1993 (12) TMI 49 - HC - Income Tax

Auction Sale Civil Court Immovable Property By Central Government Movable Property Public Interest

Summary

Issues:
1. Validity of cancellation of auction by Chief Commissioner of Income-tax.
2. Constitutionality of clause 15 of exhibit P-1.
3. Violation of principles of natural justice in cancellation of auction.
4. Jurisdiction of the court under article 226 of the Constitution.

Analysis:
The judgment by P. K. Balasubramanyan J. pertains to an auction conducted for a property by the Chief Commissioner of Income-tax, Cochin. The auction, held on September 22, 1993, saw the petitioner as the highest bidder, offering Rs. 60,50,000 against a reserve price of Rs. 35,00,000. However, the Chief Commissioner cancelled the auction on the same day, citing complaints from other bidders regarding the conduct of the auctioneer and lack of fair opportunity for all participants. The petitioner challenged this cancellation through an original petition, primarily arguing against the arbitrary power reserved by the Chief Commissioner and the violation of natural justice in the cancellation process.

The petitioner contended that clause 15 of exhibit P-1, reserving uncanalised power in the Chief Commissioner, was unconstitutional and violated article 14 of the Constitution. Additionally, it was argued that the Chief Commissioner's decision to cancel the auction without hearing the petitioner breached the principles of natural justice. The petitioner raised concerns about the Chief Commissioner's presence during the auction, lack of intervention at the time of bidding, and subsequent cancellation of the auction in favor of the petitioner. Furthermore, it was suggested that the Chief Commissioner should have compelled other bidders to deposit a higher amount if a reauction was considered.

However, the court noted that the auction sale was not statutory but contractual in nature, falling outside the purview of article 226 jurisdiction. The judge highlighted that the petitioner's title was subject to confirmation by the Chief Commissioner, which had not occurred in this case. The court expressed reluctance to delve into the specifics of the auction process and complaints raised by other bidders, emphasizing that such matters were more suited for civil court proceedings rather than constitutional challenges.

Regarding the constitutionality of clause 15 of exhibit P-1, the court found that the petitioner had participated in the auction voluntarily, abiding by the terms set out in the notification. Given the petitioner's acknowledgment of the auction process and the return of earnest money post-cancellation, the court dismissed the argument that the Chief Commissioner's power was arbitrary. The judge concluded that the Chief Commissioner's actions appeared to be in public interest and not indicative of mala fides, leading to the dismissal of the original petition.

In summary, the court declined to interfere with the Chief Commissioner's decision to cancel the auction, citing lack of jurisdiction under article 226 and finding no substantial grounds to challenge the constitutionality of the auction terms or the Chief Commissioner's actions. The petition was ultimately dismissed by the court.