order of injunction would not be affected.
10. I am not inclined to accept the contention put forward by the Petitioners
that the A Diary prevails over the order of the status quo passed by the court
below in application for injunction. The operative and executable order is the
order passed by the judge and not what is noted in the A Diary by the Clerk in
the office. It is true that the A Diary should reflect the true state of affairs in
respect of the proceedings in court. However, the absence of an entry in the A
Diary does not lead to the conclusion that the order which was passed by the
learned Munsiff vanishes."
10. Point No. (vi) for consideration
(i) While considering whether the appellants are entitled for any relief as prayed for by
them in this appeal, the Tribunal finds that the appeal is laid solely seeking to set aside

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Annexure-A12 proclamation of sale dated 02.01.2012 issued by the Recovery Officer
notifying the property for sale on 15.02.2012. The said sale did not happen on
15.02.2012 for the reason of this Tribunal ordering deferment of it in its proceedings
dated 10.02.2012 in the backdrop of the then pendency of interlocutory petitions
seeking to set aside the final order dated 30.06.2010 and for staying of its operation.
When this fact was assertively pointed out by the Ld. counsel for 2nd respondent bank,
Mr. C.S. Ullas appearing for appellants did urge this Tribunal to consider and appreciate
the illegalities pointed out in the appeal leading to issuance of Annexure-A12 sale
proclamation notice. The law remains trite that the defaulter though could file a petition
within 30 days from the date of sale for seeking its cancellation on the ground of
material irregularity in publishing or conduct of sale or due to non-service of demand
notice in terms of Rule 61 of the Second Schedule to the Income Tax Act, he could
sustain his plea only on his showing of the 'substantial injury' suffered by him on
account of the alleged irregularity or illegality. By virtue of Rule 30 of RDDBFI Act, the
appellants of course are entitled to challenge every order of the Ld. Recovery Officer
which could include Annexure-A12 sale proclamation notice as well. In this case,
Annexure-A12 sale notice did not see fruition for the reason of this Tribunal ordering
deferment of it observing the then pendency of IA Nos. 329 & 331/2012 in OA
134/2009, which also had since been disallowed on merits.
(ii) The only question that still requires to be considered is whether Annexure-A12 sale
notice is to be held as illegal for the reason of it not divulging about the Annexure-A10
sale deed dated 01.10.2009 purported to be executed by the appellants to M/s. Rajesh
Exports Limited and whether such a contention coming forth from the appellants is
permissible in law?
(iii) The appellants themselves had in the present appeal filed Annexure-A9 copy of SA
295/2009 which is a securitisation appeal filed by them on 08.06.2009 under S. 17(1)
of SARFAESI Act impugning therein Annexure-A10 sale notice dated 30.04.2009 putting
the appeal subject property for sale among two other properties. In the said SA, the
appellants had conceded as to their availment of cash credit facility of Rs. 450 lakhs and
another cash credit facility of Rs. 50 lakhs from 2nd respondent bank by mortgaging the
SA subject properties which is inclusive of the appeal subject properties. That apart the
appellants had produced Annexure-A10 copy of SA 543/2009 alleged to be the SA filed
by a stranger M/s. Rajesh Exports Limited claiming ownership over the appeal subject
property by virtue of sale deed dated 01.10.2009 purportedly executed by the
appellants. The appellants had in ground 'H' of their appeal contended that it was illegal
on the part of Recovery Officer to have settled, proclaimed and published sale notice
without reflecting the alleged encumbrance on the property found in Sl. Nos. 7 & 10 of
Annexure-A8 encumbrance certificate which relates to sale agreement dated 13.09.2006
and sale deed dated 01.10.2009 for Rs. 1.05 Crores purportedly executed between the
appellants and M/s. Rajesh Exports Limited.
(iv) Mr. C.S. Ullas, Ld. counsel for the appellants submitted further that the said
contentions is being raised by them without prejudice to their challenge to the alleged
transfer of title appearing in the encumbrance certificate, as it is a fraud perpetrated on
the public by the respondents 1 & 2. Except raising such a contention, the appellants
had not made it known to this Tribunal as to what challenge he had made to the alleged
sale since 2009 onwards nor had come out with a definite, rather clear submission
either by way of pleadings or in the course of their arguments as to whether the said
transactions as reflected in Sl. Nos. 7 & 10 of the encumbrance certificate are genuine
or not. If the said transactions were fraudulent ones, what is the legal action mooted by
the appellants so far to get the said documents cancelled remains unknown and

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undisclosed. Had the appellants not executed Annexure-A10 sale deed dated 01.10.2009
in favour of M/s. Rajesh Exports Limited, it is beyond the comprehension of the Tribunal
as to the need for appellants' insistence for disclosing the alleged encumbrance in
Annexure-A12 sale proclamation dated 02.01.2012. It is understandable that the
reasons otherwise for such insistence could possibly be one aimed at deterring and
dissuading any purchasers from participating in the auction.
(v) The Tribunal which is inclined to think so, at the same time is of the view that the
Ld. Recovery Officer issuing proclamation notice under Rule 53 of the Second Schedule
to the Income Tax Act is required to make a fair disclosure of such things which he
would consider it material for the purchaser to know in order to judge the nature and
value of the property. While the defaulters (appellants in this case) are entitled to know
the time and place of sale, the amount for recovery of which the sale is ordered and the
reserve price at which the property is put for sale pursuant to they being served with
the notice for settling of sale proclamation, Rule 53(d) of the Second Schedule to the
Income Tax Act is only a beneficial provision intended for the purchasers to expect fair
disclosure of such other thing which the Recovery Officer would consider it material for
the purchaser to know for judging the nature and value of the property.
(vi) Rule 8(6)(f) of Security Interest (Enforcement) Rules is a pari materia provision
akin to Rule 53(d) of Second Schedule to the Income Tax Act which requires the
Authorised Officer of the bank to disclose such other thing which he considers material
for a purchaser to know in order to judge the nature and value of the property and that
apart, Rule 8(6)(a) of the Security Interest (Enforcement) Rules enjoins a duty on the
Authorised Officer to include in the sale notice the details of the encumbrances known
to the secured creditor. Taking a close look at Rule 53 of Second Schedule to the
Income Tax Act, it could be found that the requirement for disclosure of encumbrance is
conspicuously absent therein, although fairness would require disclosure of such
encumbrances in the know of things of the Recovery Officer to avoid any claim or
challenge by the purchaser in respect of such encumbrances.
(vii) In the present case, the Tribunal finds that Annexure-A12 sale proclamation notice
has come to be issued stating that the properties will be sold on 'AS IS WHERE IS'
condition along with liabilities if any. It is further found mentioned therein that there is
no information about any liability or charge against the properties. The said sale
proclamation notice has not culminated in sale prejudicing the interest of anybody more
particularly the purchasers on the said property. The Tribunal therefore holds that it is
not open for the appellants to contend that the non-disclosure of the alleged sale deed
dated 01.10.2009 in Annexure-A12 is a fraud perpetrated on the public, more so when
they are unable to demonstrate the prejudice suffered by them on that score. The
Tribunal is reminded of the judgment of the Hon'ble High Court of Kerala rendered in
the case titled Varghese Ukken v. State Bank of India, reported in MANU/KE/2161/2010
wherein the Hon'ble Court had negatived such a plea forthcoming from the borrower in
respect of a sale notice issued under Rule 8(6) of the Security Interest (Enforcement)
Rules in the following lines:-
"20. ..................... Even otherwise, non-mentioning of the encumbrances, if
any, in the sale notification is not fatal or significant as far as the defaulter is
concerned and absolutely no prejudice has been caused to the Petitioners in this
regard. If at all anybody is to be aggrieved, it can only be the prospective
purchasers like the 3rd Respondent, who do not have any such grievance, to
contend that the amount quoted by them was on the firm belief that there was
no encumbrance, in turn seeking to avoid the liability under the contract. As it

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 stands so, there is absolutely no legal or factual basis for the contentions raised
by the Petitioners on this score.
27. It is true, applying the principles of the celebrated decision in Taylor v.
Taylor (1875 (1) Ch. D. 426) which is being followed in Indian context as well
and also by virtue of the mandate in Indian Bank's Assn. v. Devkala Consultancy
Service (MANU/SC/0355/2004 : (2004) 11 SCC 1) - Para 28, when the law
stipulates to pursue an act in a particular manner, it has to be done in that
manner alone and in no other way. But, the rules formulated by the
Government, have to be read and understood, giving a purposive interpretation,
so as to give effect to the provisions of the Act. It is also settled that, the law
has to be read and understood by its spirit and not by letters............. "
(Emphasis is mine)
(viii) The appellants concededly being the mortgagors of the appeal subject property
was themselves not possessed of any legal right to transfer the same after the bank had
initiated SARFAESI proceedings and had filed OA No. 134/2009. The said sale is hit by
S. 13(13) of SARFAESI Act as also by S. 52 of Transfer of Property Act, it being a lis
pendens sale. In so far as the appellants are relying on the said sale deed dated
01.10.2009 to press for their contention that the said encumbrance ought to have been
mentioned in Annexure-A12 sale proclamation, it only implies their admission of
existence of such an encumbrance and further speaks for the illegality committed by the
appellants in encumbering a mortgaged property without the junction of the 2nd
respondent bank. The Tribunal is incidentally reminded of the judgment of the Hon'ble
High Court of Kerala rendered in the case titled Kerala State Financial Enterprises Ltd. v.
Meenachil Co-operative Agricultural and Rural Development Bank Ltd. reported
inMANU/KE/0247/2004 : AIR 2005 KER 76 : 2004 (3) KLT 369 which reads as follows:-
"16. It is beyond dispute that mortgages by deposit of title deeds is a valid
procedure, accepted under the Transfer of Property Act, for creating an
encumbrance. Under Section 58(a) of the Act, a mortgage is a transfer of
interest in specific immovable property. This may be for the purpose of
securing the payment of money advanced or to be advanced by way of a loan.
It includes an existing or future debt over the performance of an engagement
which may give right to pecuniary liability. It is undisputable that in respect of
a Kuri transaction the petitioner had entered into such an arrangement. The law
recognizes a mortgage by deposit of title deeds. When a person delivers to the
creditor or the agent, document or title to immovable property with intend to
create a security thereon, the transaction is a mortgage by deposit of title deeds
(Section 58(f) of the Transfer of Property Act). The petitioner claims that a
mortgage deed as envisaged under Section 2(17) of the Indian Stamps Act is in
existence. A mortgager therefore is disabled from further encumbering the
properties in any case without the junction of mortgagee. It can well be
presumed that a liability is automatically attached to the property and it is a
burden imposed upon the land and the interest in the land, by the owner of the
land.(emphasis is mine)
1 7 . Advertence may also be made to the dictionary meaning of the term
'mortgage', see Black's Law Dictionary, 7th Edition, by Bryan A. Garner. It is
described as a conveyance of title to property that is given as security for the
payment of a debt or the performance of a duty and that will become void upon
payment of performance according to the stipulated terms. It is also "a lien
against property that is granted to secure an obligation (such as a debt) and

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 that is extinguished upon payment or performance according to stipulated
terms. Thus, the mortgage presupposes a (notional) conveyance of title as
such, though on limited terms and the mortgager may continue the occupation
of the property.
1 8 . While dealing with creation of encumbrances, which did not amount to
sale, as pointed out by Leonard A. Jones in "A treatise on the Law or
Mortgages", the chief distinction between a mortgage and a pledge is that by a
mortgage the general title is transferred to the mortgagee, subject to be re-
vested by performance of the condition; while by a pledge the pledgor retains
the general title in himself, and parts with the possession for a special purpose.
It can therefore be stated that by a mortgage, the title is presumed as
transferred; by a pledge, the possession alone is parted with. Therefore, if this
Court does not step in, that may result in an illegality being perpetuated."
(ix) Mr. Easwaran S, Ld. counsel for 2nd respondent bank would submit that as the
appellants are pressing for considering Annexure-A10 sale deed dated 01.10.2009
alleged to be executed by them in favour of M/s. Rajesh Exports Limited to hold
Annexure-A12 sale proclamation notice to be illegal for the reason of non-mentioning of
such encumbrance, obviously they make out a case of possessing no saleable interest in
the appeal subject property. Ld. counsel for the bank doubted the locus and competency
of the appellants to sustain this appeal and added that if M/s. Rajesh Exports Limited
had purchased the property under the alleged sale it would still be subject to the
mortgage concededly created in favour of 2nd respondent bank and the recovery
measures proceeded with by the Ld. Recovery Officer cannot be found fault with on that
score as well. As observed by this Tribunal in the foregoing discussion, the appellants
had not come out with a definite case as regards Annexure-A10 sale deed dated
01.10.2009 except trying to pick holes on the strength of it by canvassing for a
proposition that the alleged sale should have been disclosed in the said sale
proclamation. If the appellants would say that they are not possessed of title, whether
they could sustain the appeal itself in the light of they losing the right of redemption as
well is another significant question that would require further consideration. The
appellants having pointed out as regards the alleged title of M/s. Rajesh Exports Limited
reflected in the encumbrance certificate, it is for the said company to challenge the
same by invoking Rule 11 of the Second Schedule to the Income Tax Act or for the
prospective purchasers if any on a future date pursuant to the proclamation of sale to
be issued afresh to assail the same on the point of 'saleable interest' under Rule 62 of
the said schedule as and when a cause of action for such challenge arises. The Tribunal
leaves it to the wisdom of the appellants to decide for themselves as to what is their
true case and stand as regards Annexure-A10 sale deed dated 01.10.2009 purportedly
executed by them in favour of M/s. Rajesh Exports Limited as any further discussion on
that issue in this appeal is not warranted.
(x) The Hon'ble High Court of Kerala in the case titled Kuruvila v. Michael & another
reported in MANU/KE/2463/2010 held as follows:
"1. The question involved in this Revision is whether the Judgment debtor is
entitled to contend that he has no absolute title over the property sought to be
sold by the court in execution of the money decree passed against him, and
therefore, the property is not liable to be sold in execution of the decree.
9 . Going by the scheme of provisions in the Code of Civil Procedure as
mentioned above, there is no scope for adjudication of the title of the judgment

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 debtor before sale. If the court is satisfied that the judgment debtor has some
right or interest in the property, proprietary right or possessory right, nothing
prevents the court from conducting the court auction sale of that property. The
aggrieved party, whether it is the auction purchaser or a stranger, has got
remedies under the Code of Civil Procedure for protecting his rights. If the
auction purchaser shows that the judgment debtor had no title, appropriate
orders can be passed by the court setting aside the sale under Rule 91 of Order
XXI. It is also well settled that there is no guarantee for title in respect of a
court sale.
10. In Bhagwandas Dwarkadas v. Heejulbai [A.I.R (35) 1948 Sind 24] it was
held that where the court has before it an application to execute a decree by
attachment of property, the court is concerned with the property in the hands of
the judgment debtors. The court is concerned with judgment debtors; it is not
concerned with third parties; and if it should appear thereafter that the property
attached was in the possession of a third party, then it is for the third party to
raise his claim and ask for an adjudication. It was also held that it is not for the
court to adjudicate upon the claim of a third party on the objection of the
judgment debtor. In Jai Prakash Talkies v. Lakshmi Talkies [ 1964 (2) A. W. R
298] it was held that Order 21 rule 58 contemplates that the claim should be
made by a person putting forward a right or title to the property attached. An
objection by the judgment debtor that he is not the owner of the property in
question, does not bring it within the terms of rule 58 of Order 21. It was also
held that it is not open to the judgment debtor to resist the attachment
contending that the owner thereof is someone else and not the judgment
debtor.
13............... The judgment debtor, as of right, cannot contend that he has
only limited rights and the absolute right vests in a third party and therefore,
no sale could be held. If the judgment debtor has saleable interest in the
property, no matter whether it is negligible when compared to the absolute title
that does not prevent the court from proceeding with the sale of the rights of
the judgment debtor to the extent to which such rights could be sold."
(xi) The Tribunal reiterates its finding that Annexure-A12 had been rendered ineffectual
and infructuous in the present case as early on 15.02.2012 itself as it had not
culminated in sale on the notified day. Further to that, the Tribunal had arrived at a
finding in the foregoing paras and points under consideration as to Annexure-A12 notice
been lawfully issued pursuant to service of demand notices under Rule 2 and notice of
settling of sale proclamation under Rule 53 of Second Schedule to the Income Tax Act.
The other contentions raised by the appellants as regards the need for attachment of a
mortgaged property, the illegalities alleged to have been committed by Recovery Officer
on account of improper valuation, proceeding with sale of a property possessed by
Authorised Officer, etc. had been found to be farce and devoid of any merit or
substance. In coming to such an inescapable conclusion, the Tribunal is fortified by the
recent judgment dated 20.06.2016 rendered by the Hon'ble High Court of Kerala in N.P.
John v. The Recovery Office& Ors. in W.P.(C) No. 3700 of 2008(M) which apparently is
a case akin to the present case. The relevant portion of the said judgment is reproduced
hereunder:
"9. It is not in dispute that under Chapter V of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 the Recovery Officer is appointed for
executing the award passed by the Tribunal. As per Section 29, the Second

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 Schedule to the Income Tax Act mutatis mutandis is made applicable to the
procedure to be adopted by the Recovery Officer. Second Schedule, Part III
deals with attachment and sale of immovable property. In the case on hand, the
question of attachment does not arise as the sale is with reference to the
property which has been mortgaged in favour of the Bank by sale of the
property.
10. The only question now to be considered is whether there was sufficient
notice to the petitioner before effecting sale of the property. The records made
available indicates that notice was sent by registered post to the petitioner's
address. However, it is returned with the endorsement "addressee left station".
Therefore, it is evident that the Recovery Officer had taken steps for issuing
notice to the petitioner. Records also indicate that a notice dated 27.06.2005 has
been published by the Recovery Officer under S. 25 to 29 of the Act to the
petitioner in the newspaper. The publication was made in the Madhyamam daily
dated 02.07.2005. Issuance of notice is contemplated under Rule 2 of Second
Schedule.......
When no objection is raised to the said notice, then the second notice is issued
only for drawing of the proclamation as provided under Rule 53. Notice dated
04.10.2005 has been issued for settlement of proclamation and the same was
sent by registered post to the petitioner. The same was returned with the
endorsement "addressee residing at foreign country". Hence, another notice was
prepared on 16.03.2006 and published in Madhyamam Daily dated 18.04.2006
proposing to settle the proclamation on 04.05.2006. Thereafter reports were
called for from the Village Officer and the proclamation of sale was issued on
03.09.2007 proposing to effect sale on 23.10.2007. The proposal for sale was
also published in Mathrubhumi daily dated 23.09.2007 and it is in pursuance of
the same that the sale was conducted. Sale was confirmed on 27.11.2007.
11. The above records clearly indicate that all necessary steps have been taken
by the Recovery Officer while effecting sale. Notice issued in the address of the
petitioner was returned with the endorsement that he is abroad and he is not in
the said address. Therefore, publication was effected in local dailies. The sale of
property was also published in the newspaper. When all such steps have been
taken, petitioner cannot contend that the sale was without notice to the
petitioner. It is evident that there is substantial compliance of the statutory
provisions. Therefore, it has to be presumed that the petitioner was aware of the
proceedings and the sale proclamation was drawn after notice to the petitioner
by way of publication.
12. .............When there is evidence to show that notices had been published in
accordance with the statutory provisions, I do not think that any prejudice had
been caused to the petitioner, and there is no material irregularity in the conduct
of sale."
(emphasis is mine)
11. The Tribunal wherefore holds that the appellants are not entitled to any relief in this
appeal going by the indubitable fact that their challenge made to Annexure-A12 sale
proclamation notice had been rendered 'infructuous' long back. The SA No. 295/2009
filed by the appellants impugning the SARFAESIA measures is also pending since last 7
years. As none of the contentions raised in the appeal sustains, it only deserves to be
dismissed. This Tribunal is incidentally reminded of an observation that has come to be

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recorded by the Hon'ble Supreme Court in the case titled KSL and Industries Ltd. v.
Arihant Threads Ltd. and Ors. reported in MANU/SC/7980/2008 : CDJ 2008 SC 1468
which are as follows:-
"109. Apart from the above, even on merits, the conduct of the respondent No.
1-company leaves much to be desired. Without challenging the final order
passed by the DRT, Chandigarh, allowing the Bank's claim of Rs.
25,26,60,836/- together with interest @ 7.8% per annum, the said respondent
questioned the order of the Recovery Officer, fixing the reserve price of the
Company's assets for the purposes of the auction sale, under Section 30 of the
RDDB Act, having full knowledge of the fact that the final order of the DRT,
Chandigarh, could not be challenged in such appeal. The steps taken by the
respondent No. 1, Company were far from bona fide and were only aimed at
stalling the auction sale. Even at the time of auction of the company's assets,
no attempt was made by the Respondent No. 1-Company to secure a bid higher
than that of the appellant."
12. CONCLUSION:
In the result, the Tribunal holds the appeal to be unsustainable and is accordingly
dismissed. Consequently, IA No. 333/2012 is also dismissed. IA 1901/2015 filed by 2nd
respondent bank stands closed. There is no order as to costs.
13. Communicate copy of this order to both parties as provided in R.16 r/w R.2(c) of
the Debts Recovery Tribunal (Procedure) Rules, 1993 as amended in the year 2003 and
also to the Ld. Recovery Officer.
(Dictated to my PA directly on the computer, corrected and pronounced by me in the
open Tribunal on this the 30th day of July, 2016)

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