M.B.Sharma, J. - (1.) AN important question is involved in this writ petition and it is as to whether, if property is sold by the Tax Recovery Officer under the Schedule to the Income-tax (Certificate Proceedings) Rules, 1962 (for short, "the Rules"), by private negotiation, whether the Tax Recovery Officer is bound to grant a certificate of sale to the purchaser and is required to send a copy of such certificate to the Registering Officer concerned under the Indian Registration Act, 1908 (16 of 1908) (for short, "the Registration Act"), or not ?
(2.) FOR answering the aforesaid question, it is necessary that the relevant facts be stated which are these ; The Income-tax Officer, Jaipur, had forwarded a certificate for recovery of arrears of wealth-tax from Messrs. P. H. Ray and Hans Raj (Hindu undivided family). Shri P. H. Ray also owned flats Nos. 7, 8 and 9 in Dee Vila Station Road, Jaipur. The said property was attached by the Tax Recovery Officer under the Second Schedule to the Income-tax Act, 1961 (for short, "the Act"). Under Part III of the Second Schedule to the Act and more so its paragraph 48, the property of the defaulter has to be attached as provided therein and the attachment to relate back from the date of service of notice. Then there a're provisions for sale and proclamation of sale, contents of proclamation, mode of making proclamation, etc. In paragraph 56 of the Second Schedule to the Act, the sale shall be by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer. Then there are provisions for an application to set aside sale of immovable property on deposit and for confirmation of sale and paragraph 63 deals with confirmation of sale. Paragraph 65 deals with sale certificate and under it where a sale of immovable property has become absolute, the Tax Recovery Officer shall grant a certificate specifying the property sold, and the name of the person who, at the time of sale, is declared to be the purchaser, and such certificate shall state the date on which the sale becomes absolute. Paragraph 66 of the Second Schedule is important and it reads as under : "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." There appears to be no dispute that, after the property in dispute was attached, the defaulter had filed an application before the Tax Recovery Officer to postpone the sale so as to enable him to raise the amount by private sale and permission was accorded to the defaulter to sell the property by private negotiation. So far as flats Nos. 7, 8 and 9, the disputed immovable properties are concerned, it appears that the three flats were sold by private negotiation for a consideration of Rs. 1,20,000 to Pee Vee Company of which the petitioner claims to be a partner. A certificate, annexure-1, was issued by the Tax Recovery Officer to the State Government. It will be proper to reproduce the said certificate which reads as under : "Form No. I. T. C. P. 18 [See rule 63(1) of the Second Schedule to the Income-tax Act, 1961] ORDER OF CONFIRMATION OF SALE OF IMMOVABLE PROPERTY Office of the Tax Recovery Officer Messrs. Pee Vee and Co., Jaipur, purchased for Rs. 1,20,000 the immovable property specified below at a sale under Rule 66 on March 28, 1981, in execution of certificate No. 2797/190/353 dated September 7, 1979, forwarded by the Income-tax Officer, D-Ward, Jaipur, for recovery of arrears from Messrs. P. H. Rai, Hakikatrai and Hansrai (Hindu undivided family). The full amount of the purchase money to the extent of the arrears has been paid on March 20, 1981. No application under Rule 60/Rule 61/Rule 62 of the Second Schedule to the Income-tax Act, 1961, has been received for setting aside the sale. Accordingly, the said sale is hereby confirmed. SPECIFICATION OF PROPERTY Flats Nos. 7, 8 and 9 in D-Villa, Station Road, Jaipur, owned by Shri P. H. Rai, member of the aforesaid Hindu undivided family. Given under my hand and seal at Jaipur this 28th day of March, 1981. (Sd.) Tax Recovery Officer (Income-tax), Jaipur." The case of the petitioner is that though the aforesaid certificate was issued to Messrs. Pee Vee Company by the Tax Recovery Officer, a copy of it was not sent to the Sub-Registrar and when the purchaser, Messrs. Pee Vee Company, went to the Sub-Registrar and requested him to file a copy of sale in his Book No. 1, he declined to do so. After the writ petition was filed in this court, a show-cause notice was also given by the Tax Recovery Officer to the petitioner as to why the sale certificate, annexure 1, extracted above should not be cancelled and the ground on which the said notice has been given is that the sale certificate could only be granted in case of public auction and not in case of sale by private negotiation. I have heard learned counsel for the parties and I revert to the question which has been posed in the earlier part of this order. Under rule 21 of the Rules, every Tax Recovery Officer granting a certificate of sale to the purchaser of immovable property sold under the Second Schedule shall send a copy of such certificate to the Registering Officer concerned under the Indian Registration Act, 1908 (16 of 1908), within the local limits of whose jurisdiction the whole or any part of the immovable property comprised in the certificate is situate. There is no dispute as said earlier that the property in dispute was attached under Part III of Schedule II to the Act, but the sale by public auction which was the only mode of sale provided under the Second Schedule to the Act was postponed under paragraph 66 of the Second Schedule to the Act at the request of the defaulter that he be allowed to sell the property by private negotiation and to raise the money for payment of his wealth-tax dues, and the Tax Recovery Officer had granted the certificate to the defaulter authorising him to make sale by private negotiation. Only after the said certificate, the defaulter could have and should have made the sale by private negotiation and as provided under the first proviso to Sub-paragraph 2 of paragraph 66, the whole of the consideration of Rs. 1,20,000, must have gone to the Tax Recovery Officer and not to the defaulter. Not only this, the sale could have become absolute after confirmation of sale by the Tax Recovery Officer and the confirmation of sale by private negotiation was made by the Tax Recovery Officer. Therefore, there can be no dispute that the Second Schedule to the Act does not only speak of sale by public auction but also sale by private negotiation to enable the defaulter to raise the amount which amount has to go to the Tax Recovery Officer and not to the defaulter and, even if the sale is made by private negotiation after the certificate is granted as aforesaid by the Tax Recovery Officer, it has to be confirmed by the Tax Recovery Officer. Thus, as said earlier, the sale whether by public auction or by private negotiation is a sale under Schedule II to the Act.
(3.) NOW, coming to Rule 21 of the Rules to which reference has already been made in the earlier part of this order, the Tax Recovery Officer is duty bound under the aforesaid statutory provision, the sale having taken place under the Second Schedule to the Act, to send a copy of the certificate of sale to the Registering Officer (Sub-Registrar, Jaipur), but it does not appear that the certificate of sale or its copy was sent by the Tax Recovery Officer to the Sub-Registrar, Jaipur, and the Sub-Registrar, Jaipur, is said to have refused to file the sale certificate in his Book No. 1 on the ground that he has not received any copy of the sale certificate from the Tax Recovery Officer. I am, therefore, of the opinion that the Tax Recovery Officer was duty bound under Rule 21 of the Rules to send a copy of the sale certificate to the Registering Officer (Sub-Registrar, Jaipur). No doubt, under Sub-section (4) of Section 89 of the Registration Act, it has been provided that every Revenue Officer granting a certificate of sale to the purchaser of immovable property sold by public auction shall send a copy of the certificate to the Registering Officer within the local limits of whose jurisdiction the whole or any part of the property comprised in the certificate is situate, and such officer shall file the copy in his Book No. 1. As said earlier, under the rules as well as under the Second Schedule to the Act, generally the mode under which the property attached can be sold is by public auction, but only on the certificate being granted by the Tax Recovery Officer. Sale by private negotiation is also permissible, but the confirmation is required by the Tax Recovery Officer, and, therefore, it will be presumed and shall be deemed that the sale is by public auction. Therefore, the sale being under paragraph 66 of the Second Schedule to the Act, the Tax Recovery Officer was bound to send a copy of the sale certificate to the Registering Officer who was then bound to file a copy of the same in his Book No. 1, no doubt, after the purchaser pays the necessary stamp duty chargeable. It may also be mentioned here that, along with this property, some other property of the same party was also sold, which was allowed to be sold by private negotiation on the certificate having been granted by the Tax Recovery Officer and for this property also a sale certificate was granted, copies of them were sent to the Registering Officer (Sub-Registrar, Jaipur) and he had filed copies of the same in Book No. 1, but so far as the petitioners are concerned, it was not filed in Book No. 1 by the Registering Officer because the Tax Recovery Officer had not sent the copy of the sale certificate to him. This is even otherwise discriminatory. A notice to show cause had been sent as to why the sale certificate be not cancelled as the sale certificate could only be issued in case of public auction. In my opinion, this approach is not correct; firstly, because, on the ground of discrimination because, in four other cases, copies of sale certificate have already been forwarded to the Registering Officer who has filed a copy in Book No. 1 and, secondly, because, as said earlier, in the facts and circumstances of this case, the sale having taken place under the Second Schedule to the Act, though by private negotiation, shall be deemed to have taken place by public auction and the show-cause notice also, in my opinion, is not in accordance with law and is liable to be quashed. Consequently, I hereby allow this writ petition and direct the Tax Recovery Officer (II), Income-tax Department, Jaipur, respondent No. 2, to send a copy of the sale certificate granted to the petitioner on March 28, 1981, in respect of flats Nos. 7, 8 and 9 as said earlier in this order to the Registering Officer (Sub-Registrar, Jaipur) and the Sub-Registrar, Jaipur City, Jaipur, respondent No. 3, is directed that, on receipt of the sale certificate, he shall file the copy of it in Book No. 1 after the petitioners submit the requisite stamp duty. ;