Binu Vincent Vs Federal Bank Ltd. (Kerala High Court)
Conclusion: Limitation under Rule 68B of the second schedule to the Income Tax Act did not apply to RDDB Act (Recovery of Debts Due to Banks and Financial Institutions Act, 1993) proceedings as Rule 68B of the IT Act had no mandatory application to recoveries under the RDDB Act; the auction sale was valid and within jurisdiction and the writ petition, being barred by delay and res judicata, was dismissed in entirety.
Held: Assessee, borrowers and co-obligants of loans from Federal Bank, challenged the auction sale of mortgaged properties conducted on 25.07.2016 under recovery proceedings of Rs. 76,90,252.22/- pursuant to a Recovery Certificate dated 11.01.2012 issued by the DRT. Assessee argued that the Recovery Certificate, having been issued on 11.01.2012, the financial year ended on 31.03.2012, and the three-year period expired on 31.03.2015. The proclamation of sale issued on 24.05.2016 and the auction conducted on 25.07.2016 were therefore more than one year beyond the statutory limit, rendering them illegal and void. The essential contention raised by assessee, challenging the sale dated 25.07.2016 conducted by the Federal Bank, was that the sale was vitiated as it was affected beyond the period prescribed under Rule 68B of the Second Schedule to the Income Tax Act, 1961. Assessee relied on Ratheesh M.N. v. DRT [2019 (2) KHC 134] and C.N. Paramsivam v. Sunrise Plaza [(2013) 9 SCC 460], asserting that any sale beyond the statutory limitation was illegal and non est. The bank and auction purchasers argued that Rule 68B was inapplicable to proceedings under the RDDB Act, which prescribes no time limit for sale; that limitation was governed by the Limitation Act, 1963; and that the petition was barred by delay and constructive res judicata, since assessee had unsuccessfully challenged the recovery before the DRT, DRAT, and this Court multiple times. It was held that Rule 68B of the Second Schedule to the IT Act did not apply to recovery proceedings under the RDDB Act, as the latter was a self-contained code designed for expeditious recovery of debts. The incorporation under Section Act was only procedural and directory, not substantive or restrictive. The limitation period in Rule 68B was not mandatory, and its reference to “financial year” and “finality under Section 245-I” of the IT Act could not be imported into the RDDB framework. The sale, therefore, was not invalid for want of limitation. Further, the Court held that the proceedings were not void merely due to alleged procedural irregularity, and that the writ petition suffered from gross delay and laches (nearly 9 years) and was barred by constructive res judicata, as the issue had or could have been raised earlier.
