STATE OF MAHARASHTRA Vs. M N KAUL DEAD

JUDGEMENT

(1.) By an order dated February 12, 1962 this Court granted conditional stay of the operation of an Assessment Order passed by the Sales Tax Officer (XII) Enforcement Branch. Greater Bombay, and of the notice of demand issued by him against Dr. M. N. Kaul (deceased). The notice of demand required Dr. Kaul to say Rs. 18,240,06 P. and stay was granted on condition that Dr. Kaul must furnish bank guarantee for the amount in favour of the Registrar of this Court Dr. Kaul furnished guarantee of the National and Grindlays Bank Ltd. and it was accepted by this Court and the Sales Tax Officer. We shall presently refer to the terms of this guarantee which was executed by the Bank on March 23, 1962. Dr. Kaul died and the Writ Petition was placed before this Court on March 15, 1965. On that date the minutes record:

(2.) On November 25, 1965 the State of Maharashtra moved Civil Miscellaneous Petition No. 331 of 1966. It was stated that the order of stay had come to an end and the amount of Rs. 18.240.06 P. which had by addition of interest become Rs. 19,581.50 P. became payable. The State, therefore, sought to recover the amount from the guarantor. As there was a deficit of a sum of Rs. 1.341.44 P., the State asked to be paid that amount from the security for costs of Rs. 2,500 deposited by Dr. Kaul in this Court. The matter was heard on a notice of motion taken out on February 7, 1966. On February 3, 1966, the Bank addressed a letter to the Registrar to the following effect:-

(3.) On February 23, 1966, the Bank filed a counter-affidavit, raising several objections. The first objection was that the application was incompetent in the absence of the legal representatives of Dr. Kaul. The second was that the guarantee had become unenforceable as the time limit for its enforcement had expired. Lastly the Bank declined liability in excess of the amount of the guarantee. A further affidavit was filed by the Bank stating that on or about March l1, 1966 the Bank received a notice purporting to be under S. 17 of the Bombay Sales Tax Act from the Office of the Sales Tax Officer asking the Bank to pay the sum of Rupees 18,240.06 P., without prejudice to the application for directions pending in this Court. The Bank further stated that an amount of Rs. l8,411.97 P. was standing to the credit of the late Dr. M. N. Kaul with the Bank. The Bank offered to remit the amount in answer to the notice under S. 17 of the Sales Tax Act provided the Bank Guarantee was cancelled and discharged. The notice of March 11, 1966 was made an annexure of the affidavit.