A.K. Ganguly, C.J.
1. This Writ Petition has been filed challenging the proclamation of sale of properties in an auction notice dated 17.1.2007 issued by the Recovery Officer of Debts Recovery Tribunal, Cuttack in R.P. No. 125/2003/CTC.
2. The material facts of the case are that Petitioner No. 1 Mr. Sushree Builders Pvt. Ltd. is a private limited company and Petitioner No. 2 Ashok Kumar Misra is the Managing Director of the said company. Petitioner No. 2 applied for a loan from State Bank of India, Berhampur Industrial Area Branch (hereinafter called the 'said Bank') for carrying on his business of manufacturing of bricks by semi-mechanised process. The loan was sanctioned totaling about Rs. 32.96 lakhs, out of which Rs. 27.96 lakhs was sanctioned as Medium Term Loan and Rs. 5 lakhs was sanctioned as cash credit. The loan was applied for on 27.5.1996 and it was sanctioned on 5.9.1996. Thereafter the Petitioners as well as the guarantors executed mortgage deed by creating equitable mortgage of immovable properties on deposit of the title deeds.
3. As the loan of the Bank was not paid, the said Bank filed a proceeding before the Debts Recovery Tribunal, Cuttack in O.A. No. 82 of 2002 for realization of the sum of Rs. 64,89,604.20 with pendente lite interest and future interest and costs.
4. The case of Opposite Party No. 2 is that as the Petitioners avoided to receive notices sent from Debts Recovery Tribunal under registered post with A.D. the notices were published in daily newspaper 'The Samaj' dated 16.12.2002. This appears from Annexure-A to the counter affidavit filed by the said Bank. Even then as nobody appeared, the Presiding Officer, DRT, Cuttack by his Judgment and Order dated 9.6.2003 passed an order allowing the Bank's application for recovery of the sum of Rs. 64,89,604.20 with simple interest at the rate of 15.8% from the date of filing of the suit till the date of realization. On the basis of said order, the Recovery Officer, DRT issued demand notice against the Petitioner in Recovery Proceeding No. 125/2003/CTC on 23.10.2003 fixing the next date as 1 9.11.2003. After receiving the said notice, the Writ Petitioners filed an application before the DRT, Cuttack to set aside the decree. The said application for setting aside the decree was dismissed by the DRT, Cuttack. From the order-sheet, it appears that the Petitioners appeared in the Recovery Proceeding through Counsel and the Recovery Officer directed the Petitioner to clear the decretal dues and it was mentioned that on failing to clear the same appropriate orders will be issued. As the decretal dues were not cleared, on 12.8.2004 an attachment order was passed by the Recovery Officer in connection with the mortgaged property, but since a prayer was made for compromise by the Petitioners, the execution of attachment order was deferred. This appears from the Order dated 30.8.2004 passed in the aforesaid Recovery Proceeding. It further appears from the order sheet dated 27.9.2004 that the compromise proposal which was submitted by the Petitioners was not accepted by the Bank and the Petitioners have been asked to raise the offer of compromise to a reasonable level. It was made clear that if the decretal dues are not cleared by the next date, coercive measures will be taken as per law. On 21.12.2004, the Recovery Officer again noted the proposal of the Petitioners for compromise whereby the previous proposal was enhanced from Rs. 18 lakhs to Rs. 18.50 lakhs and in order to prove the bona fide of the Petitioners, they were asked to deposit an amount of Rs. 5 lakhs before the next date. The matter was fixed to 11.1.2005. But as the Petitioners failed to make the deposit of the aforesaid amount as mentioned in the Order dated 21.12.2004, the Recovery Officer directed that the attachment Order dated 16.11.2004 will be given effect to and directed the matter to appear on 28.2.2005. Thereafter the matter appeared before the Recovery Officer on 28.2.2005. On that date, the Certificate Officer noted that the Petitioners were given ample opportunity to pay the decretal dues, still they did not bother to pay the same though the attachment orders were passed long back. As such, the Recovery Officer directed execution of the attachment order forthwith. At that stage, the Petitioners challenged the order of the Certificate Officer dated 11.1.2005 and filed a Writ Petition being W.P. (C) No. 3685 of 2005 before this Court. This Hon'ble Court, however, dismissed the said Writ Petition by an order passed on 21.3.2005 giving opportunity to the Petitioners to approach the Recovery Officer for a compromise and for reducing the amount at compromise may be made. The said order of this Hon'ble Court is set out below:
Heard Mr. K.K. Patnaik, Learned Counsel for the Petitioner and Mr. G.B. Das, Learned Counsel for the Bank.
Perused the Order dated 11.1.2005 passed by the Recovery Officer, Debts Recovery Tribunal, Cuttack in R.P. No. 125/2003 vide Annexure -8. We are not inclined to interfere with the said order for which the Writ Petition is dismissed.
Mr. Patnaik, Learned Counsel for the Petitioner submits that the Petitioner shall approach the DRT, Cuttack to reduce the amount as directed in the said order.
However, liberty is give to the Petitioner to approach the Recovery Officer, DRT, Cuttack within a period of one week from today. The Recovery Officer, DRT shall take a decision on the application of the Petitioner within a period of one week thereafter. Till then there shall be no execution of the order of attachment dated 11.1.2005.
Issue urgent certified copy.
5. Thereafter on 17.3.2005 the Recovery Officer noted that though the attachment order was passed on 16.11.2004, the same has not been given effect to as the Petitioner submitted proposal for compromise. But since the proposal for compromise could not be worked out, the Order dated 28.2.2005 for execution of the attachment order was passed in presence of the Learned Counsel for the Petitioner, but the said order could not be executed as the Officer-in-charge of Kodla Police Station refused to accept the order unless it was directed by the Superintendent of Police. However, the Petitioners did not try to clear the dues and in such circumstances, a show cause notice was issued against the certificate debtors being the Petitioners as well as other guarantors. Thereafter on 11.5.2005 it appears from the order sheet of the proceeding that the Petitioners applied before the Recovery Officer for reduction of the amount of Rs. 8 lakhs as directed earlier. However, the Petitioners did not pay any amount and did not give any show cause as directed by the Recovery Officer. In view of that, a warrant of arrest was issued by Order dated 12.7.2005 against all the certificate debtors including the Petitioners. A second Writ Petition being W.P. (C) No. 9185 of 2005 was filed on 4.8.2005 by the Petitioner No. 2 challenging the Order dated 12.7.2005. This time also this Hon'ble Court by its Order dated 4.8.2005 dismissed the Writ Petition with the following order.
Heard Learned Counsel for the Petitioner.
We do not find any infirmity in the Order dated 12.7.2005 passed by the Debts Recovery Tribunal, Cuttack in R.P. No. 125 of 2003 vide Annexure-1 to be interfered with.
The writ application is accordingly dismissed.
Thereafter on 11.5.2005, it appears from the order-sheet of the proceeding that the Petitioners applied before the Recovery Officer for reduction of the amount of Rs. 8 lakhs as directed earlier. However, the Petitioners did not pay any amount and did not give any show cause as directed by the Recovery Officer. In view of that a warrant of arrest was issued by Order dated 12.7.2005 against all the certificate debtors including the Petitioners.
6. The order of attachment was executed on 27.10.2005. Thereafter on 23.12.2005 notice for settling the said proclamation was issued directing the matter to be taken up on 21.1.2006. The matter was taken up on 16.1.2006 on mentioning. On that date the Counsel for the Petitioners and Mr. A.K. Das, Learned Counsel for certificate debtors appeared. Three petitions were filed by the certificate debtors and a banker's cheque for Rs. 50,000/- was deposited by the certificate debtors. The matter was thereafter directed to appear before the Recovery Officer on 7.2.2006. On 7.2.2006 the Recovery Officer directed for issuance of proclamation of sale and withheld the warrant of arrest. Accordingly, the sale proclamation was issued and the same was published in the daily news paper 'The Sambad' dated 25.6.2006. This is the first auction notice and this appears from Annexure - K/2 to the counter affidavit filed by the Bank. On 11.7.2006 pursuant to aforesaid notice, the auction was conducted. A petition was filed by Petitioner No. 2 for withholding the auction. As the bidders did not turn up and the bidders who attended did not raise the price over the reserve price, the Recovery Officer cancelled the auction and directed revaluation of the property. The reason for canceling the auction is as follows:
1. Out of auction sale of three mortgaged properties, bidders came forward for the only one property.
2. The bidders formed a Syndicate and did not raise the initial bid amount even at one stage after repeated call thereby defeating the very purpose of the open auction sale.
3. As per information of CHB, even though the enquiries have been received regarding the property at SI. 'A', which is a major item of the auction sale, no bidders participated due to valuation of the property which is a higher stage than the prevailing market value of that area according to the local people.
7. The Branch Manager and the Manager (Law) of the Bank requested for cancellation of the auction and revaluation of the property at Annexure-1 and to conduct auction sale afresh. Thereafter fresh notice was issued on 26.9.2006 in presence of the Learned Counsel for the Bank and also the Learned Counsel for the certificate debtors. On that date Learned Counsel for Petitioners was present and he also filed a compromise petition. On 7.12.2006 the Recovery Officer directed for submission of fresh valuation report in respect of 'A' Schedule property. The valuation report was filed on 17.1.2007. The same valuation report was prepared in presence of Petitioner No. 2. The auction notice was published in 'The Anupam Bharat' dated 4.2.2007. Thereafter pursuant to the said notice auction was conducted, the proper at Schedule A was sold at Rs. 9.16 lakhs, the property at Schedule B was sold at Rs.0.40 lakh and the property at Schedule C was sold at Rs. 9.10 lakhs. The highest bidder had deposited the amount and the said amount is with the Recovery Officer. But since this present Writ Petition has been moved and the Division Bench of this Court has been pleased to pass interim order on 21.2.2007, the sale has not been confirmed as the Hon'ble Court has directed that the sale shall not be confirmed without leave of this Court.
8. These are basically the undisputed facts of the case. On the basis of these facts, the case of the Petitioners is that initially the reserve price of the property was figured at Rs. 21.40 lakhs which has been subsequently fixed at Rs. 9.11 lakhs. Similar reserve price of the land and building was fixed at Rs. 35,000/-. Therefore, the same grievances are that as a result of valuation being made for the second time and the property has been valued at a lesser price. The Learned Counsel submits that under the provisions of Section 28(5) and Section 29 of the Recovery of Debts due to Banks and Financial Institutions Act, 1 993, the provisions of second and third schedule of the rules under Income Tax Act, 1 961 shall be applicable to a recovery proceeding under the said Act. Therefore, the contention which has been raised by the Learned Counsel for the Petitioners is that Rule 53 of Schedule 2 says that a proclamation of sale of immovable properties shall be drawn up after notice to the defaulter and since that has not been done, the sale proclamation is bad.
9. Learned Counsel for the Bank submits that in the facts of the case initially notice was given to the Petitioners about sale proclamation. But before issuance of the sale proclamation for the second time, no further notice is required to be given since the Petitioners have already got the notice in respect of the sale proclamation.
10. Learned Counsel for the Bank submits that the purpose of issuance of notice under Rule 53 is to give an intimation to the certificate debtor of the sale so that he may inform the Executing Court whether there is any encumbrance, charges, claims or liabilities attaching the said properties or any portion thereof. Issuance of notice under Rule 53 has no nexus with the fixing up of the reserve price.
11. Learned Counsel for the Petitioners has relied on a Judgment of the Supreme Court in the case of Samir Kumar Shah and Anr. v. Union of India and Ors. reported in AIR 2005 SC 4111 in support of his contention that the sale proclamation has not been issued in accordance with the Rules of the Second Schedule to the Income Tax Act. In that matter a challenge was made to Rule 60 of the Debt Recovery of Tribunals, Maharashtra and Goa Regulations and Practice, 2003 inter alia on the ground that the sale is contrary to Section 29 of Recovery of Debts Due to Banks and Financial Institutions Act and Rules 52 and 53 of the Second Schedule to the Income Tax Act 1961. In that case, the proclamation of sale was also challenged on the ground that the valuation was fixed without hearing the Appellant and without reference to the valuation report submitted by the Appellant and without making the report available to the Court. The third ground of challenge was that only a portion of the plot should be sold as was necessary for recovery of the loan amount. In that case the Learned Judges of the Supreme Court held that the challenge as to Regulation 60 is without any substance and in that context the Judgment was rendered. In the instant case, there is no challenge to any Rule.
12. In so far as granting the opportunity of hearing is concerned, in paragraph 10 of the said report the Supreme Court held that the Rules, namely, Rules 52 and 53 do not require grant of any opportunity to the debtor of being heard before valuation is made and sale reserve price is fixed. The debtor is only entitled to notice for drawing up proclamation of sale. The Learned Judges of the Supreme Court also came to the finding that there is no requirement for the creditor to consider any alternative valuation filed at the instance of the debtor. The Learned Judges quoted Order 21, Rule 66 of the Code of Civil Procedure to hold that there is no corresponding provision to that effect either in Rule 52 or Rule 53 of the Second Schedule to the Income Tax Act. As such, on the question of opportunity of hearing the contention of the Appellant in that case was not approved.
13. In the instant case, this Court has found from the record that the sale proclamation was issued upon notice to the Petitioners and it is not a case of re-sale as has been alleged by Petitioners in course of argument. At the time of first sale as the reserve price was not reached and sufficient bidders did not come forward, further sale proclamation was issued and that too was done in presence of the Petitioners. Therefore, the decision in the case of Samir Kumar Shah does not at all help the contention of the Petitioners.
14. Learned Counsel for the Bank in support of his contention submitted that in the facts of the case no fresh notice is required to be given to the Petitioners. Reliance in this context was placed on a Division Bench decision of Madhya Pradesh High Court in the case of Anshiram v. Tax Recovery Commissioner, M.P.-II and Ors. reported in : [1983]142ITR6(MP) . In that case, the Chief Justice G.P. Singh while delivering Judgment and considering the provisions of Second Schedule to the Income Tax Act held that even a ground that no notice was issued to the defaulter before drawing up the proclamation of sale under Rule 53 ought to be taken only by an application under Rule 61 and that such an objection cannot be taken otherwise. It was also made clear that if no application is made under Rule 61 on this ground, the confirmation of sale will automatically follow under Rule 63. The Learned Judge also held that no notice was required to be given to the borrower before the second proclamation was issued. The Learned Judge was also of the view that under the provisions of CPC also it is well settled that when an auction sale is adjourned and a fresh proclamation is issued, no further notice need be ordered to the Judgment-debtor under Rule 66 of Order 21 CPC. (See page 12 of the report)
15. Learned Counsel for the Petitioners also relied on another Judgment of the Rajasthan High Court in the case of Surinder Nath Kapoor v. Union of India and Ors. reported in 167 ITR 56. In that case also Rules 53,61, 63 and 86 of the second schedule to the Income Tax Act came up for consideration and the Learned Single Judge discussed when a Writ Petition can be moved. The Learned Counsel relying on the observation made by the Learned Judge in page 63 of the report to the extent that in cases under Revenue law, exercise of jurisdiction by the Court under Article 226 is rather limited and it was held that unless the remedy provided under the Act and the Rules is exhausted, a party should not invoke the extraordinary jurisdiction of the Court.
16. In the instant case, the Petitioners have a right of appeal under Section 20 of the Act and that should have been exhausted. (See Judgment of the Supreme Court in Punjab National Bank v. O.C. Krishnan and Ors. reported in : AIR2001SC3208 ). But without exhausting such remedy, the Petitioners are repeatedly coming before this Court.
17. For the reasons aforesaid, the Writ Petition is dismissed and the interim order stands vacated. But this will not affect the Petitioners' right to approach the Appellate forum under Section 20 of the Act in accordance with law. Misc. Case No. 1503 of 2007 is also dismissed.
Office is directed to send back the lower Court records to the Tribunal immediately.
I. Mahanty, J.
18. I agree.