BHAGWANDAS ATMASINGH BAJAJ Vs. GULAM MOHIUDDIN M SAYYED

JUDGEMENT

(1.) IN insolvency proceedings against the two respondents who are husband and wife, the appellant claimant has been shown by the respondent as a creditor in respect of a sum of Rs. 10,000 only, while the appellant claimant has filed before the official assignee of the High Court a claim for Rs. 1 lakh which is said to be due from the insolvents. According to the respondents, the claimant had disclosed the amount due from them as being Rs. 10,000 only in a statement filed by him with the IT authorities on 19th Nov., 1971. By an ex parte order dt. 29th Sept., 1978, the Insolvency Registrar was ordered at the instance of the respondents to issue letters of request to, (i) the CIT, Bombay City V, (ii) the CIT (Central) Bombay, and (iii) the 7th ITO, A Ward, Piramal Chambers, Parel, Bombay, to cause to produce an application for settlement under S. 271(4A) of the IT Act, 1961, filed by the claimant with the CIT (Central), Bombay, as well as the order made by the CIT, Bombay. These documents were to be produced before the official assignee at the time of examination of the claimant. A notice of motion taken out by the appellant to have this ex parte order set aside having been dismissed, the appellant has now filed this appeal to have the order, requiring the Insolvency Registrar to issue the necessary letters, set aside.

(2.) MR . Keshavdas Dalpatrai has based his challenge to the impugned order on a notification issued under S. 138(2) of the IT Act, 1961, dt. 23rd June, 1965, by the Central Govt. The material part of the said notification reads as follows [(1965) 57 ITR (St.) 33] :

(3.) THE notification which is relied upon by the learned counsel for the appellant is issued in the exercise of the power contained in the above quoted provision. The question whether the notification relied upon is a notification of general application in the case of all assessees or whether, as contended on behalf of the respondents, it applies only in the case of a banking company has to be decided on the construction of the said notification. Now, the opening part of the notification refers to "the practices and usages customary among banking companies and to other relevant factors". Prima facie on a reading of the opening part of the notification, an indication is clearly given that while issuing the notification, the practices and usages customary among the banking companies have been considered by the Central Government at the time of issuing the notification. We are concerned only with cl. (i) of the notification and having analysed the notification carefully, we are left in no doubt that the notification is intended only to operate in respect of a banking company. The power under S. 138(2) of the IT Act, 1961, has to be exercised in order to prevent furnishing of any information or production of any document by a public servant. That is the subject matter of the notification. If cl. (i) of the notification is carefully read and analysed, broadly it can be divided into three parts. The first part deals with the source of the information and these sources are any statement made, return furnished or accounts or documents produced under the provisions of the Act, or in any evidence given, affidavit or deposition made. The second part describes the proceedings in which the statements or the returns or the accounts or evidence or affidavit or deposition has been made. This is clarified by using the words " in the course of any assessment proceedings under the Act or the Indian IT Act, 1922 (XI of 1922), (other than proceedings under Chapter XXII of the Act or Chapter VIII of the Indian IT Act, 1922), or in any record of any assessment proceedings or any proceeding relating to recovery of a demand". These words will indicate that two kinds of proceedings are contemplated, one is the assessment proceeding and the other is the proceeding relating to the recovery of a demand. Reading the first and the second part together, to take an illustration, an information may be in any statement made either in the course of any assessment proceeding or it may be in any record of any assessment proceeding or it may be in any proceeding relating to the recovery of a demand. So far as the information given in any evidence is concerned, such evidence may have been given in the course of any assessment proceeding or such evidence may be in any record of any assessment proceeding or such evidence may be in any proceeding relating to the recovery of a demand. Then the words used in the notification are "by or on behalf of or in respect of an assessee" and these words, excluding the material parenthetical clauses must qualify the earlier clauses dealing with the nature of information and the documents in which the information is contained. Thus the material clause will read "furnish any information contained in any statement made, return furnished or accounts or documents produced under the provisions of the Act, or in any evidence given, affidavit or deposition made ...... by or on behalf of or in respect of an assessee". The assessment proceeding must, therefore, be in respect of an assessee ; the information or the evidence, as the case may be, has to be given by or on behalf of an assessee and then the last part of the clause identifies such assessee by using the words "being a banking company within the meaning of S. 34A of the Banking Companies Act, 1949 (X of 1949)". Read in the manner indicated above, and that is the only manner in which the said clause can be read, it is obvious to us that the notification was intended to operate only in respect of an assessee which was a banking company within the meaning of S. 34A of the Banking Companies Act, 1949.