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1952 Supreme(P&H) 26
PUNJAB & HARYANA HIGH COURT
S.M.Soni, J.
Firm Ralla Ram Raj Kumar
Versus
Union Of India
Second Appeal No. 497 of 1951,
Decided On : JUNE 3, 1952
Civil courts have jurisdiction to entertain suits challenging the attachment of property where the property attached does not ex facie belong to the defaulter.
Headnote:
LAND REVENUE - JURISDICTION OF CIVIL COURTS - ATTACHMENT OF PROPERTY - PROPERTY NOT BELONGING TO DEFAULTER - CIVIL COURTS HAVE JURISDICTION TO DECIDE OWNERSHIP - SECTIONS 158(2)(XIV), (XV), 46(2), 46(5A), 67(C), 70(2), 88, ORDER XXI, RULES 58, 63, 49, CIVIL PROCEDURE CODE - LAND REVENUE ACT, SECTIONS 4(C), 5, 77 - REVENUE JURISDICTION ACT, BOMBAY, SECTION 5.
Fact of the Case:
The Collector attached the properties of the plaintiff firm, Ralla Ram-Raj Kumar, on the basis of a certificate issued by the Income-tax Officer stating that Rur Chand, a partner of the assessee firm, Messrs. Rur Chand Kishori Lal, was in arrears of income-tax. The plaintiff firm filed a suit challenging the attachment, claiming that the properties belonged to the firm and not to Rur Chand. The trial court decreed the suit, holding that the properties belonged to the plaintiff firm and that Rur Chand was not a partner of the firm. On appeal, the District Judge held that Rur Chand was a partner in the plaintiff firm and that his interest was half in the firm. The plaintiff firm filed a second appeal in the High Court.
Finding of the Court:
The High Court held that the civil courts had jurisdiction to entertain the suit as the property attached did not ex facie belong to the defaulter. The court further held that the evidence relied upon by the District Judge to conclude that Rur Chand was a partner in the plaintiff firm was not reliable and that the finding of the trial court that Rur Chand was not a partner in the firm was correct.
Issues: 1. Whether the civil courts had jurisdiction to entertain the suit challenging the attachment of the plaintiff firm's properties. 2. Whether Rur Chand was a partner in the plaintiff firm.
Ratio Decidendi: 1. The court held that the civil courts had jurisdiction to entertain the suit as the property attached did not ex facie belong to the defaulter. The court relied on the principles laid down by the Privy Council in Secy. Of State V/s. Mask And Co., ILR (1940) Mad 599, that the exclusion of the jurisdiction of the Civil Courts is not to be readily inferred, but that such exclusion must either be explicitly expressed or clearly implied. The court also relied on the provisions of Order XXI, rules 58 and 63 of the Civil Procedure Code, which provide for the investigation of claims and objections to the attachment of property. 2. The court held that the evidence relied upon by the District Judge to conclude that Rur Chand was a partner in the plaintiff firm was not reliable. The court noted that the evidence of two Income-tax Officers was hearsay evidence and that the plaint in a suit brought by Rur Chand in the name of Ralla Ram-Raj Kumar, which was relied upon by the District Judge, was not proved and could not be used to prove the truth of its contents. The court also noted that the entries in a bahi khata, which showed that Daulat Ram and another man had contributed to the capital of the firm Ralla Ram-Raj Kumar, did not prove that Rur Chand was a member of the firm.
Final Decision: The High Court set aside the order and decree of the District Judge and restored that of the trial Judge, holding that the plaintiff firm was entitled to its costs throughout.
Soni, J.
1. In March 1948, an Income-tax Officer issued a certificate under Section 46(2) of the Indian Income-tax Act in which it was stated that a firm called Messrs. Rur Chand Kishori Lal were in arrears of income-tax to the extent of Rs. 1,75,000/- odd on account of income-tax, super tax, etc. This certificate was forwarded to the Collector, Jullundur, with a request that the amount stated therein be realised as arrears of land revenue. With that certificate, a letter was also sent to the Collector in which it was said that Rur Chand, a partner of the assessee firm, was running business under the name and style of Ralla Ram-Raj Kumar and a request was made that the movable and immovable properties owned by Rur Chand in his personal name and/ or in the name of Ralla Ram-Raj Kumar be also attached. On receipt of the certificate and the letter the Collector asked the Tehsildar to do the needful. The Tehsildar attached certain currency notes, cash, goods in trade, weighing-machines, Savings Certificates, etc., of the firm Ralla Ram-Raj Kumar. Ralla Ram-Raj Kumar protested and said that the properties attached" were the properties belonging to the firm and were not properties belonging to Rur Chand. The objections of the firm were rejected by the Tehsildar on the 14th of August 1948. Therefrom the firm put an appeal before the Collector. Before the appeal was decided, the firm brought a suit against the Indian Dominion and against Rur Chand-Kishori Lal. During the pendency of the case, Rur Chand was declared insolvent and the Official Receiver was made a party. The Collector dismissed the appeal. In the suit, the Subordinate Judge held that the properties attached belonged to the plaintiff firm and that they did not belong to Rur Chand who was not a partner of the plaintiff firm. On account of this finding the Subordinate Judge decreed the plaintiffs, claim. This was on the 22nd of July 1950, the suit having been instituted on the 6th of November 1948. From the order of the Subordinate Judge, the Union of India appealed to the District Judge. The District Judge by his order dated the 7th of May 1951, accepted Governments appeal in part. He held that Rur Chand was a partner in the plaintiff firm and that his interest was half in the firm. The plaintiff firm Ralla Ram-Raj Kumar thereupon brought a second appeal in this Court.
2. The first point that was argued before me was that the civil Courts had no jurisdiction to entertain the suit. This point had not been urged before the Subordinate Judge and therefore he gave no finding on it. When the matter came up in appeal, it was urged on behalf of the Government that civil Courts had no jurisdiction. The District Judge repelled this contention. He held that if a person comes to a civil Court on the allegation that the property which is being attached and is going to be put up for auction on account of arrears of land revenue is his and not the defaulters the civil Court has jurisdiction to decide as to whom the property belongs. The learned Advocate-General has contended that this decision of the District Judge is wrong. He has relied upon Sub-clauses (xiv) and (xv) of Clause (2) of Section 158 of the Land Revenue Act. It is enacted therein that a Civil Court shall not exercise jurisdiction over any claim connected with, or arising out of, the collection by the Government, or the enforcement by the Government of any process for the recovery of land-revenue or any sum recoverable as an arrear of land-revenue; or any claim to set aside, on any ground other than fraud, a sale for the recovery of an arrear of land-revenue or any sum recoverable as an arrear of land-revenue. Mr. Sikris contention is that under the provisions of Section 46 of the Income-tax Act the Income-tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector, on receipt of such certificate, shall proceed to recover from s
