Case Note & Summary
The appeals arose from a judgment of the High Court of Madhya Pradesh dated 15.05.2009 in Writ Petition No. 2199 of 2008, which set aside the order of the Debts Recovery Appellate Tribunal, Allahabad dated 01.02.2008 and remitted the matter to the Debts Recovery Tribunal, Jabalpur for fresh inquiry. The appellants were the auction purchaser, the bank, and the son of the deceased judgment-debtor. The dispute concerned execution of a compromise decree and the auction sale of a residential property in New Delhi. The company, M/s. Sterling Malt & Foods Pvt. Ltd., had availed credit facilities from Punjab & Sind Bank. Directors, including the judgment-debtor, gave personal guarantees. The Delhi property was not mortgaged for the loan. The company's unit ceased functioning in 1983, leading to suits for recovery. A compromise decree was passed on 15.10.1991 by the Morena court, requiring L.K. Trust and its trustees to pay Rs.1.80 crores in instalments. The compromise clarified that release of title deeds of the Delhi property would not affect the personal liability of the judgment-debtor. After the judgment-debtor's death in 1994, the Trust defaulted, attributing the default to the Bank's failure to hand over possession of the factory. The Bank initiated execution, and after rejection of attachment for lack of territorial jurisdiction, the case was transferred to DRT under Section 31 of the RDDB Act. The Recovery Officer ordered auction of the Delhi property on 20.09.2004. Respondent no.1, the widow, filed recall application, which was rejected on 10.10.2006. The auction of the Delhi property took place on 27.11.2006, and the sale was confirmed with issuance of sale certificate on 01.03.2007. Respondent no.1's writ petition claiming exemption under Section 60(1)(ccc) CPC was dismissed by the Single Judge on 12.03.2007 for lack of factual foundation and failure to file Rule 60/61 application. The DRAT dismissed her appeal on 19.04.2007. The High Court in Writ Petition No. 2199 of 2008 set aside the DRAT order and remitted the matter. The final decision of the Supreme Court is not included in the provided text; the excerpt ends with the DRAT order dated 19.04.2007 dismissing the appeal.
Headnote
A) Execution of Decrees - Transfer of Execution Proceedings - Section 31 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (now Recovery of Debts and Bankruptcy Act, 1993) - Execution case transferred to DRT after establishment of DRT Jabalpur - The text records that after rejection of attachment of Delhi property for want of territorial jurisdiction, the execution case was transferred to DRT pursuant to the statutory mandate under Section 31, thereby enabling the Recovery Officer to order auction of the Delhi property (Paras 7-8).
B) Attachment and Sale of Property - Exemption from Attachment - Section 60(1)(ccc) of Code of Civil Procedure, 1908 - Residential property exemption - The Single Judge of the High Court held that respondent no.1 could not claim exemption under Section 60(1)(ccc) CPC without establishing a factual foundation and without filing an application under Rule 60 or Rule 61 of the Second Schedule to the Income Tax Act, 1961 (Para 13).
C) Auction Sale - Confirmation and Setting Aside - Second Schedule to Income Tax Act, 1961, Rules 60, 61 - Auction purchaser's rights and objections - The Recovery Officer confirmed the auction sale in favour of the Auction-Purchaser after the DRAT rejected the stay application, and respondent no.1 instead of preferring an application under Rule 60 or 61 filed a writ petition; the text indicates that no such statutory application was filed (Paras 11-13).
D) Compromise Decree - Personal Liability of Judgment-Debtor - Compromise decree terms - Clause 2(e) of the compromise recorded that title deeds of Delhi property furnished as collateral security would stand released, but expressly clarified that such release would not affect the judgment-debtor's personal liability to pay the decretal amount; this personal liability was central to subsequent execution proceedings against legal heirs (Paras 5-6, 9).
Issue of Consideration
Whether the High Court erred in setting aside the DRAT order dated 01.02.2008 and remitting the matter to the DRT for fresh inquiry; whether the Delhi property was exempt from attachment under Section 60(1)(ccc) CPC; whether the auction sale and sale certificate were validly confirmed; and related questions of procedural compliance under the RDDB Act and Income Tax Act Rules.
Law Points
- Execution proceedings transfer under Section 31 RDDB Act
- 1993
- Exemption from attachment under Section 60(1)(ccc) CPC
- Rule 60 and Rule 61 of Second Schedule to Income Tax Act
- 1961
- Personal liability of judgment-debtor under compromise decree
- Territorial jurisdiction of executing court
Case Details
2026 LawText (SC) (08) 62
Civil Appeal No. 182 of 2016, Civil Appeal No. 190 of 2016, Civil Appeal No. 191 of 2016
Sheela Gehlot, Punjab & Sind Bank, Jagminder Singh
Mohini Hardayal Singh & Ors. (in C.A. Nos. 182 and 190 of 2016); Punjab & Sind Bank & Ors. (in C.A. No. 191 of 2016)
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Nature of Litigation
Civil appeals arising from High Court order setting aside DRAT judgment and remitting matter to DRT for fresh inquiry in bank debt recovery execution proceedings.
Remedy Sought
The appellants challenged the High Court judgment dated 15.05.2009, which set aside the DRAT order and remitted the matter to the DRT for fresh inquiry; they sought restoration of the DRAT order or appropriate relief in the execution proceedings.
Filing Reason
The High Court had set aside the DRAT order dated 01.02.2008 and remitted the matter, allegedly erroneously, affecting the rights of auction purchaser, bank, and judgment-debtor's son in the execution and sale of Delhi property.
Previous Decisions
Morena court passed compromise decree on 15.10.1991; Recovery Officer DRT ordered auction of Delhi property on 20.09.2004; Recovery Officer rejected recall application on 10.10.2006; DRT rejected stay on 13.11.2006; High Court interim orders; DRAT dismissed appeal on 19.04.2007; High Court in Writ Petition No. 2199 of 2008 set aside DRAT order dated 01.02.2008.
Issues
Whether the High Court was justified in setting aside the DRAT order dated 01.02.2008 and remitting the matter to the DRT for fresh inquiry
Whether the Delhi property was exempt from attachment under Section 60(1)(ccc) of CPC
Whether the auction sale and issuance of sale certificate were valid despite objections raised by respondent no.1
Whether respondent no.1 was entitled to raise objections under Rule 60/61 of Second Schedule to Income Tax Act after confirmation of sale
Whether the execution proceedings were properly transferred to DRT under Section 31 of RDDB Act and whether notices were duly served on judgment-debtors
Submissions/Arguments
Respondent no.1 contended that no notice of execution case and transfer to DRT was served; instalments were paid but default occurred due to Bank's failure to hand over possession; compromise deed was signed by all parties; Delhi property was exempt under Section 60(1)(ccc) CPC as main residential property.
Bank contended that no lease deed was executed as per compromise, so possession was not handed over; default in instalments occurred; Form No.17 notice was duly served and no objections to valuation were raised; respondent did not file application under Rule 60/61 of Second Schedule to Income Tax Act.
Auction purchaser supported confirmation of sale and likely argued that sale certificate was validly issued after rejection of stay.
Judgment Excerpts
These appeals arise from the judgment dated 15.05.2009 passed by the High Court of Madhya Pradesh at Jabalpur (High Court) in Writ Petition No. 2199 of 2008, whereby the High Court set aside the judgment of the Debts Recovery Appellate Tribunal, Allahabad (DRAT) dated 01.02.2008 and remitted the matter to the Debts Recovery Tribunal, Jabalpur (DRT) for a fresh inquiry.
The house bearing No. S-246, Panchsheel Park, New Delhi (the Delhi Property) was not mortgaged for the loan taken by the Company.
Clause 2(e) of the compromise recorded that the title deeds of the Delhi property furnished as a collateral security by the judgment-debtor, would stand released, however, it was expressly clarified that the same would not affect his personal liability to pay the decretal amount.
The learned Single Judge of the High Court by an order dated 12.03.2007, dismissed the writ petition and inter alia held that: (i) the respondent no. 1 cannot claim exemption under Section 60(1)(ccc) of the Code without any factual foundation; and (ii) no application under Rule 60 or Rule 61 of the Second Schedule to the 1961 Act was filed.
Procedural History
The company availed credit facilities from Punjab & Sind Bank; unit ceased functioning in 1983. Bank filed suits in 1986 and 1987. Compromise decree passed on 15.10.1991 by Morena court. Judgment-debtor died on 17.11.1994. Trust defaulted after paying Rs.82,00,000. Bank filed execution petition in 1995. Attachment of Delhi property rejected for want of territorial jurisdiction on 12.08.1998. DRT established at Jabalpur on 07.04.1998; execution case transferred under Section 31 RDDB Act. Recovery Officer ordered auction of Delhi property on 20.09.2004. Respondent no.1's recall application rejected on 10.10.2006. DRT rejected stay on 13.11.2006; auction held on 27.11.2006; sale confirmed on 01.03.2007. Respondent no.1's writ petition dismissed on 12.03.2007; writ appeal disposed on 22.03.2007; DRAT dismissed appeal on 19.04.2007. High Court set aside DRAT order on 15.05.2009 and remitted matter to DRT.
Acts & Sections
- Code of Civil Procedure, 1908: Section 34, Section 60(1)(ccc)
- Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (now Recovery of Debts and Bankruptcy Act, 1993): Section 31
- Income Tax Act, 1961: Second Schedule, Rules 60, 61
