SURINDER NATH KAPOOR versus UNION OF INDIA & ORS.

SURINDER NATH KAPOOR versus UNION OF INDIA & ORS.

Since garnishee order for Rs.8,56,377.55 was passed without notice for the sum specified or opportunity to show cause, and was not supported by evidence as due, both the order and the resultant auction sale are nullities.

Parties
Applicant: Surinder Nath Kapoor; Respondents: Union of India & Ors.; Auction Purchaser: Raja Properties; Defaulter Firm: M/s. Krishna Kapoor & Co.; Beneficiary Firm: M/s. Indo-Kashmir Carpets & Handicrafts
Jurisdiction
India
Judgment Date
03 August 1988
Procedural Posture
Civil Miscellaneous Petition / Supreme Court Order Disposing CMP Following SLP
Outcome
Civil Miscellaneous Petition disposed; auction sale set aside as null and void.
Legal Topics
Income Tax Recovery, Garnishee Proceedings, Auction Sale, Nullity of Orders, Compensation
Tax Law Income Tax Recovery Garnishee Proceedings Auction Sale Nullity of Orders Compensation

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Parties

Surinder Nath Kapoor

Applicant

Union of India & Ors.

Respondents

Raja Properties

Auction Purchaser

M/s. Krishna Kapoor & Co.

Defaulter Firm

M/s. Indo-Kashmir Carpets & Handicrafts

Beneficiary Firm

Procedural Posture

Civil Miscellaneous Petition / Supreme Court Order Disposing CMP Following SLP

Legal Issues

  1. 1 Whether a garnishee order under section 226(3)(x) of the Income Tax Act for an amount not specified in notice and without notice is null and void
  2. 2 Whether a sale pursuant to such an order is also null and void
  3. 3 Entitlement of auction-purchaser to compensation after sale is set aside

Ratio Decidendi

Since garnishee order for Rs.8,56,377.55 was passed without notice for the sum specified or opportunity to show cause, and was not supported by evidence as due, both the order and the resultant auction sale are nullities.

Court Disposition

Civil Miscellaneous Petition disposed; auction sale set aside as null and void.

Orders

  • Auction-purchaser Raja Properties entitled to unconditional refund of deposit Rs.37,81,000.
  • Auction-purchaser entitled to interest of Rs.14,17,875 at fifteen percent per annum for two and a half years; Rs.11,17,875 to be paid by Revenue, Rs.3,00,000 by M/s. Krishna Kapoor & Co. and/or Surinder Nath Kapoor.