Ravi S. Dhavan, J. - (1.) THIS petition has been pending in the High Court for almost 15 years. The issues relate to the controversies under the Income-tax Act, 1961, and to a real estate in Kanpur. The first premises on which those who have addressed the court are agreed and not at issue is that the cause will be seen as when it was brought to the court ; on this aspect the law is clear in Rameshwar v. Jot Ram, AIR 1984 SC 49.
(2.) ON the facts there is no issue between the record as has been presented by the petitioners and the respondents, that is respondents Nos. 1 and 2, being the Income-tax Department. Barring these parties no other person addressed the court. The court was not addressed by respondents Nos. 5 and 4, either. For arrears of income-tax, the assessees, as at the time, R. P. Bagla, Hindu undivided family karta, B. P. Bagla and H. S. Bagla, the Hindu undivided family karta, S. N. Bagla, were defaulters with the result that their immovable property situate at Kanpur, being several houses, big bungalows and other properties, were attached by the Income-tax Department, as the law so provides, to realise the arrears of income-tax by sale of attached properties. At the relevant time, the gross income-tax arrears stood at Rs. 58,27,534. The subject-matter of this petition relates, specifically, to the property 7/76, Tilak Nagar, Kanpur. The property having been attached by the income-tax authorities, it was attempted to be sold, in the first instance in 1967. The sale did not materialise because the property would not fetch the price which the Income-tax Department was anticipating. The bids offered at the public auction were inadequate and below the reserved price. Consequentially, those who owned the properties, the defaulters, aforesaid, also raised objections, as it was within their right to do so, that the reasonable market price was not forthcoming as a result of the public auction. Their objection was that should the properties fetch a reasonable market price and beyond the bids which were received, their income-tax liability would be reduced. It is accepted by the Income-tax Department that with the objections of the defaulters and there being no issue on the aspect that the public auction did not fetch the price which had been reserved by the Department, due permission was granted to the defaulters, on their applying, to permit the sale of the property by private negotiation so that the amount anticipated by the Department could be raised. To change the scene of sale of property by public auction and permit a sale by the defaulters to raise the amount, the law provides that the defaulter must be invested with a sanction of a specific authorisation to negotiate a sale. The only difference is that the moneys which will represent considerations received on the sale (mortgage or lease not excluded) will not be paid to the defaulters, but to the Income-tax Department. Confirmation of the sale will also be certified by the Department. The law permits such a modality.
(3.) THIS is the subject-matter of the controversy on which the arguments have been addressed after common facts were placed by learned counsel arguing for the respective parties. THIS provision of law which permits change of scene from a public auction to a private negotiation by specific authorisation by the Income-tax Department needs to be noticed. The procedure is provided under the Second Schedule to the Act. It is contained in rule 66 of this Schedule and reproduced : "66. Postponement of sale to enable defaulter to raise amount due under certificate.--(1) Where an order for the sale of immovable property has been made, if the defaulter can satisfy the Tax Recovery Officer that there is reason to believe that the amount of the certificate may be raised by the mortgage or lease or private sale of such property, or some part thereof, or of any other immovable property of the defaulter, the Tax Recovery Officer may, on his application, postpone the sale of the property comprised in the order for sale, on such terms, and for such period as he thinks proper, to enable him to raise the amount. (2) In such case, the Tax Recovery Officer shall grant a certificate to the defaulter, authorising him, within a period to be mentioned therein, and notwithstanding anything contained in this Schedule, to make the proposed mortgage, lease or sale : Provided that all moneys payable under such mortgage, lease or sale shall be paid, not to the defaulter, but to the Tax Recovery Officer ; Provided also that no mortgage, lease or sale under this rule shall become absolute until it has been confirmed by the Tax Recovery Officer." The court refers to this aspect of the matter at the very outset as the controversy itself centres around the rights of whoever may be the persons interested.;