2016 (10) TMI 369 - SC - Indian Laws

Settlement of arrears under the Samadhan Scheme - delay in refund - prayer for grant of interest - Held that - The amount was deposited by the appellant way back in the year 2008 who had purchased the property in auction. This auction has been held to be illegal as proper procedure was not followed. That was not the fault of the appellant. The appellant s money got stuck for all these years. When he was denied the benefit of the auction purchase despite being the highest bidder on the procedural grounds which resulted in refund of the money deposited by him, he should have been granted interest thereupon. In the interest of justice, we deem it proper that Simple Interest at the rate of 9 per cent be awarded to the appellant from the date of deposit till the date of release of this amount which shall be payable by the Respondent No.2 viz., the Joint Commissioner, Commercial Tax (FAC), Madurai. The interest shall be calculated and paid within a period of three months. We make it clear that, in case, the property is to be ultimately sold for realising the dues payable to respondent No.2, the respondent No.2 shall be entitled to recover the aforesaid interest as well which would be paid to the appellant.

Summary

Issues:
1. Violation of statutory provisions in the sale of property.
2. Sale of individual shareholder's property.
3. Revocation of Sales Certificate under the 'Samadhan Scheme'.
4. Granting of interest to the auction purchaser.

Issue 1: Violation of statutory provisions in the sale of property:
The respondent company, facing financial crises, had its property sold due to non-payment of sales tax. The High Court allowed writ petitions citing violations of the Tamil Nadu Revenue Recovery Act, 1864. The sale took place within seven days instead of the statutory 30 days, and the sale confirmation occurred within 30 days against the prescribed period. Additionally, an individual shareholder's property was sold for the company's dues, leading to a violation of property rights.

Issue 2: Sale of individual shareholder's property:
The High Court considered the violation of an individual shareholder's property rights due to the sale of his personal property for the company's dues. The Court directed the company to discharge its dues, with one shareholder agreeing to pay a specific amount along with poundage. The Court also allowed the company to seek relief from the Government and warned of property sale if commitments were not met or relief not granted.

Issue 3: Revocation of Sales Certificate under the 'Samadhan Scheme':
After the enactment of the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010, the company settled its arrears with the Government. However, the auction purchaser challenged the settlement, leading to a show cause notice for revocation of the settlement certificate. The Division Bench dismissed appeals filed by the auction purchaser and the State, allowing the writ petitions by the assessee and directing the Department to refund the auction purchaser's amount.

Issue 4: Granting of interest to the auction purchaser:
The auction purchaser filed for a revocation of the Sales Certificate, arguing against a settlement between the Government and the assessee. The High Court denied interest on the amount paid by the auction purchaser, leading to further legal proceedings. The Supreme Court, considering the delay and injustice faced by the appellant, granted simple interest at 9% from the date of deposit till release, payable by the Joint Commissioner within three months. It clarified that the interest would be recoverable if the property is sold to realize dues.

This judgment reflects the legal complexities surrounding the sale of property, statutory violations, individual property rights, settlement schemes, and the granting of interest to affected parties, providing a comprehensive analysis of each issue addressed within the legal framework.