Quasi-judicial investigation required for third-party claim against attachment; non-speaking rejection of claim petition is invalid.

Where a third-party claim is made against attachment or sale under the Income-tax recovery procedure, the Tax Recovery Officer must conduct a real quasi-judicial enquiry, consider rival contentions, and record reasons before rejecting the claim. The statutory power under the Second Schedule is not a mere formality; it requires application of mind, evidence-based investigation, and a speaking order. A non-speaking rejection that ignores the claim and fails to adjudicate properly is unsustainable in writ jurisdiction and may be quashed, with the matter sent back for fresh consideration in accordance with law after hearing the parties.

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Issues: (i) Whether the Tax Recovery Officer was bound to conduct a full and reasoned investigation into the third-party claim under the recovery provisions before rejecting the claim petition; (ii) Whether a non-speaking rejection of the claim petition without proper adjudication was liable to be set aside in writ jurisdiction.

Issue (i): Whether the Tax Recovery Officer was bound to conduct a full and reasoned investigation into the third-party claim under the recovery provisions before rejecting the claim petition.

Analysis: The recovery machinery under section 222 of the Income-tax Act, 1961, and the Second Schedule confers quasi-judicial powers on the Tax Recovery Officer. Rule 11(1) requires investigation of a third-party claim or objection to attachment or sale, and the nature of the powers, including the authority to receive evidence, administer oaths and compel production of documents, shows that the enquiry must be real, fair and reasoned. The procedure is comparable to the civil court process under Order 21 rule 58 of the Code of Civil Procedure, and rule 11(6) also contemplates a civil suit to establish title, reinforcing that the statutory investigation cannot be treated as a mere formality. The order must disclose application of mind and the reasons for the conclusion reached.

Conclusion: Yes. The Tax Recovery Officer was bound to make a proper quasi-judicial investigation and pass a speaking order on the claim petition.

Issue (ii): Whether a non-speaking rejection of the claim petition without proper adjudication was liable to be set aside in writ jurisdiction.

Analysis: The impugned order merely rejected the claim as untenable without dealing with the rival contentions or recording reasons. In the context of adjudication affecting proprietary rights, such a perfunctory order does not satisfy the statutory requirement of investigation or the demands of judicially-informed decision-making. The absence of reasons amounted to a failure to complete the adjudication required by law and therefore constituted an error apparent on the face of the record.

Conclusion: Yes. The non-speaking order was unsustainable and had to be quashed.

Final Conclusion: The writ petitions succeeded, the rejection orders were set aside, and the claim petitions were directed to be reconsidered afresh in accordance with law after hearing the parties.

Ratio Decidendi: Where a statute requires investigation into a claim against attachment, the authority must conduct a full quasi-judicial enquiry and record reasons; a non-speaking rejection without proper consideration of the claim is invalid.

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