A decree passed by a court having jurisdiction over the subject-matter and the party cannot be treated as a nullity and ignored in subsequent litigation even if the suit was one barred by time.

CHANDRASEKHARA SASTRY, J.

( 1 ) A. S. No. 188/59: This appeal arises out of O. S. No. 19/57 on the file of the Subordinate Judges Court, Nellore, which was filed by the Union of India, represented by the 1st Additional Income-Tax Officer, Nellore against four defendants for a declaration that the equitable mortgage dated 1-4-1953 executed by defendants 1 to 3 in favour of the 4th defendant in respect of the properties described in the schedule attached to the plaint, is a sham, nominal and void transaction and that the decree obtained thereon in O. S. No. 316 of 1953 is a fraudulent and collusive decree and that the further proceedings in execution of the decree cannot affect the priority of the plaintiff in respect of the income-tax arrears of Rs. 55,298-15-0 for the assessment year 1951-52, the assesses being defendants 1 to 3. The 1st defendant is the father and defendants 2 to 4 are his sons. The plaintiffs case, as disclosed in the plaint, is shortly as follows. The 4th defendant, who is the eldest son of the 1st defendant, got divided from the family in the year 1940 and was ever since carrying on business separately on his own account and in partnership with others. Defendants 1 to 3 were assessed to income-tax at Rs. 55,298-15-0 under Section 23 (4) of the Income-tax Act for the assessment year 1951-52. The order of assessment is dated 31-3-1953 and it was served on the 1st defendant on 5-8-53. Defendants 1 to 3 filed a Writ petition, W. P. No. 746/53 on 7-9-1953 in the High Court of Madras for the issue of a Writ of Prohibition or other appropriate Writ prohibiting the plaintiff from executing the order or assessment and collecting the tax. They also filed a petition for stay and finally, an order was passed on 19-10-53 directing defendants 1 to 3 to pay the tax in 12 monthly installments of Rs. 5,000. 00 each beginning from 1-12-1953. Again, the assessee filed a further application in the High Court offering to give advance security for the tax and expressing inability to pay the instalments. Thus, the court passed a consent order that all the immovable properties of defendants 1 to 3 will be attached and that the attachment will continue till the disposal of the Writ Petition. The plaintiff was not informed of the existence of any encumbrance over the properties. But the 4th defendant filed O. S. No. 316/53 against defendants 1 to 3 praying for a preliminary mortgage decree for Rs. 84,142-3-6 alleging that the said sum was due to him on the basis of a mortgage by deposit of title deeds, dated 1-4-53. The said suit was filed on 4-12-53. There was a preliminary decree on 20-1-1954, which was followed by a final decree dated 15-9-1954. The 4th defendant next sought to execute the final decree in the mortgage suit. It is further alleged in the plaint that the debt alleged to be due to the 4th defendant from defendants 1 to 3 is a fictitious one and that the alleged transactions, which were carried on between defendants 1 to 3 and the 4th defendant were also fictitious. The alleged mortgage by deposit of title deeds is a bogus transaction created with a view to screen the properties of defendants 1 to 3 from being proceeded against for recovery of the income tax, but there was really no debt owing by defendants to 3 to the 4th defendant. It is further alleged that on the fact of this sham and nominal mortgage, the 4th defendant filed a suit O. S. No. 316/53 in the Subordinate Judges Court, Nellore and obtained the fraudulent and collusive preliminary decree and final decree for a sum or Rs. 84,14 2-3-6. On these allegations, the plaintiff prayed for the declaration above referred to. Defendants 1 to 3 were ex parte. The 4th defendant filed a written, statement denying the allegations in the plaint. He asserted that the account, between himself and defendants 1 to 3 were settled on 31-3-53 and it was found that a sum of Rs. 77,925-7-2 was owing to the 4th defendant. In order to secure the repayment of the money already du

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