Can a Writ Petition Under Article 226 Collaterally Challenge an Auction Sale Under the Revenue Recovery Act Without Invoking Sections 37-A or 38 Within 30 Days?

Summary

Practical Impact

What’s New / What Lawyers Should Note

• Clarifies that Sections 37-A and 38 of the Revenue Recovery Act constitute the exclusive and mandatory remedy to set aside an auction sale within 30 days.
• An interim order staying confirmation does not extend the 30-day limitation under the statute.
• Deposits made under interim directions of a court do not substitute for a formal application under Section 37-A.
• Rights vest in an auction-purchaser upon confirmation; collateral writ challenges after four years are impermissible absent fraud or material irregularity.
• Review jurisdiction cannot be used to re-open concluded statutory proceedings without an “error apparent on the face of the record.”

Summary of Legal Reasoning

1. The Revenue Recovery Act’s Sections 37-A and 38 prescribe a self-contained mechanism to set aside a sale within 30 days of the auction.
2. The appellant did not avail herself of these remedies within the prescribed period; limitation thus operates as an absolute bar.
3. The High Court’s interim stay on confirmation did not enjoin the auction date nor suspend the statutory timeline.
4. Reliance on State of M.P. v. M.V. Vyavsaya & Co. and Rajasthan Housing Board v. Krishna Kumari underscores judicial reluctance to hamper State revenue absent clear illegality.
5. Valji Khimji & Co. confirms that rights accrue on confirmation and can only be disturbed for proven fraud or substantial irregularity.
6. Review proceedings cannot be a substitute for an appeal; they succeed only upon an error apparent on the face of the record.

Arguments by the Parties

Petitioner (Appellant):

• Auction was illegal as it occurred during pendency of writ petition with an interim stay on confirmation.
• Deposited dues (Rs. 3,41,900) as per court directions, satisfying the demand.
• Second auction notice during sub-judice proceedings violated natural justice.
• Recovery barred by limitation; should have proceeded under CPC.

Respondents 1–3 (Revenue Authorities):

• Default by appellant’s husband on arrack shop payments led to valid ex-parte decree.
• Auction and confirmation conducted in compliance with Revenue Recovery Act.
• Appellant failed to invoke Sections 37-A or 38; challenge belated and statutory remedies unexhausted.

Respondent 4 (Auction-Purchaser):

• Paid full auction price on sale date; sale confirmed in 2008 without any stay.
• No application was filed within 30 days to set aside sale.
• Property registered in purchaser’s name and transferred to bona fide third parties; challenge is infructuous.

Factual Background

In 1972–73, the appellant’s husband defaulted on payments for arrack and toddy shops, leading to an ex-parte decree in 1987 for Rs. 56,170.20. After his death, the revenue authorities issued auction notices in 2005 under the Tamil Nadu Revenue Recovery Act to recover the arrears. An auction was held on 29.07.2005 and confirmed on 23.07.2008. The appellant did not file any application under Sections 37-A or 38 within the 30-day limitation. The High Court dismissed her writ petition, writ appeal, and review application, prompting the present appeal.

Statutory Analysis

• Sections 37-A and 38 of the Revenue Recovery Act provide exclusive modes to set aside a sale—(a) deposit of the due amount or (b) challenge on grounds of irregularity/fraud—within 30 days of sale.
• Limitation is mandatory; no extension by interim judicial orders.
• Once sale is confirmed, rights vest in the purchaser and are final barring proven fraud or substantial irregularity.

Alert Indicators

• ✔ Precedent Followed