Case: Collector Of Customs &amp; Ors Vs. M/S. Soorajmull Nagarmull &amp; Anr

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 S. 46 (5A).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. 9. It is contended lastly that the notice of the Income-tax Officer spoke of In-come-tax and /or 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 Reckitt, 1933-1 ITR 1 (CA) and learned counsel for the respondents did not controvert the proposition laid down there. It is, however, argued on the authority of Bidhoo Beebee v. Keshub Chunder Baboo, (1868) 9 Suth WR 462, Mahiganj Loan Office. Ltd. v. Behari Lal Chaki, ILR (1937) 1 Cal 781 = (AIR 1937 Cal 211), A. P. Bagchi v. Mrs. F. Morgan, AIR 1935 All 513 and thomas Skinner v. Ram Rachpal, ILR (138) All 294 = (AIR 1938 All 141 ) that the payment which can be adjusted under Order 21, Rule 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, Rule 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 though 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 46(5A), as we have stated before, is in the nature of the a garnishee payment and must, therefore, be subject to the same rule. 10. The rulings themselves do not control the present matter. In (1868) 9 Suth WR 462 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 Order 21 (then S. 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 (1937) 1 Cal 781 = (AIR 1937 Cal 211) there was a scheme framed by the depositors of a banking company for return of their deposits in spite of opposition from decree-holders depositors 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) All 294 = (AIR 1938 All 141 ), 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 reasons 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 Rule 2, Order 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 of the rule. The case turned on whether there was any understanding between the parties that sums spent by the judgment-debtor on repairs would be set off against the decretal amount and therefore Order 21, Rule 2 of the Code of Civil Procedure was held inapplicable. 11.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 46 (5A) of the Income-tax Act of 1922 stands on a different footing and if the payment had been legally made out of the 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 Order 21, Rule 2 of the Code of Civil Procedure and we order that it be so certified. 1

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In our judgment this plea is highly technical. The amount was recovered 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 I 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 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 firm8. 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 S. 46 (5A).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 IndiaThe 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, Rule 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 though 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 46(5A), as we have stated before, is in the nature of the a garnishee payment and must, therefore, be subject to the same ruleThis 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 of the rule. The case turned on whether there was any understanding between the parties that sums spent by the judgment-debtor on repairs would be set off against the decretal amount and therefore Order 21, Rule 2 of the Code of Civil Procedure was held inapplicable11.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 46 (5A) of the Income-tax Act of 1922 stands on a different footing and if the payment had been legally made out of the 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 Order 21, Rule 2 of the Code of Civil Procedure and we order that it be so certified.