Rule 17 of the Second Schedule of Income Tax Rules, 1961 doesn’t impose any restriction on the Bank from participating and purchasing property in auction where invitation to bid did not result in any response from any interested bidder and it is the Recovery Officer on whom such an embargo has been placed.
a) Whether a bank can purchase mortgaged property in auction sale from its own borrower where there is no show or invitation to bid doesn’t result in any response from bidder?
b) Whether Rule 17 of the Second Schedule of Income Tax Rules, 1961 imposes any restriction in permitting a Bank to take part in the public auctions?
a) ICICI bank Ltd. approached DRT for enforcing security interest against loan. The DRT directed recovery officer to conduct a public auction after fixing offset price however, no bidder came forward to purchase property.
b) In such circumstances, the Bank itself had offered to purchase the properties and Bank’s oer was accepted and property were sold to Banks. The Bank gave an option to the respondents-borrowers to deposit the amount with interest however, the respondent borrowers did not acted upon.
c) The respondent-borrowers moved to DRT and later to DRAT against sale of the mortgaged properties to Bank however, the plea was dismissed by both the Tribunals.