Satish Chandra, J.
1. This petition under Article 226 of the Constitution prays that the order dated 13th November, 1964, passed by the Additional District Magistrate, Kanpur, be quashed and the respondents be commanded not to enforce it.
2. The petitioner is a limited company. It carries on the business of manufacture and sale of cotton yarn and cloth. For the year 1955-56 the petitioner deposited a sum of Rs. 4,41,234 in advance by way of sales tax along with the return filed by it in view of Rule 41(2) of the rules framed under the U.P. Sales Tax Act, 1948. Ultimately on 21st May, 1958, the Sales Tax Officer passed an assessment order for this year assessing the petitioner to sales tax of Rs. 4,19,322-2-3. The petitioner was not satisfied with the assessment order. It went up in appeal. On 17th July, 1961, the appeal was allowed, the assessment order was set aside and the matter was sent back to the Assessment Officer for proceeding afresh. The petitioner was not satisfied with the appellate order and it filed a revision against it. By an order dated 15th September, 1964, passed by the Judge (Revisions) Sales Tax the appellate order was set aside and the matter was remanded back to the Judge (Appeals) for rehearing. The result of this order was that the assessment order which was set aside in appeal was again revived.
3. At this stage I may mention that the learned counsel for the petitioner stressed that on the setting aside of the assessment order no liability to pay sales tax remained and as such the petitioner was entitled to the refund of the entire amount of Rs. 4,41,234 that had been paid by it as advance tax. It was urged that till an assessment order is passed the amounts that are deposited by a dealer along with the filing of the return under Rule 41(2) continue to be the dealer's property and he can demand its refund and that to such a deposit Section 29 of the U.P. Sales Tax Act applies.
4. The learned Standing Counsel, on the other hand, urged that the liability to tax was created by Section 3 of the Act and not by the passing of the assessment orders. Rule 41(2) enables a dealer to pay the tax according to his own calculations and thereby to discharge his admitted liability, and even if no assessment order is passed, such payments remained payments of tax in fulfilment of the statutory liability created by Section 3 of the Sales Tax Act. He also urged that the true function of passing an assessment order is to evaluate and quantify the disputed liability. If the Sales Tax Officer is satisfied that the return filed by the dealer and the amounts deposited by him are correct, he need not pass any assessment order. I need not deal with these rival submissions as I am of opinion that they do not arise. The whole basis for these arguments is the setting aside of the assessment order in appeal. The revisional order dated 15th September, 1964, set aside the appellate order. Thereby the existence of the original assessment order dated 21st May, 1958, revived. This petition was filed on 2nd December, 1964. On this day there was an assessment order in existence and hence even if the petitioner's argument is accepted on merits, he will not be entitled to any relief. The decision of the question whether the petitioner was entitled to the refund of the advance tax between the dates of the appellate order and the order in revision is merely academic.
5. For the year 1956-57 the petitioner had deposited Rs. 4,12,378 as advance tax. On 27th May, 1960, the assessment order for this year was passed determining the liability to sales tax at Rs. 8,87,345. For this year the petitioner had to pay a sum of Rs. 4,74,967. Similarly for the year 1957-58 the assessment order dated 30th July, 1960, determined the petitioner's liability to sales tax at Rs. 5,93,912.40 nP. After adjusting a sum of Rs. 73,000 which had been paid as advance tax, a balance of Rs. 5,20,912.40 nP. remained to be paid. Thus for these two years the petitioner had to pay Rs. 9,95,879.40 nP. In due course on 10th October, 1960, the Sales Tax Authorities issued a recovery certificate for this amount to the Collector for realisation as arrears of land revenue. The petitioner approached the Collector and was able to come to an arrangement with him for paying this demand in instalments. The arrangement was that the petitioner would pay Rs. 25,000 per month to liquidate this demand. The petitioner continued to honour the agreement and pay the monthly instalments till May, 1963, by when the original demand for nearly ten lacs was considerably liquidated and, according to the petitioner, only a sum of Rs. 2,84,482 remained to be paid. According to the petitioner, refund of sums in excess of this balance was due to it for the past years owing to the pendency of appeals. The petitioner's case further is that the advance tax of Rs. 4,41,234 for the assessment year 1955-56 was also refundable to the petitioner. An application dated 12th July, 1963, for refund of the advance tax paid for 1955-56 was moved by the petitioner. The Sales Tax Officer on 30th of July, 1963, rejected this application (See annexure B to the rejoinder-affidavit). For all these reasons the petitioner stopped payment of further monthly instalments.
6. As the payment of instalments was stopped by the petitioner the Sales Tax Authorities imposed a penalty on the petitioner to the tune of Rs. 32,715. On 5th August, 1964, the Collector addressed a letter to one of the petitioner's directors informing him that a sum of Rs. 3.17 lakhs is in arrear as sales tax against the petitioner-company and inviting the company to send a proposal for liquidating the arrear by the end of March, 1966. The petitioner's representative appears to have discussed the matter with the Collector and ultimately on 29th August, 1964, he addressed a letter to him stating that the refund due for earlier years being a different matter should not be mixed up with the payment of the demand for another year, and that the company was prepared to pay the balance due in monthly instalments of Rs. 17,000 which will enable the arrears to be cleared by March, 1966. Thereupon on 15th September, 1964, the petitioner was informed that the Collector has accepted the plan of payment and that a sum of Rs. 30,000 be paid at once and the balance may be paid in 18 equal instalments of Rs. 17,000 payable by the 15th of each month. The petitioner-company paid a sum of Rs. 30,000 promptly whereupon the order dated 28th August, 1964, freezing the petitioner-company's bank account was vacated, on 18th September, 1964. The petitioner-company paid the monthly instalments of Rs. 17,000 for the next three months.
7. On 7th of November, 1964, it was the recipient of a bolt from the blue. On this day an order dated 6th November, 1964, passed by the Collector was conveyed to the petitioner-company. This order stated that the instalment concessions at the rate of Rs. 17,000 are vacated. The petitioner-company was asked to pay Rs. 2,71,149.90 nP. as sales tax dues and Rs. 47,722.50 nP. as interest thereon at the rate of 18% at once to avoid coercive processes. As in paragraph 32 of the petition the petitioner has reserved the right to take appropriate remedy in regard to the imposition of interest of Rs. 47,722.50 nP., nothing further need be paid about it. The petitioner approached the Collector and reminded him of the solemn agreement entered into by him with the petitioner-company, but the Collector did not agree to adhere to the agreement. By the communication dated 13th November, 1964, the petitioner was informed that 'in supersession of all previous orders on the subject the following plan of payment is proposed to be enforced with immediate effect:
1. The company shall pay a sum of Rs. 1.00 lac by 30th November, 1964.
2. For the remaining four months up to March, 1965, the company shall pay at Rs. 50,000 per month.
3. In case of default of payment in any month the company shall render itself liable for recovery of entire dues in lump sum by coercive processes.
8. Aggrieved, the petitioner-company has come to this Court for reliefs against this order of 13th November, 1964. This order is challenged on two grounds: firstly, that the agreement dated 18th September, 1964, was solemnly arrived at and was binding and could not be varied unilaterally by the Collector and secondly, in passing the impugned order without having afforded the petitioner an adequate opportunity of being heard, the Collector violated the principles of natural justice.
9. The second ground has no force. The order dated 6th November, 1964, was conveyed to the petitioner on 7th November, 1964. Admittedly the petitioner-company approached the Collector and discussed the matter with him and requested him to adhere to the earlier agreement. Thus it was heard in the matter. The subsequent order dated 13th November, 1964, did modify the proposal conveyed on 7th November, 1964. This latter order can, therefore, not be characterised as having been passed without hearing the petitioner.
10. The first ground is supported by two submissions: firstly, that the arrangement arrived at on 18th September, 1964, was a regular contract and could not be varied unilaterally by the State Government. It is urged that this contract can be enforced inter parties even though it may not be enforceable at law. I am not satisfied that the arrangement was a contract, but assuming that it was a contract it will not be binding on the State Government unless it complies with the requirements of Article 299(1) of the Constitution. This article provides that all contracts made in the exercise of the executive authority of a State shall be expressed to be made by the Governor of the State and shall be executed on behalf of the Governor by such persons and in such manner as he may direct or authorise. The contract therefore must be expressed to be made in the name and on behalf of the Governor. In the instant case there is no such formal contract. The learned counsel has urged that this omission will not render the contract void and of no effect and if the Government is shown to have satisfied it by its conduct, it will be enforceable. He has relied upon the following observations of Bose, J., in the case of Chatturbhuj Vithaldas v. Moreshwar Parashram : 1SCR817 :
It may be that Government will not be bound by the contract in that case, but that is a very different thing from saying that the contracts as such are void and of no effect. It only means that the principal cannot be sued, but there would be nothing to prevent ratification, especially if that was for the benefit of Government.
11. This question has arisen subsequently before the Supreme Court in several cases. See Bhikraj Jaipuria v. Union of India : 2SCR880 , State of West Bengal v. Messrs B.K. Mondal & Sons A.I.R. 1962 S.C. 719 and New Marine Coal Co. Private Ltd. v. The Union of India and Ors. : 2SCR859 . In these cases the Supreme Court has held that Article 299 of the Constitution is mandatory and non-compliance thereof is fatal to a contract. Such a contract is void and totally unenforceable. They have further held that they are not prepared to read the above-mentioned observation of Bose, J., as supporting the proposition that notwithstanding the failure of the parties to comply with Article 299(1), the contract would not be invalid. There is thus no doubt that the contract on which the learned counsel for the petitioner relies is void and unenforceable.
12. In the next place the learned counsel urged that the order dated 18th September, 1964, was an order under Order XX, Rule 11(2), Civil Procedure Code, and such an order could not be set aside at the mere whim of the court or of the decree-holder. Order XX, Rule 11, Civil Procedure Code, authorises the court which passes the decree to grant an order for instalments on the application of the judgment-debtor and with the consent of the decree-holder. In this case the Sales Tax Officer had passed the assessment order, the demand created where-under is sought to be recovered. The Sales Tax Officer would be in the position of the court which passes the decree. The order dated 18th September, 1964, has not been passed by the Sales Tax Officer, but by the Additional Collector, who was acting as the recovery authority. Prima facie Order XX, Rule II, Civil Procedure Code, will not be applicable to the recovery authorities as they are comparable to the execution Courts.
13. But, the learned counsel for the petitioner urged that Order XX, Rule 11, Civil Procedure Code, is applicable to execution courts. Two Full Benches of our Court have taken the view that Order XX, Rule II, Civil Procedure Code, is not applicable to execution courts. In Maharaj Kumar Mahtnud Hasan Khan v. Moti Lal Banker : AIR1961All1 the majority held that the execution court cannot vary the decree in any manner except by recording an adjustment under Order XXI, Rule 2, Civil Procedure Code. In Gobardhan Das v. Dau Dayal : AIR1932All273 , it was held that an order under Order XX, Rule II, Civil Procedure Code, can be passed by the original court only. In that case the parties filed a compromise in the execution court. Thereupon the execution court ordered that the warrant of attachment should be cancelled. The court did take cognizance of the original compromise and allowed it to be placed on the record. It was held that though the court tacitly accepted and even acted upon it, such an order was not made under Order XX, Rule II, Civil Procedure Code. The leading judgment was delivered by Sulaiman, J. Mukerji, J., observed at page 285 that on principle such, an order must be made by the court which passed the decree; it cannot be an order made in the course of execution. Boys, J., also agreed that the execution court has no power to pass such an order. In view of these Full Bench decisions the question is no longer open. It must be held that Order XX, Rule 11, Civil Procedure Code, does not authorise the execution court to pass an order of payment of the decretal amount in instalments. The Additional Collector who passed the order dated 18th September, 1964, is at best in the position of an execution court. His order cannot be treated to be an order under Order XX, Rule 11(2), Civil Procedure Code, even though the Civil Procedure Code may apply to the recovery proceedings which are being conducted under the provisions of the U.P. Zamindari Abolition and Land Reforms Act, by virtue of Section 341 of that Act.
14. In the result the petition fails and is dismissed, but under the circumstances without any order as to costs.