IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 08.07.2011 CORAM: THE HONOURABLE MR.JUSTICE S.NAGAMUTHU Second Appeal No. 293 of 1998 Rajaganapathy Ganesan .. Appellant/Plaintiff Vs 1. Union of India rep. By The Secretary, Department of Finance, Government of India, New Delhi. 2. The Tax Recovery Officer, Office of the Tax Recovery Officer, 23,Williams road, Trichy. ... Respondents/Defendants . . . Prayer:- Second Appeal filed under Section 100 of C.P.C against the judgment of the Additional District Judge, Pondicherry at Karaikal dated 16.09.97 in A.S.No.25 of 1997 setting aside the judgment of the Principal District Munsif at Karaikal dated 28.02.1997 in O.S.No.13 of 1996. For Appellant : Mr.T.P.Manoharan For respondents : Mr. K.Sureshkumar (R2) J U D G M E N T The plaintiff is the appellant. The suit in O.S.No.13 of 1996 on the file of the Principal District Munsif at Karaikal was filed by the appellant for a decree of permanent injunction to restrain the defendants from in any way proceeding against the suit property towards the arrears of income tax payable by the father of the plaintiff, namely, Govindarajan. The suit was decreed as prayed for. Challenging the same, the Union o India and Tax Recovery officer (the defendants) preferred an appeal in A.S.No.25 of 1997. The learned Additional District Judge, Pondicherry at Karaikal allowed the appeal, set aside the decree and judgment of the lower court and dismissed the suit. It is against the said judgment, the https://hcservices.ecourts.gov.in/hcservices/ plaintiff is before this Court with this Second Appeal. 2. The brief facts of the case are as follows: i. The plaintiff's father Mr.Govindarajan was an income tax assessee. The mother of the plaintiff was one Sivagangaiammal. The suit property, which is a landed property, was purchased under Ex.A.1 Sale Deed in the name of Mrs.Sivagangaiammal on 14.03.1958. According to the plaintiff, she was in possession and enjoyment of the property till her life time as absolute owner. She executed a Will in favour of the plaintiff on 05.02.1970 under Ex.A.2. After her demise, as per the Will, the plaintiff claims that he has become the absolute owner of the said property. Patta for this property has also been transferred in the name of the plaintiff. He has been paying the tax and other revenue dues for the property regularly. Thus, according to him, he is the absolute owner of the suit property. Thus according to him, Mr.Govindarajan, had no right or any title whatsoever over the property. While so, Mr.Govindarajan had fallen in huge arrears of income tax to the tune of Rs.1,79,985/- for the assessment years 1965-66, 1966-67 and 1967-68. Appropriate Assessment Orders have been passed against Mr.Govindarajan. While he was alive, he did not pay the amount as demanded. Subsequently, proceedings were initiated by the Tax Recovery Officer against the suit property by issuance of notice based on a certificate issued under the Act. This was objected to by the plaintiff stating that the property cannot be attached since the same has got nothing to do with late Mr.Govindarajan. The said objection was rejected by the Tax Officer by passing appropriate orders. As a matter of fact, the property was also attached. In those circumstances, the plaintiff had chosen to file the present suit for permanent injunction restraining the defendants in any manner proceeding against the suit property. The contention of the plaintiff is that he is the absolute owner of the property having perfect title and therefore, the proceedings cannot be initiated against the same towards the arrears of tax payable by his father, Mr.ovindarajan. ii. It was resisted by filing appropriate written statement contending that though it is true that the suit property was in the name of Mrs.Sivagangaiammal, it was in fact purchased in her name by her husband, Mr.Govindarajan, from out of his income. Thus the suit property was held by Mrs.Sivagangaiammal as benami though the property was owned by Mr.Govindarajan. It was further contended that in Ex.B.1 letter, Mr.Govindarajan himself admitted before the Income Tax Officer that the suit property was purchased by him in the name of his wife. Therefore, according to the defendant, the property is liable for attachment and to be proceeded with further as per the provisions of the Act in order to recover the arrears of tax, which had fallen due against Mr.Govindarajan. It is also the further case of the defendant that the suit is not maintainable in view of the bar contained in Section 293 of the Income Tax Act. iii. In order to prove the case, the plaintiff examined https://hcservices.ecourts.gov.in/hcservices/ himself as P.W.1. 55 documents were exhibited as Exs.A.1 to A.55. On the side of the defendants, one Mr.Salaiappan, the then Tax Recovery officer was examined as D.W.1 and on their side as man y as 7 documents were exhibited as Exs.B.1 to B.7. iv. Having considered all the above materials, the trial Court found that the civil Court had jurisdiction to try the suit and the suit property absolutely belongs to late Govindarajan and therefore, the same is liable for attachment and to be proceeded against further. v. In the appeal preferred by the defendants, the lower appellate Court held that the suit is not maintainable as there is a bar contained in the Income Tax Act and further held that the property was held by Mrs.Sivagangaiammal as benami and therefore, the attachment and other consequent proceedings initiated against the said property were all in accordance with law. Aggrieved over the same, the plaintiff is before this Court with this second appeal. 3. At the time of admission of this Second Appeal, the following substantial questions of law were framed: i. Whether in view of Section 3(2) of the Benami Transactions (Prohibition) Act, 1988, even if late Govindarajan had purchased the suit property out of his funds in the name of his wife, can it not be presumed that the same was purchased by him for her benefit and consequently, inspite of the failure of Govindarajan and the respondents to prove the contrary, was the Court below right ignoring the above provisions and the decisions relied on by the appellant viz. A>I.R.1995 S.C.2145, 1997(2) L.W.908(DB) and 1989 TNLJ 1 (S.C) and holding that it was the property of Govindarajan? ii. Whether the unilateral statement made by late Govindarajan and the action initiated by the respondent for recovery of the arrears of tax from him by sale of the suit property r/w the provisions contained under the income tax Act have overriding/superseding effect over Ex.A.1 and2 r/w Sec.3(2) of the Benami Transaction ) Prohibition) Act 1988 and Sec.14 of the Hindu Succession Act? 4.The following additional substantial question of law is framed.: "Whether the lower appellate Court was right in holding that the suit as framed is barred by Section 293 and other provisions of the Income Tax Act." 5. I have heard the learned counsel for the appellant and the learned counsel for the respondents and also perused the records carefully. 6. Since the question of jurisdiction has been raised and the same has been answered by the courts below, I deem it https://hcservices.ecourts.gov.in/hcservices/ appropriate to deal with the same first. 7. It is contended by the learned counsel for the appellant that in view of the specific provision contained in Rule 11 (6) of Second Schedule of the Income Tax Act, the suit is maintainable. The said provision reads as follows: "Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil Court to establish the right which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive." 8. It is the contention of the learned counsel for the respondents that an appeal against the order passed by the Tax Recovery Officer has to be preferred under Rule 86 only to the Chief Commissioner or Commissioner of Income Tax. He would further point out that under Section 293 of the Income Tax Act, no suit shall be brought in any civil Court to set aside or modify any proceeding taken or order made under this Act. Relying on these two provisions, the learned counsel would submit that the suit is not maintainable and thus the first appellate Court was right in holding that the suit is not maintainable. 9. In my considered opinion, the first appellate Court was not right in holding that the suit is barred under Section 293 of the Income Tax. In order to appreciate the said contention, let us first have a look at Rule 86(1) of Second Schedule of the Income Tax, which reads as follows: "Appeals: (1) An appeal from any original order passed by the Tax Recovery Officer under this Schedule, not being an order which is conclusive, shall lie to the Chief Commissioner or Commissioner." 10. A close reading of Rule 86(1) as extracted above, would go a long way to show that an appeal has been provided against any original order passed by the Tax Recovery Officer which is not conclusive. The said provision has got nothing to do with an order passed on a claim made by a third party to the Assessment in respect of the property proceeded with by the Tax Recovery Officer because, as per rule 11(6) of Second Schedule of the Income Tax Act, the said order is conclusive. If any person is aggrieved by any original order, which is not conclusive, certainly, the remedy for him is to prefer an appeal under Rule 86 of the Income Tax Act, in which case, the bar contained in Section 293 would operate against him. Section 293 of the Income Tax Act reads as follows: "Bar of suits in civil Courts; No suit shall be brought in any civil court to set aside or modify any proceeding taken or order made under this Act, and no prosecution, https://hcservices.ecourts.gov.in/hcservices/ suit or other proceeding shall lie against the Government or any officer of the government for anything in good faith done or intended to be done under this Act." 11. A close reading of Section 293 would make it manifestly clear that a Civil Suit is barred only against an original order or a proceeding under the Act which is not conclusive. But in the case on hand, the plaintiff has not challenged any such original order. The expression "original Order" denotes only an order of Assessment including the order of re-assessment as defined in Section 2 (8) of the Income Tax Act. 12.Now turning back to Rule 11 (6) of Second Schedule to the Income Tax Act, it is crystal clear that it does not speak of any challenge to the original order of assessment or the order made by the Tax Recovery Officer on a claim made by a third party. This provision, instead, provides for a suit to establish the right, which he claims to the property in dispute. 13. Thus, what is permitted under this rule is a civil suit at the instance of the claimant for the purpose of establishment of his right over the property and not a suit to challenge the order of the authority. If any such civil Suit is filed, the order of Tax Recovery Officer made on the claim shall, subject to the result of the suit, be conclusive. Therefore, in my considered opinion, Rule 86 of Second Schedule does not cover any order made on a claim under Rule 11 of Second Schedule. To put it precisely, such an order made on a claim application is not appealable and so the bar contained in Section 293 of the Act is not applicable. 14. In the instant case, the appellant has not challenged the order of the Tax Recovery Officer made on his claim in respect of the property in question. As I have already stated, the said order of the Tax Recovery Officer shall be conclusive , however, subject to the result of the suit. The suit has been filed only to establish his right over the property. Such suit is certainly not barred by the Act. As a matter of fact, as I have already stated, such suit has been provided for under Rule 11(6) of Second Schedule of the Income Tax Act. Therefore, in my considered opinion, the suit filed by the appellant is certainly maintainable. 15. The learned counsel for the respondents would raise yet another objection in respect of applicability of Rule 11(6). According to him, if the suit had been filed to establish the title making a specific prayer for declaration of title over the property, then only, the suit would be maintainable under rule 11 (6) of the Act, instead, the suit has been filed only for permanent injunction restraining the defendants from in any manner proceeding against the suit property. Further, the learned counsel submits that since there is no prayer for declaration of title, suit as prayed for in this case will not fall within the ambit of Rule 11(6) of second https://hcservices.ecourts.gov.in/hcservices/ Schedule of the Income Tax Act and therefore, the suit is not maintainable. 16. But the learned counsel for the appellant would submit that though the prayer made in the suit is for permanent injunction, since such injunction is sought for based on title of the appellant, the same would squarely fall within the ambit of Rule 11 (6) of second Schedule of the Income Tax Act. In order to substantiate his contention, the learned counsel for the appellant has relied on a judgment of the Hon'ble Supreme Court in Corporation of the City of Bangalore VS M.Papaiah and another reported in 1989 (3) Supreme Court Cases 612, wherein in paragraph 4, the Hon'ble Supreme Court has held as follows: "So far the scope of the suit is concerned, a perusal of the plaint clearly indicates that the foundation of the claim of the plaintiffs is the title which they have pleaded in express terms in paragraph 2 of the plaint. It has been stated that after cancelling the acquisition of the suit property for a burial ground the land was transferred to Guttahalli Hanumaiah under G.O.Nos.3540 dated June, 10, 1929 on payment of upset price. In paragraphs 3 and 5 the plaintiffs have reiterated that the first plaintiff was the owner-in-possession. It is well established that for deciding the nature of a suit the entire plaint has to be read and not merely the relief portion, and the plaint in the present case does not leave any manner of doubt that the suit has been filed for establishing the title of the plaintiffs and on that basis getting an injunction against the appellant-Corporation. The court fee payable on the plaint has also to be assessed accordingly. It follows that the appellant's objection that the suit is not maintainable has to be rejected." 17. Nextly, the learned counsel relies on a judgment of a Division Bench of this Court in R.Dhanalakshmi and others VS Senthilkumari and others reported in 2008(1) CTC 19 wherein in paragraph 27 and 32, the Division Bench has held as follows: "27. In the case on hand also, the real question in controversy is only title to the suit property based on which the relief of injunction has been sought for. When the entire plaint is read together, though the relief sought for is for injunction, while considering the stand taken in the written statement, the dispute is only in respect of the title. By allowing this amendment no prejudice is caused or stated to have been caused to the appellants/defendants. Only technical plea was raised. Fair play in action must inhere in judicial approach and Court's approach should be oriented with this view whether substantial justice is done between the parties https://hcservices.ecourts.gov.in/hcservices/ or technical rules of procedure are given precedence over doing substantial justice in Court. A Code of procedure is designed to facilitate justice and further its ends; not a penal enactment for punishment and penalties-vide Bhagwan Swaroop V Mool Chand 1983(2) SCC 132. The Supreme Court in the case of Santokh Sing V Mahant Iqbal Singh, 200(4) CTC 683; 2000(7) SCC 215 while considering the case in a suit for possession, where the declaratory relief has not been prayed for, observed as follows: It is correct that such a declaration should have been sought. Normally in the absence of such a declaration such a suit would not be maintainable. However, in this case, we find that even though there was no prayer to the effect that the lease deed was not valid and/or void and/or not binding, the necessary averments are there in the plaint. The appellants thus knew that the lease deed was being challenged. They met the challenge in their written statement. Thereafter, issues, namely, issues 4 and 5 had been framed. Evidence was led by the parties on those issues. Arguments were advanced on those issues. Therefore, this question has been agitated by the parties in all the Courts. Thus even though there was no formal prayer was asked for (sic), no prejudice has been caused to the appellant inasmuch as he has not been prevented from leading evidence on this aspect and has not been precluded from raising contentions in this behalf. In our view, all that was necessary to cure the defect was an amendment by incorporating one prayer. This could have been done at any stage. In this view of the matter and particularly in view of the fact that we are in agreement with the findings that the property is a trust property and that the lease in question was not for consideration or for legal necessity, we see no reason to interfere." The above said observation of the Supreme Court would aptly apply to the facts of the present case. " 32. In somewhat comparable facts, the Supreme Court in the case of Corporation of City of Bangalore V M.papaiah, 1980 (3) SCC 612, has held that for non seeking of relief of declaration, a suit for injunction cannot be dismissed. That was a suit filed for decree of perpetual injunction restraining the Corporation from interfering with the possession of the plaint. The case of the Corporation was that the disputed area was acquired for house on a burial ground under G.O and compensation was paid to the plaintiffs out of Municipal https://hcservices.ecourts.gov.in/hcservices/ funds and land was in possession of the defendants since then. The plaintiff's case was that the alleged G.O was cancelled and the land settled under another G.O to persons who subsequently sold it to the plaintiff. The plaintiff also got his name entered into the revenue records. The Suit was decreed by the Trial Court, but the decision was reversed in the first Appeal. The plaintiff's Second Appeal was allowed by the High Court and the Trial Court's decision was restored. In this factual situation of the case, the Supreme Court held that the foundation of the claim of the plaintiff was title which was pleaded in the earlier part of the plaint and for deciding the nature of the Suit, the entire plaint has to be read and not merely, the relief portion. The plaint in that case does not leave any manner of doubt that the Suit has been filed for establishing title of the plaintiff and on that basis, getting an injunction against the Corporation. The Court fee payable was also assessed accordingly." 18. As has been very optly laid down by the Hon'ble Supreme Court and as followed by this Court in the above referred to judgments, while doing substantial justice, the Courts should not allow themselves to be swayed by the technical rules of procedure by giving precedents for such procedure. The Court has to see whether the parties had sufficient notice and opportunity to contest a particular issue though the prayer made in the plaint has not been properly framed in the suit. For that purpose, the entire plaint and the written statement are to be read. In the instant case, if it is so done, it is obvious that the plaintiff's stand was that the suit property had nothing to do with Mr.Govindarajan whereas the stand of the defendants was that it belongs to Mr.Govindarajan and the same was benami in the name of Sivagangiamal. Thus the real issue was in respect of title. The same was contested, there was an issue on the same and evidence was let in by the parties in respect of this issue. Therefore, in the instant case, though technically there was no prayer for title, still, the suit is maintainable as provided in Rule 11(6) of the Second Schedule to the Income Tax Act. 19. Nextly, it is contended by the respondents that the suit property was purchased in the name of Mrs.Sivagangaiammal by way of benami by her husband Mr.Govindarajan. But, it is the specific contention of the appellant that the property was purchased in the name of Mrs.Sivagangaiammal, out of her own funds as she was very rich. Therefore, the next question is as to whether sale consideration was paid by Mr.Govindarajan or by Mrs.Sivagangaiammal. For this purpose, neither side has let in any evidence. At this juncture, we have to consider the fact that the document is of the year 1958 i.e. more than 30 years old. As per Section 90 of the Evidence Act, there shall be a presumption that it was duly executed in favour of Mrs.Sivagangaiammal. https://hcservices.ecourts.gov.in/hcservices/ 20. Section 54 of the Transfer of Property Act, defines as to how a sale is to be made, which reads as follows: "Sale" defined:- "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Sale how made: - Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards or in the case of a reversion or other intangible thing, can be made only by a registered instrument. "In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property." 21. From a plain reading of Section 54 of the Transfer of Property Act one can easily understand that 'due execution of sale deed' means effecting transfer of ownership in exchange for a price paid or promised or part-paid or part-promised. As I have already stated, under Section 90 of the Evidence Act, there may be a presumption of due execution of sale if the sale deed is 30 years old. As per the said provision, in the instant case, there may not be any difficulty to presume that the sale deed was executed by the vendor in favour of mrs.Sivagangaiammal for the consideration paid by her as mentioned in the document. This presumption, has not been rebutted in any manner by the respondents. 22. Now I may also refer to Section 101 of the Evidence Act, which speaks of the burden of proof, which reads as follows: "Burden of proof:- whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person." After having understood the purport of Section 101 of the Evidence Act, if we look into the materials available on record, in the instant case, there can be no controversy that absolutely no evidence has been let in by the respondents to prove that the sale consideration was paid only by Mr.Govindarajan for execution of sale deed. Ex.A.1 was in the name of Mrs.Sivagangaiammal. In view of the presumption under Section