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1973 Supreme(Cal) 278
HIGH COURT OF CALCUTTA
AMARESH ROY, AMIYA KUMAR MUKHERJI
JATIA ESTATES PRIVATE LTD. - Appellant
Versus
TAX RECOVERY OFFICER - Respondent
Appeal From Original Order 172 Of 1971
Decided On : NOVEMBER 16, 1973
Gautam Chakraborty, R.N.BAJORIA, SUHAS SEN
A sale held under a proclamation that is ambiguous and misleading as to the date of the sale is a nullity and not a sale under the Second Schedule to the Income-tax Act, 1961.
Headnote:
INCOME TAX - SALE OF PROPERTY - PROCLAMATION OF SALE - MENTIONING TWO DATES - SALE HELD ON ONE OF THE DATES - WHETHER A NULLITY OR A MATERIAL IRREGULARITY - ALTERNATIVE REMEDY - AVAILABILITY - WRIT UNDER ARTICLE 226 OF THE CONSTITUTION - MAINTAINABILITY.
Fact of the Case:
The appellant-company's property was attached and sold in execution of four certificates issued under Section 222 of the Income-tax Act, 1961, for default in payment of income tax. The sale proclamation mentioned two dates for the sale, 14th August 1970 and 22nd August 1970. The sale was held on 14th August 1970. The appellant-company filed an application under Rule 87 of Schedule II to the Income-tax Act, 1961, to review the sale on the ground that it was held on the wrong date due to a mistake. The Tax Recovery Officer rejected the application. The appellant-company then filed a writ petition under Article 226 of the Constitution challenging the sale. The High Court dismissed the writ petition holding that the appellant-company had an alternative remedy by way of an appeal under Rule 86 of Schedule II to the Income-tax Act, 1961.
Finding of the Court:
The High Court held that the sale held on 14th August 1970 was not a sale under the Second Schedule to the Income-tax Act, 1961, as the conditions precedent for assumption of jurisdiction by the Tax Recovery Officer were not fulfilled. The court found that the sale proclamation was ambiguous and misleading as it mentioned two dates for the sale. The court also held that the appellant-company's application for review under Rule 87 was incompetent as there was no order passed by the Tax Recovery Officer on 14th August 1970 against which the appellant-company could file an application for review.
Issues: 1. Whether the sale held on 14th August 1970 was a nullity or a material irregularity. 2. Whether the appellant-company had an alternative remedy by way of an appeal under Rule 86 of Schedule II to the Income-tax Act, 1961. 3. Whether the appellant-company's application for review under Rule 87 was competent.
Ratio Decidendi: 1. The court held that the sale held on 14th August 1970 was a nullity and not a sale under the Second Schedule to the Income-tax Act, 1961, as the conditions precedent for assumption of jurisdiction by the Tax Recovery Officer were not fulfilled. The court found that the sale proclamation was ambiguous and misleading as it mentioned two dates for the sale. 2. The court held that the appellant-company did not have an alternative remedy by way of an appeal under Rule 86 of Schedule II to the Income-tax Act, 1961, as there was no order passed by the Tax Recovery Officer on 14th August 1970 against which the appellant-company could file an appeal. 3. The court held that the appellant-company's application for review under Rule 87 was incompetent as there was no order passed by the Tax Recovery Officer on 14th August 1970 against which the appellant-company could file an application for review.
Final Decision: The High Court allowed the appeal, set aside the judgment and order of the trial court, and issued a writ of mandamus commanding the Tax Recovery Officer to withdraw and cancel the sale held on 14th August 1970.
( 1 ) THIS appeal is by the assessee-company and it is directed against the judgment and order of B. C. Mitra J. dated June 7, 1971, discharging a rule nisi obtained by the appellant upon the view that, as the appellant failed to adopt and pursue the alternative remedy which was available to it, a writ-court ought not to grant it any relief under Article 226 of the Constitution.
( 2 ) THE appellant-company is the owner of premises No. 21, Rup Chand Roy Street, Calcutta. The company made default in payment of income-tax in respect of three assessment years 1964-65, 1965-66 and 1966-67. Four certificates under Section 222 of the Income-tax Act, 1961, were forwarded by the Income-tax Officer to the Tax Recovery Officer. In execution of the said certificates, the Tax Recovery Officer attached the said premises No. 21, Rup Chand Roy Street, Calcutta. According to the appellant, it had paid in three instalments a total sum of Rs. 30,000 towards the claim under the said certificates. Thereafter, on July 20, 1970, a proclamation of sale was drawn up. It was stated as follows :"and Whereas on the 14th day of August, 1970 (the date fixed for the sale) there will be due thereunder a sum of Rs. 98,048 including costs and interest : Notice is hereby given that even in the absence of any order of postponement the said property shall be sold by 14th August, 1970, by public auction at 1 p. m. on the said date of 22-8-70 at P-7, Chowringhee Square, Calcutta, Room 74. "
( 3 ) THE sale proclamation was also published in Amrita Bazar Patrika on the 9th of August, 1970. In that advertisement the date of sale was stated as August 14, 1970.
( 4 ) ON August 14, 1970, the Tax Recovery Officer sold the right, title and interest of the appellant-company in the said premises No. 21, Rup Chand Roy Street, Calcutta, to the respondent No. 4 at Rs. 18,000 which was the highest bid. On August 22, 1970, the appellant-company made an application to the Tax Recovery Officer under Rule 87 of Schedule II to the Income-tax Act, 1961, to review the said sale on the ground that due to some mistakes the house property was sold by public auction on the 14th day of August, 1970, instead of 22nd day of August, 1970, as per proclamation of sale and the said mistake was apparent from the records. The said application was rejected by the Tax Recovery Officer by his order dated August 22, 1970, upon the view that the review petition under Rule 87 was not maintainable in view of the provisions of Rules 60 and 61 for setting aside the sale on deposit and on ground of material irregularity. The appellant being aggrieved by the sale and also by the rejection of its review petition by the Tax Recovery Officer, moved this court in an application under Article 226 of the Constitution and obtained a rule nisi on the I4th of September, 1970. The said rule being matter No. 526 of 1970 came up for final hearing before B. C. Mitra J. and the learned judge by his order dated 7th June, 1971, discharged the said rule.
( 5 ) THE learned judge is of opinion that the appellant could have preferred an appeal under Rule 86 which provides an appeal from any original order passed by the Tax Recovery Officer under Schedule II of the Act. Setting out two different dates in the proclamation of sale was not such a material irregularity in the instant case, having regard to the advertisement published in the newspaper, as to make it a material irregularity as contemplated by Rule 61 of the Rules. The certificate-debtor company being aggrieved by the said order of the learned trial judge preferred this present appeal.
( 6 ) TO appreciate the contentions of the parties, it would be convenient to advert to the relevant provisions of the Rules.
( 7 ) RULE 53 reads as follows :" A proclamation of sale of immovable property shall be drawn up after notice to the defaulter, and shall state the time and place of sale, and shall specify, as fairly and accurately as possible,-- (a)
