# Kamal Kishore v. Debts Recovery Appellate Tribunal, Allahabad & Ors

- **Citation:** (2022) 7 ILRA 625
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-05-16
- **Case number:** Special Appeal No.165 of 2022
- **Bench:** Rajesh Bindal, C. J. J.J. Munir
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/kamal-kishore-v-debts-recovery-appellate-tribunal-allahabad-ors-48818
- **Pages:** 16

## Headnote

A. Banking Law - Mortgage - Transfer -
Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 - Sections
29 & 30 - Second Schedule to the 1961
Act: Rules 54, 56, 57, 60 and 61; Section
222, 276; Transfer of Property Act, 1882:
Section 48, 60.

A.(a) Right to appeal u/s 30, RDDBFI Act -
The learned Single Judge was not right in
holding that since the petitioner-appellant
had not followed the procedure prescribed
u/Rule 60 of the Second Schedule to the
1961 Act, he could not ask the auction
sale, not yet confirmed, to be set aside
through an appeal u/s 30 of the RDDBFI
Act. (Para 23)

An appeal u/s 30 of the RDDBFI Act can be
preferred by a person aggrieved by the
Recovery Officer's orders, notwithstanding the
fact that he has not invoked the provisions of
Rule 60 or 61 of the Second Schedule to the
1961 Act. This is so because S.30 of the RDDBFI
Act opens with a non-obstante clause that gives
an overriding effect to the provisions of S.30 of
the said Act. It is S.29 of the RDDBFI Act,
extracted hereinabove, that makes provisions of
Second Schedule of the 1961 Act applicable to
proceedings for recovery under the RDDBFI Act.
The application of the Rules, including
Rules 60 and 61 of the Rules under the
Second Schedule of the 1961 Act to a
recovery under the RDDBFI Act cannot,
therefore, be construed in a manner so as
to derogate from the plenary right of a
person
aggrieved
by
the
Recovery
Officer's order of any kind to appeal to the
Tribunal. (Para 18)

A.(b) Harmonious constructions of the
provisions of Sections 29 & 30 of the
RDDBFI Act - The right of a person
aggrieved by an order of the Recovery
Officer under the aforesaid Act cannot be
confined in the manner that he must of
necessity invoke Rule 60 of 61 by making an
application before the Recovery Officer in
the first instance and against the order of
the Recovery Officer, come up in appeal u/s

## Text

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7 All. Kamal Kishore Vs. Debts Recovery Appellate Tribunal, Allahabad & Ors.
625
whether it was installed or not. Lord Shri
Ram Chandraji is a juristic person and the
property
vested
in
Him
once
the
endowment was complete following the
Sankalp and Utsarg.

35. Considering the facts and
circumstances of the case, I find that the
judgment and order of lower Appellate
Court needs no interference by this Court.

36. The appeal fails and is hereby
dismissed.
----------
(2022)07ILR A625
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 16.05.2022

BEFORE

THE HON'BLE RAJESH BINDAL, C. J.
THE HON'BLE J.J. MUNIR, J.

Special Appeal No.165 of 2022

Kamal Kishore ...Appellant
Versus
Debts
Recovery
Appellate
Tribunal,
Allahabad & Ors. ...Respondents

Counsel for the Appellant:
Sri Deepak Kumar Jaiswal, Sri Sanjay
Kumar Gupta

Counsel for the Respondents:
Sri Gyan Prakash Shrivastava, Sri S.K.
Srivastava, Sri Padmaker Pandey

A. Banking Law - Mortgage - Transfer -
Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 - Sections
29 & 30 - Second Schedule to the 1961
Act: Rules 54, 56, 57, 60 and 61; Section
222, 276; Transfer of Property Act, 1882:
Section 48, 60.

A.(a) Right to appeal u/s 30, RDDBFI Act -
The learned Single Judge was not right in
holding that since the petitioner-appellant
had not followed the procedure prescribed
u/Rule 60 of the Second Schedule to the
1961 Act, he could not ask the auction
sale, not yet confirmed, to be set aside
through an appeal u/s 30 of the RDDBFI
Act. (Para 23)

An appeal u/s 30 of the RDDBFI Act can be
preferred by a person aggrieved by the
Recovery Officer's orders, notwithstanding the
fact that he has not invoked the provisions of
Rule 60 or 61 of the Second Schedule to the
1961 Act. This is so because S.30 of the RDDBFI
Act opens with a non-obstante clause that gives
an overriding effect to the provisions of S.30 of
the said Act. It is S.29 of the RDDBFI Act,
extracted hereinabove, that makes provisions of
Second Schedule of the 1961 Act applicable to
proceedings for recovery under the RDDBFI Act.
The application of the Rules, including
Rules 60 and 61 of the Rules under the
Second Schedule of the 1961 Act to a
recovery under the RDDBFI Act cannot,
therefore, be construed in a manner so as
to derogate from the plenary right of a
person
aggrieved
by
the
Recovery
Officer's order of any kind to appeal to the
Tribunal. (Para 18)

A.(b) Harmonious constructions of the
provisions of Sections 29 & 30 of the
RDDBFI Act - The right of a person
aggrieved by an order of the Recovery
Officer under the aforesaid Act cannot be
confined in the manner that he must of
necessity invoke Rule 60 of 61 by making an
application before the Recovery Officer in
the first instance and against the order of
the Recovery Officer, come up in appeal u/s
30. If that were done, it would whittle down
the scope of the appellate powers of the
Tribunal against all orders of the Recovery
Officer, that include an order of attachment,
auction and sale prior to its confirmation. If
the challenge is laid on grounds completely
different from those envisaged u/Rule 60 of
the Rules framed under the Second Schedule
of the 1961 Act, there may not be any
requirement of deposit at all. The challenge
may be on grounds like those envisaged
u/Rule 61 of the Rules aforesaid or on any
other ground. (Para 22)
626 INDIAN LAW REPORTS ALLAHABAD SERIES
B. Transfer of Property Act, 1882 - Section
48 - 'Property once mortgaged is always
mortgaged'. This principle is applicable to
preserve and keep intact the mortgagee's
estate. It does not militate against the
mortgagor's right to redeem or transfer
his interest in favour of a third party, who
would then acquire as part of the
mortgagor's
estate
the
equity
of
redemption. (Para 24)

B.(a) The learned Single Judge was not right
because S. 48 of the TP Act gives priority to an
earlier right or clogs a later created right, if the
two sets of rights cannot exist together or be
exercised to their full extent together. The sale
of the mortgagor's right, which could be no
more than the right to redeem after paying off
the mortgage debt, is in no way one that cannot
coexist with the mortgagee's interest or charge
on the property held by the mortgagor's
transferee. The sale by the mortgagor would not
in any way impair the mortgagee's right or
militate against his security unless it could be
shown that the transfer in fact would impair it.
This could be the case, if the mortgagor were to
transfer the right to a person or entity, who
under the law would take it free from all
encumbrance. The sale deed executed in favour
of the petitioner-appellant does not in any
manner
rid
the
property
of
the
bank's
encumbrance, traceable to the mortgage by
deposit of title deeds. It is only a change of
hand or name or identity of the mortgagor with
no impairment of the security. (Para 27)

All that S.48 of the TP Act postulates is
that the purchaser of the mortgagor's
interest would take it as much subject to
the mortgage as the original owner. (Para
28)

The prior transfer that is a mortgage in
favour of the bank can certainly coexist with
a transfer of mortgagor's estate or interest
in favour of the petitioner-appellant by the
judgment-debtor.
It
is
just
that
the
petitioner-appellant will hold it subject to the
mortgagee's interest to secure repayment of
his debt. That has been ensured in the
present case by the petitioner-appellant
under orders of the Tribunal since set at
naught by the Appellate Tribunal and the
learned Single Judge. The Tribunal was
right in saying that it is always open to
the mortgagor or a purchaser of the
charged
property,
to
redeem
the
property by paying off the creditor. The
Tribunal has rightly remarked that the
right of redemption of mortgage is a
statutory right, which can only be
extinguished
in
one
of
the
ways
mentioned in para 2 of S.60 of the TP
Act. (Para 30)

B.(b) The learned Single Judge considered
the
transfer
to
the
petitioner-appellant
during
the
subsistence
of
the
bank's
mortgage
a
second
charge
without
discharging the first charge and therefore
thought that S.48 of the TP Act would hinder
creation of any right in favour of the
petitioner-appellant.
What
was
transferred to the petitioner-appellant
was not at all any kind of a mortgagee's
interest or created a further charge on
the property already mortgaged with
the Bank. It was, in fact, transfer of the
larger estate of the mortgagor, which
cannot be called a charge on the
property. (Para 31)

Appeal allowed. Impugned order passed by
the learned Single Judge is set aside. Writ
petition allowed. Order dated 19.09.2013
passed by the Appellate Tribunal is quashed.
Order dated 08.03.2013 passed by the
Tribunal setting aside the auction sale dated
13.10.2009 is restored with modification.
(Para 33) (E-4)

Precedent followed:

1. C.N. Paramasivam & anr. Vs Sunrise Plaza
through Partner & ors., (2013) 9 SCC 460 (Para
16)

2. Sarang Avinash Kamtaker Vs Alpha Organic &
ors., MANU/MH/1202/2022 (Para 19)

3. Hill Properties Ltd. Vs U.O.I. & ors., 2016 SCC
OnLine Bom 10362 (Para 20)

4. Nazims Continental & ors. Vs The Indian
Overseas Bank, Triplicate Branch, Madras & ors.,
2009 SCC OnLine Mad 862 (Para 21)
7 All. Kamal Kishore Vs. Debts Recovery Appellate Tribunal, Allahabad & Ors.
627
5. Sh. Ishar Dass Malhotra Vs Sh. Dhanwant Singh
& ors., 1983 SCC OnLine Del 284 (Para 28)

6. Nagalinga Nadar Vs K. Mehrunisa Begum,
1979 SCC OnLine Mad 146 (Para 29)

(Delivered by Hon'ble J.J. Munir, J.)

1. This Special Appeal is directed
against the judgment and order of a learned
Single Judge of this Court in Writ - C No.
57359 of 2013 dated January 17, 2022
dismissing the petitioner-appellant's writ
petition and affirming an order of the Debts
Recovery Appellate Tribunal at Allahabad
in Appeal No. 8114 of 2013. The Debts
Recovery Appellate Tribunal, by the order
under challenge before the learned Single
Judge, has reversed an appellate order of
the Debts Recovery Tribunal at Allahabad
in Appeal No. 23 of 2009 under Section 30
of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (for short
"RDDBFI Act") and restored the auction
sale dated October 13, 2009 in DRC No.
213 of 2002 by the Recovery Officer
attached to the Tribunal in favour of
Respondent No. 4 to this appeal, Ramu
Jaiswal.

2. The facts giving rise to this appeal
are that the petitioner-appellant purchased
through a registered sale deed dated July
28, 1995 land comprising Arazi No. 286,
situate
at Village
Kukradeo,
District
Kanpur Dehat from Harish Kumar son of
Bhagwandas.
Harish
Kumar
shall
hereinafter be referred to as 'the judgmentdebtor'. Upon the land being purchased by
the petitioner, he established a small-scale
industry. The property above described and
purchased by the petitioner shall hereinafter
be called 'the property in dispute'. Prior to
execution of the sale deed in the petitionerappellant's favour by the judgment-debtor,
the latter had mortgaged his one-fourth
share in the property in dispute in favour of
Central Bank of India, Branch Sisamau,
Kanpur Nagar in order to secure a loan that
he had availed. The judgment-debtor had
defaulted in the repayment of loan that he
owed the Bank. The Bank filed Application
No. 580 of 2000 for recovery of its
outstandings amounting to ₹ 10,68,844/-
which was decided against the judgmentdebtor by the Debts Recovery Tribunal.
DRC No. 215 of 2002 was issued against
the judgment-debtor in proceedings for
enforcement of the certificate.

3. On April 2, 2009 the Recovery
Officer fixed a date for holding the auction,
scheduling it on June 10, 2009 at 11:00 a.m.
On the said date, the auction could not be
held. The Recovery Officer thereupon got a
sale proclamation published in Amar Ujala
Hindi Daily issue dated October 11, 2009
scheduling the auction for October 13, 2009
at 11:00 a.m. The order to do so was passed
by the Recovery Officer on August 19, 2009.
On October 13, 2009 the auction was held,
with only one bidder, that is to say, Ramu
Jaiswal/ Respondent No. 4, who purchased
the property in dispute for a sum of ₹
93,500/-. The petitioner-appellant challenged
the aforesaid auction sale dated October 13,
2008 by preferring Misc. Appeal No. 23 of
2009 under Section 30 of the RDDBFI Act
before
the
Debts
Recovery
Tribunal,
Allahabad (for short 'the Tribunal'). The
confirmation in the auction sale was stayed
by an interim order passed by the Tribunal on
November 12, 2009 subject to deposit of ₹
92,200/- which the petitioner made good. The
respondent No. 4, Ramu Jaiswal made an
application for impleadment in the aforesaid
appeal, but it appears that the application was
dismissed for non-prosecution. The order of
the Tribunal dated April 8, 2013 to which
allusion would be made a little later, however,
shows that the fourth respondent, who shall
628 INDIAN LAW REPORTS ALLAHABAD SERIES
hereinafter be called 'the auction purchaser'
appears to have been heard by the Tribunal
and his case was considered in Appeal No. 23
of 2009, which was allowed by the Tribunal
vide order dated April 8, 2013 on the ground
that the right of redemption, that the
petitioner had purchased from the judgmentdebtor, would continue up to confirmation of
the sale and the sale was not binding, so long
as it was not confirmed. It was also held that
the petitioner had already deposited the
amount, for which the property in dispute
was sold in favour of the fourth respondent.
There was a further direction to refund the
sale price to the auction purchaser, together
with simple interest @ 10% per annum from
the date of sale till full payment was made by
the petitioner-appellant.

4. Upon an appeal carried to the Debts
Recovery Appellate Tribunal, Allahabad (for
short 'the Appellate Tribunal') from the order
of the Tribunal dated April 8, 2013, the
Appellate Tribunal vide its order dated
September 12, 2013 allowed the fourth
respondent's appeal and set aside the order
made by the Tribunal, reviving the order of
the Recovery Officer, affirming the sale in
favour of the auction purchaser. It was this
order of the Appellate Tribunal that the
petitioner-appellant had questioned before
this Court in Writ - C No. 57359 of 2013 that
came up before the learned Single Judge. The
learned Single Judge has upheld the
determination of the Appellate Tribunal,
restoring the auction sale in favour of the
fourth respondent.

5. Aggrieved, the petitioner has
preferred the instant appeal under Chapter
VIII Rule 5 of the Rules of Court.

6. Heard Mr. Deepak Kumar Jaiswal,
learned counsel for the petitioner-appellant,
Mr. Gyan Prakash Shrivastava, learned
counsel appearing for Respondent No. 3
and Mr. S.K. Srivastava, Advocate holding
brief of Mr. Padmaker Pandey, learned
counsel for Respondent No. 4.

7. The records have been carefully
perused, including the affidavits that were
exchanged before the learned Single Judge,
together with the annexed documents.

8. The learned Counsel for the
petitioner-appellant
has
assailed
the
impugned order primarily on the ground
that his right to challenge the auction sale
held by the Recovery Officer under Section
30 of the RDDBFI Act is in no way
restricted by the provisions of Rules 60 and
61 of the Second Schedule to the Income
Tax Act, 1961 (for short "the 1961 Act").
He submits that the provisions of Section
29 of the RDDBFI Act that make the
provisions of the Second and Third
Schedules to the 1961 Act applicable with
necessary modifications to recovery of debt
due under the former Act, adjudged by the
Tribunal
have
to
be
harmoniously
construed with the provisions of Section 30
of the RDDBFI Act.

9. It is emphasized that the provisions
of Section 30 of the RDDBFI Act make
every order of the Recovery Officer
appealable and that right cannot be
curtailed for a judgment-debtor or other
person aggrieved by order of the Recovery
Officer, or even a person whose interest are
affected by a sale held by the Recovery
Officer, by subjecting the rights of any of
the person(s) above named to the rigors of
Rule 60 or 61 framed under the Second
Schedule to the Transfer of Property Act. It
is not that in every case where a sale is held
and a person's right adversely affected by
it, according to the learned Counsel for the
petitioner-appellant that an application
7 All. Kamal Kishore Vs. Debts Recovery Appellate Tribunal, Allahabad & Ors.
629
under Rule 60 or 61 of the Rules framed
under the Second Schedule has to be made
in the first instance to the Recovery Officer
and failing there, an appeal would lie to the
Tribunal under Section 30 of the RDDBFI
Act.

10. The learned Counsel for the
petitioner-appellant submits that if such a
construction were placed on the provisions
of Sections 29 and 30 of the RDDBFI Act,
it would be whittle down the scope of the
remedy under Section 30, which is
available to any person aggrieved by an
order of the Recovery Officer and is cast in
the widest possible terms.

11. It is also submitted by the learned
Counsel for the petitioner-appellant that the
learned Single Judge has completely
misapplied the provisions of Section 48 of
the Transfer of Property Act, which are not
at all attracted to the facts of the present
case. It is also submitted that the learned
Single Judge has misconstrued a sale of the
mortgagor's interest in favour of the
petitioner-appellant by the judgment-debtor
as creation of a second charge which the
sale is not. He submits that the sale in
favour of the petitioner-appellant can coexist with the bank's charge based on the
equitable mortgage.

12.

The
learned
counsel
for
respondent
No.4
has
supported
the
impugned order passed by the learned
Single Judge on both counts of its
reasoning. The learned Single Judge has
expressed opinion that a sale by the
Recovery Officer in execution of a
recovery certificate issued under RDDBFI
Act has to be done in accordance with
Rules 54 to 61 of the Second Schedule to
the 1961 Act. It is submitted that the said
rules are applicable by virtue of provision
of Section 29 of the RDDBFI Act. It is
pointed out that the provisions of the
Second and Third Schedule to the 1961 Act
being applicable as far as possible, with
necessary modifications for recovery of a
debt due under the RDDBFI Act, those
provisions have to be strictly complied
with. The crux of the submissions that the
learned Counsel for respondent No.4 has
come up with and which has been the
reasoning of the Appellate Tribunal also, in
one part, is that the petitioner-appellant
having not preferred any objection(s)
before the Recovery Officer, either under
Section 60 or 61 of the Rules framed under
the 1961 Act, his appeal from the order of
the Recovery Officer holding the auction
sale was not competent.

13. In order to appreciate the
contention of learned Counsel for parties, it
would be necessary to refer to the
provisions of Sections 29 and 30 of the
RDDBFI Act, that read:

"29. Application of certain
provisions
of
Income-tax
Act.--The
provisions of the Second and Third
Schedules to the Income-tax Act, 1961 (43
of 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,
630 INDIAN LAW REPORTS ALLAHABAD SERIES
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)."

14. Again, the provisions of Rules 54,
56, 57, 60 and 61 of the Second Schedule
to the 1961 Act, that provide the
mechanism for the recovery of tax
envisaged under Section 222 and 276 of the
1961 Act, are extracted hereinbelow :

"54.
Mode
of
making
proclamation.--(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.

(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.

55. Time of sale.--No sale of
immovable property under this Schedule
shall, without the consent in writing of the
defaulter, take place until
after the
expiration of at least thirty days calculated
from the date on which a copy of the
proclamation of sale has been affixed on
the property or in the office of the Tax
Recovery Officer, whichever is later.

56. Sale to be by auction.--The
sale shall be by public auction to the
highest bidder and shall be subject to
confirmation by the Tax Recovery Officer:

Provided that no sale under this
rule shall be made if the amount bid by the
highest bidder is less than the reserve price,
if any, specified under clause (cc) of rule
53.

57. Deposit by purchaser and
resale in default.--(1) On every sale of
immovable property, the person declared to
be the purchaser shall pay, immediately
after such declaration, a deposit of twentyfive per cent on the amount of his purchase
money, to the officer conducting the sale;
and, in default of such deposit, the property
shall forthwith be resold.

(2) The full amount of purchase
money payable shall be paid by the
purchaser to the Tax Recovery Officer on
or before the fifteenth day from the date of
the sale of the property.

58. Procedure in default of
payment.--In default of payment within the
period mentioned in the preceding rule, the
deposit may, if the Tax Recovery Officer
thinks fit, after defraying the expenses of
the sale, be forfeited to the Government,
and the property shall be resold, and the
defaulting purchaser shall forfeit all claims
7 All. Kamal Kishore Vs. Debts Recovery Appellate Tribunal, Allahabad & Ors.
631
to the property or to any part of the sum for
which it may subsequently be sold.

59. Authority to bid.--(1) Where
the sale of a property, for which a reserve
price has been specified under clause (cc)
of rule 53, has been postponed for want of
a bid of an amount not less than such
reserve price, it shall be lawful for an
Assessing Officer, if so authorised by the
Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner
or Commissioner in this behalf, to bid for
the property on behalf of the Central
Government at any subsequent sale.

(2) All persons bidding at the sale
shall be required to declare, if they are
bidding on their own behalf or on behalf of
their principals. In the latter case, they shall
be required to deposit their authority, and in
default their bids shall be rejected.

(3) Where the Assessing Officer
referred to in sub-rule (1) is declared to be
the purchaser of the property at any
subsequent sale, nothing contained in rule
57 shall apply to the case and the amount of
the purchase price shall be adjusted
towards the amount specified in the
certificate.

60. Application to set aside sale
of immovable property on deposit.--(1)
Where immovable property has been sold
in execution of a certificate, the defaulter,
or any person whose interests are affected
by the sale, may, at any time within thirty
days from the date of the sale, apply to the
Tax Recovery Officer to set aside the sale,
on his depositing--

(a) the amount specified in the
proclamation of sale as that for the
recovery of which the sale was ordered,
with interest thereon at the rate of one and
one-fourth per cent for every month or part
of a month], calculated from the date of the
proclamation of sale to the date when the
deposit is made; and

(b) for payment to the purchaser,
as penalty, a sum equal to five per cent of
the purchase money, but not less than one
rupee.

(2) Where a person makes an
application under rule 61 for setting aside
the sale of his immovable property, he shall
not, unless he withdraws that application,
be entitled to make or prosecute an
application under this rule.

61. Application to set aside sale of
immovable property on ground of nonservice of notice or irregularity.--Where
immovable property has been sold in
execution of a certificate, such Income-tax
Officer as may be authorised by the Principal
Chief Commissioner or Chief Commissioner
or Principal Commissioner or Commissioner
in this behalf, the defaulter, or any person
whose interests are affected by the sale, may,
at any time within thirty days from the date of
the sale, apply to the Tax Recovery Officer to
set aside the sale of the immovable property
on the ground that notice was not served on
the defaulter to pay the arrears as required by
this Schedule or on the ground of a material
irregularity in publishing or conducting the
sale:

Provided that--(a) no sale shall be
set aside on any such ground unless the Tax
Recovery Officer is satisfied that the
applicant has sustained substantial injury by
reason of the non-service or irregularity; and

(b) an application made by a
defaulter under this rule shall be disallowed
632 INDIAN LAW REPORTS ALLAHABAD SERIES
unless the applicant deposits the amount
recoverable from him in the execution of
the certificate."

15.

The
learned
Counsel
for
respondent No.4 has emphasized that there
was no application by the petitionerappellant before the Recovery Officer to
whom the provisions of Rules 54 to 61
framed under the 1961 Act are applicable,
seeking to exercise his right as a person
whose interests were affected by the sale
under Rule 60, or under Rule 61 on the
ground that notice was not served on the
defaulter to pay the arrears, as required by
the Schedule or that there was a material
irregularity in publishing or conducting the
sale. The petitioner, from the order of
auction sale dated October 13, 2009 had
straightway appealed to the Tribunal under
Section 30 of the RDDBFI Act, which was,
therefore, not maintainable.

16. In addition, it has also been
argued that upon initiation of recovery
proceedings by the Recovery Officer
attached to the Tribunal, the petitionerappellant had filed objections that were
rejected by the Recovery Officer vide order
dated October 28, 2006, which remain
unchallenged. The learned Single Judge has
accepted
the
petitioner-appellant's
contention on this score, firstly on the
reasoning that after the auction proceedings
were held ending in favour of the fourth
respondent on October 13, 2009, the
petitioner did not take any steps to repay
the outstanding loan. Rather, the earlier
challenge
that
he
had
laid
to
the
proceedings before the Recovery Officer on
October 18, 2010 remained unfruitful.
Now, so far as the order dated October 28,
2006 rejecting the petitioner-appellant's
objections to the recovery proceedings on
the ground of his independent rights as the
mortgagor's transferee are concerned, the
same does not impair the petitionerappellant's right to challenge after the
auction sale was held, as that is the
statutory right of the petitioner-appellant
under Rules 60 and 61 of the Rules framed
under the Second Schedule to the 1961 Act.
That right accrues only after the auction
sale is held and not earlier. Therefore, the
finality attached to the order dated October
28, 2006, so far as the present cause of
action is concerned, post auction is not at
all relevant. The learned Single Judge has
particularly emphasized the point that the
proclamation for sale is governed by Rules
54, 55, 60 and 61 of the Second Schedule
to the 1961 Act and relied on the decision
of
the
Supreme
Court
in
C.N.
Paramasivam and another v. Sunrise
Plaza through Partner and others, (2013)
9 SCC 460 to remark that the rules are
mandatory in character and their breach
would render the auction non-est in the
eyes of law. But, relying on C.N.
Paramasivam (supra) the learned Single
Judge has further held that the Rules being
mandatory
in
nature,
the
petitionerappellant would get a right to ask the sale
to be set aside under Rule 60, provided he
made an application to set aside the same
within 30 days of the auction sale upon
depositing the amount specified in the sale
proclamation together with interest at the
rate of 6% per annum. The learned Single
Judge has held that here the petitionerappellant never moved an application under
the said Rule and challenged the auction
sale by filing an appeal, where an interim
order was passed, directing him to deposit
an amount equal to that for which the
auction sale was made. It was remarked
that the petitioner-appellant's case is based
on an advantage that he seeks to derive out
of the said interim order, or so, the
petitioner-appellant's argument proceeds.
7 All. Kamal Kishore Vs. Debts Recovery Appellate Tribunal, Allahabad & Ors.
633
The learned Single Judge has then held that
it would be relevant to note that the
petitioner-appellant has never taken any
steps or deposited any amount towards the
outstanding loan to show his bona fides
before the interim order was passed. It has
been held that the petitioner-appellant has
not exercised his right, if any, as provided
under the Second Schedule to the 1961 Act
and therefore, the submission that there was
no adherence to those Rules by the
Recovery Officer, is not available to the
petitioner-appellant.

17. On the above count, it appears
that the learned Single Judge was of
opinion that the right of appeal under
Section 30 could not be exercised by the
petitioner-appellant, unless as a person
whose interest was affected by the sale, he
had made an application to the Recovery
Officer within 30 days of the auction sale,
asking the sale to be set aside by making
the necessary deposits under Section 60, or
made an application in terms of Rule 61.
He could not have simply appealed under
Section 30 of the RDDBFI Act without
making either an application under Rule 60
or 61 before the Recovery Officer.

18. The reasoning of the learned
Single Judge on this score does not appeal
to us, because it is not that the provisions of
the relevant Rules for recovery under the
Second Schedule to the 1961 Act are
applicable in derogation of the right of a
person aggrieved by any order of the
Recovery Officer made under the RDDBFI
Act, to prefer an appeal under Section 30 of
the said Act to the Tribunal. An appeal
under Section 30 of the RDDBFI Act can
be preferred by a person aggrieved by the
Recovery Officer's orders, notwithstanding
the fact that he has not invoked the
provisions of Rule 60 or 61 of the Second
Schedule to the 1961 Act. This is so
because Section 30 of the RDDBFI Act
opens with a non-obstante clause that gives
an overriding effect to the provisions of
Section 30 of the said Act. It is Section 29
of the RDDBFI Act, extracted hereinabove,
that makes provisions of Second Schedule
of the 1961 Act applicable to proceedings
for recovery under the RDDBFI Act. The
application of the Rules, including Rules 60
and 61 of the Rules under the Second
Schedule of the 1961 Act to a recovery
under the RDDBFI Act cannot, therefore,
be construed in a manner so as to derogate
from the plenary right of a person
aggrieved by the Recovery Officer's order
of any kind to appeal to the Tribunal.

19. The aforesaid question fell for
consideration
very
recently
before
a
Division Bench of the Bombay High Court
in Sarang Avinash Kamtaker v. Alpha
Organic
and
others,
MANU/MH/
1202/2022, where considering an identical
contention, the Division Bench held :

"22. So far as the contention
raised by learned Counsel on behalf of
Kamtekar that Alpha Organic failed to
invoke the provisions of Rules 60 and 61 of
the Second Schedule of the IT Act, in the
absence of which, the Appeal is not tenable,
we find that the DRAT for the reasons
mentioned in paragraph 12 rightly came to
the conclusion that the said contention on
behalf of Kamtekar deserves to be rejected.
Rule 60 of the Second Schedule of the IT
Act provides for setting aside of the sale of
the immovable property by deposit of the
amount specified in the proclamation of
sale and interest thereon along with penalty
for payment to the purchasers within 30
days from the date of the sale. Rule 61
provides for setting aside the sale on
ground of non-service of notice or
634 INDIAN LAW REPORTS ALLAHABAD SERIES
irregularity. Section 30 (1) of the RDDB &
FI Act provides for an Appeal. It reads
thus:-

"30(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."

23. Section 30 (1) starts with a
non-obstante clause. The DRAT in support
of its conclusion that Section 30 (1)
overrides Section 29 of the RDDB & FI
Act, took support from the observation of
this Court in Hill Properties Ltd. (supra).
We may usefully refer to paragraph 29 of
the said decision which reads thus:-

"29.
Section
30
as
now
substituted by Act 1 of 2000 begins with a
non-obstante clause. A person aggrieved by
an order of the Recovery Officer may
within thirty days from the date on which a
copy of the order is issued to him, prefer an
appeal to the Tribunal. Under Sub-section
(2) of Section 30 a power is given to set
aside or modify an order made under
Sections 25 to 28. Section 30 co-jointly
with
Section
29
would
mean
that
irrespective of the Appellate remedy
provided in Part VI of IInd Schedule (Rule
86) to the I.T. Act an Appeal would lie to
the Tribunal in respect of orders made
under the Second Schedule to the I.T. Act.
We may clarify that considering the
language of Rule 11(6) an appeal would not
lie under Rule 86 of the Second Schedule.
Therefore, under Section 30 even if an
appeal as provided under Rule 86 is not
available because of Rule 11(6) making the
order of the Recovery Officer conclusive,
nevertheless Section 30 of the Act provides
a remedy by way of Appeal against the
order passed under the IInd Schedule. We
may clarify here that Section 20 is a
provision for Appeal from an order of the
Tribunal, when Section 30 is a provision
for appeal against the order of the Recovery
Officer."

 24. Section 30 thus
provides for an appellate forum against any
orders of the Recovery Officer which may
not be in accordance with law. The
contention of learned Counsel on behalf of
Kamtekar that unless the provisions of
Rules 60 and 61 are resorted to, the Appeal
under Section 30 is not maintainable can
only be stated to be rejected."

20. The aforesaid decision of the
Bombay High Court follows an earlier
decision in Hill Properties Limited v.
Union Bank of India & Ors., 2016 SCC
OnLine Bom 10362.

21.
 The
same
issue
fell
for
consideration before the Madras High
Court in Nazims Continental and others
v. The Indian Overseas Bank, Triplicane
Branch, Madras and others, 2009 SCC
OnLine Mad 862, where it was held:

"20. In view of the provisions of
law and finding of the Court and
discussions made above, we hold that the
recovery officer has also jurisdiction to
entertain an application under rules 60, 61
and 62 of Part-III of 2nd Schedule to the
Income Tax Act and in case any person is
aggrieved against such order, may prefer
appeal u/s 30 of the Act, 1993. As the
defaulter or any person whose interests are
affected by sale is supposed to pay the predeposit amount under Rule 60 and a
7 All. Kamal Kishore Vs. Debts Recovery Appellate Tribunal, Allahabad & Ors.
635
defaulter required to pay pre-deposit
amount under Rule 61 except the person
whose interests are affected due to nonservice of notice on defaulter to pay the
arrerars
or
material
irregularity
in
publishing or conducting the sale should
apply under Rule 61 or the purchaser, who
may file application under Rule 62, who
are not liable to pre-deposit any amount, in
such case, for preferring an appeal u/s 30 of
Act, 1993, against an order of recovery
officer under Rules 60, 61 or 62, no predeposit amount required to be deposited.

21. Section 30 starts with non
obstante clause, as evident from the said
provision and quoted hereunder:--

"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 enquiry 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)."

In the case of Union of India v.
I.C. Lala (AIR 1973 SC 2204), Supreme
Court held that non obstante clause does
not mean that the whole of the said
provision of law has to be made applicable
or the whole of the other law has to be
made inapplicable. It is the duty of the
Court to avoid the conflict and construe the
provisions to that they are harmonious.

22. Mode of recovery of debt is
prescribed u/s 25 of DRT Act, as quoted
hereunder:--

"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;

(b) arrest of the defendant and his
detention in prison;

(c) appointing a receiver for the
management of the movable or immovable
properties of the defendant."

From the aforesaid provision it
will be evident that apart from attachment
and sale of movable or immovable property
of the defendant, the recovery officer, under
the said provision, may proceed to recover
the amount of debt by arresting the
defendant and his detention in prison or by
appointing a receiver for the management
of the movable or immovable properties of
the defendant. Those two provisions made
under clauses (b) and (c) of Section 25
cannot be challenged before the Recovery
Officer under II or III Schedule of Income
Tax Act. Therefore, except by preferring an
application (appeal) u/s 30 against the order
of recovery officer, any aggrieved person
has no other option. It cannot be said that
for sale of movable or immovable property
636 INDIAN LAW REPORTS ALLAHABAD SERIES
as made under II Schedule to Income Tax.
Act, including Rules 60 or 61 or 62 of PartIII of II Schedule, then by way of appeal
only u/s 30 could be preferred and no such
appeal could be preferred directly against
the order of attachment and sale of movable
or immovable property of the defendant, if
recovery officer pass such order u/s 25.
Therefore, we hold that against the order of
attachment and sale of movable or
immovable property of defendant, who are
the defendants before the Tribunal, an
aggrieved person, instead of moving
application under Rule 60 of 61 or 62, may
also prefer an application (appeal) u/s 30 of
the Act, 1993. Therefore, there being a
concurrent jurisdiction, DRT u/s 30 and
recovery officer under Rules 60, 61 and 62
of Part-III of II Schedule of Income Tax
Act in regard to movable property and
jurisdiction of Tribunal under Part-II of II
Schedule of Income Tax Act in regard to
movable property, application of any
defendant
cannot
be
entertained
by
Tribunal u/s 30 without pre-deposit of the
amount in terms with Rules 60 or 61
bypassing the jurisdiction of the recovery
officer under the aforesaid provisions of II
Schedule of Income Tax Act. Further, the
auction purchaser being not a defendant in
the original application u/s 19, cannot file
an appeal u/s 30 against the order of
recovery officer, if it intends to prefer an
application, if under the provision of Rule
62 of Part-III of II Schedule to Income Tax
Act."

 (emphasis by Court)

22. The aforesaid position of the law
makes it pellucid that it is not imperative
for a defaulter or any person whose interest
is affected by the sale held by the Recovery
Officer acting under the RDDBFI Act to
take resort to the provisions of Section 60
or 61 of the Second Schedule to the 1961
Act. Doing a harmonious constructions of
the provisions of Sections 29 and 30 of the
RDDBFI Act, the right of a person
aggrieved by an order of the Recovery
Officer under the aforesaid Act cannot be
confined in the manner that he must of
necessity invoke Rule 60 of 61 by making
an application before the Recovery Officer
in the first instance and against the order of
the Recovery Officer, come up in appeal
under Section 30.