Court sets aside auction sale for failure to remit balance consideration.

The court set aside the auction sale due to the auction purchaser's failure to remit the balance consideration under Rule 58 of the IT Act, 1961. The judgment favored respondents 5 to 8, directing a re-auction and the return of the balance amount after deducting expenses. The petitioner was allowed to settle IT Act dues to lift the attachment and retain property rights, with specified payment deadlines. Failure to comply would lead to auction by the Income Tax Department. The writ petition was allowed with directions, resolving the auction sale dispute and assigning costs to respective parties.

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Issues:
Challenge to auction sale due to non-remittance of balance consideration under Rule 58 of IT Act, 1961; Claim of respondents 5 to 8 regarding injunction preventing balance payment; Dispute over default under IT Act by 4th respondent; Claim of petitioner as bona fide purchaser; Litigation history and delays in auction process; Equity considerations for petitioner in possession of property; Directions for payment of dues and property rights.

Analysis:
The petitioner challenged an auction sale due to the auction purchaser's failure to remit the balance consideration, invoking Rule 58 of the IT Act, 1961. Respondents 5 to 8 argued that an injunction obtained by the petitioner delayed the balance payment, leading to the current willingness to pay. The dispute involved the default under the IT Act by the 4th respondent, with notices issued and property attachment. The petitioner's claim as a bona fide purchaser was disputed, emphasizing the auction purchaser's default in payment.

The judgment delved into the lengthy litigation history, including the auction sale, injunction, suits, appeals, and delays in balance payment. The court noted the auction purchaser's lack of action despite multiple opportunities for payment, leading to the application of Rule 58 and setting aside the sale in favor of respondents 5 to 8. The court highlighted the necessity for a re-auction and the return of the balance amount to respondents 5 to 8 after deducting expenses.

Considering the petitioner's possession of the property pre-sale, the court emphasized equity by allowing the petitioner to settle the IT Act dues to lift the attachment and retain property rights. The judgment directed the computation of dues with interest for the petitioner to settle by a specified date, with consequences for non-compliance. It also addressed the potential return of the 25% deposit to respondents 5 to 8, subject to an application to the Income Tax authorities under Rule 58.

In case of the petitioner's failure to comply with the payment directive, the Income Tax Department was authorized to proceed with auction and sale of properties, with distribution of remaining amounts as per holding extents. The writ petition was allowed with specified directions, leaving parties to bear their respective costs, thereby resolving the complex legal issues and providing a comprehensive resolution to the auction sale dispute.

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