2005 (8) TMI 403 - SC - Companies Law

Attachment orders - Discharge of liabilities - Held that - The appellant is at liberty to seek an order of stay from the Tribunal and if the Tribunal stays the recovery then the question of properties being subjected to sale for recovery of the amount which is stayed may not arise. However, this does not amount to expression of any opinion by us on the question whether the Tribunal would grant stay or not, which question lies within the discretion of the Tribunal. We also clarify that this order is confined to disposing of the appellant applicant s aforesaid four properties only.

Summary

Issues:
1. Appellant's status as a "notified person" under the Special Court Act.
2. Sale of properties under attachment without investigation under section 9A of the Act.
3. Stay on proposed sale of properties during appeal process.
4. Appellant's claim regarding pending appeals before the Tribunal.
5. Equitable relief regarding sale of specific property.
6. Alleged mortgagees' claim on properties under attachment.

Analysis:
1. The appellant is considered a "notified person" under section 3(2) of the Special Court Act, with properties under attachment due to a significant demand for arrears of income tax. Assessments by the Assessing Officer and Commissioner have been confirmed, with further appeals pending before the Tribunal.

2. The Special Court allowed the sale of certain properties belonging to the appellant without conducting an investigation under section 9A of the Act. The appellant raised concerns about this decision, emphasizing the need for a proper investigation before the sale of the property.

3. An application was filed seeking a stay on the proposed sale of the properties during the appeal process. The appellant's counsel argued that recovery should not proceed until the pending appeals before the ITAT are decided. However, the court refused the stay, citing the outstanding demand and lack of a stay on recovery.

4. The appellant highlighted that appeals against tax assessments are pending before the Tribunal, but there is no interim stay order against recovery. The court clarified that the appellant could seek a stay order from the Tribunal, and if granted, the properties would not be subject to sale for recovery.

5. As a matter of equitable relief, the court directed that the sale of properties, excluding one claimed to be the residential house of the appellant, should proceed first. If the claims are not satisfied from the sale of other properties, then the residential property may be subjected to sale.

6. Alleged mortgagees from the co-owners of the properties under attachment and proposed for sale made a claim in court for the first time. The court refused their impleadment, suggesting they move the Special Court and expressing no opinion on the merits of their claim or their standing to make the application.