H.N. Seth, J.
1. By these petitions under Article 226 of the Constitution, the two petitioners seek to challenge the validity of certain recovery proceedings initiated at the instance of the ITO, ' A ' Ward, Ferozabad.
2. It appears that on 6th May, 1972, a settlement was arrived at between the petitioners and the revenue authorities according to which the petitioners had undertaken to discharge the income-tax liabilities of the firm, Madan Mohan Dhamma Mal and its five partners, Ferozabad Glass and Chemical Industries Ltd., M/s. Kumar Pharmaceutical Works Private Ltd., and Madan Mohan Dhamma Mal Trust Society. The petitioners came to this court with the allegation that the ITO, ' A ' Ward, Ferozabad, forwarded recovery certificates in respect of the dues of the aforementioned parties to the TRO. The TRO issued a notice to the petitioners-requiring them to show cause why they should not be committed to civil prison, in execution of the recovery certificates issued by the ITO. The notice was served on the petitioners on 2nd March, 1976, and they were asked to appear before the TRO on 5th March, 1976. The petitioners appeared before the TRO and they were informed that the TRO had gone out of station. The petitioners then filed applications asking for another date to enable them to file their objections. Accordingly, the matter was adjourned to 27th March, 1976. On 27th March, 1976, the petitioners' accountant attended the office of the TRO and filed objections claiming that the recovery was illegal as credit of the taxes already paid had not been given either in the case of the firm or its partners. He was then informed that a warrant for the petitioners' arrest had already been issued on 26th March, 1976. The petitioners, therefore, rushed to this court and filed the present writ petitions impugning the recovery proceedings on a number of grounds.
3. Learned counsel appearing for the petitioners contended that the fact that after issuing notice to the petitioners to show cause why in execution of the recovery certificates issued by the ITO, they should not be detained in civil prison, the TRO has, before, affording an opportunity to them to offer their explanation, issued a warrant for the petitioners' arrest, shows that the TRO is going to commit the petitioners to civil custody. This action of the TRO is, according to the petitioners, without jurisdiction. Learned counsel contends that for the present the petitioners are confining their relief in this petition only against the steps which the TRO is taking to commit them to civil prison without deciding their objections to the execution of the recovery certificate.
4. The Second Schedule to the I.T. Act contains the rules relating to the procedure for recovery of tax. Rule 73 thereof provides that no order forthe arrest and detention in civil prison of a defaulter shall be made unless the TRO has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the TRO, for reasons recorded in writing, is satisfied, (a) that the defaulter with the object or effect of obstructing the execution of the certificate, has after the receipt of the certificate in the office of the TRO, dishonestly transferred, concealed, or removed any part of his property, or (b) that the defaulter has, or has had since the receipt of the certificate in the office of the TRO, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. Sub- Rules (2) and (3) of Rule 73 further enable the TRO to issue warrant of arrest of an assessee in certain contingencies mentioned therein. According to Rule 74 of the Second Schedule, when a defaulter appears before the TRO in obedience to a notice to show cause or is brought before the TRO under Rule 73, the TRO shall proceed to hear the ITO and take all such evidence as may be produced by him in support of execution by arrest, and shall then give the defaulter an opportunity of showing cause why he should not be committed to the civil prison. After the enquiry as mentioned in Rule 74 is over, the TRO is, under Rule 76, enabled to pass an order for the detention of the defaulter in civil prison and to have the assessee arrested if he is not already under arrest.
5. A perusal of the various rules contained in the Second Schedule mentioned above shows that once the defaulter has, in pursuance of the notice under Rule 73, appeared before the TRO, no order for committing him to civil prison can be made under Rule 76 unless the proceedings under Rule 74 are over. In this case, the fact that the petitioner had, in pursuance of the notice issued under Rule 73(1), appeared before the TRO on 5th March, 1976, and again on the adjourned date, i.e., on 27th March, 1976, has not been denied. As admittedly the petitioners had put in appearance before the TRO on the date mentioned in the show-cause notice, prima facie there was no occasion for the TRO to issue a warrant for the petitioner's arrest on 26th March 1976, in exercise of the powers conferred by Sub-rules (2) and (3) of Rule 73.
6. We find that there is substance in the submission made by the learned counsel for the petitioners. A perusal of the rules contained in the Second Schedule clearly shows that once the defaulter has appeared in response to the notice under Rule 73(1) before the TRO, he is not to be arrested or detained in civil prison unless either the enquiry, contemplated by Rule 74, is over, or the conditions mentioned in Sub-rules (2) and (3) of Rule 73 are fulfilled. At present, there is no material before us to show that the conditions mentioned in Sub-rules (2) and (3) of Rule 73, enabling the TRO to issue a warrant for the petitioners' arrest, exist. The attempt made by the TRO to arrest thepetitioners in execution of the recovery certificate at this stage, therefore, cannot be justified. However, if the conditions mentioned in Sub-rules (2) and (3) are found to exist, any order passed by us in these petitions will not preclude the TRO from taking fresh proceedings under those two sub-rules.
7. Learned counsel for the revenue contended that the writ petitions, as framed, do not raise the question about the validity of the petitioners' arrest under the warrant said to have been issued on 26th March, 1976, which fact is not admitted by them in the counter-affidavit. It is true that the relief claimed in the writ petitions generally seeks the quashing of the entire recovery proceedings. It, however, cannot be denied that the issuing of a warrant for the arrest of a defaulter for purposes of executing a recovery certificate, is part of the recovery proceedings. The relief claimed, in the petition, therefore, covers the relief with regard to the improper issue of the warrant of arrest as well. Necessary facts in relation to this part of the case have clearly been mentioned by the petitioners in paragraphs 31 to 33 of the petition. It has been stated therein that the TRO had issued warrants for the petitioners' arrest even though they had, in response to the notice issued under Rule 73(1), not failed to appear before the TRO. In this view, the relief in respect to which the petitioners have now confined their submission, is clearly involved in the two writ petitions and an appropriate order can be made in that regard.
8. In the result, the petitions are allowed only to this extent that the TRO is directed not to take steps to get the petitioners arrested in pursuance of the warrants alleged to have been issued on 26th March, 1976, and not to commit the petitioners to civil custody under Rule 76 without first disposing of the proceedings as contemplated by Rule 74. It is, however, made clear that if in the meantime the conditions mentioned in Sub-rule (2) or (3) of Rule 73 of the Second Schedule to the I.T. Act happened to come into existence, it will be open to the TRO to deal with the petitioners under those rules. In the circumstances of the case, we direct the parties to bear their own costs in these petitions.