Though Section 25 of Recovery of Debts and Bankruptcy Act, 1993 does not indicates a hierarchy amongst the recovery modes available and Recovery Officer is free to choose the one suitable, if chooses to exercise the option “arrest and detention in prison of the borrower” will have to carefully assess all the facts on record to ensure that ingredients of Rule 73 of Second schedule of the Income Tax Act are established – Kishor K. Mehta Vs. Recovery Officer, Debts Recovery Tribunal, II, Mumbai – Bombay High Court
Hon’ble High Court held that the arrest of the defaulter and his detention in civil prison is one of the modes. Though Section 25 does not indicates a hierarchy amongst the modes available and the Recovery Officer is free to choose the one suitable, the arrest and detention of a person in prison, considering consequences will be the most stringent measure available. This is not to say the arrest should be the mode of last resort. But considering the consequences, the Recovery Officer, if chooses to exercise the option “arrest and detention in prison of the borrower” as mode of recovery will have to carefully assess all the facts on record to ensure that ingredients of Rule 73 are established. The Recovery Officer has to satisfy himself that the defaulter, with the object or effect of obstructing the execution of the certificate, has, after the drawing up of the certificate by the Recovery Officer, dishonestly transferred, concealed, or removed any part of his property. He has to be further satisfied that the defaulter has, or had since the drawing up of the certificate by the Tax Recovery Officer, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. The Recovery Officer can issue a warrant of arrest against the defaulter, that, with the object of delaying the execution of recovery certificate, the defaulter is likely to abscond or leave the local limits of jurisdiction of the Recovery Officer.
