STATE BANK OF PATIALA Vs. UNION OF INDIA

JUDGEMENT

(1.) MESSRS. Khosla Engineering Company, respondent No. 5, is a partnership firm comprised of respondents Nos. 6 to 10, carrying on the business of manufacturing electrical fans, motors and pumping sets at Kapurthala. These respondents opened cash credit accounts with the State Bank of Patiala at Kapurthala (petitioner herein), wherein the petitioner-bank had agreed to make advances to the extent of Rs. 20 lakhs. There were some other accounts of the firm in the bank. In order to secure the said cash credit accounts and some medium term loans, respondent No, 5 mortgaged all the lands, structures, buildings, plant and machinery situate at Jullundur Road, Kapurthala, with the bank by way of equitable mortgage by depositing title deeds. On May 15, 1968, the petitioner-bank filed a suit for the recovery of Rs. 22,59,137. 28 and interest thereon against respondents Nos. 5 to 10 in the Court of the Senior Subordinate Judge, Kapurthala, on the basis of the said mortgage and prayed for a preliminary decree in terms of Order 34, Rule 4, read with Order 34, Rule 2, of the Code of Civil Procedure, and some other reliefs including a declaration that the said aggregate sum of Rs. 22,59,137. 28 was due from the defendants jointly and severally to the plaintiff as on May 15, 1968. Other reliefs claimed were with regard to the interest on the said amount from May 15, 1968, up to the date of the decree at the rate of 7 per cent. per annum above the Reserve Bank of India rate with a minimum of 12 per cent. per annum with monthly rests, and interest on the decreed amount from the date of the decree up to the date of payment at the rate mentioned above. It is, thus, clear from the plaint, a copy of which has been filed with the petition as annexure " E ", that the suit filed by the petitioner-bank was on the basis of the mortgage referred to above. That suit is still pending, but the amount has been reduced to Rs. 13,34,158. 21, as the bank has received the remaining amount from the insurance company on account of the loss occasioned by a fire, which occurred in the factory of the said respondents.

(2.) AGAINST respondent No. 5 an assessment under the Income-tax Act was made which remained unsatisfied. On April 30, 1970, the Tax Recovery Officer, Amritsar, issued an order of attachment of immovable property of respondents Nos. 5 to 10 under Rule 48 of the Second Schedule to the Income-tax Act, 1961, reading as under :

(3.) THE petitioner-bank filed objections to the aforesaid attachment on December 24, 1970, in which it was stated that the attached properties were under mortgage with the bank and either the attachment should be vacated or the attached properties should be sold without prejudice to the rights and contentions of the bank and that sale should be made subject to the first charge of the bank to the extent of its dues from respondents Nos. 5 to 10, etc. In the objection-petition it was stated that the bank had filed a suit for the recovery of Rs. 22,59,137. 28 on the basis of the mortgage against the said respondents on May 15, 1968, but that the present out-standings were Rs. 13,34,158. 21 plus interest and other charges due from May 15, 1968, together with future interest, etc. It was also mentioned that the said respondents had been restrained by the Civil Court from alienating, removing or damaging in any way the mortgaged properties and that an appeal against that order had been rejected by a Division Bench of this court. The Tax Recovery Officer sent the objections of the petitioner-bank to the Income-tax Officer for his comments and after receiving the same called upon the petitioner-bank to prove its interest in the attached properties. On May 25, 1971, the petitioner-bank filed photostat copies of certain documents and typed copies of others to prove the mortgage in its favour. On June 15, 1971, the case was taken up for arguments when it was objected by the representative of the income-tax department that the original documents had not been filed and the documents filed could not be taken into evidence as no witness had been produced to prove them. The Tax Recovery Officer accepted this contention of the representative of the income-tax department and dismissed the objections as unproved. The present petition has been filed by the bank challenging the validity of the said order of the Tax Recovery Officer. Written statement has been filed on behalf of the Tax Recovery Officer in which it has been pleaded that the writ petition is not competent as under Rule 11 (6) of the rules contained in the Second Schedule to the Income-tax Act, 1961, the proper remedy of the petitioner-bank is to file a suit in the Civil Court to establish the right which it claims to the property in dispute. On the merits it has been pleaded that the petitioner-bank did not prove its interest in the attached properties in accordance with the provisions of the Evidence Act.