Kerala H.C : the rules contained in the IInd Schedule to the Income Tax Act govern the procedure for sale of an immovable property

High Court Of Kerala

Somasundaram vs. CCIT & Ors.

Section : 29, 311, 306

Antony Dominic & Dama Seshadri Naidu, JJ.

WA Nos. 551 & 588 of 2015 IN WP(C) 27566/2008

24th July, 2017

Counsel appeared:

Anil D. Nair Advs., C.S. Sulekha Beevi, R. Sreejith, Rosie Athulya Joseph Kum., Soumya Prakash for the Petitioner.: Jose Joseph, Christopher Abraham, K.M.V. Pandalai, Sreelal N.Warrier, Muhammed Rafiq Advs. for the Respondent

ANTONY DOMINIC, J.

1. These appeals are filed against the judgments in W.P.(C) Nos.27566/08 and 14170/2005. Though the writ petitions were disposed of by separate judgments, the subject matter being connected, these cases were heard together and are disposed of by this common judgment, treating W.A.551/15 filed against W.P.(C) No.27566/08 as the leading case.

2. The writ petition was filed by the appellant’s deceased wife Smt.Amaravathy Somasundaram, who was a defaulter under the Income Tax personally as well as in her capacity as the Director of a company. Proceedings were initiated against her for recovery of the tax d e and notice under Rule 2 of the IInd Schedule to the Income Tax Act, 1961 was issued intimating her that in default of payment of the amount specified in the certificate within 15 days, steps would be taken to realise the dues in terms of the Schedule. That notice was issued on 16.5.1990. Tax was not paid and, the before, on 3.8.1990, 5.25 Acres of land in Thrissur district was attached by Ext.P10. After completing all procedural formalities, on 12.5.1995 property was sold in terms of Rule 52.

3. In the auction, the property was purchased by late T.A.Moideen (hereinafter referred to as the Purchaser). On 12.5.1995 itself purchaser deposited 25% of the bid amount in compliance with Rule 57. While the sale was taking place, the defaulter had moved this court by filing O.P.No.7180/95 and this court passed order dated 12.5.1995 itself staying further proceedings pursuant to the sale. Initially, the stay order was for one month, and was extended thereafter until further orders. While the stay order was in force, on 21.10.2002, the defaulter transferred the property to Sri.R.S.Moideen, (hereinafter referred to as the Assignee). Subsequently, the Purchaser expired on 11.7.2002. In this context, it may also be relevant to state that neither the Purchaser nor the Assignee were parties to O.P.No.7180/95.

4. The interim order of stay passed by this court on 12.5.1995 was vacated only on 18.12.2005. Subsequently, on 28.3.2005, the purchaser’s wife (the third respondent in W.A.551/2015), who also was the power of attorney holder of the other legal heirs, remitted the balance 75% and, accordingly, the sale was confirmed by Ext.P19 order dated 29.3.2005 and Ext.P19(a) sale certificate was also issued on 30.3.2005.

5. In terms of Rule 86 of the IInd Schedule, on 15.4.2005 the defaulter filed Ext.P18 appeal and the appeal was dismissed by the Chief Commissioner of Income Tax as per Ext.P22 order. It was this order, which was challenged in W.P.(C)27566/08 filed by the defaulter. The writ petition was dismissed by the learned Single Judge, mainly concluding that the defaulter having transferred the property, did not have locus standi to maintain an appeal under Rule 86 and that if at all, the remedy available to the defaulter was to apply under Rule 60 and 61 of the Rules to set aside the sale. It is this judgment, which is under challenge in W.A.551/15, filed by the deceased defaulter’s husband.

6. The contention raised by the learned counsel for the appellant is mainly that the rules contained in the IInd Schedule to the Income Tax Act govern the procedure for sale of an immovable property and, according to him, the rules governing deposit of the auction money are mandatory in character. It is stated that in this case, these mandatory rules were not complied with and, therefore, the sale was void. In such a case, according to the counsel, he could not have maintained an application under Rule 60 or 61 to set aside the sale. He also further contends that irrespective of the transfer of the property, which insofar as the Revenue is concerned, is a void one, the defaulter could not have been non suited on the ground of absence of locus standi to maintain an appeal under Rule 86 of the Rules.

7. However, this contention is refuted by the learned Standing Counsel appearing for the Revenue by inviting our attention to the fact that the purchaser had expired on 11.7.2002, at a time when further proceedings pursuant to the sale were stayed by this court. According to him, the stay was vacated only on 18.12.2005 and in such a situation, the rigor of Rule 57 or 58 requiring deposit within the time specified cannot be imported into the case. He also contended that if at all the appellant was aggrieved, the remedy available to was to apply under Rule 60 and 61 of the Schedule to set aside the sale.

8. The learned counsel appearing for the third respondent, the wife of the deceased purchaser, adopted the contentions of the Standing Counsel for the Revenue and also contended that having regard to the fact that the third respondent is in possession of the properties since 2005 and the appellant, who has not taken recourse to Rule 60 and 61, cannot be heard to contend that he is aggrieved by the sale in question. It was also argued that since the property was transferred when the matter was pe ding consideration of this court, the appellant has ceased to have locus standi to maintain challenge against the sale in question.

9. We have considered the submissions made. Admi tedly, the assessee, the deceased wife of the appellant in W.A.551/15 was a defaulter both in her personal capacity and also as in her capacity as the Director of a company. That liability had become final and it was to realize the dues that proceedings under the IInd Schedule to the Income Tax Act were initiated against her. It is also the admitted fact that even after notice under Rule 2 of the IInd schedule was issued, the defaulter did not comply with the demand and the Revenue were entitled to take steps to realize the amoun due invoking the further provisions contained in the IInd Schedule.

10. When an immovable property is to be attached and sold, the Revenue has to comply with the provisions contained in Part III of the IInd Schedule. In Part III, the Rule 56 provides that the sale of a property attached under Rule 48 and proclaimed under Rule 54, shall be by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer.

11. Rule 57 and 58 being relevant in the context of this case, are extracted below for reference: Rule 57. Deposit by purchaser and resale in default

(1) On every sale of immovable property, the person declared to be the purchaser shall pay, immediately after such declaration, a deposit of twenty five percent on the amount of his purchase money, to the officer conducting the sale; and, in default of such deposit, the property shall forthwith be resold.

(2) the full amount of purchase money payable shall be paid by the purchaser to the Tax Recovery Officer on or before the fifteenth day from the date of the sale of the property.

Rule 58. Procedure in default of payment–In default of payment within the period mentioned in the preceding rule, the deposit may, if the Tax Recovery Officer thinks fit, after defraying the expenses of the sale, be forfeited to the Government, and the property shall be resold, and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it may subsequently be sold.

12. Language of Rule 57 is clear that on every sale of immovable property, the person declared to be the purchaser shall, immediately after such declaration, deposit 25% of the amount of his purchase money, to the officer conducting the sale. The Rule further provides that in default of such deposit, the property shall forthwith be resold. In addition, Sub Rule 2 further provides that the full amount of purchase money payable shall be paid by the purchaser to the Tax Recovery Officer on or before the 15th day from the date of sale of the property.

13. Rule 58 providing for consequences of default in complying with Rule 51 show that on default of payment within the period mentioned in Rule 57, the deposit may, if the Tax Recovery Officer thinks fit, after defraying the expenses of the sale be forfeited to the Government, and the property shall be resold and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it may subsequently be sold. These Rules, it is to be noted are mandatory not only its language but also makes it to be so explicit by providing consequences for its non compliance.

14. Reference to Rule 60 and 61 are also necessary in this case and, therefore, we ext act these provisions also for reference;

Rule 60. Application to set aside sale of immovable property on deposit-

(1) Where immovable property has been sold in execution of a certificate, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing

(a) [***] the amount specified in the proclamation of sal as that for the recovery of which the sale was ordered with interest thereon at the rate of [one fourth pe cent or every month or part of a month], calculated from the date of the proclamation of sale to the date when the deposit is made; and

(b) for payment to the purchaser, as penalty, a sum equal to five percent of the purchase money, but not less than one rupee.

(2) Where a person makes an application under rule 61 for setting aside the sale of his immovable property, he shall not, unless he withdraws t at application, be entitled to make or prosecute an application under this rule.

Rule 61. Application to set aside sale of immovable property on ground of non service of notice or irregularity–Where immovable property has been sold in execution of a certificate, [such Income Tax Officer as may be authorised by the Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner in this behalf, the defaulter, or any person whose interest are affected by the sale, may, at any time, within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this Schedule or on the ground of a material irregularity in publishing or conducting the sale:

Provided that-

(a) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of the non-service or irregularity; and

(b) an application made by a defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in the execution of the certificate.

15. If a sale is validly conducted under Rule 57, then the procedure to get the sale set aside is enumerated in Rule 60, which provides that where any immovable property has been sold in execution of a certificate, the defaulter, or any person whose interests are affected by the sale, may, at any time within 30 days from the date of sale, apply to the Tax Recovery Officer to set aside the sale. Such an applicant is required to deposit the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered with interest thereon at the rate prescribed. In addition, for payment to the purchaser, as penalty, a sum equal to 5% of the purchase money, but not less than one rupee shall also be deposited. Rule 61 provides application to set aside sale of immovable property on ground of non service of notice or other irregularity.

16. Once sale is validly completed, the sale is required to be confirmed in terms of Rule 63 and sale certificate is to be issued under Rule 65. Rule 86 provides for an appeal and in terms of this Rule, an appeal from any original order passed by any Tax Recovery Officer, not being an order which is conclusive, shall lie to the Principal Chief Commissioner (w.e.f.1.6.13) or the Chief Commissioner or Principal C (w.e.f.1.6.13) or Commissioner.

17. A reading of these provisions of the IInd Schedule to the Act show that the requirement of deposit of 25% as contemplated in Rule 57(1) immediately after a person is declared to be the purchaser and also deposit of the balance purchase money on or before 15th day of date of sale of the property in terms of Rule 57(2), are mandatory in character.

18. The provisions contained in Rule 57, 58, 60 and 61 of the Income Tax Act are in pari materia with the provisions contained in rule 84, 85, 86, 87, 88, 89 and 90 of Order XXI C.P C. Rule 84 and 85 of Order XXI CPC, providing for deposit of 25% and 75%, have been consistently held to be mandatory in character and it has been held that the courts have no power to extend the time prescribed herein. The Apex Court had occasion to consider the consequence of its non compliance Manilal Mohanlal Shah and others v. Sardar Sayed Ahmed Sayed Mahmad and another [AIR 1954 SC 349] where it has been held thus:

8. The provision regarding the deposit of 25 per cent. by the purchaser other than the decree-holder is mandatory as the language of the rule suggests The full amount of the purchase-money must be paid within fifteen days from the date of the sale but the decree-holder is entitled to the advantage of a set-off. The provision for payment is,. however, mandatory… (Rule 85). If the payment is not made within the period of fifteen days, the Court has the discretion to forfeit the deposit, and there the discretion ends but the obligation of the Court to re-sell the property is imperative. A further consequence of non-payment is that the defaulting purchaser forfeits all claim to the property (Rule 86).

9. It is not denied that th purchasers had not obtained any decree on foot of their mortgage and the claim of Rs. 1,20,000 which they put forward before the execution Court had not been adjudicated upon or determined. The mortgagees, one of whom is a pleader, applied on the day of the sale claiming a set-off on foot of the mortgage. The Court without applying its mind to the quest-ion immediately passed the order allowing the set-off. This claim was obviously not admissible under the provisions of rule 84 which applies only to the decree-holder. The Court had clearly no jurisdiction to allow a set-off. The appellants misled the Court into passing a wrong order and obtaining the advantage of a set-off while they knew perfectly well that they had got no decree on foot of the mortgage and their claim was undetermined. There was default in depositing 25 percent of the purchase-money and further there was no payment of the full amount of the purchase-money within fifteen days from the date of the sale. Both the deposit and the payment of the purchase-money being mandatory under the combined effect of rules 84 and 85, the Court has the discretion to forfeit the deposit but it was bound to re-sell the property with the result that on default the purchaser forfeited all claim to the property. These provisions leave no doubt that unless the deposit and the payment are made as required by the mandatory provisions of the rules, there is no sale in the eye of law in favour of the defaulting purchaser and no right to own and possess the property accrues to him.

10. In two cases decided by the Calcutta High Court, viz., Munshi Md. Ali Meah v. Kibria Khatun (1), and Sm. Annapurna Dasi v. Bazley Karim Fazley Moula (2), the sale was held to be no sale where the purchaser had failed to deposit the balance of the purchasemoney as required by rule 85. A similar view was taken by a Division Bench of the Allahabad High Court in Nawal Kishore and Others v. Buttu Mal and Subhan Singh (3). The provisions of rule 86 were held to be mandatory in another decision of the same Court, Haji Inam Ullah v. Mohammad Idris (4), and it was held that the Court was bound to re-sell the property upon default irrespective of any application being made by any party to the proceedings.

The case of Bhim Singh v. Sarwan Singh (5) was a case of failure to make a deposit as required by section 306 of the Code of 1882 (corresponding to rule 85 of the present Code). The Court treated it as a material irregularity in conducting the sale which must be enquired into upon the application under section 311, (corresponding to rule 90 of the present Code), and not by a separate suit to set aside the sale. The Court did not apply its mind to the question whether the provisions of section 306 being mandatory the sale should not be treated as a nullity for non-compliance with those provisions.

The decision of a single Judge (app J.) in Nathu Mal v. Malawa Mal and Others (1) is distinguishable upon its facts. There the auction-purchaser had actually tendered the money but the payment was postponed by consent of parties pending the disposal of the objection by the judgment debtor. We do not agree with the remark made in that case that the provisions of rule 85 are intended “to be d rectory only and not absolutely mandatory.” A Division Bench of the same Court (Tek Chand and Abdul Rashid JJ.) held in A. R. Davar v. Jhinda Ram (2), that the Court had no jurisdiction to extend the time for th payment of the balance of the purchase-money under rule 85 and must order resale under rule 86.

11. Having examined the language of the relevant rules and th judicial decisions bearing upon the subject we are of opinion that the provisions of the rules requiring the deposit of 25 per cent. of the purchase-money immediately on the person being declared as a purchaser and the payment of the balance within 15 days of the sale are mandatory and upon non-compliance with these provisions there is no sale at all. The rules do not contemplate that there can be any sale in favour of a purchaser without depositing 25 per cent. of the purchase-money in the first instance and the balance within 15 days. When there is no sale within the contemplation of these rules, there can be no question of material irregularity in the conduct of the sale. Non-payment of the price on the part of the defaulting purchaser renders the sale proceedings as a complete nullity. The very fact that the Court is bound to resell the property in the event of a default shows that the previous proceedings for sale are completely wiped out as if they do not exist in the eye of law. We hold, therefore, that in the circumstances of the present case there was no sale and the purchasers acquired no rights at all.

19. These principles have been followed in Balram son of Bhasa Ram v. Ilam Singh and others [AIR 1996 SC 2781], it was again held thus:

10. It is also to be noted that the duty to pay the full amount of purchase money the prescribed period of 15 days from the date of sale of the property is cast on the purchaser by virtue of Rule 85 of Order XXI and therefore, the entire responsibility to make full compliance of the mandatory provision is his. The proviso to Rule 85 is enacted for the benefit of the purchaser when he is the decree-holder and is entitled to the advantage of any set off under Rule 72. The proviso giving this benefit to the decree-holder purchaser merely relieves him of the requirement of depositing that amount of which he is entitled to claim set off, but it does not relieve him of they duty to deposit the full amount taking advantage of the set off. Any mistake made while claiming the set off which results in failure to deposit the full amount of purchase money within 15 days of the date of sale renders the decree-holder purchaser liable to the same adverse consequences which would ensue to any other purchaser due to non-compliance of Rule 85. No distinction is made between a decree-holder purchaser entitled to claim set off under Rule 72 and any other purchaser for the purpose of strict compliance with the requirement under Rule 85. The contentions of learned counsel for the appellant have not merit.

20. Similar are the principles laid down in Gangabai Gopaldas Mohata v. Fulchand and others [AIR 1997 SC 1812], where the sale has been held to be void.

15. Rules relating to Court sale provided in Order 21, Rules 84 and 85 are analogous. They require the purchaser to make deposit of 1/4th of the purchase money immediately after sale and the balance shall be deposited within 15 days. This Court held in Manilal Mohanlal Shah v. Sardar Sayed Ahmed Sayed Mahamad. 1966 (1) SCR 108: (AIR 1954 SC 349), that non-compliance with Rules 84 and 85 of Order 21 would render the sale void in the eye of law. The contention in the said case, that non-compliance with the aforesaid rule only renders the sale irregular, was repelled by this Court. The same principle would apply to the sale regulations contained in the above quoted Maharashtra Rules.

21. The legal position in the context of Rule 57 itself has already been clarified by the Apex Court in its judgment in C.N.Paramsivan and Another v. Sunrise Plaza Tr. Partner and Others [2013] 4 S.C.R. 1. That was a case arising under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 where sale of the properties are to be held in terms of the IInd Schedule to the Income Tax Act. In that context, the provisions contained in the IInd Schedule came up for consideration of the Apex Court and the paragraphs to the extend it is relevant read thus:

27. There is nothing in the provisions of Section 29 of RDDB Act or the scheme of the rules under the Income Tax Act to suggest that a discretion wider than what is explained above was meant to be conferred upon the Recovery Officer under Section 29 of the RDDB Act or Rule 57 of the Income Tax Rules which reads as under:

“57. (1) On every sale of immovable property, the person declared to be the purchaser shall pay, immediately after such declaration, a deposit of twenty-five per cent on the amount of his purchase money, to the officer conducting the sale; and, in default of such deposit, the property shall forthwith be resold.

(2) The full amount of purchase money payable shall be paid by the purchaser to the Tax Recovery Officer on or before the fifteenth day from the date of the sale of the property.”

28. It is clear from a plain reading of the above that the provision is mandatory in character. The use of the word “shall” is both textually and contextually indicative of the making of the deposit of the amount being a mandatory requirement. xx xx xx xx

32. In the light of the above we see no reason to hold thatRules 57 and 58 of the Income Tax Rules are anything but mandatory in nature, so that a breach of the requirements under those Rules will render the auction non-est in the eyes of law.

22. It is in the light of these binding principles that we have to appreciate the case before us. Admittedly, the sale was on 12.5.1995. On 12.5.95 purchaser was declared to be successful and, therefore, she deposited 25% of the purchase money and thus complied with Rule 57(1). She ought to have deposited the balance amount within 15 days thereafter. It is the contention of the Department and the purchaser that the interim order passed by this court on 12.5.95 in O.P.7180/95 prevented the authorities from accepting the balance sale consideration within the 15 days period. Even if we accept the aforesaid contention in favour of the Income Tax Department and the purchaser, that benefit can extend only till 18.2.2005 when the stay was vacated by this court. Then also, the Purchaser or it being the estate left behind by the Purchaser, who had expired in the meantime, his legal heirs, had the duty to comply with the requirements of Rule 57(2) within 15 days thereafter. However, what transpired thereafter is revealed from paragraph 19 of Ext.P22, the order passed by the Commissioner, thus:

“The TRO contacted Smt.V.H.Kunhipathu, wife of the deceased, to know the details of legal heirs. A “heirship certificate” from Tahsildar, Kodungallur was filed. Copies of power of attorney executed by each of the legal heirs on various dates in 2003 and 2004 giving Smt.Kunhipathu the authority to act and deal with all the properties of Sri.T.A.Moideen were filed. Smt.Kunhipathu informed the TRO, vide letter dated 8.3.2005, that she was willing to remit the balance, but she asked for a time of one month, as her son Dr.Mubarak was away in UAE. The balance amount of the price fixed in auction was paid on 28.3.2005. The TRO issued a sale certificate dated 30.3.2005 in form No.ITCP 20 in respect of the property, in favour of Smt.V.H.Kunjipathu, the power of attorney holder for the legal heirs of Sri.T.A.Moideen.”

The above paragraph of the order would show that despite the fact that the Department had no obligation to have issued any notice or other intimation to the legal heirs of the deceased purchaser, the Department in fact informed the wife of the deceased purchaser, SmtV.H.Kunhipathu, the third party respondent in W.A.551/15 and that she, vide her letter dated 8.3.2005, informed the Department that she was willing to remit the balance but asked for one month’s time. It was, accordingly, that she deposited the balance 75% of the amount on 28.3.2005. In other words, the wife of the deceased Purchaser, who also held power of attorney of the other legal heirs of the deceased, did not deposit the balance amount within the 15 days period specified in Rule 57(2), even if the said period is reckoned from 18.2.2005, when the order of stay was vacated by this court. Evidently, therefore, there is non compliance of the mandatory provisions of Rule 57(2) attracting the consequences of such default as contained in Rule 58 and explained by the Apex Court in the judgments referred to above. This means that the confirmation of sale, ordered on 29.3.2005 is of a void sale and the sale certificate issued on 30.9.2005 being a dependent order is also void and is of no consequence.

It was argued before us that if at all the appellant wanted to avoid the sale, the remedy available was to take recourse to Rule 60 or 61 of the Rules by making an application to set aside the sale and not an appeal under Rule 86. We are unable to accept this contention. Apex Court has repeatedly held that confirmation of sale in contravention of Rule 57 and 58 is void and that as a result of the default committed by the purchaser or his legal heirs, the sale itself is wiped out, to borrow the expression used by the Apex Court. In a case where a sale held under Order XXI of CPC pursuant to a decr e which was a nullity, there is no question of any party having to resort to the provisions of Rule 89 and 90 of Order XXI C.P.C. to have the sale set aside and any claim based on a void sale can be resisted without having the sale set aside. This principle has been recognized by the Apex Court in its judgment in Ram Chandra Arya v. Man Singh and another [AIR 1968 SC 954] where it, inter alia, held thus:

“In the present case the decree being a nullity, has to be treated as non est and, consequently the sale, when held, was void ab initio. In such a case, there is no question of any party having to resort to the provisions of Rr. 89 and 90 of O. 21, C.P.C. o have the sale set aside. Any claim based on a void sale can be resisted without having that sale set aside. The decision of this Court in that case itself bring out this distinction by stating:

“It is to be noted however, that there may be cases in which, apart from the provisions of Rr. 89 to 91 the Court may refuse to confirm a sale, as, for instance, where a sale held without giving notice to the judgment-debtor, or where the Court is misled in fixing the reserve price or when there was no decree in existence at the time when the sale was held.”

This Court, thus, in that case, clearly recognised that, if there be no decree in existence at the time when the sale is held, the sale can be ignored and need not be set aside under the provisions of Rr. 89 to 91, C.P.C. In the present case, as we have held, the decree passed against Ram Lal was void and has to be treated as non-existent and, consequently, the sale must be held to be a nullity.

“ 25. Reference should, in this context be made again to the principles laid down in Manilal Mohanlal Shah’s case [AIR 1954 SC 349] (supra). Paragraphs 9, 10 and 11 already extracted above shows that default in remittance of purchase money, renders a sale in execution of a decree, a nullity.

26. We have already held that Rule 60 and 61 of the IInd Schedule to the Income Tax Act are pari materia with the provisions contained in Rule 89 and 90 of Order 21 C.P.C., and as held by the Apex Court the principles which govern the rules under Order XXI would apply to the rules in the IInd Schedule to the Act also. Therefore, the principles of law laid down by the Apex Court in the context of Rule 89 and 90 are equally applicable in interpreting Rule 60 and 61 of the Ist Schedule.

27. If that be so, the law as laid down in the case of Ram Chandra Arya (supra) has to answer the contention now raised before us.

28. Apparently, as a last resort, an argument was raised, that the Purchaser who had alienated the property in favour of R.S.Moideen on 21.10.2002 had no proprietary interest in the property to maintain an appeal under Rule 86 of the Rules. Therefore, according to the respondents, not only the appeal filed by her before the Commissioner but also the writ petition and the writ appeal are liable to be dismissed for want of locus standi.

29. Admittedly, it was the default of the deceased defaulter which led to the sale and the consequential proceedings. It was the defaulters property, which came to be proceeded against and was ultimately sold. According to the Revenue, such a sale is hit by Rule 16 of the Rules in the IInd Schedule which reads thus:

16. Private alienation to be void in certain cases-

(1) Where a notice has been served on a defaulter under rule 2, the d faulter or his representative-in-interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any civil court issue any process against such property in execution of a decree for the payment of money.

(2) Where an attachment has been made under this Schedule, any private transfer or delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or other moneys contrary to such attachment, shall be void as against all laims enforceable under the attachment.

30. This rule provide that any private alienation after notice under Rule 2 has been served on the defaulter, except with the permission of the Tax Recovery Officer shall be void. Sale admittedly was without the permission of the Tax Recovery Offic r. Therefore, and as rightly contended by the counsel for the Revenue, the sale is void at least as against the Revenue. If that be so, insofar as the proceedings between the appellant and the Revenue are concerned, the appellant is fully entitled to maintain legal proceedings impugning the sale and the further proceedings Therefore, this contention is only to be refuted and we do so.

31. For all these reasons, we are inclined to think that the learned Single judge erred in dismissing the writ petition filed by the appellant. Accordingly, the judgment under appeal in W.A.551/2015 is set aside and Ext.P22 order passed by the first respondent is also set aside. The writ appeal is allowed as above.

32. Turning to W.A.588/15 filed by the assignee of the property Sri.R.S.Moideen, that assignment, according to us, is hit by Rule 16 of the IInd Schedule to the Act.

33. If that be so, he could not derive any benefit consequent on the transfer in his favour. In that view of the matter, we are not inclined to entertain any challenge against the proceedings initiated by the Income Tax Department at the instance of the appellant herein. Consequently, W.A.588/15 has to fail and is dismissed.

Resultantly, W.A.No.551/15 is allowed and W.A.588/15 is dismissed.

[Citation : 408 ITR 642]