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M/S. Gupta Metallics & Power v/s State of Telangana & Others

    W.P. Nos. 2353 of 2003, 5335 of 2012 & 13206 of 2021

    Decided On, 04 January 2022

    At, High Court of for the State of Telangana

    By, THE HONOURABLE MR. JUSTICE UJJAL BHUYAN & THE HONOURABLE DR.(MRS.) JUSTICE CHILLAKUR SUMALATHA

    For the Petitioner: ------ For the Respondent: ------



Judgment Text

Common Judgment & Order: (Ujjal Bhuyan, J.)

1. All the three writ petitions were heard together and are being disposed of by this common judgment and order.

2. We have heard Sri Dammalapati Srinivas, learned senior counsel for the petitioners in W.P.No.5335 of 2012, respondent No.4 in W.P.No.2353 of 2003 and W.P.No.13206 of 2021; Sri B.S.Prasad, learned Advocate General for the State respondents in all the three writ petitions; and Sri B.Adinarayana Rao, learned senior counsel for the petitioners in W.P.No.2353 of 2003 and 13206 of 2021 and respondent No.5 in W.P.No.5335 of 2012.

W.P.No.2353 of 2003:

3. This writ petition has been filed by the petitioner M/s. Gupta Metallics & Power Limited. Initially, the Government of Andhra Pradesh, represented by the District Collector, Ranga Reddy District and the Board for Industrial and Financial Reconstruction were arrayed as respondents.

4. By filing this writ petition under Article 226 of the Constitution of India, petitioner M/s. Gupta Metallics & Power Limited (for short, ‘Gupta Metallics’, hereinafter) seeks a declaration that the action of the respondents in forfeiting an amount of Rs.61,80,000-00 paid by the petitioner Gupta Metallics towards 15% of the price for purchase of the auctioned land pursuant to Gazette Notification dated 18.12.2002, if the balance amount was not paid within 30 days from the date of sale is arbitrary, unreasonable and illegal and seeks a direction to the first respondent not to forfeit the said amount of Rs.61,80,000-00.

5. Case of the petitioner Gupta Metallics is that it is a company incorporated under the Companies Act, 1956, having its registered office at Nagpur in the State of Maharashtra. Gupta Metallics is carrying on the business of trading in coal products. First respondent in accordance with the provisions of the Andhra Pradesh Revenue Recovery Act, 1864 (for short, “Revenue Recovery Act” hereinafter) and the Rules framed thereunder, issued a Gazette Notification on 18.12.2002, whereby the property mentioned in the said Gazette was being put to auction sale.

6. Pursuant to the Gazette Notification, petitioner Gupta Metallics approached the first respondent and participated in the auction sale that was held on 10.01.2003 in which it became the highest bidder. It is stated that auction of the said property was held in view of the fact that the company whose properties were being auction sold had become a sick industrial unit under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 and had defaulted in the payment of tax dues.

7. Elaborating further, according to petitioner Gupta Metallics, 52 bidders including itself had participated in the auction sale in which petitioner Gupta Metallics became the highest bidder. The upset price in the said auction was fixed at Rs.20,00,000-00 per acre of the land. The sale was in favour of the petitioner Gupta Metallics for a consideration of Rs.30,50,000-00 per acre. The land auction sold measured Ac.13-20 guntas in Sy.Nos.57, 58, 59, 60, 61, 62, 63, 64, 68(AA) and 86/AA situated at Gaganpahad village, Rajendranagar Mandal, Ranga Reddy District. The total sale consideration worked out to Rs.4,11,75,000-00.

8. In terms of Section 36 of the Revenue Recovery Act, Gupta Metallics immediately deposited 15% of the purchase price which worked out to Rs.61,76,250-00 (rounded off to Rs.61,80,000-00) by way of bankers cheques, one dated 09.01.2003 and other six dated 10.01.2003 on the date of the sale i.e., on 10.01.2003. Receipt of the aforesaid amount was acknowledged by the Deputy Commercial Tax Officer, Rajendranagar and authorised nominee of the first respondent. Petitioner Gupta Metallics was asked to deposit the balance 85% of the bid amount within 30 days of sale.

9. Petitioner Gupta Metallics made all arrangements for collection and payment of the balance 85%. In the meanwhile, second respondent i.e. Board for Industrial and Financial Reconstruction (‘BIFR’ hereinafter) passed an order on 16.01.2003 by which Collector of Ranga Reddy District was directed to stay execution of the sale of the land auctioned on 10.01.2003. Deputy Commercial Tax Officer, Rajendranagar Circle was show caused as to how he could approach the Collector for initiating proceedings under the Revenue Recovery Act without the prior approval of BIFR and in violation of Section 22 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (briefly, “the 1985 Act” hereinafter).

10. In view of the aforesaid order dated 16.01.2003 passed by the BIFR, petitioner Gupta Metallics made enquiries with the officials of the Commercial Taxes Department. However, Commercial Taxes Department authorities insisted upon the petitioner Gupta Metallics to deposit the balance 85% of the bid amount failing which it was stated that the amount deposited by the petitioner would be forfeited.

11. Contending that the aforesaid action of the first respondent is arbitrary and unreasonable, thus violative of Article 14 of the Constitution of India, petitioner Gupta Metallics has filed the present writ petition seeking the reliefs as indicated above.

12. Commissioner of Commercial Taxes, Government of Andhra Pradesh got himself impleaded as third respondent in W.P.No.2353 of 2003. In the counter affidavit filed by the third respondent on 18.02.2003 it was stated that M/s. Vinedale Distilleries Limited, Gagahpahad, Ranga Reddy District, is a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957 and the Central Sales Tax Act, 1956. M/s. Vinedale Distilleries Limited (referred to as “Vinedale Distilleries”, hereinafter) is a manufacturer and seller of India Made Foreign Liquor (IMFL) which is exigible to sales tax. Vinedale Distilleries approached BIFR under the 1985 Act contending that it was a sick company and sought for rehabilitation. BIFR registered the case of Vinedale Distilleries as Case No.70/1989. A scheme was framed for rehabilitation of the sick company - Vinedale Distilleries on 24.09.1991 by the BIFR. In view of such scheme, no coercive steps could be taken by the creditors for recovery of sales tax dues in the light of the embargo under Section 22 (1) of the 1985 Act.

13. It is stated that by order dated 19.05.2000, BIFR had held that arrears of Vinedale Distilleries for the period prior to 24.09.1991 should not be enforced without the permission of BIFR. However, BIFR gave liberty to the Commercial Taxes Department to recover the sales tax dues of Vinedale Distilleries subsequent to 24.09.1991.

14. While the arrears prior to 24.09.1991 stood at Rs.1,20,18,609.00, the arrears relating to post 24.09.1991 were worked out at Rs.3,39,35,129-00. Commercial Taxes Department thereafter took steps to recover the arrear tax amount. Consequently, Gazette Notification for public auction of the lands belonging to Vinedale Distilleries, admeasuring Ac.67-13 guntas was issued. Public auction for sale of the land took place on 10.01.2003. But that was confined to only the land at Sy.Nos.58 and 59.

15. In the public auction held on 10.01.2003, several bidders including the petitioner Gupta Metallics had participated. Gupta Metallics became the highest bidder in respect of the land admeasuring Ac.13-50 acres located at Sy.Nos.58 and 59 of Gaganpahad village under Rajendranagar Mandal in Ranga Reddy District for an amount of Rs.30,50,000-00 per acre. Total value of the land (Ac.13.50) came to Rs.4,11,75,000-00. In compliance to the requirements of the Revenue Recovery Act, the auction purchaser i.e. petitioner Gupta Metallics paid 15% of the aforesaid amount i.e. Rs.61,80,000-00 through bankers cheques dated 09.01.2003 and 10.01.2003 on the date of the sale itself.

16. However, BIFR passed an ex parte order on 16.01.2003, directing the Collector of Ranga Reddy District to stay execution of the sale of the land auctioned on 10.01.2003. Deputy Commercial Tax Officer, Rajendranagar Circle, was directed to explain under what circumstances he had approached the Collector of Ranga Reddy District for sale of the land under the Revenue Recovery Act without the consent of BIFR.

17. Assailing the order dated 16.01.2003 passed by the BIFR, State of Andhra Pradesh filed a writ petition before this Court which was registered as W.P.No.2139 of 2003. A Division Bench of this Court, by order dated 06.02.2003 directed that any confirmation of sale would be subject to further orders of the Court.

18. Petitioner Gupta Metallics, despite being the highest bidder, did not approach the Commercial Taxes Department for confirmation of sale. However, it is stated that as and when petitioner approaches the Commercial Taxes Department, it would be asked to pay the balance amount before confirmation of sale. It is further stated that as on 18.02.2003, there was no attempt to forfeit the amount of Rs.61,80,000-00 paid by the petitioner Gupta Metallics.

19. This Court by order dated 07.02.2003 issued notice and passed an interim order not to forfeit the amount of Rs.61,80,000-00 deposited by the petitioner Gupta Metallics.

20. Subsequently, third respondent i.e. Commissioner of Commercial Taxes filed another counter affidavit on 10.07.2021. It is stated that petitioner Gupta Metallics had filed an additional affidavit seeking a direction to the respondents to return the amount deposited by it and to treat the sale proceedings as non-est. That apart, on account of further developments, it is stated that it has become necessary to place certain facts before the Court for better appreciation and adjudication. Therefore, the additional counter affidavit has been filed with the submission that the additional counter affidavit may be treated as part of the counter affidavit filed on 18.02.2003.

21. It is stated that Vinedale Distilleries, a company incorporated under the Companies Act, 1956, fell in arrears of sales tax dues of the Commercial Taxes Department to the tune of Rs.4,58,00,000-00. Vinedale Distilleries approached BIFR in BIFR Case No.70/1989. In the meanwhile, land of Vinedale Distilleries was attached, which was auctioned on 10.01.2003 for realization of the sales tax arrears. In the auction petitioner Gupta Metallics became the highest bidder in respect of the said land for an amount of Rs.4,11,75,000.00. Gupta Metallics paid 15% of the said amount i.e. Rs.61,80,000-00 on the date of auction itself i.e. 10.01.2003.

22. Ms. BDA Limited, New Delhi, originally planned to take over Vinedale Distilleries and approached BIFR in Case No.70/1989. At its instance, order dated 16.01.2003 was passed by BIFR staying execution of sale of land.

23. Assailing the order of BIFR dated 16.01.2003, the State of Andhra Pradesh filed W.PNo.2139 of 2003 before this Court. This Court passed an order on 10.02.2003 to the effect that any confirmation of sale would be subject to further orders of this Court.

24. Petitioner Gupta Metallics did not take steps for confirmation of sale by depositing 85% of the balance purchase price. Instead, petitioner filed the related writ petition.

25. It is contended that Gupta Metallics was not at all interested in further auction sale proceedings. Therefore, it sought for a direction from the Court to the respondents for return of the deposited amount by treating the auction proceedings as non-est.

26. According to the third respondent, petitioner Gupta Metallics did not deposit the balance 85% of the bid amount which was in contravention of Condition No.3 prescribed in Form No.7 (notice of sale of land) dated 07.12.2002. As per Condition No.3, the purchaser was required to deposit 15% of the purchase price at the time of sale and the balance 85% within 30 days from the date of sale failing which the money deposited by the purchaser would be liable to forfeiture. This is also the requirement of Section 36 of the Revenue Recovery Act. In view of the stay order granted by this Court, there was no restraint on the petitioner Gupta Metallics to pay the balance 85%, which it failed to do. Petitioner having acquiesced to the auction conducted and having failed to deposit 85% of the balance amount as per auction condition, is estopped from seeking refund of the 15% deposit.

27. Respondent No.3 has stated that in the meanwhile it received a communication dated 06.07.2021 from M/s. Edelweiss Asset Reconstruction Company Limited (referred to hereinafter as “the Asset Reconstruction Company”). By the said letter, third respondent was informed that the Asset Reconstruction Company is the assignee of the debts of the petitioner M/s.Gupta Metallics, which had borrowed money from the State Bank of India and other consortium lenders. It was mentioned that the amount of Rs.62,00,000-00 deposited by the petitioner had appeared in its balance sheet for the year ending 31.03.2013, over which the secured creditors were claiming first charge. Asset Reconstruction Company informed the third respondent that for recovery of dues from Gupta Metallics, it had also filed O.A.No.1335 of 2016 before the Debts Recovery Tribunal – II, Mumbai (“the Tribunal” hereinafter) under the Recovery of Debts and Bankruptcy Act, 1993 and has also invoked the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly, ‘the SARFAESI Act’ hereinafter).

28. In the above circumstances, third respondent has stated that he is bound to remit the amount deposited by Gupta Metallics pursuant to the auction sale to the Asset Reconstruction Company. Question of refund of the said amount does not arise. In any case, petitioner cannot claim any refund since it failed to deposit the balance amount within 30 days from the date of sale.

29. Vinedale Distilleries got itself impleaded as respondent No.4 in the writ petition and filed counter affidavit. In the counter affidavit it is stated that all the directors of the petitioner Gupta Metallics have been disqualified to hold office with effect from 01.11.2016 till 31.10.2023 under Section 164 (2) r/w Section 167 of the Companies Act, 2013. Therefore, none of the directors can represent the petitioner Gupta Metallics.

30. No assessment order was passed by the Commercial Taxes Department whereby and whereafter the tax liability of the fourth respondent was crystallized, more particularly with effect from 24.09.1991 when the rehabilitation scheme was sanctioned by BIFR. That apart, when the scheme was in force Commercial Taxes Department could not have initiated proceedings under the Revenue Recovery Act for recovery of undetermined, un-quantified and un-assessed arrears of sales tax of the fourth respondent. Fourth respondent has given the sequence of various orders passed by the revenue authorities, which finally culminated in the order dated 14.07.2008 passed by this Court in Special Appeal No.95/1997, setting aside the order of the Commissioner of Commercial Taxes. Thereafter, no assessment order was passed.

31. Writ Petition No.2139 of 2003 filed by the Commissioner of Commercial Taxes was withdrawn on 08.09.2011 whereafter first respondent issued Memo dated 04.02.2012 giving liberty to the petitioner Gupta Metallics to pay the balance amount.

32. There were serious property disputes as regards ownership of the fourth respondent between M/s.Sanman Distributors Private Limited, Satish Kumar Agarwal and Anil Agarwal, which resulted in several suits before the Delhi High Court. In view of above, the property in question of the fourth respondent was placed in custody of the Court Commissioner by the Delhi High Court by order dated 13.02.1995 which was confirmed by the Supreme Court by order dated 10.05.1995. That being the position, Commercial Taxes Department could not have resorted to auction sale of the properties which were in custodia legis of the Delhi High Court.

33. Adverting to various provisions of the Revenue Recovery Act, it is stated that no such notices were issued under the said Act before the auction sale.

34. Additionally it is contended that first and third respondents did not obtain valuation of the land put to auction sale on 10.01.2003.

35. It is reiterated that petitioner Gupta Metallics had failed to deposit the balance 85% as is the requirement under the law. It is the stand of the petitioner Gupta Metallics itself that the auction sale had become non-est and therefore the amount deposited by it (15%) should be refunded.

36. In the meanwhile, fourth respondent has stated that it approached the Commissioner of Commercial Taxes with the proposal that it would deposit Rs.7,50,000-00 per month towards whatever arrears of sales tax dues and sought for renewal of excise license which has been accepted by the Government. It is however contended that first respondent had no legal authority to issue the Memo dated 04.02.2012 which has been impugned in W.P.No.5335 of 2012. In the circumstances fourth respondent seeks dismissal of the writ petition.

37. Petitioner has filed two rejoinder affidavits. In the first rejoinder affidavit to the counter affidavit of the first respondent, it is stated that petitioner Gupta Metallics participated in the auction conducted by the first respondent and being the successful bidder, paid 15% of the bid amount. As the first respondent threatened to forfeit the deposited amount of the petitioner, it was constrained to file the present writ petition.

38. If there is any dispute between Vinedale Distilleries and the Commercial Taxes Department, petitioner Gupta Metallics has nothing to do with the same. However, it is stated that having regard to the nature of the dispute which has unfolded, petitioner Gupta Metallics felt that it would be desirable if appropriate orders are passed by the Court directing the first respondent to refund the entire amount deposited by the petitioner Gupta Metallics and await outcome of the litigation pending between Vinedale Distilleries and the Commercial Taxes Department.

39. Petitioner has also filed rejoinder affidavit to the additional counter affidavit filed on behalf of the third respondent. After narrating the relevant facts, including the fact that by order dated 08.09.2011 this Court dismissed Writ Petition No.2139 of 2003 filed by the Commercial Taxes Department challenging the order of BIFR as infructuous on the statement made by learned counsel for the Commercial Taxes Department.

40. It is stated that petitioner Gupta Metallics by letters dated 11.03.2006, 11.06.2006 and 12.09.2007, had requested the Commercial Taxes Department to confirm the sale in its favour by accepting 85% of the purchase price. But there was no response. Hence it is contended that the allegation made by the answering respondent that petitioner did not take any steps for confirmation of sale by depositing the remaining amount is not correct. As a matter of fact, in view of the order dated 16.01.2003 of BIFR and categorical refusal by the Commercial Taxes Department to accept the payment of balance amount by the petitioner, question of non-payment of the 85% of the sale price by the petitioner does not arise. In the circumstances the State is not entitled to forfeit the amount deposited by the petitioner.

41. Regarding the additional counter affidavit filed by the third respondent, it is stated that the Commercial Taxes Department has changed its stand after 18 long years and is now supporting the defaulter which is difficult to comprehend. According to the petitioner, Commercial Taxes Department had induced it to participate in the auction sale and collected Rs.61,80,000-00 in the year 2003 with the assurance to confirm the sale. But, instead, petitioner has been made to suffer for the last 18 years for various reasons which are totally unconnected to the petitioner.

W.P.No.5335 of 2012:

42. This petition has been filed by M/s.Sanman Distributors Private Limited and Vinedale Distilleries as the petitioners. It is stated that Mr.Shiv Shankar Sanyal, Director of M/s.Sanman Distributors Private Limited was appointed by the Delhi High Court to represent Vinedale Distilleries. In this proceeding the two petitioners seek quashing of Memo dated 04.02.2012, issued by the second respondent i.e. Principal Secretary to the then Government of Andhra Pradesh, Revenue Department for recovering the dues from Vinedale Distilleries by proceeding with confirmation sale of the auctioned property in favour of the fifth respondent i.e. Gupta Metallics. This petition also seeks quashing of sale notice dated 18.12.2002 and thereby to nullify the auction proceedings of the properties belonging to Vinedale Distilleries.

43. It is stated that Vinedale Distilleries had defaulted in payment of commercial tax dues which were sought to be recovered by respondent Nos.1 and 2 by taking coercive steps in respect of the immovable properties of Vinedale Distilleries. It is further stated that ownership of the assets belonging to Vinedale Distilleries is the subject matter of dispute before the Delhi High Court, which has appointed Court Commissioners to protect and preserve the assets of Vinedale Distilleries. Though allegations have been made against the Court Commissioners as acting against the interest of Vinedale Distilleries, it may not be necessary for us to enter into the above aspect in view of the nature of the lis which is before us. However, it is contended that Delhi High Court is the custodia legis of the properties of Vinedale Distilleries.

44. Petitioners have given a brief background of the ownership dispute of Vinedale Distilleries and how the matter has reached Delhi High Court as well as BIFR under the 1985 Act.

45. Notwithstanding the fact that matter relating to revival of Vinedale Distilleries was before BIFR, first respondent i.e. Commissioner of Commercial Taxes issued notice for sale of the properties belonging to Vinedale Distilleries for recovering alleged outstanding dues. Therefore, BIFR passed an order on 16.01.2003 staying sale of the properties undertaken by the first respondent being in violation of Section 22 (1) of the 1985 Act.

46. First respondent filed writ petition before this Court for setting aside the order of BIFR dated 16.01.2003. But the said order was neither vacated nor stayed by the High Court.

47. In the meanwhile, the auction purchaser i.e. fifth respondent – Gupta Metallics filed an application before the first respondent in April, 2003 for withdrawal of its bid and for return of the amount deposited.

48. However, the writ petition filed by the first respondent against the order dated 16.01.2003 passed by BIFR was withdrawn.

49. Second respondent i.e. Principal Secretary to the then Government of Andhra Pradesh, Revenue Department issued the impugned Memo dated 04.02.2012 calling upon the first respondent to confirm the sale in favour of Gupta Metallics. It is this Memo which has been impugned in the present writ petition.

50. This Court, by order dated 05.03.2012, admitted the writ petition for hearing and passed an interim order directing the first respondent not to pass orders or to take steps to confirm the sale of the schedule property in favour of Gupta Metallics.

51. Respondent Nos.1 and 2 have filed a common affidavit through Smt. Neetu K. Prasad, Commissioner of Commercial Taxes, Government of Telangana.

52. Putting the facts in perspective, answering respondents have stated that Vinedale Distilleries was a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957. It was carrying on the business of production and sale of alcoholic products. However, it became a sick company whereafter it registered itself with the BIFR in Case No.70/1989. After declaring it as a sick industrial company, BIFR sanctioned scheme of rehabilitation on 24.09.1991. Two groups of shareholders i.e. M/s. Agarwal Group and M/s. Sanman Group tried to take over control of Vinedale Distilleries which led to lot of litigation and counter litigation.

53. Vinedale Distilleries was required to pay large sums of money to the Commercial Taxes Department on account of outstanding commercial tax dues for the period prior to 24.09.1991 and also for the period after 24.09.1991. Commercial Taxes Department took several steps for recovery of the outstanding dues with intermittent litigation in between at the instance of Vinedale Distilleries. Be that as it may, according to the answering respondents, the outstanding dues of Vinedale Distilleries for the period prior ro 24.09.1991 was Rs.1,20,18,809-00 and for the period after 24.09.1991 it was Rs.3,39,35,129-00, aggregating to Rs.4,59,53,738-00.

54. It is stated that Commercial Taxes Department had obtained permission from the BIFR to recover the commercial tax dues of Vinedale Distilleries for the post sanctioned period i.e. for the period after 24.09.1991. Thereafter notice for sale was issued on 07.12.2002 in Form No.7 and on 18.12.2002 in Form No.7A for sale of the immovable properties of Vinedale Distilleries consisting of Ac.67-13 guntas of land in Sy.Nos.57 to 65, 68 (A) and 86 (AA) of Gaganpahad village, Rajendranagar Mandal, Ranga Reddy District.

55. Referring to Condition No.3 in Form No.7 dated 07.12.2002, it is stated that as per the said Condition, the purchaser would be required to deposit 15% of the purchase price at the time of sale and if the purchaser failed to pay the remainder of the purchase price within 30 days from the date of sale, the money deposited by the purchaser would be liable to forfeiture.

56. On 10.01.2003, the aforesaid property was auctioned in which Gupta Metallics i.e. fifth respondent was the highest bidder quoting Rs.31.50 lakhs per acre for Ac.13.5 guntas of land in Sy.Nos.58 and 59. The total value of the bid was Rs.4,11,75,000-00. Gupta Metallics deposited Rs.61,80,000-00 by way of bankers cheques on the same day i.e. 10.01.2003 being 15% of the sale price.

57. However, BIFR passed an order dated 16.01.2003 staying the execution of sale of land belonging to Vinedale Distilleries auctioned on 10.01.2003.

58. Against the order of BIFR dated 16.01.2003, Commercial Taxes Department filed Writ Petition No.2139 of 2003 before this Court. By orders dated 10.02.2003 and 24.02.2003, this Court clarified that confirmation of sale if any would be subject to result of the writ petition.

59. Writ Petition No.2139 of 2003 was dismissed as infructuous on 08.09.2011 as BIFR had disposed of the case before it i.e. Case No.70 of 1989 on 10.04.2006 on account of Dena Bank taking over possession of the assets of Vinedale Distilleries on 26.01.2006 under the SARFAESI Act.

60. Thereafter, reference has been made to the Writ Petition No.2353 of 2003 filed by Gupta Metallics before this Court. Respondent Nos.1 and 2 have stated that even though there was no restraint on Gupta Metallics to pay the remaining 85% of the bid amount, it did not pay the same.

61. It is further stated that Gupta Metallics had taken a stand in W.P.No.2353 of 2003 that the amount deposited by it should be returned. According to the answering respondents, Gupta Metallics having participated in the auction conducted under the Revenue Recovery Act and thereafter having failed to deposit the balance 85% of the sale amount is estopped from seeking refund of the deposited amount. State would be within its right to forfeit the amount deposited by Gupta Metallics.

62. After disposal of W.P.No.2139 of 2003 on 08.09.2011, Government had issued Memo dated 04.02.2012 requesting the Commissioner of Commercial Taxes to take necessary steps to confirm the sale by collecting the balance 85% of the sale amount with interest. It is this order which is under impugnment in the present proceeding.

63. However, this Court by order dated 05.03.2012 restrained the Government from passing order(s) or from taking steps to confirm the sale of the schedule property in favour of Gupta Metallics.

64. Answering respondents have stated that in view of the provisions of the Revenue Recovery Act and conditions prescribed in Form No.7 and as Gupta Metallics had failed to comply with such conditions by not paying the remaining 85% of the sale amount within the stipulated period of 30 days, the auction sale proceedings have failed. In the circumstances the Government Memo dated 04.02.2012 pales into insignificance and no right whatsoever can accrue on the basis of the said Memo. Question of confirmation of sale in favour of Gupta Metallics does not arise. The only question that may fall for consideration is whether Gupta Metallics would be entitled to refund of the forfeited amount.

65. In the meanwhile, the Asset Reconstruction Company sent a communication dated 06.07.2021 to the Commissioner of Commercial Taxes informing him that it is the assignee of the debts of Gupta Metallics which it had borrowed from State Bank of India and other lenders. It is further stated that the Asset Reconstruction Company has initiated action against Gupta Metallics under the SARFAESI Act. In the circumstances, it is contended that the amount deposited by Gupta Metallics in the auction sale should be transferred to the Asset Reconstruction Company on account of the dues of Gupta Metallics. Therefore, answering respondents have stated that they would be bound under the law to release the said amount in favour of the Asset Reconstruction Company.

66. Finally, the answering respondents have stated that Vinedale Distilleries through Mahalaxmi Hyderabad Projects LLP has now come forward to pay all the commercial tax arrears along with interest amounting to Rs.21.75 Crores (Tax: Rs.4-37 Crores and Interest: Rs.17.38 Crores).

67. Gupta Metallics i.e. fifth respondent has filed counter affidavit. After narrating and reiterating the facts, it is contended that Gupta Metallics had participated in a statutory auction and became the successful bidder. Therefore, it is entitled to confirmation of sale. There was no default on the part of Gupta Metallics as it had offered the balance sale consideration of 85% by way of demand drafts. Since the proceedings before BIFR stood abated, the bar under Section 22 of the 1985 Act would no longer apply. Therefore, the auction held on 10.01.2003 can be confirmed by the State Government. Gupta Metallics, facing SARFAESI proceedings at the hands of the secured creditors, cannot in any manner influence or effect the auction sale conducted by the State on 10.01.2003 for recovery of the dues of Vinedale Distilleries. In the circumstances, Gupta Metallics seeks dismissal of the writ petition.

68. Gupta Metallics has also filed a reply affidavit to the counter affidavit of respondent Nos.1 and 2. It has questioned the stand taken by respondent Nos.1 and 2 as being contrary to the Government Memo dated 04.02.2012. It has alleged that the change of stand of the State is on account of wholly extraneous reasons.

69. Petitioners have filed a detailed reply affidavit to the counter affidavit filed by the fifth respondent i.e. Gupta Metallics to which rejoinder has been filed by Gupta Metallics.

70. Gupta Metallics i.e. fifth respondent has also submitted brief written submissions.

W.P.No.13206 of 2021:

71. Eighteen years after filing of Writ Petition No.2353 of 2003, Gupta Metallics has again approached this Court by filing the present writ petition for a direction to respondent Nos.1 and 2 to consider his representation dated 31.05.2021 and also to take steps to protect the auctioned land of which petitioner – Gupta Metallics was the successful bidder.

72. After narrating the facts upto filing of Writ Petition No.5335 of 2012 by Sanman Distributors and Vinedale Distilleries, it is stated that till a decision is rendered by this Court in W.P.Nos.2353 of 2003 and 5335 of 2012, respondent Nos.1 and 2 have to protect the above property from encroachment by third parties and not allow any activity on the said land by anybody including by Sanman Distributors and Vinedale Distilleries. It is stated that Gupta Metallics had submitted a representation dated 31.05.2021 to respondent Nos.1 and 2 in this regard. But there has been no response by the said respondents. Aggrieved, present writ petition has been filed seeking the reliefs as indicated above.

73. Respondent Nos.1 and 2 have filed a common counter affidavit through Smt. Neetu K. Prasad, Commissioner of Commercial Taxes, Government of Telangana. Again the answering respondents have narrated the facts upto filing of Writ Petition No.5335 of 2012. In fact, the present counter affidavit is identical to the counter affidavit filed by the answering respondents in W.P.No.5335 of 2012.

74. However, it is stated that petitioner, having failed to comply with the condition for payment of balance 85% of the sale price within the stipulated period of 30 days, the auction proceedings had lapsed. Answering respondents would assert their right to forfeit the amount deposited by the petitioner- Gupta Metallics. Gupta Metallics has no enforceable right to demand refund of the amount deposited. However, allegation made by Gupta Metallics regarding encroachment over the auctioned property has been denied.

75. Respondent No.4 - Vinedale Distilleries has also filed counter affidavit. Subject counter affidavit of Vinedale Distilleries is identical to the counter affidavit filed in W.P.No.2353 of 2003 and the stand taken in W.P.No.5335 of 2012 as the petitioner.

76. Vinedale Distilleries has asserted that Gupta Metallics was never a bona fide bidder. This would be borne out by the fact that it had failed to pay the balance 85% of sale price within the stipulated period of 30 days. Contention that auctioned property is in the custody of respondent Nos.1 and 2 has been denied. It is stated that the said property was never attached nor possession thereof was taken over by respondent Nos.1 and 2. Vinedale Distilleries is still in possession over the said property.

77. Insofar submission of representation dated 31.05.2021 by Gupta Metallics is concerned, it is stated that the same was filed only as a ground work for filing the present writ petition.

78. It is stated that there has been a change of management of Vinedale Distilleries. Consequently, all pending inter se disputes have been resolved and closed. Now Sanman Distributors alone owns 100% shareholding in Vinedale Distilleries. The new management is committed to clear all outstanding tax dues of Vinedale Distilleries.

Submissions:

79. Mr.Srinivas, learned senior counsel appearing for Vinedale Distilleries submits that Gupta Metallics had paid only 15% of the sale amount and did not pay the balance 85% of the same. Therefore, Gupta Metallics is only a bidder and cannot be construed as purchaser. Under Section 36 of the Revenue Recovery Act, the auction has not only failed but the amount deposited by Gupta Metallics is liable to forfeiture.

79.1 Learned senior counsel has raised various objections to the auction sale, such as, there being no assessment order for claiming arrears of tax. Secondly, the procedure prescribed under the Revenue Recovery Act for holding of auction sale, including the requirement for 30 days notice period which has vitiated the impugned auction sale. However, according to him all these aspects may not be gone into as it is sufficient for declaring the auction sale as having failed in view of contravention of Section 36 of the Revenue Recovery Act.

79.2 Insofar contention of Gupta Metallics is concerned, he submits that in the first writ petition i.e. W.P.No.2353 of 2003, Gupta Metallics had sought a direction from the High Court for refund of the 15% bid amount deposited by it and to declare the auction sale as non-est and illegal. In contradiction to this stand, Gupta Metallics, in W.P.No.13206 of 2021, has sought for a direction to the State respondent i.e. Commercial Taxes Department to protect and preserve the auctioned property and not to allow any construction thereon. Such contradictory stands cannot go together.

79.3 Mr.Srinivas submits that there were corporate issues plaguing Vinedale Distilleries as to its control and management for a long time. Now those issues have been sorted out and Sanman Distributors is 100% in control of Vinedale Distilleries.

79.4 Mr. Srinivas further submits that Vinedale Distilleries has now come forward to pay all the commercial tax arrears along with interest amounting to a total figure of Rs.21,75,00,000-00. Since the auction has failed which is admitted by the State respondents, there can be no embargo on the said respondents in accepting the aforesaid amount from Vinedale Distilleries which will put a quietus to all the disputes. In any case, Gupta Metallics is now facing action at the hands of the Asset Reconstruction Company under the SARFAESI Act. Therefore, it is in no position to pay the balance amount as per the auction sale, which in any event is not legally permissible. On the other hand, the amount deposited by it is liable to be forfeited because of non-compliance to the provisions of Section 36 of the Revenue Recovery Act. Even if a liberal view is taken and forfeiture is not insisted upon, the aforesaid deposited amount is liable to be appropriated by the Asset Reconstruction Company as part of the recovery of outstanding dues of Gupta Metallics under the SARFAESI Act.

80. Mr.B.S.Prasad, learned senior counsel and Advocate General for the State of Telangana submits on behalf of the State respondents that the stand of the State has been consistent right from the beginning from the first affidavit filed by the Commissioner of Commercial Taxes in W.P.No.2353 of 2003. He submits that Commercial Taxes Department took steps to recover the arrear tax amount of Vinedale Distilleries post rehabilitation plan framed by BIFR dated 24.09.1991, which worked out to approximately Rs.3,39,00,000-00. After following the due process, public auction for sale of land belonging to Vinedale Distilleries was resorted to. In the public auction held on 10.01.2003, Gupta Metallics emerged as the highest bidder in respect of the land admeasuring Ac.13-50 located at Sy.Nos.58 and 59 for a total amount of Rs.4,11,75,000-00. Gupta Metallics paid 15% of the aforesaid amount on 10.01.2003 itself by way of bankers cheques totaling to Rs.61,80,000-00. In the meanwhile, BIFR passed order dated 16.01.2003 staying execution of the sale of the auctioned land. Though State had filed a writ petition before this Court challenging the aforesaid order dated 16.01.2003, there was no stay granted by this Court; rather it was directed that any confirmation of sale would be subject to further orders of the Court.

80.1 Mr. Prasad further submits that in the subsequent affidavit (additional affidavit) Commercial Taxes Department has taken the stand that Gupta Metallics was not at all interested in further proceedings of auction sale. It did not deposit the balance 85% within 30 days which was in contravention of Condition No.3 prescribed in the notice for sale of land as well as Section 36 of the Revenue Recovery Act. After this Court had stayed forfeiture of the amount deposited, there was no restraint on Gupta Metallics to pay the balance 85%, which it failed to do.

80.2 On the other hand, Commercial Taxes Department was informed by the Asset Reconstruction Company on 06.07.2021 that it is the assignee of the debts of Gupta Metallics which had borrowed heavily from State Bank of India and other consortium lenders. Gupta Metallics is facing proceedings before the Tribunal under the Recovery of Debts and Bankruptcy Act, 1993 as well as under the SARFAESI Act. Therefore, Commercial Taxes Department has been called upon to remit the deposited amount to the Asset Reconstruction Company.

80.3 Learned Advocate General submits that even after the writ petition filed by the State against the order of BIFR was withdrawn on 08.09.2011, Gupta Metallics did not pay the balance 85%.

80.4 Learned Advocate General points out that this stand has been reiterated by the Commercial Taxes Department in the other two writ petitions as well. Though Principal Secretary to the then Government of Andhra Pradesh, Revenue Department, had issued Memo dated 04.02.2012 calling upon the Commissioner of Commercial Taxes to confirm the sale in favour of Gupta Metallics by collecting the balance 85% of the sale amount with interest, this Court passed an interim order on 05.03.2012 restraining the State from taking steps to confirm the sale in favour of Gupta Metallics. He categorically submits that in view of the provisions of the Revenue Recovery Act and Condition No.3 in Form No.7 and as Gupta Metallics had failed to comply with such condition by depositing the balance 85% of the sale amount within the stipulated period of 30 days, the auction proceedings had failed. This is the categorical and clear stand of the State. In the circumstances the Government Memo dated 04.02.2012 would have no legal consequence.

80.5 In the event it is directed to release/refund the amount deposited by Gupta Metallics, Commercial Tax Department is bound to act in accordance with law and would have to release the said amount in favour of the Asset Reconstruction Company in view of Gupta Metallics facing action under the Recovery of Debts and Bankruptcy Act, 1993 as well as under the SARFAESI Act.

80.6 Finally, learned Advocate General submits that State may now work out payment of outstanding dues by Vinedale Distilleries since it has come forward to pay the same together with interest.

81. Sri B.Adinarayana Rao, learned senior counsel appearing for Gupta Metallics at the outset submits that it is astonished to find the State singing the same tune as that of the tax defaulter. Instead of punishing the defaulter, it has taken a stand which is likely to benefit the tax defaulter i.e. Vinedale Distilleries by agreeing to consider its request for payment of the outstanding dues at this distant point of time.

81.1 Adverting to the relevant facts, learned senior counsel submits that auction was held on 10.01.2003. After being declared the successful bidder Gupta Metallics immediately deposited 15% of the bid amount. Before expiry of the 30 days window period for deposit of the balance 85%, BIFR passed an order on 16.01.2003 staying the auction sale. In view of such stay, Commercial Taxes Department did not accept payment of the balance 85%. In the first writ petition filed by Gupta Metallics this Court directed the Commercial Taxes Department not to forfeit the 15% amount deposited by Gupta Metallics.

81.2 Special Standing Counsel of the Commercial Taxes Department by letter dated 12.09.2011 had informed the said department that it could now proceed with the confirmation of sale after receiving the balance consideration with applicable interest. Consequent thereto the State Government issued Memo dated 04.02.2012 calling upon the Commissioner of Commercial Taxes to confirm the sale after collecting the balance 85% of the tax dues together with interest from 10.02.2003 till actual payment. However, this Memo has been stayed by this Court in W.P.No.5335 of 2012 filed by Vinedale Distilleries and another.

81.3 Mr.B.Adinarayana Rao, learned senior counsel for Gupta Metallics submits that due process of law was followed in conducting the auction. Gupta Metallics could not deposit 85% within the stipulated period due to the stay order of BIFR. Vinedale Distilleries did not file any application under Section 38 of the Revenue Recovery Act to set aside the auction sale. He submits that W.P.No.5335 of 2012 filed by Vinedale Distilleries is nothing but a gross abuse of the process of the Court. The auction sale was conducted on 10.01.2003. Nine years thereafter the said writ petition came to be filed to declare the auction sale as null and void. On the ground of delay and laches itself W.P.No.5335 of 2012 should be dismissed.

Analysis:

82. Submissions made by learned counsel for the parties have received the due consideration of the Court. Also perused the materials on record and the cited judgments.

83. From the materials on record, we find that the Collector of Ranga Reddy district had published notice of sale of land in Form No.7 (Section 36) on 07.12.2002 in the Ranga Reddy District Gazette. It was notified thereunder that the surplus land belonging to Vinedale Distilleries would be sold by public auction on 10.01.2003 at 11.00 AM for recovery of arrears of sales tax and revenue default. As per paragraph No.3 of the said Form No.7 it was mentioned that the purchaser would be required to deposit 15% of the purchase money at the time of sale and if it failed to pay the remainder of the purchase money within 30 days from the date of sale, the money deposited by it would be liable to forfeiture. In the said notice of sale the name of the defaulter was mentioned as Vinedale Distilleries.

84. This notice of sale in Form No.7 was followed by another notice of sale issued by the Collector of Ranga Reddy District in Form No.7A on 18.12.2002. While mentioning the date of sale as 10.01.2003, names of the defaulters were mentioned too.

85. As already noted above, the auction sale was conducted on 10.01.2003 in which Gupta Metallics emerged as the highest bidder in respect of land admeasuring Ac.13-50 located at Sy.Nos.58 and 59 of Ganganpahad village of Rajendranagar Mandal in Ranga Reddy District for a total sale consideration of Rs.4,11,75,000-00. Gupta Metallics deposited 15% of the aforesaid amount i.e. Rs.61,80,000-00 on 10.01.2003.

86. BIFR in Case No.70/1989 passed an order on 16.01.2003. It was noted that Vinedale Distilleries was declared as sick industrial company under Section 3 (1) (0) of the 1985 Act on 10.12.1989. Thereafter a scheme for rehabilitation of Vinedale Distilleries was sanctioned by BIFR on 24.09.1991. While the scheme was declared failed on 23.02.2001, BIFR had appointed Industrial Development Bank of India (IDBI) as the Operating Agency under Section 17 (3) of the 1985 Act. When steps for change in the management of Vinedale Distilleries were under consideration, the auction sale was held on 10.01.2003, which was in violation of Section 22(1) of the 1985 Act, having overriding effect over other laws. It was held that provisions of the 1985 Act would take precedence over the Revenue Recovery Act; recovery proceedings could not have been initiated without the approval of the BIFR. It is in such circumstances that BIFR directed stay of execution of the sale of the land.

87. This order was challenged by the State before this Court by filing W.P.No.2139 of 2003. This Court passed an order on 06.02.2003 directing the State that any confirmation of sale would be subject to further orders of the Court. Thus, it is evident that this Court did not stay the auction sale proceedings. It had only made it clear that any confirmation of sale would be subject to further orders of the Court. Therefore, there was no impediment for Gupta Metallics to deposit the balance 85% of the sale amount.

88. It appears that Dena Bank had taken over possession of the assets of Vinedale Distilleries under Section 13 (4) of the SARFAESI Act. In the circumstances BIFR passed an order on 10.04.2006 holding that BIFR could not proceed further in the matter and therefore the reference pending before it stood abated in terms of the third proviso to Section 15 (1) of the 1985 Act, as amended. In view of the aforesaid development, W.P.No.2139 of 2003 was withdrawn by the State on 08.09.2011.

89. We find from the materials on record that Commissioner of Commercial Taxes had written to the then Principal Secretary to the Government of Andhra Pradesh (Revenue Department) on 14.12.2011 seeking guidance from the Government whether to confirm the auction sale by collecting the balance 85% of sale price. The Principal Secretary, vide Memo dated 04.02.2012 informed the Commissioner of Commercial Taxes that as per Section 16 of the Andhra Pradesh General Clauses Act, 1957 and Section 22 of the Andhra Pradesh Value Added Tax Act, 2005, if any dealer fails to pay the tax due or fails to pay any tax assessed or penalty levied within the time prescribed, he shall pay, in addition to the amount of such tax or penalty that may be calculated at the rate of one percent per month for the period of default. Therefore, Commissioner of Commercial Taxes was requested to take necessary action and to confirm the sale by collecting the balance 85% of the tax dues and interest from 10.02.2003 till actual payment of the tax dues.

90. This has been assailed by Vinedale Distilleries in W.P.No.5335 of 2012. This Court by order dated 05.03.2012 had admitted the writ petition and passed an interim order directing the State not to pass orders or to take steps to confirm the sale of the schedule property in favour of Gupta Metallics.

91. Having noticed the above, we may advert to Section 36 of the Revenue Recovery Act. The same reads as under:

36. Procedure in sale of immovable property:- In the sale of immovable property under this Act the following rules shall be observed.

First-Publication:- The sale shall be by public auction to the highest bidder. The time and place of sale shall be fixed by the Collector of the district in which the property is situated, or other officer empowered by the Collector in that behalf. The time may be either previous to or after the expiration of the fasli year.

Second-Notification one month before sale:- Previous to the sale the Collector, or other officer empowered by the Collector in that behalf, shall issue a notice thereof in English and in the language of the district, specifying the name of the defaulter; the position and extent of land and of his buildings thereon; the amount of revenue assessed on the land, or upon its different sections; the proportion of the public revenue due during the remainder of the current fasli; and the time, place, and conditions of sale. This notice shall be fixed up one month at least before the sale in the Collector’s office and in the Taluk cutcherry, in the nearest police station-house, and on some conspicuous part of the land.

Third-Deposit by purchaser:- A sum of money equal to fifteen per cent of the price of the land shall be deposited by the purchaser in the hands of the Collector, or other officer empowered by the Collector in that behalf, at the time of the purchase, and where the remainder of the purchase-money may not be paid within thirty days, the money so deposited shall be liable to forfeiture.

Fourth-Re-sale in default of payment:- Where the purchaser may refuse or omit to deposit the said sum of money, or to complete the payment of the remaining purchase-money, the property shall be resold at the expense and hazard of such purchaser, and the amount of all loss or expense which may attend such refusal or omission shall be recoverable from such purchaser in the same manner as arrears of public revenue. Where the lands may, on the second sale, sell for a higher price than at the first sale, the difference or increase shall be the property of him on whose account the said first sale was made.

Fifth-Agents to name principals:- All persons bidding at a sale may be required to state whether they are bidding on their own behalf or as agents, and, in the latter case, to deposit a written authority signed by their principals. If such requisition be not complied with, their bids may be rejected.

92. Thus Section 36 envisages five stages in the sale of immovable property. As per the first stage, the sale should be by a public auction to the highest bidder. The second stage provides for issuance of notice notifying the details which should be fixed up one month at least before the sale. As per the third stage, a sum of money equal to 15% of the price of the land shall be deposited by the purchaser to the Collector or to the empowered officer at the time of purchase. If the remainder of the purchase money is not paid within 30 days, the money so deposited shall be liable to forfeiture. The fourth stage envisages a situation where the purchaser fails to deposit the 15% or to comply with the payment of remaining purchase money. In such a situation the property should be resold at the expense and hazard of the purchaser. The fifth stage requires the bidders to declare whether they are bidding on their own behalf or as agents.

93. Section 38 of the Revenue Recovery Act provides that an application may be made to the Collector to set aside sale at any time within thirty days from the date of sale of the immovable property. Such application may be filed on the ground of some material irregularity or mistake or fraud in publishing the sale notice or conducting the sale. Under sub-Section (3) of Section 38, on expiry of the period of thirty days from the date of sale, the Collector shall make an order confirming the sale.

94. In the instant case what we find is that while Gupta Metallics had paid 15% of the sale price on the date of auction i.e. on 10.01.2003, but it did not pay the balance 85% within 30 days from the date of sale. Though it may be contended that the order dated 16.01.2003 passed by BIFR staying the auction sale had come in the meanwhile and it prevented Gupta Metallics from depositing the balance 85%, the fact remains that in W.P.No.2139 of 2003 filed by the State challenging the order dated 16.01.2003, this Court, by order dated 06.02.2003 clarified that any confirmation of sale would be subject to orders of this Court. Therefore, there was no legal impediment for Gupta Metallics to make payment of the balance 85%. Though Gupta Metallics has taken a stand that it had come forward to pay the balance 85%, which was not accepted by the State, the fact remains that the said amount was not deposited by Gupta Metallics. There was no application by Gupta Metallics before this Court seeking a direction to the State to accept the balance 85% of the sale price which would have been subject to outcome of the writ petition. In the absence of the same, we are afraid law will take its own course. We have already seen that as per paragraph No.3 of the notice of sale in Form No.7, the purchaser is required to deposit 15% of sale price on the date of sale and the remainder 85% within 30 days from the date of sale, failing which the auction sale would be construed as having failed. This provision can be traced to the third stage envisaged by Section 36 of the Revenue Recovery Act, which says that when the remainder of the purchase money is not paid within 30 days, the money so deposited shall be liable to forfeiture.

95. Having noticed the above, we may first advert to the stand of Gupta Metallics in W.P.No.2353 of 2003 and W.P.No.13206 of 2021. In the first case, a direction has been sought for against the State not to forfeit the deposit of 15% made by it. On the other hand, in W.P.No.13206 of 2021 Gupta Metallics has sought for a direction to the State to consider its representation dated 31.05.2021 and to take steps for protection of the auctioned land. The representation dated 31.05.2021 pertains to alleged encroachment by third parties on the auctioned land. As already noticed above in none of the two writ petitions Gupta Metallics made any statement or sought for any order from the Court for deposit of the balance 85% of the sale price subject to outcome of the two writ petitions. Therefore, we are of the view that Gupta Metallics cannot insist on taking the auction sale held on 10.012003 to its logical conclusion b

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y allowing it to pay the balance amount at this stage after 18 years and thereafter to confirm the sale. In our considered view such a contention is wholly untenable and is liable to be rejected. 96. As we have already discussed, Gupta Metallics had not paid the remaining 85% of the sale price within the prescribed period, in contravention of paragraph No.3 of Form No.7 Notice dated 07.12.2002 as well as in terms of Section 36 of the Revenue Recovery Act. That being the position, the auction sale had failed. 97. In Manilal Mohanlal Shah Vs. Sardar Sayed Ahmed Sayed Mahmad (AIR 1954 SC 349) Supreme Court held that the full amount of purchase money must be paid within the prescribed period which is the mandatory requirement. Unless the deposit and the payment are made as required by the mandatory provisions, there would be no sale in the eye of law in favour of the defaulting purchaser and there would be no right to own and possess the property by him. This has been the consistent view of the Supreme Court. The obligation of the purchaser to deposit the full purchase price within the prescribed time is a mandatory requirement and non-compliance thereto would render the sale a nullity. (Shilpa Shares and Securities Vs. National Co-operative Bank Limited (2007 12 SCC 165). Again in C.N. Paramsivam vs. Sunrise Plaza Tr. Partner (AIR 2013 SC 2941), while considering the provisions of Rules 57 and 58 of the Income Tax Rules, 1962, Supreme Court held that a breach of the requirements under those rules would render the auction non-est in the eye of law. 98. Insofar W.P.No.5335 of 2012 is concerned, the Memo dated 04.02.2012 of the then Principal Secretary of the Government of Andhra Pradesh cannot survive in view of what we have discussed above. In any case, the State itself has taken a categorical stand in the said writ petition by filing counter affidavit that in view of failure of Gupta Metallics to pay the remaining 85% of the sale amount within the stipulated period, the auction proceedings had failed. In fact, this has been the consistent stand of the State in all the three writ petitions. Thus, the Government Memo dated 04.02.2012 pales into insignificance and no right whatsoever can accrue on the basis of the said Memo. Therefore, in view of what we have discussed above, we concur with the stand of the State that the Government Memo dated 04.02.2012 has no legal consequence though it would have been better if the State itself had sought leave of the Court to withdraw the said Memo dated 04.02.2012. 99. As to challenge to the auction sale held on 10.01.2003 by Vinedale Distilleries is concerned, we find that the challenge was made after nine years in 2012. There is no explanation for such belated challenge. Therefore, it would not be just and proper to examine the legality and validity of the auction sale and the preceding sale notice at this distant point of time. In any case, such a challenge has only become academic in view of what we have discussed above holding that the auction sale has failed. 100. Though learned senior counsel for Gupta Metallics argued that Vinedale Distilleries did not file any application under Section 38 of the Revenue Recovery Act, we are of the view that we need not enter into this aspect of the matter in view of what we have discussed above. Even otherwise, the said provision providing for filing of application to set aside the auction sale, may not be applicable insofar the present case is concerned, inasmuch as there was no concluded sale. Gupta Metallics had only deposited 15% of the sale price. Till the full sale price was not paid, it could not be termed as the purchaser and the sale was not complete; its status remained nebulous at best. In such circumstances, it was not necessary to file application for setting aside the sale. 101. Having reached the conclusion as above, we are of the view that the question as to whether the 15% deposit made by Gupta Metallics pursuant to the auction sale held on 10.01.2003 is liable to be forfeited or not and if not, whether it should be refunded to Gupta Metallics or to the secured creditor (Asset Reconstruction Company) since Gupta Metallics is facing proceedings under the Recovery of Debts and Bankruptcy Act, 1993 as well as under the SARFAESI Act, should be left to the Commissioner of Commercial Taxes to take a decision. Furthermore, since the auction has failed, there is no legal impediment for the Commercial Taxes Department in accepting the proposal of Vinedale Distilleries to clear the outstanding tax dues together with interest by taking a reasoned decision. This is because the right of Vinedale Distilleries to redeem the property by paying the outstanding dues would subsist till the property is auction sold. Decision: 102. In the light of the above discussions, we issue the following directions: i. Commissioner of Commercial Taxes Department, Telangana, shall take a decision as to whether 15% of the sale price deposited by Gupta Metallics on 10.01.2003 is liable to be forfeited or not? ii. If the decision is in the negative, the Commissioner shall take a further decision as to whether the said amount should be refunded to Gupta Metallics or to the secured creditor represented by the Asset Reconstruction Company? iii. Let the above decision Nos.1 and 2 be taken by the Commissioner of Commercial Taxes within a period of eight weeks from the date of receipt of a copy of this order after affording an opportunity of hearing to Gupta Metallics as well as to the Asset Reconstruction Company. iv. Commissioner of Commercial Taxes Department shall also consider the proposal of Vinedale Distilleries to pay the outstanding tax arrears together with applicable interest after hearing Vinedale Distilleries and thereafter passing a reasoned order within a period of four weeks from the date of receipt of a copy of this order. 103. In view of the aforesaid directions, W.P.Nos.2353 of 2003 and 13206 of 2021 are dismissed, whereas, W.P.No.5335 of 2012 is disposed of in the above terms. No order as to costs. Miscellaneous petitions, if any, pending in these writ petitions shall stand closed.
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