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Advocates
  • S.R.Ashok
  • R.V.Subba Rao
  • K.Venkatramaiah
  • C.V.Ramulu
  • A.Chaya Devi
Judges
  • S.R. Nayak
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Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • S.R.Ashok
  • R.V.Subba Rao
  • K.Venkatramaiah
  • C.V.Ramulu
  • A.Chaya Devi
Judges
  • S.R. Nayak
Acts
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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The central factual matrix concerns a house property bearing municipal door No. 28/49 (the "petition schedule property") on Subhash Road, Old Town, Anantapur. Wealth-tax arrears for assessment years 1982-83 to 1988-89, amounting to approximately Rs. 5.5 lakhs, were assessed against the late Nimmalla Appanna (and the HUF). The Tax Recovery Officer (TRO), Income-tax Department, published a proclamation and brought the petition schedule property to auction. On January 12, 1996, an auction was conducted and the sale was knocked down in favour of the purchaser (petitioner in W.P. No. 9227 of 1996) for Rs. 6,58,000. The purchaser deposited the full sale consideration (one quarter as initial deposit and the balance by bank draft) and the TRO issued a receipt on January 25, 1996, but did not execute the sale deed.

Separately, on January 8, 1996, N. Mangathayaramma and her five children filed W.P. No. 109 of 1996 seeking to restrain auction and to declare the auction illegal, claiming that the properties in the auction notification (including the petition schedule property and other door numbers 28/50, 28/51 and 28/52) belonged to them by virtue of a registered will dated July 5, 1969 and a codicil of 1974 executed by the late Peddanna. On February 19, 1996, N. Bala Raju (grandson of the late N. Appanna) filed W.P. No. 3870 of 1996 challenging the TRO's order rejecting his claim petition under Rule 11 of the Second Schedule to the Income-tax Act, 1961, on the ground of laches; he asserted title through gift deeds and wills.

Procedurally, W.P. No. 9227 of 1996 (the purchaser's petition seeking a writ of mandamus to compel issuance of sale certificate and execution of sale deed) was filed on April 23, 1996. The court considered all three writ petitions together and reserved judgment on the competing claims and procedural objections.

Legal Issues Presented

  1. Whether the petition schedule property (municipal door No. 28/49) is liable to be sold for recovery of wealth-tax arrears due from the late N. Appanna for assessment years 1982-83 to 1988-89.
  2. Whether the Tax Recovery Officer acted without authority of law in auctioning and selling the petition schedule property (including whether title to the property was the late N. Appanna's or belonged to third parties claiming under wills/gift deeds).
  3. Whether the order of the Tax Recovery Officer rejecting the claim petition under Rule 11 of the Second Schedule to the Income-tax Act, 1961, on the ground of laches, was correct (as challenged in W.P. No. 3870 of 1996).
  4. Whether the purchaser who paid the sale consideration is entitled to a sale certificate and execution of the sale deed (relief sought in W.P. No. 9227 of 1996).

Arguments of the Parties

Petitioners in W.P. No. 109 of 1996 (N. Mangathayaramma and children)

  • Asserted that the properties listed in the auction notification (including door No. 28/49) are the properties of petitioners Nos. 2 to 6 (their children) and not of the late N. Appanna.
  • Relied on a registered will dated July 5, 1969, executed by the late Peddanna, claiming that the properties were self-acquired by Peddanna and passed to the children under that will.
  • Alleged a subsequent registered codicil in 1974 apportioning properties among Bhujangarayudu and his children.

Petitioner in W.P. No. 3870 of 1996 (N. Bala Raju)

  • Claimed to be a grandson of the late N. Appanna and asserted that the disputed house properties are self-acquired properties of N. Appanna.
  • Alleged that during Appanna's lifetime, certain children attempted to usurp joint family properties, and therefore Appanna executed registered gift deeds bequeathing specific houses to the petitioner and his brother; and a registered will by Lalithamma transferred another property to the petitioner's family.
  • Challenged the TRO's rejection of his claim under Rule 11 of the Second Schedule, alleging improper denial.

Purchaser / Petitioner in W.P. No. 9227 of 1996 (Sri Y. Madhusudhana Reddy)

  • Contended that he was the highest bidder at the public auction held on January 12, 1996, and deposited the full sale consideration (initial deposit plus balance by bank draft).
  • Sought a writ of mandamus directing the Tax Recovery Officer to issue a sale certificate and execute the sale deed in his favour for the petition schedule property.

Income-tax Department / Tax Recovery Officer

  • Maintained that the house properties and appurtenant lands were assessed in the hands of N. Appanna, Hindu undivided family, and that the petition schedule property belonged to the late N. Appanna.
  • Rejected a belated claim petition under Rule 11 on the ground of laches (observing that the timing indicated a dilatory tactic to delay recovery of tax dues).

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court's analysis proceeded by addressing distinct legal and factual questions on the available record:

  1. On the central dispute of title, the court observed that whether the petition schedule property belongs to the petitioners in W.P. No. 109 of 1996 or to the petitioner in W.P. No. 3870 of 1996 is "primarily a question relating to title." The court emphasized that title disputes cannot be resolved in summary proceedings under Article 226 of the Constitution and that title cannot be determined on affidavits and counter-affidavits alone.
  2. The court noted the existence of a civil decree in O.S. No. 31 of 1978 (dated April 28, 1998) in favour of the plaintiffs (the petitioners in W.P. No. 109 of 1996) declaring right and title over plaint "A" schedule properties (which include the petition schedule property), and directing delivery of possession. However, the court recorded that (a) the decree is presently challenged in appeal (A.S. No. 1229 of 1999), (b) the decree is stated to be stayed by the appellate court, (c) the petitioner in W.P. No. 3870 is not a party to that decree, and crucially (d) the Income-tax Department and the purchaser are not parties to that civil suit and therefore the civil decree does not bind them in the present writ proceedings.
  3. The court observed numerous factual controversies on title and possession from the parties' pleadings and concluded that a trial before a competent civil court is the appropriate forum for adjudicating those disputes; summary adjudication under Article 226 would be inappropriate.
  4. The court relied on a contemporaneous documentary fact adverse to W.P. No. 109 petitioners: a letter dated April 4, 1994, from the petitioners in W.P. No. 109 of 1996 to the Tax Recovery Officer expressly stating that they had no objection to the sale of the attached residential building bearing door No. 28/49 towards wealth-tax arrears of N. Appanna. On that basis, the court applied the principle against approbation and reprobation and held that the petitioners cannot both consent to the sale and later challenge its validity.
  5. Concerning W.P. No. 3870, the court accepted the TRO's reasoning that the claim petition under Rule 11 was filed after final proclamation for sale, treating the belated claim as a dilatory tactic aimed at delaying recovery. The court held that rejection of the claim on the ground of laches was justified.
  6. Having concluded that title cannot be resolved in these writ proceedings, that the W.P. No. 109 petitioners had earlier consented to sale, and that the W.P. No. 3870 petitioner had been belated in asserting claims, the court found no merit in the two challenge petitions. At the same time, the court recognised that the purchaser had complied with auction conditions and paid the entire sale consideration and that the TRO had issued a receipt but had not executed the sale deed.

Holding and Implications

Holding:

DISPOSITION: The court dismissed W.P. No. 109 of 1996 and W.P. No. 3870 of 1996, and allowed W.P. No. 9227 of 1996.

Orders made:

  • The respondent in W.P. No. 9227 of 1996 (Tax Recovery Officer) was directed to issue the necessary sale certificate and to execute the sale deed in favour of the petitioner in W.P. No. 9227 of 1996 in respect of the petition schedule property (municipal door No. 28/49) pursuant to the public auction conducted on January 12, 1996.
  • Each party was directed to bear its own costs in all writ petitions.
  • The court clarified that this order does not preclude the petitioners in W.P. No. 109 of 1996 and/or the petitioner in W.P. No. 3870 of 1996 from pursuing appropriate legal remedies regarding their claims over the petition schedule property before a competent civil court, provided they implead the concerned authorities of the Income-tax Department and the purchaser in W.P. No. 9227 of 1996.

Implications:

  • The direct effect is that the purchaser who paid the auction consideration is to be regularised by issuance of sale certificate and execution of sale deed by the Tax Recovery Officer.
  • The court refused to decide competing title claims in the writ forum and directed that such claims, if pursued, must be litigated before a competent civil court (i.e., the decision preserves and defers resolution of title disputes to civil proceedings).
  • The opinion did not cite any judicial precedents nor indicate the setting of any new precedent; it rests its disposition on procedural principles (limitations of Article 226 for title disputes), the parties' own conduct (consent letter), and the TRO's procedural finding of laches regarding a belated claim.

That rule nisi has been made absolute as recorded in the opinion.

Show full summary ...

    N. Mangathayaramma And Ors. v. Tax Recovery Officer And Ors.

    1. The main question that arises for decision in these writ petitions is whether the house property bearing municipal door No. 28/49 situated as Subhash Road, Old Town, Anantapur, hereinafter referred to as the "petition schedule property", is liable to be sold for recovery of wealth-tax arrears for the assessment years 1982-83 to 1988-89 due from the late Nimmalla Appanna. It is stated that N. Appanna and his father, the late N. Peddanna, were wealth-tax assessees and were residents of Anantapur town.

    2. It appears that there were wealth-tax arrears to the tune of Rs. 5.5 lakhs owed by N. Appanna in respect of the assessment years 1982-83 to 1988-89. According to the wealth-tax authorities, the above house properties with appurtenant lands belonged to the joint family and were assessed in the hands of N. Appanna, Hindu undivided family (HUF). In connection with the recovery of the said arrears of the wealth-tax, the Tax Recovery Officer, Income-tax Department, issued a proclamation in the Tetitgu daily newspaper Eenadu and brought to sale the petition schedule property and ultimately auction was conducted on January 12, 1996, and the sale was knocked down in favour of the petitioner in W. P. No. 9227 of 1996, he being the highest bidder, for a consideration of Rs. 6,58,000. As, per the auction conditions, the purchaser deposited a sum of Rs. 1,65,000 being 1/4th of the total value of the bid and the balance of the bid amount of Rs. 5 lakhs was also subsequently paid by the purchaser to the Tax Recovery Officer vide bank draft No. 301196, dated January 24, 1996, drawn on the Andhra Bank, Tirupati, and the Tax Recovery Officer issued receipt dated January 25, 1996, in favour of the purchaser for having received the entire sale consideration. However, the sale deed was not executed in favour of the purchaser. In the said background, the purchaser, viz., Sri Y. Madhusudhana Reddy filed W. P. No. 9227 of 1996 praying for a writ in the nature of mandamus directing the Tax Recovery Officer to issue sale certificate and also execute the sale deed in his favour in respect of the petition schedule property. W. P. No. 9227 of 1996 was filed in this court on April 23, 1996.

    3. Even before W. P. No. 9227 of 1996, was filed by the purchaser, W. P. No. 109 of 1996 was filed by N. Mangathayaramma, wife of the late Bhujangarayudu and her five children on January 8, 1996, praying for a direction to the Tax Recovery Officer and the concerned Inspectors of Income-tax not to auction the petition schedule property as well as other house properties bearing municipal door Nos. 28/50, 28/51 and 28/52 situated at Subhash Road, Old Town, Anantapur, and to declare the impugned action of auctioning the above properties as illegal. In the said writ petition, the petitioners claimed that the properties mentioned in the, auction notification dated January 7, 1996, and published in Eenadu daily are the properties of petitioners Nos. 2 to 6 and they are not the properties of the late N. Appanna and therefore those properties are not liable to be attached and sold for recovery of wealth-tax arrears due from N. Appanna. According to N. Mangathayaramma and her children, the above properties were acquired by them through a registered will deed dated July 5, 1969, executed by the late Peddanna, who is the father of N. Appanna. They claimed that the house properties were the self-acquired properties of the late Peddanna and therefore N. Appanna did not have any title or right or interest in those properties and the title to those properties passed on to the children of N. Mangathayaramma and her late husband Bhu-jangarayudu. They also claimed that subsequent to the execution of the registered will, the late Peddanna executed a registered codicil in the year 1974 apportioning all his properties among Bhujangarayudu and his children.

    4. Further, one N. Bala Raju, son of N. Siva Prasad filed W. P. No. 3870 of 1996 on February 19, 1996, questioning the correctness of the action of the Tax Recovery Officer dated January 2, 1996, rejecting the claim petition filed by the petitioner under Rule 11 of the Second Schedule to the Income-tax Act, 1961, on the ground of laches. According to this writ petitioner, he is the grandson of the late N. Appanna and Appanna had two wives, Govindamma and Lalithamma by names and the petitioner and his brother by name Devarajulu are grandsons of N. Appanna through his second wife, Lalithamma. It is the further case of this writ petitioner, that the abovenoted four items of house properties in question are the self-acquired properties of the late N. Appanna. According to him, during the life time of N. Appanna, his children through his first wife, Govindamma, attempted to usurp ail the properties of the joint family and, therefore, N. Appanna executed a registered gift deed bequeathing house properties bearing municipal door Nos. 28/49, 28/50 and 28/52 in favour of the writ petitioner and his brother, Devarajulu, and the house property bearing municipal door No. 28/51 in favour of Smt. Lalithamma. After the death of Smt. Lalithamma, the house property bearing municipal door No. 28/51 devolved on the family of the writ petitioner by virtue of a registered will executed by the late Smt. Lalithamma and thus he became the absolute owner of the house property bearing door No. 28/51 also.

    5. Before proceeding further, at this stage itself, it needs to be noted that though the house properties bearing municipal door Nos. 28/49, 28/50, 28/51 and 28/52 were sought to be auctioned and sold for recovery of the wealth-tax dues due from N. Appanna, only the petition schedule property was auctioned and sold and the remaining house properties are not sold, obviously, because the money realised out of the sale of the petition schedule property could satisfy the outstanding wealth-tax dues due to the Income-tax Department. In that view of the matter, the question to be considered is whether the Tax Recovery Officer in auctioning and selling the petition schedule property acted without authority of law and whether the said property was the property of N. Appanna or not ?

    6. The question whether the petition schedule property belongs to the petitioners in W. P. No. 109 of 1996 or the petitioner in W. P. No. 3870 of 1996, it is trite, is primarily a question relating to title. This court cannot go into title questions in summary proceedings under article 226 of the Constitution. Although the petitioners in W. P. No. 109 of 1996 place reliance on the decree dated April 28, 1998, in O. S. No. 31 of 1978 on the file of the court of the Principal Senior Civil Judge, Anantapur, it is stated at the Bar that that decree is assailed in A. S. No. 1229 of 1999 and the same is pending. It is true that the said suit O. S. No. 31 of 1978 was filed by the petitioners in W. P. No. 109 of 1996 against N. Appanna and others to declare their right to plaint "A" schedule properties and for recovery of the same by directing the defendants to deliver possession and for rendition of accounts, etc. As could be seen from the decree produced before the court at the time of hearing, plaint "A" schedule properties include the petition schedule property also. It is true that by the decree passed in the said suit, the plaintiffs' (writ petitioners) right and title over plaint "A" schedule properties which include the petition schedule property is declared and there is also a direction to the defendants to deliver possession of the same to the plaintiffs. It is stated that the said decree is stayed by the appellate court. Be that as it may, from a perusal of the decree passed in O. S. No. 31 of 1978, it does not seem that the petitioner in W. P. No. 3870 of 1996 is a party to the said decree. Further, the authorities under the Wealth-tax Act are also not parties to the suit. According to the Income-tax Department, the petition schedule property bearing municipal door No. 28/49 is the property of the late N. Appanna. Even according to the purchaser, the said property belonged to the late N. Appanna. Thus, there is a serious title dispute among the parties to these writ petitions. Title questions cannot be decided on the basis of affidavits and counter affidavits only. Further, from the pleadings of the parties, many factual controversies touching title and possession of the petition schedule property arise for resolution. Furthermore, the decree passed in O. S. No. 31 of 1978 does not bind either the Income-tax Department or the purchaser.

    7. It is a matter of record that petitioners in W. P. No. 109 of 1996 in their letter dated April 4, 1994, addressed to the Tax Recovery Officer, Anantapur/ Nellore, have stated that they had no objection for the sale of the petition schedule property. The letter reads :

    Anantapur, 4-4-1994.

    The Tax Recovery Officer, Anantapur/Nellore.

    Sir, Sub : Wealth-tax arrears of N. Appanna-Regarding In the above matter we write to inform you that we do not object for the sale of the attached residential building bearing door No. 28/49, Subhash Road, Old Town, Anantapur, towards the wealth-tax arrears of N. Appanna, Anantapur. This is for your kind information.

    Thanking you, Yours faithfully, (Sd.) 1. N. Mangathayaramma,

    2. N. Thyagaraju,

    3. N. Ramakrishnan,

    4. N. Premaraju,

    5. N. Nagaraju,

    6. N. Kalyani.

    8. The petitioners in W. P. No. 109 of 1996 cannot be permitted to approbate and reprobate. Having agreed for the sale of the petition schedule property for realisation of the wealth-tax dues, the petitioners in W. P. No. 109 of 1996 cannot turn round after the sale and question the validity of the sale.

    9. There is also no merit in W. P. No. 3870 of 1996 which is directed against the order of the Tax Recovery Officer, Tirupati, in rejecting the claim petition filed by the petitioner therein under Rule 11 of the Second Schedule to the Income-tax Act, 1961, because the said petition was filed only after final proclamation was issued for sale of the property. The observation made by the Tax Recovery Officer, Tirupati, that the intention behind making of the claim petition at a belated stage is a dilatory tactic and to delay the recovery of the tax dues, is fully justified. The reasons stated above to dismiss W. P. No. 109 of 1996 equally hold good for dismissal of W. P. No. 3870 of 1996.

    10. In the result and for the foregoing reasons, we dismiss W. P. No. 109 of 1996 and W. P. No. 3870 of 1996, and allow W. P. No. 9227 of 1996, and direct the respondent in Writ Petition No. 9227 of 1996 to issue necessary sale certificate and also execute the sale deed in favour of the petitioner in respect of the petition schedule property, i.e., house property bearing municipal door No. 28/49, Subhash Road, Old Town, Anantapur, pursuant to the public auction conducted by him on January 12, 1996. The parties are directed to bear their own costs in all the writ petitions. However, we make it clear that this order shall not preclude the petitioner in W. P. No 109 of 1996 and/or the petitioner in W. P. No. 3870 of 1996 from pursuing appropriate legal remedies as regards their respective claims over the petition schedule property before a competent civil court by impleading the concerned authorities of the Income-tax Department and the petitioner in W. P. No. 9227 of 1996.

    11. That rule nisi has been made absolute as above.

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    Comments

    N. Mangathayaramma And Ors. v. Tax Recovery Officer And Ors.
    (Feb 26, 2002)