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2008 DIGILAW 534 (BOM)

Bhagwandas Laxmichand Shah v. Union of India

2008-04-10

SWATANTER KUMAR, V.M.KANADE

body2008
Judgment SWATANTER KUMAR, C.J.:- This appeal is directed against the order dated 28th February, 2008, rejecting the Notice of Motion taken out by the plaintiffs-appellants praying for interim relief of injunction restraining the Union of India, the Commissioner of Customs (Export Promotion) and the Assistant Commissioner of Customs, Tax Recovery Cell, (Export), from acting in any manner in furtherance to the recovery certificate and the order of attachment dated 25th April, 2007. 2. The facts, as recorded in the impugned order and which appear from the record before us, are that on 4th August, 1987, an order was passed by the Collector of Customs, New Customs House, Mumbai, in exercise of the power of adjudication under the Customs Act, 1962, holding that the partnership under the name and style of M/s. N. Devidas & Company, was liable to pay an amount of Rs.2,83,43,821/- and personal penalties were also imposed on the firm and its partners. The partnership had four partners. The said partners were even detained under the COFEPOSA. In furtherance to this order, the Tax Recovery Cell of the Customs Department served the order of attachment dated 28th February, 2007 upon the partnership firm and its partners and attached properties i.e. immovable properties which stood in the name of the partners viz. Niranjan and Jaykant Devidas Shah. 3. The appellants, who claim to be the executors of the Will of Smt. Kusumben Virchand Shah dated 4th May, 2003, were granted Letters of Administration on 4th May, 2007. The will provided that all her movables and immovable properties including the property at Mazgaon, after the payment of all taxes, will be distributed amongst the members of the family of her sons as per the ratio stated in the Will. In the year 1988 a suit was filed being Suit No.328 of 1988 wherein, inter alia, the deceased testatrix Kusumben was impleaded as seventh defendant. Consent terms were entered into between the parties. As per clause 3 of the said consent terms, it was envisaged that the three flats reflected therein would be sold by a private treaty towards the realisation of the decretal debt of Rs.3.35 crores outstanding in the name of the appellants. The properties were agreed to be handed over and would vest in deceased Kusumben. As per clause 3 of the said consent terms, it was envisaged that the three flats reflected therein would be sold by a private treaty towards the realisation of the decretal debt of Rs.3.35 crores outstanding in the name of the appellants. The properties were agreed to be handed over and would vest in deceased Kusumben. As per clause 7 of the said consent terms, all the remaining properties and assets of the partnership firm were to belong to deceased Kusumben. 4. The basic argument raised on behalf of the appellants, while impugning the order dated 28th February, 2008, is that the partnership firm and its partners were not defaulters within the meaning of the provisions of Customs Act, 1962, and as such no properties could be attached. Further, it is stated that the properties had unequivocally vested in the deceased who had bequeathed the properties vide her Will dated 4th May, 2003 to the appellants and as such the properties had come to their hands without any charge. These contentions were rejected by the learned single Judge after noticing the facts in great detail and for the following reasons :- "In fact, it would, be of some significance to note that after the attachment was levied, some of the partners of the partnership firm namely Mr. Niranjan Shah, Mr. Jaykant Shah, Mr. Rameshchandra Shah and Mr. Vijay Shah have in pursuance of the order of adjudication purported to deposit in part the penalty each in the amount of Rs.25,000/ - with the Assistant Commissioner of Customs. 6. There is no material forthcoming on the record to lead the Court to hold that prima facie, the Government of India has proceeded to take action by levying an attachment against a party who is not a defaulter. The burden in such a case must clearly lie upon a party which seeks raising of the attachment to demonstrate levied means of cogent documentary material that an attachment has been levied other than in respect of the property of the defaulter. That burden has not been displaced. An internal arrangement between the partners of M/s. N. Devilal & Co., albeit in the form of Consent Terms after the order of adjudication cannot operate to divest the Union Government of its overriding and paramount claim arising out of the order of adjudication. 7. That burden has not been displaced. An internal arrangement between the partners of M/s. N. Devilal & Co., albeit in the form of Consent Terms after the order of adjudication cannot operate to divest the Union Government of its overriding and paramount claim arising out of the order of adjudication. 7. In these circumstances, no case has been made out for lifting the order of attachment or for the grant of an interlocutory injunction restraining the Union Government from taking recourse to its remedies for the realization of its dues under the order of adjudication." 5. As is evident from the above reasoning, the appellants had no prima facie case nor there was the balance of equity in their favour so as to entitle them for grant of an adinterim injunction. An attempt was also made by the appellants to show that the properties were already under attachment and there was no need and occasion to sell the properties in question. According to them, no prejudice would be caused to the department, if the properties continue to be under attachment. These contentions are again without any merit. It is not even in dispute that the properties in question belonged to the partners and were in the name of the partners in the year 1987. The order of the Collector of Customs was passed on 4th August, 1987 where after it is nobody's case that the dues were not paid as such they would be apparently defaulters. A decree was obtained by way of consent terms in Suit No.328 of 1988 to which the department was not a party. Thus the consent terms and/or even a finding recorded in the suit would in no way bind the respondents in the present appeal. There is no dispute to the fact that the partners were detained under the provisions of the COFEPOSA. If during the interregnum period the properties have been diverted by adopting a cleverly devised methodology, there is no dispute that even the present appellants were the partners of the firm. In fact, the appellants are the step-sons of the deceased. The property would change the hands subject to its liabilities. The concerned parties were heard by the competent authority before the partners were held liable to pay a sum of Rs.2,83,43,821/-. The whole process adopted be the appellants is merely a camouflage to overreach the order of attachment. In fact, the appellants are the step-sons of the deceased. The property would change the hands subject to its liabilities. The concerned parties were heard by the competent authority before the partners were held liable to pay a sum of Rs.2,83,43,821/-. The whole process adopted be the appellants is merely a camouflage to overreach the order of attachment. The finding of the learned single Judge, that there was no prima facie case and no material had been produced on record to show that the property belongs to the persons who were not defaulters and as such the order of attachment cannot be executed, cannot be faulted. 6. We find no merit in this appeal and the same is dismissed, while leaving the parties to bear their own costs. Appeal dismissed.