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2025 DIGILAW 640 (AP)

Bio Green Papers Ltd. v. State of Andhra Pradesh

2025-05-02

K.MANMADHA RAO, R.RAGHUNANDAN RAO

body2025
JUDGMENT : R. RAGHUNANDAN RAO, J. 1. As both the writ petitions relate to the same auction proceedings between the same parties, they are being disposed of by way of this common order. 2. Heard Sri M.V. Subba Reddy, learned counsel appearing for the petitioner W.P.No.24746 of 2021, Sri V. Sudhakar Reddy, learned counsel appearing for the petitioner in W.P.No.1280 of 2022 and learned Government Pleader for Commercial Tax, appearing for the respondents. 3. The petitioner in W.P.No.24746 of 2021 had established a manufacturing unit for manufacture of craft paper in Srikakulam District. The petitioner had been granted concessions whereunder, the sales tax payable on the sale of products of the petitioner were deferred for 14 years from 09.07.1999. This deferment was subject to certain conditions, including the condition that the petitioner would not stop production activity. As the petitioner had stopped production prior to the 14 year period, and as the petitioner was unable to clear the deferred payment of tax, proceedings were initiated under the provisions of the A.P. Revenue Recovery Act, 1864 (for short ‘the Act’). 4. Initially, a notice dated 08.09.2014 was issued, under the provisions of the Act, for sale of Ac.31.77 cents of land belonging to the petitioner. The petitioner sought to resist the same by appealing to the Government as well as the Commercial Tax Department for revival of the unit of the petitioner and for grant of further time for clearing the sales tax dues. Apart from this, the petitioner also approached the erstwhile High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh, by way of W.P.No.342 of 2018. The erstwhile High Court, by order dated 14.02.2018, directed the respondent authorities to consider the petitioner’s application for revival and pass orders thereon within two months from the date of receipt of the petitioner’s application and not to take any coercive steps till the application of the petitioner is considered. The petitioner is said to have filed his application for revival. However, according to the petitioner, no decision was rendered by the authorities on his application. 5. The respondent authorities again sought to initiate further proceedings for sale of the land. The petitioner is said to have filed his application for revival. However, according to the petitioner, no decision was rendered by the authorities on his application. 5. The respondent authorities again sought to initiate further proceedings for sale of the land. At that stage, the petitioner had approached this Court, by way of W.P.No.24746 of 2021, contending that the 4 th respondent had issued a public notice for auction, dated 25.10.2021, for sale of the land of the petitioner to be conducted on 28.10.2021, and the same was contrary to the provisions of the Act. The petitioner sought a declaration that the said re-auction public notice, dated 25.10.2021, was violative of the principles of natural justice as well as the provisions of the Constitution of India and the order of the erstwhile High Court in W.P.No.342 of 2018 and consequentially to set aside the public notice. The petitioner also sought a direction to the respondents to permit the petitioner to sell the properties of the petitioner in small lots so as to derive better price for the land, so that the tax dues of the department can be cleared. 6. This Court had initially granted stay on condition of payment of certain amounts of money. As the petitioner was unable to comply with the said directions, the auction process was permitted to go on. 7. On 28.10.2021, the auction was held and the 5 th respondent, in W.P.No.24746 of 2021, was declared as the successful auction purchaser. Thereafter, the 5 th respondent, on his application, was impleaded as respondent No.5 in the writ petition. 8. The 5 th respondent, in W.P.No.24746 of 2021, also approached this Court by way of W.P.No.1280 of 2022 on the ground that the respondent authorities were not receiving the balance sale consideration and issuing appropriate sale certificate because of which, his money was locked with the respondent authorities, and there was no clarity as to when the sale process would be completed. The 5 th respondent in W.P.No.24746 of 2021 sought a direction to the respondent authorities for completion of the sale process. 9. The successful bid amount, of the 5 th respondent, was for Rs.3,30,30,000/- for purchase of Ac.31.77 cents of land. The 5 th respondent in W.P.No.24746 of 2021 sought a direction to the respondent authorities for completion of the sale process. 9. The successful bid amount, of the 5 th respondent, was for Rs.3,30,30,000/- for purchase of Ac.31.77 cents of land. The 5 th respondent in W.P.No.24746 of 2021 is said to have deposited 47,65,500/- as 15% of the total value of the property and was ready to pay the remaining sale consideration in terms of the provisions of the Act. 10. During the pendency of these writ petitions, the Deputy Assistant Commissioner, who is arrayed as the 4 th respondent, in W.P.No.1280 of 2022, had issued a notice on 07.02.2022, calling upon the auction purchaser to pay the balance amount of Rs.2,82,64,500/-. Accordingly, the auction purchaser is said to have deposited 8 Demand Drafts aggregating to the aforesaid sum on 09.02.2022. In a parallel development, both the writ petitions came up before this Court, on 09.02.2022. On that day, this Court had stipulated that it would be open to the petitioner in W.P.No.24746 of 2021, to deposit a sum of Rs.1,00,00,000/- by 16.02.2022 failing which it would be open to the authorities to complete the exercise of sale of the property subject to the further condition of the auction purchaser paying the entire bid amount. 11. As the petitioner in W.P.No.24746 of 2021 was unable to deposit a sum of Rs.1,00,00,000/-, subsequent proceedings of issuance of sale certificate in Form-VIII and proclamation of sale in Form-X were issued on 25.02.2022, and the same were also published in the Srikakulam District Gazette, dated 17.03.2022. Apart from this, possession of the land was also handed over to the auction purchaser. 12. The petitioner, in W.P.No.1280 of 2022, has also brought to the notice of this Court, the further developments in the disposal of the land. According to the petitioner, in W.P.No.1280 of 2022, the petitioner had converted the land to non-agricultural purpose and had formed a layout, which was sold to various persons under registered deeds of sale. The petitioner, in W.P.No.1280 of 2022, further states that he does not hold any of the land purchased by him as the entire extent of land has already been disposed of. 13. The case of the petitioner, in W.P.No.24746 of 20221, is that the auction conducted on 28.10.2021 is illegal, violative of Section 36 of the Act and requires to be set aside. 13. The case of the petitioner, in W.P.No.24746 of 20221, is that the auction conducted on 28.10.2021 is illegal, violative of Section 36 of the Act and requires to be set aside. Apart from this, the auction is violative of the directions of the erstwhile High Court dated 14.02.2018 in W.P.No.342 of 2018. 14. The petitioner contends that the erstwhile High Court, by its order, dated 14.02.2018, had directed the Commercial Tax Department not to take any coercive steps for recovery of arrears until the application of the petitioner for revival had been considered and a decision is being communicated to the petitioner. The petitioner stated that no such communication has been given and as such no sale could have been conducted on 28.10.2021. 15. The 4 th respondent-Deputy Assistant Commissioner, in W.P.No.24746 of 2021 had filed a counter affidavit. In the counter affidavit, it is stated that the petitioner, in pursuance of the directions of erstwhile High Court dated 14.02.2018, had submitted a representation dated 20.02.2018. The Commissioner of Industries and the Chairman State Level Rehabilitation Committee had thereupon issued a letter dated 27.03.2018 informing the petitioner that the guidelines for revival of small scale industries, contained in G.O.Ms.No.203, dated 20.07.2006 required such industries to submit proposals to the concerned bank or the financial institution after which, the said Committee would examine the report of the financial institution and the appraisal report, to verify whether the application for revival is in accordance with the guidelines laid down in the scheme. A further communication was also sent on 12.08.2018 informing the petitioner that the proposals need to come from the lending institutions for consideration for providing rehabilitation. However, the petitioner neither submitted proposals from any financial institution nor did he communicate any further proposal to the Commercial Tax Department or to the Industries Department. These facts were informed to the Chief Commissioner of State Tax with the further submission that the orders of the erstwhile High Court, in W.P.No.342 of 2018 had been complied. Thereupon, the Commercial Tax Department had continued recovery proceedings. These contentions in the counter affidavit have not been controverted by the petitioner. 16. These facts were informed to the Chief Commissioner of State Tax with the further submission that the orders of the erstwhile High Court, in W.P.No.342 of 2018 had been complied. Thereupon, the Commercial Tax Department had continued recovery proceedings. These contentions in the counter affidavit have not been controverted by the petitioner. 16. The said averments, set out in the counter affidavit of the 4 th respondent, and the fact that these averments are not disputed by the petitioner, are sufficient for this Court to hold that there has been compliance of the directions of the Hon’ble High Court dated 14.02.2018. 17. The petitioner in W.P.No.24746 of 2021 contends that the sale of the property, by the auction dated 20.10.2021 suffers from two infirmities, which are fatal. Firstly, Section 36 of the Act requires a minimum notice period of 30 days before an auction can be conducted. Failure to adhere to the minimum period of 30 days would render the sale null and void, as held by a Division Bench of the erstwhile High Court of Andhra Pradesh in the case of Madali Narasimha Rao vs. Neerla Rangaiah , 1975 (1) APLJ 41 . The petitioner contends that the auction public notice was issued on 25.10.2021, whereas the auction was conducted on 28.10.2021 with a gap of three days, and the same is violative of the requirement under Section 36 of the Act of a minimum period of 30 days between the issuance of notice and conduct of auction. Secondly, Section 36 of the Act requires the deposit of 15% of the price of the land at the time of the auction and payment of the remaining purchase money within 30 days, failing which the money deposited till then would be liable for forfeiture. Apart from this, where the purchaser refuses or omits to deposit the initial 15% or the balance purchase money, the property should be resold at the expense of and hazard of such purchaser. 18. The petitioner contends that there was only a three day gap between the date of publication of notice and the date of auction and that the auction purchaser should have deposited the remaining amount of Rs.2,82,64,500/- by 18.11.2021, but had deposited the money on 09.02.2022 and the same is a violation of the requirement of Section 36 of the Act. 19. 19. The 4 th respondent in his counter states that the notice of re-auction dated 25.01.2021 had been served on the petitioner on 25.09.2021 itself. It is further stated that the petitioner had acknowledged the same by stating on the notice that the petitioner had received both Telugu and English copies on 25.09.2021. It is further stated that the public notices were also mailed digitally on 30.09.2021. Apart from this, auction notice was also published in two local Newspapers on 20.10.2021 and 21.10.2021. 20. Section 36 of the A.P. Revenue Recovery Act 1864 reads as follows: 36. Procedure in sale of immovable property: - In the sale of immovable property under this Act the following rules shall be observed. First - Publication : - The sale shall be by public auction to the highest bidder. The time and place of sale shall be fixed by the Collector of the district in which the property is situated, or other officer empowered by the Collector in that behalf. The time may be either previous to or after the expiration of the fasli year. Second - Notification one month before sale : - Previous to the sale the Collector, or other officer empowered by the Collector in that behalf, shall issue a notice thereof in English and in the language of the district, specifying the name of the defaulter; the position and extent of land of his buildings thereon; the amount of revenue assessed on the land, or upon its different sections. The proportion of the public revenue due during the remainder of the current fasli; and the time, place, and conditions of sale. This notice shall be fixed up one month at least before the sale in the Collector's office and in the Taluk cutcherry, in the nearest police station house, and on some conspicuous part of the land. Third - Deposit by purchaser : - A sum of money equal to fifteen per cent of the price of the land shall be deposited by the purchaser in the hands of the Collector, or other officer empowered by the Collector in that behalf at the time of the purchase, and where the remainder of the purchase-money may not be paid within thirty days, the money so deposited shall be liable to forfeiture. Fourth - Re-sale in default of payment: - When the purchaser may refuse or omit to deposit the said sum of money or to complete the payment of the remaining purchase money, the property shall be re-sold at the expense and hazard of such purchaser, and the amount of all loss or expenses which attend such refusal or omission shall be recoverable from such purchaser in the same manner as arrears of public revenue. Where the lands may, on the second sale, sell for a higher price than at the first sale, the difference shall be the property of him on whose account the said first sale was made. Fifth : xxxxx 21. The second condition, in Section 36 of the Act states that the notice of auction shall be fixed up one month at least before the sale, in the Collector’s Office and in the Taluk cutcherry, etc. The requirement of compliance of this condition and consequences of non-compliance were considered by a Division Bench of the erstwhile High Court of Andhra Pradesh in Madali Narasimha Rao vs. Neerla Rangaiah . The Division Bench, after reviewing the scheme of the Act, had also gone into the requirement of a minimum period of one month elapsing from the date of notice to the date of sale. The Division Bench, in paragraph 16 of the said judgment, had held that the scheme of the Act provided an opportunity for the defaulter, to make good the default at any point of time, prior to the conduct of the sale and that a further period of 30 days is given, even after the sale, to get the sale set aside by depositing the amount which has been defaulted. The Division Bench held that in that view of the matter, Section 36 of the Act requires a minimum period of 30 days before the conduct of the auction, has to be given to the defaulter. The Division Bench held that violation of this requirement of notice to the defaulter would strike at the very root of the matter as any sale, within 30 days, would deprive the defaulter of his valuable right to clear his liability and save his property. The Division Bench held that violation of this requirement of notice to the defaulter would strike at the very root of the matter as any sale, within 30 days, would deprive the defaulter of his valuable right to clear his liability and save his property. 21.1 In the present case, the petitioner has not controverted the contention of the 4 th respondent that notice of auction had been served on the petitioner, on 25.09.2021 while the auction was conducted on 28.10.2021. The publication of the notice on 20.10.2021 and 21.10.2021 in the Newspapers would not make any difference to the second condition prescribed under Section 36 of the Act. 22. The contention of the petitioner was that the third condition set out in Section 36 requires deposit of the auction purchase amount in two installments of 15% at the time of the auction and deposit of the remaining amount within 30 days has not been complied. The averments in the counter affidavit filed by the respondents as well as the affidavit filed by the petitioner in W.P.No.1280 of 2022 show that the initial deposit of 15% had been completed by the auction purchaser within time. The remaining purchase money was to be paid within 30 days from the date of auction. However, it has been paid beyond the said 30 days period. At first blush, it would have to be held that there is non-compliance of the requirement of the third condition. 23. This non-compliance appears to have arisen on account of reluctance of the authorities to receive the sale consideration from the 5 th respondent in W.P.No.24746 of 2021 on account of pendency of the writ petition. The communication addressed by the 5 th respondent as well as the averments in the affidavit filed before this Court, would show that the 5 th respondent is ready and willing to deposit the money at any point of time. In the circumstances, the delay in depositing of money was not on account of any refusal or omission on the part of the 5 th respondent in depositing the said money. The fourth condition in Section 36 of the Act stipulates that there would be re-auction of the property where the purchaser refuses or omit to deposit the money. The 5 th respondent, in W.P. No. 24746 of 2021 had never omitted or refused to pay the remainder of the sale consideration. The fourth condition in Section 36 of the Act stipulates that there would be re-auction of the property where the purchaser refuses or omit to deposit the money. The 5 th respondent, in W.P. No. 24746 of 2021 had never omitted or refused to pay the remainder of the sale consideration. There does not appear to be any case made out for setting aside the auction on account of non-deposit of the remaining amount of purchase money within 30 days from the date of auction. 24. For all the aforesaid reasons, W.P.No.24746 of 2021 is dismissed. 25. As the respondent authorities have received the balance sale consideration and have completed the sale formalities, nothing further remains in W.P.No.1280 of 2022 and the same is accordingly closed. There shall be no order as to costs. As a sequel, miscellaneous petitions, pending if any, shall stand closed.