DEVAKI AMMAL DECD Vs. TAX RECOVERY OFFICER

JUDGEMENT

(1.) THE above writ petitions have been filed by the same writ petitioner, who claims to be the wife of the late M. Natesan, who was an assessee to income-tax and the defaulter. After her death, the legal representatives have been brought on record. Common submissions have been made and, therefore, the writ petitions are dealt with together.

(2.) THE income-tax dues recoverable from the late M. Natesan having fallen into arrears, the ITO concerned appears to have issued a certificate dt. 22nd March, 1971, pursuant to which the properties bearing door No. 15, Kandappa Pillai Street, Madras-31, and door No. 4, Dr. Guruswami Mudaliar Road, Madras-31 came to be attached in terms of the provisions contained in Schedule II to the IT Act, 1961 (hereinafter referred to as "the Act"), for attachment and sale of the immovable properties of the defaulter. On 2nd Jan., 1985, the petitioner and her sons appear to have been issued with a notice for settling the terms of sale proclamation of the property situate at No. 15, Kandappa Pillai Street, Madras-31, since by then the defaulter had died. THE petitioner appears to have given a letter agreeing to have the property bearing door No. 15, Kandappa Pillai Street, Madras-31, sold in public auction. On 18th March, 1985, the sale notice in respect of that property has been issued along with a proclamation of sale of even date. On 25th April, 1985, the petitioner appears to have presented a petition to the CIT (Tax Recovery), praying for postponement of the auction sale. THE sale was fixed originally to be held on 26th April, 1985, and it was proceeded with and conducted on that day, in which the third respondent, who got subsequently impleaded as a party respondent, was the successful bidder for a sum of Rs. 70,500. THEre is no controversy over the position that the successful bidder has remitted the amounts due in respect of the purchase made by him in accordance with law. While that be the position, on 9th May, 1985, the petitioner presented a petition under r. 61 of the Rules in the Second Schedule to the Act praying for setting aside the sale, but without complying with the stipulation contained in proviso (b) which obliges an application made by the defaulter under the rule to be disallowed unless the applicant deposits the amount recoverable from him in execution of the tax recovery certificate. By an order dt. 13th June, 1985, the application dt. 9th May, 1985, came to be rejected for non-compliance with the proviso (b) to r. 61 of the Second Schedule. THEreupon, on 17th June, 1985, an order of confirmation of sale was also made by the sale officer. While that be the position, the petitioner has moved this Court on 2nd July, 1985, praying for a writ of certiorari to call for and quash the proceedings of the first respondent dt. 13th June, 1985, rejecting the application. On 23rd July, 1985, this Court in WMP No. 10724 of 1985, granted stay of further proceedings. On 25th March, 1987, the stay petition came up for orders along with an application filed by the third respondent for vacating the stay and by an order dt. 25th March, 1987, it was directed that the issue of sale certificate be stayed pending disposal of the writ petition. THE writ petitioner also filed WP No. 7089 of 1985, for a writ of declaration declaring that the proviso to r. 61 of the Second Schedule to the Act which imposed a condition of pre-deposit of the arrears as a condition precedent for entertaining an application for setting aside the sale as unconstitutional.

(3.) SO far as the facts on hand in this case is concerned, it cannot be ignored that proviso (b) to r. 61 obliges the authority concerned to disallow an application for setting aside the sale unless as a condition for such filing pre-deposit of the arrears as per the certificate issued by the TRO is deposited. In this case, it is an indisputable fact that no amount whatsoever has been paid leave alone the payment of the arrears as per the certificate from the materials made available before this Court, it is seen that the auction sale was initiated to recover a sum of Rs. 5 lakhs odd as on that date. Consequently, the rejection of the application as per the statutory mandate by the first respondent on 13th June, 1985, could not be said to be illegal nor could the order of confirmation which followed as an inevitable consequence on 17th June, 1985, be said to be contrary to law. The question for consideration in the light of the submissions made on behalf of the petitioner is as to whether the filing of the writ petition and its pendency could be said to have rendered the sale proceedings remain in a fluid state without attaining finality or that this Court can direct fresh consideration of the petition perfunctorily filed under r. 61 without complying with the essential prerequisite for setting aside the sale. Unlike the case dealt with by the Division Bench in Varadarajan v. Muthu Venkatapathi Reddy (supra), it cannot be stated in this case that the confirmation came to be made on account of an order which has been or which has got to be set aside, inasmuch as the confirmation in this case came to be made only on account of dismissal of the application necessitated by the dictates of the very rule, under which the application for setting aside the sale came to be filed. The learned judge dealing with the case which resulted in the decision reported in S.V. Ramalingam v. K.E. Rajagopalan (supra) was concerned with an application for setting aside the sale on the ground of the sale having been vitiated on account of material irregularities in the conduct of the sale under Order XXI, r. 90 of the CPC, 1908. SO far as the provisions of the Second Schedule to the Act are concerned, an application to set aside a sale on the ground of non-service of notice or any irregularity, unlike the provisions contained in Order XXI, r. 90, cannot be merely filed raising certain grounds of irregularity only, but has to satisfy the condition relating to the pre-deposit of the amount recoverable in execution of the certificate. Otherwise, it cannot be considered to be an application in the eye of law and if as per the mandate contained in the proviso (b) to r. 61, the application was rejected and as a consequence of the same under r. 63, there has been confirmation merely because after seven years of the confirmation of the sale, the defaulter has paid the arrears of tax that is no extenuating circumstance to give a go-by to the specific requirement of the proviso (b) to r. 61 and impress the application otherwise perfunctory with legality for consideration afresh. As rightly pointed out by learned counsel for the third respondent his client also has paid a sum of Rs. 70,500 plus the additional amounts by way of incidental charges as early as in 1985, and consideration of equity does not lie only in favour of the petitioner and the same should weigh more in favour of the third respondent. With reference to the valuation as noticed supra, the location of the property as found disclosed in the counter-affidavit filed by the first respondent is pressed into service and it is contended that there is no material to the contra also. For the above reasons and circumstances, I am unable to countenance the claim made on behalf of the petitioner on some abstract considerations of equity alone ignoring the equity that has to be taken into account in favour of the third respondent also, whose money has been locked up with the Department all along for no fault of his. The principles laid down by the learned judges, in the decisions reported in Varadarajan v. Muthu Venkatapathi Reddy (supra) and S.V. Ramalingam v. K.E. Rajagopalan (supra), in my view will have no application to the situation of the particular rules with which we are concerned. As pointed out earlier, it may not be proper at this stage to direct the restoration of an application rejected as early as on 13th June, 1985, for valid and justifying reasons.