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Auction Sale within 3 Years of issuing recovery certificate by DRT

In RATHEESH M.N vs THE DEBT RECOVERY TRIBUNAL, the High Court of Kerala has set aside an auction sale held for recovery of arrears due to a bank on the ground that it was done beyond the period of three years from the end of financial year in which recovery certificate was issued by the Debts Recovery Tribunal(DRT) on the basis of Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act,1993 (RDDBFI) read with Rule 68B of Second Schedule of the Income Tax Act,1961.

The Court noted that as per Section 29 of the RDDBFI Act, provisions of second and third schedule of the Income Tax Act should apply to procedure for recovery of debts as far as possible. Sale of immovable property in respect of income tax arrears is carried out as per Rule 68B of Second Schedule of Income Tax Act, as per which sale has to be carried out within 3 years from the end of financial year in which the order giving rise to dues under the Income Tax Act has become final or conclusive. In the context of RDDBFI Act, the Court read this as three years from the end of financial year in which recovery certificate was issued by the DRT.

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