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M/S Ashok Kumar Rice Oil & Flour Mills & Others v/s Recovery Officer & Others


Company & Directors' Information:- N K OIL MILLS PVT LTD [Active] CIN = U15201GJ1994PTC022669

Company & Directors' Information:- B P OIL MILLS LIMITED [Active] CIN = U15142UP1965PLC003232

Company & Directors' Information:- J P FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15311WB2004PTC098409

Company & Directors' Information:- N K FLOUR MILLS LIMITED [Amalgamated] CIN = U24231GJ1992PLC017406

Company & Directors' Information:- INDIA RICE LTD [Under Liquidation] CIN = U01111KL1994PLC008050

Company & Directors' Information:- K P L OIL MILLS PRIVATE LIMITED [Active] CIN = U15142KL1983PTC003685

Company & Directors' Information:- R S RICE MILLS PRIVATE LIMITED [Active] CIN = U15319UP1998PTC023610

Company & Directors' Information:- K B M FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15122UP2013PTC054902

Company & Directors' Information:- P. D. R. D. RICE MILLS PRIVATE LIMITED [Active] CIN = U01403WB2009PTC132822

Company & Directors' Information:- R R FLOUR MILLS PVT LTD [Active] CIN = U15147MP1987PTC003858

Company & Directors' Information:- G M T RICE MILLS PRIVATE LIMITED [Active] CIN = U15312PB2000PTC023708

Company & Directors' Information:- B S RICE MILLS PVT LTD [Active] CIN = U15312WB1991PTC051888

Company & Directors' Information:- H R RICE MILLS PRIVATE LIMITED [Active] CIN = U15312WB2008PTC128015

Company & Directors' Information:- H P RICE MILLS PRIVATE LIMITED [Dormant under section 455] CIN = U15312OR2005PTC008428

Company & Directors' Information:- A K FLOUR MILLS PRIVATE LIMITED [Active] CIN = U24231GJ1981PTC004155

Company & Directors' Information:- A G RICE MILLS PRIVATE LIMITED [Active] CIN = U15311PB1996PTC018430

Company & Directors' Information:- M. P. FLOUR MILLS PRIVATE LIMITED [Active] CIN = U74899DL1966PTC004548

Company & Directors' Information:- H H OIL & FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15143DL2011PTC226114

Company & Directors' Information:- J B FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15311UP2004PTC029134

Company & Directors' Information:- N K B OIL MILLS PRIVATE LIMITED [Active] CIN = U15142KL1999PTC013095

Company & Directors' Information:- L R RICE MILLS PVT LTD [Active] CIN = U15312AS1989PTC003244

Company & Directors' Information:- G RICE INDIA LIMITED [Strike Off] CIN = U15312HP1998PLC022089

Company & Directors' Information:- K M J RICE MILLS PRIVATE LIMITED [Strike Off] CIN = U15312KL1999PTC013400

Company & Directors' Information:- K K K OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15142KL2000PTC013621

Company & Directors' Information:- K M RICE MILLS PRIVATE LIMITED [Under Process of Striking Off] CIN = U15491UP1992PTC014716

Company & Directors' Information:- P C RICE MILLS PRIVATE LIMITED [Active] CIN = U01111DL1998PTC092389

Company & Directors' Information:- M P RICE PRIVATE LIMITED [Active] CIN = U15312PB1998PTC021722

Company & Directors' Information:- G B RICE MILLS PRIVATE LIMITED [Active] CIN = U15312UP1987PTC008772

Company & Directors' Information:- A P RICE MILLS PVT LTD [Active] CIN = U15312PB1993PTC013139

Company & Directors' Information:- M R RICE MILLS PRIVATE LIMITED [Active] CIN = U15312PB1986PTC006773

Company & Directors' Information:- A AND F FLOUR MILLS PRIVATE LIMITED [Strike Off] CIN = U15311JK1997PTC001694

Company & Directors' Information:- S N OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15142HR1986PTC025702

Company & Directors' Information:- G. B. OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15326HR1985PTC019817

Company & Directors' Information:- R. OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15141DL1992PTC047883

Company & Directors' Information:- J K OIL MILLS COMPANY LIMITED [Strike Off] CIN = U15143UP1955PLC002570

Company & Directors' Information:- R K RICE MILLS PVT LTD [Active] CIN = U15312PB1988PTC008140

Company & Directors' Information:- S D RICE PRIVATE LIMITED [Strike Off] CIN = U15312PB1999PTC022547

Company & Directors' Information:- KUMAR OIL MILLS PRIVATE LIMITED [Active] CIN = U65921UP1985PTC007368

Company & Directors' Information:- K. RICE AND OIL MILLS PRIVATE LIMITED [Active] CIN = U15319PB1993PTC012970

Company & Directors' Information:- KUMAR OIL MILLS PRIVATE LIMITED [Active] CIN = U15141RJ1987PTC004063

Company & Directors' Information:- KUMAR RICE AND FLOUR MILLS PRIVATE LIMITED. [Strike Off] CIN = U15311UP1984PTC006770

Company & Directors' Information:- N N OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15147MH1999PTC117989

Company & Directors' Information:- R K FLOUR MILLS PVT LTD [Strike Off] CIN = U15310AP1981PTC003087

Company & Directors' Information:- ASHOK RICE MILLS PRIVATE LIMITED [Active] CIN = U15312HR1993PTC032090

Company & Directors' Information:- C S FLOUR AND RICE MILLS PRIVATE LIMITED [Strike Off] CIN = U74120UP2015PTC072522

Company & Directors' Information:- KUMAR FLOUR MILLS PRIVATE LIMITED [Strike Off] CIN = U15419TN1989PTC018472

Company & Directors' Information:- C N FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15311DL1983PTC172336

Company & Directors' Information:- THE RICE COMPANY INDIA PRIVATE LIMITED [Active] CIN = U74899DL2001PTC109522

Company & Directors' Information:- J & T OIL MILLS PRIVATE LIMITED [Strike Off] CIN = U15141KL2006PTC019754

Company & Directors' Information:- U P OIL AND FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15134UP2021PTC142001

Company & Directors' Information:- A AND R OIL MILLS PVT LTD [Strike Off] CIN = U15315CH1994PTC014265

Company & Directors' Information:- B R RICE MILLS PRIVATE LIMITED [Strike Off] CIN = U01404DL1990PTC038906

Company & Directors' Information:- RICE INDIA (P) LTD. [Strike Off] CIN = U99999DL1998PTC092455

Company & Directors' Information:- R L FLOUR MILLS PRIVATE LIMITED [Active] CIN = U15311ML2001PTC006521

Company & Directors' Information:- K P FLOUR MILLS PRIVATE LIMITED [Strike Off] CIN = U15122UP2009PTC037995

Company & Directors' Information:- INDIA FLOUR MILLS LIMITED [Not available for efiling] CIN = U99999MH1908PTC000283

Company & Directors' Information:- ASHOK OIL MILLS LTD. [Dissolved] CIN = U99999MH1948PLC006680

    Writ-C No. 29981 of 2009

    Decided On, 03 March 2016

    At, High Court of Judicature at Allahabad

    By, THE HONOURABLE MR. JUSTICE ARUN TANDON & THE HONOURABLE MR. JUSTICE HARSH KUMAR

    For the Petitioners: J.H. Khan, Gulrez Khan, W.H. Khan, Advocates. For the Respondents: Asgi, A.K. Mishra, Dr. A.K. Nigam, K.M. Asthana, Manoj Kumar Srivastava, Advocates.



Judgment Text

1. Heard Shri W.H. Khan, learned counsel for the petitioner

2. Petitioner before this Court is stated to have taken certain financial assistance from State Bank of India. Because of his having failed to return the financial assistance, the bank instituted Civil Suit no.61 of 1991 for realisation of a sum of nearly Rs.12.00 lacs.

3. The suit against the petitioner was decreed ex-parte on 27.5.1994. The petitioner made an application under Order 9, Rule 13 along with an application under Section 5 of the Limitation Act on 9.2.1996 for recall of the ex-parte decree.

4. In the meantime, Debit Recovery Tribunal was constituted under the Recovery of debt due to Bank, and other Financial Institutions Act, 1992 as a result whereof the suit proceedings along with the application for recall of the ex-parte decree stood transferred to the Debt Recovery Tribunal at Jabalpur and finally to Allahabad. The Debt Recovery Tribunal vide order dated 13.6.2002 rejected the application for recall of ex-parte decree.

5. Not being satisfied, the petitioner filed First Appeal No.R-187 of 2002 before the Debt Recovery Appellate Tribunal, Allahabad. The appeal was rejected vide order dated 3.11.2004. Not being satisfied, the petitioner filed writ petition no.50209 of 2004 wherein an interim order was granted on 29.11.2004 which provided that on deposit of 25% of the total amount due as on date with reference to the ex-parte judgment and decree along with interest within two months, the recovery proceedings against the petitioner shall remain stayed.

6. The records reflect that the petitioner failed to avail the benefits of the interim order so granted in his favour. The bank accordingly, proceeded for execution of the ex-parte judgment and decree.

7. The property of the petitioner had been attached under an order dated 22.4.2002. This property was put to auction and sale proclamation was issued on 27.5.2002. The petitioner objected to the fixation of the reserve price. It is his case that without considering the said objections of the petitioner, the property was sold on 28.4.2009 for a sum of Rs.9,55,000/-, after the reserve price was shown as Rs.9.00 lacs only.

8. The petitioner in order to challenge the auction proceedings made an application under Rule 61 of the Second Schedule of the Income Tax Act, 1961. Since the application was not being entertained because of the non-compliance of proviso (b) to Rule 61, the petitioner has come up before this Court by means of the present writ petition with the following prayer :-

'(i) issue a writ, order or direction in the nature of mandamus declaring proviso (b) to Rule 61 of the second schedule to Income Tax Act 1961 as ultra vires and commanding the respondents not to give effect to the said provision;

(ii) issue a writ, order or direction in the nature of certiorari quashing the impugned orders dated 29.05.2009 (Annexure-10) passed by respondent No. 1;

(iii) issue a writ, order or direction in the nature of mandamus commanding the for mandamus commanding the respondent no. 1 to entertain and decide the application/objection of the petitioners under Rule 61 of the second proviso to Income Tax Act 1961 on merits;

(iv) issue a writ, order or direction in the nature of certiorari quashing the auction sale dated 28.4.2009.'

9. So far as the first prayer made by the petitioner for the purpose of challenging the vires of proviso (b) to Rule 61 of the Second Schedule of the Income Tax Act, 1961 is concerned, counsel for the petitioner Shri W.H. Khan contended before us that the condition of deposit of the entire amount mentioned in the certificate as a condition precedent for entertaining the application, raising objection to the auction sale is arbitrary as it imposes harsh condition and makes the remedy illusory.

10. It is submitted that the condition provided for under proviso (b) to Rule 61 is hit by Article 14 of the Constitution of India, being oppressive in nature.

11. Counsel for the petitioner refers to the judgment of the Apex Court in the case of Mardia Chemicals Ltd. Etc. v. Union of India & Others reported in 2004(4) SCC 311 specifically paragraph 59 in support of the proposition that the proceedings under Rule 61 are in the nature of original proceedings and requirement of pre-deposit of the amount at the first instance of the proceedings to the extent mentioned in the recovery certificate cannot be sustained.

12. It is explained that such conditions for approaching the Adjudicating Authority at the first instance, would render the remedy illusory for the reasons which have been stated in paragraph 64 of the said judgment. He submits that same is the nature of proviso (b) to Rule 61.

13. Counsel for the respondent points out that the issue with regard to the validity of the condition imposed under Rule 61 proviso B had been the subject matter of consideration before the Madras High Court in the case of B. Sampath Kumar v. Recovery Officer, decided on 25.10.2007, reported in Madras Law Journal 2007 (6) page 1199. It is further explained to the Court that the recovery certificates with reference to which the property has been put to auctioned was preceded by adjudication by competent authority under the Debt Recovery Act followed by the decision on appeal provided before the Appellate Tribunal and in such a situation it cannot be said that recovery certificate which has been issued is the first stage of determination/quantification of the amount, which is said to be recovered. It is then stated that Rule 61 of the Income Tax Rule has stood the test of time for more than 55 years. There is hardly any reason for this Court to declare the rule as unreasonable, arbitrary and violative of Article 14 of the Constitution of India.

14. We have heard counsel for the parties and examined the records of the present writ petition.

15. At the very outset we may record that the Apex Court in the case of Mardia Chemicals (supra) has laid down that the conditions of pre-deposit while approaching the adjudicating authority at the first instance, not in appeal may be discriminatory if it imposes such conditions of deposit of 75% of the amount claimed. Inasmuch as such conditions are not alone onerous and oppressive they are also unreasonable and arbitrary.

16. But it has to be kept in mind that the Apex Court was examining the proceedings under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 wherein for setting aside the ex-parte recovery proceedings. It was held that the proceedings under Section 17 of the Securitization Act are in lieu of Civil Suit which remedy alternatively available but for the bar of section 34 of the Act which required deposit of 75% of the amount. It is in this context that the Supreme Court had gone on to hold that the condition imposed was oppressive and therefore, arbitrary and violative of Article 14 of the Constitution of India.

17. The facts in hand are clearly distinguishable as there had been adjudication of the quantum of the money which was due against the petitioner in the civil suit. Although under ex-parte decree and thereafter the petitioner had availed the two opportunities by making an application for setting aside the ex-parte decree, which was rejected by the Debt Recovery Tribunal. The appeal filed against the same was also rejected by the Appellate Tribunal. It is only thereafter that the recovery certificate has been issued which is sought to be recovered in the manner prescribed under Rule 61 of the Second Schedule to the Income Tax Act, 1961.

18. We therefore, have no hesitation to record that the proceedings under Rule 61 of the Income Tax Act, 1961 on a certificate issued under the Debt Recovery Tribunal Act cannot be said to be proceedings at the first instance and therefore, the judgment in the case of Mardia Chemicals (supra) is clearly distinguishable.

19. We may also record that the obligation for deposit of the entire amount as per the certificate under Rule 61 of the Income Tax Act has been provided for only to avoid frivolous and routine applications for interfering with the auction of the properties of a defaulter after adjudication by a competent Tribunal. The certificates are issued mostly in favour of public sector banks and financial institutions.

20. It is with a definite purpose that the Legislature has come out with the mode and manner of the recovery of the money in terms of the adjudication order of the competent court by resorting to the procedure under Rule 61 of the Income Tax Act, after the adjudication of the right takes place.

21. We, therefore, do not find any substance in the challenge to the vires of Proviso (b) to Rule 61. Prayer in that regard is refused.

22. So far as the other prayer made by the petitioner is concerned, we find that he has already filed a writ petition against the appellate order, wherein a conditioned interim order was granted in his favour, requiring him to deposit 25% of the amount. The petitioner has failed to avail the benefit of such interim order as a result whereof the judgment and decree had to be put to execution. The property of the petitioner

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after attachment has been sold. These proceedings are of consequently dependent upon the fate of the writ petition, which has been filed by the petitioner challenging the appellate order. 23. If the appellate order falls all sub-sequential auction, proceedings will also fall automatically, provide an amendment application is made in the pending writ petition. 24. We are, therefore, of the opinion that this Court may leave it open for the petitioner to make an amendment in his pending writ petition for challenging the auction proceedings, if he feels aggrieved there from. 25. It is clarified that we have not gone on the merits of challenge to the auction proceedings in any manner. 26. The deposited sum of Rs.20.00 lacs by the prospective buyer may be returned by the Registrar General of this Court by means of Crossed Cheque drawn in his name within a month. 27. The writ petition is dismissed. 28. Interim order, if any, stands discharged. Petition dismissed.
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