N.THANGAVELU V. UNION OF INDIA

WP(C)/30417/2009

AI Insights

The case revolves around a writ petition filed by N. Thangavelu challenging the order Ext.P8 issued by the Recovery Officer of the Debts Recovery Tribunal, which disallowed his petition to set aside a sale under Rule 61 of Schedule II of the Income Tax Act. The petitioner had previously been granted a stay against the sale proceedings on the condition of depositing Rs. 2 lakhs, which he failed to comply with fully. The main contention in the writ was the alleged irregularities in the conduct of the sale and the improper rejection of his petition to set it aside without a proper notice or opportunity to deposit the required amount. The court, after considering the arguments and the circumstances, decided to quash the Ext.P8 order and remand the matter back for a decision on merits, provided the petitioner deposits the sale amount within the stipulated time.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 722469 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 17-11-2009
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: T P M KHAN
• Assessee Lawyers: B RAMACHANDRAN
• Keywords: Debt Recovery; Natural Justice; Writ petition; Sale Set Aside
• Section: 61

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 17TH NOVEMBER 2009 / 26TH KARTHIKA 1931 WP(C).No. 30417 of 2009(V) -------------------------- PETITIONER(S): --------------- N.THANGAVELU, AGED 60 YEARS,S/O.NACHUMUTHU CHETTIYAR, ANGALA NIVAS,MARATH LANE,THRISSUR-680 001. BY ADV. SRI.B.RAMACHANDRAN RESPONDENT(S): --------------- 1. UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE,NEW DELHI. 2. RECOVERY OFFICER, DEBTS RECOVERY TRIBUNAL,K.S.H.B.BUILDING, PANAMPILLY NAGAR,KOCHI-682 036. 3. BANK OF INDIA, THRISSUR BRANCH,VADAKKE MADHAM BUILDING, M.G.ROAD,THRISSUR. 4. P.K.ASHARAF,S/O.P.K.KUNJU, PUTHENVEETTIL HOUSE,KOORUKKANCHERRY, THRISSUR DISTRICT-680007. R1 & R2 BY ADV. SRI.T.P.M.IBRAHIM KHAN,ASST.SOLICITOR GENERAL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17/11/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: shg/ C.K. ABDUL REHIM, J. - - - - - - - - - - - - - - - - - - - - - - - W.P.(C)No. 30417 of 2009 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 17th day of November, 2009 J U D G M E N T 1. Challenge is against Ext.P8 order issued by the 2nd respondent, wherein a petition to set aside the sale filed under Rule 61 of Schedule II of the Income Tax Act, is disallowed. The petitioner had approached this court on an earlier occasion when notice was issued by the 2nd respondent with respect to settlement of proclamation for sale. This court by virtue of an interim order granted stay against further proceedings, on condition of the petitioner making payment of an amount of Rs.2 lakhs, within one month from 03.06.2009. The petitioner failed to comply with the condition, but paid an amount of Rs.50,000/- on 03.07.2009. The petitioner also failed to file any petition seeking extension of time, before the expiry of the time stipulated or thereafter. Through Ext.P4 judgment, W.P.(C)No. 30417 of 2009 -2- this court declined to interfere and dismissed the petition without prejudice to rights of the petitioner to challenge the sale by filing appropriate proceedings before appropriate forum. Further, this court had shown indulgence to direct status quo to be maintained for a period of two weeks. 2. Pursuant to Ext.P4 judgment the petitioner had approached the 2nd respondent with Ext.P5 petition seeking to set aside the sale, alleging irregularity in conduct of sale. Ext.P7 is the objection field by the auction purchaser, the 4th respondent herein. After considering rival contentions, the 2nd respondent issued Ext.P8 order. Without considering merits of the allegations regarding irregularities with respect to fixation of upset price and with respect to publication of sale, the 2nd respondent had invoked proviso (b) to Rule 61 of II nd Schedule of Income Tax Act, 1961, and dismissed the petition holding that it is not maintainable/ sustainable in the eye of law, because the petitioner had failed to make deposit to the certificate amount along with interest. W.P.(C)No. 30417 of 2009 -3- 3. Heard, counsel for the petitioner, counsel for the 4th respondent, and standing counsel appearing for the 3rd respondent Bank. It is contended by the petitioner that rejection of the petition to set aside sale which is filed under Rule 61, on the allegation of failure to make payment of the entire certificate amount, is highly illegal and unjustifiable. It is contended that the amount of sale which is subject matter in dispute is Rs.8,04,000/- only and the total certificate amount is much higher. It is further contended that rejection of the petition was made without issuing any notice requiring petitioner to make deposit of the required amount. In other words, rejection of the petition invoking proviso (b) was made even without affording an opportunity to the petitioner or without calling upon him to make payment of the certificate amount. 4. It is contended by learned counsel for the 4th respondent that the petitioner has got an effective remedy by way of appeal against Ext.P8 and therefore jurisdiction of this court may not be exercised in the matter. W.P.(C)No. 30417 of 2009 -4- It is further contended that there is no material challenge made pointing out any substantial irregularity with respect to the sale. The petitioner had not objected fixation of upset price, when proclamation of sale was settled. Therefore the 4th respondent is opposing interference. 5. Learned standing counsel appearing for the 3rd respondent submitted that the certificate amount under the O.A. itself is Rs.8,70,564/- and the OA was allowed as early as on 13.11.2003 and therefore a huge amount is now pending in arrears recoverable from the petitioner . 6. Having regard to rival contentions and facts and circumstances of the case, I am of the opinion that the recovery officer ought to have considered merits of Ext.P5 petition, based on allegations regarding irregularity with respect to conduct of sale. It is further noticed that the 2nd respondent has not issued any notice prior to rejection of the application, requiring the petitioner to make deposit of the amount. Therefore I am of the opinion that inspite of availability of statutory remedy violation of principles of W.P.(C)No. 30417 of 2009 -5- natural justice is evident on the face of the order impugned. Therefore I am inclined to set aside Ext.P8 order and to direct the 2nd respondent to afford an opportunity to the petitioner to contest the matter on merits. 7. In the result Ext.P8 order is hereby quashed. If the petitioner makes deposit of the sale amount of Rs.8,04,000/- which is the sale amount, within a period of six weeks from today, the 2nd respondent shall restore Ext.P5 application and consider and dispose of the same on merits, after affording opportunity to all parties concerned, as early as possible. Taking note of the interest of the auction purchaser it is directed that a final decision on the application will be taken by the 2nd respondent at any rate within a period of two months from the date of deposit of the amount by the petitioner. C.K. ABDUL REHIM JUDGE shg/ "