Pankaj Mithal, J.
Challenging the order dated 5.10.2000 (Annexure - 9 to the writ petition) passed by the Commissioner of Income-Tax, Kanpur, the petitioner has prayed for issuance of a writ of certiorari quashing the same and a writ of mandamus directing the respondent No.1 to decide petitioner's appeal on merits within a time bound period. A further prayer has also been made for quashing confirmation of the auction sale and the sale certificate both dated 25.4.1988.
A portion of immoveable property, plot No.80/87, Latouche Road, Kanpur was put to auction for realisation of certain income-tax dues outstanding in the name of Smt. Indramani Singhania. The auction was conducted on 22.3.1988. Respondent No.3 was the highest bidder. The auction was confirmed by the Tax Recovery Officer vide order dated 25.4.1988 and a certificate of sale in favour of the auction purchaser, respondent No.3 was issued on the sae day. One Gobind Ram Tibrewal who was one of the executors of the Will of Smt. Indramani Singhania preferred an appeal purporting to be under Rule 86 of Schedule II of the Income Tax Act (hereinafter referred to as the Act) before the Commissioner, Income Tax Act, Kanpur. On the death of Gobind Ram Tibrewal the petitioner continued with the appeal being the administrator of the estate of late Smt. Indramani Singhania appointed by the High Court vide order dated 2.5.1996 in a Testamentary Case No.12 of 1980 and thereafter as a residuary legatee to the estate of the aforesaid deceased under the order dated 4.1.2000 of the High Court. The said appeal has been dismissed as not maintainable and being barred by time.
Aggrieved, petitioner has invoked the writ jurisdiction of this Court.
Necessary pleadings between the petitioner and respondents No.1 and 2 have been exchanged and are complete.
The writ petition is listed for final hearing.
Counsel for the petitioner and respondents No.1 and 2 are ready and agreeable for final hearing.
Respondent No.3 was earlier represented by a counsel but he never filed any counter affidavit. The said counsel having died, respondent No.3 was issued notice by the office of the Court by registered post to engage another counsel. The service of the notice so sent to respondent No.3 is deemed to be sufficient in view of provisions of Explanation - II to Rule 12 of Chapter VIII of the Rules of the Court. However, no new counsel has put in appearance nor anyone has come forward to represent respondent No.3.
I have heard Sri Sri Navin Sinha, Senior Advocate assisted by Sri Vipin Sinha, learned counsel appearing for the petitioner and Sri Shambhu Chopra, learned counsel for respondents No.1 and 2.
Sri Sinha submits that the order confirming the sale and the sale certificate both dated 25.4.1988 were served upon the petitioner on 29.8.1988. The petitioner acquired knowledge of the auction sale, the order of sale confirmation and issuance of sale certificate for the first time on 18.8.1988. The appeal under Rule 86 of Schedule II of the Act (hereinafter referred to as 'Rules') was filed on 19.9.1988. It is within limitation from the date of knowledge. He has further submitted that where statutes provide a particular period for filing an appeal from the date of the order, it has been interpreted to mean the date of service of the order. Therefore, the actual date of the order is not material for calculating limitation for filing appeal. The order confirming the sale dated 25.4.1988 was served and communicated to the petitioner on 29.8.1988. The appeal is therefore within time.
The second contention of Sri Sinha is that neither the order confirming the sale passed under Rule 63(1) of the Rules nor the order issuing the sale certificate under Rule 65 of the Rules are conclusive and, therefore, an appeal lies against the same under Rule 86 of Schedule II of the Act.
Sri Chopra, learned counsel for the respondent’s no.1 and 2, on the other hand, contends that the appeal is not maintainable. The petitioner had filed the appeal only against the sale certificate issued under Section 65 of the Rules and there is no challenge to the order confirming the sale. No appeal is provided against the sale certificate. The order confirming the sale happens to be a conclusive order and, therefore, in terms of Rule 86 of Schedule II of the Act no appeal lies even against the it.
Apart from the above, Sri Chopra argued, that the petitioner had full knowledge of the auction sale. He had not participated in the proceedings at any point of time before the sale was conducted and, as such, after confirmation of the sale he cannot have any grievance and the only remedy available to him was to have applied to the Tax Recovery Officer under Rule 63(2) of the Rules for setting aside the auction sale. The remedy of appeal to the Commissioner was not available to the petitioner in view of Scheme of Schedule II of the Act.
In view of respective submissions advanced on behalf of the contesting parties, following two points arise for consideration:
1. Whether the appeal of the petitioner before the Commissioner of Income Tax purported to have been filed under Rule 86 of Schedule II of the Act is maintainable?
2. Whether the limitation for filing the appeal would run from the actual date of the order or from the date when the same was served upon the petitioner and, consequently whether the appeal is barred by time or not?
I have considered the pleadings of the parties.
There is no dispute to the fact that the property was put to auction on 22.3.1988 in which the respondent No.3 was the successful bidder. No one had participated in the proceedings on behalf of Smt. Indramani Singhania for whose default in payment of income-tax dues the property was auctioned.
The procedure for recovery of income-tax dues has been provided in Sections 222 to 276 of the Act read with Rules contained in Schedule II of the Act. Attachment and sale of the defaulters immoveable property is one of the modes for recovery of income-tax dues from the defaulter. The Scheme for recovery provides for issuance of intimation/notice to the defaulter at every stage of the proceedings by the Tax Recovery Officer. Once recovery certificate is drawn, a notice is contemplated to be served upon the defaulter to make payment of the amount mentioned in the recovery certificate before executing the same. Then on attachment of the immoveable property also, the order of attachment is required to be served upon the defaulter and a proclamation in this regard is to be issued. Thereafter, a sale proclamation in respect of the immoveable property attached is to be issued by beat of drums or other customary mode and by affixation of the copy of proclamation on a conspicuous part of the property and in the office of the Tax Recovery Officer. It may also be published, at the discretion of the Tax Recovery Officer, in the Official Gazette. The proclamation is supposed to contain the description of the property to be sold, the amount of the recovery for which sale is being affected, the reserve price of the property and the time and place of auction sale not being less than 30 days from the affixation of the sale proclamation on some part of the property or in the office of the Tax Recovery Officer. The highest bid received in the public auction is subject to confirmation by the Tax Recovery Officer provided the bid is not less than the reserve price specified in the proclamation.
The Rules provide for several remedies for getting the auction sale of the immoveable property set-aside. The first remedy is provided under Rule 60 of the Rules. It enables the defaulter or any person who is adversely affected by the sale to apply to the Tax Recovery Officer for setting-aside the sale within 30 days from the date of sale by depositing the amount specified in the sale proclamation with interest thereon from the date of sale proclamation to the date of making the deposit along with penalty. The second remedy is available under Rule 61 of the Rules which empowers the defaulter or the person adversely affected by the sale to apply to the Tax Recovery Officer within 30 days from the sale to set aside the auction on the ground of non service of notice or any other irregularity by depositing the amount recoverable under the recovery certificate.
Apart from the aforesaid two remedies available to the defaulter or the person who is adversely affected by the sale, a remedy to the purchaser has also been provided under Rule 62 of the Rules to get the sale set-aside on the ground that the defaulter was having no saleable interest in the property sold.
It is only when no application for setting aside the auction sale is moved by any one concerned or, if moved has been disallowed, the Tax Recovery Officer is entitle to proceed and to make an order confirming the sale whereupon the sale becomes absolute as envisaged under Rule 63(1) of the Rules. Even where the sale has been confirmed a further remedy is provided under Rule 63(2) of the Rules for getting the sale set aside on deposit of amount, penalty and other charges by moving an application to the Tax Recovery Officer. It is thereafter that the Tax Officer Recovery Officer grants a certificate in favour of the purchaser under Rule 65 of the Rules certifying that the property has been sold to the person mentioned in the certificate.
In addition to the above procedure, Rule 86 of the Rules gives a statutory right of filing an appeal against the original order of the Tax Recovery Officer passed under the provisions of the Rules contained in Schedule which is not conclusive in nature. Such an appeal is to be presented within 30 days from the date of the order. It may be noted that there is no provision for condoning the delay, if any, in presentation of such an appeal. The relevant clauses of Rule 86 of the Rules are quoted below:
"86. (1) An appeal from any original order passed by the Tax Recovery Officer under this Schedule, not being an order which is conclusive, shall lie to the Chief Commissioner or Commission.
(2) Every appeal under this rule must be presented within thirty days from the date of the order appealed against.
Thus, an appeal under Rule 86 of the Rules lies against the original order of the Tax Recovery Officer passed under the Rules contained in the Schedule provided such an order is not conclusive in nature. The limitation for preferring an appeal under Rule 86 of the Rules is 30 days from the date of order.
Let me now first examine the first point for determination mentioned above as to whether the appeal of the petitioner before the Commissioner of Income Tax purported to have been filed under Rule 86 of Schedule II of the Act is maintainable.
A perusal of the memo of appeal which has been filed as Annexure - 2 to the writ petition reveals that the appeal was preferred against order(s) passed "Under Rules 65 and 65(1) of the Second Schedule" and the relief claimed in the appeal is "As per the grounds of Appeal, the sale of part of property (Land) No.80/87, Latouche Road, Kanpur be kindly cancelled and set aside".
The submission of Sri Shambhu Chopra, learned counsel for respondent’s No. 1 and 2 is that the appeal itself states that it is directed against the order passed under Rule 65 of the Rules which speaks about the issuance of the sale certificate. The issuance of sale certificate is not an order and, as such, is not amenable to appeal. Therefore, the reasoning adopted by the appellate authority in holding that the appeal was not maintainable cannot be faulted with.
Sri Navin Sinha on the contrary emphasised that the description of the provision is not very material and the substance of the appeal is to be looked into to find out as the exact nature of the order impugned in appeal. According to him, there is a typographical error in mentioning Rule 65 in the memo of appeal twice. In fact, the challenge in appeal is to both the orders; one confirming the sale passed under Rule 63 of the Rules and the other directing for issuance of the sale certificate passed under Rule 65(1) but due to some typographical error "Under Rules 65 and 65(1) of the Rules of the Second Schedule" has been typed instead of "Under Rules 63 and 65(1) of the Second Schedule".
The argument of Sri Sinha appears to be not without substance. There is no occasion to mention Rule 65 twice in memo of appeal and since the relief claimed in the appeal is for setting aside the sale of the immoveable property, it is apparent that the intention was to challenge the order of sale confirmation and the order issuing the sale certificate. Therefore, in appeal Rule '65' occurring in the first place has incorrectly been typed instead of '63'.
Apart from the above, the relief claimed as well as the grounds taken in the appeal clearly reveal that what was intended to be challenged was the sale of the immoveable property also and not only the sale certificate.
It is important to note that mere mentioning of a wrong provision in appeal would not take away the statutory right of the petitioner, if the appeal is otherwise provided under the statute and is maintainable.
Now comes the question as to whether an appeal lies against an order passed by the Tax Recovery Officer under Rule 63 of the Rules confirming the auction sale. Rule 63 of the Rules provides that after the procedure for making the sale has been completed and where there is no application by any party for getting the sale set aside or where such application, if any, has been disallowed, he shall pass the order confirming the sale. The aforesaid provision further states that the sale on such confirmation shall become absolute. However, the word 'conclusive' has not been used in the provision. It does not say that the sale would be conclusive. On comparison of other provisions contained in the Rules, I find that in many of them, especially Rule 10 regarding exemption of property from attachment, it has been provided that the Tax Recovery Officer's decision would be 'conclusive'. However, such a terminology has not been used in Rule 63 of the Rules and, as such, there is a mark departure in the language used in Rule 63 of the Rules vis-a-vis the other Rules. It is thus apparent that Rule 63 of the Rules does not contemplate the order of confirmation of sale to be a conclusive order. It the order confirming the auction sale is not conclusive, an appeal lies against it under Rule 86 of the Rules.
A similar controversy, as to the nature of the order of the Tax Recovery Officer passed under Rule 63 of the Rules came up for consideration before a Division Bench of the Bombay High Court in the case of Balkishandas Vs. Additional Collector, Akola and others (1977) 106 ITR 77 (Bom). In the aforesaid case also the issued raised was that against the order passed under Rule 63 of the Rules confirming the the sale there is no right to appeal in Rule 86 of the Rules. The Division Bench held that the order passed by the Tax Recovery Officer confirming the sale is undoubtedly an original order. Rule 86 of the Rules is an enabling provision providing for a remedy of appeal and the courts are always slow in excluding such a statutory remedy unless there are clear and obvious reasons that such a remedy is not available. The availability of remedy of appeal under Rule 86 of the Rules is dependent upon the fact as to whether the order appealed against is conclusive or not. The order passed under Rule 63 of the Rules is said to be absolute and not conclusive. The word 'absolute' does not make the order conclusive and, therefore, the court went on to hold that an order confirming the sale would be an original order liable to be appealed against under Rule 86 of the Rules.
The aforesaid decision has been followed by the learned Single Judge of the Allahabad High Court with approval in the case of Subash Chandra Goyal Vs. Tax Recovery Officer and others (2002) 255 ITR 289 (All).
Sri Chopra has argued that making the order absolute in effect gives conclusiveness to the order and, as such, the appeal under Rule 86 of the Rules would stand excluded. He has tried to explain the meaning of the words 'absolute' and 'conclusive' with the help of Law Lexicon and Black's Law Dictionary. But in view of law laid down in the aforesaid two decisions, I am not inclined to go into the dictionary meaning of the two words as the issue is no longer resintigra and stands concluded. No contrary decision has been cited at the Bar.
In the aforesaid facts and circumstances coupled with the legal position narrated above, I am of the opinion that the appeal of the petitioner in addition to challenging the sale certificate was also directed against the order of the Tax Recovery Officer dated 25.4.1988 passed under Rule 63(1) of the Rules confirming auction sale which is not a conclusive order and as such is open to appeal under Rule 86 of the Rules.
Accordingly, the appeal is held to be maintainable.
This brings me to the second point of determination mentioned earlier as to whether the limitation for filing the appeal would run from the actual date of the order or from the date of service of the order and, consequently as to whether the appeal is barred by limitation.
There is no dispute to the fact that the order confirming the sale was passed on 25.4.1988 and the sale certificate was also issued on the same day. The appeal was presented under Rule 86 of the Rules on 19.9.1988. The limitation for filing the appeal under Rule 86(2) of the Rules is 30 days "from the date of the order". Thus, the appeal apparently appears to be beyond time by 117 days. However, the argument is that the limitation for filing the appeal would start running from the date when the order was served and the date of service of the order would be recognised as the date of the order.
Generally speaking, judicial and quasi-judicial orders are required to be passed in the presence of the parties or their representatives and where parties or their representatives are not present, normally the orders are communicated, especially where the order is appellable or revisable so as to enable the party to avail the remedy so provided. Therefore, communication and knowledge of the order passed is necessary and in consonance with the principles of fair play. If the party aggrieved is not made aware of the order it cannot be expected to take recourse to the remedy available against it. Therefore, the fundamental principle is that the party whose rights are affected by any order must have the knowledge of the order.
In the case of Raja Harish Chandra Raj Singh Vs. The Deputy Land Acquisition Officer and another AIR 1961 SC 1500 the Apex Court had an occasion to consider the question as to the starting point of limitation in a case under the Land Acquisition Act. It was a matter concerning a reference under Section 18 of the Land Acquisition Act which provides for a limitation of six months from the date of Collector's award for seeking a reference provided the person interested was not present before the Collector at the time of making of the award or had not received any notice of the date of pronouncement of the award. The Supreme Court observed as under:
"The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fair-play and natural justice the expression "the date of the award" used in the proviso must mean the date when the award is either communicated to the party or is known by him either actually or constructively. In our opinion, therefore, it would be unreasonable to construe the words "from the date of the Collector's award" used in the proviso to Section 18 in a literal or mechanical way.
..........where the rights of a person are affected by any order and limitation is prescribed for the enforcement of the remedy by the person aggrieved against the said order by reference to the making of the said order, the making of the order must mean either actual or constructive communication of the said order to the party concerned."
A similar question came up for consideration before the Supreme Court in the case of Madan Lal Vs. State of U.P. and others AIR 1975 SC 2085. This was a case under the Indian Forest Act where also the question was with regard to the starting point of limitation for the purposes of filing an appeal. Section 17 of the Indian Forest Act prescribes a time limit of three months from the "date of the order" for presenting the appeal. The Supreme Court heavily relied upon its earlier decision in the case of Raja Harish Chandra Raj Singh (Supra) and
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interpreted the expression "date of order" to mean the date of knowledge of the order passed without notice to and in absence of the appellant. In a recent case of D. Saibaba v. Bar Council of India and another (2003) 6SCC 186 the Supreme Court was seized with the consideration of the expression "sixty days from the date of that order" used in Section 48-AA of the Advocates Act, 1961 which confers power of review upon the authority concerned. The Court held that where the law provides a remedy to a person, the provision has to be so construed to make the availing of the remedy practical and the exercise of power conferred on the authority meaningful and effective. A construction which would render the provision nugatory ought to be avoided. The words "the date of that order",therefore, mean and must be construed as meaning the date of communication or knowledge, actual or constructive, of the order sought to be reviewed. In short, the ratio is that for the purposes of calculating limitation the expression "from the date of the order", is to be construed to mean "the date of communication or knowledge of the order" In the instant case, the date of knowledge of the order, according to the petitioner is 18.8.1988 and the date of actual service and communication undisputedly happens to be 29.8.1988. The appeal was preferred on 19.9.1988. On 18.9.1988 there was a holiday. Thus, the appeal was within limitation both from the date of knowledge of the order and its service. In this view of the matter, the appellate authority manifestly erred in law in dismissing the appeal as barred by time. Accordingly, I am of the opinion that the order passed by the appellate authority on both the counts that the appeal is not maintainable and is barred by time is unsustainable in law and the writ petition deserves to be allowed. The order impugned dated 5th October, 2010 (Annexure - 9 to the writ petition) passed by the respondent no.1, Commissioner of Income Tax, Kanpur is hereby quashed and a writ of certiorari is directed to be issued accordingly and the respondent no.1 is directed to decide the appeal in accordance with law, on merits, as expeditiously as possible. In the circumstances, the writ petition stands allowed. However, there shall be no order as to costs.