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Petitioner: KRISHAN PRASAD SINGHI and others VS Respondent: TAX RECOVERY OFFICER-II (INCOME- JUDGMENT
Court Name: Calcutta High Court Judge(s): Shyamal Kumar Sen Title:KRISHAN PRASAD SINGHI and others vs TAX RECOVERY OFFICER-II (INCOME-
JUDGMENT
Reported As: 1998 PTD 540 Result: Rule made absolute Judgment JUDGMENT ' SHYAMAL KUMAR SEN, J.---In this writ application, the petitioners who are trustees of a public charitable trust (in short, "the petitioner-trust") have challenged an order of attachment against the shares owned by the petitioner-trust issued by the Tax Recovery Officer-II (Income-tax), Jaipur (in short, "the T.R.O."), under rule 26(1)(ii) of the Second Schedule to the Income-tax Act, 1961 (in short, "the Act"), for an alleged demand against a private trust known as Raja Baldeodas Birla Santatikosh Trust (hereinafter referred to as "the private trust"). The order of attachment is in respect of the shares of Jiyajeerao Cotton Mills Ltd. Owned by the petitioner-trust and registered in the name of its trustees and lying in its possession at its office at Calcutta. The said shares were received by the petitioner-trust from another public charitable trust, namely, Birla Jan Kalyan Trust, which had in its turn received such shares from the private trust as donation. The other two trusts also filed the writ applications on similar ground challenging the orders of the Tax Recovery Officer attaching such shares owned and held by them. The writ petitions challenging the orders of attachment were moved by the said two trusts and the petitioner-trust on the same day. The writ applications of the other two trusts were marked Civil Revisions Nos. 6549(W) and 6550(W) of 1977. This writ petition was heard earlier by Susanta Chatterjee, J., and at such hearing supplementary affidavit was filed incorporating facts subsequent to the filing of the writ petition and written submissions were also submitted. The judgment was reserved but was not delivered by Susanta Chatterjee, J. The records of the case were misplaced and have now been reconstructed. ' The cases of the said two other trusts being Civil Revisions Nos.6549(W) and 6550 (W) of 1977 came up for final hearing before Ajit Kumar Sengupta, J., as he then was, and were finally disposed
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of by the judgment, dated July 30, 1992, reported as Anandilal Goenka v. TRO (1994) 208 ITR 46 (Cal). All the contentions raised and dealt with in Anandilal's case (1994) 208 ITR 46 (Cal) are involved in the instant writ petition. The facts and circumstances of Anandilal's case (1994) 208 ITR 46 (Cal) are identical with the present case and the said decision fully applies and should be followed in the instant case. The respondents have also not disputed that the facts and circumstances of the instant case are identical to that of Anandilal's case (1994) 208 ITR 46 (Cal) and the said decision is applicable. ' Mr. A. C. Maitra, the learned Advocate on behalf of the Revenue, however, has taken a preliminary objection relating to the maintainability of the writ petition in this Court on the ground that this Court has no jurisdiction to proceed with the matter. ' He has further submitted that Anandilal's case (1994) 208 ITR 46 (Cal) should not be followed in view of the subsequent decision of the Supreme Court in ONGCs case, AIR 1994 SCW 3287; (1994) 4 SCC 711. He has further submitted that in view of the decision in ONGC's case, AIR 1994 SCW 3287, the decision in Anandilal's case (1994) 208 ITR 46 (Cal) which held that this Court has jurisdiction to entertain the writ petition should be considered as overruled on the point and the writ petition should be dismissed on the ground of lack of jurisdiction. ' It is, therefore, necessary to consider whether this Court has jurisdiction to entertain the writ petition. It has been submitted by Mr. Bajoria, the learned Advocate, for the petitioner, that in ONGC's case, (1994) 4 SCC 711, the Supreme Court held on facts that no part of cause of action arose within the jurisdiction of this Court. ' He has also submitted that it cannot, however, be disputed that in the event part of the cause of action has arisen within the jurisdiction, this Court has territorial jurisdiction to entertain the writ petition. It has been submitted that in the instant case, there cannot be any dispute that part of the cause of action has arisen within the jurisdiction of this Court. The contention of the learned Advocate for the petitioner is that the attached shares in question were lying at Calcutta. The said property was located at Calcutta. It has further been submitted by the petitioner that the order of attachment was served at Calcutta and such order of attachment cannot be effective unless served. It is also the contention of the learned Advocate for the petitioner that a service of the order as prescribed by rule 26 of the Second Schedule to the Act is a sine qua non for making an attachment. It has been submitted that the attachment is made only by service of the order prohibiting the person in possession of the shares from dealing with it. The learned Advocate for the petitioner has further submitted that the order becomes effective only when served and not otherwise. It has further contended that as the attachment itself has taken place at Calcutta and the property attached is lying at Calcutta, a part of the cause of action has arisen within the jurisdiction of this Court. In support of this contention, the learned Advocate has referred to paragraphs 55 and 56 of Anandila's case (1994) 208 ITR 46 (Cal). ' The learned Advocate for the petitioner has relied upon the judgment and decision in the case of Everest Coal Co. (P.) Ltd. v. Coal Controller (1986) 90 CWN 438. ' It has been submitted by him that in the aforesaid decision, it was held that if an order is passed by an authority beyond the territorial limits of a particular High Court but the same is given effect to against the petitioner within the said High Court's jurisdiction, the High Court will have jurisdiction in the matter. The learned Advocate has further submitted in the case of Everset Coal Co. (P.) Ltd. v. Coal Controller (1986) 90 CWN 438, the decision of the Supreme Court in the case of State of Rajasthan v. Swaika Properties, AIR 1985 SC 1289, was also considered. It has further been submitted by him that the said decision in Swaika Properties' case, AIR 1985 SC 1289, was followed and relied on in ONGC's case (1994) 4 SCC 711. The contention of the learned Advocate for the petitioner is that ONGC's case (1994) 4 SCC 711 does not any way affect the decision given by this Court in Anandilal's case (1994) 208 ITR 46 on the question of jurisdiction.
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' He has further submitted that it is to be seen in each case whether any part of the cause of action arises within the jurisdiction of this Court. The learned Advocate has further submitted that in the instant case, it cannot be disputed that part of the cause of action has arisen within the jurisdiction of this Court. ' The learned Advocate for the petitioner has relied upon the following decisions in this connection: (1) Modern Food Industries (India) Ltd. v. Juverkar (M.D.) (1989) Lab 1C 224 (Guj); (2) Union of India v. P. Kunhabdulla (1985) 1 LLJ 331 (Ker); (3) Keshavlal Madhavji v. Bibi Soghra, AIR 1934 'Pat. 619; (4) Raoof (M.A.A.) v. K.G. Lakshmipathi AIR 1969 Mad. 268; (5) CIT v. Oriental Rubber Works (1984) 145 ITR 477 (SC). (6) Ajantha Industries v. C.B.D.T. (1976) 102 ITR 281(SC). ' Mr. Bajoria has further submitted that from all the above decisions it would be seen that where an order is required to be communicated in order to be effective, the High Court within whose jurisdiction it is communicated would have jurisdiction since a part of the cause of action would arise within the jurisdiction of such High Court. ' It has been also submitted on behalf of the petitioners that in any event the files of the private trust including the tax recovery cases have been transferred from Jaipur to Calcutta with effect from April 15, 1978 and all assessm ents including recovery proceedings are now with the authorities at Calcutta and the purported objection as to the jurisdiction of this Court taken by the respondents part from being devoid of merit, is merely academic and of no consequence since all the records of the proceedings and the authorities are within the jurisdiction of this Court since April, 1978. This aspect was also considered in Anandilal's case (1994) 208 ITR 46 (Cal.), while rejecting the respondents contention as to the jurisdiction of this Court. ' The learned Advocate for the respondents has further argued that the decisions relied upon on behalf of the petitioners dealing with analogous provisions of the Civil Procedure Code as rule 26 of the Second Schedule to the Act, it was submitted on behalf of the respondents that the said decisions are not relevant as the Civil Procedure Code was not applicable to the writ proceedings. ' It has also been submitted on behalf of the respondents that section 141 of the Code has been amended to provide that the proceedings referred to in the said section did not include proceedings under Article 226 of the Constitution. ' The learned Advocate for the petitioner has further submitted that the contention of the respondent cannot be accepted since there is no issue involved in the instant case as to whether the present proceedings are to be governed by the provisions of the Civil Procedure Code or the Rules made by this Court under Article 226 of the Constitution. The writ petition has been filed according to the rules of this Court framed under Article 226 of the Constitution and the contention raised by the respondents as such has no application in the instant case. ' I have considered the respective submissions of the learned Advocates for the parties and the decisions cited on behalf of the respective parties. The main question involved in this case is if this Court has jurisdiction to entertain the writ application and if Anandilal's case (1994) 208 ITR 46 (Cal.) is applicable in the instant case. ' In support of the contention of the respondents that this Court has no jurisdiction. Mr. A.C. Moitra, the learned Advocate for the Revenue has relied upon the decision of ONGC's case, AIR 1994 SCW 3287; (1994) 4 SCC 711. It cannot be disputed that if part of the cause of action arises within the jurisdiction, this Court can exercise jurisdiction under Article 226 of the Constitution in view of the provisions contained in Article 226(2). The Supreme Court in ONGC's case (1994) 4 SCC 711 in fact reiterated the same principle that for the purpose of determining whether a part of the cause of action has arisen within the jurisdiction of the Court or not, the facts pleaded in the writ petition alone are to be taken into consideration. The Supreme Court in ONGC's case (1994) 4 SCC 711
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examined the facts of that case and came to the conclusion that none of the facts pleaded constituted any part of the cause of action. At page 3293 of the said report, the Supreme Court observed that mere reading of the advertisement at Calcutta, submitting the offer from Calcutta and making representation from Calcutta would not constitute facts forming an integral part of the cause of action. It further held that the receipt of the fax message, dated January 15, 1993, at Calcutta would not constitute an integral part of the cause of action as the fax message could not be construed as rejection of the offer as that fact, namely, of rejection occurred on January 27, 1993, that is after the fax message. The Supreme Court further noted at page 3293 of the said reports that the advertisement itself mentioned that the tender should be submitted at New Delhi; that those would be scrutinised at New Delhi and that a final decision whether or not to award the contract to the tenderer would be taken at New Delhi. It would thus be seen that in ONGC's case (1994) 4 SCC 711, it was held that no part of the cause of action arose within the jurisdiction of the High Court as tenders were to be submitted at New Delhi and were to be scrutinised at New Delhi and a final decision on acceptance of such tender was also to be taken at New Delhi. The Supreme Court further held that even the rejection of the tender was not communicated at Calcutta since such rejection occurred only on January 27, 1993, and not on January 15, 1993, the date when the fax message was received at Calcutta. However, if the tenders were to be submitted from Calcutta and the rejection was communicated at Calcutta then the said decision itself shows that part of the cause of action would have arisen at Calcutta. ' It may be noted, however, that the said judgment of the Supreme Court was delivered in the special leave petition filed against the decision of the Court in the case of Utpal Kumar Bose v. ONGC AIR 1994 NOC 296; (1994) 1 CLJ 448. It is apparent from the said judgment of this Court that the question of jurisdiction was not argued before this Court. In the said judgment details of the arguments on the merits of the case advanced on behalf of the petitioner as well as on behalf of the respondent by learned Solicitor-General were recorded. It may also be noted, however, that after the ad interim order was passed in the said proceeding, the respondent appeared and took directions for filing of affidavits and hearing continued for days together in detail but the question of jurisdiction was not specifically argued on behalf of the respondent. It was also not argued on behalf of the respondent that no part of the cause of action had arisen within the jurisdiction of this Court. ' It may not be out of place in this connection to refer to the decision in the case of Union of India v. Hindustan Aluminium Corporation Ltd. (1983) AIR 1983 Cal. 307, wherein it was held that the question whether a High Court has territorial jurisdiction to entertain a writ petition has to be decided on the basis of the allegations made in the petition. The truth or otherwise of the allegations is immaterial at that stage. In the said case the impugned orders fixing the selling price and the retention. Price of aluminium was fixed by the Central Government at Delhi, the factory of the petitioner-company was located outside the West Bengal. However, the head office was situated at Calcutta. The petitioner-company had alleged that it suffered losses in business at Calcutta as the direct consequence of the impugned orders. ' It was further held that part of the cause of action arose at Calcutta and, therefore, the Calcutta High Court hAl territorial jurisdiction to entertain the petition. ' In the aforesaid decision the Division Bench of this Court further held in paragraph 24 (page 314) of the said judgment as follows: "Under Article 226(2) of the Constitution, the High Court may exercise its power conferred by clause (1) of Article 226 to issue directions, orders or writs if the cause of action, wholly or in part, arises within the territory over which it exercises jurisdiction. It is now well-settled that 'cause of action' means every fact which the plaintiff should prove, if traversed, in order to succeed in the suit. Hindustan Aluminium Corporation Ltd. Has come with a case that in view of the impugned orders, it
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has been suffering loss in its business in the sale of aluminium and its products produced and manufactured by it in Calcutta where its principal office is situate. If there had been no allegation of incurring of any loss as a result of the impugned orders, we are afraid, there would not have given rise to any cause of action either wholly or in part, in Calcutta. Normally no person institutes any suit or proceeding unless his right is jeopardized or prejudiced in consequence of any action of a private individual or of the Government. In the writ petition, there has been a categorical averment of the suffering of loss by Hindustan Aluminium Corporation Ltd. By the sale of aluminium and aluminium products in Calcutta. We are now not concerned with the truth or otherwise of the allegation as the question of jurisdiction is to be determined on the basis of the allegations made in the writ petition. If there was no such allegation of any loss suffered by Hindustan Aluminium Corporation Ltd. In Calcutta, the High Court would not entertain the writ petition, however, illegal the impugned orders may be. A writ petition is not entertained unless the petitioner comes with a case that he has been prejudiced by any action of the Government or a statutory body or authority. So, in our opinion, the writ petition, prima facie, discloses that a part of the cause of action arose in Calcutta within the jurisdiction of this Court." ' It may be noted in the aforesaid writ petition in the case of Utpal Kumar Bose v. ONGC AIR 1994 NOC 296; (1994) 1 CLJ 448, the petitioner has specifically pleaded that a part of the cause of action has arisen within the aforesaid jurisdiction and part of the cause of action has arisen outside the jurisdiction and the petitioner is likely to suffer loss at its registered office within the said jurisdiction if the contract is not awarded to the petitioner. ' It has not been disputed on behalf of the respondent, ONGC, that the petitioner would not have suffered loss if the cause of action has arisen within the jurisdiction and in fact no issue was raised on the said question since no specific argument on the question of jurisdiction was advanced an impression was created that there was no such issue involved in the said case. ' Under the aforementioned circumstances, there was no occasion for this Court to consider this question of jurisdiction suo motu. ' In the Supreme Court, however, the points regarding jurisdiction were taken and the Supreme Court found that no part of the cause of action has arisen within the jurisdiction. On the basis of the points taken, the Supreme Court, however, decided the issue and held on facts that no part of the cause of action arose within the jurisdiction of this Court and as such the Calcutta High Court has no jurisdiction. ' It is, however, to be noted that had the question of jurisdiction been argued by learned counsel for the respondent, the said point could have been gone into by this Court. This aspect of the matter, however, was unfortunatley not brought to the notice of the Supreme Court. ' In the instant case, the undisputed facts are that the attached shares in question were and are still lying at Calcutta. The order of attachment was served at Calcutta. Such order of attachment cannot be effective unless served. Service of the order as prescribed by rule 26 of the Second Schedule to the Act is the sine qua non for making an attachment. The attachment is made only by service of the order prohibiting the person in possession of the shares from dealing with it. The order becomes effective only when served and not otherwise. Hence, as the attachment itself has taken place at Calcutta and the property attached is lying at Calcutta part of the cause of action has arisen within the jurisdiction of this Court. This aspect has been dealt with in Anandilal's case (1994) 208 ITR 46 (Cal.). The relevant decisions on the point are discussed hereinafter: (a) In the case of Everset Coal Co. (P.) Ltd. v. Coal Controller (1986) 90 CWN 438, a Division Bench of this Court at page 443 of the said reports held as under: "An order has been made by an authority or person at a place beyond the territorial limits of a particular High Court but the same is given effect to against the petitioner within the said High Court's jurisdiction. In such a case, at least a part of the cause of action arises, where the
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impugned order is implemented. Thus, when an order becomes effective only when it is communicated or served, the service of the order or receipt of a notice thereof would form part of the cause of action for filing a writ petition by the person aggrieved thereby." ' In Everset Coal Co. (P.) Ltd. v. Coal Controller (1986) 90 CWN 438, the Supreme Court decision in the case of State of Rajasthan v. Swaika Properties, AIR 1985 SC 1289, was also considered. The decision in State of Rajasthan v. Swaika Properties, AIR 1985 SC 1289, was also followed and relied upon in ONGC's case (1994) 4 SCC 711. ' In Anandilal's case (1994) 208 ITR 46 (Cal.), the Division Bench decision in Everset Coal Co. (P.) Ltd. v. Coal Controller (1986) 90 CWN 438 (Cal.) was relied upon and followed. (b) It would thus be evidence that ONGC's case (1994) 4 SCC 711, does not in any way affect the decision given by this Court in Anandilal's case (1994) 208 ITR 46 on the question of jurisdiction. It is to be seen in each case whether any part of the cause of action arises within the jurisdiction of the High Court. In the instant case as stated earlier the attached attachment itself was made at Calcutta and the property attached was at Calcutta. These facts are not in dispute. The respondents have not made any submission to the effect that attachment of the property lying at Calcutta does not and cannot constitute part of the cause of action. Save and except referring to ONGC's case (1994) 4 SCC 711, it has not been shown how the said case is applicable to the facts of the instant case. The respondents have not argued, as they could not that an attachment can be effected of the shares even without serving the order on the shareholder or that actual attachment of shares lying within the jurisdiction of the High Court would not form part of the cause of action. (c) The petitioner has relied upon various decisions of the High Courts and the Supreme Court wherein service of the order has been held to be a part of the cause of action since the order could not be effective without service thereof. ' The learned Advocate for the petitioner has relied upon the judgment and the decision in the case of Modern Food Industries (India) Ltd. v. Juverkar (M.D.) (1989) Lab 1C 224, Justice Ahmadi of the Gujarat High Court as his Lordship then was held that the place where the order of termination of service was served gave rise to the cause of action. In the said case the order of termination was passed at Delhi and it was sent to Calcutta where the employee was serving. Since the employee was on leave and staying at Ahmedabad and the order was served upon the employee there it was held that a part of the cause of action arose within the jurisdiction of the Gujarat High Court. In paragraphs 17, 18 and pages 235 to 238 of the Reports the issue relating to jurisdiction was considered. At page 239 of the Reports, the Court held that whether the order was communicated at Ahmedabad since he was at the relevant time on leave or for the convenience of the employee or for any other reason was not material but what was material was the fact that it was communicated to him at Ahmedabad. The Court further held that it could not subscribe to the submission of the employer that the consequence of the termination order fell on the respondent only at Calcutta because the employee was posted at Calcutta. It further held that although a part of the cause of action can be said to have arisen at Calcutta also but that could not nullify the fact that its consequences also fell at Ahmedabad where the employee was informed of the termination of his services. ' In the case of Union of India v. P. Kunhabdullah (1985) 1 LLJ 331, relied upon by the learned Advocate for the petitioner, Justice M. Fathima Beevi as she was then held that the order of removal became effective only on acceptance of the order communicated by registered post. In the said case the action was taken by the authorities outside the State of Kerala. The employee concerned was not serving in the State of Kerala. However, since the order was received by the petitioner in Kerala the Court held that it had jurisdiction to entertain the writ petition. ' In the case of Keshavlal Madhavji v. Bibi Soghra, AIR 1934 Patna 619, it was held by the Patna High Court construing similar provisions of attachment in the Civil Procedure Code that the mere order
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to make an attachment does not amount to an actual attachment and that the attachment is not complete until it has been effected in the manner prescribed that is by a copy of the order being sent to the debtor and if it is not so sent or served on the debtor there is no attachment. ' In the case of M.A.A. Raoof v. K.G. Lakshmipathi, AIR 1969 Mad. 268; the Madras High Court while considering the attachment of shares under similar provisions in the Civil Procedure Code held that the jurisdiction to attach such shares is of the Court within whose jurisdiction the shareholder who is to be prohibited from transferring the shares resided. It was held that the prohibitory order is to be issued for attachment only to the person in whose name the share stands and, therefore, it is significant if he resides within the…
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