1996 (2) TMI 428 - SC - VAT and Sales Tax

Supreme Court Invalidates 1974 Auction Sale

Seth Banarsi Dass [Decd. by L. Rs.] Versus District Magistrate and Collector, Meerut and Others

The Supreme Court set aside the auction sale held on January 2, 1974, due to irregularities in addressing the appellant's objections before the sale. The ... Whether auction sale is invalid because the auction purchasers did not deposit the full purchase price on the date of the auction sale? Held that:- Appeals are allowed and the auction sale held on 2nd of January, 1974 is set aside. The High Court was not right in observing that the objections could be decided at a later date even after the sale of the shares to which the objections pertained. Proceeding with the auction sale without adjudicating upon the objections is a material irregularity which vitiates the sale. The appellant has thereby lost his valuable right to have his objections adjudicated upon in accordance with law. The objections were raised much prior to the auction sale and they ought to have been decided before the auction sale took place. Failure to do so vitiated the sale. Respondents 2 and 3 will be at liberty to withdraw the purchase price deposited by them which as informed, is invested in fixed deposits together with accrued interest thereon. Issues:1. Validity of auction sale due to partial payment by auction purchasers.2. Adjudication of objections raised by the appellant before the auction sale.3. Impact of U.P. Sugar Undertakings (Acquisition) Ordinance, 1971 on the auction sale.Analysis:Issue 1: Validity of auction sale due to partial payment by auction purchasersThe appellant contended that the auction sale was invalid as the auction purchasers did not deposit the full purchase price on the date of the auction sale. The auction was conducted under the U.P. Zamindari Abolition and Land Reforms Act, 1950, which mandates full payment at the time of sale unless the officer holding the sale grants time. The auction purchasers deposited an initial amount on the day of the auction and the balance amount as directed by the sale officer. The Court found that the purchasers complied with the payment terms set by the officer, thus upholding the validity of the auction sale.Issue 2: Adjudication of objections raised by the appellant before the auction saleThe appellant raised objections to the auction sale, including discrepancies in the amount claimed and the pledging of shares with a bank. These objections were not resolved before the auction took place. The Court noted that under the Civil Procedure Code, objections raised by the debtor in execution proceedings must be decided before proceeding with the sale. Failure to address these objections prior to the auction sale was deemed a material irregularity, vitiating the sale. The appellant's right to have objections adjudicated in accordance with the law was compromised, leading to the setting aside of the auction sale.Issue 3: Impact of U.P. Sugar Undertakings (Acquisition) Ordinance, 1971 on the auction saleThe appellant raised a new contention regarding the U.P. Sugar Undertakings (Acquisition) Ordinance, 1971, arguing that the acquisition of S.B. Sugar Mills under this ordinance would adjust debts and encumbrances against compensation. However, as this argument was presented for the first time during the appeal and lacked factual data, the Court declined to examine it. Despite this, the Court allowed the appeals, setting aside the auction sale due to the irregularities in addressing the appellant's objections before the sale.In conclusion, the Supreme Court set aside the auction sale held on 2nd of January, 1974, allowing the auction purchasers to withdraw the purchase price deposited by them. No costs were awarded in the circumstances of the case.