MODES OF RECOVERY
• Attachment of movable property of
defaulter(schedule II part II)
• Attachment of immovable property of
defaulter(schedule II part III)
• Appointment of Receiver for management
of defaulters property(schedule II part IV)
• Arrest of defaulter &his detention in prison
SERVICE OF NOTICE
• Most important
• TRI plays vital role.
• Improper service can vitiate proceedings
• Onus of service is on the Department
• Notices can be served by any of the modes
prescribed u/s282(i) of the IT Act.
DIFFERENT MODES OF
• Service by post
• Service otherwise than by post.
– Service on person
– service by affixture
– substituted service
ISSUE OF DEMAND NOTICE
• Issue of ITCP 1 sets in motion the recovery
• Important that demand is verified before
issue of notice
• D gets 15 days to pay demand.
• TRO can start further proceedings only after
the period of 15 days
• Notice should be sent by RPAD (SEC27Of
General clauses Act
• Presumption of service if
– notice was properly addressed
– pre paid
– &dispatched by registered post.
• Notice is also presumed to be served if the
same is received back with the remark of
SERVICE OTHERWISE BY
• Service on person-
– served by notice Server/Any other officer
– on the D or authorised person(orderVCPC
• Can be served on any adult family member
residing with D.Servant not included.
• Acknowledgment to be obtained.
• Despite service on person notice can also be
required to served by RPAD IF TRO so
• Tact& resourcefulness necessary.
SERVICE BY AFFIXTURE
• Can be resorted to if,
– D or his agent refuses to take notice
– serving officer after using all due&reasonable
diligence can not find D or his agent or any
other member on whom service can be made.
• Procedure-copy of notice should be affixed
• outer door(entrance) or any conspicuous
part of the building 9
• In which D ordinarily resides or carries on
business or personally works for gain
• Original should be returned to the TRO with
a repot giving i)circumstances under which
it was resorted to, ii)procedure
followed.iii)name &address of person
identifying the premises &in whose presence
notice was affixed iv) time of affixture.
• On receipt of report TRO should record
satisfaction note should examine if affidavit
not enclosed with report 10
• Can be resorted to if the D is avoiding
• TRO has to pass order(rule 20) recording
– copy of the notice to be affixed conspicuous
part of TROs office or on notice board
– rest of the procedure same as in service by
• Difference in two types of service 11
• Mere knowledge of issue of notice not sufficient
• Irregularity in service of notice - considered
material irregularity and auction sale can be
cancelled on this ground
• Period of 15 days after service of notice - valuable
right of defaulter. Consent or waiver on his part
does not confer jurisdiction on TRO to proceed
further in execution of the certificate
Attachment Of Property
• TRI plays important role in attachment of movable
/ immovable property.
• Knowledge about procedure and intricacies
involved is necessary.
• What is property ?
– No comprehensive definition in I.T.Act or transfer of
property act, general clauses act.
– These acts give definition of certain types of property
• There is distinction in Law between
movable property and immovable property.
• What is immovable property ?
– Property which is rooted / embedded in earth
e.g. Wall, Buildings etc.
– Factum of attachment to the earth though an
important consideration is however not the sole
– Degree and nature of attachment has also to be
– If the attachment or embedding is required only
when the property is in use, the property can be
considered as movable e.g. touring cinema.
• Examples of immovable property.
– Land, Houses, Building
– Tenancy rights where the tenant has disposing
– The interest of a member in the Undivided
Property of HUF.
• Examples of movable property.
– Growing or standing crops
– Partners interest in partnership property.
• Property does not merely connote full
ownership or proprietorship, but also
includes any right or power in respect of the
• Not defined in the Act
• Dictionary meaning- to take or apprehend
• In the context of recovery proceedings it
means seizure by legal process
• Coercive method to force D to pay the
• Power of attachment not unlimited.
• Rule 10 of II schedule exempts certain
– Houses and other buildings with the material
and sites thereof and the land immediately
appurtenant thereto and necessary for their
enjoyment, and belonging to an agriculturist or
a labourer domestic servant and occupied by
– Wearing apparel, cooking vessels, personal
ornaments as in accordance with religious
usage cannot be parted with by any woman.
– Tools of artisans - implements of husbandry
used by an agriculturists
– Provident Fund .
– Salary to the extent of first Rs.400/- and two
thirds of the reminder.
– An expectancy of succession by survivor- ship
or other merely contingent or possible right or
– A right to future maintenance.
• Properties which can be attached.
– Section 60 of the CPC lays down that the
following properties are liable to attachment:
– Land, Houses or other Buildings,Goods,
– Money, Bank notes, cheques, bills of exchange
Hundies, Govt. Securities, Bond or other
securities for money , debts, shares in a
corporation, all other salable property.
• The term property is used in a wide sense.
Even if a property does not belong to the
defaulter, any right or power in respect of
the same which the defaulter may have
– Acquired for his benefit can be seized and sold.
• Salable property means salable at a
compulsory court sale and not merely
transferable by acts of parties.
ATTACHMENT OF MOVABLE
• Warrant of attachment of movable property
can be issued when
– defaulter fails to pay demand within 15 days of
service of notice.
– Should be in writing and signed by TRO
– should specify the name of the defaulter and the
amount to be realised.
– Should state the place where the movables
should be attached.
• Service of warrant on the defaulter.
• Being coercive action should not be served
on any other family member.
• Attachment of property if amount not paid
• Attachment should be after sun rise and
before sun set.
• Power to break open outer/inner doors of the
house. No power to search or break open
doors of Almirah etc.
• Inventory of articles attached
• valuables like jewellery should be got
• Attached articles should be transported to
the Office of TRO for safe custody.
• Role of TRI in the above process.
– Considering the onerous nature of the duties
the TRI has to be methodical & meticulous.
• materials to be carried should be checked as
• Attachment of agricultural produce.
– Copy of the warrant to be affixed on the land.
– On the outer door or conspicuous part of the
house of D.
– Attachment of other movable property can be
made by issue of prohibitory orders.
• Attachment order is issued in Form
• Service of order on defaulter
• Fact of attachment to be proclaimed.
• Copy of order to be affixed-property of
D&in the o/o TRO
• panchnama to be prepared.
• Report of attachment to given to TRO
• TRI should collect all details of property
from office records. should carry necessary
forms &other material should make
necessary arrangement for proclamation
• Arrange for witnesses
• collect relevant details from Municipal
PROCLAMATION OF SALE
• ITCP12 warrant in favour of TRI
• Issue of proclamation of saleITCP13
– In local language
– time &place of sale
– should state whether subject to confirmation
– proper description of property.
– In case of more than one property order of sale
should be mentioned
• Attached property – to be sold by public auction
• Sale after 15 days from proclamation
• Exceptions-’d ’agrees ,cost of storage likely to be
excessive, property subject to natural decay
• Special procedure for agricultural produce
• Valuables-sale can be subject to confirmation
• Sale of agricultural produce R-41
• Growing crop-at or near the land
• If produce or gathered-at or near threshing
floor or market plce
• Sale can be postponed only once-offer not
fair in the opinion of auctioneer or ‘d’
requests on the same ground
• To sale next date at what ever that is offered
• R-42 sale to be held when ?
• Immovable property
• TRI should carry necessary kit for
• service of notice ,affixture on property ,
proclamation, panchanama & report are
some of the important points to be
• Settlement of sale proclamation -
– Before ITCP-13 - ITCP-17 is issued.
• Check list to be kept by TRI.
– Particulars applicable to movable/immovable
– Form No.12, 13 whether filled correctly.
– Correct arrears.
– Details of property.
– Name of Inspector
– Place of auction.
– Date & time of auction.
– Value of property.
• Preparation for auction
• How to conduct Auction
– 1) One of the important function -
– 2) Requires leadership, tact, ability to organise,
capacity to deal with public, tenacity, patience
and above all public relations.
– 3) Lot of preliminary work involved
– (i) Advertisement in local newspapers.
– (ii) Particulars of movable / immovable
a) Motor Car - taxes paid, year of
Registration, Condition etc. b) Building -
Details as Municipal record, Title deed,
Encumbrance, Taxes, Plan of property etc.
– (iii) Terms & Conditions of Auction to be
prepared carefully - copies given to bidders.
– (iv) Reserve price - fixation.
– (v) Venue of Auction .
– (vi) Proper arrangement - Drinking water, tea,
snacks, sealing arrangement etc.
– 4) Before Commencing Auction -
– Public address system - Adequate manpower
– i) Bidders list, collection of amount as security.
– ii)Authority letter from bidders - bidding on
behalf of other person.
– iii) Allow inspection of property by bidders.
– iv) Read conditions of sale, rate of bid.
– v) During auction - Name of bidder & amount
of bid - announce loudly & clearly. In case -
Adjournment - Signature of bidder -
vi) Knocking down of property - Signature of
– vii) Movable / Immovable Property - On
collecting money - poundage fee, Certificate of
sale to be given.
• Confirmation of sale of immovable property
– can be done only If no application for setting
– rule60,61 62
• Rule60-application by ‘D’or person
whose interests are affected. Payment as
per sale proclamation,plus 5%of purchase
money for payment to purchaser.
• 61-On the grounds of material irregularity
-ao or person whose interests are
– Sale to be set aside only if substantial injury
– Application by d only on payment.
DELIVERY OF POSSESSION
• A) Movable -
– Delivery is complete - property actually handed
over to the purchaser.
– Share in a Company -
– TRO makes order prohibiting ‘D’ from
transferring to anyone except to the purchaser -
– Alternative - Duplicate share certificate to be
• B) Immovable property -
– Rule 30 to 45 of ITCP Rules -
– TRO has powers to eject the ‘D’/ Occupant.
• Procedure for delivering possession:
– i) TRO issues Warrant in the name of TRI -
– ii)TRI serves Warrant on ‘D’ / Occupant.
– iii)Reasonable time to vacate to be given.
– iv)TRI to be present till complete vacation.
– v) Record panchanama in presence of two
– vi) Call purchaser - hand over vacant
– vii) Obtain statement from purchaser /
representative - possession has been taken.
– viii) Report to TRO.
• Physical removal of the occupant -
– Symbolic delivery - where the property is in
possession of the tenant.
• Time limit for sale of attached property-
APPOINTMENT OF RECEIVER
• Rules 69 to 72 second schedule
• property of D consists of business -business
can be attached -receiver for appointment of
• Attachment by prohibiting D from
transferring his business.
• 70- where immovable property is attached
receiver can be appointed instead of sale.
• Receiver has necessary powers for
management of property & realisation of
• After deducting expenses remaining
amount to be adjusted against dues of D.
• Rule 72withdrawal at the discretion of
TRO.or on full realisation of arrears.
ITCP RULES 48 TO 52
• Rule 48-powers of receiver
– Bringing in &defending suits
– Powers of realisation management, protection,
preservation of property collection of
rents/profits execution of documents as the
owner has. or such of these as TRO deems it fit
• Rule 49 remuneration TRO to fix it
• Duties of receiver-R-50(1)
• Furnish security
• Submit periodical accounts as directed
• Pay amount due from him to TRO
• Be responsible for any loss due to to his
negligence or willful default
• Rule 50(2)maintainance of ledger, cash book
counterfoil receipt book
• Rule 50(3)- bank account transaction
• Rule 50(4) accounts every three months or
• Rule 51 enforcement of duties-
• Receiver fails to submit accounts-property
can b attached
• TRO can make enquiry-whether payments
due from receiver are received whether any
loss –due to negligence etc if so direct
payment in specified time
• 51(3) failure to pay amount due – recovery
out of security or attachment &sale of
property of receiver
• Failure to render accounts or unlawful
retention of money-whole or part of
remuneration can be disallowed
• Rule 52 appointment of receiver form ITCP