LEO EDIBLES & FATS LIMITED Vs. TAX RECOVERY OFFICER (CENTRAL), INCOME TAX DEPARTMENT, HYDERABAD AND OTHERS

JUDGEMENT

(1.) The petitioner company's grievance is with regard to the action of the Sub-Registrar, Erragadda, Hyderabad, in refusing to register its purchase of immovable property in the liquidation proceedings relating to VNR Infrastructures Limited, Banjara Hills, Hyderabad, under the Insolvency and Bankruptcy Code, 2016 (for brevity, 'the Code'). Refusal in this regard by the registration authorities was at the behest of the Income-tax Department, which claimed a charge over the immovable property sold, pursuant to the attachment proceedings of the Tax Recovery Officer (Central), Income-tax Department, Hyderabad, the first respondent herein.

(2.) In the affidavit filed in support of the writ petition, the petitioner company stated that pursuant to the order passed by the National Company Law Tribunal (NCLT), Hyderabad, a liquidator was appointed to liquidate VNR Infrastructures Limited, Hyderabad, under the provisions of the Code. The assets of the said company were pooled to form a liquidated estate and all such assets were sought to be sold by e-auction. A notice was published in newspapers on 29.12.2017 in this regard, notifying the e-auction sale date as 31.01.2018. The petitioner company participated in the said auction and was declared the highest bidder at Rs.11,55,00,000/- for the commercial/ residential building, along with land, situated at H.No.8-2-322/D, Road No.3, Banjara Hills, Hyderabad. The liquidator, the fifth respondent herein, issued letter dated 31.01.2018 confirming the sale in favour of the petitioner company and called upon it to deposit the sum of Rs.2,00,75,000/-, inclusive of the Earnest Money Deposit (EMD) of Rs.88,00,000/- already paid, towards 25% of the bid amount within 24 hours. The petitioner company duly complied with this direction and requested the fifth respondent to issue a sale letter. The fifth respondent thereupon issued sale letter dated 01.02.2018, received by the petitioner company on 19.02.2018, calling upon it to deposit the balance sale consideration of Rs.8,66,25,000/- within fifteen days. The petitioner company claims that at this stage, it came to know that the property purchased by it was subjected to attachment by the first respondent pursuant to the recovery proceedings initiated by the Income-tax Department against VNR Infrastructures Limited, the company in liquidation. Thereupon, the petitioner company addressed letter dated 21.02.2018 to the fifth respondent requesting it to get the attachment withdrawn. However, the fifth respondent, vide letter dated 22.02.2018, again called upon the petitioner company to pay the balance sale consideration within the stipulated time. As the petitioner company was under threat of the amount deposited by it towards 25% of the sale consideration being forfeited, it addressed letter dated 23.02.2018 requesting the fifth respondent to extend the due date for depositing the balance sale consideration until 07.03.2018. By letter dated 24.02.2018, the fifth respondent extended time subject to payment of interest at 15% per annum for the delayed period. The petitioner company alleges that it made enquiries and came to know that the Sub-Registrar, Erragadda, Hyderabad, the fourth respondent, would not entertain any request for registration in relation to the subject property until and unless the attachment order of the first respondent was lifted. Hence, the present writ petition.

(3.) The petitioner company filed I.A.No.1 of 2018 in the writ petition seeking an interim order directing the first respondent to recall the attachment and directing the fourth respondent to register the sale of the property by the fifth respondent in its favour. It also filed I.A.No.2 of 2018 seeking a direction to the fifth respondent not to insist upon the petitioner company paying the balance sale consideration till the sale deed was registered in its favour.