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2010 (3) TMI 1035 - HC - VAT and Sales TaxRepayment of loan by the borrower to the Pradeshiya Industrial and Investment Corporation, Uttar Pradesh ( the PICUP ), as well as auction and sale of the industry on account of default of payment of loan. Held that - In the present case, the power to auction the property has been given to Collector or Assistant Collector of First Class. The Sub-Divisional Magistrate, who is Assistant Collector of First Class, authorised the Naib Tahsildar Mohanlalganj, to auction the property. On the date of auction, the Naib Tahsildar Mohanlalganj proceeded on leave and in the present case, the property was auctioned by another Naib Tahsildar who was not authorised by the Collector. Thus, the impugned auction and sale of property seems to have been done by a person who was neither Collector nor Assistant Collector. Moreover, under rule 285A only Collector may appoint an Assistant Collector to conduct the auction and sale of property. SubDivisional Magistrate is not competent to nominate or appoint a person/ Naib Tahsildar to hold auction. Accordingly, auction and sale of the property has been done in violation of Rules by a person who was not competent to do so. The petitioner UPCL had filed successive writ petitions challenging the auction proceeding and failing to achieve its object, had filed regular suit and obtained ex parte injunction which was later on, vacated. Thus, the petitioner UPCL approached the civil court as well as this court with uncleaned hands concealing the material facts, and has abused the process of law. The repeated filing of writ petitions in this court against the auction and sale proceeding, the transfer of property in violation of interim order of this court, the concealment of fact with regard to pending of writ petition while filing the R.S. No. 27/2004 and concealment of fact in this court with regard to filing of regular suit, shows a clandestine effort on the part of the UPCL, to abuse of process of law and makes out a case for trial of perjury, contempt of this court as well as imposition of exemplary costs. W.P. dismissed.
Issues Involved:
1. Liability of deferred tax. 2. Validity of the auction and sale under U.P. Zamindari Abolition and Land Reforms Act and Rules. 3. Transfer of property during the pendency of the writ petition. 4. Concealment of facts and abuse of process of law. Detailed Analysis: 1. Liability of Deferred Tax: The court examined whether UPCL is liable for the deferred tax loan initially availed by UPAL. Despite UPCL's arguments to the contrary, the court found that UPCL had accepted the transfer of the full loan amount and was responsible for its repayment. The court noted, "Parties have signed an agreement dated July 5, 2001 for transfer of interest-free loan in lieu of tax deferment scheme." The court concluded that UPCL owes the liability to pay the deferred tax, which at the moment is Rs. 240 lakhs and odd. The court emphasized that UPCL had not challenged the validity of the agreement or the order passed by the Principal Secretary, State Government, hence the writ petition against the consequential notice and recovery proceeding was not maintainable. 2. Validity of the Auction and Sale: The court scrutinized the auction and sale process under the U.P. Zamindari Abolition and Land Reforms Act and Rules. It was determined that the auction was conducted by a Naib Tahsildar who was not authorized by the Collector, thus violating Rule 285A which mandates that only the Collector or an Assistant Collector appointed by him can conduct such sales. The court stated, "The impugned auction and sale of property seems to have been done by a person who was neither Collector nor Assistant Collector." Additionally, the auction did not comply with the requirement of a 30-day notice and the publication of the estimated value in two widely circulated newspapers, rendering the auction and sale illegal and void. The court referenced the Supreme Court judgment in Swadeshi Polytex Limited [2008] 12 SCC 596, which underscores the statutory force of these rules. 3. Transfer of Property During Pendency of Writ Petition: The court found that the property was transferred by Sri P. Kumar to his wife Smt. Mamta Sinha during the pendency of the writ petition and in violation of the court's interim order. The court cited Section 52 of the Transfer of Property Act, 1882, which prohibits the transfer of property during the pendency of a suit. The court stated, "In view of the above, Smt. Mamta Sinha, who purchased the property during the pendency of writ petitions as well as continuance of interim orders passed by this court (supra), shall also be bound by the judgment of this court." The court concluded that the transfer was void ab initio and Smt. Mamta Sinha would acquire no right and title over the land. 4. Concealment of Facts and Abuse of Process of Law: The court noted that UPCL had concealed material facts and filed multiple writ petitions and a civil suit to obstruct the auction and sale proceedings. The court observed, "The petitioner UPCL approached the civil court as well as this court with uncleaned hands concealing the material facts, and has abused the process of law." The court emphasized that such actions amounted to fraud and abuse of the judicial process, warranting exemplary costs and potential contempt proceedings. The court cited various judgments, including Dalip Singh v. State of U.P. [2010] AIR SCW 50, to highlight the serious consequences of such conduct. Summary: (i) Tax Liability: UPCL owes the deferred tax liability and cannot escape it without challenging the underlying agreements and orders at the appropriate forum. (ii) Auction Validity: The auction and sale conducted by unauthorized personnel and without proper notice and publication were illegal and void. (iii) Property Transfer: The transfer of property during the pendency of the writ petition was void, and Smt. Mamta Sinha acquired no rights over the land. (iv) Concealment and Abuse: UPCL's concealment of facts and abuse of the judicial process warranted exemplary costs and potential contempt proceedings. Order: - W.P. No. 6345 (M/B) of 2002: Dismissed with exemplary costs of Rs. 10,00,000 to be deposited within one month. - W.P. No. 9080 (M/B) of 2007: Dismissed, and the auction money deposited by M/s. R.D. Cements Industries Pvt. Ltd. to be refunded within one month. - Fresh Auction: District authorities to proceed with a fresh auction in compliance with statutory provisions.
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