Judgment

HIDAYATULLAH, C.J.I. : This is an appeal against the judgment and decree of the High Court of Calcutta, refusing to enter satisfaction of two decrees under Order 21, Rule 2 of the Code of Civil Procedure obtained by the respondents against the Union of India in the following circumstances.

2. The respondents M/s. Soorajmull Nagarmull imported spindle oil form Philadelphia. The firm was required to pay Customs Duty under Item 27 (3) of the First Schedule to the Tariff Act, 1934 at 27 per cent ad valorem. The firm filed two suits asking for refund of excess duty claiming that the oil was dutiable only under Item 27 (8) at-/ 2/6 per imperial gallon. The suits were filed against the Collector of Customs, the Assistant Collector of Customs for Appraisement and the Union of India. The suits were successful and decrees were passed against the Union of India for refund of the amount charged in excess. In one suit the decree was for payment of Rs. 43,723 with interest at 6 per cent per annum from 1st day of April, 1952 until realisation. In the second suit the decree was for Rs. 75,925 with similar interest.

3. Since the firm had not paid a sum of Rs. 18,08,667.72 as tax the Income-tax Officer, Circle II, Calcutta issued a notice under section 46 (5A) of the Indian Income-tax Act, 1922 calling upon the Collector of Customs to pay the amount of the decree to him and stating that his receipt would constitute a good and sufficient discharge of the liability for refund to the firms. The Collector of Customs paid the amount into the Reserve Bank and the Reserve Bank issued receipts crediting the amount against Super-tax due from the firm. The Collector of Customs then applied to the High Court of Calcutta under Or. 21, R. 2 of the Code of Civil Procedure for the adjustment of the decrees by this payment. This was refused by a learned single Judge who gave no reasons while dismissing the petition. On appeal to the Division Bench it was held by the Division Bench on January 22, 1964 that the adjustment of the decree could not be granted. It is against the last order that the present appeals have been filed by special leave of this Court.

4. This High Court in reaching the conclusion observed that the decrees were against the Union of India and not the Collector of Customs. Further the sums were held by the Collector of Customs on behalf of the Union of India and not on behalf of the firm. The High Court found the notice to be defective inasmuch as it asked for payment towards Income-tax and towards penalty, while the receipts which were granted to the firm, stated that the amount was for Super-tax. On these three grounds, the High Court held that the learned single Judge was right in dismissing the application of the Collector of Customs for the adjustment of the decrees.

5. Order 21, Rule 2 of the Code of Civil Procedure takes note of payments out of court to decree-holders and provides that where any money payable under a decree of any kind is paid out of Court, or the decree is otherwise adjusted in whole or in part to the satisfaction of the decree-holder, the decree-holder shall certify such payment or adjustment to the Court whose duty it is to execute the decree, and the Court shall record the same accordingly. It is also provided that the judgment-debtor also may inform the Court of such payment or adjustment, and apply to the Court to issue a notice to the decree-holder to show cause why such payment or adjustment should not been recorded as certified.

6. The contention of the respondents in these appeals is that the decrees were not passed against the Collector of Customs but against the Union of India and that payment by the Collector of Customs was not a payment by the judgment-debtor. In our judgment this plea is highly technical. The amount was recovered by the Collector of Customs from the firm and was being held by the Union of India through the Collector of Customs. The Collector of Customs paid the money not on behalf of