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TMI Blog2022 (5) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed upon the property or apart thereof. If revenue has not been assessed, question of including the same in the proclamation sale does not arise. In this case the property was admittedly in the hand of one sudhakar jayaraj who had filed W.P. Even according to the petitioner, the property was not used for any business by the petitioner. When the first attempt was made to recover the amount with the issue of auction notice, dated 16.06.2008, there was response - No irregularity committed by the Income Tax Department while auctioning the property. The Income Tax Department also made it very clear that the auction amount will be adjusted toward the tax liability and the interest thereon and the balance if any will be adjusted and payable toward the other state holders namely 234 time share holders, dues to Repco Bank and the tax due to the Commercial Tax Department totalling to Rs.95,02,968/-. Since the amount was recovered from the auction sale is only Rs. 3,38,03,500/-, the third respondent is also bound to pay the amounts due to the 234 time share holders, Commercial Tax Department and Repco Bank. These are the liabilities of the petitioner which the third respondent has unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(procedure for recovery of tax). The auction was proposed on 13.10.2008 at 11.30 a.m. However, the aforesaid auction did not materalise as the public did not evince any interest in the auction. 4. Thereafter, a second attempt was made by the Income Tax Department by issuing another proclamation of sale dated 21.08.2009. At that point, it was mentioned that the petitioner was in arrear for a sum of Rs. 18,63,83,869 as on 29.09.2009 excluding cost and interest. If public auction was fixed to be held on 29.09.2009 at the Income Tax Auditorium, No.121, Uthamar Gandhi Salai, Nungambakkam, Chennai-34 at 3p.m. However, it appears that the said auction also did not materalise. 5. Meanwhile, one Sudhakar Jayaraj representing the interest of Park View Resort Owners Welfare Association filed a writ petition in W.P. (MD).No.9640 of 2009 stating that the persons who had invested in the time shares in the petitioner's company were the owners of the property and that he had been nominated by the association to maintain the property and since attempts were made to auction the property, prayed for a writ of Certiorari to quash auction sale notice dated 03.09.2009 published by the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that once a reserve price is fixed, a special procedure is mandatorily to follow. The rule also does not give any power to put the property for sale, and sell it away, once a tag of reserve price has been fixed. The Government also has not been given power to under-quote the original price specified, as Rule 59 is silent on this matter. The right of the Government to participate in auction, does not ipso facto do away with the rights of the defaulter. It also does not authorise a sale for a lower price to a new bidder. The rule is intended, according to me, for the safety of the defaulter, expressing an anxiety that the property is not lost to him for the only reason that there were no adequate offer. A defaulter may be in an unenviable position, and may be passing through a phase of distress. The State as the protector of rights of ail citizens, who may include criminals, defaulters, or undesirables, have to give them equal protection of law. The rights of property of a defaulter are also to be safeguarded, and he is not to be viewed as a fugitive nor can he be placed in a disadvantageous position. The right of the Government to participate in the auction is to rejuvenate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given due importance. What is postulated is definitely not a notice about the proclamation to the defaulter. But notice is to be given before the proclamation is drawn up. This, according to me, is the quintessence of the rule prescribing the procedure. When the defaulter gets an opportunity as above, he has the option to suggest the reserve price. He has to be realistic and normally cannot afford to be casual as it is in his interest to discharge the liability at the earliest point of time, once the properties have parted from his hands. The Department also is able to get the views of the defaulter and the reserve price is thus fixed. Therefore, there is an inbuilt safety mechanism for minimising arbitrariness. Viewed from this point, 1 have to find that the condition for a reserve price becomes automatically relevant. Only because the rule has referred to the procedure as if any the discretion arising from the procedure cannot be ignored. If there is a failure for giving notice of drawing up of proclamation, I am of the opinion that there is procedural irregularity. In the present case, as a reserve price in respect of the property at the time of previous occasion was speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale, the reserved price was fixed as Rs.3,33,03,500/-. 11. It is submitted that there is no material irregularity in following Rule 51, 52, 53 and 54 of the Chapter II of the Second Schedule of the Income Tax Act, 1969 and therefore, the writ petition is liable to be dismissed. It is further submitted that even according to the petitioner, the property did not evince any interest from the public right from the year 2008 and the third party have to be evicted only after the orders came to be passed by this Court in W.P.(MD).No.9640 of 2009 filed at the behest of the third party vide order, dated 25.07.2014. 12. I have considered the arguments advanced by the learned counsel for the petitioner and the learned counsel for the respondents. I have also perused the documents filed in support of the present writ petition filed by the petitioner and the documents filed by the third respondent, namely the bidder who has taken possession of the property. 13. The arguments advanced on behalf of the petitioner that Rule 52 and 53 (of the II Schedule of the Income tax Act 1961) were not followed cannot be countenanced in the light of the fact that the impugned auction notice clearly s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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