Appeal Nos 429 and 430 of 1966 Appeals by special leave from the judgments and orders dated January 22 1964 of the Calcutta High Court in Appeals Nos 199 and 200 of 1962 from Original Order
BSen and section P Nayar for the appellants in both the appeals
AN Sinha and D N Gupta for respondent No 1 in both the appeals
The Judgment of the Court was delivered by Hidayatullah CJ
This is an appeal against the judgment and decree of the High Court of Calcutta refusing to enter satisfaction of two decrees under O 21 r 2 of the Code of Civil Procedure obtained by the respondents against the Union of India in the following circumstances
The respondents Ms Soorajmull Nagarmull imported spindle oil from Philadelphia
The firm was required to pay Customs Duty under Item 273 of the First Schedule to the Tariff Act 1934 at 27 ad valorem
The firm filed two suits asking for refund of excess duty claiming that the oil was dutiable only under Item 278 at 26 per imperial gallon
The suits were filed against the Collector of Customs the Assistant Collector of Customs for Appraisement and the Union of India
The suits were successful and decrees were passed against the Union of India for refund of the amount charged in excess
In one suit the decree was for payment of Rs 43723 with interest at 6 per annum from 1st day of April 1952 until realisation
In the second suit the decree was for Rs 75925 with similar interest
Since the firm had not paid a sum of Rs 180866772 as tax the Income Tax Officer Circle 11 Calcutta issued a notice under section 465a of the Indian Income Tax Act 1922 calling upon the Collector of Customs to pay the amount of the decree to him and stating that his receipt would constitute a good and sufficient discharge of the liability for refund to the firm
The Collector of Customs paid the amount into the Reserve Bank and the Reserve Bank issued receipts crediting the amount against Super 125 tax due from the firm
The Collector of Customs then applied to the High Court of Calcutta under 0
21 r 2 of the Code of Civil Procedure for the adjustment of the decrees by this payment
This was refused by a learned single Judge who gave no reasons while dismissing the petition
On appeal to the Division Bench it was held by the Division Bench on January 22 1964 that the adjustment of the decrees could not be granted
It is against the last order that the present appeals have been filed by special leave of this Court
The High Court in reaching the conclusion observed that the decrees were against the Union of India and not the Collector of Customs
Further the sums were held by the Collector of Customs on behalf of the Union of India and not on behalf of the firm
The High Court found the notice to be defective inasmuch as it asked for payment towards Income tax and towards penalty while in the receipts which were granted to the firm stated that the amount was for Super tax
On these three grounds the High Court held that the learned single Judge was right in dismissing the application of the Collector of Customs for the adjustment of the decrees
Order 2 1 r 2 of the Code of Civil Procedure takes note of payments out of court to decree holders and provides that where any money payable under a decree of any kind is paid out of Court or the decree is otherwise adjusted in whole or in part to the satisfaction of the decree holder the decree holder shall certify such payment or adjustment to the Court whose duty it is to execute the decree and the Court shall record the same accordingly
It is also provided that the judgment debtor also may inform the Court of such payment or adjustment and apply to the Court to issue a notice to the decree holder to show cause why such payment or adjustment should not be recorded as certified
The contention of the respondents in these appeals is that the decrees were not passed against the Collector of Customs but against the Union of India and that payment by the Collector of Customs was not a payment by the judgment debtor
In our judgment this plea is highly technical
The amount was recoved by the Collector of Customs from the firm and was being held by the Union of India through the Collector of Customs
The Collector of Customs paid the money not on behalf of himself but on behalf of the Union of India and it must be treated as a proper payment of the amount to the firm
The objection of the respondent that it amounts to a payment by one Department of the Government to another does not in our opinion hold much substance
It is also extremely technical
The Union of India 126 operates through different Departments and a notice to the Collector of Customs in the circumstances was a proper notice to issue because it was the Collector of Customs who had in the first instance recovered this money and held it from the firm
It is next contended that the notice is defective inasmuch as it shows that the money was lying with the Collector of Customs whereas it was in fact lying with the Union of India and that it was not money held by the Collector of Customs on behalf of the firm
Section 465A of the Income tax Act reads as follows  46
Mode and time of recovery
5A The Income tax Officer may at any time or from time to time by notice in writing a copy of which shall be forwarded to the asessee at his last address known to the Income tax Officer 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 Income tax Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice riot being before the money becomes due or is held so much of the money as is sufficient to pay the amount due by the tax payer in respect of arrears of income tax and penalty or the whole of the money when it is equall to or less than that amount
Any person making any payment in compliance with a notice under this I sub section shall be deemed to have made the payment under the authority of the assessee and the receipt of the income tax Officer shall constitute a good and sufficient discharge of the liability of such person to the assessee to the extent of the amount referred to in the receipt
Any person discharging any liability to the assessee after receipt of the notice referred to in this sub section shall be personally liable to the Income tax Officer to the extent of the liability discharged or to the extent of the liability of the assessee for tax and penalties whichever is less
127 If the person to whom a notice under this sub section is sent fails to make payment in pursuance thereof to the Income tax Officer further proceedings may be taken by and before the Collector on the footing that the Income tax Officer s notice has the same effect as an attachment by the Collector in exercise of his powers under the proviso to sub section 2 of section 46
Such notices of the Income tax Officer are no more than a kind of a garnishee order issued to the person holding money which money is due to an assessee
The Collector of Customs had recovered this money and under the decrees of the Court the Union of India was liable to refund it to the firm
A garnishee order is issued to a debtor not to pay to his own creditor but to some third party who has obtained a final judgment against the creditor
By a parity of reasoning this amount which was with the Collector of Customs could be asked to be deposited with the Income tax Authorities under section 465A
The argument is extremely technical for that the firm is entitled to get a double benefit of the decree first by having the decretal amount paid to the benefit of the firm and then to recover it again from the Union of India
It is contended lastly that the notice of the Income tax Officer spoke of Income tax andor penalty whereas the amount was taken towards payment of Super tax due from the firm It is however conceded in the face of authorities cited at the Bar that the Super tax is also a kind of Income tax and therefore the notice could issue in the form it did
The leading case on the subject is In re Beckitt1 and learned counsel for the respondents did not controvert the proposition laid down there
It is however argued on the authority of Bidhoo Beebee vs Keshub Chunder Baboo and Ors 2 Mahiganj Loan Office Ltd vs Behari Lal Chaki3 A P Bagchi vs Mrs F Morgan4  and Thomas Skinder vs Ram Rachpal5 that the payment which can be adjusted under O 21 r 2 is a voluntary payment by the judgment debtor to the decree holder and that this iS not a case of voluntary payment at all
The rulings which have been cited do not in our opinion apply here
This point was not considered in the High Court and seems to have been thought of here
Order 21 r 2 merely contemplates payment out of court and says nothing about voluntary payment
A garnishee order can never by its nature 1  2 3 1
L R 4 A 1
R 1935 All 513
5 1
L R 1938 All
128 lead to a voluntary payment and it is not to be thought that a garnishee order does not lead to the adjustment of the decree sufficient for being certified by the Court
Payment by virtue of section 465A as we have stated before is in the nature of a garnishee payment and must therefore be subject to the same rule
The rulings themselves do not control the present matter
In the payment was not under a garnishee order but under the process of the court issued in execution by arrest of the judgment debtor
Contrasting what had happened in the case with the words of the second rule of 0 21 then section 206 of the Code of 1859 the learned Judges observed that section 206 covers cases of voluntary payment
The debtor was protected by treating the payment as being made through the court
The exact point we are dealing with was not before the Court
In ILR there was a scheme framed by the depositors of a banking Company for return of their deposits in spite of opposition from decree holders depositor of the Company
The scheme was sanctioned by the Court
The scheme was binding on the decree holder but it was not treated as an adjustment within O 21 r 2 of the Code of Civil Procedure
The reason given was that the adjustment must be to the satisfaction of the decree holder and must be with the consent of both the decree holder and the judgment debtor and not one which is made binding by operation of law
It is to be noticed that that was a payment to which the judgment debtor had objected although it was binding on him
We see no reason for making a distinction between a voluntary payment out of court and a payment out of court which the law regards as valid
No reasons are given in the judgment why such a distinction should be made
In ILR 1938 An 294 the payment was made in court and not outside court
This  is the nearest case to the present one and but for this difference it is reasonable to think that the learned Judges would have taken the same view of the matter as we have taken
The reason given by the learned judges brings out the real object of the rule  where a judgment debtor makes payment outside the Court the Court knows nothing about the payment  and therefore r 2 0
21 ordains that the parties should inform the Court about the payment
 This object in our opinion is fully achieved when there is payment under a garnishee order outside the Court
In the case cited the Court knew of the payment and could give protection in other ways
In AIR 1935 All
513 the payment was again without the consent of the Judgment debtor either in fact or in law
Too much emphasis appears to have been placed upon mutual understanding and too little on payment out of court which is the essence 129 of the rule
The case turned on whether there was any understanding and too little on payment out of court which is the essence debtor on repairs would be set off against the decretal amount and therefore O 21 r 2 of the Code of Civil Procedure was held inapplicable
In none of the cases the point of a garnishee order was considered
In our opinion a case of a garnishee payment or one made under section 465A of the Income tax Act of 1922 stands on a different footing and if the payment has been legally made out of Court in full and final discharge of the liability under a decree there is no reason why the judgment debtor cannot move the Court for getting the adjustment or payment certified The payment was required to be certified under O 21 r 2 of the Code of Civil Procedure and we order that it be so certified
The appeals are accordingly allowed with costs here and in the High Court
RKPS Appeals allowed


Summary:
The respondent filed suits against the Collector of Customs and the Union of India claiming refund of excess customs duty levied on spindle oil imported into India
The trial court granted decrees against the Union of India for the amounts charged in excess
As the respondent had large outstandings of tax the Income Tax Officer issued a notice under section 465A of the Income Tax Act 1922 calling upon the Collector of Customs to pay the amount of the decree to him
The Collector paid the amount into the Reserve Bank who issued receipts crediting the amount against super tax due from the respondent
He then applied to the High Court under O 21 r 2 CPC for the adjustment of the decree by this amount
This was refused by a single Judge as well as in appeal by a division bench
It was held that the decrees were against the Union of India and not the Collector of Customs and that payment by the Collector was not a payment by the judgment debtor
Furthermore the amounts were held by the Collector on behalf of the Union of India and not on behalf of the Firm
The High Court also found the notice to be defective inasmuch as it asked for payment towards income tax and penalty while the receipts which were granted to the Firm stated that the amount paid was against super tax due
On appeal to this Court HELD  The Union of India operates through different Departments and a notice to the Collector of Customs in the circumstances was a proper notice to issue because it was the Collector of Customs who had in the first instance recovered the amount and held it from the respondent
Collector paid the amount on behalf of the Union of India
126 A A notice under section 465A is no more than a kind of garnishee order issued to the person holding money and the money is due to an assessee
The amount which was held
by the Collector of Customs could properly be asked to be deposited with the income tax authorities under section 465A
127 B D Super tax is also a kind of income tax and therefore the notice could issue in the form it did
There was no force in the contention that the amount which could be adjusted under O 21 r 2 is a voluntary payment by the judgment debtor to the decree holder and the present case was not one of voluntary payment at all
Order No 21 r 2 merely contemplates payment out of court and says nothing about voluntary payment
A garnishee order can never by its nature lead to a voluntary payment and it is not to be thought that a garnishee order does not lead to the adjustment of the decree 124 sufficient for being certified by the Court
Payment by virtue of section 465A is in the nature of a garnishee payment and must therefore be subject to the same rule
127 G 128 B In re Beckitt 1933TR 1 Bidhoo Beebee vs Keshub Chunder Baboo  Ors  Mahiganj Loan Office Ltd vs Behari Lal Chaki ILR  A P Bagchi vs Mrs F Morgan AIR 1935 AU 513 Thomas Skinner vs Ram Rachpal ILR 1938 All 294 distinguished