Karnataka High Court
Sri Rudraswamy vs The Tax Recovery Officer on 30 March, 2023
Author: B M Shyam Prasad
Bench: B M Shyam Prasad
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WP No. 234 of 2018
IN THE HIGH COURT OF KARNATAKA AT
BENGALURU
DATED THIS THE 30TH DAY OF MARCH, 2023
BEFORE
THE HON'BLE MR JUSTICE B M SHYAM PRASAD
WRIT PETITION NO. 234 OF 2018 (T-IT)
BETWEEN:
1. SRI RUDRASWAMY
S/O. LATE HUCHEERAIAH,
AGED ABOUT 5 YEARS
(REPRESENTED BY HIS GPA HOLDER,
SRI.B.M. KARUNESH,
AGED ABOUT 53 YEARS,
S/O LATE B.M.MADAIAH,
RESIDING AT VILLAGE NO.46,
"PALM MEADOW", RAMAGONDANAHALLI,
VARTHUR MAIN ROAD, BENGALURU - 560 066.
2. M/S ADARSH DEVELOPERS
NO.10, VITTAL MALLYA ROAD,
Digitally
signed by BENGALURU - 560 001
NARASIMHA (REPRESENTED BY ITS MANAGING PARTNER,
MURTHY
VANAMALA SRI.B.M.JAYESHANKAR,
Location: AGED ABOUT 61 YEARS,
HIGH
COURT OF S/O LATE B.M.MADAIAH)
KARNATAKA ...PETITIONERS
(BY SRI. K.K. CHAITHANYA, SR. ADVOCATE FOR
SRI. TATA KRISHNA., ADVOCATE)
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WP No. 234 of 2018
AND:
1. THE TAX RECOVERY OFFICER, RANGE-4,
NO.553/5TH FLOOR, 80 FEET ROAD,
6TH BLOCK, BMTC OFFICE,
KORMANGALA, BENGALURU - 560 095.
2. THE ASSISTANT COMMISSIONER OF INCOME -
TAX
CENTRAL CIRCLE 2(1),
CENTRAL CIRCLE, C.R.BUILDING,
QUEENS ROAD, BENGALURU - 560 001.
3. SRI JAYARAM DEVELOPERS & CONTRACTORS
NO.1, 1ST CROSS,
SHANIMAHATMA TEMPLE ROAD,
DEVASANDRA, K.R. PURAM,
BENGALURU - 560 036.
...RESPONDENTS
BY SRI. E.I. SANMATHI FOR C/R1 & R2,
ADVOCATE;
SRI. B.S. MURALI FOR R3, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER
ARTICLES 226 AND 227 OF THE CONSTITUTION OF
INDIA PRAYING TO QUASH AS FAR AS THE
PETITIONERS ARE CONCERNED BY AN
APPROPRIATE WRIT OR ORDER IN THE NATURE
OF CERTIORARI OR OTHERWISE IMPUGNED
ORDER OF ATTACHMENT IN I.T.C.P.-16 DATED
28.6.2017 IN RELATION TO RECOVERY
CERTIFICATE IN I.T.C.P.-1 DATED 29.4.2009
ENCLOSED IN ANNEXURE-B; TO QUASH AS FAR
AS THE PETITIONER IS CONCERNED BY AN
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WP No. 234 of 2018
APPROPRIATE WRIT OR ORDER IN THE NATURE
OF CERTIORARI OR OTHERWISE IMPUGNED
ORDER UNDER RULE 11[5] DATED 07.11.2017
ENCLOSED ANNEXURE-A.
THIS PETITION, COMING ON FOR
PRELIMINARY HEARING IN "B" GROUP, THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
The petitioners have impugned the first respondent's Order of Attachment dated 28.06.2017 in No. ITCP-16 [Annexure-B] under Section 222(1) of the Income Tax Act, 1961 and Rule 48 of the Second Schedule to this Act and the first respondent's subsequent order dated 07.11.2017 [Annexure-A] under Rule 11 of the Second Schedule to the Income- Tax Act, 1961. For reasons of convenience the Income Tax Act, 1961 is referred to as 'the IT Act' and the Second Schedule of this Act is referred to as 'the Second Schedule'.
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2. The first respondent by the order dated 28.06.2017 [Annexure-A] has attached four different immovable properties1, which are hereafter referred to as the subject properties. The first respondent by the subsequent impugned order dated 07.11.2017 has rejected the second petitioner's application under Rule 11 of the Second Schedule as not maintainable.
3. The second petitioner [a firm] is engaged in land development, and it has entered into Memorandum of Understanding dated 15.02.2006 not just with the third respondent [a Certified Defaulter] and a Sri. C. Vijay Kumar but also with three others reducing into writing the terms upon which the third respondent [and 1 The Lands measuring 36 guntas in Sy No. 107/3, measuring 2 acres 8 guntas in Sy No. 107/4, measuring 1 acre 2 guntas in Sy No. 106/2 and measuring 1 acre 2 in Sy No. 106/2 of Huttanahalli Village, Jala Hobli, Bengaluru North Taluk. These lands are converted for non-agricultural purposes vide separate order by the Special Deputy Commissioner, Bangalore.
-5-WP No. 234 of 2018 others] must procure lands for the firm in Huttanahalli village. The first petitioner has entered into an Agreement dated 18.06.2007 [the Sale Agreement] with Sri C. Vijay Kumar to purchase the subject properties, and the third respondent has joined in execution of this agreement as a Confirming Party. Sri C. Vijay Kumar and Sri M. Jayaram, who are partners of the third respondent, have also signed this agreement for the third respondent.
4. The petitioners contend that because of a prior agreement, the first petitioner has executed a Power of Attorney dated 26.05.2005 in favour of Mr. B. M. Karunesh - one of the partners of the second petitioner - the firm, and the Sale Agreement is a result of this prior agreement and Memorandum of Understanding dated 15.02.2006. Sri. C. Vijay Kumar, notwithstanding the Sale Agreement, has entered -6- WP No. 234 of 2018 into an agreement to sell with the third-party, and this third-party has caused a Public Notice in Times of India, English Daily on 14.05.2008. There have been exchanges of notices after such publication between this third party and the petitioners. Sri B.M. Karunesh, as the attorney of the first petitioner, has commenced the suit in O.S.No.858/2008 for specific performance of the Sale Agreement dated 18.06.2007 against Sri C.Vijay Kumar with the third respondent and the third party being arrayed as defendants.
5. It is undisputed that in O.S. No.858/2008, the civil Court on the first petitioner's application under Order XXXIX Rules 1 and 2 CPC has granted temporary injunction on 07.11.2008. If the petitioners contend that this order of temporary injunction is in force even today, the third respondent proposes to refute the same. This should be a matter of -7- WP No. 234 of 2018 record, and this Court in the present proceedings need not delve on this aspect except for observing that the petitioners had the benefit of the temporary injunction when the third respondent's2 jurisdictional Assessing Officer has completed the assessment under Section 143(3) of the IT Act on 31.12.2008.
6. Simultaneously with the assessment order dated 31.12.2008, notice is issued under Section 156 of the IT Act to the third respondent. The third respondent could have paid the demand in terms of this notice under Section 156 of the IT Act on or before 31.01.2009, and because the third respondent has not met such demand, the Tax Recovery Officer has drawn Recovery Certificate on 29.04.2009. As seen from the impugned order and other annexures appended to the writ petition, Sri. B.M. 2 The Third respondent later turns into being a Certified Defaulter -8- WP No. 234 of 2018 Karunesh [as power of attorney for the first petitioner], with the issuance of attachment order under Rule 48 of the Second Schedule to the IT Act, has filed an application lodging a claim under Rule 11 of the Second Schedule, and this claim is rejected by the first respondent on 12.02.2013.
7. The third respondent, who had not until challenged the assessment order dated 31.12.2008, has challenged such order in appeal before the Commissioner of Income Tax [Appeals] in ITA No.675/180/W-4(2)(1)/CIT(A)-4/12-13 which is decided on 15.02.2015. When the proceedings are initiated for recovery of the penalty with the dismissal of the third respondent's aforesaid appeal with the issuance of the impugned attachment order dated 28.06.2017 [Annexure B], Sri B.M. Jayeshankar, as the Managing Partner of the second petitioner, -9- WP No. 234 of 2018 has filed an application under Rule 11 of the Second Schedule to the IT Act which is rejected by the first respondent by the impugned order dated 07.11.2017 [Annexure-A].
8. The first respondent, in rejecting this application under Rule 11 of the Second Schedule to the IT Act vide the impugned order dated 07.11.2017 [Annexure-A], has reasoned that the petitioners cannot take advantage of the Tax Recovery Officer's communication that the Recovery Certificate dated 29.04.2009 is closed and contend that the attachment is beyond the limitation contemplated under Rule 68B of the Second Schedule. The first respondent, while rejecting the petitioners' case on limitation, has observed that when the Recovery Certificate was issued on 29.04.2009, the consequent attachment order is issued only for recovery of the penalty.
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9. The first respondent has also opined that with the disposal of the third respondent's appeal before the Commissioner of Income Tax [Appeals] in ITA No.675/180/W-4(2)(1)/CIT(A)- 4/12-13, the Recovery Certificate dated 29.04.2009 would automatically stand revived by operation of law in view of the provisions of Rule 68B of the Second Schedule to the IT Act. The first respondent has further opined that if the demand imposed in terms of the order dated 18.06.2009 under Section 271(1)(c) of the IT Act could be recovered by attachment, the demand under section 143(3) could also be recovered under the said Recovery Certificate and that the Sale Agreement relied upon by the petitioners does not by itself create any interest or charge on the subject property and any decision in O.S. No.
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WP No. 234 of 2018858 of 20083 would be binding only on the parties to the proceedings and not the Tax Recovery Officer [TRO] or Union of India because of non-compliance with the provisions of sections 79 and 80 of CPC.
10. Sri Chythanya K K, the learned Senior Counsel for the petitioners, submits that though the petitioners have raised the ground of limitation in view of the provisions of Rule 68B of the IT Act, but his endeavour would be to persuade this Court to pass just orders observing that the first respondent's attachment order dated 28.06.2017 and the first respondent's subsequent order dated 07.11.2017 is made subject to the outcome of the suit in O.S.No.858/2008. In fact, Sri Chythanya K K submits that the attachment in terms of order 3 The suit for specific performance commenced by the first petitioner against the third respondent as first mentioned supra.
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WP No. 234 of 2018dated 28.06.2017 could prevail until the culmination of the dispute in O.S.No.858/2008.
11. Sri Chythanya K K canvasses that upon issuance of notice under Rule 2 of the Second Schedule, insofar as any immovable property attached under Rule 48 thereof, a claim or an objection could be preferred before the concerned Tax Recovery Officer [TRO] as against the attachment or sale asserting that such property would not be liable to be attached or brought to sale, and when such claim or objection is preferred, the TRO will have to investigate the claim or objection. The provisions of Rule 11(3) of the Second Schedule enable the person, who files such claim or objection, to adduce evidence to demonstrate that as of the date of service of notice under Rule 2 to the Second Schedule he or she had some interest or possessed the property in question.
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WP No. 234 of 2018
12. Sri Chythanya K K argues that if a claim or objection is based on possession, it will have to be considered by the TRO either under Rule 11 (4) or Rule 11(5), and when the claim or objection is because of some interest in the property, the adjudication will have to be under Rule 11(1). Whether the investigation is either under Rule 11(5) or 11(4) or 11(1), the investigation will be subject to the decision in any suit that may be filed, and the TRO's orders on the claim, subject to the outcome of the suit, will be conclusive. The impugned order is an order under Rule 11(1) and therefore, must be made subject to the suit in O.S.No. 858/2008.
13. Sri Chythanya K K further contends that though the provisions of Rule 11(6) of the Second Schedule of IT Act read that a party whose claim or objection is rejected, may institute a suit in the proper Court to establish
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WP No. 234 of 2018such right of claim in the subject property, the proposition in Rule 11(6) must also be applied to priorly instituted and pending cases. The learned Senior Counsel emphasizes that the significance of this Rule is to ultimately enable the decision of a civil Court with proper jurisdiction to prevail as in such suit every gamut of the controversy will be examined after a detailed trial.
14. Sri. E. I. Sanmathi, the learned Counsel for the first and second respondent, submits that when attachment of subject properties was first issued in the year 2013, admittedly an application is filed on behalf of the petitioners asserting rights under the very same agreement of sale dated 18.06.2007 and the then TRO has, by his order dated 12.02.2013, concluded that the petitioners, who assert that they have entered into agreement to purchase
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WP No. 234 of 2018the subject properties, cannot claim any interest in the subject property to object to the attachment and the consequential sale. The petitioners have not challenged this order dated 12.02.2013, and in fact they have paid the demand accepting this order. As such the petitioners will have no locus to challenge the first respondent's impugned orders.
15. Sri. E. I. Sanmathi argues that the petitioners rely upon the Sale Agreement [which is dated 18.06.2007], and in the facts and circumstances of the case, the first respondent has rightly concluded that this agreement could only be a shield as against the transferor, who is not a party to the proceedings, and the agreement cannot be pressed into service against the authorities as this agreement by itself does not create any interest in the petitioners in subject properties. Sri. E. I. Sanmathi argues
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WP No. 234 of 2018that the Hon'ble Supreme Court in K.Basavarajappa vs. Tax Recovery Commissioner and Others4, in similar circumstances, has opined that an agreement of sale creates no legal interest in the property and therefore there would be no locus in the person claiming under the agreement to assert a claim as contemplated under Rule 11 of the Second Schedule.
16. Sri B.S. Murali, the learned Counsel for the third respondent, in reiteration of Sri E.I.Sanmathi's submissions argues that the claim under Rule 11 of the Second Schedule is filed in the year 2013 by Sri B.M.Karunesh on behalf of the first petitioner as his power of attorney and this application is rejected insofar as the first petitioner. Therefore, the TRO's order dated 01.02.2013 operates as res judicata and 4 [1997] 223 ITR 0297
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WP No. 234 of 2018hence no indulgence can be granted in favour of the first petitioner against the impugned orders.
17. Sri B.S. Murali further submits that the second petitioner has no locus to challenge the attachment order because the petitioners' claim in the subject properties is based on the agreement dated 18.06.2007 which is pending suit in O.S.No. 858/2008. The second petitioner is neither a party to the agreement nor to the suit, and if the second petitioner is neither a party to the agreement nor to the suit, the claim as filed with the first respondent under Rule 11 to the Second Schedule would be tenuous and if the claim is tenuous, this Court cannot observe that the impugned attachment order will be subject to the outcome of the suit.
18. In rejoinder, Sri Chythanya K K invites this Court's attention to the written statement filed by Sri C.Vijay Kumar and the
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WP No. 234 of 2018third respondent in the suit in O.S.No. 858/2008 [which are produced as Annexures- J.4 and J.5] to canvass that both Sri. C.Vijay Kumar and the third respondent have acknowledged that the first petitioner acts on behalf of the second petitioner, a firm which is represented by its partners, Sri B.M.Jayeshankar and Sri B.M. Karunesh, and the second petitioner has purchased immovable properties in the name of the first petitioner. This acknowledgement establishes comity of interest, and even for the purposes of deciding whether a claim as contemplated under Rule 11 is established, this would be crucial.
19. Sri Chythanya K K, canvases that neither the third respondent nor Sri. C.Vijay Kumar can, in the light of this acknowledgement in the pleadings in the suit, contend that the second petitioner is a stranger to the transaction
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WP No. 234 of 2018and therefore cannot have a claim in the subject property. Insofar as the contention that the Principle of res judicata will apply, the learned Senior Counsel submits that the orders of the TRO under Rule 11 of Second Schedule must necessarily be construed as an administrative decision as the officer would be an Income Tax Authority under Section 116 of the IT Act and if the orders under Rule 11 of Second Schedule are administrative orders, it is settled that the principle of res judicata will not apply.
20. Sri Chythanya K K finally submits that even otherwise, because the provisions of the provisions of Rule 11(6) of the Second Schedule stipulate that where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil Court to establish the right which he claims in the property in dispute, the *TRO's order *Retyped and replaced vide Court order dated 17.08.2023
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WP No. 234 of 2018dated 12.02.2013 cannot be final on the controversy for res judicata to apply.
21. The question for consideration in the circumstances of the case would be:
[a] Whether the petitioners could be said to have 'some interest' as contemplated under Rule 11 of the Second Schedule, and if it could be held that the petitioners have such interest, would the *TRO's order dated 12.02.2013 operate as res judicata, and [b] If the *TRO's order dated 12.02.2013 cannot operate as res judicata, whether such order must be made subject to the outcome of the suit in O.S. No. 858 of 2008.
22. The petitioners do assert interest in the subject properties because of the possession *Retyped and replaced vide Court order dated 17.08.2023
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WP No. 234 of 2018of the subject properties, and the question of possession is pending adjudication in the priorly instituted suit in O.S. No. 858 of 2008. The petitioners' different contentions in this suit, including this facet, will have to be examined in the light of the terms of the Sale Agreement which is executed by Sri C. Vijay Kumar as the owner and the third respondent [the Deemed Defaulter] as a confirming party and the other transactions. The petitioners, apart from this right, assert the right to seek specific performance of the Sale Agreement to acquire title to the subject properties, a right envisaged under the provisions of Specific Relief Act, 1961. The provisions of Rule 11(2)5 of the Second 5 Investigation by Tax Recovery Officer.-(1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection :
Provided that no such investigation shall be made where the Tax Recovery Officer considers that the
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Schedule contemplate that a TRO must investigate a claim filed, and the person filing such claim must establish as against interest as generally understood, "some interest" in the concerned property or the interest of being in possession of such property.
23. The petitioners' interest under the Sale Agreement and the prelude transactions inter se will have to be examined in the context of claim or objection was designedly or unnecessarily delayed.
(2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the Tax Recovery Officer shall deem fit .
(3) The claimant or objector must adduce evidence to show that--
(a) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or
(b) (in the case of movable property) at the date of the attachment, he had some interest in, or was possessed of the property in question .
The underlining is by this Court.
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WP No. 234 of 2018the expression 'some interest' as found in Rule 3 of Rule 11 of the Second Schedule. If the expression 'interest' was not qualified by the expression 'some', perhaps the question for interpretation could have been different, but with this qualification, this Court is of the considered view that the interest that is contemplated under Rule 11(3) can be a variety of interests and would definitely include the right to seek specific performance and right to protect its alleged possession of the subject properties which are pending adjudication in the suit in OS No. 858 of 2008, a priorly instituted suit. These rights could be under the provisions of the Specific Relief Act, 1961 and Section 53A of the Transfer of Property Act, 1882, and within the compass of "some interest" as contemplated under Rule 11(3) of the Second Schedule.
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24. The third respondent has relied upon the proposition that 'a sale agreement can only be a shield and not a sword' to reject the petitioners' claim, and this proposition is trite. A useful reference could be made to the Hon'ble Supreme Court's decision in Patel Natwarlal Rupji V. Shri Kondm Group Kheti Vishayak and Another6, and it is held as follows:
"Section 53-A of the Act provides that where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf which constitutes 'transfer', and the transferee has, in part performance of the contract, taken possession of the property of the transferor, the transferee being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then 6 (1996) 7 SCC 690
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notwithstanding that the contract, though required to be registered, has not been registered, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract.
Though the doctrine of part performance embodied in Section 53-A of the Act is part of equitable doctrine in English Law, Section 53-A gives statutory right which is available to the transferee for consideration in possession of the property had under the contract. In terms of the section, so long as the transferee has done and is willing to perform his part of the contract or, in other words, is always ready to abide by the terms of the Contract and has performed or is always ready and willing to perform his part of the contract, the transferee is entitled to avail of this statutory
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WP No. 234 of 2018right to protect his possession as a shield but not as a sword."
It is settled that specific performance is an equitable relief granted under the Specific Relief Act, 1961 by the Court to enforce contractual obligations between the parties, and it is a remedy in performance as opposed to a claim for damages for breach of the contract. This Court must, in the facts and circumstances of the case, consider the rights that could avail to the petitioner both under the provisions of the Specific Relief Act, 1963 and Section 53A of the Transfer of Property Act, 1882.
25. The third respondent's reliance on the decision of the Hon'ble Supreme Court in K.Basavarajappa vs. Tax Recovery Commissioner and Others [1997] 223 ITR 0297 supra would not inure to the respondent's benefit because of the difference in the factual
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WP No. 234 of 2018matrices. In the case on hand, the Supreme Court was examining the right of a purchaser under a sale agreement, in view of the trajectory in the different proceedings commenced by him, to file an application under Rule 60 of the Second Schedule for setting aside a completed auction sale. In the present case, the claim is filed objecting to the attachment of the subject property and the proposed sale relying upon a claim for specific performance which is being pursued, without a compromise, in a priorly instituted suit. This Court, in the peculiarities of this case, must opine that the petitioners' have 'some interest' in the subject properties which must be examined under Rule 11 of the Second Schedule.
26. It is undisputed that the first application in the year 2013 under Rule 11 of the Second Schedule is filed for the benefit of the
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WP No. 234 of 2018petitioners; that this application is rejected by the order dated 12.02.2013; and that this order is also accepted with the petitioners depositing with the TRO the demand for which the properties stood attached as of that date. With the TRO issuing the impugned attachment order in the year 2017 the present application is filed and again asserting rights under the Sale Agreement referring to the pending proceedings in No. 858 of 2008. The respondents' objections are two-fold; firstly, that there is acceptance of this order and secondly, on the ground of res judicata and limitation.
27. It is undisputed that when the subject properties were attached in the year 2013, it was only for a certain liability and after the claim is rejected by the then TRO, the third respondent [a certified defaulter] who had not called in in question the assessment order dated
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WP No. 234 of 201831.12.2008 until then, has filed appeal in ITA No.674 which is disposed of on 15.02.2015. It is after the culmination of these proceedings the second recovery proceedings are initiated. If the petitioners have satisfied the liability after the TRO's order dated 12.02.2013, this Court is of the considered view that the acquiescence or acceptance cannot be read into as it is trite that acquiescence must be borne out by the definite intention to acquiesce, and such intention cannot be inferred merely because the demand as of that date is satisfied. The intention to acquiesce must be consistently seen in the conduct. The alacrity and unabated continuance of the proceedings by the petitioners to protect their interests in the properties do not render themselves to a ready inference in this regard.
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28. The expression used under Rule 11 of the Second Schedule is 'investigation' but significantly, there is opportunity to lead evidence as contemplated under Rule 11 (3). The decision under this Rule essentially involves an element of adjudication. This Court is not persuaded to opine that the orders under Rule 11 of the Second Schedule would be an executive or administrative decision given the opportunity that is made available to a claimant to give evidence with the jurisdiction in the *TRO to decide on the claim based on the evidence led to release the property from attachment. This Court must refer to the attributes, as delineated by the Hon'ble Supreme Court in Jaswant Sugar Mills Ltd., Meerut Vs. Lakshmi Chand & Ors7, which distinguish a judicial [or a quasi- judicial] decision, and these attributes are: 7
AIR 1963 SC 677 *Retyped and replaced vide Court order dated 17.08.2023
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i. It is in substance a determination upon investigation of a question by the application of objective standards to facts found in the light of pre-existing legal rule;
ii. it declares rights or imposes upon parties obligations affecting their civil rights; and iii. that the investigation is subject to certain procedural attributes contemplating an opportunity of presenting its case to a party, ascertainment of facts by means of evidence if a dispute be on questions of fact, and if the dispute be on question of law on the presentation of legal argument, and a decision resulting in the disposal of the matter on findings based upon those questions of law and fact."
29. For the principles of res judicata to apply, it should be a decision by a Court or an authority which can conclusively decide on an issue that too finally. The provisions of Rule 11[6] of the Second Schedule in providing that the TRO's order shall be subject to the result of a suit and shall be conclusive only on the
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conclusion of the suit, takes away the element of finality. This provision recognizes that a right in a property can be adjudicated finally in a civil suit. As such, this Court cannot opine that the TRO's first order dated 12.02.2013 would operate as res judicata.
30. The provisions of Rule 11(6) makes a TRO's order subject to a suit that may be instituted after the order, but if the real intent of the Legislature is to enable a final adjudication by civil Court, the provisions cannot be read to confine only to the suits that may be instituted after the TRO's order and such a reading would defeat the very object and it is salient that the provisions cannot be interpreted to defeat the objects of the Statute. Therefore, the petitioners must be granted the relief with the petition being disposed of observing that the *TRO's impugned order must be subject to the final *Retyped and replaced vide Court order dated 17.08.2023
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WP No. 234 of 2018outcome of the suit in O.S. No. 858 of 2008 and that the attachment in terms of Annexure-B shall prevail until final adjudication in the suit.
31. At this stage, Sri Chythanya K K points out that this Court has granted an interim order on 09.01.2015 staying the operation of the *TRO's impugned order dated 07.11.2017 on the condition that a sum of Rs.1.25 Crores be deposited, and this amount has also been deposited with the third respondent on 24.01.2018 and communicated to the first respondent.
32. Sri Chythanya K K submits that the attachment prevailing until culmination of the suit and the TRO's impugned order being made subject to the outcome of the suit in O.S. No. 858 of 2008, there must be necessary directions to the *TRO to refund this amount.
*Retyped and replaced vide Court order dated 17.08.2023
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WP No. 234 of 2018He canvasses that if the petitioners fail in the suit, the *TRO will bring the subject properties to sale, and on the other hand, if the petitioners succeed in the suit, the *TRO cannot have any claim in the properties and there cannot be any claim against the petitioners for any amount.
33. As against these submissions, it is submitted by the respondents that the first petitioner will have to pay the balance amount of Rs.2 Crores and appropriate orders will therefore have to be made to ensure that this amount is available subject to the outcome of the writ petition. Sri Chythanya K K responds in rejoinder that whether the first petitioner is actually due to pay any amount is a matter that will have to be decided subject to the outcome of the suit.
*Retyped and replaced vide Court order dated 17.08.2023
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34. It is obvious from the above that the Revenue's interest is not jeopardized as the subject properties shall continue to be attached until culmination of the suit and if the petitioners fail in the suit, the subject properties, as canvassed, will be brought to sale for all amount dues as of that date. Therefore, this Court is of the considered view that there must be directions to the *TRO to refund the sum of Rs.1.25 Crores deposited by the petitioners pursuant to the interim order of this Court. Hence the following:
ORDER The petition stands disposed of observing that the Attachment Order dated 28.06.2017 as per Annexure-B shall continue to be in force until the final outcome in the suit in O.S.No.838/2008, and further the *Retyped and replaced vide Court order dated 17.08.2023
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TRO's impugned order dated 07.11.2017 as per [Annexure-A] is made subject to the outcome of the suit in OS No. 838/2008. The *TRO and the second respondent are called upon to refund the amount of Rs.1.25 crores deposited by the petitioners in compliance with this Court's interim order at the earliest, and in any event within an outer limit of four months from the date of receipt of a certified copy of this order.
Sd/-
JUDGE NV *Retyped and replaced vide Court order dated 17.08.2023
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WP No. 234 of 2018IN THE HIGH COURT OF KARNATAKA AT BENGALURU [SRI RUDRASWAMY AND ANOTHER VS. THE TAX RECOVERY OFFICER AND OTHERS] BMSPJ 17.08.2023 (VIDEO CONFERENCING / PHYSICAL HEARING) ORDER ON IA NO.1/2023 This Court has disposed of this petition by order dated 30.03.2023 observing that attachment order dated 28.06.2007 shall be in force until the final outcome in the suit in O.S.No.838/2008 and that the first respondent
- TRO's order dated 07.11.2017 is made subject to the outcome of the suit with further direction to the TRO to refund an amount of Rs.1.25 Crores deposited.
The present application is filed pointing out that this Court, instead of referring "TRO" as such, in the course of the order this Court has referred to the "TRO" as the "third respondent" in many places, and it is also stated that the direction for refund must be to the "TRO and the second respondent" and not just to the "TRO".
On perusal of the records including this Court's order dated 30.03.2023, it must be observed that indeed the
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WP No. 234 of 2018application is well founded and there must be corrections in the order dated 30.03.2023 as regards the "TRO" being mentioned as the "third respondent". As the corrections will be required in number of places in the order dated 30.03.2023 and to ensure that there is no ambiguity, the application stands disposed of observing that in the order dated 30.03.2023 wherever the "TRO" is referred to as the "third respondent", it shall be read as "TRO".
The office is directed to issue a fresh certified copy of this Court's order dated 30.03.2023 with necessary changes.
SD/-
JUDGE SA List No.: 1 Sl No.: 9