# PADRAUNA RAJKRISHNA SUGAR WORKS LTD. & ORS v. LAND REFORMS COMMISSIONER, U.P. & . ORS

- **Citation:** [1969] 3 S.C.R. 468
- **Court:** Supreme Court of India
- **Decided:** 1969-01-31
- **Bench:** J. C. Shah, V. Ramaswami, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/padrauna-rajkrishna-sugar-works-ltd-ors-v-land-reforms-commissioner-u-p-ors-4603
- **Pages:** 11

## Headnote

B
U.P. Zamindari Abolition & Land Reforms Act (U.P, I of 1951), ss.
279 and 286---Dues under other statutes recoverable as arrears of land
revenue-Whether restrictions under ss. 279 and 286(1) applicable.
The amount of dues under the Indian Income-tax Act, 1922 the U.P.
Sugar Factories Control Act.
1938 and the. Co-operative Societies
Act,
1912 were 'fecoverab!e as arrears of land
revenue.
Section
286( 1) of
the U.P. Zamindari Abolition & Land Reforms Act provides that if any
arrears of ]and revenue could not be recovered by any of the processes
mentioned in els. (a) to (e) of s. 279, the Collector may realise the same
by attachment and sale of the interests o'f the defaulter in any other immovable property of the defaulter, and s. 286(2) provided that money
recoverable as arrears of land revenue, may be
recovered by process
"under this section" from any immovable property of the defaulter.
As
the appellant-company was unable to meet its liabilities in
respect of
income.tax dues, sugar cess and the amount due for cane supplied to it,
the immovable property o'f the company were sold to meet the dues. The
appellant challenged the sale contending that (i) the immovable property
of the company could be attached and sold only after the processes prescri·bed in els. (a) to (e) of s. 279 i.e. by the sale of movable properties
y.·ere resorted to; (ii} the sale was illegal or irregular as the CoUector
ignored the intimation of the Income-tax Officer staying the sale for recovery of income-tax; and (iii) the appellant, was prevented from raising
funds 'for making the deposit os provided by r. 285H (of the rules framed
under the Act) for .setting aside the sale as the purchaser was appointed
as the Authorised Controller and put in possession of all the properties of
the appellant. Dismissing the appeal this Court,
HELD : (i) Power to recover arrears of land revenue from a defaulter
is governed by the processes mentioned in els. (a) to (e) of s. 279 of the
Act and s. 286( I) places certain restrictions upon the power o'f the Collector to recover land revenue by attachment and sale of lands other than
the holdin~ in respect of which the land revenue is due. But the restrictions on the power of the Collector operated only when land revenue is
in arrears.
Re~trictions, if any, upon the power of the Collector to re·
cover dues under statutes,
as a'rrears of land
revenue arise. from
the
statute \\•hich is the source of the liabi1ity and not from the U.P. Zamindari Abolition & T~and Re'forms Act, which merely sets out the processes
for recovery of the dues.
To hold that sub-s. (2) of s. 2R6 requires the
CoJiector in the first instance to recover out of the movable property or
by arrest and detention of the defaulter before immovable property of the
defaulter is attached and sold is to amend the substantive provisions 0[
the Acts under which the liability for money due is recoverable as land
revenue.
For instance. under s. 46 of the Income-tax Act. 1922. the
powers exercisable by the CoIIecto'r in recovering arrears of income-tax,
which are recover1bie a" arrears of land revenue are not re!'tricted to the
Land Revenue Code; the Collector is entitled to exercise all the powers of
a Civil Court for the purpose of recovery of an amount due under a decree
under the Code o'f (:ivil PrQl'eC:ure, and the Code of CiVJl Proctdure imc
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PAI>MUNA V, COMMISSIONER (Shah, 1.)
469
A . poses no obligations to recover the dues by sale of movables or by arrest
and detention of the defaulter before immovable property may be attach·
ed. The provisions of the Act, which authorise
recovery of sums
of
money as arrears of land revenue, do not require the Collector to follow
any sequence df the processes for recovery; it is competent to the Collector to resort to any process prescribed by s. 279 in aid of recovery of
the .dues which are recoverable as arrears of land revenue. [473 H-474
B
D; 475 HJ
(ii) The sale was not illegal or irregular for the reason that

## Text

PADRAUNA RAJKRISHNA SUGAR WORKS LTD. & ORS.
A
v.
LAND REFORMS COMMISSIONER, U.P. & . ORS.
January 31, 1969
(J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.J
B
U.P. Zamindari Abolition & Land Reforms Act (U.P, I of 1951), ss.
279 and 286---Dues under other statutes recoverable as arrears of land
revenue-Whether restrictions under ss. 279 and 286(1) applicable.
The amount of dues under the Indian Income-tax Act, 1922 the U.P.
Sugar Factories Control Act.
1938 and the. Co-operative Societies
Act,
1912 were 'fecoverab!e as arrears of land
revenue.
Section
286( 1) of
the U.P. Zamindari Abolition & Land Reforms Act provides that if any
arrears of ]and revenue could not be recovered by any of the processes
mentioned in els. (a) to (e) of s. 279, the Collector may realise the same
by attachment and sale of the interests o'f the defaulter in any other immovable property of the defaulter, and s. 286(2) provided that money
recoverable as arrears of land revenue, may be
recovered by process
"under this section" from any immovable property of the defaulter.
As
the appellant-company was unable to meet its liabilities in
respect of
income.tax dues, sugar cess and the amount due for cane supplied to it,
the immovable property o'f the company were sold to meet the dues. The
appellant challenged the sale contending that (i) the immovable property
of the company could be attached and sold only after the processes prescri·bed in els. (a) to (e) of s. 279 i.e. by the sale of movable properties
y.·ere resorted to; (ii} the sale was illegal or irregular as the CoUector
ignored the intimation of the Income-tax Officer staying the sale for recovery of income-tax; and (iii) the appellant, was prevented from raising
funds 'for making the deposit os provided by r. 285H (of the rules framed
under the Act) for .setting aside the sale as the purchaser was appointed
as the Authorised Controller and put in possession of all the properties of
the appellant. Dismissing the appeal this Court,
HELD : (i) Power to recover arrears of land revenue from a defaulter
is governed by the processes mentioned in els. (a) to (e) of s. 279 of the
Act and s. 286( I) places certain restrictions upon the power o'f the Collector to recover land revenue by attachment and sale of lands other than
the holdin~ in respect of which the land revenue is due. But the restrictions on the power of the Collector operated only when land revenue is
in arrears.
Re~trictions, if any, upon the power of the Collector to re·
cover dues under statutes,
as a'rrears of land
revenue arise. from
the
statute \\•hich is the source of the liabi1ity and not from the U.P. Zamindari Abolition & T~and Re'forms Act, which merely sets out the processes
for recovery of the dues.
To hold that sub-s. (2) of s. 2R6 requires the
CoJiector in the first instance to recover out of the movable property or
by arrest and detention of the defaulter before immovable property of the
defaulter is attached and sold is to amend the substantive provisions 0[
the Acts under which the liability for money due is recoverable as land
revenue.
For instance. under s. 46 of the Income-tax Act. 1922. the
powers exercisable by the CoIIecto'r in recovering arrears of income-tax,
which are recover1bie a" arrears of land revenue are not re!'tricted to the
Land Revenue Code; the Collector is entitled to exercise all the powers of
a Civil Court for the purpose of recovery of an amount due under a decree
under the Code o'f (:ivil PrQl'eC:ure, and the Code of CiVJl Proctdure imc
D
E
F
G
fl
PAI>MUNA V, COMMISSIONER (Shah, 1.)
469
A . poses no obligations to recover the dues by sale of movables or by arrest
and detention of the defaulter before immovable property may be attach·
ed. The provisions of the Act, which authorise
recovery of sums
of
money as arrears of land revenue, do not require the Collector to follow
any sequence df the processes for recovery; it is competent to the Collector to resort to any process prescribed by s. 279 in aid of recovery of
the .dues which are recoverable as arrears of land revenue. [473 H-474
B
D; 475 HJ
(ii) The sale was not illegal or irregular for the reason that the Collector isnored the intimation of the Income-tax Officer staying the sale for
recovery of income-tax dues. The immovable property could have been
put up for sale for recovery df sugar cane cess and the cane price which
were many times more than the income-tax dues.
[476 G]
(iii) There was no force in the contention. that the appellant was \JnC
able to raise funds and make the deposit under r. 28SH because the purchaser was appointed the Authorised Controller, who took possession of
all the properties of the Comnany. The appellant could not comply with
the provision of r. 285H for having the sale set aside as the movables were
not sufficient to enable the aopellant to raise the amount required for deposit under r. 28SH. [476 HJ
CIVIL APPBLLATB JUIUSDICTION:
Civil Appeal No. 130 of
D
1966.
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Appeal from the judgment and decree dated December 13,
1961 of the Allahabad High Court in Special Appeal No. 217 of
1958.
C. K. Daphtary, B. Sen, 1. P. Goyal and A. Banerjee, tor the
appellants.
C. B. Agarwala and 0. P. Rana, for respqrldents Nos. 1, 2, 3
and 8.
T. A. Ramachandran and R. N. Sllchthey, for respondent No.
4.
M. C. Chagla, G. D. Srivastava, B. Datta and 1. B. Dada.
chanji, for respondents Nos. 5 and 6.
The Judgment of the Court was delivered by
Shah, J. The Padrauna Rajkrishna Sugar Works Ltd.-
hereinafter called 'the Company'-carried on the
business
of
manufacture and sale of sugar and supply of electricity.
The
Companv was in financial difficulties in 1954 and was
unable
to meet its obligations.
The principal liabilities of the Comp~.nv
in July 1955 were Rs. 81,821-2-0 due as income-tax provisionally
assessed for the assessment year 1952·53 in respect of which an
order for recovery was made under s. 46(2) of the Income-tax
Act. 1922; Rs. 5,64,301-14-9 due as sugarcane cess under s. 29
of the Suizar Factories Control Act, 1938, for the years 1952-53
to 1954-55: and Rs. 1,92,053-12-3 due by the Company to the
Co-operative Development Union Ltd. as arrears of cane price
for the year 1954-55.
470
SUPllEME COURT 11.EPOR TS
(1969] 3 S.C.R.
By order dated July 14, 1954, issued under the Fsseritial
Supplies (Temporary Powers) Act, the Government of U.P.
appointed the Collector, Deoria as the Authorised Controller of
the Company.
On August 8, 1955 the La,nd Reforms Commis·
sioner sanctioned the proposal submitted by the Collector, Deoria,
to sell the holdings and the property of the Company for realizing
Rs. 8,38,176-13-0.
Sardar Jagjit Singh, Chief Engineer, Indian
Institute of Sugar Technology, Ka,npur, valued the movables
belonging to the Company i.e. tools and workshop plant, mill
stores, spare parts and furniture at Rs. 7 ,64,817 /. and the lands
and the factory at Rs. 23, 75,000/ ·· Thereafter a sale proclama·
tion was issued on October 4, 1955, for recove.ry of the total
amount of Rs. 8,38,17Q·13-0.
The sale was fixed for November
8, 1955. In the first iinstance only the movables were put up for
sale by the Collector, Deoria, but the highest bid offered was
Rs. 2, 75,000/ •.
The Collector then put up for sale the immov·
able property for which a bid of Rs. 23,50,000/ • was made. and
accepted.
The movables were then put up for sale and the
highest bid for Rs. 2,75,000/· was accepted. The purchasers of
both the lots were the Cawnpore Sugar Works Ltd., through their
managing agent Tulsidas Mundra-respondent No. 7 in this
appeal.
·
On December 6, 1955, the Company moved an application
before the Commissioner, Gorakhpur Division, under r. 285·1 of
the U.P. Zarnindari Abolition and Land Reforms Rules praying
that the sale be set aside.
The Commissioner rejected the peti·
tion, observing that an application u.nder r. 285-1 of the U.P.
Zarnindari Abolition and Land Reforms Rules,
1952, to set
aside a sale on the ground cl material irregularity or mistake in
publishing or conducting a sale may be granted only if the appli·
c!llllt proves to the satisfaction of the Commissioner that he has
sustained substantial injury by reason of such irregularity or mistake, and that no material irregularity or mistake was proved to
be committed in publishing or conducting the sale, far less, a
mistake or irregularity which could have caused substantial injury
to the applicant.
The sale was confirmed by order dated July
2. 1956. by the Land Reforms Commissioner.
Otn July 30, ·a petition was moved by the Company in the
High Court of Allahabad for a writ in the nature of certiorari
q11ashing the order dated June 25, 1956, of the Commissioner,
Gorakhpur Division.
The petition was dismissed by Oak, J. In
appeal under the Letters Patent the order was confirm~ by the
High Court.
Mukherji, J., was of the view that s. 286 of the
U.P. Zarnindari Abolition and Land Reforms Act did not oblige
the Collector to exhaust the processes prescribed by els. (a) to
( e) in s. 279 cl that Act before resorting to the sale of immovable property of the Company and that it was not proved that
A
B
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PAD!lAUNA V. COMMISSIONER (Shah, J.)
4'1
A there was
any material in:egularity or mismke in publishing or
conducting the sale o.r that any substantial injury had resulted to
the Company. Jagadish Sahai, J., was of the view thats. 286(2)
of the U.P. Zamindari Abolition and Land Reforms Act provides
that where an amount is recoverable as arrears of land revenue,
the Collector has first to attempt under els. (a) to ( e) of s. 279
II
to recover the amount due, and if he is unable to recover the
amount he may proceed to sell the immovable property of. the
defaulter.
But the learned Judge was of the opinion that the
provision was
merely directory and
not mandatory.
He
observed:
c
" ...... the provision relating to the exhaustion of
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the processes contemplated by clauses (a) to ( e) of
section 279 of the Act is merely directory.
In view of
the provisions of the various Acts which make the
realization of sums becoming due under those Acts as
arrears of land revenue and in view of the provisions
of the Act the Collector has got a duty and a statutory
obligation to realise those sums. He has no discretion
in the matter.
Consequently I read the words "may
realise the same from the interest of the defaulter in
any immovable property" in sub-section (1) or "may
be recovered from any immovable property of the defaulter" in sub-section (2) as meaning that if the Collector does nat succeed in recovering the amount by '-
having recourse to the processes mentioned in clauses
(a) to ( e) of sectioo 279 of the Act he shall sell immovable property of the defaulter."
The learned Judge also observed that the Collector acted ih violation of the statutory provision contained in s. 286(2) of the
Act in selling the immovable property before selling the movable
property, but the sale could rot'be set aside, because substantial
injury was not shown to have been caused.
The Compamy has
appealed to this Court against the order passed by the High
Court confirming the order passed by Oak, J.
In this appeal, it is urged in the first instance, that the Company possessed stocks of sugar of value exceeding the liability for
payment of Rs. 8,38,000/- odd.
But the stocks of sugar were
not menti~ ~n the Collector's repo!'t to the Land Reforms
Commissioner : they were not included in the sale proclamation
as property put up for sale, nor were they valued in the report of
Sardar Jagjit Singh.
The Company asserted in the petition
before the High Court that it possessed stocks of sugar worth
Rs. 9 lalchs which had not been attached earlier, but no such
contontion was advanced in support of the application for setting
472
SUPREME COURT REPORTS
[1969] 3 5.C.R.
-~·-
aside the sale before the Commissioner, nor was any argument
advanced before the High Court.
It appears that the stocks of
sugar were mortgaged separately a1rtd the amount for which they
were mortgaged was not included in the claims made for which
the property of the Company was to be put up for sale.
It was then urged that under s. 286(2) of Act 1 of 1951,
the Collector, was bound in the first instance to exhaust the processes for recovery of arrears prescribed by els. (a) to ( e) of
s. 279 of the Act and he could not attach and sell immovable
property of the Company until those processes were exhausted.
It was urged that s. 286(2) of the Act was mandatory and the
Collector not having sold the movables in the first instance, the
sale must be declared void.
The amount for the recovery of which the sale of the assets
of the Company was held, included income-ta:ic dues, sugarcane
cess' and the amount due for cane supplied to the Company. · This
amount was. recoverable as arrears of land revenue because of the
provisions of the Indian Income-tax Act. 1922, the U.P. Sugar
Factories Control Act. 1938. and the Co-operative Societies Act
I 912.
Section 286(2) of the
U.P. Zamindari Abolition
and
Land Reforms Act provides :
"Sums of money recoverable as arrears
of ]and
revenue. but not due in respect of anv specific ]and.
may be recovered by process under this section from
any immovable property of the defaulter."
Though the amount for which the property was put up for sale
was recoverable as arrears of land revenue. mo part of it was due
in respect of anv specific land.
The amount could nrima facie
be recovered from the immovable propertv of the defoulter. But
relyill!! uoon the expression "under this section" in s. 286 (2) of
Act 1 of 195 I it was contended that the immovable pronerty of the
Comnanv could be attached and sold only after the proce,se'
prescribed in s. 279 els. (a) ·to ( e) were resorted to and the
Collector was unable to recover the dues.
It was urned that this
fa the tn1e effect of s. 286 ( 1 )
and s. 279 of Act 1 of 1951.
Section 286 ( l ) provides :
, "r.t any arrears of land revenue cannot be recovered
. by anv of the processes mentioned in dames (a) to ( e)
of Section 279. the Collector may realize the same bv
rittachment and sale of the interest of the defaulter in
any other immovable propertv of the defaulter."
Section 279 of the Act sets out the procedure fnr recovery of
arrears of )and revenue.
The section as it stood at the date of
sale provided :
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PADRAUNA V, COMMISSIONER (::1/Jah, J.)
"An arrear of land revenu.:: 0ma:,- be recovered by
any one or morn o.f the following processes :
(a) by serving a writ of dema,nd or a citation to
appear on any defaulter,
( b) by arrest and detention of his person,
(c) by attachment and sale of his movable properly
including produce,
( d) by attachment of the holding
in respect
of
which the arrear is due,
( e) by sale of the holding in respect of which the
arrear is due.
(f) by attachmeint and sale of
other immovable
property of the defaulter."
473
Section 280 deals with the mode of recovery prescribed by cl. (a)
of s. 279; s. 281 with the mode prescribed by cL
(b) i.e. by
arrest and detention; and s. 282 with the mode prescribed by cl.
( c) i.e. by attachment and sale of the movable property including
produce.
Section 284 sets out the procedure for sale of the
holding in respect of which the arrear was due and s. 286(1)
deals with the power to proceed against the interest of the defaulter in other immovable property.
For recoverv of arrears of la.rid revenue, the
Collector is
bound to resort to one or more of the processes mentioned in
s. 279 read with ss. 280, 282, 284 & 285 of the Act, before he
attaches and sells the immovable property of the defaulter, other
than the holding in respect o.f which the land revenue is due.
That clearly follows from the terms of sub-s. ( 1) of s. 286. Subsection (2) of s. 286 makes the same process
applicable for
recovery of sums of money which are recoverable as arrears of
land revenue. But the liability to pay the amount so recoverable
arises by virtue of the provisions of other Acts and is not due in
respect of any holding of the defaulter. It is only recoverable
as arrears of land revenue by virtue of the provisions of the Act
under which the liability has arisen. Since U.P. Act 1 of 1951
provides bys. 286(2) that sums of money recoverable as arrears
of land revenue may be recovered from any immovable property of
the defaulter, the procedure prescribed b.y the Act applies to such
recovery.
Because of the use of the expression
"under . this
section" iJll sub-s. (2) of s. 286 it is not intended that the Collector must resort in the first instance to the processes prescribed by
els. (a) to (e) before he resorts to cl. (f} of s. 279. Cls. (d)
& (e) of s. 279 have no application, where income-tax dues and
sugarcane ccss or cane price arc recoverable from the defaulter :
and cl. (b) is inapplicable where the defaulter
is an
artificial
person like a Company.
Power to recover am>ars of land reve-
•
474
SUPlUIME GOURT Rl!PORTS
[196Yj :i S.C.R.
111ue from ~ defaulter is governed by_ the processes mentioned in
A
s. 279 els. (a) to (e), and s. 286(1) places certain restrictions
upon the power of the Collector to r(\cover land revenue by
attachment ·and sale of lands other than the holding in respect of
which the land revenue is due.
But the restrictions on the power
of the Collector operate Oll)ly when land revenue is in arrears.
Restrictions if any upon the power of the Collector to recover
B
dues under other statutes, as arrears of land revenue arise rrom
the statute which is the source of the liability and not from Act
1 of 1951 which merely sets out the processes for recovery of the
dues.
To hold that sub-s. ( 2) of s. 286 requires the Collector in the
first instance to recover out of the movable property or by arrest c
and detention of the defaulter before immovable property of the
defaulter is attached and sold is to amend the substantive provi
sions of the Acts under which the liability for money due. is recoverable as land revenue.
For instance, under s. 46 (2) of the
Indian Income-tax Act, 1922, it is provided :
"The Income-tax Officer may forward to the CollecD
tor a certificate under his
signature specifyilllg
the
amount of arrears due from an assessee, and the Collector, on receipt of such certificate, shall. proceed to
recover from such assessee the amount specified therein
as if it were ·an arrear of land revenue :
Provided that without prejudice to any other powers
E
of the Collector in this behalf, he shall for the purpose
of recovering the said amount have the powers which
<Under the Code of Civil Procedure, 1908 (V of 1908),
a Civil Court has for the purpose of the recovery of ain
amount due under a decree."
The power exercisable by the Collector in recovering arrears of
F
income-tax which are recoverable as arrears of land revenue are,
it is clear, not restricted to the Land Revenue Code: the Collector
is eintitled to exercise all the powers of a Civil Court for the
purpose of recovery of an amount due under a decree under the
Code of Civil Procedure, and the Code of Civil Procedure imposes
no obligation to recover the dues by sale of movables or by arrest
G
and detention of the defaulter before immovable property may
be attached.
Section 51 of the Code of Civil Procedure provides:
"Subject to such conditions and limitations as may
be prescribed, the Court may, on the applicatiqn of the
decree-holder, order execution of the decree--
(a) by delivery of any property ·specifically decreed;
H
(b) by attachment and sale or by
sale without
attachment of any pronett}';
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PADRAUNA v. COMMISSIONER (Shah, ).)
475
( c) by arrest and detention in prison;
(d) in such other manner as the nature of the relief
granted may require :
Provided
"
By virtue of 0. 21 r. 30(e) of the Code of Civil Procedure
simultaneous execution both against the property and person of
the judgment-debtor is allowed.
To hold,
therefore,
that in
seeking to recover income-tax dues the Collector is in the first
instance, by virtue of sub-s. (2) of s. 286, restricted io the
recovery of arrears by attachment ~ sale of movables or by
arrest and detention in prison of the defaulter, and 1f he cannot
recover the · amount then and then only to have recourse to the
immovable property of the judgment-debtor is to seek to amend
both the ~come-tax Act, 1922~ as well as
the Code of Civil
Procedure.
The U .P. Legislature is incompetent to
alter the
provisions of the Income-tax Act.
We are, therefore, unable to agree with the opinion expressed
by Jagadish Sahai, J., that the use of the words
"under this
section" points to the applicability of the whole section i.e. subsection ( 1) in the recovery dues recoverable under sub-section
(2) of section 286, and "that the two sub-sections have got to be
rea~ together and the effect of sub-section ( 2) is that even in
connection with the recovery of miscellaneous dues as arrears of
land revenue it is permissible to sell immovable property of the
defaulter but subject to what is provided for in sub-section ( 1) ".
We are also unable to agree with the observations made by the
learned Judge that -
" ..... .if sub-section (2) of section 286 of the Act
were to be read in isolation and detached from subsection (I) it would become impossible to administer
the same. Sub-section (2) only provides that the arrears
of miscellaneous dues may be recovered from any immovable property of the defaulter without
specifying
the manner in which they are to be recovered, that is
to say, without indicating whether it would be recovered
from the usufruct of the property or by jts sale or by
mortgage or lease."
The provisions of the Act which authorise recovery of
sums of money as arrears of land revenue do not require
the Collector to follow any sequence of the processes for recovery:
it is competent to the Collector to resort to any process prescribed
by s. 279 in aid of recovery of the dues which are recoverable as
arrears of l!Uld revenue. It is unnecessary in the circumstanoes to
476
SUPi.EME COURT REPORTS
[1969] 3 S.C.R.
consider whether the provisions of s. 28 6 (1 ) are mandatory or
directory.
It was urged in the alternative that after selling the immovable
property which realized more than Rs. 23,50,000/- the Collector
should not have sold the movable property, for the claim for which
the properties of tile Company were put up for sale was only
Rs. 8,30,176-13-0.
At first bl_ush there is torce in this argument.
Why the Collector thought it necessary to sell the ·movables after
the immovable property was knocked down to the Cawnpore Sugar
Works Ltd. for Rs. 23,50,000/- was never explained.
After the
immovable property belonging to the Company was knocked down
to the purchasers for an amount of Rs. 23,50,000/- it was apparently not necessary to hold the auction for sale of movables valued
at Rs. '/,64,817/- and to accept a bid of only Rs. 2,75,000/-.
The argument that the movables were of no use to any person
other tnan the purchaser of immovable property is w1tl1out substance.
The movables sold· were the tools and workshup p.ant,
mill stores, spare palls ·and furniture, and it is difficult to accept
the contention· that these movables were of no value except to the
purchaser. But the Company raised no contention in this behalf
before the Commissioner, nor in the petition before the High
Court. The question was also not argued before the High
Court in that form. We cannot at this stage investigate the reasons
why movables valued at Rs. 7 ,64,817 /- were put up for sale and
sold when it was not necessary to sell them to realise the dues.
It was then urged that the Income-tax Officer had, by intimaticin dated December 11, 1954, asked the Collector to stay the sale
proceeding for recovery of
income-tax
dues
amounting
to
Rs. 81,821-2-0.
For some reason, which is not clear from the
record, the Collector ignored the intimation given by the Incometax Officer and proceeded to put the property to sale. He
included the amount in the sale proclamation, overruling the protests of the Company, and sold the properties for recovery of a
consolidated amount which Included Rs.
81,821-2-0 due as
income-tax. But on that account the sale is not illegal or irregular.
An amount exceeding Rs. 7 lakhs was recoverable for the
sugarcane cess and the cane price and the immovable property of
the Company could have been put up for sale for recovery of those
dues. The sale is not proved to be vitiated on the ground of any
material irregularity or mistake in publishing or cQ!lducting it, and
it is therefore not liable to be set aside.
It was finally contemded that the Company was
prevented
from exercising its right under r. 285-H of the rules framed under
U.P. Act 1 of 1951, because ilie purchaser at the sale was
appointed, by order of the Central Government, Authorised ConA
B
c
I)
E
G
H
PADRAUNA v, COMMISSIONER (Shah, /,)
477
.,.
troller' of the factory of the Company, and all the properties bf
the Company were put in the possession of the purchaser, and
that the Company was unable to raise the requisite amount to be
deposited under r. 285-H.
Under r. 285-H any person whose
holding or other immovable property has been sold under the
Act may, at any time within thirty days from the date of sale,
B
·apply to have the sale set aside on his depositing in the Collector's
office--
c
(a) for payment to the purchaser, a sum equal to 5 per
cent. of the purchase money; and
(b) for paymqnt on account of the arre~r, the
amount
specified in the proclamation in Z.A.
Form 74 as
that for the recovery of which the sale was ordered,
Jess ·any amount which may, since the date of such
proclamation of sale, have been paid on that account;
and
( c) the cost of the sale.
D H the deposit is made, the Collector shall pass an order setting
aside the sale. It was open to the Company under r. 285-H eve;n
after the bids were accepted to deposit 5 per cent. of the sum
realised by sale of the immovable property and to pay the amount
due for the recovery of which the sale was ordered and the C06t
of the sale.
But no attempt was made to deposit the amounts
E
mentioned in els. (a), (b) & (c) of r. 285-H.
'.The contention
that the Company was wiable to make the deposit under Rlile
285-H because the purchaser was appointed Authorised Controller
~aS also not raised before the Commissioner and the High Court.
The argument ·that if the movable property had not been sold,
the Company may have raised the amount liable to be deposited
under els. (a), (b) & (c), but by sale of those properties and
purchase of the same by a person who was shortly after the purF
chase appointed the Aiuthorised Controller prevented the Comp~ from exercising the right under r. 285-H is hypothetical.
Again even that argument was not raised before the Commissioner, nor in the petition, nor in the arguments before the High
Court.
Evidently, the Company was required to comply with the
G
provis.ions of r. 285-H for having the sale set aside to deposit a_n
amount of Rs. 9,50,000/, besides the cost of the sale. Even if
the movables had not been sold, and assuming that they were of
the value of Rs. 7,64,817/- the movables wer~ not sufficient to
enable the Company to raise the amount required for deposit
under r. 285-H.
H
The contentions raised by the Company fail and the appeal
is dismissed.
We are, however, of the view, especially because
of the action of the Collector in putting the movables to sale even
L8 Sup Cf/69-12
478
SUPREME COURT REPORTS
[1969) 3 S.C.R.
after the immovable property realised an amount very much in
A
excess of the dues, and ignoring the intimation sent by the Incometax Officer to stay the sale proceeding, which has involved the
Company in loss of property of substantial value, that the parties
should bear their OW\ll costs throughout.
Y.P.
Appeal dismissed.
B