JUDGMENT - H.L. GOKHALE, J.:---Heard Mr. Tulzapurkar and Mr. Andhyarujina for the petitioners in these petitions. Mr. Chandurkar appears for respondent Nos. 1 and 2 and Mr. Deodhar appears for respondent Nos. 3 and 4. 2.All these petitions seek a direction through prayer Clause (a) to prohibit respondent No. 1 Government of India (for the Canteen Stores Department of Ministry of Defence) from withholding the payments of the amounts which are due and which may become due to the petitioners on the basis of the notices issued by the Income Tax Authorities (respondent Nos. 3 and 4 to these petitions). 3.The petitioners other than the petitioners in Writ Petition Nos. 1259 of 2001 and 1261 of 2001 are companies with dominant shareholding by M/s. Shaw Wallace Company (for short "SWC"). Thus, in the case of one M/s. Pampasar Distillry Limited, 72% of its shares are held by SWC. One Central Distillery Breweries Limited, which is one of the petitioners, has 98% of its shares held by SWC. Three other petitioners viz. Maharashtra Distilleries Limited, Raj Breweries Limited and VRV Breweries Bottling Industries Limited have 100% of their shares held by SWC. All these petitioners supply Indian Manufactured Foreign Liquor ("IMFL" for short) to respondent No. 1 i.e. Canteen Stores Department of the Ministry of Defence, Government of India. Their submission is that their income is independent of that of SWC and, therefore, if SWC is in default of any amounts as arrived at by its Assessing Officer, the recovery cannot be transferred and affected against them. The petitioners in Writ Petition Nos. 1259 and 1261 of 2001 are independent tie-up units 4.Now, what has happened is that an amount of Rs. 93,23,43,357/- is outstanding from M/s. Shaw Wallance Company towards Income Tax and to recover it, a notice dated 26th March, 2001 has been issued by the Tax Recovering Officer under section 226(3) of the Income Tax Act, 1961 (for short, "the Act") to respondent No. 1 directing it to stop payments which are due from the Canteen Stores Department on account of M/s. Shaw Wallace Co. That notice is annexed as Exhibit "C-1" to the petitions. The grievance of these petitioners is that on the basis of this notice, respondent No. 1 has stopped making any payment to them for the supplies which they have already made to respondent No. 1. That notice is annexed as Exhibit "C-1" to the petitions. The grievance of these petitioners is that on the basis of this notice, respondent No. 1 has stopped making any payment to them for the supplies which they have already made to respondent No. 1. Respondent No. 1 has filed an affidavit in reply and Mr. Deodhar, learned Counsel appearing for respondent Nos. 3 and 4, has tendered a compilation of some of the documents from the record of the Tax Recovery Officer. 5.Mr. Tulzapurkar, learned Counsel appearing for the petitioners, relied upon a judgment of the Karnataka High Court in the case of (K.A. Veerichetty Sons. v. Income-Tax Officer (Collection), Circle-I, Salem, another)1, reported in 1976(102) T.R. page 225. He submitted that as held by the learned Single Judge of that Court the requirement of section 226(3) of the Act for attaching money in the hands of any third person is that the money must be due, or held on behalf of the assessee in default. He submitted that all these petitioners are assessed for tax independently and their income has nothing to do with the income of M/s. Shaw Wallace Co. He further submitted that though some of these companies were 100% subsidiary and franchisee distilleries of Shaw Wallace Co., they were functioning as independent entities, they paid royalty to M/s. Shaw Wallace Co., for particular brands of liquor, and that the money to which they are entitled from respondent No. 1 is not the money meant for M/s. Shaw Wallace Co. and, therefore, respondent No. 1 had no business to stop the payment to the petitioners. 6.Mr. Andhyarujina, learned Counsel appearing for the petitioners in Writ Petition No. 1157 of 2001, 1158 of 2001 and 1159 of 2001, relied upon two judgments. Firstly, he relied upon a judgment of the Apex Court in the case of (Income-Tax Officer, Madras another v. Budha Pictures)2, reported in 1967(LXV) Income Tax Reports page 620. He submitted that as held by the Apex Court with respect to the provisions of the Indian Income Tax Act, 1922 (as it was in operation at that time) there has to be a relationship of debtor and creditor between the third party and the assessee. Unless the relationship is available, a garnishee Order cannot be passed with respect to the amount due to such a third party. Unless the relationship is available, a garnishee Order cannot be passed with respect to the amount due to such a third party. Then he relied upon a judgment of the learned Single Judge of this Court in the case of (Mcdermott International Inc. (No. 2) v. Union of India others)3, reported in 1988(173) Income Tax Reports page 173. In that matter, the Court held that a plain reading of section 226(3) suggests that before any notice can be issued under section 226(3), the assessee must be in default in payment of tax. In the instant case, he submitted that whether M/s. Shaw Wallace Co. is in default or not, no notice of demand can be served on the present petitioners and the Order or stoppage of payment by the 1st respondent was unjustified. 7.Mr. Deodhar, on the other hand, drew our attention to the fact that the petitioners are as such not challenging the demand made by the Income Tax Authorities on M/s. Shaw Wallace Co. There is a specific averment to that effect in paragraph 3 of the petitions. He drew our attention to the various documents available on the file of the Tax Recovery Officer and submitted that the entire contractual relationship with respect to supply of I.M.F.L. was between respondent Nos. 1 and 2 on one hand and M/s. Shaw Wallace Company on the other. All necessary documents were signed by M/s. Shaw Wallace Company with the 1st respondent. It is Shaw Wallace Company which informed the 1st respondent that supply will be made to the 1st respondent from the various distilleries whose names were made available along with the necessary form filled in by M/s. Shaw Wallace Company on 14th of June, 1995. Further, it is Shaw Wallace Company which by its affidavit of 28-9-1998, informed the 1st respondent that their particular products were available for purchase by respondent No. 1. Then Mr. Deodhar showed us further documents, particularly the form of application on which name of the supplier is mentioned as Shaw Wallace Company Limited. As far as the rates for the supplies to be made are concerned, they are also entered into with M/s. Shaw Wallace Co. In the proforma applying for price revision with respect to one of, the products viz. Olde Adventurer Rum, again it is Shaw Wallace Co. As far as the rates for the supplies to be made are concerned, they are also entered into with M/s. Shaw Wallace Co. In the proforma applying for price revision with respect to one of, the products viz. Olde Adventurer Rum, again it is Shaw Wallace Co. which informed respondent No. 1 as to what was the existing rate and what would be the revised rate. Then the orders were placed by respondent No. 1 with M/s. Shaw Wallace Company which is as per one of the invoices placed on record and which is at page 38 of the documents tendered by Mr. Deodhar. He also produced one notice in which the undertaking is given by M/s. Shaw Wallace Co. to deliver the necessary supply of I.M.F.L. either by itself or through its subsidiaries. 8.One such agreement dated 21-7-1999 between M/s. Shaw Wallace Company and one of the petitioners in terms specifically provided as follows:--- "The price at which Shaw Wallace will purchase I.M.F.L. products from Maharashtra Distillery or Maharashtra Distillery will sell as per direction of Shaw Wallace, is detailed in Annexure I ........." Thereafter it is stated--- "Shaw Wallace will be responsible for obtaining Orders, excise permits etc., either from SWC godown (referred to as "godowns") from parties to whom the I.M.F.L. products are to be sold directly....." The agreement thereafter states--- "Shaw Wallace will be responsible to and shall arrange for the collection of the sale proceeds and declaration forms required for Sales Tax and other statutory enactments and regulations on such sales made to SWC godown or direct indenters." Mr. Deodhar, therefore, submits that all these supplies made by the present petitioners were on behalf M/s. Shaw Wallace Company. It is, therefore, that when Tax Recovery Officer sent the garnishee notice to respondent No. 1, there was nothing wrong on the part of respondent No. 1 in stopping the payments to the petitioners. Respondent No. 1 was bound by the mandate of the particular provision of law and direction given by respondent No. 4 and it had to forward those payments to the Tax Recovery Officer on account of the default made by M/s. Shaw Wallace Company. 9.In our view, there is much force in the submissions advanced by Mr. Deodhar. There can be no quarrel with the authorities relied upon by the petitioners. However, in the facts of the present case, respondent Nos. 9.In our view, there is much force in the submissions advanced by Mr. Deodhar. There can be no quarrel with the authorities relied upon by the petitioners. However, in the facts of the present case, respondent Nos. 3 and 4 have, prima facie, established that the entire contractual relationship for the concerned supply of I.M.F.L. to the Canteen Stores Department was between M/s. Shaw Wallace Company and respondent No. 1. The money in the hands of the petitioners is due and held on behalf of the assessee and hence the garnishee notice will not be hit by the proposition in the Veerichetty case (supra) from Karnataka or of the Apex Court in Budha Pictures (supra). And as required under the judgment in Mcdermott's case of this Court (supra), the assessee in the present case i.e. M/s. Shaw Wallace Company is very much in default and all prior requirements have been completed before the assessing officer. In that view of the matter, respondent No. 4 was fully justified in issuing the impugned garnishee notice to respondent No. 1 under section 226 of the Income Tax Act, 1961. 10.Section 226 of the Income Tax Act provides for other modes of recovery. In that view of the matter, respondent No. 4 was fully justified in issuing the impugned garnishee notice to respondent No. 1 under section 226 of the Income Tax Act, 1961. 10.Section 226 of the Income Tax Act provides for other modes of recovery. Sub-section (3)(i) of section 226 provides that--- "The (Assessing) Officer (or Tax Recovery 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 who holds or may subsequently hold money for or on account of the assessee to pay to the (Assessing) Officer (or Tax Recovery 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 that amount." Sub-section (vi) of section 226(3) provides that--- "Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then nothing contained in this sub-section shall be deemed to require such person to pay any such sum....." Sub-section (vii) of section 226(3) provides that--- "The (Assessing) Officer (or Tax Recovery Officer) may, at any time or from time to time, amend or revoke any notice issued under this sub-section or extend the time for making any payment in pursuance of such notice." Mr. Deodhar, therefore, states that in case the Court so directs, the Assessing Officer will hear the objections if filed by the petitioners and thereafter pass appropriate Order with respect to the notice issued by him. Mr. Tulzapurkar and Mr. Andhyarujina, on the other hand, submit that under the statute, as it stands, it provides for respondent No. 1 to raise these objections and they are not likely to object. They submit that under this section present petitioners have no forum nor are they provided with an access to the Assessing Officer in such proceedings. Mr. Tulzapurkar and Mr. Andhyarujina, on the other hand, submit that under the statute, as it stands, it provides for respondent No. 1 to raise these objections and they are not likely to object. They submit that under this section present petitioners have no forum nor are they provided with an access to the Assessing Officer in such proceedings. 11.Here, we are concerned with the situation where respondent No. 1 has stopped making payments to the petitioners. Those amounts, according to the petitioners, are due to them for the supplies made and that the amounts are being wrongfully withheld. It is pointed out on behalf of respondent No. 4 that prima facie the supplies concerned were made by and on behalf of M/s. Shaw Wallace Company and, therefore, all such payments on account of these supplies are now stopped by respondent No. 1. In our view, there is nothing wrong on the part of respondent No. 1 in stopping these payments because respondent No. 1 is duty bound to obey the notice which is issued by the Tax Recovery Officer. If the petitioners are aggrieved by the action of respondent No. 1, it would be open to them to take appropriate proceedings including filing of a suit, if they so desire to recover the amounts. Alternatively, in the facts and circumstances of the present case, it would be open to them to make a representation to the Assessing Officer, on whose assessment the disputed notice has been issued by the Tax Recovery Officer. The language of section 226(3)(vi) of the Act permits a person to whom a notice is sent to lodge his objections and after these objections are raised there is also a provision under sub-section (vii) that thereafter the notice can be revoked. Undoubtedly, the section provides for these objections being raised by a person to whom the notice is sent. In the present case, respondent No. 1 to whom the notice is sent, has chosen to abide by it and is not likely to raise objections. However, it is the petitioners who are the affected parties and, therefore, in our view, this provision can be read to permit such sufferers to raise objections before the Assessing Officer. In the present case, respondent No. 1 to whom the notice is sent, has chosen to abide by it and is not likely to raise objections. However, it is the petitioners who are the affected parties and, therefore, in our view, this provision can be read to permit such sufferers to raise objections before the Assessing Officer. In fact, the petitioners are contending that even if their predominant shareholding is by M/s. Shaw Wallace Company (except in the case of two companies), they are assessed to income independently and the amounts attached under the impugned notices are their income. As against that, the I.T.O. has placed sufficient material before this Court to at-least prima facie satisfy that the entire disputed earning is out of the contractual relationship between the Canteen Stores Department and M/s. Shaw Wallace Company and that it is the income of M/s. Shaw Wallace Company. Having been satisfied that there is sufficient material before the I.T.O. to justify his action, this Court is not inclined to interfere therein. From that point of view also, it is desirable that the petitioners should approach the I.T.O., place all necessary additional material before him and persuade him to revoke the notice. This will also avoid conflicting Orders. In this view of the matter, if the petitioners so desire, they may alternatively raise their objections under section 226(3)(vi) of the Act before the Assessing Officer and the Assessing Officer will decide these objections on hearing the parties and pass appropriate Orders. In the event the petitioners resort to this remedy and the decision is adverse to them, all those remedies which are available to such objectors will be available to them. 12.Mr. Tulzapurkar makes an application that a part of the amount may be directed to be released. We asked him as to whether the petitioners are in a position to furnish any Bank guarantee or an adequate security, upon which he expressed his inability to do so. In the circumstances, the only direction we give is that in the event the petitioners prefer to file their objections before the Assessing Officer, he will hear and decide the same within four weeks thereof. The Assessing Officer will be expected to decide the same on the basis of the merits of the documentary evidence that would be produced before him. 13.All the petitions are dismissed with the above observations. The Assessing Officer will be expected to decide the same on the basis of the merits of the documentary evidence that would be produced before him. 13.All the petitions are dismissed with the above observations. 14.Authenticated copy of this Order be made available to the parties. Petition dismissed. -----