Zamindari Abolition Compensation Bonds issued by the U. P. Government to intermediaries in payment of compensation payable on the basis of their rights under the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 (U. P. Act 1 of 1951) are not required to be accepted by the appropriate authorities in payment of the agricultural income-tax due from them.

Judgement

RAGHUBAR DAYAL, J : This appeal, by special leave, raises the question whether Zamindari Abolition Compensation Bonds (shortly termed Bonds) issued by the U. P. Government to intermediaries in payment of compensation payable on the basis of their rights under the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 (U. P. Act 1 of 1951), hereinafter referred to as the Act, have to be accepted by the appropriate authorities in payment of the agricultural income-tax due from them.

2. The facts leading to the appeal, in brief, are that the respondent, an ex-zamindar, was assessed to agricultural income-tax in the assessment year 1860 F corresponding to 1952-53, on the basis of the agricultural income accruing in the previous year 1359 F corresponding to 1951-52. He did not pay the assessed tax and was further assessed to a penalty. In the result, Rs. 868 were to be paid by him for tax plus penalty,

3. The respondent s writ petition contending that he was not liable to pay tax was dismissed by the High Court. Thereafter, the agricultural income-tax authorities took out proceedings for the realisation of the amount due from him. On July 24, 1956 the respondent presented an application to the Agricultual Income-tax Assessing Officer, Allahabad, stating that he had no ready cash to pay the dues and that he was therefore depositing Bonds of the value of Rs. 850 and Rs. 18 in cash and praying that the Bonds be accepted in payment of tax dues. This application was rejected by an order stating that there was no rule for the acceptance of those bonds and that they be returned to the applicant.

4. On August 1, 1956, the respondent made a similar application to the collector complaining that the Assessing Officer had no valid reason to refuse to take the Bonds when the Bonds were negotiable instruments. This application was also rejected on a report of the Assessing Officer that the Bonds were not accepted in the settlement of agricultural income-tax dues; that they were not negotiable and that there was no provision in the Act for their acceptance.

5. Thereafter, the respondent presented a writ petition to the High Court of Allahabad praying for the issue of a writ of certiorari quashing the order of the Assessing Officer and the Collector. Allahabad, for the issue of a writ of mandamus directing them to accept the Bonds in lieu of the tax dues and, in any, case, to deduct the amount from the rehabilitation grant due to the petitioner and for the issue of a writ of prohibition directing the opposite parties from adopting coercive measures for the realisation of the tax due from the petitioner. The grounds mentioned in support of the prayers were that the Bonds were negotiable instruments and therefore refusal to accept them in payment of agricultural income-tax dues was illegal that they, having been issued by Government, could not be subsequently refused they being perfectly valid legal tender and that in view of R. 8A of the Rules made under the Act the amount due for tax should have been deducted from the interim compensation.

6. The counter affidavit filed by the Naib Tehsidar Agriculture Income-tax Officer, Allahabad, on behalf of the State stated that the respondent was assessed to agricultural income-tax in the assessment year commencing from July, 1. 1952 on the income derived in the previous year commencing from July 1, 1951, that the tax had to be paid in four instalments and in default of payment a penalty of Rs. 43 was imposed form each default in payment of the four instalment and that the Bonds could not be accepted towards the tax due under S. 6(d) of the Act red with R. 48 of the Rules as the tax had fallen due in 1360 F, corresponding to July 1, 1952 to June 30, 1953.

7. The High Court held that the orders of the Agricultural Income-tax Assessing Officer and the Collector were wrong as the ground for refusing to accept the Bonds in payment of the tax on the ground that there was no rule or statutory provision f