PISHORI LAL SETHI Vs. TAX RECOVERY OFFICER

JUDGEMENT

(1.) THIS writ petition is filed by the auction purchasers to set aside the order forfeiting the amount deposited by them towards the sale price. It arises in the following circumstances. One Salig Ram was a defaulter to the Income-tax Department. Against him, recovery proceedings were taken and his property was brought to auction. The auction took place on March 26, 1980. At the said auction, the petitioners were the highest bidders in a sum of Rs. 45,000. As required by Rule 57(1) of Schedule II to the Income-tax Act, they deposited 25 per cent. amount on the same day, i.e., a sum of Rs. 11,250. The balance amount had to be paid within 15 days as provided by Sub-rule (2) of Rule 57. The petitioners deposited a sum of Rs. 13,343 on March 27, 1980. They say that they also deposited a further sum of Rs. 18,407 on April 2, 1980. The total of these three amounts comes to Rs. 43,000 which is two thousand short of the sale amount. Admittedly, the petitioners did not deposit the full amount within the period of 15 days, though they have an explanation therefor.

(2.) THE widow of the defaulter deposited the entire amount due along with other amounts as provided by Rule 60 and applied for setting aside the sale. This deposit and application for setting aside the sale, according to the petitioner, was made within 15 days of the auction. Upon the said application being made by the defaulter's wife, a notice dated April 21, 1980, was issued to the petitioners asking them to intimate whether they have any objection to the sale being set aside. THE notice expressly stated that the defaulter's wife has deposited Rs. 29,000 in full satisfaction of the requirement of Rule 60. At the same time, another notice of the same date was issued to the petitioners calling upon them to show cause why the amount of Rs. 24,593 (Rs. 11,250 plus Rs. 13,343) should not be forfeited to the Government after defraying the expenses of auction sale as provided by Rule 58. THE petitioners submitted their explanations/objections. THEy did not object to the setting aside of the sale but requested that the amount of Rs. 43,000 deposited by them may be refunded to them. THEy denied that there was any default on their part. THEreafter, the Tax Recovery Officer passed the impugned order on May 12, 1980. After setting out the relevant facts, the Tax Recovery Officer observed and concluded thus :

(3.) THESE rules are but a mere reproduction of the relevant rules in Order XXI, Civil Procedure Code. In particular, Rule 58 corresponds, word for word, to Rule 86 of Order XXI, Civil Procedure Code. The contention of learned counsel for the petitioner is that, under Rule 58, the forfeiture of the amount deposited is not automatic in case of failure of the auction purchaser to comply with the terms of Rule 57(2) but that it is discretionary with him. Once there is a discretion, it is argued, the Tax Recovery Officer has to consider all the circumstances and facts of the case and determine whether the said amount should be forfeited and if it is to be forfeited whether it should be in full or in part. For this proposition, he relied upon the decision in Manilal Mohanlal Shah v. Sardar Sayed Ahmed Sayed Mahmad, AIR 1954 SC 349, 351, rendered under Order XXI, Civil Procedure Code. Paragraph 8 in the said decision which interprets Rules 85 and 86 reads thus :