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Badri Dass Vs. Union of India (Uoi) and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 46 of 1953
Judge
Reported inAIR1963All346
ActsSale of Goods Act, 1930 - Sections 19 and 20; Evidence Act, 1872 - Sections 115; Income-tax Act, 1922 - Sections 26(2), 46(8) to 46(10) and 48
AppellantBadri Dass
RespondentUnion of India (Uoi) and anr.
Appellant AdvocateIqbal Ahmad and ;Naziruddin, Advs.
Respondent AdvocateS.C. Das and ;J.S. Trivedi, Advs.
DispositionAppeal partly allowed
Excerpt:
commercial - attachment - sections 20 and 19 of sale of goods act, 1930, sections 26 (2) and 48 of income-tax act, 1961 and section 115 of evidence act, 1872 - agreement to sell stocks - subject to sanction of military authorities - goods attached for recovery of income-tax arrears of vendor - held, title to goods vested in vendor before date of sanction - warrant of attachment by income-tax authorities is illegal - sections 26 (2) and 48 of income tax act not applicable - vendee purchasing property not estopped from challenging attachment. - - it was also pleaded on their behalf that the alleged transfer of goods in favour of the plaintiff was fraudulent and, therefore, bad in law. tney as well as k. 14 is a copy of another express telegram dated the 27th september, 1947 sent by badri.....n.u. beg, j. 1. this is a plaintiff's first appeal against a judgment and decree of the civil judge, lucknow, dismissing the plaintiff's suit for the recovery of rs. 35,575/-from the defendants together with costs and interest, pendente lite and future, as the court may deem just.2. the plaintiff in the suit was badri das appellant, who held canteens as an army contractor at jheium, mona and sargodha before the partition of india, which took place with effect from the 15th august, 1947. similarly messrs. k. s. haji s. abdullah and brothers also held canteen contracts at lucknow, allahabad and faizabad in u. p. before the partition. after the partition messrs. k. s. haji s. abdullah and brothers wanted to migrate to pakistan. badri das found it difficult to carry on his business in.....
Judgment:

N.U. Beg, J.

1. This is a plaintiff's first appeal against a Judgment and decree of the Civil Judge, lucknow, dismissing the plaintiff's suit for the recovery of Rs. 35,575/-from the defendants together with costs and interest, pendente lite and future, as the Court may deem just.

2. The plaintiff in the suit was Badri Das appellant, who held canteens as an Army contractor at Jheium, Mona and Sargodha before the partition of India, which took place with effect from the 15th August, 1947. similarly Messrs. K. S. Haji S. Abdullah and Brothers also held canteen contracts at Lucknow, Allahabad and Faizabad in U. P. before the partition. After the partition Messrs. K. S. Haji S. Abdullah and Brothers wanted to migrate to Pakistan. Badri Das found it difficult to carry on his business in Pakistan due to the disturbances there. Hence he also wanted to migrate to India.

In this situation, the plaintiff and Messrs. K. S. Haji S. Abdullah and Brothers agreed to exchange their respective business as Army contractors in India and Pakistan. The oral agreement between the two parties appears to hare been stipulated about the month of September, 194/-This agreement was, however, reduced to writing by the parties on the 26th October, 1947. This written agreement is Ex. 8 in the present case. In this agreement Messrs. Ch. Badri Dass and Sons, Station Contractors Jheium, are party No. 1, and Messrs. K. S. Haji S. Abdullah and Brothers, Station Contractors, Lucknow, Allahabad and faizabad, are party No. 2. The terms of the said agreement are as follows:--

'(a) Party No. 1 will take over all the stocks of party Ho. 2 at the places mentioned above (Lucknow, Allahabad and Faizabad) at C.S.D. wholesale price plus all overhead charges, viz., Terminal Tax, Cartage, and Bank Commission.

(b) Party No. 1 will take over all the furniture, crockery, and cutlery, etc. etc. placed in canteens and fesidential quarters along with the Garage in No. 7, Post Office Road, Dilkusha, Lucknow.

(c) Party No. 1 will take over all the outstandings, i.e., the amounts due to party No. 2, as far as they are verified and confirmed by the officers concerned.

(d) In lieu of the above, party No. 2 agrees to takeover all business of party No. 1 including furniture andstocks etc. etc. at Jehlum in West Punjab, i.e. canteensat jehlum, Mona and Sargodha, on the same terms andconditions as aforesaid.

(e) The payments are to be made by one party to the other on completion of the Board proceedings at Lucknow in U. P. and Jheium in West Punjab.'

The above agreement of exchange was approved by the Military authorities concerned in both the dominions. On the 10th December, 1947. Messrs. K. S. Haji S. Abaullan and Brothers transmitted a receipt for Rs. 30,000/- to the plaintiff and sent a letter No. 29/5/X/3 dated 11th December, 1947, of adjustment of Rs. 30.000/- towards the value of the goods to be taken over by the plaintiff at Lucknow, Allahabad and Faizabad. The Military authorities in India accorded their sanction to the handing over or canteen goods to the plaintiff on the 7th November, 1947.

A Board of Military authorities was constituted forthe purpose of handing over the said canteen goods. ThisBoard met at Lucknow on the 15th November, 1947, inthe morning. The plaintiff's case is that the possession 01the goods of Messrs. K. S. Haji S. Abdullah and Brotnerswas delivered to him by the Board on this date. At about5 P.M. after the possession of the goods had been delivered to the plaintiff, the allegation of the plaintiff is thatthe said goods were attached as a result of a certificateissued by the income-tax Department for the realisation oran amount of over six lakhs of rupees alleged to be due from K. S. Haji S. Abdullah and Brothers. The plaintiff's case is that the said attachment of the property for the realisation of the Income-tax dues of Messrs. K. s. Haji S. Abdullah and Brothers was unlawful and illegal, as the property in the goods had already passed to him before the attachment of goods had taken place. The said goods were sold by the Income-tax Department En an auction commencing on the 24th Feb. 1948. The auction of the goods continued on various dates. The proceeds of the auction of the goods were adjusted towards tne income-tax dues. The attached goods, stores and furniture were sold for considerably over Rs. 30,000/-. The plaintiff is entitled to recover from the defendants at least an amount of Rs. 30,000/- in respect of which a receipt had been transmitted to him by Messrs. K. S. Haji S. Abdullah and Brothers. The plaintiff was further entitled to interest at the rate of six per cent per annum from January 1948, when the first sale of canteen goods took place. This amount came to Rs. 5,575/-. The plaintiff, therefore, brought the present suit for the recovery of Rs. 35,575/-together with pendente lite and future interest from the date of the decree to the date of realisation at such rate as the Court may deem fit.

The plaintiff impleaded the Union of India through the Secretary-in-charge Defence Department of the central Government, New Delhi, as defendant No. 1, and the secretary-in-charge, Finance Department (relating to Income-tax) New Delhi, as defendant No. 2. The decree for the afore-said amount was claimed against both the defendants.

3. Both the defendants filed a joint written statement. On their behalf, it was admitted that a certificate for the realisation of Income-tax dues from Messrs. K. 5. Haji S. Abdullah and Brothers was issued by the income-tax authorities, and the goods and stores in question were attached for the realisation of the said dues on the 15th November, 1947. Their case was that the attachment in question was a valid attachment, as the goods in question belonged to the assessee Messrs. K. S. Haji S. Abdullan and Brothers, and were the property of the said assessee at the time of the said attachment.

It was also pleaded on their behalf that the alleged transfer of goods in favour of the plaintiff was fraudulent and, therefore, bad in law. The defendants further pleadedthat the plaintiff being the successor of Messrs. K.S. Haji S. Abdullah and Brothers was liable for the income-tax dues of his predecessor-in-interest. In any case, the plaintiff's suit was barred by estoppel. So far as defendant No. 1 was concerned, it was further pleaded on its behalf that the suit was not maintainable against it, as no cause of action was disclosed in respect of the claim against the Union of India through the Secretary-in-charge, Defence Department of the Central Government, New Delhi.

4. On the question as to whether the title in the goods vested in the plaintiff prior to the time of the attachment of the said goods, the trial Court gave a finding in favour of the plaintiff. The trial Court further held in favour of the plaintiff that the transfer of goods in question in his favour was not fraudulent nor was it made for the purpose of defeating the realisation of the Income-tax dues. It was, however, of opinion that the plaintiff's claim was barred by estoppel. it further came to the conclusion that the plaintiff, being the successor in business of Messrs. K. S. Haji S. Abdullah and Brothers, was liable for the Income-tax assessed on his predecessor-in-interest, under Section 26(2) of the Indian Income-tax Act. In this view of the matter, the lower Court was of opinion that the plaintiff was not entitled to the amount claimed by him and dismissed the suit in toto. Dissatisfied with the said judgment, the plaintiff has filed the present appeal.

5. The first question that arises in this appeal is whether the title in the goods had already vested in the plaintiff prior to the attachment of the said goods at the instance of the Income-tax authorities on the 15th November, 1947. On this question, the learned counsel for the appellant invited our attention to the terms and stipulations of Ex. 8 reproduced above. The learned counsel argued that the terms and conditions of the agreement in question indicate that it was a transaction of exchange as defined in Section 118 of the Transfer of Property Act. Under Section 118 of the Transfer of Property Act an 'exchange' is defined as follows:--

'When two persons mutually transfer the ownership or one thing for the ownership of another neither thing or both things being money only, the transaction is called an 'exchange.'

'The rights and liabilities of parties' to such a transaction are defined in Section 120 of the Transfer of Property Act as follows:--

'Save as otherwise provided in this Chapter, each party has the rights and is subject to the liabilities of a seller as to that which he gives, and has the rights and is subject to the liabilities of a buyer as to that which he takes.'

So far as the transfer of title in the goods comprised m the present agreement is concerned, the learned Counsel relied on Section 20 of the Indian Sale of Goods Act. Section 20 runs as follows:

20. 'Specific goods in a deliverable state.-

Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods or both, is postponed.'

In the present case the learned Counsel argued that there was a contract for the sale of specific goods. a perusal of the terms of the contract would indicate that the contract is of an unconditional nature. The goods sold thereby are specified goods. According to the contract, anthe goods lying in the stock of Messrs. K. S. Haji S. Abdullan and Brothers, Station Contractors, in their canteens 31 Lucknow, Allahabad and Faizabad were sold by them in favour of the plaintiff under the aforesaid contract. nO conditions are attached to the sale of these goods. The permission of the Military authorities might have been. necessary so far as the transfer of the contract Business was concerned. It was open to Messrs. K. S. Haji S. Abudullan and Brothers to sell their stocks in favour of the piaintiff without the consent of the Military authorities. The contract of the sale of goods is severable from the contract of the sale of business. In so far as the sale of goods is concerned, it was an unconditional contract. Only the date of the delivery of the goods and the time of the payment of price is postponed. The price was to be ascertained in future by a Military Board, and the manner of its adjustment was also prescribed in the said agreement. The learned Counsel therefore argued that the title to the said goods passed in the plaintiff on the date of the contract, i.e. the 26th October, 1947.

6. The learned counsel for the plaintitf further argued that even if the contract in question be deemed to be an agreement to sell goods, the question as to the transfer of title would depend on the intention of the parties. The intention of the parties in this regard is to be ascertained according to the principles laid down in Section 19 of the Indian Sale of Goods Act, Section 19 of the Act lays down as follows:

'19. Property passes when intended to pass (1) where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyers at such time as the parties to the contract intend it to be transferred.

(2) For the purpose of ascertaining the intention ot the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances or the case.

(3) Unless a different intention appears, the rules contained in Sections 20 to 24 are rules far ascertaining the intention of the parties as to the time at which me property in the goods is to pass to the buyer.'

In the present case, even if the contract is treated as. an agreement to sell and the implementation of the contract is considered to be dependent on the sanction of the Military authorities, the title in the goods would be deemed to pass as soon as the Military authorities accorded their sanction to the terms of the said contract and decided to accord their consent to the transfer of business of Messrs. K. S. Haji S. Abdullah and Brothers in favour of the plaintiff.

In the present case, the main hurdle in the way of transfer of business by the transferor to the transferee was the consent of the Military authorities. Both the parties themselves had fully agreed to exchange each others, business. All that remained to be done was the obtaining of the sanction of the Military authorities in respect of this transaction. So far as the question of delivery of possession and the ascertainment of price is concerned it would follow as a matter of routine after the Military authorities had accorded their sanction, once the Military authorities gave the sanction a Military Board would be constituted to value the stocks in trade lying in the canteens of either party, and the delivery of possession would take place in the normal course in a routine manner.

Considering, therefore, the circumstances of the case, the date on which the Military authorities accorded theirsanction to the terms of the agreement should be considered to be the crucial date for the transfer of title in favour of either party. The documentary evidence produced in the present case establishes beyond any shadow of doubt that the Military authorities both in India as wen as in Pakistan had given sanction to the aforesaid contract of exchange prior to the 15th November, 1947, which is the date of attachment. As already mentioned above, the oral agreement between the parties appears to nave been arrived at earlier than the 26th October, 1947, which is the date on which the agreement was incorporated in writing. This is borne out by Ex. 15, which is an express telegram dated the 20th September, 1947 sent by the Station Staff Officer, Jhelum, to the Military authorities at Lucknow informing the latter that Messrs. K. S. Haji S. Abdullah and Brothers, Station Contractors, Lucknow, and Messrs. Ch. Badri Dass and Sons, Station Contractors, Jhelum, were willing to exchange their contracts mutually and enquiring whether the Lucknow authorities were agreeable to it.

7. Ex. 13 is another express telearam dated the 27th September 1947 sent by Badri Dass and Sons to the Military authorities at Lucknow and to the Premier, U.P. Government informing the latter that both the parties, i.e. tney as well as K. S. Haji Abdullah and Brothers were willing to exchange their business and requesting them to send a reply in this regard.

8. Ex. 14 is a copy of another express telegram dated the 27th September, 1947 sent by Badri Dass and sons to the Army Headquarters, Delhi, as well as to the Premier, Government of India, Delhi to the same effect.

9. Ex. 16 is a copy of a message sent by the station Staff Officer, Jhelum, to the Headquarters, Lucknow Area, dated the 6th October, 1947, asking the latter to expedite their reply.

10. Ex. 24 is a copy of the letter dated the 6th October, 1947, sent by the Army Headquarters, Pakistan, to the Station Officer, Jhelum. This letter snows mat the Army Headquarters, Pakistan, had accorded sanction to Ch. Badri Dass and Sons to hand over their canteen contracts to K. S. Haji S. Abdullah and Brothers, Lucknow, provided that the Lucknow area also agreed to the said cnange over. They had further issued necessary instructions to tne Station Officer, Jhelum, to expedite arrangements for the handing over of the said business with the minimum delay. This letter is important as it shows that in so far as the Military authorities in Pakistan were concerned, they had accorded their approval to the said agreement as early as the 6th October, 1947. The plaintiff has also tiled Ex. 16. This exhibit shows that in fact on the 6lh October, 1947, the Military Board had assembled on that date and started proceedings for handing over Jhelum canteen contract from Messrs. Ch. Badri Dass and Sons to Messrs. K. S. Haj'i S. Abdullah and Brothers. They had drawn up a list of the goods in stock and verified the same on the said date. The said proceedings were confirmed by an order dated the 15th November, 1947. It is, therefore, obvious that so far as Pakistan authorities are concerned, they had accorded their sanction to the transfer of business, and had handed over the goods of the plaintiff to Messrs. K. S. Haji S. Abdullah and Brothers prior to the 15tn November, 1947.

11. So far as the Military authorities of India are concerned, Ex. 17 dated the 31st October, 1947, snows that the Lucknow area had also accorded their approval to the said agreement before that date. This is also borneout by Ex. 20, which is a copy of the letter from the Headquarters, U. P. Area, Lucknow, to the General Headquarters, New Delhi dated the 6th November, 1947. This letter states that exchange was acceptable to all parties, The same conclusion is supported by Ex. 21, dated the 7th November, 1947, which is a copy of the letter sent by the Headquarters, U. P. Area, to the Sub-Areas at Lucknow and Allahabad. This letter instructs the aforementioned SUD-Areas to hand over contracts of K. S. Haji S. Abdullah and Brothers to Ch. Badri Dass and Sons, and to hold the meeting of the Board for the purpose of handing over the goods.

12. Ex. 22 is a copy of letter from the U. P. Area to the Station Staff, Jhelum, dated the 7th November, 1947, informing the latter that the exchange of contracts had been confirmed by the Military authorities in India.

13. Ex. 23 is a letter sent by the U. P. Area to the Military Headquarters at New Delhi, on the 7th November, 1947, informing the latter of the confirmation of the said agreement.

14. Ex. 26 dated the 7th November, 1947, is a letter from the Headquarters, U. P. Area, to the Lucknow and Allahabad Sub-Areas to the same effect.

15. Ex. 24 dated the 9th November, 1947, is a copy of a letter sent by the U.P. Area to the Station Staff Officer, Jhelum, informing the latter that Messrs. Ch. Badri Dass and Sons were taking over Lucknow, Allahabad and Faizabad contracts, and requesting them to hand over Jhelum, Sargodha and Mona contracts to K. S. Haji s. Abdullah and Brotners, whose representative had already gone to Jhelum.

16. Ex. 27 dated the 12th November, 1947, is a copy of a letter issued by the Headquarters, Lucknow Sub-Area to the various authorities referred to therein informing them that a Board had been constituted as mentioned in paragraph 8 of the said letter, and would assemble at 9 A.M. on the 15th November, 1947. It was late on the same date at about 5 P.M. when the impugned order of attachment was received, and the goods in question were attached.

17. There is, therefore, overwhelming evidence in the present case to indicate that the Military authorities both in Pakistan as well as in India had accorded full sanction to the transfer of business in favour of either party in their respective countries before the 15th November, 1947. Even if, therefore, Ex. 8 is treated to be an agreement of sale dependent on the condition that sanction is accorded to it by the Military authorities, the said condition was fully fulfilled before the 15th Novembar, 1947. The title in the goods, therefore, must be taken to have vested in the parties concerned before that date.

18. So far as the question of possession is concerned, a perusal of Ex. 18 would indicate that proceedings for handing over canteen contracts at Jhelum had already been held in Pakistan on the 6th October, 1947, and the confirmation of the same had already been done on the 15th November, 1947. As to India, a perusal of Ex. 27 would indicate that the Military Board had assembled on the 15th November, 1947, in the morning at 9 A.m. to implement the said agreement. The plaintiff has produced two witnesses, namely Dhan Prakash (P. W. 3) and Narendra Singh (P. W. 2) to prove that the stock had already been handed over to his representative before 5 P. M. p. w. 3 Dhan Prakash states that the work of handing over had been finished by 5 P.M. when Shri Narendra Singh arrived at the spot and attached the goods. At that time, the members of the Military Board had already left after delivering the goods. The plaintiff has produced Narendra Singh also. He is P. W. 2, He stated that he was deputed by the Deputy Commissioner, Lucknow, to attach the goods in question. His evidence shows that when he had gone to the spot, the Members of the Military Board, had gone away and only two youngsters and one servant were ten inside the canteen at 7, Post Office Road. This corroborates the evidence of P. W. 3 Dhan Prakash. The Members of the Board would have left the place only after they had done their work. It appears that possession of the goods was formally given to the plaintiff's representative by the Military Board in the morning and the stock taking and the preparation of lists was left to be done subsequently for the purpose of making a valuation of the same. The probabilities of the case, therefore, point to the conclusion that even the possession of goods was handed over to the parties concerned both in India as well as in Pakistan prior to the actual moment of attachment of the said goods late in the evening on the 15th November, 1947.

19. In view of the above evidence, we have no doubt in our mind that even if Ext. 8 is treated as an agreement to sell, the title in the goods had vested in the plaintiff prior to the time of the attachment of the goods on the evening of the 15th November, 1947. The finding of the trial Court is also to the same effect.

20. Once it is found that the title in the goods had Vested in the plaintiff prior to the attachment of the goods in question, we are of opinion that this appeal would have to be allowed. The trial Court has relied on Section 26(2) of the Indian Income-tax Act for The purpose of repelling the plaintiff's claim for the recovery of the amount of Rs. 30,000/-. Section 26(2) of the Act runs as follows:--

'Where a person carrying on any business profession or vocation has been succeeded in such capacity by another person, such person and such other person snail, subject to the provisions of Sub-section (4) of Section 25, each be assessed in respect of his actual share, if any, of the income, profits and gains of the previous year:

Provided that, when the person succeeded in the business, profession or vocation cannot be found, the assessment of the profits of the year in which the succession took place upto the date of succession, and for the year preceding that year shall be made on the person succeeding him in like manner and to the same amount as it would have been made on the person succeeded or when the tax in respect of the assessment made for either of such years assessed on the person succeeded. cannot be recovered from him, it shall be payable by and recoverable from the person succeeding and such person, shall be entitled to recover from the person succeeded the amount of any tax so paid.'

Sub-section (2) of Section 26 quoted above consists of two parts: viz., the main portion and the proviso. So far as the main part of Sub-section (2) of Section 26 is concerned, it cannot be applied in the present case. It relates to a case where a person has been assessed to incometax m respect of a part of the year. According to it the successor-in-interest is liable to pay proportionate amount of income-tax in respect of the part of the year during which the business in question was held by him. In the present case the plaintiff was never assessed to any income-tax in respect of any portion of the year during which he was in possession of the business. No proceedings under Section 26(2) of the Indian Income-tax Act can, therefore,be validly taken against him under the main part ot Section 26(2).

21. So far as the proviso is concerned, it also consists of two parts. The first part applies only when the person who is the predecessor-in-interest of the person succeeding cannot be found. In the present case the predecessor-in-interest was Haji Abdullah. There is clear evidence in the present case to indicate that Haji Abdullah was present in Lucknow even after the 15th November, 1947. Ex. A-9 dated the 20th November, 1947, is a copy of the application presented by him to the Commissioner of Income-tax, U. P. and Ajmer Marwara, Lucknow. This is a long application containing a catalogue of his grievances, and complaining against the arbitrary manner in which the Income-tax authorities had proceeded to make the assessment against him and seeking a number of reliefe in this regard. Ex. A-10 is a Vakalatnama dated the 20th November, 1947, executed on behalf of Messrs. K. S. Haji S. Abdullah and Brothers in favour of a number of counsel authorising them to act on their behalf. In view of this evidence it is not possible to hold that the present case would be covered by the first part of me proviso to Section 26(2)

22. So far as the second portion of the proviso to section 26(2) is concerned, it is applicable only when tne Tax assessed is found to be not recoverable from the predecessor-in-interest of the person to whom the business is transferred. It is not the case of the defendants that the income-tax assessed on Haji Abdullah could not be recovered from him. Moreover, there is a provision in the Indian Income-tax Act itself for the recovery of income-tax from persons migrating from India to Pakistan. Reference in this connection might be made to sub-sections (8) to (10) of Section 46 of the Indian Income-tax Act it was open to the Income-tax authorities to resort to these provisions or law for the purpose of realising income-tax dues front Messrs. K. S. Haji S. Abdullah and Brothers, in the present case, therefore, it cannot be said that the second part of the proviso is attracted.

23. The appellant's Counsel further argued that Section 26(2) is inapplicable also because Badri Das was not a successor in business of Haji Abdullah because so far as the business itself was concerned, Haji Abdullah could not transfer it to Badri Das. Badri Das-could take over Abdullah's business only if military authorities terminated their contract with Abdullah, and entered into a fresh contract with him. All that could be and was transferred in the present case was therefore the goods and not the Business of Abdullah.

In this connection learned Counsel referred to Kanniappa Naicker and Co. v. Commr. of Income-tax Madras AlR 1937 Mad. 316 (SB) and Tole Ram Ram das v. Commissioner or Income-tax, Bombay Presidency and Aden, 'AIR 1938 Sind 33 whatever view might be taken on this aspect of the case, we are of opinion that Section 26(2) was in - any case inapplicable in the present case for the simple reason that the income-tax authorities themselves never purported to take any proceedings under Section 26(2) against Badri Das. In fact, Badri Das was never impleaded in these proceedings, nor even any notice of these proceedings sent against him. Being not a party in the proceedings, he could neither object to nor appeal against the orders passed by them. It would obviously be against the principles of natural justice to fasten the liability of another person on him without giving him an opportunity to defend himself or meet the case. If the Income-tax authorities thoughtthat this was a case under Section 26(2), it was open to them to take proceedings under that section against the plaintiff. Admittedly no such proceedings were taken against the plaintiff. Under the circumstances, we find it difficult to understand how the provisions of Section 26(2) of the Income-tax Act can be invoked for the purpose of supporting a warrant of attachment for the realisation of dues which were never assessed under Section 25(2) at all or how Badri Das can be made liable for the dues of Abdullah without giving Badri Das any notice of such action, Section 26(2) is, therefore, in our opinion, inapplicable in the present case.

24. The only other section on which reliance is placed on behalf of the defendants is Section 46 of the Indian Income-tax Act. Section 46, however, can help the defendants only if the title to the goods vested in Messrs. K.S. Haji S. Abdullah and Brothers at the time of the attachment of the said goods. We have already held that betore the crucial hour the title had already passed in favour of the plaintiff. Section 46 of the Income-tax Act is, therefore, also of no avail to the defendants. The warrant of attachment, therefore, cannot be supported either on the basis of Section 26(2) or Section 46 of the Indian income-tax Act.

25. No other provision of law has been relied on in support of the case of the defendants before us. me warrant of attachment must, therefore, be held to be illegal and invalid.

26. On behalf of the defendants it was sought to be argued that, in any case, the plaintiff's case was barred by the Plea of estoppel, as he himself purchased some goods in the auction held in pursuance of the attachment. We fail to understand how the conduct of the plaintiff which was subsequent to the illegal attachment can attract the doctrine of estoppel. It is not alleged that illegal attachment by the Income-tax authorities was the result of any representation made by Badri Das prior to it and that the Income-tax authorities were induced to act on any such representation to their prejudice. In any case, there can be no estoppel against law. In our opinion, the view taken by the trial Court in respect of this part of the defendants' case is clearly erroneous and insupportable, we are, therefore, of opinion that this plea has no substance and must be repelled.

27. The last argument raised on behalf of the detts.respondents before us is that in any case, no cause of action has been disclosed against defendant No. 1, the Union of India through the Secretary in-charge Defence Department of the Central Government, New Delhi, because so far as the Military authorities are concerned, they were no party to the illegal attachment. In fact, it is argued that the illegal attachment was made in opposition to the action of the Military authorities who had taken all steps to implement the agreement to which they had accorded sanction. We are of opinion that there is substance in this argument and the plaintiff is, therefore, not entitled to a decree against defendant No. 1.

28. The plaintiff has, however, succeeded in establishing his case against the Secretary-in-charge, Finance Department (relating to Income-tax, New Delhi, defendant No. 2 for an amount of Rs. 30,000/-. So far as the amount of Rs. 5,575/- is concerned, that relates to interest on me said amount of Rs. 30,000/-. in view of the Privy council decision in Bengal Nagpur Railway Co. ltd. v. Rattanji Ramji and others , we are or opinion that interest on a claim of this nature cannot beallowed. This appeal cannot, therefore succeed so far as. this item of the plaintiff's claim is concerned, the claim of pendente lite and future interest is, however, at the discretion of the Court. We are, therefore, of the opinion, that the plaintiff should be given a decree for an amount of Rs. 30,000/- with interest at the rate of three percent, per annum from the date of suit till the date of realisation. In other words, the plaintiff would be given pendente-lite and future interest on Rs. 30,000/- at the rate of three per cent per annum up to the date of realisation.

29. We accordingly, allow this appeal in part, set aside the decree of the trial Court and decree the plaintiffs, suit against defendant No. 2 only for an amount af Rs. 30,000/- with pendente lite and future interest at three per cent per annum up to the date of realisation. The plaintiff will be entitled to proportionate costs of both the Courts against defendant No. 2 only. The plaintiff's, suit against defendant No. 1, however, stands dismissed. So far as defendant No. 1 is concerned the plaintiff's suit having been dismissed against the latter will be entitled to its costs throughout against the plaintiff.


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