Income Tax Act, 1961: Second Schedule, r. 60 – Application to set aside sale of immovable property on deposit – Right available to the judgment debtor u/r. 60 – Held: Is a valuable right and the last resort/opportunity to the judgment debtor to save his property – It is a right available to the judgment debtor after his property is sold in a court auction – Such a valuable right available to the judgment debtor to save his property should not be affected on the technical ground and/or for the mistake and/or the bona fide mistake for which he was not at all responsible – On facts, judgment debtor filed an application u/r 60 to set aside the auction sale and in compliance thereof, deposited the amount, and the application was allowed by the Recovery Officer as also by DRAT which had set aside the sale in favour of the auction purchasers – However, the High Court while dismissing the application by the judgment debtor u/r. 60 holding that as there was a shortfall in the deposit of the amount while exercising the right u/r. 60, quashed and set aside the order passed by the DRAT and the Recovery Officer – High Court did not at all appreciate and consider the fact that for the inaccuracy and/or mistake on the part of the Recovery Officer, the judgment debtor cannot be made to suffer for no fault of his – When the substantial amount was deposited, there was no reason for the judgment debtor not to deposit the shortfall, which as such can be said to be very meagre amount – As and when the judgment debtor was made aware about the shortfall, immediately, the shortfall amount was deposited by the judgment debtor – Thus, the order passed by the High court is unsustainable, and is quashed and set aside, and that of the DRAT is restored – Recovery of Debts due to Banks and financial Institutions Act, 1993 – ss. 25 to 29. Allowing the appeal, the Court
HELD: 1.1 In the sale certificate, the amount mentioned was Rs.1,27,30,527/- including interest as on 30.06.2006. The judgment debtor while exercising the right under Rule 60 deposited Rs.1,27,30,527/- alongwith Rs. 6,75,000/- for payment to the purchaser as penalty, a sum equal to 5% of the purchase money and also further deposited Rs. 3,01,290/- towards interest @ 15% from the date of sale proclamation to the date of deposit i.e., 25.01.2007. However, it was the case on behalf of the auction purchasers that there was a shortfall in not making the payment of interest from 30.06.2006 to 25.01.2007. However, it is required to be noted that as such it was the duty cast upon the Recovery Officer to mention the exact amount in the sale certificate. The Recovery Officer mentioned the amount in the Sale Certificate of Rs.1,27,30,527/- including the interest as on 30.06.2006, however, did not specify any further amount towards the interest for the period between 30.06.2006 till the date of the sale proclamation, i.e., 08.01.2007, which the Recovery Officer ought to have mentioned specifically. The said mistake and/or inaccuracy on the part of the Recovery Officer led to the shortfall in the deposit of the amount, which was towards the interest for the period between 30.06.2006 to 08.01.2007, otherwise, the judgment debtor had substantially complied with Rule 60. The shortfall was Rs.3,57,647/-. When the judgment debtor deposited the substantial amount of Rs. 1,27,30,527/- and other amounts due and payable under Rule 60 including the penalty and the interest, there was no reason for the judgment debtor not to deposit Rs. 3,57,647/- which is a very small amount as against the amount deposited. At this stage, it is required to be noted that though the Bank filed its reply before the Recovery Officer in response to the application made by the judgment debtor borrower made under Rule 60 and in which it was stated that there was some shortfall in the amount deposited, but according to the judgment debtor, no calculation sheet was attached to the reply and/or supplied to the judgment debtor. [Para 6.1][944-GH; 945-A-E]
1.2 At the time of hearing of the application under Rule 60, a grievance was made before the Recovery Officer as to why the Bank had not served a copy of the calculation sheet and in the meantime, the judgment debtor had himself deposited a further sum of Rs.2.80 lakhs towards the difference in calculation, if any. The Recovery Officer directed the Bank to supply the calculation sheet and the Bank submitted the calculation sheet before the Recovery Officer on 12.02.2007 and on that day, a sum of Rs.77,647/- was the shortfall, which the judgment debtor deposited on the very next day, i.e., on 13.02.2007. If the Bank would have submitted the calculation sheet earlier alongwith the reply on 06.02.2007, which was 29th day from the date of auction, the judgment debtor would have deposited the balance shortfall amount. Therefore, in the facts and circumstances of the case, there was a substantial compliance of Rule 60. If the Recovery Officer would have been accurate in submitting the exact amount in the sale proclamation due and payable on the date of sale proclamation then the said eventuality would not have arisen. There was an absurd misconduct on the part of the Recovery Officer for which the judgment debtor should not be made to suffer. [Para 6.2][945-E-H; 946-A]
1.3 The right available to the judgment debtor under Rule
60 is a valuable right and the last resort/opportunity to the judgment debtor to save his property. It is a right available to the judgment debtor after his property is sold in a court auction. Therefore, such a valuable right available to the judgment debtor to save his property should not be affected on the technical ground and/or for the mistake and/or the bona fide mistake for which he was not at all responsible. [Para 6.3][946-B-C]
1.4 The submission on behalf of respondent Nos. 1 and 2 that according to the Bank, a sum of Rs.4.63 lakhs was the balance amount due and payable against which even subsequently the borrower has deposited Rs. 3,57,647/- and thus, still there is a shortfall is concerned, has no substance. On deposit of the amount of Rs. 3,5,7647/-, (Rs.2,80,000/- + Rs.77,647/-) as on 13.02.2007, the Recovery Officer directed the Bank to hand over the original documents pertaining to the impugned properties and file compliance affidavit and thereafter the Bank was allowed to appropriate the decretal amount deposited by the judgment debtor and that on 19.02.2007 itself, the Bank complied with the order passed by the Recovery Officer and handed back to the judgment debtor the documents pertaining to the properties in question and requested to release the amount deposited, which came to be allowed by the Recovery Officer. At that time, no dispute was raised by the Bank that any further amount was due and payable. The Bank was satisfied with the deposit of the amount by the judgment debtor. [Para 6.5][946-F-H; 947-A]
1.5 The High Court erred in quashing and setting aside the order passed by the DRAT and the Recovery Officer by which the Recovery Officer and the DRAT set aside the sale in favour of the auction purchasers. The view taken by the High Court is too technical. The High Court did not at all consider the facts in its true perspective. The High Court did not at all appreciate and consider the fact that for the inaccuracy and/or mistake on the part of the Recovery Officer, the judgment debtor cannot be made to suffer for no fault of his. The High Court also did not properly appreciate and consider the valuable right available to the judgment debtor under Rule 60. When the substantial amount was deposited, there was no reason for the judgment debtor not to deposit the shortfall, which as such can be said to be very meagre amount. As and when the judgment debtor was made aware about the shortfall, immediately, the shortfall amount was deposited by the judgment debtor. Under the circumstances, the impugned judgment and order passed by the High court is unsustainable, and is quashed and set aside. The order passed by the DRAT setting aside the auction sale is restored. The amount deposited by respondent Nos. 1 and 2 would be returned to them alongwith the interest accrued thereon, if not received by them so far. To do the substantial justice, the appellant is directed to pay a further sum of Rupees Ten Lakhs to respondent Nos. 1 and 2 by Demand Draft within the stipulated period. [Para 7, 8][947-B-G]
Gajadhar Prasad v. Babu Bhakta Ratan (1973) 2 SCC
629 : [1974] 1 SCR 372; Hotel Paras Garden, Balapur & Anr. v. Central Bank of India, Balapur & Ors. (2015) SCC Online Bom 3398; M/s. National Rice and General Mills, Jagraon and Ors. v. Bank of India and Ors. C.W.P. No. 19113 of 2005; Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal and Ors. (2011) 1 SCC 236 : [2010] 13 SCR 820; Excise
Commissioner & Ors. v. Ajith Kumar and Anr. (2008) 5 SCC 495 : [2008] 6 SCR 778 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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