UNION OF INDIA v. N. K. CHOWDHURY — 1978 DIGILAW 171 (CAL)

M. M. Dutt, D. C. Chakravorti, JJ. ( 1 ) THIS Rule is at the instance of the defendant Union of India representing the Indian Posts and Telegraphs Department and is directed against order no. 40 dated July 4, 1977 of the Chief Judge, City Civil Court, Calcutta rejecting the application of the petitioner for modification of order No. 27 dated July 9, 1976 passed under S. 17 (2) of the West Bengal Premises Tenancy Act, 1956, hereinafter referred to as the Act. ( 2 ) A suit for ejectment has been instituted by the plaintiffs opposite parties, as joint trustees against the petitioner on the ground of default in payment of rent since May 1972 at the rate of Rs. 1043/- per month in respect of the suit premises consisting of a portion of the ground floor of premises no. 2/2b, Harrington Street, Calcutta. The Little Russel Street Post Office of the petitioner is situate in the suit premises. The petitioner has been contesting the suit by a written statement inter alia denying therein the relationship of landlord and tenant between the opposite parties and itself. The case of the petitioner is that its tenancy of the suit premises is under one Narayan Prosad Chowdhury. The said Narayan Prosad Chowdhury intimated the petitioner that on May 18, 1972 a trust had been created by him in respct of his share in the said premises no. 22/2b, Harrington Street, Calcutta and the opposite parties nos. 1 and 2 had been appointed by him trustees in respect of the said trust. Subsequently, by his letter dated September 19, 1972 the said Narayan Prosad Cowdhury instructed the petitioner not to make any payment of rent to the said trustees on the ground that he was cheated by them. In view of the said instruction, the petitioner could not pay rent either to the said Narayan Prosad Chowdhury or to the said trustees. The petitioner was served with a notice under S. 226 (3) of the Income-tax Act, 1961 whereby the petitioner was directed by the Income-tax Officer to forthwith pay to him, the monies, if any, due and payable to the said Narayan Prosad Chowdhury on account of rent. The petitioner who did not attorn the tenancy in favour of the said trustees, paid a sum of Rs. The petitioner who did not attorn the tenancy in favour of the said trustees, paid a sum of Rs. 45,982/- to the Income-tax Officer towards rent of the suit premises for the period from May 1, 1972 to December 31, 1976 bona fide believing that such payment would be a valid discharge of its liability on account of rent for the said period. It is contended by the petitioner that in the circumstances it is not a defaulter in payment of rent and is not, therefore, liable to be evicted. ( 3 ) DURING the pendency of the suit, the opposite parties moved an application under Article 226 of the Constitution of India against the Income-tax authorities inter alia challenging the legality and validity of the notices under S. 226 (3) of the Income-tax Act, 1961 served upon the different tenants of the said premises including the petitioner and obtained a Rule Nisi being C. R. 1809 (W) of 1976. An ad interim injunction was also granted by this Court inter alia restraining the Income-tax authorities from taking any steps pursuant to the said notices under S. 226 (3 ). Further, this Court directed that Mr. L. P. Agarwalla, the Advocate of the petitioners in the said Rule (opposite parties herein) would realise rents from all the tenants of the said premises no. 2/2b, Harrington Street, Calcutta. ( 4 ) THE petitioner also filed an application under S. 17 (2) of the Act raising a dispute as to the relationship of landlord and tenant between the parties and the amount of rent and denied that it was a defaulter. The learned Chief Judge by his order no. 27 dated July 9, 1976, disposed of the application under S. 17 (2) of the Act and directed the petitioner to pay to the opposite parties or deposit in Court within 30 days from that date, the sum of Rs. 52,150/- towards arrears of rent and Rs. 9,240/- towards interest, that is, in all a sum of Rs. 61,393/ -. The learned Chief Judge, however, did not advert to and decide the plea of the petitioner as to the absence of relationship of landlord and tenant between the parties. After the said order no. 27 dated July 9, 1976 was passed by the learned Chief Judge under S. 17 (2) of the Act directing the petitioner to deposit Rs. The learned Chief Judge, however, did not advert to and decide the plea of the petitioner as to the absence of relationship of landlord and tenant between the parties. After the said order no. 27 dated July 9, 1976 was passed by the learned Chief Judge under S. 17 (2) of the Act directing the petitioner to deposit Rs. 61,393/-, the petitioner claimed refund of the said sum of Rs. 45,892/- from the Income-tax Officer. The Income-tax Officer, however, informed the petitioner that as the matter was pending before this Court, he was unable to accede to the request of the petitioner for refund of the said amount without a direction from this Court. The petitioner, thereafter, made an application for being added as a party in the said Rule, which was allowed. On the prayer of the petitioner Amiya Kumar Mookerji J directed the Income-tax authorities to refund the sid sum of Rs. 45,892/- to the petitioner so as to enable it to deposit the same in the City Civil Court. The said order was subsequently modified on May 20, 1977 at the instance of the Income-tax authorities to this extent that the Income-tax authorities were directed to deposit the said sum of Rs. 45,892/- with the said Mr. Agarwalla, the Advocate. ( 5 ) ON June 23, 1977, the petitioner filed an application in the said suit praying for the modification of the said order no. 27 dated July 9, 1976. In the said application, the petitioner stated about the orders passed by this Court in the said Rule including the said order dated December 7, 1976 directing the Income-tax authorities to deposit with the said Mr. Agarwalla the sum of Rs. 45,892/- paid by the petitioner towards arrears of rent. In the said application, the petitioner prayed that as it had paid the said sum of Rs. 45,892/- to the Income-tax authorities who, as directed by this Court, was to deposit the same with the said Mr. Agarwalla, the order of the learned Chief Judge dated July 9, 1976 should be modified, and that instead of the sum of Rs. 61,393/-, the petitioner should be permitted to deposit in Court the balance sum of Rs. 15,501/- in compliance with the order passed under S. 17 (2) of the Act. The learned Chief Judge rejected the said application for modification on the ground that the said Mr. 61,393/-, the petitioner should be permitted to deposit in Court the balance sum of Rs. 15,501/- in compliance with the order passed under S. 17 (2) of the Act. The learned Chief Judge rejected the said application for modification on the ground that the said Mr. L. P. Agarwalla was not a party to the suit. Hence the Rule. ( 6 ) THE only question that is involved in this rule is whether pursuant to the notice under S. 226 (3) of the Income-tax Act, 1961, the payment made by the petitioner to the Income-tax Officer of the said sum of Rs. 45,892/- can be said to be a valid discharge of its liability to pay the said amount of rent to his landlord. Section 226 (3) (i) provides that the Income-tax Officer may at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person or any person who holds or may subsequently hold money for or on account of the assessee, to pay to the Income-tax Officer, 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 assessee in respect of arrears or the whole of the money when it is equal to or less than the amount. Under clause (ii) of S. 226 (3) every person to whom a notice is issued shall be bound to comply with such notice. In the notice under S. 226 (3) which was served upon the petitioner, the name of the said Narayan Prosad Chowdhury was mentioned as the assessee. It is contended on behalf of the opposite parties that the arrears of rent payable by the petitioner in respect of the suit was not due to the said Narayan Prosad Chowdhury but to the opposite parties who were the landlords of the petitioner. It has been already stated of relationship of landlord and tenant between the parties. It is unfortunate that the learned Chief Judge did not think it proper to decide the dispute as to the relationship of landlord and tenant between the parties. It has been already stated of relationship of landlord and tenant between the parties. It is unfortunate that the learned Chief Judge did not think it proper to decide the dispute as to the relationship of landlord and tenant between the parties. When a tenant takes the plea of absence of relationship of landlord and tenant between the parties, such plea must be decided before any order is passed directing the tenant to pay or deposit rent. The proper course for the Court is to frame an issue in regard to that plea decide the same before it passes any order under S. 17 (2) or 17 (3) of the Act. The petitioner also took the plea of the absence of relationship in the application under S. 17 (2) and thereby raised a dispute as to the amount of rent. It appears that an issue has been framed by the learned Chief Judge in that regard and he could have decided that issue simultaneously with the hearing of the application under S. 17 (2 ). In our opinion, the order no. 27 dated July 9, 1976 passed by the learned Chief Judge under S. 17 (2) of the Act suffers from gross irregularity. ( 7 ) THERE can be no doubt that when a notice under S. 226 (3) of the Income-tax Act, 1961 is served on a tenant to pay to the Income-tax Officer all monies due on account of rent and payable to his landlord and if the tenant complies with the notice by making payment of the amount due to his landlord on account of rent to the Income-tax Officer, such payment will undoubtedly be a valid discharge of the liability of the tenant for that amount. After the payment, the tenant will not be under any obligation to pay to his landlord the amount that has been paid by him to the Income-tax Officer. To hold otherwise would be to ignore that provision of S. 226 (3) which is not permissible. After the payment, the tenant will not be under any obligation to pay to his landlord the amount that has been paid by him to the Income-tax Officer. To hold otherwise would be to ignore that provision of S. 226 (3) which is not permissible. Under S. 17 (1) or 17 (2) of the Act, it is only when rent is due from a tenant he is liable to deposit the same, but if the tenant discharges or has discharged his liability in respect of any amount towards rent in accordance with the provision of S. 226 (3), he cannot be held to be in default and the Court, in our view, cannot insist on him to pay or deposit such amount over again. In our view, there is no conflict between the provision of S. 226 (3) of the Income-tax Act, 1961 and Ss. 17 (1) and 17 (2) of the Act, for under the provisions of Ss. 17 (1) and 17 (2), no question of paying or depositing rent would arise if the same is not due from the tenant. ( 8 ) MUCH reliance has been placed on behalf of the opposite parties on a Bench decision of this Court in Hanuman Estates (P) Ltd. v. Dhanuka Industries (P) Ltd. and Ors. 79 Calwn 88. In that case, it has been observed that the prohibitory notice under S. 226 (3) of the Income-tax Act, 1961, cannot have the effect of overriding the special provisions of S. 17 of the Act and absolving the tenant from his statutory obligation to deposit sums equivalent to rent in Court. In that case, the tenant did not pay to the Income-tax authorities, any amount due and payable by it to the landlord, but it has been held by the Bench that the tenant had defaulted in payment of rent. It is in this context that the said observation has been made. It is clear, therefore, that if the tenant had made payment of the amount due on account of rent to the Income-tax authorities, he would not have been held liable to deposit the same amount over again under the provision of S. 17 of the Act. In our opinion, the view which we have taken, does not militate against that expressed in the above Bench decision. Moreover, in the instant case, after the said order no. In our opinion, the view which we have taken, does not militate against that expressed in the above Bench decision. Moreover, in the instant case, after the said order no. 27 dated July 9, 1976 was passed under S. 17 (2) of the Act, the petitioner had taken steps for getting a refund of the said sum of Rs. 45,892/- from the Income-tax Officer but failed. Thereafter, the petitioner got itself added a party to the said Rule and ultimately it was directed by this Court that the Income-tax Officer should deposit the money with the said Mr. Agarwalla, who was authorised by this Court to realise rents from the tenants of the said premises including the suit premises. These directions were made in the presence of the opposite parties. It thus appears that the petitioner acted bona fide and in good faith and the direction that was made by this Court is binding upon the parties to the said rule including the opposite parties herein. In these circumstances, we hold that the petitioner cannot be asked to deposit the said sum of Rs. 45,892/ -. The learned Chief Judge acted illegally in dismissing the application of the petitioner for modification. ( 9 ) FOR the reasons aforesaid, the impugned order of the learned Chief Judge is set aside and the application of the petitioner for modification is allowed. The petitioner is permitted to deposit in the Court below the balance sum of Rs. 15,501/- within four weeks from the date of arrival of the records in that Court. The Rule is made absolute, but there will be no order for costs. D. C. Chakravorti , J. : i agree. Rule made absolute.