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Sri Ramalingeswara Rice and Oil Mill Co. Ltd. Vs. the Additional Income Tax Officer, Tenali and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAndhra Pradesh High Court
Decided On
Case NumberCivil Revn. Petn. No. 1111 of 1960
Judge
Reported inAIR1964AP74
ActsCode of Civil Procedure (CPC) , 1908 - Sections 47 and 73 - Order 21, Rule 52 - Order 40, Rule 1
AppellantSri Ramalingeswara Rice and Oil Mill Co. Ltd.
RespondentThe Additional Income Tax Officer, Tenali and anr.
Appellant AdvocateM.B. Rama Sarma, Adv.
Respondent AdvocateNarayana, Adv. for ;C. Kondaiah, Adv.
DispositionPetition dismissed
Excerpt:
.....47 and 73 of code of civil procedure, 1908 - x (lessor) instituted a suit against leasee - suit decreed in x's favour and property attached - lessor and government claimed to realize their shares out of decree property - court opined that doctrine of priority of crown debts is applicable here - held, government has preferential right to realize money followed by other creditors. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to..........that case has no analogy here, as we are not here concerned with the question as to whom the money deposited belonged, the question in the instant case being as to whether the decree-holder is entitled to preferential rights in regard to the deposit made to the credit of the suit. in that case it was not decided that when once the money was deposited in a suit it ceased to be the property of the depositor. on the other hand, the learned judges proceeded on the assumption that persona other than the one that made the deposit had no concern with the money and that it was the property of the depositor. whatever that be, that ruling does not govern the instant case.12. bird v. barstow, (1892) 1 qb 94 and in re ford; ex parte the trustee (1900) 2 qb 211 do not also advance the.....
Judgment:

Chandra Reddy, C.J.

1. This case is referred to a Bench by Ananthanarayana Ayyar, J., as he thought that it raises a question of general and public importance and there should be an authoritative pronouncement.

2. The civil revision petition is brought against the order of the Subordinate judge, Tenali, accepting E. A. No. 284 of 1959, a petition filed by the Income-tax Officer, Tenali, for the issue of a cheque for Rs. 3,281.88 nP. being the arrears of income-tax due by the judgment-debtor out of Rs. 12,500/- in deposit in Court to the credit of O. S. No. 88 of 1955.

3. The circumstances leading to this litigation are these. O. S. No. 88 of 1055 was instituted by the petitioner against the second respondent herein (Jainullabdin Saheb) for eviction from the factory which the latter was holding on lease. During the pendency of the suit, the petitioner filed I. A. No. 1899 of 1955 under Order 40, Rule 1 Civil Procedure Code for the appointment of receiver to take possession of the factory and lease for two or more years, on the allegation that the defendant was threatening to commit acts of waste on the machinery and the structures.

4. This petition was contested by the defendant, who represented that he was willing to deposit annual rent of Rs. 7,250/- into Court and give security as required by Court.

5. Thereupon the Subordinate Judge passed an order to the effect that the defeadant should deposit into Court Rs. 12,500/- by 33-12-1955 and furnish security of immovable property for a sum of Rs. 12,500/- within three weeks, failing which a Receiver would be appointed to take possession of the suit mill and to auction the lease-hold right in it from year to year till the disposal of the suit. The learned Subordinate Judge thought that this order would afford sufficient protection to the plaintiff. The defendant complied with the conditions by depositing the amount in Court in time and by furnishing security in time.

6. Ultimately the plaintiffs recovered judgment and in execution of the decree attached the above-mentioned amount. Another decree-holder also attached this amount.

7. On 27-6-1959, the Additional Income-tax Officer, Tenali filed E. A. No. 284 of 1959 for the issue of a cheque for Rs. 3,281.88 nP. representing the arrears of income-tax and penalty due by the judgment-debtor, Jainullabdin Saheb.

8. In spite of the opposition of the petitioner and the other attaching decree-holder, the Subordinate Judge allowed the application of the Income-tax Officer and ordered the issue of a cheque. It is this order that is impugned in this revision petition.

9. In support of this petition, it is contended by Sri Rama Sarma, learned Counsel for the petitioner, that as the money was deposited to the credit of the petitioner's suit the doctrine of priority of crown debts would be inapplicable to this case and the decree-holder for whose benefit the deposit was made earlier was entitled to withdraw the whole amount.

10. As substantiating this argument, reliance is placed by the learned Counsel for the petitioner on the judgment of the Divisioa Bench of the Madras High Court Gopalaiyar v. Thiruvengadam, AIR 1918 Mad 1158. In the case under citation a deposit was made by the first defendant as a condition to the setting aside of a decree made under Order 37, Rule 4 C. P. C., he having failed to obtain leave to contest the suit under that chapter. Thereafter, the suit was tried and judgment was entered against the first defendant. Some time later, his brother, who was the third defendant in the suit, claimed that the money which was deposited by the first defendant belonged to the joint family and therefore it was not available to the plaintiff, the judgment-debtor. This claim was disallowed by the Subordinate judge. On appeal the District Judge held that since the money came from the joint family property the plaintiff was not entitled to it. In second appeal, the Madras High Court ruled that the view of the lower appellate Court was wrong, since the money was deposited as security for satisfying any judgment that might be passed against the first defendant and the deposit was made as a condition precedent to the setting aside of the decree. The learned Judges observed that the whore object of requiring security in a case would be frustrated if an enquiry should be held as to whom the money belonged and that such an enquiry would be defeating the very object for which security was required.

11. That case has no analogy here, as we are not here concerned with the question as to whom the money deposited belonged, the question in the instant case being as to whether the decree-holder is entitled to preferential rights in regard to the deposit made to the credit of the suit. In that case it was not decided that when once the money was deposited in a suit it ceased to be the property of the depositor. On the other hand, the learned Judges proceeded on the assumption that persona other than the one that made the deposit had no concern with the money and that it was the property of the depositor. Whatever that be, that ruling does not govern the instant case.

12. Bird v. Barstow, (1892) 1 QB 94 and In re Ford; Ex parte the Trustee (1900) 2 QB 211 do not also advance the proposition enunciated by the learned counsel for the petitioner. Both these cases dealt with deposits made as a condition to the granting of a leave to defend under the Rules of the Supreme Court 1883, Order XIV Rule 6 (similar to Order 37 of our Civil Procedure Code). In the first case, it was held that since the money was to be brought into Court to abide the event and the plaintiff being successful he was entitled to have the money paid to him forthwith, the second of the eases followed the first case. So these decisions do not bear on the question to be decided by us.

13. In the instant case, the deposit was made to avoid a receiver being appointed and to protect the interests of the plaintiff. There was no order giving a direction to appropriate it towards any decree that might be passed. The order was merely to deposit the amount into Court. It is only when an appropriation is made of the money deposited in Court under the orders of Court towards the decree that it ceases to be the property of the judgment-debtor and his creditors could not proceed against it either in execution of decree or in realisation of arrears of land revenue or taxes. Mere direction to deposit a particular sum of money does not amount to its being ear-marked for a particular purpose. It is only when there is a definite order directing appropriation of the amount deposited that other creditors or the Government could have no claim to it.

14. Apart from the general principles, there are decided cases which lend support to this proposition. In Krishnaswamy Mudaliar v. Official Assignee, Madras, ILR 26 Mad 673 (FB) a Full Bench of the Madras High Court ruled that an attachment before judgment of money belongingto tie defendant would not operate to create a title in favour of the judgment-creditor so as to prevail against that of the Official Assignee under the vesting order in insolvency made after the order of attachment. The only effect of an order under Order 38, Rule 5 Civil Procedure Code, according to the Full Bench, is to give certain rights in execution to the decree-holder but he cannot acquire any right to the money attached to proceed against it in preference to the claim of the Official Assignee after an order of vesting is made.

15. To a like effect is the judgment of a Division Bench of the same Court in Errikulappa Chetty v. Official Assignee, Madras, ILR 39 Mad 903: (AIR 1917 Mad 743 (2)). There it was decided that the plaintiff, who had obtained an order under Order 38, Rule 5 Civil Procedure Code, had no charge on the money paid into Court as against the Official Assignee of the insolvent. Jagannatha Rao v. Maharajah of Pittapur, AIR 1535 Mad 1046 is in consonance with this doctrine. It was held by a Division Bench of the Madras High Court in that case that the money collected by a receiver could not be said to have been appropriated towards satisfaction of the decree in the absence of any direction given by the Court. The learned Judges equivated the position of A receiver appointed in execution to that of a receiver appointed in the suit and the receiver in either case held the monies 'subject to the orders of the Court'. It is true that this is a case of the receiver collecting the monies.

However, the judgment is based upon the principle that till the appropriation is made towards satisfaction of the decree or the money is specifically ear-marked for a particular purpose it will be subject to the orders of the Court and that the property remains the property of the debtor. Further the petitioner cannot be said to be in a better position as the deposit was made to obviate the appointment of a Receiver. It is also noteworthy that the petitioner also has attached the money in execution of the decree. If really as contended by him, the money ceased to be the property of the judgment-debtor and the title to it had vested in him we fail to appreciate how he could attach this money in execution of the decree. If it is his own money there is no purpose in attaching it. It is not disputed that the Government has preferential rights in regard to arrears of taxes. If that were so, the Government is entitled to be paid first out of the money deposited in Court before the claims of the other creditors could be recognised. It follows that the order under revision is correct and does not call for interference.

16. In the result, the civil revision petition is dismissed. But there will be no order as to tests. Advocate's fee Rs. 100/- (one hundred).


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