Indo Foreign Commercial Agency ... vs Punjab And Sind Bank
2010 Latest Caselaw 2813 Del

             THE HIGH COURT OF DELHI AT NEW DELHI

%                                  Judgment delivered on: 28.05.2010

+            W.P.(C) 12640/2009

INDO FOREIGN COMMERCIAL AGENCY (PRODUCE) PVT. LTD
AND ORS                              ..... Petitioner

                                   versus


PUNJAB AND SIND BANK                           ..... Respondent

Advocates who appeared in this case:

For the Appellant : Mr Neeraj Kishan Kaul, Sr. Adv. with Mr Madan Lal Sharma, Mr B.R. Ranjan and Mr Varun Nischal For the Respondent : Mr Rajinder Wali

CORAM:-

HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE V.K. JAIN

1. Whether Reporters of local papers may be allowed to see the judgment? Yes

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in Digest? Yes

BADAR DURREZ AHMED, J (ORAL)

1. This writ petition is directed against order dated 28.04.2009

passed by the Debts Recovery Appellate Tribunal (DRAT). The appeal

before the DRAT was, in turn, directed against the order dated 12.09.2008

passed by the Debts Recovery Tribunal (DRT) in IA No. 188/2008 in OA

No. 443/1996 in which the appellants were defendants. By virtue of the

order passed by the DRT, the appellants were restrained from selling,

transferring, disposing of or creating any third party interest in respect of

House No. 5 and 7, Hemkunt Colony, New Delhi. The DRAT has

confirmed this order of the DRT and that is why the petitioners are before

us.

2. Petitioner No.2 (Mr Iqbal Singh) is the registered owner of House

No.7, Hemkunt Colony, New Delhi. Similarly, the petitioner No. 4 (Mrs

Amrita Sahni) is the registered owner of House No.5, Hemkunt Colony,

New Delhi. The petitioner No.1 had taken a loan from the respondent bank

(Punjab & Sind Bank) and the aforesaid petitioner Nos. 2 and 4 had given

personal guarantees in view of the fact that they were Directors in the

petitioner No.1 company. However, it is the case of the petitioners that the

aforesaid properties were not the subject matter of any mortgage or any

charge, etc. in connection with the said loan transaction.

3. The plea taken before us by the petitioners is that these properties

were the only residential premises which the said two petitioners namely

petitioner Nos. 2 and 4 owned, possessed and occupied, respectively. It was,

therefore, contended that in view of the provisions of clause (ccc) of the

proviso to Section 60(1) of the Code of Civil Procedure, 1908 (CPC) as

applicable to Delhi, sole residential premises could not be the subject matter

of any restraint or attachment order. Mr Kaul, the learned senior counsel

appearing on behalf of the petitioner was candid enough to say that this plea

was not taken before the authorities below, but in view of the fact that it is a

legal plea he may be permitted to advance arguments before us on this

aspect.

4. We permitted him to do so. The point taken by Mr Kaul is that

under Section 291 of the Recovery of Debts Due to Banks and Financial

Institutions Act, 1993 (hereinafter referred to as the DRT 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, apply, as far as possible with necessary modifications, as if the said

provisions and the said rules referred to debts due under the DRT Act

instead of recoveries under the Income Tax Act, 1961. The Second

Schedule to the Income Tax Act, 1961 deals with the procedure for recovery

of tax. Rule 10 of the said second schedule reads as under:

"Property exempt from attachment. (1) All such property as is by the Code of Civil Procedure, 1908 (5 of 1908), exempted from attachment and sale in execution of a decree of a civil court shall be exempt from attachment and sale under this Schedule.

(2) The Tax Recovery Officer's decision as to what property is so entitled to exemption shall be conclusive."

5. It is clear from a reading of Rule 10 that all the properties which

are exempted from attachment and sale in execution of a decree of a civil

court by virtue of the Code of Civil Procedure, 1908 would also be

exempted from attachment and sale under the Second Schedule. Meaning

thereby that the said exemption would also apply to recovery proceedings

under the DRT Act.

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.

6. The proviso to Section 60(1) (CPC) lists a set of properties which

are not be liable to attachment or sale. In so far as Delhi is concerned,

clause (ccc) of the said proviso reads as under:-

"One main residential house and other buildings attached to it (with the material and the sites thereof and the land immediately appurtenant thereto and necessary for their enjoyment belonging to a judgment-debtor other than an agriculturist and occupied by him.

Provided that the protection afforded by this clause shall not extend to any property specifically charged with the debt sought to be recovered."

7. Thus, one main residential house and other buildings attached to

it and the land immediately appurtenant thereto and necessary for their

enjoyment belonging to a judgment-debtor other than an agriculturist and

occupied by him is excluded from the purview of attachment or sale in

execution of a decree. Of course, clause (ccc) to the said proviso also

contains a proviso that the protection afforded by the clause would not

extend to any property specifically charged with the debt sought to be

recovered. It is an admitted position that the properties in question have not

been specifically charged with the debt sought to be recovered.

Consequently, this proviso to clause (ccc) would not apply.

8. Hence, if the contention of the petitioners that the aforesaid

properties are their main residential houses, respectively, and that the same

are occupied by them, is correct, then, in view of the aforesaid provisions,

the said properties would be exempt from attachment or sale in execution of

any decree or in the present case recovery of a debt.

9. Section 19(12) of the DRT Act empowers the DRT to make an

interim order whether by way of injunction or stay of attachment against the

defendant debarring it from transferring, alienating or otherwise dealing with

or disposing of any properties and assets belonging to him without the prior

permission of the said Tribunal. It is obvious that this power of making an

interim order which the Tribunal possesses will have to be read with the

provisions of Section 29 of the DRT Act, which, in turn, would have to be

read with provisions of Rule 10 of the second schedule of the Income Tax

Act, 1961 and clause (ccc) of the proviso to Section 60(1) of the Code of

Civil Procedure, 1908. We are in agreement with the submission made by

Mr Kaul that what cannot be done at the stage of execution of a decree or

recovery of debt after the debt is determined cannot also be done at the

interim stage. Since the main residential house, which is occupied by a

debtor, is exempt from attachment and sale in recovery of a debt, which has

been finally determined by the Tribunal, it cannot also be made the subject

matter of an interim order by way of restraint or injunction. Therefore, the

reference to properties and assets in Section 19(12) of the DRT Act would

have to be read as meaning only those properties and assets which have not

been excluded from attachment or sale under the said provisions of CPC as

applicable to Delhi.

10. As pointed out above, this plea had not been taken before the

authorities below and, therefore, there is no factual determination as to

whether the aforesaid two properties namely House No. 5 and House No. 7,

Hemkunt Colony, New Delhi were the main residential houses occupied by

the petitioner Nos. 2 and 4, respectively. Thus, it would be necessary for us

to remit the matter to the DRT to examine this issue on facts and then pass

an order in view of the position in law explained by us.

11. The impugned order is set aside. The matter is remitted to the

Tribunal as aforesaid. The consequence of this order is that IA No.

188/2008 in OA 443/1996 will get revived and will have to be heard for

determining the factual position with regard to the said properties being the

main residential houses and being occupied by petitioner Nos.2 and 4,

respectively. In case they are held to be the main residential houses

occupied by the said petitioners, then no attachment or restraint order can be

passed in respect thereof.

12. Mr Kaul, learned senior counsel appearing on behalf of the

petitioners makes a statement on instructions received by him that till such

determination by the DRT, the said properties will not be sold, alienated,

transferred or the possession be parted with. We hope that the DRT shall

dispose of the said application as expeditiously as possible, preferably within

three months. It is also understood that the parties shall not take

adjournments.

The writ petition stands disposed of.

BADAR DURREZ AHMED, J

V.K. JAIN, J

MAY 28, 2010 Ag