G N GANDHI Vs. TAX RECOVERY OFFICER

JUDGEMENT

(1.) The petitioner challenges the validity of an auction sale of property No. A-206, defense Colony, New Delhi, which took place on February 27, 1987, at the instance of the Income Tax Department (represented by respondents Nos. 1 and 2). The sale was conducted under the provisions of Schedule II to Income Tax Act, 1961 (hereinafter referred to as "the Act"), for the recovery of arrears of Income Tax due from a firm known as Karamchand Pyarelal and its partners (hereinafter referred to as "the assessed").

(2.) The sale of the property by public auction was initially advertised to be held at 11.30 a.m. on February 19, 1987. Bidders were required to deposit a sum of Rs. 10,000 by way of refundable deposit. The successful bidder had to pay 25% of the sale price of the spot and the balance within 15 days. Clause 5 of the rules and conditions of the sale ran thus :

(3.) Other terms and conditions of the sale are not of much importance. An auction was conducted on the said date. A reserve price of Rs. 13,79,900 is said to have been fixed. It is not found mentioned in the advertisement; it was perhaps mentioned in the proclamation of sale, which has not been placed before us. There were six bidders at the auction. One of them was the petitioner. The first and second respondents also jointly bid for the property. The petitioner bid up to Rs. 12,90,000, respondents Nos. 1 and 2 up to Rs. 13 lakhs. The maximum bid was, however, only Rs. 13,01,000 and, as this fell below the reserve price, the highest bid was rejected. The auction papers of the auctioneer contain an endorsement "closed" by the auctioneer and also contain a signature of respondent No. 1.