High Court Of Gujarat
Shatrushalyasinhji Digvijaysinhji Jadeja vs. CIT & Anr.
Section 222, Sch. II, R. 52, Sch. II, R. 53, Sch. II, R. 54
D.A. Mehta & S.R. Brahmbhatt, JJ.
Special Civil Appln. No. 22581 of 2006
9th February, 2009
Counsel Appeared :
K.H. Kaji with Sudhir Mehta, for the Petitioner : Pranav G. Desai, for the Respondents
JUDGMENT
D.A. MEHTA, J. :
This petition has been preferred seeking following reliefs :
“(a) this Hon’ble Court may be pleased to issue an appropriate writ, direction or order under Art. 226 of the Constitution quashing and setting aside the orders passed by the 1st and 2nd respondents dt. 4th May, 2005 and 7th June, 2005 respectively and set aside the auction sale held by the 2nd respondent on 18th March, 2005;
(b) that during the pendency and final hearing of this petition, the 2nd respondent be restrained from issuing sale certificates to the 22 purchasers of the plots illegally sold at auction sale conducted by the 2nd respondent on 18th March, 2005 and that the 2nd respondent be further restrained from putting to auction sale further plots as announced by him after the conclusion of the auction held on 18th March, 2005;
(c) that any other and further relief which is just and proper may kindly be granted by this Hon’ble Court.”
The facts in the backdrop of which the controversy arises are that the petitioner, an individual, became liable to make payment to the respondent Department, pursuant to various proceedings under the IT Act, 1961 (the Act). Due to paucity of funds the petitioner entered into an agreement on 16th Oct., 1980 with CIT, respondent No. 1 herein, regarding sale of certain plots of land, out of various properties owned by the petitioner in and around the city of Jamnagar. Accordingly, vide letter dt. 30th Sept., 2004 the petitioner offered plot Nos. 10 to 12 and 16 to 61 falling within Walkeshwar Nagari, Phase VIII, as per layout plan annexed along with the said communication dt. 30th Sept., 2004. The said communication further stated that, 60 per cent of the realization from auction sale may be retained by the respondent Department while 40 per cent balance of the realization of sale may be paid to the petitioner in terms of agreement dt. 16th Oct., 1980 entered into between the parties. Accordingly, on 18th Oct., 2004 sale proclamation was issued by respondent No. 2 in terms of provisions of the Second Schedule to the Act, followed by public advertisement dt. 9th March., 2005. On 17th March., 2005 auction sale was announced, but according to the petitioner, as the same was in relation to a layout plan, different than the signed layout plan submitted by the petitioner, the petitioner opposed the auction, and accordingly the auction was deferred to 18th March., 2005. The petitioner submitted written objections on 18th March., 2005. However, on 18th March, 2005 respondent No. 2 conducted auction sale of 22 plots out of 35 plots in all, and the balance number of plots were to be put to auction sale on 21st March., 2005 as announced on 18th March., 2005.
At this stage, the petitioner approached the Court of Civil Judge (Senior Division), Jamnagar, seeking relief against respondent No. 2, accompanied by an application for interim relief. Ad interim injunction was granted on 19th March, 2005 which came to be extended from time to time. The said order of ad interim injunction was challenged by respondent No. 2 by way of writ petition before this High Court and notice was issued on 20th April, 2006 making it returnable on 27th April, 2006. In the meantime the Civil Court rejected application for interim injunction on 25th April, 2006, but stayed operation of the said order upto 12th May, 2006. Hence the petitioner preferred two separate petitions before this High Court, one challenging the order made by Civil Court, being Special Civil Appln. No. 10714 of 2006, and the second petition being the present petition. To complete the chain of events, it may be noted that, thereafter, sometime in 2008 Special Civil Appln. No. 10714 of 2006 was withdrawn by the petitioner. But, till that point of time, the order of status quo made by the High Court on 12th May, 2006 had continued.
Insofar as the present petition is concerned, though learned advocate appearing on behalf of the petitioner has made various submissions on the legality of the auction sale, in light of the view that the Court is inclined to adopt, it is not necessary to set out the said contentions in detail. This petition is taken up for final hearing and disposal today, considering the course the Court intends to adopt. Hence rule. Learned counsel for respondent authorities is directed to waive service.
The ‘proclamation of sale’ of an immovable property falls within Part III of the Second Schedule to the Act. The said part deals with “Attachment and sale of immovable property”. Rules 48 to 51 of the Second Schedule (the rules), fall within the division relatable to attachment while remaining rules fall under the division relating to sale . Rule 52 stipulates that after attachment of a property the TRO has a discretion to direct sale of any immovable property, or such portion thereof, out of the property so attached, to satisfy the tax recovery certificate. Under sub-r. (2) of r. 52 of the rules, the TRO is under a mandate to cause a proclamation of the intended sale to be made in the language of the district where the immovable property, which is ordered to be sold, is situate. Rule 53 of the rules lays down as to what should be the contents of a ‘proclamation’ and reads as under : “53. Contents of proclamation—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) the property to be sold; (b) the revenue, if any, assessed upon the property or any part thereof; (c) the amount for the recovery of which the sale is ordered; (cc) the reserve price, if any, below which the property may not be sold; and) (d) any other thing which the TRO considers it material for a purchaser to know, in order to judge the nature and value of the property.”
The opening portion of the aforesaid r. 53 of the rules requires that, proclamation shall specify, with a marginal leeway to the authority to so specify, as fairly and accurately as possible. The five requirements which should be contained in a proclamation are as specified by cls. (a) (b) (c) (cc) and (d) of the said rule. To put it differently all five clauses should find place in the proclamation, but the description thereof may vary and may not be absolutely to the T, but could be possibly rounded of to the nearest figure available. Rule 54 of the rules stipulates the mode of making proclamation and under sub-r. (2) thereof, the TRO is required to publish such proclamation also in the Official Gazette, or any local newspaper, or in both. Thus the requirements of the said provision envisage that once the TRO so directs the proclamation made under sub-r. (2) of r. 52 containing the particulars mentioned in r. 53 shall be published either in the Official Gazette, or in the local newspaper, or in both. But, the said rule does not permit any variation in the contents of the proclamation when a proclamation has already been made under r. 52(2) of the rules.
In the present case, the proclamation which appears at ‘Ex.-B’ mentions 3 recovery certificates of different dates, seeking recovery of a sum of Rs. 11,12,02,942. Insofar as column relating to reserve price is concerned, it states that the property shall not be sold below the Jantri price fixed by local authority. Thereafter the Schedule of the property has been mentioned containing five columns, out of which the first column relating to number of lots has been filled up, the second column relating to description of property has also been filled up, while column Nos. 3, 4 and 5 have been left blank, with column No. 4 showing details of any encumbrances to be ‘nil’.
The public notice which followed the proclamation is in Gujarati, and in the said public notice, the amount of outstanding tax dues has not been mentioned, while the reserve price has been specified to be Rs. 5,950 per sq. meter; in relation to the description of the property and the other columns relating to revenue assessed upon the land, municipal tax, and other encumbrances, the last three columns, except the description, specifically state that ‘assessed revenue or the municipal tax, or any other encumbrances on the property are not known.
Thus, it is apparent that, there is a variation between the public notice published in vernacular and the proclamation. Admittedly, during the course of hearing, it has come on record that municipal tax amounting to rupees four lakhs and odd as stated in communication dt. 18th Feb., 2005 from the petitioner to TRO are due and outstanding.
In the circumstances, it is apparent that, there is a failure to comply with the requirements of r. 53 of the rules of the Second Schedule, and there is a variation between the proclamation made under rr. 52 & 53 read together and the public notice issued and published under r. 54(2) of the rules. The contention on behalf of the respondent authority that such a variation would have no material bearing insofar as the petitioner is concerned, and it would only be the prospective bidder who would be affected, can not be accepted. It is also not possible to accept the submission that when both, the proclamation and public notice are read together, there is substantial compliance with the requirements of the rules of the Second Schedule.
In the first instance, it is an admitted position between the parties that by virtue of agreement entered into in 1980, 60 per cent of the realization from the auction sale is to be retained by the respondent authority in satisfaction of the recovery certificate, whilst balance 40 per cent is to be paid over to the petitioner. Therefore, to say that the petitioner is not prejudiced due to the variation in the details mentioned in the proclamation and public notice, can not be upheld. Under r. 54(2) of the rules the phrase used is ‘such proclamation’, namely, ‘proclamation’ which has been made under r. 52(2) of the rules containing the particulars specified in r. 53 of the rules of the Second Schedule. Therefore, once the statute envisages that the Official Gazette, and/or the public notice, shall be of the ‘proclamation’ already made under the preceding rules, the same cannot be wished away. The publication of the same proclamation, as qualified by use of the preceding term such, makes it mandatory that the version published in the Official Gazette, and/or in the local newspaper, cannot differ in any manner whatsoever except the language, if any and has to contain the same particulars as specified in r. 53, and the proclamation as made in terms of r. 52(2) of the rules. Hence, on this count, the public notice which followed the proclamation cannot be sustained.
15. Insofar as the ‘proclamation’ is concerned, it is an accepted fact that, the said proclamation does not specify the amount of outstanding revenue due and payable insofar as the property put to auction sale is concerned. The learned counsel sought to draw a fine distinction by stating that, said requirement of cl. (b) of r. 53 referred to revenue assessed upon the property and was not relatable to municipal tax and, therefore, there was no requirement to mention the figure of municipal tax. This distinction is a distinction without any difference. If one reads the entire r. 53, it becomes clear that, the purpose of specifying the contents in the proclamation are for the purpose of judging the nature and value of the property in question. To put it differently, a prospective bidder must be made aware of outstanding liabilities vis-a-vis the property put to auction sale. Therefore, the contention that the term ‘revenue’ does not take within its sweep, insofar as r. 53 is concerned, municipal taxes cannot be upheld. There is one more reason. In fact in the public notice, as already noted hereinbefore, specific reference to outstanding municipal taxes by way of a column is there, and then the column says “not known”. Thus the entire exercise is misleading, not only from the point of view of the prospective bidder but also from point of view of any person who is directly or indirectly interested in disposal of the property, including the petitioner. In the result, it is apparent that the ‘proclamation’ and the public notice following the proclamation do not comply with the statutory requirements specified by the relevant rules and there are material irregularities which would warrant a person to seek setting aside of the sale. However, from this, it does not flow that the properties under attachment cannot be put to sale once again. It will be open to the respondent authority to initiate fresh action in accordance with law, and in strict compliance with the requirements of the rules of the Second Schedule, more particularly Part III thereof, which deals with the sale of the attached property. Hence, the orders made by the respondent authorities on 4th May, 2005 and 7th June, 2005 are quashed and set aside. The auction sale held on 18th March, 2005 is also quashed and set aside, leaving it open to the respondent authorities to initiate fresh proceedings in accordance with law.
In light of the view that the Court has adopted, it is not necessary to deal with various other contentions raised in the petition, and at the time of hearing, and it will be open to the petitioner to raise the same, in accordance with law, before the appropriate authority at the relevant point of time.
The petition stands allowed accordingly. Rule made absolute to the aforesaid extent, with no order as to costs.
[Citation : 329 ITR 316]
