The Karnataka High Court has declined to quash a Recovery of Debts and Bankruptcy Act (RDBA) demand notice issued alongside income tax provisions, advising the appellants to seek One Time Settlement (OTS) with the bank. The court found that the notice was properly issued per the process set out by the Debt Recovery Tribunal.
Karnataka HC Upholds RDBA Demand Notice
The Karnataka High Court has refused to interfere with a demand notice issued under the Recovery of Debts and Bankruptcy Act, 1993, in conjunction with provisions of the Income-Tax Act, 1961. The court dismissed the writ petition of a beverage company and its partner, stating that the demand notice could not be quashed as it was duly issued following an order from the Debt Recovery Tribunal (DRT).
In its reasoning, the court highlighted that the petitioners' plea for additional time to settle the outstanding loan amount did not provide a valid ground for quashing the demand notice. The issuance of such notices is governed by specific statutory provisions designed to facilitate the resolution of debts.
This judgment underscores the importance of proper procedures in debt recovery involving income tax. Lawyers representing clients in similar situations should heed this ruling while navigating the recovery landscape, as it delineates the boundaries within which such demand notices can be challenged.
Citations
- Karnataka HC Order (2026) 2 Tax Reporter 456
