ORDER
J. Chelameswar, J.
1. The writ petition is filed with the prayer as follows:
This honourable court may be pleased to issue an appropriate writ, order or direction more particularly one in the nature of writ of mandamus declaring the action of the third respondent in cancelling the public auction conducted and held in favour of the petitioner on December 29, 2005 in respect of the company guest house of the fourth respondent situated at Pithapuram, East Godavari District for recovery of the arrears of sales tax as illegal, arbitrary, high handedness and contrary to Section 37A of the Revenue Recovery Act and set aside the same and direct the respondent Nos. 1 to 3 to confirm the sale in favour of the petitioner and register the auctioned property in favour of the petitioner.
2. The facts leading to filing of the writ petition are that, the fourth respondent fell in arrears of tax due under, the Andhra Pradesh General Sales Tax Act, 1957 (for short, 'the APGST Act'). For recovery of the said arrears of Rs. 28,58,830 the property of the fourth respondent (guest house situated at Pitapuram, East Godavari District) was brought to sale under the provisions of the Revenue Recovery Act, 1864. On more than one occasion, the sale was intercepted by the fourth respondent invoking the jurisdiction of this Court under Article 226 of the Constitution of India. It may not be necessary to go into the details of various orders passed by this Court earlier, but suffice to say that this Court stayed the auction on more than one occasion on condition that the fourth respondent makes certain payments towards the arrears of the tax, but the fourth respondent never complied with those conditional orders. Therefore, the second respondent once again issued an auction notification, dated December 19, 2005 calling upon the interested persons to make an appropriate application. The relevant portion of the auction notification reads as follows:
Office of the Commercial Taxes Department : Tuni
East Godavari District.
Open Auction Notification
This is to inform to the public that for the purpose of collection of due amount along with interest from M/s. Kirlampudi Sugar Mills Limited, Pithapuram, the authorities are decided to put open auction of the property of g uest house and its open place on December 29, 2005 at 11.00 am at Tuni Commercial Taxes Office.
_________________________________________________________________________________Name of defaulter Time of Particulars of property Value ofauction property_________________________________________________________________________________The Kirlampudi 29.12.2005 The guest house belongs to defaulter Rs.Sugar Mills Ltd. which is situated at Pithapuram, 63,19,740Pithapuram Kakinada main road in an extent of2698 sq. mtrs of RCC building,tiled house and open land whichis having boundaries ofEast : Chennai-Howra RailwaytrackWest : Petrol bunk belongs toBharat Petroleum Corpn.South : Pithapuram-KakinadaRoadNorth : Nursing Home (Part) &Bharat; Petroleum Corpn.Ltd. Petroleum bunk (part)_________________________________________________________________________________The value of the above property is decided by the Sub-Registrar, Pithapuram as on July 1, 2005 and also having the property value declaration. Hence, the Government auction will be started from that market value.
Hence, interested person can apply along with the E.M.D. at 15 per cent on the market value, i.e., Rs. 9,48,000 in the name of D.C.T.O. Pithapuram in the shape of D.D. and the D.D. must be drawn from any Nationalised Bank. For further details you can contact at any reasonable dates and timings at the concerned office.
Yours
G. Ratna Giri Babu
Asst. Commercial Taxes Officer,
Pithapuram
Place : Tuni
Dt. 19-12-2005.
3. Initially, under the notification, the auction was scheduled on October 19, 2005, but however, the same could not take place on that day. A further notification was published by the second respondent fixing the auction on December 29, 2005 at 11.00 a.m. The upset price of the property was fixed at Rs. 63,19,740. The writ petitioner who responded to the notification filed his bid and deposited 15 per cent of the bid price. Apart from the petitioner, 14 others also participated in the said auction. Eventually, it so happened that the petitioner offered highest bid of Rs. 70,50,000 and the auction was declared in his favour. Admittedly, the petitioner paid the entire amount in terms of the conditions of the auction notice. The details of payment are admitted by the second respondent in his counter-affidavit at paras 6 and 7.
4. The petitioner, thereafter, requested the respondents 1 and 2 to confirm the auction in his favour and convey the property. However, the respondents did not convey the property to the petitioner. In the meanwhile, the petitioner came to know that the third respondent issued proceedings cancelling the above mentioned auction. The petitioner asserted on oath in the writ petition at para 6 that such a decision was taken by the third respondent without any prior notice to him and he came to know about such a decision through a daily newspaper ('Eenadu' Telugu newspaper), dated January 23, 2006. Hence, the writ petition.
5. The second and third respondents filed their counter-affidavits. The second respondent admitted all the material allegations made by the petitioner. He further stated in the counter-affidavit that, on receipt of the entire amount of sale consideration from the petitioner, he informed the same to the third respondent on January 6, 2006 and requested the third respondent to confirm the auction as per Section 38(3) of the Revenue Recovery Act, 1864. It is further stated by the second respondent in his counter-affidavit as follows :-
It is submitted that the Deputy Commissioner (CT), Kakinada in Ref. G3/1146/94, dated January 6, 2006 cancelled the auction sale held on December 29, 2005, which was received in this office on January 9, 2006. It is submitted that, the Deputy Commissioner (CT) Kakinada granted installments to the fourth respondent in ref. G3/1146/94, dated January 6, 2006. These orders were sent to the first respondent's office in duplicate for causing service on the dealer. The same was served on Sri Ks. Veerabhadra Rao, Accountant of the Sugar Mill on January 16, 2006.
6. The third respondent filed a separate counter. According to the third respondent, subsequent to the issuance of the auction notice by the second respondent, the fourth respondent requested the Commissioner of Commercial Taxes to grant him three installments to pay the entire amount of tax arrears due. It is further stated in the counter that, the request of the fourth respondent was accepted by the Commissioner of Commercial Taxes. No proceedings of the Commissioner granting such installments in favour of the fourth respondent are placed before the court nor even a reference of the same is made in the counter-affidavit filed by the third respondent. The third respondent further stated that the telephonic instructions of the Commissioner of Commercial Taxes had been communicated by him to the first respondent and instructed the first respondent to postpone the auction. A pleading in this behalf is, as vague as it can be, at para 3 and it reads as follows:
The request of the fourth respondent had been considered by the Commissioner of Commercial Taxes. In fact my office has also communicated the telephonic instructions of the Commissioner of Commercial Taxes on the even day itself, i.e., December 29, 2005 to the first respondent to postpone the auction on certain conditions specified by the Commissioner of Commercial Taxes, Hyderabad well in advance. However, contrary to the above, the first and second respondents have conducted the auction of the fourth respondent's guest house on December 29, 2005.
7. In the proceedings, dated January 6, 2006, of the third respondent, by which the Deputy Commissioner communicated to the Managing Director of the fourth respondent-company, the alleged decision of the Commissioner, Commercial Taxes, dated December 29, 2005, to grant installments in favour of the fourth respondent, a reference is made to the telephonic instructions of Commissioner, Commercial Taxes, Hyderabad, dated December 29, 2005. The proceedings of the third respondent, dated January 6, 2006, reads as follows:
Proceedings of the Deputy Commissioner (CT) : Kakinada
Present : Sri Ahmad Nadeem, I.A.S.
Ref: G3. 1146/94, Dated : 6-1-2006Sub : The Kirlampudi Sugar Mills Ltd.s, Pithapuram--Auction of their guest house is cancelled-The dealer's request is accepted and Installments granted-Orders-Regarding. Ref : (1) Representation filed by the dealer requesting for grant of installments addressed to the Commissioner (CT) Hyderabad, Dated 28-12-2005.
(2) Telephonic instructions of the Commissioner (CT), Hyderabad dated 29-12-2005.
(3) Telephonic instructions of the DC (CT) Kakinada, dated December 29, 2005 and DC (CT) Ref. No. G5/1146/94, dated December 30, 2005.
(4) CTO, Tuni Ref. B6/1323/2000, dated December 30, 2005.
Order
Sri C. Raghuram, Managing Director of M/s. Kirlampudi Sugar Mills Limited, Pithapuram is assessee on the rolls of the Commercial Tax Officer, Tuni and fell in arrears of interest of Rs. 28,58,830 under the APGST Act, 1957, for the year 1994-95. The dealer requested for grant of installments vide his representation in the reference first cited.
As per the instructions of the Commissioner (CT), Hyderabad, dated December 29, 2005 the request of the dealer is considered and it is hereby ordered for grant of installments as detailed below under Section 16(3) of the APGST Act, 1957.
Instalment Month Amount Payable in the monthNo.____________________________________________________________________1. Rs. 10,00,000 Immediately2. January, 2006 Rs. 9,29,415 In January 20063. February, 2006 Rs. 9,29,415 In February, 2006____________________________________________________________________Total Rs. 28,58,830 + Interest due thereonalong with the expenses of auction asthe auction is postponed at his request.____________________________________________________________________(Rupees twenty eight lakhs fifty eight thousand eight hundred and thirty rupees only)
The dealer is hereby informed that failure to pay the installments granted within the time specified, the whole of the amount then remaining unpaid may be recovered from him as if it were an arrear of land revenue. The dealer shall give a commitment to the assessing authority to pay the arrears.
The above order does not preclude to levy the interest under Section 16(3) of the APGST Act, 1957 and is issued without prejudice to any action under Section 17 of the APGST Act, 1957 or Revenue Recovery Act, 1864 already initiated.
Sd/-
Ahmad Nadeem, I.A.S.
Deputy Commissioner (CT)
Kakinada
//true copy//
sd/- J. Srinivasa Rao,
Manager(FAC)
To
Sri C.Raghauram, Managing Director,
M/s Kirlampudi Sugar Mills Ltd., Pithapuram,
Copy to the Commercial Tax Officer, Tuni in duplicate for causing service on the dealer and resubmission of served copy.
Copy submitted to the Commissioner (CT), Hyderabad.
8. Except the ipso dixit of the third respondent that the Commissioner of Commercial Taxes granted installments in favour of the fourth respondent, there is no other material on record to establish that the Commissioner of Commercial Taxes passed such an order. The respondents did not produce any material in this regard. The third respondent further states in the counter-affidavit that apart from the alleged instructions of the Commissioner, Commercial Taxes, not to proceed with the auction of the property in question, certain complaints including several adverse news items published on the manner of conduct of the auction, were received, but it is not specified, by whom and what is the nature of the complaint. The counter of the third respondent in this regard reads as follows:
It is submitted here that the auction was not conducted in a proper manner and the whole auction took place contrary to the instructions of higher authorities. Even workers of the fourth respondent who are opposing the auction were removed by taking the help of police. In view of the above irregularities I have ordered the cancellation of auction/sale proceedings recorded in favour of the petitioner who participated in the auction/sale held on behalf of Government of Andhra Pradesh under the powers vested in me under Section 38 of the Revenue Recovery Act and accordingly I have communicated the same to the first respondent to take necessary further action under the Revenue Recovery Act.
9. Therefore, the third respondent issued the proceedings referred to ear-lier cancelling the auction.
10. Three questions arise for consideration of this Court in this case,
(1) the authority of the third respondent to cancel the auction already conducted?
(2) Whether such power was exercised in accordance with the known procedure established by law?
(3) Assuming for the sake of argument that the Commissioner of Commercial Taxes has the authority to grant installments and the third respondent has the necessary authority to cancel the auction already conducted ; whether such a power could be exercised after the entire sale consideration has been received by the respondents acting on behalf of the State of Andhra Pradesh ?
11. Before we answer the said questions, one more question is to be examined ; assuming for the sake of argument that the Commissioner of Commercial Taxes had in fact granted installments in favour of the fourth respondent, which, as a matter of fact (as already noticed) has not been established, whether such a power can be exercised by the Commissioner when once the property of defaulting dealer is brought to sale under the provisions of the Revenue Recovery Act.
12. The learned Government Pleader for Commercial Tax appearing for the respondents pointed out Section 16(2) of the APGST Act, as the source of power authorising the Commissioner, Commercial Taxes to grant installments in favour of defaulted dealer. The said section reads as follows:
Section 16(2)(a).-Notwithstanding anything contained in subsection (1), on an application made by the assessee, the Deputy Commissioner may, by an order, allow extension of time for payment of any tax, penalty or other amount due under this Act, or permit the payment thereof, in such installments, within such intervals and subject to such conditions as he may specify in the said order, having regard to the circumstances of each case.
13. From a reading of the above sub-section it appears that the power to such grant installments is vested only in the Deputy Commissioner, Commercial Taxes by the statute. It is doubtful whether such a power could be exercised by the Commissioner of Commercial Taxes in the absence of any specific authorisation under the law. We do not wish to express any final opinion in the matter, having regard to the fact that we found nothing on record to establish that the Commissioner of Commercial Taxes did, in fact, exercise such power.
14. Coming to the authority of the third respondent to cancel the auction already conducted, the learned Government Pleader for Commercial Tax, relied upon Section 38 of the/Revenue Recovery Act, 1864, which reads as follows:
Application to set aside sale :-(1) At any time within thirty days from the date of sale of the immovable property, application may be made to the Collector to set aside the sale on the ground of some material irregularity, or, mistake or fraud, in publishing or conducting it; but, except as otherwise as hereinafter provided no sale shall be set aside on the ground of any such irregularity or mistake unless the applicant proves to the satisfaction of the Collector that he has sustained substantial injury by reasons thereof.
(2) If the application be allowed, the Collector shall set aside the sale and may direct a fresh one.
(3) Order confirming or setting aside sale :-On the expiration of thirty days from the date of the sale, [if no application to have the sale set aside is made under Section 37A or under clause (1) of this section] or if such application has been made and rejected, the Collector shall make an order confirming the sale provided that, if he shall have reason to think that the sale sought to be set aside notwithstanding that no such application has been made or on ground other than those alleged in any application which has been made and rejected, he may, after recording his reason in writing set aside the sale.
(4) Refund of deposit or purchase money when sale set aside :- Whenever the sale of any lands is not so confirmed or is set aside, the deposit or the purchase-money, as the case may be, shall be returned to the purchaser.
(5) On confirmation of sale, purchaser's name to be registered :- After the confirmation of any such sale, the Collector shall register the lands sold in the name of the person declared to be the purchaser and shall execute and grant a certificate of sale bearing, his seal and signature to such purchaser.
(6) Certificate of sale :-Such certificate shall state the property sold and name of the purchaser, and it shall be conclusive evidence of the fact of the purchase in all courts and Tribunals, where it may be necessary to prove the same ; and no proof of the Collector's seal or signature shall be necessary, unless the authority before whom it is produced shall have reason to doubt its genuineness.
15. Admittedly, the powers of the Collector under Section 38 of the A.P. Revenue Recovery Act are conferred upon the Deputy Commissioner of Commercial Taxes, while bringing the properties to sale, for recovery of arrears of tax due, under Section 17C of the APGST Act. An examination of Section 38 of the A.P. Revenue Recovery Act discloses that the power to set aside the sale can be exercised on an application made to the Collector/Deputy Commissioner, Commercial Taxes on the ground of some material irregularity or mistake or fraud in conducting the same and further, that mere existence of a material irregularity or mistake or fraud, in publishing or conducting the same by itself is not the only factor for cancelling the sale, but such an auction must have had resulted in a substantial injury to the person who is filing the application to set aside the same. Under sub-section (3) the Collector/Deputy Commissioner, Commercial Taxes is authorised to suo motu set aside the sale notwithstanding the fact that there was an application in that behalf, but such power is required to be exercised for the reasons to be recorded in writing.
16. There is no material on record to establish that the fourth respondent ever made any application to set aside the same. In spite of service, the fourth respondent never chose to file counter-affidavit nor does the order dated January 6, 2006 of the third respondent make any reference to any application made by the fourth respondent. Obviously, the decision was taken by the third respondent on his own, in which case the decision is referable to sub-section (3) of Section 38 of the Act, which obligates the third respondent to record the reasons for such a decision. The order, dated January 6, 2006, insofar as it is material for the present purpose reads as follows:
Proceedings of the Deputy Commissioner (CT) : Kakinada
Present : Sri Ahmad Nadeem, I.A.S
Ref. G3/1146/94 Dated : 06-01-2006Sub : R.R. Act 1864-Attachment of property of M/s Kir-lampudi Sugar Mills Ltd., Pithapuram situated in D.No. 11-1-45, Pithapuram-Auction held on 29-12-2005-Auction is cancelled-Orders-Issued- Reg.
Ref : (1) Telephonic instructions of DC (CT), Kakinada dated 29-12-2005
(2) Representation filed by the dealer requesting for grant of installments addressed to CCT, Hyderabad, dated 29-12-2005.
(3) This office Ref. G5/1146/94, dated 30-12-2005.
(4) CTO, Tuni ref. B6/1323/2000, dated 30-12-2005.
Order
With reference to the Commercial Tax Officer, Tuni's reference fourth cited and in pursuance to the proceeding recorded during the course of auction sale held on December 29, 2005 and sale under Section 38 of the R.R. Act, I hereby order the cancellation of the auction/sale proceedings recorded on December 29, 2005 in favour of Sri M.V.S. Suryanarayana Raju, who participated in the auction sale held on behalf of Government of Andhra Pradesh.
The Commercial Tax Officer has conducted the auction in spite of specific instructions issued by the higher authorities to postpone the auction on certain conditions and also several adverse news items on the manner and conduct of auction besides under valuation and it is not conducted in a transparent manner.
The Commercial Tax Officer, Tuni is requested to take necessary further action under R.R. Act to repay to the purchaser the purchase money so far, as it has been deposited together with five per centum deposited by the bidders.
Sd/Ahmad Nadeem, I.A.S.
Deputy Commissioner (CT)
Kakinada.
//True copy//
Sd/- J. Srinivasa Rao
Manager (FAC)
To
The Commercial Tax Officer,
Tuni
Copy to the Commissioner (CT), Hyderabad
Copy to the Collector, East Godavari District, Kakinada.
17. The reasons, if they can be called as reasons at all, are to be seen in par- 17 agraph 2 of the above extracted proceedings. Barring a bald assertion that the auction was conducted contrary to the specific instructions of the higher authorities and a reference to some vague adverse news items, no reason worth being called so in the eye of law, is recorded by the third respondent.
18. The third respondent does not even refer to the fact that the Commis- 18 sioner of Commercial Taxes had issued the orders granting installments in favour of the fourth respondent. Interestingly, the only material on record to show that some installments were granted in favour of the fourth respondent in the proceedings of the third respondent, which was also dated January 6, 2006, and the same was already taken note of, earlier. If the third respondent really received the instructions from the Commissioner, Commercial Taxes to stop the auction proceedings in the instant case and also informed of the grant of installments in favour of the fourth respondent on December 29, 2005, this Court fails, to simply, understand as to why the third respondent took one week's time to communicate the same decision in writing both to the fourth respondent and to the petitioner. All these factors make the court to draw an inference that both the proceedings dated January 6, 2006, issued by the third respondent are not issued bona fide.
19. As admitted, by January 4, 2006 the entire amount of sale consideration was paid by the petitioner, the details of which are admitted in the counter-affidavit of the second respondent. In such a case, the cancellation of the auction is not permissible.
20. Dealing with the question, whether the sale conducted in execution of the decree of a civil court could be declined to be confirmed on the ground that the decree is reversed, in appeal the Supreme Court held in Janak Raj v. Gurdial Singh AIR 1967 SC 608 that the confirmation cannot be declined. At para 24 it was held as follows:
For the reasons already given and the decisions noticed, it must be held that the appellant-auction purchaser was entitled to a confirmation of the sale notwithstanding the fact that after the holding of the sale the decree had been set aside. The policy of the Legislature seems to be that unless a stranger auction purchaser is protected against the vicissitudes of the fortunes of the suit, sales in execution would not attract customers and it would be to the detriment of the interest of the borrower and the creditor alike if sales were allowed to be impugned merely because the decree was ultimately set aside or modified....
21. No doubt, the Supreme Court was dealing with the specific provisions of the Code of Civil Procedure, 1908 in coming to such conclusion, where elaborate provisions are made regarding the conduct of sale and confirmation of the same and the objections that can be raised regarding confirmation of the sale. Neither the provisions of the APGST Act, nor the provisions of the Revenue Recovery Act, 1864, do make such elaborate provisions. But we do not see any reasons to take a different view in the case of sale under the Revenue Recovery Act. For the reason as it was held by the Supreme Court in the above referred decision, that the policy of the Legislature should be understood that a stranger auction purchaser must be protected against the vicissitudes of the fortunes of the suit (caprice of the higher authorities of Commercial Tax Department in the contest of the present case) otherwise such sales would not attract customers and it would be detrimental to the interest of the exchequer.
22. We, therefore, are of the opinion that the writ petition is required to be allowed as prayed for and the respondents be directed to convey the property purchased by the petitioner in the auction, pursuant to the notice referred to earlier. We also deem it appropriate to direct that the action of the third respondent in cancelling the auction requires an examination by the State. We, therefore, direct the Chief Secretary, Government of Andhra Pradesh, to examine the matter and take appropriate action against the third respondent.
The writ petition is, accordingly, disposed of. No costs.