Laxmikant Chhotelal Gupta & Ors Vs. State of Maharashtra & Ors  Insc 529 (9
S.B. Sinha & Markandey Katju
CIVIL APPEAL NO. 2406 OF 2007 (Arising out of SLP (C) No. 2615 of 2006) S.B.
1. Leave granted.
2. Respondent Nos. 5 to 7 herein were partners of a firm known as M/s.
Somras Distillers. It ran into arrears inter alia in payment of sales tax.
3. The properties of the partners were attached. A Writ Petition came to be
filed by the respondent nos. 5 to 7 inter alia praying for a direction to the
sales tax authorities to recover the dues in respect of the said firm from the
appellants alone and not from them.
4. As Respondent Nos. 1 to 4 intended to put the properties of the
partnership firm on auction, the High Court in terms of an Order dated
28.4.2003 directed:- "In so far as item No. 4, namely Plant Machinery of
the firm is concerned, we are informed that the upset price fixed is rupees
twenty-five lacs and no bidders are coming forward. It will be appropriate if
advertisement of auction in relation to this item is given in the national
dailies which are widely circulated. The cost of auction as also advertisement
shall be payable out of the auction sale proceeds.
The auction be conducted within a period of 45 days from today and report of
auction in respect of the above mentioned properties be filed before the Court,
S.O. to eight weeks."
5. Pursuant to the said direction, an auction was held on 6.6.2003 of the
factory premises of the firm; the highest bid being Rs. 65 lakhs.
6. Public auction in such matters are governed by the provisions of
Maharashtra Land Revenue Code, 1966, the relevant provisions of which read as
under:- "Purchase money when to be paid.
202. The full amount of purchase-money shall be paid by the purchaser before
the expiration of two months from the date on which sale of the immovable
property took place or before the expiration of fifteen days from the date on
which the intimation of confirmation of the sale is received by the purchaser,
whichever is earlier;
Provided that, if the last date on which the purchase-money is to be paid
happens to be a Sunday or other authorised holiday, then the payment shall be
made before the sunset of the first office day after such date."
"Effect of default.
203. In default of payment within the prescribed period of the full amount
of purchase-money whether of movable or immovable property, the deposit after
defraying thereout the expenses of the sale, shall be forfeited to the State
Government, and the property shall be resold, and the defaulting purchaser
shall forfeit all claims to the property or to any part of the sum for which it
may be subsequently sold."
7. A question arose as to whether the auction purchaser had deposited the
amounts in terms of the said provision. By an order dated 29.4.2004, despite
the High Court's notice having been drawn thereto, a learned Single Judge
directed:- "I am unable to find any substance in this argument. It may be
noted that despite the order of the Court that the auction shall be held
strictly in accordance with law, it has confirmed the auction by order dated
09.12.2003 and now the petitioners cannot take recourse to contempt
They should have brought this fact to the notice of the Court in Writ
Petition No. 2530/2001. In this view of the matter the petition is dismissed.
Needless to say that the petitioners are at liberty to move the Court in
Writ Petition No. 2530/2001."
8. A similar application for recalling the said order was dismissed
"In view of the above referred observations, it is evident that auction
sale was confirmed subject to result of this petition. Therefore, grievance of
any party to the proceedings would be considered at the time of final hearing.
The earlier orders have been passed by us in the petition from time to time
keeping in view the necessary recovery to be effected by the Department towards
sales tax dues."
9. It was further directed:
"In view of the above referred facts and circumstances, we see no
justification whatsoever for respondent Nos. 5 to 7 to oppose handing over of
possession particularly when auction of sale is already confirmed by this Court
and huge amount has already been observed in the earlier order dated 9.12.2003
that auction sale is subject to result of the petition. In the circumstances,
we direct respondent Nos. 5 to 7 to hand over possession of the property in
question to the Department without any obstacle within fifteen days from
10. The matter was brought before this Court thereagainst by the appellants
herein which was marked as Civil Appeal No. 6631 of 2005.
Upon hearing the counsel for the parties, this Court opined:- ...In that
view of the matter, it was obligatory on the part of the High Court to consider
the effect of non-compliance of the provisions of Section 202 &
203 of the Maharashtra Land Revenue Code itself.
Before confirming the sale, the High Court otherwise also could have
directed the parties to take recourse to the said Code. Had such an order been
passed by the High Court, it would have been open to the appellants herein to
file appropriate application before respondent no. 3, who was the appropriate
authority to hold such auction.
Having regard to the peculiar facts and circumstances of this case we are of
the opinion that it was a fit case wherein the High Court should have exercised
its jurisdiction in entertaining the appeal filed by the appellants herein, so
as to enable the parties to know as to where they stand.
Mr. Lalit, is right in his submission that if the possession of factory
premise is handed over to the auction purchaser of the land and building where
the factory is situated, the appellants herein may be put to irreparable and
irretrievable injury. What would be the fate of the machineries installed in the
factory premises is also not known. We are informed at the Bar that another
auction may take place in respect of the plant and machineries but in relation
thereto there may be another auction purchaser and so long as such auction sale
in relation thereto is not confirmed and the plant and machinery are not handed
over to the said auction purchaser, the same would remain in possession of the
11. When, however, the matter was placed before the High Court pursuant
thereto, it again failed to examine the effect of the provisions of Sections
202 and 203 of the Maharashtra Land Revenue Code, and disposed of all
objections including the one for recalling its Order dated 9.12.2003 filed by
the appellants being Civil Application No. 3730 of 2004 directing ;
"The present state is that some of the properties which are already put
to auction and purchased by auction purchasers could not be handed over to them
for various objections raised by respondent nos. 5 to 7 who are the main
contestants. This includes the factory and plant of M/s. Somras Distillers.
We, therefore, propose to dispose of this petition by directing respondent
nos. 1 to 4 to take further steps in the matter in accordance with law and
after giving fair opportunity to all concerned, including the petitioners and
respondent nos. 5 to 7 and the auction purchasers so as to enable them to lodge
their objections to the procedure adopted by the sales-tax department in
conducting auction sale of the property and after hearing all concerned pass
appropriate orders in accordance with law."
12. Appellants are, thus, before us.
13. It is unfortunate that the High Court did not address itself to a vital
aspect of the matter despite its attention having been drawn thereto. It
purported to have disposed of all the pending applications directing only the
respondent Nos. 1 to 4 to take further steps in the matter in accordance with
law, but what those other or further steps in the matter would be, have not
been spelt out. Such a direction was wholly unwarranted.
14. There cannot be any doubt or dispute that the dues of the revenue should
be recovered wherefor properties of the defaulters inter alia can be put to
auction, but there cannot also be any doubt or dispute that procedures laid
down therefor must be complied with. This Court has noticed in its Order dated
28.10.2005 passed in Civil Appeal No. 6631 of 2005 that the High Court resorted
to a wrong procedure. The issues involved in the writ petition filed by the
respondent Nos. 5 to 7 was limited. The High Court unjustly expanded its
15. Even when an auction takes place under orders of the competent civil
court, the procedures laid down in the Code of Civil Procedure are required to
be complied with. Objections to the validity of sale at the instance of one
party or the other are required to be considered and determined. Even an appeal
lies against such an Order in terms of Order XLIII Rule 1(u) of the Code of
16. Provisions of a statute whether directory or mandatory necessitating
strict or substantial compliance are questions which must be determined by the
courts. This Court thought that the High Court would do so.
Presumably the effect and purport of this Court's Order having not been
brought to its notice, we, therefore, are of the opinion that the matter should
be directed to be considered afresh by the competent authority. We are informed
at the bar that Respondent No. 4 being Assistant Commissioner of Sales Tax is
the competent authority therefor. We, therefore, while setting aside the Order
of the High Court would direct the said authority to consider the contentions
raised by the appellants herein on their own merits.
17. Before parting with this case, we may however, notice the submissions of
Mr. P.S. Mishra, the learned senior counsel appearing on behalf of the auction
purchaser, that the requirement of Section 202 and 203 of the Code had been
complied with. Learned counsel appearing on behalf of the writ petitioners/
respondents submit that the intention of the appellants herein is to delay the
disposal of the matter. We need not go into the correctness or otherwise of the
said contentions, as Respondent No. 4 indisputably would have to take into
consideration facts and aspect of the matter also.
18. Mr. Satyajit A. Desai, learned counsel appearing on behalf of respondent
Nos. 1 to 4 submitted that it may be possible for Respondent No. 4 to dispose
of the objections within a period of two weeks from the date of filing of the
documents by the parties.
19. Original records in respect of the auctions held must be with the
respondent No. 4. Even otherwise, the same should be produced before him.
Appellant herein would file their written objections as also a copy of Civil
Application No. 3730 of 2004 before respondent No. 4 within two weeks from
date. Writ Petitioners/respondents as also the auction purchaser having regard
to the fact that they are aware of the contentions raised by appellants herein
may file replies thereto within the said period. Respondent No. 4 thereupon may
proceed to determine the matter in accordance with law within a period of four
weeks' thereafter, upon giving an opportunity of oral hearing to the parties
after fixing a date of hearing.
20. We make it clear that all contentions of the parties shall remain open.
The impugned judgment is set aside. This Appeal is allowed with the
aforementioned directions. In the facts and circumstances of this case,
however, there shall be no order as to costs.