JUDGMENT Dev Darshan Sud, J.(Oral)-The petitioner is aggrieved by the order dated 27.12.2004 passed by the H.P.State Consumer Disputes Redressal Commission in M.A. No. 164 of 2004 declining the application filed by the Tax Recovery Officer for the recovery of income tax, penalties and interest due from Himachal Gramin Sanchayaka Ltd.(hereinafter referred to as the assessee} It is undisputed that the assessee is a Company which is under liquidation. It is also not disputed before us that a Division Bench of this Court vide its order dated 26.3.2004 passed in Coy. Appeal No. 2 of 2003, permitted the Tax Recovery Officer to file an application under Section 226(4) of the Income Tax Act claiming the amount of tax due. The order reads:- “In Company Petition No. 6 of 2001 an order was passed by the learned Company Judge on 4.4.2002 whereby H.P.State Consumer Disputes Redressal Commission, Shimla was directed not to release/disburse any amount to any person realized by the Commission on the auction of the properties of Himachal Gramin Sanchayaka Limited including the properties of M/s Himachal Gramin Sanchayaka Limited, namely, Sanchayaka Bhawan, Chakkar, Shimla and Sanchayaka Resort, Darlaghat, District Solan which was allegedly sold / auctioned for Rs.63,00,000/-and sale proceeds whereof are lying in deposit with the H.P.State Consumer Disputes Redressal Commission, Shimla (Commission : for short). Company Petition No.6/2001 was finally disposed of vide judgment dated 11th July, 2003 and it is this judgment which is under challenge in this appeal pending before us. Tax Recovery Officer, Shimla Range, Shimla, filed an application before the commission for the release of an amount of Rs. 31,02,200/- but the Commission vide its order dated 3rd March, 2004 declined to grant any relief to the aforesaid applicant because of the aforesaid restraint order issued on 4th April, 2002 by the learned Company Judge. The order dated 4th April, 2002 passed by the learned Company Judge undoubtedly merged with the final judgment dated 11th July, 2003 passed in Company Petition No.6 of 2001 whereby the Company Petition No.6 of 2001 was finally disposed of. We are not seized of the entire matter. The order dated 4th April, 2002 passed by the learned Company Judge undoubtedly merged with the final judgment dated 11th July, 2003 passed in Company Petition No.6 of 2001 whereby the Company Petition No.6 of 2001 was finally disposed of. We are not seized of the entire matter. Both the applications filed by the Tax Recovery Officer, Shimla Range, Shimla, are disposed of with the direction that in modification of the order dated 4th April, 2002 or any other earlier order passed by this Court, it is open to the aforesaid applicant to apply afresh to the Commission in terms of Section 226 (4) of the Income Tax Act, 1961 and if the applicant does so within two weeks from today, the Commission shall dispose of the aforesaid application of the applicant on its merits and in accordance with law, uninhibited by any order previously passed by this Court. The applications are disposed of.” 2. The State Commission vide its order dated 27.12.2004 has gone beyond its jurisdiction in holding that the application is not maintainable. It is further held by the State Commission that the Tax Recovery Officer did not take any steps for recovery of the amount of tax due earlier and waited till execution proceedings were initiated before the State Commission by the depositors for recovery of their deposits. The reasoning of the State Commission is not in concord with law and we hold that the right of the Income Tax authorities to recover tax cannot be rejected on this ground alone. It is not the domain of the State Consumer Disputes Redressal Commission to comment on the manner in which the Income Tax Authorities should recover the tax due. The second reason advanced by the Commission is that the consumers, who are numerous in number and who have been duped by the assessee would be back to square one and left high and dry in the process in case this amount is attached by the Income Tax Authorities. This is also no reason to deny the legitimate right of recovery of tax. 3. Learned counsel appearing for the petitioner relies upon the decision of the Supreme Court in Union of India Vs. This is also no reason to deny the legitimate right of recovery of tax. 3. Learned counsel appearing for the petitioner relies upon the decision of the Supreme Court in Union of India Vs. Somasundaram Mills P. Ltd, and another [1985] 152 I.T.R. 420 to urge that tax due has priority over other claims and since the amount is lying deposited with the executing court i.e. the State Commission prior attachment is not necessary. He submits that this principle was reiterated in Lakshman Swarup Om Prakash Vs. Union of India and others [1998] 229 I.T.R. 662, wherein the Supreme Court re-affirmed this principle of giving priority to recovery of Income tax due in Lakshman Swarup Om Prakash (Supra), the Court while interpreting the provision of Section 226 (4) of the Income Tax Act, held :- ”Under Section 226(4) of the Act, the Assessing Officer or the Tax Recovery Officer can move the court having custody of money belonging to the assessee for payment to him of such money for discharging the tax liability of the assessee. What is necessary is that on the date when the application is made the court should have custody of money belonging to the assessee. The question, therefore, is whether on August 31, 1973, when the application under Section 226(4) was moved by respondent No.1 any money belonging to the judgment-debtors was in the custody of the executing court. For that purpose, it is necessary to consider Section 73, Civil Procedure Code, which provides as under: “73. Proceeds of execution sale to be rateably distributed among decree-holders. – (1) Where assets are held by a court and more persons than one have, before the receipt of such assets, made application to the court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realization, shall be rateably distributed among all such persons : Provided as follows : (omitted).” Under Section 73, Civil Procedure Code, the money lying in the executing court continues to belong to the judgment-debtor till it is disbursed among the decree-holders or other creditors of the judgment-debtor. On August 31, 1973, the date on which the application under Section 226(4) of the Act was filed by respondent No.1, cheques sent by the Civil Judge, Agra, to the executing court were lying with the executing court. The payment was actually made to the appellant on April 23, 1974, i.e., after the passing of the order dated March 4, 1974, rejecting the application under Section 226 (4) filed by respondent No.1. The High Court was, therefore, right in holding that on the date of filing of the application under Section 226(4) of the Act the money had not been distributed to the appellant decree-holders and was lying with the executing court. The executing court was, therefore, in error in rejecting the application filed by the Union of India under section 226(4) of the Act on the view that the money had ceased to be the property of the judgment-debtors on the date of the filing of the said application. The money could have ceased to be the property of the judgment-debtor only on its being distributed among the decree-holders and till it was so distributed it continued to remain the money of the judgment-debtor in the custody of the court. Shri Markendaya has placed reliance on the following observations of this Court in Union of India vs. Somasundaram Mills (P) Ltd. [1985] 152 ITR 420 {headnote}: ‘It is a general principle of law that debts due to the State are entitled to priority over all other debts. If a decree-holder brings a JUDGMENT-debtor’s property to sale and the sale proceeds are lying in deposit in court, the State may, even without prior attachment, exercise its right to priority by making an application to the executing Court for payment out. If, however, the State does not choose to apply to the court for payment of its dues from the amount lying in deposit in the court but allows the amount to be taken away by some other attaching decree-holders, the State cannot thereafter make an application for payment of its dues from the sale proceeds, since there is no amount left with the court to be paid to the State.’ These observations do not lend support in the case of the appellant because in the present case it cannot be said that the Union of India had allowed the amount to be taken away by the decree-holders. Before the amount could be distributed among the decree-holders the application had been filed by respondent No.1 under section 226(4) of the Act.” (PP 664 – 666). (Emphasis supplied). 4. In view of the law settled by the Supreme Court we hold that the decision of the State Commission is contrary to this settled law. It is not disputed before us that the amount deposited in the Commission is from the sale proceeds of the assets of the assessee. 5. This writ petition is accordingly allowed, order of the State Commission dated 27.12.2004 challenged in the writ petition is quashed and set-aside. We hold that the Income Tax Authorities shall be entitled to recover the amount as claimed. This is subject to the condition that the amount shall not be released in case it is attached in some other judicial proceedings before this Court.