Elbridge Watson v. R. K. Das — 1950 DIGILAW 194 (CAL)

JUDGMENT DAS GUPTA, J. 1. THIS is an application by one Mr. Elbridge Watson for a writ of mandamus or a writ of like nature or an order directing the respondent Sri R. K. Das, an ITO, to show cause why the orders complained of and dt. 18th March, 1949, should not be set aside and for quashing the said orders. The case of the petitioner before me is as follows : The petitioner, an American citizen by birth, is a citizen of India and thereafter of the Union of India for about 16 years. The petitioner is the manager and director of M/s Chrestian Mica Industries Ltd. The total income which the petitioner gets from the said company is the net sum of Rs. 60,000 to Rs. 70,000 annually after deducting the income-tax payable by him. On 22nd Oct., 1948, the petitioner was assessed to incometax for asst. yr. 1946- 47. The tax assessed was Rs. 5,30,526, and after crediting the sums of Rs. 50,252-11-0 and Rs. 12,616-4-0 realised by the respondent, a sum of Rs. 4,67,657-1-0 became due and payable by the petitioner to the IT authorities. On 18th Nov., 1948, the respondent caused a notice of attachment under s. 46(5A) of the IT Act, 1922, to be issued and served upon the Chrestian Mica Industries Ltd., the employers of the petitioner. By the said notice of attachment, the said M/s Chrestian Mica Industries Ltd., were required to pay to the respondent forthwith any money due from them to the petitioner or held by them for or on account of the petitioner and also to pay any money which may become due to him or any money which the said M/s Chrestian Mica Industries Ltd., may subsequently hold for or on account of the petitioner within the next three months. On 21st Dec., 1948, the respondent forwarded to the office of the Certificate Officer, 24 Parganas, Alipore, a certificate for Rs. 4,67,657-1-0 under s. 46 (2) of the IT Act for recovery of the said sum by the Certificate Officer under the Bengal Public Demands Recovery Act, 1913. The said certificate was filed with the Certificate Officer, 24 Parganas, Alipore, and the case was numbered and registered as No. 201 I.T. of 1948-49. 4,67,657-1-0 under s. 46 (2) of the IT Act for recovery of the said sum by the Certificate Officer under the Bengal Public Demands Recovery Act, 1913. The said certificate was filed with the Certificate Officer, 24 Parganas, Alipore, and the case was numbered and registered as No. 201 I.T. of 1948-49. After having forwarded to the office of the Certificate Officer, 24 Parganas, the certificate as aforesaid, the ITO on 18th March, 1949, caused another letter of attachment to be served upon the employers of the petitioner, namely, M/s Chrestian Mica Industries Ltd., and caused an attachment to be effected under s. 46(5A) of the IT Act. By the said notice M/s Chrestian Mica Industries Ltd., were required under s. 46(5A) of the IT Act, 1922, to pay to the respondent forthwith any amount due from them to the petitioner or held by them for or on account of the said petitioner up to the amount of arrears shown in the said letter which was Rs. 3,37,345-5-0 and also requiring the said M/s Chrestian Mica Industries Ltd., to pay any money which may subsequently become due from them to the petitioner or which they may subsequently hold for or on account of him up to the amount of arrears still remaining unpaid. Thereafter on 28th Dec., 1949, the petitioner made an application to the Certificate Officer for payment of his dues in monthly instalments. The said application was not disposed of but kept pending at the instance of the respondent. On 25th May, 1950, another application was made to the Certificate Officer and on that application an order was made allowing the petitioner to pay his dues in monthly instalments of Rs. 5,000 each, the first of such instalments being payable on 15th June, 1950, and subsequent instalments by the 15th of subsequent months. The material portions of the order passed by the Certificate Officer run as follows : ". . . . . I do not understand why a petition for instalments as submitted by the C. D. should have been kept hanging fire like this at the instance of the ITO. I permit the C.D. to pay for the present at the rate of Rs. 5,000 per month, each payment being made by the 15th of each month. The rate of instalment is, however, liable to be reconsidered and refixed in the light of future developments. I permit the C.D. to pay for the present at the rate of Rs. 5,000 per month, each payment being made by the 15th of each month. The rate of instalment is, however, liable to be reconsidered and refixed in the light of future developments. The first payment is to be made by 15th June, 1950. Also write to the ITO for information regarding other payments that may have since been made by him." 2. THEREAFTER on 30th May, 1950, the petitioner through his advocate made an application to the respondent asking him to withdraw the notices under s. 46(5A) of the IT Act. In the said application it was inter alia stated as follows : "I have the honour to state that by an order of the Certificate Officer in Certificate Case No. 201 I. T./1948-49, the learned Certificate Officer has been pleased to grant me instalments of Rs. 5,000 per month. I would therefore request you to withdraw all notices under s. 46(5A), which you have issued for the realisation of the aforesaid dues so that my client above-named may be able to make the payments according to the instalments granted and that he may have something to live upon." Nothing was done regarding the said application and the said application has been kept pending since May, 1950, and no order on the same to the knowledge of the petitioner has been passed by the respondent ; but the respondent in his affidavit in opposition has stated that the same was rejected on 5th June, 1950. Under the circumstances the petitioner has made the present application for the reliefs mentioned. 3. DR. Pal appearing on behalf of the petitioner contended before me that in view of the order passed by the Certificate Officer on 25th May, 1950, granting instalments the respondent should either withdraw the attachment which had been made on 18th March, 1949, or at least modify the same. He relies on s. 46(5A), and contends before me that in any event the attachment which has been effected by the notice of 18th March, 1949, should be revised to this extent, namely, that the employers of the petitioner should be asked to pay Rs. 5,000 per month being the amount of instalments which has been ordered to be paid by the Certificate Officer and it is incumbent on the ITO to do so. 4. 5,000 per month being the amount of instalments which has been ordered to be paid by the Certificate Officer and it is incumbent on the ITO to do so. 4. IT is necessary for me, in order to determine this matter, to consider the effect of s. 46 and particularly s. 46(5A) of the IT Act. The material provisions of s. 46 necessary for me to consider are as follows : "46.(2) The ITO 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 such assessee the amount specified therein as if it were an arrear of land revenue : Provided that without prejudice to any other powers of the Collector in this behalf, he shall for the purpose of recovering the said amount have the powers which under the CPC, 1908, a Civil Court has for the purpose of the recovery of an amount due under a decree." "46. (5A) The ITO may at any time, or from time to time, by notice in writing (a copy of which shall be forwarded to the assessee at his last address known to the ITO) require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the ITO, either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the taxpayer in respect of arrears of income-tax and penalty or the whole of the money when it is equal to or less than that amount. The ITO may at any time or from time to time amend or revoke any such notice or extend the time for making any payment in pursuance of the notice." The point which specifically arises for my consideration is what would be the "amount due" as mentioned in s. 46(5A) of the IT Act ? Is it, in the present case the whole of the amount which is payable to the IT authorities by the petitioner, viz., Rs. 3,37,345-5-0 or is it Rs. Is it, in the present case the whole of the amount which is payable to the IT authorities by the petitioner, viz., Rs. 3,37,345-5-0 or is it Rs. 5,000 per month as and when the instalments become due ? 5. DR. Pal contended before me that the ITO should either withdraw or amend his notice so as to make it consistent with the order for payment by instalments which has been due. In other words, he should in any event direct the debtors of the assessee to pay at the rate of Rs. 5,000 per month. The expression "the amount due" appearing in s. 46(5A), according to him, must mean the amounts which become "due for payment"; in other words the amounts of the instalments as and when they fall due. Mr. Meyer appearing on behalf of the respondent on the other hand contends that "the amount due" must mean the whole of the amount for which the assessee has been assessed by the ITO which has to be paid. 6. I have carefully considered this matter but I cannot accept Mr. Meyer's contention and I accept the contention of Dr. Pal on this point. It seems to me that after the Certificate Officer has allowed instalments at Rs. 5,000 per month the assessee has the right to pay only Rs. 5,000 per month and the IT authorities would be under an obligation to take, so long that order stands, only at such instalments. If that is so, then the ITO cannot direct the debtors of the assessee to pay anything more than at the rate of Rs. 5,000 per month, and it was incumbent on the ITO at least to amend his notice accordingly. The position, it seems to me, would be entirely anomalous if, on the one hand, the Collector, who is authorised to do so, allows the assessee to pay in certain instalments, but the ITO issues notices for payment of the entire sum all at once. The result in that case is that an order passed by the Collector granting instalments is nullified by the order of attachment passed by the ITO. The interpretation which Dr. Pal asks me to put on the section seems to me to be the only sensible and logical interpretation to put upon it. The result in that case is that an order passed by the Collector granting instalments is nullified by the order of attachment passed by the ITO. The interpretation which Dr. Pal asks me to put on the section seems to me to be the only sensible and logical interpretation to put upon it. The expression "amount due" in this case to my mind must mean the amount of instalments as and when they become due. The use of the words "in respect of" after the words "the amount due by the taxpayer" and before the words " arrears of income-tax and penalty" also supports the contention of Dr. Pal. If that is so, then in my opinion it was incumbent on the ITO to revise the order which had been made by him on 18th March, 1949, so as to make it consistent with the order passed by the Certificate Officer, 24 Parganas. Mr. Meyer then contends that this application is not maintainable in view of the provisions of s. 67 of the IT Act. Sec. 67 of the IT Act runs as follows : "67. Bar of suits in Civil Court.--No suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act, and no prosecution, suit or other proceeding shall lie against any officer of the Government for anything in good faith done or intended to be done under this Act". 7. MR. Meyer contends that the provisions of this section of the IT Act is a bar to any suit, prosecution or other proceedings unless it can be shown that the Act complained of was done in bad faith. MR. Meyer pointed out to me that there was hardly any allegation, far less any satisfactory proof, of any bad faith on the part of the ITO in making the said order. If that is so, then MR. Meyer contends that this application is not maintainable. In support of his contention he cited before me the decision of Bachawat, J., in Pragdas Mithuradas vs. ITO, Central Circle I (1950) 18 ITR 757 : 86 C.L.J. 77 Calcutta and on the strength of this authority contended that the provision of s. 67 of the IT Act is a bar to the maintainability of the present application. 8. DR. 8. DR. Pal appearing on behalf of the petitioner on the other hand contends that the application before me is under Art. 226 of the Indian Constitution and Art. 226 of the Indian Constitution cannot be subject to the provisions of the Indian IT Act. In other words he contends that Art. 226 of the Indian Constitution gives to the High Court very wide powers which cannot be fettered by any provisions of any Act. The circumstances under which the Court can interfere with an action of the executive has been the subject-matter of decision by the Court of Appeal of this Court. Banerjee, J., sitting with Harries, C.J., in a recent decision carefully laid down the principles on which this Court can interfere with the action of the executive. In Amulya Paul vs. R.N. Roy (1950) 54 C.W.N. 850, Banerjee, J., observed as follows : "The respondent must act within the four corners of the authority given him by the Act and cannot act beyond that authority". In the subsequent case of Patrishaw vs. R.N. Roy (1950) 54 W.N. 855, Banerjee, J., again observed as follows : "The only question before the Court when the matter is brought before it, is to see whether (1) the order has been made by a competent authority; (2) whether that authority has acted within the four corners of the powers committed to it; (3) whether it has acted honestly. If the Court answers these questions in the affirmative, the Court has no jurisdiction to interfere with any order made by such authority. The Court has nothing to do with the rightness or wrongness of the order." 9. THE net result of the decisions to which I have just now referred is that the Court can interfere if the act complained of does not come within the four corners of the Act. It can also interfere if the act complained of is mala fide. But in the absence of either of those two conditions the Court has no authority to interfere with the action of the executive. THE Court cannot, as Banerjee, J., pointed out, question the rightness or the wrongness of the order complained of. THE two decisions which I have just now cited relate to the provisions of the West Bengal Securities Act (Act III of 1948). THE Court cannot, as Banerjee, J., pointed out, question the rightness or the wrongness of the order complained of. THE two decisions which I have just now cited relate to the provisions of the West Bengal Securities Act (Act III of 1948). Sec. 34 of the said Act contains exactly similar provisions as that of s. 67 of the IT Act. I should have mentioned that Mr. Meyer drew my attention and laid emphasis upon the words "intended to be done" appearing in s. 67 of the IT Act, but I find that the same words were also used in the West Bengal Securities Act which came to be considered in the two decisions which I just now cited. It does not seem to me that the two decisions to which I have just now referred were placed before Bachawat, J., for his Lordship's consideration. In any event I am bound to follow the principles laid down by the Court of Appeal and I also respectfully agree with the same. 10. IF that is so, and if I come to the conclusion that the action of the IT authorities was not within the four corners of the powers committed to it under s. 46(5A) of the IT Act then the said order should be set aside. Apart from this, in my opinion, Art. 226 of the Constitution is an overriding Article and is not fettered by any provisions of law and in this respect I accept the contention of Dr. Pal. Article 226 of the Constitution lays down : "Notwithstanding anything in Art. 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them for the enforcement of any of the rights conferred by Part III and for any other purpose". Now looking at the article itself one does not find any fetter to the same. It is not made subject to any existing laws or to any restrictions imposed by the law. A reference to some other provisions of the Indian Constitution makes this position more clear. Now looking at the article itself one does not find any fetter to the same. It is not made subject to any existing laws or to any restrictions imposed by the law. A reference to some other provisions of the Indian Constitution makes this position more clear. Art. 225 of the Constitution lays down : "Subject to the provisions of this Constitution and to the provisions of any law of the appropriate Legislature made by virtue of powers conferred on that Legislature by this Constitution, the jurisdiction of, and the law administered in, any existing High Court, and the respective powers of the Judges thereof in relation to the administration of justice in the Court, including any power to make rules of Court and to regulate the sittings of the Court and of members thereof sitting alone or in Division Courts, shall be the same as immediately before the commencement of this Constitution." There is a proviso to this Article which is not necessary to be considered. Thus under Art. 225 of the Indian Constitution the High Court and the Judges thereof should administer the law which the appropriate Legislature by virtue of the powers conferred on the Legislature by this Constitution could promulgate but that must be subject to the provisions of the Constitution itself. Again under Art. 372 of the Constitution the existing laws are to be continued in the territory of India which were in existence immediately before the commencement of this Constitution until altered, repealed or amended but this is to be subject to the other provisions of the Constitution. Thus both in the matter of the existing laws and in the matter of future laws which are to be promulgated by the Legislature empowered by the Constitution, such laws are to be subject to provisions of the Constitution. Therefore such laws must be subject to Art. 226 of the Indian Constitution. Art. 226 is unfettered and the powers conferred by Art. 226 are not subject to any restrictions imposed by any existing law or to be imposed by any future enactment. 11. Therefore such laws must be subject to Art. 226 of the Indian Constitution. Art. 226 is unfettered and the powers conferred by Art. 226 are not subject to any restrictions imposed by any existing law or to be imposed by any future enactment. 11. IN view of this, I have come to the conclusion that the powers conferred by Art. 226 of the INdian Constitution are not subject to the restrictions imposed by the provisions of s. 67 of the IT Act and the same cannot override or control the provisions of Art. 226 of the INdian Constitution. 12. MR. Meyer then contended before me that Article 226 cannot have any retrospective effect. In other words Art. 226 can be applied only to such acts of the executive which has been committed after the passing of the Indian Constitution. In support of this proposition he relied on a decision of this Court in Rishindra Nath Sarcar vs. Sakti Bhusan Ray (1950) A.I.R. 1950 Cal 512 : 5 D.L.R. Cal 125, in which Sen, J., sitting with Chunder, J., came to the conclusion that assuming that the High Court has been given powers of interference by Art. 227 of the Constitution of India, with final orders, that would not entitle it to interfere with an order which was passed at a time when such a power of interference did not exist. In this case their Lordships were considering the effect of the provisions of Art. 227 and not the provision of Art. 226 of the Indian Constitution. Their Lordships were not called upon to decide the point which is now before me or to consider the scope of Art. 226 of the Indian Constitution. The only question which their Lordships were considering was whether Art. 227 of the Indian Constitution gives them the right to interfere in cases of decrees which have already been passed and under which rights have been vested. The principle on which their Lordships proceeded in deciding that case is that the rights which have already vested under decrees which have been passed, cannot be interfered with under Art. 227 of the Indian Constitution and their Lordships relied on the decision of the Judicial Committee in Delhi Cloth and General Mills Co. The principle on which their Lordships proceeded in deciding that case is that the rights which have already vested under decrees which have been passed, cannot be interfered with under Art. 227 of the Indian Constitution and their Lordships relied on the decision of the Judicial Committee in Delhi Cloth and General Mills Co. Ltd. vs. CIT (1927) L.R. 54 I.A. 421, Delhi, and the principle laid down, namely, that while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment. I also respectfully agree with the view which was taken by their Lordships. Rights which have already accrued to the parties cannot be taken away unless clear provisions have been made to that effect, and Art. 227 does not purport to take away that right. But these considerations to my mind, do not arise in the case of Art. 226 of the Indian Constitution and particularly to the present case. Under Art. 226 of the Indian Constitution powers have been given to the High Court to issue to any person in authority orders or directions for enforcement of fundamental rights and there is no question of taking away rights which have already vested. Dr. Pal also contended before me that "the High Court" can exercise powers conferred upon it by Art. 226 of the Indian Constitution, and it is "the High Court" sitting after 26th Jan., 1950, which will have those powers. Dr. Pal contends that the only condition to the use of that power is that it must be exercised by a High Court as constituted by the Constitution and sitting after 26th Jan., 1950, and if that condition is fulfilled, there is nothing to fetter the powers which are conferred upon the High Court under Art. 226 of the Indian Constitution. I cannot accept the contention of Mr. Meyer on this point. 13. THE only other point which remains to be considered and urged by Mr. I cannot accept the contention of Mr. Meyer on this point. 13. THE only other point which remains to be considered and urged by Mr. Meyer is that there is adequate remedy provided by the IT Act itself, which the petitioner could have availed himself of and if there is an adequate remedy provided by the IT Act, then the High Court cannot interfere under Art. 226 of the Indian Constitution. Although I do not accept the extreme proposition which Mr. Meyer wants me to accept, namely, that under Art. 226 of the Indian Constitution the High Court has no power to interfere if there is a suitable enactment in the Statute itself, I am inclined to agree with him to this extent, namely, that if there is an adequate legal remedy provided in the Statute itself, then High Court should not interfere under Art. 226 of the Indian Constitution. Mr. Meyer for this purpose relied on s. 33A of the IT Act which runs as follows : "33A. Mr. Meyer for this purpose relied on s. 33A of the IT Act which runs as follows : "33A. Power of revision by CIT.--THE CIT may of his own motion call for the record of any proceeding under this Act in which an order has been passed by any authority subordinate to him and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit : Provided that the CIT shall not revise any order under this sub-section if-- (a) where an appeal against the order lies to the AAC or to the Tribunal, the time within which such appeal may be made has not expired, or (b) the order is pending on an appeal before the AAC or has been made the subject of an appeal to the Tribunal, or (c) the order has been made more than one year previously." Sub-s. (2) which is important for the present purpose runs as follows : "THE CIT may, on application by an assessee for revision of an order under this Act passed by any authority subordinate to the CIT, made within one year from the date of the order, call for the record of the proceeding in which such order was passed, and on receipt of the record may make such enquiry or cause such enquiry to be made, and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit." 14. THEN there is a proviso which is in the same terms as the proviso to sub-s. (1). The question for my decision is whether the remedy provided by s. 33A is an adequate legal remedy and whether on the facts and circumstances of this case the petitioner could have availed himself of the same. The remedy in question must be a specific remedy at law which is not less convenient, beneficial and effective (Halsbury's Laws of England, Hailsham Edition, Vol. 9, Art. 1309). In my opinion the remedy provided by s. 33A is not such a remedy which should disentitle me, if I am otherwise satisfied about this matter, from giving relief on this application. 9, Art. 1309). In my opinion the remedy provided by s. 33A is not such a remedy which should disentitle me, if I am otherwise satisfied about this matter, from giving relief on this application. Sec. 33A merely gives a discretion to the CIT, which he may or may not exercise, to call for the records and intervene in the matter. The petitioner cannot ask for such intervention as a matter of right. Besides, I am doubtful whether in the facts and circumstances of this case the petitioner could have even availed himself of the said remedy. It appears that the attachment in question was made on 18th March, 1949, and at that time it was a perfectly valid attachment order. The order for instalments was made on 25th May, 1950, that is, more than a year after the attachment was effected. It was because of the order which was passed on 25th May, 1950, that the position was altered and the order for attachment which was made on 18th March, 1949, has to be withdrawn or revised. If then, it is a question of revising the order dt. 18th March, 1949, which is to be asked for, the same cannot be done because of the fact that the said order was made more than one year ago. The delay in obtaining the order for instalment does not seem to be due to any default on the part of the petitioner because his original application was kept pending and in the opinion of the Certificate Officer, at the instance of the ITO. In any event I am not satisfied that the remedy provided by s. 33A is such an effective specific remedy at law which should disentitle me from making an order on this application. I am, therefore, of the opinion that it was incumbent on the ITO either to withdraw the attachment effected on 18th March, 1949, or at least to revise the same so as to make it consistent with the order for instalments which has been made by the Certificate Officer, 24 Parganas. I am, therefore, of the opinion that it was incumbent on the ITO either to withdraw the attachment effected on 18th March, 1949, or at least to revise the same so as to make it consistent with the order for instalments which has been made by the Certificate Officer, 24 Parganas. I am of the opinion, therefore, that the applicant is entitled to relief on this application and the direction which I give is that the ITO do revise the order which has been made on 18th March, 1949, and make it consistent with the order for instalments which have been granted by the Certificate Officer, 24 Parganas, on 25th May, 1950. The petitioner is entitled to the costs of this application.