1. This is a petition under Article 226 of the Constitution filed by one H. Tej Raj Chordia. The 1st, 2nd and 3rd respondents are respectively the Collector of Srikakulam, the Special Deputy Tahsildar (Income-Tax) Visakhapat-nam, and the Revenue Divisional Officer, Parvatipuram; respondents 4 to 7 arc the successors-in-interest of the late Kandula Guravaiah. In this petition, the petitioner seeks a writ of certiorari or any other appropriate writ, order or direction calling for the records relating to the tale by public auction of a mill at Salur known as “Sri Kanyaka Parameswari Rice and Oil Mill” and to quash the order of the Revenue Divisional Officer, Parvatipuram, the 3rd respondent herein, dated 16-12-1962 in D. Dis. No. 4253 of 1961, whereby the auction sale of the rice mill in question which had been held on 16-3-1959 under the provisions of the Madras Revenue Recovery Act, 1864 (hereinafter referred to as “the Act”), at which the petitioner was the highest bidder, was set aside. The petitioner also seeks a direction for the issue of a sale certificate in his favour.

2. The impugned order passed by the 3rd respondent reads as follows:—

“D. Dis. 4253/61 dated 16-12—62 R.D.O), Parvatipuram.

Sub: Income Tax-Srikakulam District-Salur Taluq and Town-Recovery of arrears from Sri K. Narasinga Rao-Attachment of Rice Mill-sale set aside-orders issued.

Ref: 1. This office proceedings R.C 4253/61-N. dt. 6-12-62

2. Petition dt. 11-12-62 of Sri H. Tej Raj Chordia represented by Sri N. Patanjala Sastry, B.A, B.L Advocate, Parvatipuram.

I am to inform that the auction of the Rice Mill at Salur has been set aside in this office proceedings first cited for the following reasons:

1. The bid amount secured is too low as reported by the Special Deputy Tahsildar (Income-Tax) Visakhapatnam.

2. For want of proper records.

(Sd.) Partab Karan,

Revenue Divisional Officer.

3. The facts giving rise to this writ petition are as follows:

One late Kandula Guravaiah of Salur was in arrears of income-tax to the tune of Rs. 54,995-87 nP. He was the Kartha of the Hindu Joint family of which respondents 4 to 7 are members. Recovery proceedings were initiated by the 1st respondent on certificates issued by the concerned Income-tax officer under section 46(2) of the Income Tax Act. The Special Deputy Tahsildar, Visakhapatnam, the 2nd respondent, was in charge of the collection of the income las arrears in the District. He attached the mill in question belonging to the assessee-defaulter and on 16-3-1959 conducted a sale of the mill by public auction. Six persons attended the sale but only two among them took part in the bidding and they were the petitioner and one Janki Das Bihani who claimed to be a lessee of the mill. The highest bid was that of the petitioner for Rs. 9,700/- and the bid was knocked down in the petitioner's favour. The petitioner remitted the entire purchase money by 13-4-1939. On 16-5-1959 however the Special Deputy Tahsildar who had conducted the sale, sent a report to the Revenue Divisional Officer appraising the latter that the amount fetched at the auction was too low as according to him, the mill would be easily worth Rs. 35,000/- and he further alleged that there was a collusion between the bidders to secure the mill for a low price to serve their own private ends. The following was the report submitted by the Special Deputy Tahsildar to the Revenue Divisional Officers.

“Rc. 87/58 B dated 16-5-1959.

From To Sri S.I Adolphus, B.A, The Revenue Divisional Special Deputy Tahsildar, Officer, Paryatipuram. Income Tax, Visakhapatnam.

Sub: Income tax-arrears-Salur Taluq and town-Recovery from Sri Kandula Narasinga Rao-Sale Report-submitted.

I submit that for the realisation of Income tax arrears amounting to Rs. 54,995-80 nP. due from Kandula Narasingarao of Salur, I have notified the three properties mentioned in the sale list for sale on 16-3-1959 and conducted the sale on that date. I submit herewith my sale report. As the entire records were filed in the civil courts the report could not be submitted earlier. Even now the served copies of notices in forms No. 4 and 5 are not available as they were filed in the court.

Only six persons attended the sale and only two persons paid the initial deposit. There was bid for lot No. 1, that is for Sri Kanyaka Parameswari Rice and Oil Mill. It was knocked down in favour of Sri Tej Raj Chordia of Srikakulam for Ra. 9,700/-.

Just before the sale the defaulter submitted a petition stating that the arrears shown in the notice are incorrect and as such the sale if held would be illegal, His petition is enclosed. This contention is not correct. The Income Tax Officer, Vizayanagaram informed me in his letter G.I.R No. 20-b dated 25-3-1959 that the correct arrear balance is Rs. 54,995-14-0. This petition does not deserve any consideration.

One Sri Janakidas Bihani submitted a copy of the petition filed by him before the Collector, objecting to the sale on the ground that he has taken the mill on lease on 16-1-1959 on a yearly rental of Rs. 1000/- and has expended a sum of Rs. 20,000/- on the mill and that it can be sold subject to his lease and payment of the amount, said to have been spent by him. He has also got hand bills printed to this effect and got them distributed. As the lease is long after the attachment of the property by the Government, it is not valid and no cognizance need be taken of the objection. The objection petition and the hand bill are submitted for perusal and return.

Only the above petitioners and Sri Tej Raj Chordia who is having a decree against the defaulter participated in the sale, The mill is easily worth Rs. 35,000/-. They wanted to have it at a low cost so that they can realise the debts due to them by the defaulter by selling the mill later on. There is every chance of getting higher bids if the property is resold and the bid now offered is too low.

The highest bidder has remitted the balance of the purchase money on 13-4-1959. The sale may be set aside as the bid amount secured is too low. After receiving your orders I will resell the mill once again. I submit a copy of my preliminary report dated 9-3-1959 submitted to the Collector for your perusal.

(Sd.)…………

16-5-1959

Spl. Deputy Tahsildar, Income Tax,

Visakhapatnam,”

4. Before any action was taken on this report, Kandula Sanyasi Raju, the 5th respondent herein, one of the members of the joint family of the defaulter, filed a writ petition (Writ Petition No. 778 of 1959) objecting to the sale on the ground that the amount of arrears of Income-tax was only Rs. 20,000/- and not Rs. 55,000/- as contended by the Income-tax authorities, and further alleging that no notice under Section 25 of the Act had been issued. The writ petition was admitted by this Court and further proceedings in pursuance of the sale held on 16-3-1959, were stayed. In that writ petition, the petitioner herein was made a party besides the Collector the Special Deputy Tahsildar and the, Income-Tax Officer, Vizianagaram. The writ petition was finally disposed of by this Court on 10-1-1961 and the contentions of the petitioner therein were rejected and the writ petition was dismissed. Thereafter the petitioner submitted a petition to the Collector on 9-9-1961 requesting him to confirm the sale in his favour and issue a sale certificate. To this, a reply dated 24-9-1961 was sent slating that the matter was under correspondence and the question of confirmation of the sale would be considered after the receipt of the sale papers from the Special Deputy Tahsildar, Income-Tax, Visakhapatnam. The petitioner waited for more than three months and on 4-1-1962 submitted another petition to the Collector appaising him of all the facts and complaining that although two years had elapsed from the date of the sale and one year from the date of the High Court's order dismissing the writ petition filed by Sanyasi Raju, no steps had been taken to confirm the sale in the petitioner's favour, and he drew pointed attention to the relevant provisions of the Act pertaining to revenue sales. The petitioner received no reply to (his representation. So he sent another petition on 1-8-1962 and yet another on 17-11-1962 requesting the Collector to confirm the sale in his favour. On 1-12-1962, the petitioner received a reply from the Collector's office advising him to approach the Revenue Divisional Officer, Farvatipuram, for orders. The petitioner did so and received the following memorandum dated 6-12-1962:

Rev. Dvl. Office,

Parvatipuram,

“R.C 4253/61 N. dt 6-12-1962.

Proceedings.

Sub: Income-tax-Srikakulam District, Salur Taluk and town-Recovery of arrears from Sri K, Narasinga Rao-attachment of Rice Mill-Sale set aside-Orders issued.

Ref: D.O Roc. D. 7769/62 dt. 24-11-62 of the Collector, Srikakulam.

The sale of rice mill conducted by the Spl. Dy. Tahsildar, Income-Tax Visakhapamam on 16-3-1959 in favour of Sri Tej Raj Chordia of Srikakulam for the bid amount of Rs. 9,700/- regarding the income-tax arrears balance of Rs. 54,995-87 due from Sri Kandula Narasinga Rao of Salur is hereby set aside for want of proper records,

Sd. Partab Karan

Rev. Dvl. Officer”.

5. This was followed up by the impugned order dated 16-12-62 which has been Bet out supra and in which it was stated that the auction of the rice mill at Salur had been set aside on 6-12-62 on two grounds: (1) that the bid amount secured was too low as reported by the Spl. Deputy Tahsildar, and (2) for want of proper records.

6. It will be seen that the impugned order setting aside the sale, was passed three years and nine months after the sale, and about two years after the writ petition filed by Sanyasi Raju was disposed of by the High Court; and although the petitioner had been sending repeated reminders to the Collector, he was not served with any notice to show cause why the sale knocked down in his favour should not be set aside, nor was he apprised of the contents of the report sent by the Spl. Deputy Tahsildar who had held the auction, wherein an allegation was made of collusion and fraud.

7. Before adverting to the contentions on behalf of the petitioner, it is necessary to refer to the relevant provisions of the Act pertaining to confirmation and setting aside of Sales held under the Act. Section 38 is the relevant section and it provides;

“38(1) At any time within thirty days from the date of the sale of immovable property, application may be made to the Collector to set aside the sale on the ground of some material irregularity, or mistake, or fraud, in publishing or conducting it but, except as otherwise is hereinafter provided, no sale shall be set aside on the ground of any such irregularity or mistake unless the applicant proves to the satisfaction of the Collector that he has sustained substantial injury by reason thereof,

(2) If the application be allowed, the Collector shall set aside the sale and may direct a fresh one.

(3) On the expiration of thirty days from the date of the sale, if no application to have the sale set aside is made under section 37-A or under clause (1) of this section or if such application has been made and rejected, the Collector shall make an order confirming the sale; provided that, if he shall have reason to think that the sale ought to be set aside notwithstanding that no such application has been made or on grounds other than those alleged in any application which has been made and rejected, he may, after recording his reasons in writing, set aside the sale.

(4) Whenever the sale of any lands is not so confirmed or is set aside, the deposit or the purchase-money, as the case may be, shall be returned to the purchaser.

(5) After the confirmation of any such sale, the Collector shall register the lands sold in the name of the person declared to be the purchaser and shall execute and grant a certificate of sale bearing his seal and signature to such purchaser.

Such certificate shall state the property sold and the name of the purchaser, and it shall be conclusive evidence of the fact of the purchase in all Courts and Tribunals, where it may be necessary to prove the same; and no proof of the Collector's seal or signature shall be necessary, unless the authority before whom it is produced shall have reason to doubt its genuineness”.

8. Although it is not stated in the impugned order under what provision of the Act it was passed, it is apparent that the 3rd respondent had purported to act under the proviso to sub-section (3) of section 38 of the Act, which says inter alia that if the Collector shall have reason to think that the sale ought to be set aside notwithstanding that no application under sub-section (1) of section 38 had been made to set aside the sale on the ground of some material irregularity, or mistake, or fraud, in publishing or conducting the sale, he may, after recording his reasons in writing, set aside the sale.

9. In support of this writ petition, Mr: Raja Aiyar, the learned advocate for the petitioner, put forward several contentions and I shall deal with them seriatum.

10. His first contention was that although no time limit is prescribed for setting aside a sale under the proviso to sub-section (3) of section 38 where the Collector acts suo motu, it should be done within a reasonable time, but in the present case the Collector had taken an unconscionably long time to pass the order setting aside the sale and consequently his order is bad. No doubt there was an inordinate delay in passing the impugned order, but the delay was to some extent caused by the pendency of the writ petition filed by Sanyasi Raju in the High Court and to the fact that the records relating to the sale were missing. Even so, the delay in passing the order, does not affect the jurisdiction of the Collector to make the order. There is therefore no substance in this contention.

11. It was then contended that the proviso requires the Collector to record his reasons in writing before setting aside a sale and although in the instant case the Collector has recorded two reasons, those reasons are Dot valid ones. The reasons recorded by the Collector are: (1) that the bid amount was too low as reported by the Special Deputy Tahsildar, and (2) that the relevant records were not available. It was contended that the loss of records is an irrelevant and extraneous ground, and equally invalid is the ground that the bid amount was too low as reported by the Special Deputy Tahsildar. While I am prepared to accept the contention that the missing of records is not a proper ground for setting aside the sale, the other ground viz, that the bid amount was too low, is certainly a valid one if it is factually correct. According to the report of the Special Deputy Tahsildar made soon after the sale, it would appear that although the market value of the mill was amount Rs. 35,000/-, by reason of collusion among the bidders, the price fetched was only Rs. 9,700/- with the result that the Revenue stood to lose a good deal by reason of the exceedingly low bid. Hence there is no force in this point cither.

12. The next point made by Mr, Raja Aiyar was that under section 38 of the Act, it is the Collector who is authorised to confirm or set aside sales but in the instant case it was the Revenue Divisional Officer who had passed the order setting aside the sale dated 6-12-1962 and the supplemental order dated 16-12-1962, in which an additional reason was mentioned for setting aside the sale. This contention is devoid of force, because Standing Order No. 41 of the Standing Orders of the Board of Revenue, which prescribes the general procedure under the Madras Revenue Recovery Act, 1864, has by clause 13, delegated to a Subordinate, Deputy or Assistant Collector in charge of a division of a district, the power to confirm or set aside sales under section 38 of the Act. Clause (13) provides:—

“13 Confirmation of sales A subordinate, Deputy or Assistant Collector in charge of a division of a district has the power to confirm sales and issue certificates under section 38, Act II of 1864, But the orders of these officers confirming or setting aside sales are subject to the general powers of revision and control exercised by the Collector under Regulation VII of 1828. Such powers may be exercised by the Collector suo motu or at the instance of one or other of the parties concerned. The law imposes no limitation as to the period within which such powers may be exercised”.

13. In the present case, therefore, the Revenue Divisional Officer had the power to set aside the sale in question.

14. It was lastly contended that in setting aside the sale, the Revenue Divisional Officer had acted contrary to the principles of natural justice inasmuch as no opportunity was given to the petitioner to meet the allegations contained in the report submitted by the Special Dy. Tahsildar that there had been collusion among the bidders and as a consequence, the price fetched was too low. It was urged that had the petitioner been given an opportunity, he would have satisfied the Revenue Divisional Officer that there was neither collusion nor fraud in the conduct of the sale, and that the price fetched was the highest that could be got under the circumstances. On behalf of the Department it was contended that the proviso to sub-section (3) of section 38 of the Act does not contemplate notice and hearing before a sale is set aside and the only requirement is the recording of reasons in writing, and that has been done in the present case.

15. I do not think it necessary in this case to decide the broad and abstract question whether a sale can be set aside under the proviso to sub-section (3) of section 38, without giving notice to the auction-purchaser, because I am fully satisfied that in the peculiar circumstances of this case, it was grossly unfair on the part of the Revenue Divisional Officer to have set aside the sale without giving a notice to the petitioner and without giving him some proper opportunity to put forward his case and satisfy that authority that the sale was not vitiated by collusion and fraud.

16. The long lapse of time between the date of the sale and the actual order setting aside the sale; the continued inaction of the authorities in spite of repeated reminders sent by the petitioner; the fact that the authority was himself not certain as to the ground on which the sale had to be set aside because in the first order passed on 6-12-1962 all that was stated was that the sale was set aside for want of proper records, whereas in the supplemental order passed on 16-12-1962 it was stated that the Bale had been set aside in the order dated 6-12-1952 for two reasons:—

“(1) The bid amount secured is too low as reported by the Spl. Deputy Tahsildar (Income-Tax) Visakhapatnam; and

(2) for want of proper records”;

and the serious allegations made in the report submitted by the Special Deputy Tahsildar who had himself conducted the sale and had knocked down the bid in favour of the petitioner in view of all these circumstances, it was but just, fair and proper that the petitioner should have been given a reasonable opportunity to disprove if he could, the allegations contained in the report sent by the Special Deputy Tahsildar, after his being apprised of those allegations. Since that was not done, I am clearly of opinion that the orders of the Revenue Divisional Officer dated 16-12-1962 and 6-12-1962 should be sat aside and the Revenue Divisional Officer be directed to give notice to the petitioner and all others interested in or affected by the sale, and then pass appropriate orders.

17. I would accordingly allow this writ petition in part, quash the orders of the Revenue Divisional Officer dated 16-12-1952 and 6-12-1962 and direct him to give notice to the petitioner and all others affected by or interested in the sale of the mill in question, give them a reasonable opportunity to make their representations and then decide whether the sale should be set aside or confirmed. In all the circumstances of this case, I make no order as to costs.

18. Writ Petition allowed in part.