PRECISION INSTRUMENTS PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THE controversy in this petition centres round the sale of properties belonging to the petitioner for realisation of arrears of income-tax dues. THE petitioner has, inter alia, prayed for quashing the auction proceedings as also the order of the Tax Recovery Officer confirming the sale and the sale certificate dated 24th November, 1975, issued in favour of respondent No. 3 and the sale deed dated 29th November, 1975, executed by the Tax Recovery Officer.

(2.) THE facts leading up to the controversy may be shortly stated : Income-tax arrears amounting to Rs. 56,628 including penalty and interest were due against the company. A sum of Rs. 8,905 was due against the managing director of the company. Separate recovery certificates appear to have been sent by the Income-tax Officer to the Tax Recovery Officer for realisation of these amounts. It transpires that initially the petitioner-company received a notice from the Tax Recovery Officer stating that a sum of Rs. 75,653 was due against the petitioner. Petitioner made representations against this notice alleging that certain amounts already paid by him had not been credited and that the sum demanded was not correct. In spite of these representations a sale proclamation was drawn up for sale of certain properties of the company for recovery of an amount of Rs. 75,653 together with interest. THE sale took place on that date and the highest bid received was Rs. 65,000. As the bid appeared to be low as compared to the reserve price fixed for the property by the department, the sale does not appear to have been confirmed. A fresh sale was held on 3rd July, 1972, but as none appeared to bid, it was postponed and a fresh proclamation of sale was issued on the 6th July, 1972, fixing the date of the sale for the 17th August, 1972. THE sale was again postponed on orders of the Additional Commissioner of Income-tax, Kanpur. It is not necessary to refer to certain other facts showing how the tax arrears which were claimed to be Rs. 75,653 were toned down to Rs. 56,628 as that is not relevant for the purposes of the present controversy.

(3.) NOW, it is not disputed that the properties in question had been sold for realisation of an amount of Rs. 56,628 due against the company and also an amount of Rs. 8,905 due against the managing director. Annexure "A4" is the sale proclamation, on the basis of which the sale had taken place, mentions that the properties were being sold for realisation of an amount of Rs. 62,513 due from the petitioner. Although the sale proclamation mentions this amount as being due from the petitioner alone, but from the counter-affidavit filed on behalf of the department and on a perusal of the records produced before us, it is clear that this amount represented not only the demand against the petitioner-company but also of the managing director. Question is whether in these circumstances the sale is valid.