N B FILMS Vs. DAYA SHANKER

JUDGEMENT

(1.) The short point that this petition raises is as to the power of the Court to issue process in execution of a decree against the property of a defaulter against whom a notice under Rule 2 of the Second Schedule to the Income Tax Act, 1961 has been issued in respect of payment of outstanding tax.

(2.) The respondent obtained a decree against the petitioner from the Additional Judge, Small Causes Court, Delhi on June 2, 1961. Before the execution could be taken out, the petitioner had received a notice from the income tax authorities under Rule 2 of the said Schedule followed by another claiming a total sum of about Rs. 4,000.00 from the defaulter on account of arrears of income tax. The petitioner filed objections to the execution procedings on the ground that by virtue of the aforesaid notice, no process could be issued by the executing Court pursuant to the decree against any property of the petitioner by virtue of the bar created for the issue of such a process by Rule 16 (1) of the said Schedule. On this objection, the executing Court by an order of May 25, 1973, held that the bar of Rule 16 (1) would operate only if the property sought to be proceeded against in execution had been attached pursuant to the notice issued under Rule 2 and, therefore, directed the petitioner to show as to whether the income tax authorities had actually attached any property of the petitioner pursuant to the aforesaid notices. This order proceeded on the basis that the bar of Rule 16 (1) would operate only in respect of the property of the defaulter which had in fact been attached under the Rules. The petitioner was unable to furnish any further material with the result that by an order of June 1, 1973, the executing Court over-ruled the objection on the ground that the income tax authorities had not affected any attachment of any property of the petitioner in pursuance of the notice of demand and the bar of Rule 16 (1) would not, therefore, be attracted. The execution was directed to proceed and warrant of attachment in respect of certain property of the petitioner was directed to be issued. It is these orders of the executing Court which are sought to Ie challenged in the present petition.

(3.) Learned counsel for the petitioner contends that on a true construction of Rule 16 (1), it must be held that once notice under Rule 2 was issued to a defaulter, he becomes disentitled in terms of Rule 16 (1) to mortgage charge, lease or otherwise deal with any pro- perty belonging to him except with the permission of the Tax Recovery Officer and that no process against any such property can be issued by any Civil Court in execution of a decree for the payment of the amount. The argument of the learned counsel in sum is that the expression "such property" occurring in Rule 16 (1) must be construed to mean "property" belonging to the defaulter which the defaulter becomes disentitled to deal with by virtue of Rule 16 (1) of the Schedule as a result of notice issued under Rule 2 thereof.