Mandatory deposit rules in recovery sales invalidate an auction when unpaid, and a void sale can be challenged directly.

Mandatory deposit requirements for recovery sales under the Second Schedule to the Income-tax Act were treated as imperative: failure to pay the balance bid amount within the prescribed time rendered the auction non est, and the later confirmation of sale and sale certificate could not cure the defect. A void sale could be challenged without first pursuing the remedies for setting aside a valid sale, and the transferee's private transfer after service of notice was void against the Revenue. The challenge to the recovery sale was therefore maintainable, while the assignee's claim failed because his transfer was ineffective against the Revenue.

---

---

Issues: (i) Whether the deposit requirements under Rule 57 of the Second Schedule to the Income-tax Act are mandatory and whether non-compliance renders the sale and its confirmation void. (ii) Whether the appellant had locus standi to challenge the sale and the recovery proceedings despite the transfer of the property and the availability of remedies under Rules 60 and 61.

Issue (i): Whether the deposit requirements under Rule 57 of the Second Schedule to the Income-tax Act are mandatory and whether non-compliance renders the sale and its confirmation void.

Analysis: The rules governing sale of immovable property in the Second Schedule require immediate deposit of 25% of the bid amount and payment of the balance within fifteen days. The statutory language is imperative and the consequences of default are expressly provided in Rule 58. The Court applied the settled principle that analogous provisions governing court sales are mandatory and that failure to comply makes the auction non est in law. On the facts, the balance amount was not remitted within the prescribed period even after the stay was vacated, so the later confirmation of sale and issue of sale certificate could not cure the defect.

Conclusion: The sale was void for non-compliance with Rule 57, and the confirmation and sale certificate were of no legal effect.

Issue (ii): Whether the appellant had locus standi to challenge the sale and the recovery proceedings despite the transfer of the property and the availability of remedies under Rules 60 and 61.

Analysis: A void sale can be resisted without first seeking to set it aside under the provisions governing applications to avoid a valid sale. The Court further held that the private transfer made after service of notice under Rule 2 was void against the Revenue under Rule 16, so the appellant was not non-suited on the ground of transfer or absence of proprietary interest as between him and the Revenue. The alternative-remedy objection under Rules 60 and 61 therefore did not defeat the challenge to a sale that was already a nullity.

Conclusion: The appellant was entitled to maintain the challenge, and the objection based on locus standi and alternative remedy was rejected.

Final Conclusion: The writ appeal challenging the recovery sale succeeded in substance, while the connected appeal filed by the assignee failed because the transfer in his favour was void against the Revenue.

Ratio Decidendi: Non-compliance with the mandatory deposit requirements governing recovery sales under the Second Schedule renders the auction a nullity, and a void sale may be resisted without first invoking procedures meant to set aside a valid sale.

---