HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Surinder Nath Kapoor v. Union of India and Others
Civil Miscellaneous Petition No. 2340 of 1988 in Special Leave Petition (Civil) No. 9946 of 1987
[1988] Supp. 2 SCR 211 ·
Income-tax Act, 1961: sections 222 to 226, especially section 226(3)(x) · Income-tax Act, 1961: Second Schedule, rules 61 and 86
Holding and result. A garnishee could be deemed in default only for the Rs.2,86,450 specified in the notice; the order and sale for Rs.8,56,377.55 were nullities despite confirmation, and compensation was awarded to the auction purchaser.
Sources & disclosures includedDownload original judgment / order
Two-judge bench; order delivered for the Court. · Ranganath Misra, J. · Murari Mohon Dutt, J.
01 · Facts of the case
A notice under section 226(3) specified Rs.2,86,450 as due from Krishna Kapoor & Co. to an assessee concern. The IAC nevertheless made a garnishee order for Rs.8,56,377.55 and the Tax Recovery Officer sold property to Raja Properties for Rs.37,81,000. Later proceedings and a representation about tax payment led the Supreme Court to set aside the sale.
02 · Discussion by the Hon’ble Court
Section 226(3)(x) deemed the garnishee in default only for the amount specified in the notice. The larger figure lacked a notice and hearing foundation, so the order was a nullity and every enforcement step based on it was likewise void. Confirmation could not cure absence of the foundational order. Revenue and the firm shared responsibility for compensating the innocent purchaser.
Source: Primary judgment: reasoning
03 · Judicial decision
The Rs.8,56,377.55 garnishee order and auction sale were null and void. The earlier sale-setting-aside order was not recalled despite misrepresentation; instead the Court allocated compensation responsibility.
Source: Primary judgment: holdings
04 · Outcome / in whose favour
Petition disposed of without costs. The purchaser could withdraw Rs.37,81,000 and received Rs.14,17,875 interest compensation: Rs.11,17,875 from Revenue and Rs.3 lakh from the firm or Surinder Nath Kapoor.
05 · AKHB REVIEW POINT
AKHB analysis: match a garnishee default and every recovery step to the exact amount and notice that create jurisdiction. A confirmed sale may still collapse where the foundational recovery order is a nullity, but compensation and third-party consequences require separate treatment.
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
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Later treatment
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General legal and tax research only; not legal or tax advice. Verify the complete judgment, governing statutory version and subsequent judicial treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court's holding, and no current-law clearance is claimed.