SRINIWAS PANDIT Vs. JAGJEET SINGH SAWHNEY S

JUDGEMENT

(1.) THIS application under S. 151 of the CPC has been moved by the Union of India, through the CIT, Central Delhi, New Delhi, as an interlocutory application in a proceeding to which neither the Union of India nor the CIT is a party. The application raises very substantial and important question regarding the interpretation of the Second Sch. of the INCOME TAX ACT, 1961. It is necessary to state that the application has been moved in the course of the execution proceedings which are pending in this Court in which one Shri Sriniwas Pandit is the decree -holder and S. Jagjeet Singh Sawhney and S. Gurcharan Singh Sawhney, who are brothers, are the judgment -debtors.

(2.) I may shortly state the facts of the case to the extent necessary for deciding this application. A decree was obtained by the said decree -holder against the judgment -debtors from the civil Court of Badayun (U.P.), which was transferred to this Court for execution. Even before the execution came to this Court, it was being entertained by a subordinate judge of Delhi, but on the setting up of the High Court of Delhi, the execution was transferred to the Delhi High Court, on the original side. In the course of the execution certain house property situated at 152/48, Diplomatic Enclave, Malcha Marg, New Delhi, which was partly owned by the judgment -debtors was attached and then ordered to be sold. Just a few days before the sale was to take place, the CIT moved the present application pointing out that the property in question had already been attached by the TRO under the Second Schedule to the INCOME TAX ACT, 1961. It was prayed in this application that the property in question should be released from attachment and the proclamation of sale should be withdrawn and the sale already fixed should be cancelled. In the alternative, it was prayed that in case the property was not released from attachment, the sale proceeds should be paid to the applicant to the extent necessary to satisfy the public dues outstanding against the two judgment -debtors before paying anything to the decree -holder. There seems to be no doubt that this Court had ordered the sale only of the interest of Jagjeet Singh and Gurcharan Singh in the property whereas their mother, Smt. Basant Kaur, is also a co -sharer in the property in question. As far as the Department is concerned, Smt. Basant Kaur is also a defaulter. According to the Department different amounts are due from Jagjeet Singh, Gurcharan Singh and Smt. Basant Kaur and the entire property has been attached for the purpose of realising these tax dues, in consequence of a certificate issued by an ITO to the TRO. It, therefore, appears that if the property is sold by the TRO, the intention is to recover the tax dues from all the three defaulters. But, as far as this Court is concerned, the execution of the decree is concerned with the sale of the interest of Jagjeet Singh and Gurcharan Singh only, and not with the remaining property. Now, the proceedings in this Court have been pending since 1967. It appears that even before the case was transferred to this Court under the provisions of the Delhi High Court Act, 1966, the property in question had already been attached for the purpose of executing the decree passed by the Civil Judge, Badayun. Since 1967, a number of objections of various types to the execution have been tried by this Court, and this Court has also recorded a decision, as per judgment of Prithvi Raj, J. delivered while deciding OMP 280 of 1968 and some other OMPs, that Smt. Darshan Kaur, step mother of Jagjeet Singh and Gurcharan Singh, was also entitled to a right of residence in this property. Eventually, by that very judgment the learned judge directed the sale of this property only as far as the interest of the two judgment -debtors was concerned. This sale was later stayed to await the decision of the present application. All these proceedings have taken place in this Court without the Court being made aware that a notice had been issued by the TRO under r. 2 of Sch. II of the INCOME TAX ACT, 1961. The effect of the issue of such a notice is set out in r. 16 of the said Sch. II. I quote only the relevant portion of that rule :

(3.) THE provisions of the Schedule are such that the ITO sends a certificate to the TRO and the TRO in turn sends a notice under r. 2 to the defaulters mentioned in the certificate. Under r. 2 of the said Schedule thee notice served on the defaulters requires them to pay the amounts specified in the certificate within 15 days, failing which steps can be taken to recover the amounts mentioned in the notice in compliance with the procedure set out in the Schedule. Now, when such a notice has been sent to the defaulters the only persons who know of the factum of such notice having been served are the defaulters and the TRO. The Court which is supposed to desist from issuing any process is completely unaware of the issue of such a notice till somebody brings such notice to the Court's notice. There is also another difficulty in complying with r. 16 which I may point out. The notice sent under r. 2 does not prescribe or specify any particular property and, therefore, it is not possible for any one to know as to which property is not to be proceeded against by operation of r. 16, except the person to whom such notice has been sent, i.e., the defaulters. The clear meaning of r. 16 is that all the property of the defaulters to whom the notice has been sent of every description, including his movable property, is incapable of being transferred, mortgaged, charged, leased or otherwise dealt with. It should, therefore, logically be the obligation of the defaulters to bring this fact to the notice of all the authorities concerned. Unfortunately, there is a lacuna in the rule as it does not make it obligatory of the defaulters to mention these facts to any person who may be dealing with this property, including a Court which may be about to issue a process in execution. I make these observations in this case, because they are so apparently appropriate here because the proceedings have been pending since the year 1967 and the demand notice of the TRO was also issued round about 1967. If this fact had been brought to the notice of this Court in 1967, all the multifarious proceedings that had taken place before the Court would have been avoided and the time taken to decide the numerous applications which had been placed before the Court would have been saved.