1991 (4) TMI 68 - HC - Income Tax

Court dismisses writ petitions for lack of standing under rules 61 and 16, Transfer of Property Act

DV. Satyanarayana And Others Versus Tax Recovery Officer And Others

The court dismissed the writ petitions, ruling that the petitioners lacked standing to challenge the sale under rule 61 as their agreement with the ... Objection To Sale Issues Involved:1. Whether the petitioners are 'persons interested' within the meaning of the expression used in rule 61.2. Whether the application made by the petitioners for setting aside the sale was maintainable.3. Whether the writ petitions filed by the petitioners for the same relief can be entertained.Issue-wise Detailed Analysis:1. Whether the petitioners are 'persons interested' within the meaning of the expression used in rule 61:The petitioners contended that they should be recognized as persons whose interests are affected by the sale because they had entered into an agreement to purchase the property and paid an advance of Rs. 1,30,000. They argued that their pecuniary interest in the property made them 'persons interested' under rule 61. However, the Tax Recovery Officer and the Commissioner rejected this contention. The petitioners relied on various judgments to support their argument, including *Jose (K. M.) v. Anantha Bhat (D.)*, *Jasbhai Motibhai Desai v. Roshan Kumar Haji Bashir Ahmed*, and *Shanthi Institute of Commerce v. State of Karnataka*. The court noted that the rules in the Second Schedule to the Income-tax Act are framed similarly to rules under Order 21, C.P.C. The court concluded that the petitioners, as agreement-holders, did not have an interest in the property within the meaning of rule 61, as their agreement with the defaulter was void under rule 16, which prohibits private alienation of the property without the permission of the Tax Recovery Officer.2. Whether the application made by the petitioners for setting aside the sale was maintainable:The court examined the maintainability of the application made by the petitioners under rule 61. The Tax Recovery Officer had rejected the application on the grounds that there was no irregularity in the auction sale proceedings and that the petitioners had not sustained 'substantial injury.' The Commissioner upheld this decision, stating that the agreement entered into by the petitioners with the defaulter was void under rule 16, and therefore, they had no locus standi to file the application. The court agreed with the Commissioner's view, emphasizing that rule 16 and section 54 of the Transfer of Property Act, which states that a contract of sale does not create any interest in the property, rendered the petitioners' agreement void and their application under rule 61 non-maintainable.3. Whether the writ petitions filed by the petitioners for the same relief can be entertained:The court considered whether the writ petitions filed by the petitioners could be entertained. The petitioners argued that they had a pecuniary interest in the property and should be considered as persons whose interests are affected by the sale. However, the court held that, according to rule 16 and section 54 of the Transfer of Property Act, the petitioners did not have any interest in the property that would allow them to challenge the sale. The court also noted that the sale had been confirmed, and the petitioners had not made any application under rule 60 to set aside the sale. The court concluded that the petitioners had no locus standi to file the writ petitions based on their agreement of sale, which only gave them a pecuniary interest and not an interest in the property itself.Conclusion:The court dismissed the writ petitions, holding that the petitioners did not have locus standi to challenge the sale under rule 61, as their agreement with the defaulter was void under rule 16 and section 54 of the Transfer of Property Act. The petitioners' pecuniary interest did not qualify them as persons whose interests are affected by the sale.