THE HON’BLE SRI ANIL R. DAVE, THE CHIEF JUSTICE and THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN W.P.No.749 of 1996 and A.S.No.468 of 2002 COMMON JUDGMENT: (Per HON’BLE SRI JUSTICE RAMESH RANGANATHAN) W.P.No.749 of 1996 is filed questioning auction of the petitioner’s property by the first respondent for recovery of tax arrears of the second respondent. In the auction held on 29.12.1995 the said property was sold in favour of the third respondent for Rs.4,02,000/-. According to the petitioner the house property, put to auction, originally belonged to Sri Nayanala Koteswara Rao who entered into a registered agreement of sale dated 16-04-1984, with Sri Chunduri Sreeramulu, for Rs.1,40,000/-. Sri N. Koteswara Rao is also said to have executed a registered power of attorney in favour of Sri Chunduri Subba Rao, the adopted son of Sri Chunduri Sreeramulu, giving him the power to execute and register the sale deed on his behalf in favour of Sri Chunduri Sreeramulu. Sri Chunduri Sreeramulu, in turn, entered into an agreement of sale with the petitioner on 16.08.1985 for Rs.1,36,058=35. Petitioner claims that possession of the house property was handed over to him on 14.10.1985, that a sale deed was registered with the District Registrar, Ongole, under document no.3047 of 1993, on 2.8.1993, that he was a bonafide purchaser and that he had purchased the property on payment of full sale consideration. The petitioner would submit that the mere fact that he was distantly related to Sri Chunduri Sreeramulu could not be construed to mean that he had conspired with the second respondent, that as on the date of registration of the sale deed the market value of the house property was Rs.1,63,500/- and that registration was effected only for the agreement value. According to him, there was no basis to come to the conclusion that the sale transaction was not genuine. A notice in ITCP form no.13 was pasted on the premises of the property by the first respondent informing that the property would be auctioned on 29.12.1995 for recovery of arrears of tax due from Sri Chunduri Sreeramulu. The petitioner filed O.S.No.112 of 1995 on 22.12.1995 in the court of the Additional Senior Civil Judge, Ongole. He also filed I.A.No.2186 of 1995, under Order 39 Rule 1 CPC, seeking temporary injunction restraining the first respondent from taking further action. However, I.A.No.2186 of 1995 was dismissed on 29.12.1995 mainly on the ground that the petitioner could have moved the first respondent to get the sale set aside under Rule 62 of the Second Schedule to the Income Tax Act, 1961. The petitioner, thereafter, filed an objection petition on 10.1.1996, under Rules 11, 61 and 62 of the Second Schedule, before the first respondent. According to the petitioner no opportunity was given to him at anytime prior to the notice having been pasted on the house property, in ITCP form no.13, some time after 15.12.1995. He would submit that the alleged letter of consent given by Sri Chunduri Sreeramulu on 25.09.1995, for auction of the property, would not justify auction being held since Sri Chunduri Sreeramulu had nothing to lose by permitting the department to auction the property of some others for adjustment of his tax arrears. Consequent upon receipt of the petitioner’s objections on 12.01.1996 the first respondent, in his order dated 16.01.1996, noted that the Assistant Commissioner of Income Tax, Circle-I, Nellore, had forwarded a tax recovery certificate to the Tax Recovery Officer on 17.03.1989 for realization of arrears of tax of Rs.7,69,196/- for the assessment years 1979-80 to 1984-85, that a notice under Rule 2 of the Second Schedule to the Income Tax Act, 1961, was served on the defaulter on 20.06.1989, that the property in question was also attached and a proclamation was issued, that a notice under Rule 53 for settling the sale proclamation was also served on the defaulter on 19.08.1995, that a sale proclamation in ITCP form no.13 was affixed on the property on 29.11.1995 and served on the defaulter, that the petitioner had filed a suit in O.S.No.112 of 1995 on 22.12.1995, that he had also filed an injunction petition in I.A.No.2186 of 1995 on the same date, that the injunction petition was dismissed, that the Tax Recovery Inspector had conducted the auction for sale of the house property on 29.12.1995, that the petitioner had filed his objections under Rule 11, which was posted on 10.01.1996 and was received in the office on 12.01.1996 and, as it was filed subsequent to the date of public auction, the objection petition could not be entertained by the Tax Recovery Officer, Nellore, and was, therefore, rejected. The first respondent placed reliance on Proviso (a) to Rule 58 (1) of Order XXI CPC to hold that no such claim or objection could be entertained where, before the claim was preferred or an objection was made, the attached property had already been sold. O.S.No.112 of 1995 filed by the petitioner was dismissed by the Additional Senior Civil Judge, Ongole, on 22.11.2001 on the ground that the Civil Court had no jurisdiction to entertain the suit. Aggrieved thereby, the petitioner has preferred A.S.No.468 of 2002, which was taken up for hearing along with W.P.No.749 of 1996. Section 222 of the Income Tax Act provides for a certificate to the Tax Recovery Officer. Under sub-section (1) thereof, when any assessee is in default in making payment of tax, the Tax Recovery Officer may, under his signature, draw up a statement in the prescribed form specifying the amount of arrears due from the assessee and shall proceed to recover from such assessee the amount specified in the certificate by, among others, attachment and sale of the assessee’s immovable property in accordance with the rules laid down in the Second Schedule. The Second Schedule to the Income Tax Act prescribes the procedure for recovery of tax. Rule 2 thereof relates to issue of notice and, thereunder, when a certificate has been drawn up for recovery of arrears under the Second Schedule, the Tax Recovery Officer shall cause to be served a notice requiring the defaulter to pay the amount specified in the certificate within fifteen days from the date of service of the notice and intimating that, in default, steps would be taken to realize the amount under the Schedule. Rule 4 provides that, if the amount mentioned in the notice is not paid within the time specified therein or within such further time as the Tax Recovery Officer may grant in his discretion, the Tax Recovery Officer shall proceed to realize the amount by, among others, attachment and sale of the defaulter’s immovable property. Rule 8 relates to disposal of proceeds of execution. Rule 9 prescribes a general bar to the jurisdiction of Civil Courts save where fraud is alleged and, there under, except as otherwise expressly provided in the Act, every question arising between the Tax Recovery Officer and the defaulter relating to the execution, discharge or satisfaction of a certificate, or relating to the confirmation or setting aside, by an order under the Act, of a sale held in execution of such certificate, shall be determined, not by a Suit but by order of the Tax Recovery Officer before whom such question arises. Rule 11 relates to investigation by the Tax Recovery Officer and, under sub-rule (1) thereof, where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection. As noted hereinabove, the petitioner had filed the suit in O.S.No.112 of 1995, against the first respondent, for declaration and permanent injunction. In view of the bar under Rule 9, of the Second Schedule to the Income Tax Act, no such suit was maintainable and the learned Additional Senior Civil Judge, Ongole had rightly held that the Civil Court had no jurisdiction to entertain the suit. Consequently, A.S.No.468 of 2002 filed against the judgment and decree in O.S.No.112 of 1995 is liable to be, and is accordingly, dismissed. As the Tax Recovery Officer did not investigate into the claim preferred by the petitioner, on the ground that no such claim could be preferred after the property had been sold, the only question which necessitates examination is whether the first respondent was justified in not entertaining, and investigating into, the claim preferred by the petitioner. As noted hereinabove, the first respondent had relied on Proviso (a) to Rule 58 (1) of Order XXI CPC. Rule 58 of Order XXI CPC relates to adjudication of claims to, or objections to attachment of property. Under Sub-rule (1) thereof, where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to adjudicate upon the claim or objection in accordance with the provisions contained in the Rule. Under proviso (a) to Sub rule (1) no such claim or objection shall be entertained where, before the claim is preferred or objection is made, the property attached has already been sold. It is no doubt true that, under proviso (a) to Rule 58(1) of Order XXI CPC, no claim or objection to the attachment of the property can be entertained after the property attached, in execution of a decree, has already been sold. It cannot, however, be lost sight of that, under Rule 11 of the Second Schedule to the Income Tax Act, where any claim is preferred to, or any objection is made to the attachment or sale of any property, in execution of a certificate, it is required to be investigated by the Tax Recovery Officer. Sri J.V. Prasad, Learned standing counsel for the Income Tax Department, would fairly submit that there is no provision, either in the Income Tax Act or under the Schedules thereto or under the Rules made thereunder, which make the provisions of CPC applicable to investigation of a claim or objection made to the attachment or sale of property in execution of a certificate drawn up by the Tax Recovery Officer under Section 222 of the Income Tax Act. Even otherwise, in the light of a specific provision in this regard in Rule 11(1) of the Second Schedule to the Income Tax Act, the Tax Recovery Officer was not justified in placing reliance on proviso (a) to Rule 58(1) of Order XXI CPC and in holding that the petitioner was disentitled to make any claim or objection to the auction and sale of the property. As Rule 11(1), of the Second Schedule to the Income Tax Act, specifically entitles a claim being preferred, or an objection being made, both with regards attachment and sale of the property in execution, even in cases where the property is sold, the objection filed, and the claim made, by the petitioner should have been investigated by the first respondent Tax Recovery Officer. The order of the Tax Recovery Officer dated 16.01.1996, refusing to entertain the objection petition filed by the petitioner, is, accordingly, quashed. The first respondent shall entertain the objection petition, filed by the petitioner under Rule 11 of the Second Schedule, investigate the claim and, after complying with the procedural requirements of the second schedule to the Income Tax Act, pass orders on the objection petition in accordance with law. As a result, A.S.No.468 of 2002 is dismissed and W.P.No.749 of 1996 is allowed. However, in the circumstances without costs. ___________________ ANIL R. DAVE, CJ _____________________________ RAMESH RANGANATHAN, J Date:23--06-2009 CVRK THE HON’BLE SRI ANIL R. DAVE, THE CHIEF JUSTICE and THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN W.P.No.749 of 1996 and A.S.No.468 of 2002 (Per HON’BLE SRI JUSTICE RAMESH RANGANATHAN) Date: --06-2009 CVRK