K. BASAVARAJAPPA versus TAX RECOVERY COMMISSIONER, BANGALORE AND OTHERS

Citation: [1996] SUPP. 7 S.C.R. 523 · Decided: 11-10-1996 · Supreme Court of India · Bench: A.S. ANAND · Disposal: Dismissed

Judgment (excerpt)

K. BASA V ARATAPP A 
v. 
TAX RECOVERY COMMISSIONER, BANGALORE AND 
OTHERS 
OCTOBER 11, 1996 
[DR. A.S. ANAND AND S.B. MATMUDAR, JJ.] 
A 
B 
Income Tax Act, 1961, Income Tax Rules,-Rule 60 of the Second 
Schedule-Locus Stan di of proposed purchaser to make application for setting 
aside auction sale-Deposited the amount-Held by mere agreement to sell C 
the appellant got no interest in the property put to auction and cannot claim 
to get the auction sale set aside by making an application and depositing the 
amount. 
Rule 16(1) and 16(2) Read with Rules 51 & 48 Agreement of 
sale-Defaulter-No pennission of tax recovery officer-Held entering into an D 
agreement bypassing the statutory requirements cannot claim any legal interest 
for setting aside the auction sale. 
D has committed default in payment of Income Tax for the relevant 
assessment year. He has entered into an agreement of sale of certain E 
property with the appeUant. The appellant filed a suit for specific perfor· 
mance when D failed to execute the sale deed. In the meantime, tax recovery 
officer attached the property and auctioned it for recovery of the tax dues 
from the defaulter. The appellant within 30 days from the date of auction 
sale filed an application under Rule 60 of the Second Schedule to the 
Income Tax Act. The Appellant also deposited the tax dues of the defaulter F 
and prayed for setting aside of the auction sale. When the application of 
the appellant was refused he approached the High Court in Writ Petition 
challenging the rules. The said writ petition was allowed by the High Court 
holding that the application made by the appellant was maintainable 
under Rule 60. The Division Bench of the High Court reversed the order G 
of the Single Judge. 
In this appeal, it was contended by the appellant that he has made 
an application within 30 days of the auction sale along with authority letter 
entitling him to deposit the tax amount on behalf of the defaulter; that he 
has sufficient locus standi as his suit for specific performance was pending H 
523 
524 
SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R. 
A on the date of auction sale and was decreed by consent of parties the very 
next day, and that the High Court erred in taking the view that his 
application under Rule 60 was not maintainable. 
Revenue contended that the application moved by the appellant could 
not have been entertained and was rightly refuted by the tax authority as 
B such agreement was violative of Rule 16 sub Rule (1) and Rule 51 read with 
Rule 48, and that the appellant could not be said to be a person having any 
legal interest in the property put to action. 
Dismissing the appeal, this court 
C 
HELD : 1. The original defaulter whose property was put to auction 
had locus standi to move an application himself or through general power 
of attorney holder under Rule 60 of the Income Tax Rules for getting it set 
aside. In this case, the applicant himself has moved an application as a 
prospective purchaser of property. On the date of application he was not 
D armed with any decree granting specific performance of the agreement. By 
mere agreement to sell, the appellant got no interest in the property to 
auction to enable him to apply for setting aside under Rule 60. 
[530-B, 532-B, 534-C] 
2. When the defaulter agreed to sell off his property to the appellant 
E he totally bypassed the requirement of Rule 16(2). If a party with an open 
eye bypasses the statutory requirement of Rule 16(1) and gets an agreement 
to sell executed by defaulter, he cannot on the basis of such an agreement 
claim to get the auction sale of defaulter's property set aside by depositing 
the amount. It would amount to circumventing statutory provision of Rule 
16(1) and 2 read with Rules 51 and 48. Therefore the appellant had no locus 
F 
standi to move an application for getting the auction sale set aside. [532-E, 
533-D, 534-F] 
D.V. Satyanarayana and Others v. Tax Recovery Officer and Others, 
(1992) 197 ITR 407, approved. 
G 
M. Rajagopal v. Secretary, State Transport Authority, Trivandrnm and 
Others, (1978) 115 ITR 864, referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 13049-50 
of 1996. 
H 
From the Judgment and Order dated 13.2.92 of the Karnataka High 
K. BASAVARAJAPPAv. TAX RECOVERY COMMR [S.B. MAJMUDAR,J.) 
525 
Court in W.A. No. 293-721 of 1991. 
A 
P.P. Rao, A.V. Palli and Mrs. Pekha Palli for the Appellant. 
Harish N. Salve, R.R. Mishra, A.A. Kulkarni, Mukul Mud

Excerpt shown. Read the full judgment & AI analysis in Lexace.