Statutory attachment defeats private sale: alienation of attached property cannot obstruct recovery under the EPF recovery framework.

Private transfer of property already under statutory attachment under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 was treated as void against the recovery claim because Rule 16(2) of the Second Schedule to the Income-tax Act, 1961 applied through Section 8-G. The court noted that the impugned sale was executed despite notice of attachment and without clearing the statutory dues, so it could be ignored for recovery purposes. It further held that the recovery framework permitted the Recovery Officer to proceed afresh, including by conducting a fresh auction, and that the writ remedy could be used to remove the barrier created by the void alienation.

---

---

Issues: (i) Whether sale deeds executed by the defaulter's power agent in respect of property already under statutory attachment under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 were void. (ii) Whether the recovery machinery under the Act, read with the Second Schedule to the Income-tax Act, 1961, permitted the Recovery Officer to ignore such alienations, proceed to fresh auction, and obtain relief in writ jurisdiction.

Issue (i): Whether sale deeds executed by the defaulter's power agent in respect of property already under statutory attachment under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 were void.

Analysis: The property was under attachment pursuant to the statutory recovery mechanism under Sections 8-B, 8-C and 8-G of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. By virtue of Section 8-G, the Second Schedule to the Income-tax Act, 1961 applied to the recovery proceedings. Rule 16(2) of the Second Schedule declares private transfer of attached property void against claims enforceable under the attachment. The power deed itself referred to the attachment and authorised sale only for clearing liabilities, yet the impugned sale was effected in favour of the power agent's wife without discharging the statutory dues.

Conclusion: The sale deed in document No.2441 of 2009 was void and could be ignored for recovery purposes.

Issue (ii): Whether the recovery machinery under the Act, read with the Second Schedule to the Income-tax Act, 1961, permitted the Recovery Officer to ignore such alienations, proceed to fresh auction, and obtain relief in writ jurisdiction.

Analysis: Rule 9 of the Second Schedule bars questions relating to execution, discharge, satisfaction, or setting aside of sale from being tried by suit, except on the ground of fraud. Rule 12 permits removal of attachment only on payment of dues, costs, and expenses or on cancellation of the certificate. The Court held that the statutory framework empowered the Recovery Officer to proceed with sale, and that the cited authority on cancellation of sale deeds arising out of contractual disputes did not govern a sale made in the face of statutory attachment. Accordingly, the Recovery Officer could proceed afresh, and the writ remedy was available to neutralise the void alienation.

Conclusion: The Recovery Officer was directed to conduct a fresh auction and the impugned alienation was not allowed to stand as a barrier to recovery.

Final Conclusion: The Court upheld the statutory recovery process, declared the impugned sale deed void, and enabled the EPFO to conduct a fresh auction for realization of dues and disbursement of the balance, if any, in accordance with law.

Ratio Decidendi: A private alienation of property already subjected to statutory attachment under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, where the Second Schedule to the Income-tax Act, 1961 applies, is void and cannot defeat the recovery proceedings.

---