TMI Blog1998 (4) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... te at Kanpur, being several houses, big bungalows and other properties, were attached by the IT Department, as the law so provides, to realise the arrears of income-tax by sale of attached properties. At the relevant time, the gross income-tax arrears stood at Rs. 58,27,534. The subject-matter of this petition relates, specifically, to the property 7/76 Tilak Nagar, Kanpur. The property having been attached by the IT authorities, it was attempted to be sold, in the first instance in 1967. The sale did not materialise because the property would not fetch the price which the IT Department was anticipating. The bids offered at the public auction were inadequate and below the reserved price. Consequentially, those who owned the properties, the defaulters, aforesaid, also raised objection, as it was within their right to do so, that the reasonable market price was not forthcoming as a result of the public auction. Their objection was that should the properties fetch a reasonable market price and beyond the bids which were received, their income-tax liability would be reduced. It is accepted by the IT Department that with the objections of the defaulters and there being no issue on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the matter at the very outset as the controversy itself centres around the right of whoever may be the persons interested. 5. The Court will now revert to certain essential facts. When between the years 1967 to 1973, that is for about six years, the IT Department could not arrange to sell the property which was already attached to the Department as arrears of income-tax had not been paid, the defaulters approached the Department for permission to negotiate a sale under r. 66. The first offer which met with satisfaction and requirement of the IT Department came from one Amar Chand Agrawal on 3rd May, 1982. The offer was addressed to the CIT, Kanpur. It was for Rs. 3,50,000. This offer stood on record for almost seven months. As an abundant caution before the offer could be considered for the purposes of being accepted or approved by the IT Department, it wrote to the defaulters through the CIT, Kanpur, by his letter dt. 20th May, 1982. It said whereas one Sri Amar Chand Agrawal had left an offer for the purchase of the property, consent of all other co-owners may be obtained and filed in the office. In response to the letter of the CIT, Kanpur, all the other co-owners joi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuer. The note recorded by the TRO for the CIT, taking all the circumstances into account mentions "looking to the facts narrated above, if the proposal is approved, the private sale may be allowed in the interest of the Revenue. " On 23rd Nov., 1982, the officer of the CIT, Kanpur, recorded an endorsement for the TRO : "TRO should decide the matter on merit." The TRO on 24th Nov., 1982, wrote to petitioner No. 1, Amar Chand Agrawal, that the offer of 3rd May, 1982, upon which consent had been received from the defaulters on 3rd June, 1982, has been considered carefully and it is accepted. The purchasers were now required to deposit a sum of Rs. 3,50,000 in favour of the TRO within seven days of the receipt of the letter, copy of this letter was endorsed for information, as an abundant caution, by the TRO to : (1) the IAC, C-Range, Kanpur, (2) Mr. S.N. Bagla, Karta, a defaulter, (3) Mr. B.P. Bagla, another defaulter, and (4) the CIT, Kanpur, in compliance to his letter dt. 23rd Nov., 1982. Having verified the valuation of the property and satisfied that the offer was more than what was valued, and having assessed that the amount will be paid to the TRO, as the rule so provides, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef. : Your letter No. Appeal/86/CIT/Recy/82-83/354/6638 dt. 23rd March, 1983 Sir, On the above subject we have to submit as under : The property No. 7/46, Tilak Nagar, Kanpur, with all the rights the previous owners (the vendors) had therein has vested in us (the vendees) absolutely by virtue of its release and duly authorised private sale confirmed in our name ; the sale thereby becoming conclusive and absolute. The previous owners as vendors have also in he absence of any impediment or restraint validly executed the corresponding sale deed which is duly registered and the document (title deed) is in our hands. We continue to deal with and the possessed of the said property as its absolute owners since then. We are further advised to state on legal advice that in the context of the letter under reply specific reply can be given or it called for in the absence of any intimation worth the name about the alleged grounds of objections, cause against us and other particulars which can be known only by inspection of records, and the relevant connected files. However, the writing/representation vaguely pointed out in the letter aforesaid is liable to the thrown out on the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der r. 86 of the Second Schedule to the Act. In short the sale was set aside by the appellate order, impugned in this writ petition. The appellate order is dt. 1st Sept., 1983. The appellate authority was of the view that D.R. Bajpayee had made an offer on 25th Nov., 1982, for a higher amount of Rs. 4 lakhs which has been rejected by the TRO without assigning any reasons. The appellate order records that this appellant had met the TRO about ten days prior. The other appellant, B.K. Agrawal, contended that he made all offer on 27th Nov., 1982, for Rs. 4,10,000 which was illegally rejected by he TRO on 1st Dec., 1982. Both the appellants contended that they were under the impression that the property would be sold by a public auction only. The appellant, B.K. Agrawal, submitted that the requisite rule had not been followed and the contention was that a private negotiation can only be permitted if the highest bid is less than the reserved price; and Amarchand Agrawal had not authority to deal with the property on behalf of his other family members; that the offer and acceptance took place on 24th Nov., 1982; that the defaulter had left India for the U.K. where he died ; that the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents watched the entire proceeding only to interfere at the last stage, and the contention of these respondents that they were not aware of what was on and that everything done was in a hurry is not bona fide. On facts it was placed before the Court that the amount as an offer and a commitment from the petitioners lay on record since May, 1982. Only orders for depositing the amount were passed in November, 1982, a period of seven months has elapsed and the record was very clear that proceedings under r. 66 were in process and the defaulters had been authorised to raise the money, in effect, by private negotiations and the IT Department was checking and rechecking whether the offer received from the petitioner met with the valuation report, was more than what the Department had evaluated and beyond the last offer received in the public auction. It is contended that the facts on record show that these respondents were watching the entire proceedings and that they say so themselves that prior to the order requiring the petitioners to deposit the amount, at least ten days before, if not more, the respondents had met the TRO. What is relevant, it is contended, is that the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, it was contended that apart from the defaulter should any other person satisfy that he has sustained substantial injury for reason of non-service or irregularity, then, upon the TRO being satisfied that that is so, he may set aside the sale. The contention on behalf of the petitioners was that resort to r. 61 was never taken by these respondents because it had been the petitioners who had made a deposit of Rs. 3.5 lakhs, logically on a notice to act on the Department's offer. Further, it was contended that if the provision of r. 61, to which these respondents always had access, for some reason was not the recourse, then, these respondents, insofar as their case was concerned, of an order which affected or aggrieved them, could be reviewed under r. 87 on the ground that the matter before the TRO suffered from a mistake apparent on the fact of record. But, these, respondents never took recourse to this remedy because if sought the application would not be considered except after notice to the persons interested. The contention is that insofar as the petitioners were concerned, no one could say after they had been required to deposit Rs. 3.5 lakhs that they were not persons inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m or sink on his own. Under these circumstances, therefore, the appellant must be held to be devoid of any locus standi for moving an application under r. 60 of the Rules for setting aside this auction sale. 10. The summing up of the petitioners was to the effect that with the public auction having failed to deliver the desired result the IT Department having checked and rechecked that the inadequacy of consideration could only be made adequate if private negotiations were to be permitted to the defaulters, as prescribed, and further having scrutinised that the offer received was beyond and better than the valuer's report, what the petitioners were required to deposit has surpassed the valuation of the property and, thus, the petitioners were required to conclude the sale by depositing a sum of Rs. 3.5 lakhs by a bankers's cheque, which they did. There has been no allegation of lack of bona fides on behalf of any one of any surreptitious deal. Thus, the allegations whether it is the TRO, the defaulters or the petitioners as purchases, the argument was wound up with the submission that these respondents were watching the proceedings all the time and when they found that the sale w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be mentioned therein, the qualifying words, "notwithstanding anything contained in the Schedule" is not without meaning. If the words "notwithstanding anything contained in the Schedule" were not there, then the interplay of the other qualification of the sale being concluded not earlier than 30 days would come into play. It is in these circumstances, whether it is O. 21, r. 83 of the Code or r. 66 of the IT Act, both these provisions, in context, are independent, composite and rest without qualification of any provision of the Code or the Act. 13. The legislative intent also is very clear that if the TRO is to authorise a period within which the negotiations are to be concluded, then, it is that period during which the defaulter must conclude the sale. Rule 66, thus, is not qualified by other provisions of Sch. II relating to a public auction insofar as a sale in the context of this case is concerned. Clearly, the appellate authority had made not only an apparent, but a manifest error in permitting and being impressed by an argument that the respondents D.R. Bajpai and B.K. Agrawal had a right to object within a period of 30 days. The TRO had concluded the sale as on date whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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