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PETITIONER: JANAKI S. MENON & ORS.

       Vs.

RESPONDENT: DR. V.R.S. KRISHANAN & ORS.

DATE OF JUDGMENT:       04/10/1996

BENCH: K. RAMASWAMY, S.P. KURDUKAR

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Leave granted.      We have heard learned counsel on both sides.      These appeals  by special leave arise from the order of the High  Court of  Kerala made  on November  1,1955 in  CRP Nos.1745 and 1980 of 1995. The case has a chequered history, details of  which need  no repetition.  Suffice it  to state that the  late V.  Madhava Raja  owed Certain  dues  towards income tax,  wealth tax  and agriculture  income-tax. On his demise when  a partition  suit, viz.,  OS. No.l/64 was filed for division of the properties by meets and bounds among the sharers, an attempt was made by the State to have the estate  attached for  recovery of the tax dues. Pursuant to an  agreement between  the parties,  the Court  passed an order   avoiding   attachment   and   directed   the   Joint Commissioners to  recover the  dues from  the estate and pay over the  same to  the Income-tax and other Government dues. On an  application, final decree was passed on July 15, 1967 in which  the appellants  had purchased 4/13th share. In the final decree  proceedings for  recovery of dues of the State certain properties came to be identified and ultimately Devi Vilas Palace  was also  agreed to  be sold  by order  of the Court dated  January 28,  1983 for  recovery of the arrears. Several attempts were made to sell out the properties to the co-sharers for  realisation of  the tax  dues of  the  State remained unsuccessful.  Consequently, by  order of the court dated April  8,  1992,  direction  was  given  to  sell  the property  by   public  auction.  After  due  publicity,  the property in  dispute was  sold on June 15, 1992 for a sum of RS. 31,15,0OO/-.  Under the  terms of  the sale 1/4th of the bid amount  was required  to be  deposited forthwith and the balance  amount   was  to   be  deposited   within  15  days thereafter. In  default 1/4th amount was to be forfeited. In the meanwhile  pending the  litigation, the  matter  reached twice to  this Court. SLP (C) No.8040/92 came to be filed in this Court  wherein  this  Court  passed  an  interim  order directing stay of the confirmation of the sale. Resultantly, the auction  purchaser respondents  filed an  application in the Court  on June  26, 1992  seeking permission to withdraw from the  auction.  Pending  that  applications  they  filed

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another application  on June  29, 1992 for extension of time to  deposit   3/4th  amount.   Ultimately,  by  order  dated September 19,  1992, this  Court had  dismissed the  special leave petition  with  liberty  to  the  executing  Court  to confirm the  sale already  made etc.  In the  meanwhile; the Court passed vague orders on auctionpurchaser’s applications for permission to withdraw from auction and for extension of time. Auction  purchaser filed a revision in the High Court. The learned single Judge further directed the trial Court to consider the  matter in the light of the direction issued by this Court in the special leave petition.      The appellants  also filed  an application  under Order 21, Rule  90 CPC  to set  aside the  sale. All these matters were heard  together and by order dated August 16, 1995, the executing Court  rejected the  objections to  the  sale  and extended time  for payment of the balance amount. The matter was then  carried in revision to the High Court and the High Court dismissed  the revision petitions. Thus, these appeals by special leave.      Shri  D.D.  Thakur,  learned  senior  counsel  for  the appellants, has  contended that  it is clear from the record that the  arrears for recovery of the tax were liquidated as on the  date of  the sale.  Therefore, the  property was not liable  to   be  sold.  This  Court  having  considered  the contention, passed  an order  on November 27, 1995 directing the respondents  to place on record whether any liability as on the  date  of  the  auction,  viz.,  June  15,  1992  was subsisting.  In   pursuance  thereof,  a  certificate  dated December 6,  1995 was  produced  in  which  the  Income  Tax Officer,  Ward-2,  Palghat  had  certified  that  a  sum  of Rs.5,15,824/- was  still due and recoverable from the estate of Venugopala  Verma Raja,  Kollengode estate.  In  view  of these facts,  the question  arises: whether  the  objections raised by the appellants are tenable?      It is  true that  in the  order passed by the executing Court the  plea that  the property was not liable to be sold since the arrears had already been liquidated as on the date of the  sale, was  not properly  considered on  the mistaken view that this Court had already directed whether or not the sale should be confirmed and the sale that was sanctioned by the executing  Court was upheld by this Court in yet another previous order. But in view of the certificate issued by the Tax Recovery  Officer, admittedly,  the amount of Rs.5 lakhs and odd  was due  and recoverable  from the  estate  of  the deceased  Venugopal  Varma  Raja.  Shri  Thakur  has  placed reliance on  Section 222  of the  Income  Tax  Act  and  the procedure prescribed  in Schedule  II of  that act  for  the recovery of  the arrears  of the income tax, wealth tax etc. Since that  procedure was  not followed  and Rule  9 of  the Rules being  a bar  to the  jurisdiction of the civil Court, proceedings taken  for recovery  of the  amount were without authority of  law. We  find  no  force  in  the  contention. Section 222  and Schedule  II are relatable to the procedure to be  adopted by  the Tax  Recovery Officer for recovery of arrears of  tax from  the assessee  or  the  estate  of  the assessee. In this case, the Tax Recovery Officer had not proceeded under the Act. It is seen that when an attempt was made by the State, as stated earlier, to proceed against the estate,  by consensus  and consent  of the  parties, the property was  directed to  be sold  to liquidate the arrears due to the State. Income tax and other dues are first charge on the  estate of  the deceased  Therefore they  had rightly proceeded to  recover the arrears of the tax from the estate before partition of the properties. Resultantly, the Income Tax Officer  had not  invoked the  provisions of Section 222

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and Schedule  II of  the Act  to recover the same Therefore, the  need  to  proceed  under  the  Act  was  obviated.  The executing Court  was well  within its  power to proceed with the recovery  of the tax due and to pay over the same to the State.      Shri Thakur  sought to  place reliance on two documents in which  there was  a mention  that the  amounts  had  been adjusted and  thereby sought  to draw an inference therefrom that no  amount was  due from the estate of Venugopala Varma Raja. We  do not  find any  force in  his submission.  These letters do indicate that out of the total amount recoverable from the  estate, a  sum of Rs.6,60,000/- was collected from the Joint Commissioners appointed by the civil Court and the sum was  appropriated towards  specified amounts outstanding towards expenditure  tax and  wealth  tax.  As  regards  the agriculture income  tax, certain  properties were sold and a sum of  Rs.12,000/- and odd had remained surplus. For refund thereof, one  of the  defendants  to  the  suit,  viz.,  7th defendant made  an application  and thereon  refund  of  the amount was  ordered. These  two documents would not indicate that there  was no  amount due  from the  assessee. As  seen earlier from  the  certificate  issued  by  the  Income  Tax Officer on  December 6, 1995, an amount of Rs.5,15,000/- and odd was still due and recoverable from the estate.      It  is  then  contended  that  since  the  property  is valuable property  and was  sold for  a meagre  amount, this Court  may  interfere  and  direct  the  appellants  to  pay interest  on  the  1/4th  amount  deposited  and  also  some compensation to the auction purchaser. Having considered the contention, we  find on  the facts  in the this case that it would not  be justifiable  on  the  part  of  the  Court  to interfere with  the sale.  It is  seen that  on the  earlier occasion, the executing Court had unsuccessfully limited the sale inter  se between  the parties. This Court in the first round of  the present litigation, by several orders tried to save the  estate but  the same  proved fruitless. This Court had on  the second occasion, directed to consider whether or not confirmation  of sale would be made. This Court had gone into that  question. Even  the tax  liability was one of the issues raised  in this  case by some of the judgment-debtors and this Court had not agreed with the contention that there was no  liability subsisting  towards arrears  of  the  tax. Considered from  this backdrop,  viz.,  the  nature  of  the litigation which has been going on and several opportunities given by this Court to have the matter settled by negotiation by  way of  sale between the parties to reach an amicable settlement, having rendered futile, we do not think it is a fit case warranting interference. We do not find any procedural  infraction.   Otherwise,  no  court  sale  would successfully preceded.      The appeals  are  accordingly  dismissed,  but  in  the circumstances without costs.      We are  informed that  the amount  due has already been deposited. Therefore,  it is  open to the executing Court to have the  sale confirmed.  Six months’  time from  today  is granted to  the appellants  for vacating the palace, portion of which  is occupied  by the  appellants, subject  to their filling usual  undertaking within a period of six weeks from today.