BANSAL EXPORTS PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This suit has been filed by the plaintiff on the allegations that the plaintiff had withdrawn amounts totaling Rs. 28,00,000.00 from Asaf Ali Road branch of Bank of India for the purposes of his business in the morning of 29th July, 1983 and it had a cash balance of Rs. 17,28,490.00 . On the same day at about 10.00 a.m. officers of the Directorate of Enforcement reached the premises of the plaintiff company and searched the same upto about 5.00 p.m. According to the plaintiff the raiding party did not find any incriminating documents. However, the said officers wrongly, illegally, unauthorisedly, maliciously and without any rhyme or reason or any justification summoned the Income-tax authorities to come to the premises and seize the said amount. On their having been summoned, the Assistant Director of Inspection (Investigation) of the Income-tax department made a thorough search of the premises from 5.30 p.m. to 10.00 p.m. and they also did not find any unaccounted money or any other incriminating documents. According to the plaintiff, the cash in the premises was found to be in order. The officers of the Income-tax department, however, sealed the safe in which the said cash amount was lying and passed a restraint order under Section 132(3) of the Income Tax Act sealing the safe containing the cash of Rs. 17,38,490 .00 . According to the plaintiff there was no justification for the officers of Income-Tax department to pass any restraint order under Section 132(3) and seal the safe with the cash lying therein. The plaintiff is alleged to have made representations to the Directorate of Enforcement and on having their not with drawn the restraint order, the plaintiff filed a Civil Writ Petition before the High Court of Delhi for returning the said amount. It is the case of the plaintiff that the Directorate of Enforcement made an application before the High Court of Delhi in the said writ petition for permission to seize the said amount as being necessary for the purposes of investigation into certain violations of the Foreign Exchange Regulations Act (FERA) by the plaintiff company. However, the said application was dismissed on 22nd March, 1984. According to the plaintiff, the writ petition was fixed for hearing on 24th April, 1984. It is alleged that anticipating a likely dismissal of the case put forward by the Income-tax department, the department two days prior to the date of hearing withdrew the restraint order and the writ petition was, therefore, dismissed on 24th April, 1984 as having become infructuous but the Court was pleased to award Counsel fee. It is, therefore, alleged that as the plaintiff has been wrong fully deprived of the use of the money from 29th July, 1983 to its release on 19th April, 1984 it was entitled to interest because of the plaintiff having been put to serious loss by the said money continuing to remain blocked under alleged wrongful orders of the Officers of the Income-tax department.

(2.) Written statement has been filed by the defendant. The defendant has taken the objection that suit is barred under Section 293 of the Income-tax Act as action of the Officers of the Government was in good faith and was done in accordance with the provisions of the Act in the discharge of public duties. The suit was stated to be not maintainable. It was also stated that plaint does not disclose any cause of action. On merits, the defendants have justified the passing of the restraint order because the availability of the cash of Rs. 17,38,490.00 was not duly accounted for in the relevant books of account. The cash book was written upto 26th July, 1983 and the statement of Shri Gopal Dass, Director of the Company and Shri Ashok Kumar, Accountant were not found to be satisfactory. Certain figures have also been quoted in the written statement to indicate that there was difference between the cash balance and the balance available, as per the books of account of the plaintiff- company. It has further been stated that Director of the plaintiff-company was requested to attend the Office of the Director of Inspection on 6th August, 1983 at 10.30 a.m. The Director did not attend the office and Shri D.S. Rastogi, Assistant Director of Inspection (investigation) visited the office of the plaintiff on 1st August, 1983 at 12.30 p.m. to conclude the search and take necessary action under the Income-tax Act. The premises was found to be locked with only a Chowkidar found at the premises. By a letter dated 9th October, 1983 it was proposed to take further action for completing the search on 10th August, 1983. The plaintiff however sought an adjournment by its letter dated 9th August, 1983 and vide letter dated 11th August, 1983 fresh opportunity was given to the plaintiff-company fixing the date as 22nd August, 1983 for concluding search and seizure operation. Officers of the Income-tax department visited the premises of the plaintiff on 22nd August, 1983 at 11.30 a.m. and stayed there upto 1.00 p.m. However, no one was present at the premises and the same was found to be locked. Mrs. Rani Singh Nair, Assistant Director of Inspection (Investigation) vide her letter dated 24th November, 1983 requested for certain explanations to be provided on 28th November, 1983. An appraisal information and material before the Department, a report was prepared on 9th December, 1983 by Shri P.S. Gupta, Assistant Director of Inspection ( Investigation). It is, therefore, stated that-the action taken by the defendant was in good faith and no malafide can be imputed. The action is stated to be in the discharge of public duties and warranted by law.

(3.) On the pleadings of the parties following issues were framed :- 1. Whether the suit is barred under Section 293 of the Income Tax Act? 2. Whether the restraint order passed by the defendants against the plaintiff was illegal. Arbitrary and unjust? If so, its effect. 3. Whether the plaintiff is entitled to interest by way of damages? If so, at what rate? 4. Relief.