SMT. MOHINDER KAUR VS INCOME TAX OFFICER
1999 P T D 2751
[228 I T R 545]
[Allahabad High Court (India)]
Before B. M. Lal and B. K. Sharma, JJ
Smt. MOHINDER KAUR
Versus
INCOME TAX OFFICER and others
Civil Miscellaneous Writ Petition No.718 of 1996, decided on 17/10/1996.
Income-tax---
----Recovery of tax---Attachment and sale of property---Entire property need not be sold for satisfying recovery---Only sufficient portion of attached property to be put to auction to satisfy recovery---If sale proceeds not sufficient to satisfy recovery, remaining portion of attached property to be sold---Indian Code of Civil Procedure, 1908, 0.21, R.64.
The Tax Recovery Officer derives jurisdiction to sell the property attached only to the point at which the recovery is wholly satisfied, taking aid of Order 21, Rule 64, Civil Procedure Code, 1908, which envisages power to order property attached to be sold and the proceeds to be paid to the person entitled, and postulates that "any Court executing a decree may order that any property attached by it and liable to sale, or such portion thereof as it may deem necessary to satisfy the decree shall be sold, and that the proceeds of such sale, or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive the same". Therefore, only sufficient portion of the attached property should 'be put to auction so as to satisfy the recovery and if the sale proceeds are not sufficient to satisfy the recovery, the remaining portion of the attached property may also be proceeded with. The intent of the Legislature is not that the entire property attached amounting to crores and crores be sold for satisfying the recovery in a few lakhs. If the recovery can be satisfied by selling a particular portion of attached property no further sale of the remaining portion of that property be made:
Held, on the facts, that the Tax Recovery Officer should first sell the factory which was under attachment and if the sale proceeds were not sufficient to satisfy the whole recovery, then only the residential house in question which was also under attachment should be sold.
Ambati Narasayya v. Subba Rao (M.) AIR 1990 SC 119 fol.
Shashi Kant Gupa for Petitioner.
Ashok Kumar for Respondents.
JUDGMENT
B.M. LAL, J.---Sri Shashi Kant Gupta for the petitioner and Sri Ashok Kumar, standing counsel for the respondents. They are heard.
This petition was heard yesterday also, i.e., on October 16, 1996, and orders were reserved but during the lunch hour Sri Shashi Kant Gupta appeared in Chambers to request that the writ petition be reheard as certain legal grounds could not be urged during the course of arguments. This persuaded this Court to place this petition for rehearing today.
Having heard learned counsel for respective parties, the petition is being disposed of finally with their consent.
By this petition, the petitioner Smt. Mohinder Kaur, wife of the late Sardar Saran Singh, seeks a writ in the nature of certiorari quashing the proclamation of sale, dated September 9, 1996, and an order, dated September 17, 1996, passed by respondent No.2, the Tax Recovery Officer, Kanpur (contained in Annexures 8 and 9 to the writ petition respectively), whereby auction sale of the house of the late Sardar Saran Singh, bearing corporation No.113/14, located in Swarup Nagar, Kanpur, fixed on October 17, 1996, at "Aaykar Bhawan", Civil Lines, Kanpur, is adjourned to October 23, 1996.
In a nutshell it is contended for the petitioner that the petitioner's husband the late Sardar Saran Singh, was a partner in Atma Singh Steel Rolling Mills, Kanpur, wherein Sardar Gurmukh Singh and others are also partners. During the search and seizure conducted in the year 1972 by the income-tax authorities at the business premises of the firm and at the residence of Sardar Gurmukh Singh and the late Sardar Saran Singh, certain books of account and a number of loose papers were seized wherein it is found that the business transactions of individual dealings of Sardar Gurmukh Singh for the assessment years 1970-71, 1971-72, 1972-73 and prior transactions were of the firm, Atma Singh Steel Rolling Mills, Kanpur, and the same appears to have not been disclosed in the return filed by them. Therefore, proceedings were initiated against the late Sardar Saran Singh and the firm, Atma Singh Steel Rolling Mills, Kanpur, which ultimately culminated into recovery proceedings of huge amounts against the assessee and pursuant to that aforesaid, the house of the petitioner and the factory of Atma Singh Steel Rolling Mills, Kanpur, located at 24/7, Factory Area, Fazalganj, Kanpur, were attached on November 16, 1972, for realisation of income-tax dues alongwith interest.
It is also contended that Sardar Gurmukh Singh had filed Civil Miscellaneous Writ Petition No.201 of 1982, challenging the said recovery proceedings, which was ultimately dismissed by this Court on August 4, 1995.
The main submission of learned counsel for the petitioner is that the total amount sought to be recovered as income-tax dues is not more than Rs.9 lakhs and there are certain other dues against the firm and Sardar Gurmukh Singh for which the above referred to factory of the firm has also been attached. The land appurtenant to the factory is worth about Rs. 1 crore, measuring about 1 acre, 'therefore, the said amount may first be recovered from the property of the firm, i.e., the factory, which is under attachment, and if the total recovery is not satisfied then only they may switch on the recovery proceedings to the residential house in question.
The reference of Rule 86 of the Income-tax Rules, 1962, was also given. However, in this regard the well-settled law is that the execution authority, 'i.e., the Tax Recovery Officer in the instant case, derives jurisdiction to sell the property attached only to the point at which the recovery is wholly satisfied, taking aid of Order 21, Rule 64. Civil Procedure Code, 1908, which envisages power to order property attached to be sold and proceeds to be paid to person entitled, and postulates:
"Any Court executing a decree may order that any property attached by it and liable to sale, or such portion thereof as may seem necessary to satisfy the decree, shall be sold, and that the proceeds of such sale, or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive the same."
Giving emphasis to the terms "sufficient portion thereof" and "necessary to satisfy the decree" if the aforesaid provision is read, it makes it crystal clear that only a sufficient portion of the attached property should be put to auction so as to satisfy the recovery and if the sale proceeds are not sufficient to satisfy the recovery, the remaining portion of the attached property may also be proceeded with. The intent of the Legislature is not that the entire property attached amounting to crores and crores should be sold for satisfying the recovery in a few lakhs. If the recovery can be satisfied by selling a particular portion of the attached property no further sale of the remaining portion of that property should be made. This being so, in our considered opinion, in the instant case, the respondents should first sell the factory which is under attachment and if the sale proceeds are not sufficient to satisfy the whole recovery, then only the residential house in question which is also under attachment can be sold.
This proposition also finds support from the view taken by the apex Court in Ambati Narasayya v. M. Subba Rao, AIR 1990 SC 119, that it is obligatory on the Court and not discretionary that only such property or a portion thereof as is necessary to satisfy the decree, be sold, and the tendency to sell blindfold the entire property be deprecated.
This being so and as a consequence of the aforesaid discussion, the impugned orders, dated September 9, 1996 and September 17, 1996 (Annexure 8 and 9 to the writ petition), are set aside to the extent they pertain to the sale of the residential house of the petitioner bearing corporation No.113/ 14, located in Swarup Nagar, Kanpur. However, the respondents shall proceed to sell the property of the firm, Atma Singh Steel Rolling Mills; Kanpur, 24/7, Factory Area, Fazalganj, Kanpur, in pursuance of the impugned orders for the realisation of income-tax dues alongwith interest.
With these directions, this petition stands allowed. There shall be no order at to costs.
M.B.A./3023/FCPetition allowed.