Banks can recover dues from sale of leased property mortgaged by tenant -SC

 This is a typical case of the abuse of the process of the legal system by unscrupulous litigants.  The person entitled in law to the possession of any immovable property, which is in the occupation of some other persons whether a tenant, licencee or trespasser can evict such tenant, licencee or trespasser by obtaining a decree for eviction from a competent civil court.

Attachment and sale of immovable properties of a person, who is adjudged to be owing some amount to another person is one of the modes of securing the repayment of such judgment debt. When an immovable property of the judgment debtor is brought to sale in order to recover the amounts adjudicated to be due, the possibility of such a property being in the possession of a third party either pursuant to some legal right or otherwise is recognized by law. Law also recognizes the possibility of such a third party objecting to or resisting his dispossession in the process of delivering the possession of the property to the purchaser in the execution proceedings. When such resistance is offered, law also contemplates an examination whether the resistance is justified or not. Depending upon the conclusion arrived at such an examination, the third party’s possession is either protected or he is evicted.

he first respondent Bank initially chose to seek a decree of eviction against the petitioner. The Debt Recovery Tribunal allowed the claim of the respondent Bank for recovery of the amount due from respondents.  On facts, the respondent-bank is entitled to recover the amounts claimed by it.   Once such a determination is made, the Presiding Officer of the tribunal is required to issue a certificate under Section 19(22) for the recovery of the amount of debt specified in the said certificate addressed to the Recovery Officer. Such a certificate, of, came to be issued. Thereafter the amounts due are required to be recovered by following an appropriate procedure established by law.

The scheme of the Income Tax Certificate Proceedings Rules, 1962 clearly establishes an alternative procedure for the eviction of a person (third party to the proceedings) in occupation of a property which is brought to sale pursuant to a Recovery certificate issued under the 1993 Act. The Rules under the Income tax Act which are adopted for the purpose of the recovery of debts due to the financial institution and banks under 1993 Act, provided for eviction of person other than judgment debtor in possession of the property of the judgment debtor in an appropriate case where it is found that the person in possession is not legally entitled for the same.

Thus, interference in exercise of the jurisdiction under Article 136 with the judgment under appeal and protecting the petitioner’s possession in the property in dispute would only delay the sale of the property in dispute thereby effectively postponing the recovery of the amounts due to the respondent-bank indefinitely.   The special leave petition is dismissed. The respondents are at liberty to proceed with the sale of property in dispute and handover the possession of the property to the purchaser after evicting the petitioner.

Nitin Gunwant Shah v.  Indian Bank (Supreme Court of India) – SLP (C) No. 22785 of 2010 Dated- 10.07.2012 

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