Allowed

Naman M. Patel v. Union of India and Anr.

Bombay HC6 May 2014S/565/2010

Case brief

AI extract

What is this about?

The High Court of Bombay, in a suit filed by the plaintiff to claim title and possession of a flat and to quash attachment orders, found that the defendants failed to specifically deny the plaintiff's case of possession and title. Relying on Supreme Court precedent and holding that the plaintiff's claim was not reversed by the Revenue Officer, the court ruled that no issues remained. Consequently,

What did the court decide?

A decree was passed in terms of the plaintiff's prayer clauses: declaration of interest and possession, quashing of prohibitory orders, and restraint from proceedings against the flat.

Naman M. Patel Vs Union of India and Anr. — Income Tax | Bombay HC (2014)

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907-S-5652010.DOC

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Ars

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO.565 of 2010

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Naman M. Patel

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…Plaintiff

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Versus

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Union of India and Ors.

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…Defendants

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Mr.Amit Shroff, a/w Ms. Neha Bane, for the Plaintiff.
Mr.Arvind Pinto, for the Defendants.

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CORAM: G.S. PATEL, J DATED: 6th May 2014

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PC:-

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1.This suit is filed against the Union of India and the Tax
Recovery Officer. The plaintiff claims to have been the owner of and
in possession of flat no.12-C, Atlas Apartments, 11, Harkness Road,
Mumbai - 400006, since 5th August 1993. He claims to have been in
lawful possession of and to have had a beneficial interest in that flat as
on 26th May 2005. This is the date on which the Tax Recovery
Officer, the 2nd defendant, issued the prohibitory order assailed in
the suit against one B.M. Patel, the plaintiff’s estranged grandfather,
in respect of the suit flat, restraining B.M. Patel from transferring or
charging that flat. A copy of that notice, which is not disputed, is
Exhibit-E to the Plaint.

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2.The suit seeks a declaration of the plaintiff’s interest and that
he is in possession of this flat. The second prayer in the suit is for a

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declaration that this notice of 26th May 2005, and a subsequent
order dated 26th March 2008 (Exhibit-H to the Petition) passed on
the present plaintiff’s application, are both null and void and of no
legal effect.

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3.Shortly stated, the plaintiff’s case is that he is the owner of, in
possession of, and has at the very least a beneficial interest in the flat
in question. This suit is filed under Rule 11(6) of Schedule-II of the
Income Tax Act, 1961. I will turn to the statutory provisions
presently.

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4.The plaintiff’s case is that at the relevant time, i.e. on the date
of the first prohibitory order, BM Patel, the assessee before the 2nd
defendant, the Tax Recovery Officer, had no title and interest in the
flat.

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5.The plaintiff’s positive case is that this flat was purchased by
the plaintiff’s father, one Madhav Bhagubhai Patel, and the plaintiff’s
paternal aunt (his father’s sister) one Alpana Bhagubhai Patel in 1979.
The names of Madhav Patel and Alpana Patel are shown in the share
certificate. There is deed of transfer of 6th January 1979. According
to the plaintiff there was then an undocumented internal family
arrangement/understanding by which this flat was transferred to the
plaintiff’s name in 1982. In 1987, for a variety of reasons, the shares
in the co-operative society were transferred to the name of plaintiff’s
now estranged grandfather, but on the understanding that these
would be transferred to the plaintiff, as the eldest male child of
Madhav Patel, on his birth. This transfer of shares to the plaintiff was
done by a declaration of gift. That declaration of gift was stamped,
but not registered.

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6.Ever since that transfer, all maintenance bills, utility bills and
other out goings in respect of the flats are in the name of the plaintiff
alone. While he was a minor, these bills were paid by his parents. The
plaintiff attained majority on 15th October 2006.

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7.In February/March 2003, the defendants raided all the
premises alleged to pertain to the defaulting assessee, B.M. Patel.
Although B.M. Patel was neither the owner of the flat in question,
nor in possession of it, and, in fact, was not even residing in Bombay,
the prohibitory order assailed in the suit came to be passed on 26th
May 2005. The plaintiff was at that time still a minor. On his behalf
his mother filed a formal objection. That objection was decided
against the plaintiff and resultant order of 26th March 2008, also
challenged in the suit, came to be passed.

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8.In the plaint, the plaintiff has set out particulars of the other
proceedings that followed, all the way to the Supreme Court. These
are not immediately germane. What is relevant is that the cause of
action in the plaint is on two grounds. The first is the plaintiff’s claim
as an owner with a lawful title to the flat under the deed of gift; and
the second, in the alternative, for the purposes of the Income Tax Act,
is that the plaintiff was undisputably and demonstrably in possession
of the suit flat at the relevant time. Paragraphs 6 and 8 of the plaint
read as follows:

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“6.The plaintiff submits that it is evident from all the
documents attached hereto that, since 5th August 1993,
on the date of attachment being 26th May 2005 and
even thereafter the flat and the said shares continue to
belong to the plaintiff herein and the order of the
defendant No.2 dated 26th March 2008 is patently
incorrect and bad in law and requires to be declared as
null and void and of no effect.

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7....

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8.The plaintiff states that in the circumstances
aforesaid it is evident that the plaintiff was in possession
of and had interest in the said flat on the day of
attachment thereof and as such the attachment is on the
said flat required to be raised. The said flat is already in
possession of the plaintiff. The plaintiff therefore prays
that it be declared that the plaintiff was in possession of
and had interest in the said flat as a member of the
society on the date of attachment thereof by the
defendant no.2 and as such the order of the defendant
no. 2 is null void and bad in law and of no effect. The
defendants be restrained by a perpetual order and
injunction of this Hon’ble Court in taking any action
against the plaintiff or the said flat for recovery of dues
of Mr. B.M. Patel, pursuant to the order dated 26th
March 2008 or otherwise.”

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9.This makes the basis of the plaint abundantly clear. In
response, the defendant first filed an “affidavit in reply”. By an order
dated 28th April 2014, after I made it clear that there was no such
procedure available to the defendants, I granted the defendants liberty
to file a written statement. A written statement dated 29th April 2014
was then filed.

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10.With the assistance of Mr. Pinto, learned counsel appearing on
behalf of the defendants, I have carefully considered the entirety of
this written statement. I have made every effort to find in it a single
specific denial as required under Order VIII Rule 5 of the Code of
Civil Procedure, 1908 of the specific case pleaded by the plaintiff. I
find none. The only case that seems to have been made is that the
deed of gift is void for want of registration. An allegation is made that
it is fraudulent strategy. No particulars of fraud are pleaded. There is
no denial of any paragraph of the plaint, including in particular

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paragraphs 6 and 8. It was imperative for the defendant to have made
a specific traverse of these paragraphs. Most telling of all is that there
is no denial anywhere in the written statement that the plaintiff was
in possession of the suit flat at the relevant time. The word possession
is, indeed, not used even once in the written statement.

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11.Mr. Shroff learned counsel for the plaintiff’s relies on the
decision of the Supreme Court in Tax Recovery Officer-II, Sadar,
Nagpur Vs Gangadhar Vishwanath Ranade.1 In that decision, the
Supreme Court examined the effect of Rule 11 of Schedule II to the
Income Tax Act. In paragraph 9, the Supreme Court said that TRO
must examine who is in possession of the property sought to be
attached and in what capacity. The only property that is capable of
attachment is property in possession of the assessee in his own right or
in the possession of his tenant or a third party on behalf of the
assessee. The TRO cannot declare any transfer made by the assessee in
favour of a third party void. If the department finds that the property
is transferred by the assessee to a third party with fraudulent intent, it
must file a suit under Rule 11(6) to have the transfer so declared. No
such suit has been filed by the TRO. In the present written statement,
there is no denial of the plaintiff’s possession of the property. A bald
averment assertion is made that the transfer is fraudulent and illegal
for want of registration. Want of registration will not render the
transaction void. It is, on payment of the necessary penalty and
interest, a curable irregularity. It might be that title may not fully pass
to a party unless the document is registered. Want of registration by
itself does not establish fraudulent intent. It also does not establish a
lack of possession.

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12.In paragraph 10 of its decision in Gangadhar Vishwanath
Ranade, the Supreme Court held that the provisions of Rule 11 are

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1 (1998) 6 SCC 658

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analogous to those of Order 21 Rules 58 to 61 and 63 of the C.P.C.
prior to the 1976 amendment. Where the property attached is
claimed by third party, i.e. not the assessee, that third party may
adduce evidence to show that he is in possession “under some kind of
title” and if he does so that property must be released from the
attachment. This procedure is not to decide intricate questions of law
as to the title of the property. A claimant can always institute a suit.
In defence, the revenue can take stand that the transfer was
fraudulent., that no title passed and that third party claimant was
never in possession. But that plea must must necessarily be both
pleaded and proved. The rules of Civil Procedure Code in a civil suit
will apply as much to the Revenue and to the Tax Recovery Officer as
they due to any other party. I am unable to accept Mr. Pinto’s
suggestion that I must read in to the written statement an implicit
denial of the plaintiff’s case. I do not think that a fair reading of
Order VIII Rule 5 allows me to do so. The case of the plaintiff is
explicit and clearly stated. He claims title. He claims possession. Even
if there is not line by line and paragraph by paragraph traverse of the
plaint, these two facts must be specifically denied. There is no specific
denial of title. The only case is that the document of title on which
the plaintiff relies suffers from a want of registration. As to the
plaintiff’s claim to have been in possession there is no denial at all.

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13.Mr. Pinto then attempts to support his case by referring to a
findings of the Tax Recovery Officer. These are entirely irrelevant.
Rule 11 of Schedule II to the Income Act reads as follows:

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11.(1) Where any claim is preferred to, or any
objection is made to the attachment or sale of, any
property in execution of a certificate, on the ground that
such property is not liable to such attachment or sale,
the Tax Recovery Officer shall proceed to investigate the
claim or objection:

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Provided that no such investigation shall be made
where the Tax Recovery Officer considers that the claim
or objection was designedly or unnecessarily delayed.

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(2)Where the property to which the claim or
objection applies has been advertised for sale, the Tax
Recovery Officer ordering the sale may postpone it
pending the investigation of the claim or objection, upon
such terms as to security or otherwise as the Tax
Recovery Officer shall deem fit.

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(3)The claimant or objector must adduce evidence to
show that-

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(a)(in the case of immovable property) at the
date of the service of the notice issued under this
Schedule to pay the arrears, or

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(b)(in the case of movable property) at the
date of the attachment, he had some interest in,
or was possessed of the property in question.

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(4)Where, upon the said investigation, the Tax
Recovery Officer is satisfied that, for the reason stated in
the claim or objection, such property was not, at the said
date, in the possession of the defaulter or of some
person in trust for him or in the occupancy of a tenant or
other person paying rent to him, or that, being in the
possession of the defaulter at the said date, it was so in
his possession, not on his own account or as his own
property, but on account of or in trust for some other
person, or partly on his own account and partly on
account of some other person, the Tax Recovery Officer
shall make an order releasing the property, wholly or to
such extent as he thinks fit, from attachment or sale.

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(5)Where the Tax Recovery Officer is satisfied that
the property was, at the said date, in the possession of
the defaulter as his own property and not on account of

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any other person, or was in the possession of some
other person in trust for him, or in the occupancy of a
tenant or other person paying rent to him, the Tax
Recovery Officer shall disallow the claim.

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(6)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.

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14.The provisions of Rule 11(6) are unambiguous. The plaintiff is
entitled to maintain the suit. He has done so to establish the right he
claims. The order of the Tax Recovery Officer is, in the specific words
of Rule 11(6), subject to the result of this suit. Mr. Pinto’s submission
appears to be exactly the reverse: that this suit is not maintainable
because of the findings of the Tax Recovery Officer. That submission
needs to be stated to be rejected

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15.The result is that there is before me a plaint with a specific case
set out. There is a written statement in substitution of the affidavit in
reply. In that written statement there is no specific denial. Material
proposition of facts and of law are asserted by the plaintiff, but not
denied by the defendants. The result is inevitable. There is no issue
that can be drawn in this suit. The parties can not be said to at issue
on any matter for want of any specific denial and a proper pleading
by the defendants.

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16.The provisions of Order 15 Rule 1 allow me to pronounce
judgment at once where at the first hearing of the suit it is apparent
that the parties are not at issue on any question of law or fact. There
are no other materials before me today on which I could, in addition
to the pleadings, frame any issue.

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17.There is, therefore, no question of taking this suit to trial at all.
In a case like this, the plaintiff would be entitled to succeed in the
same manner as if the defendant had filed no written statement
whatever. Strictly speaking since there is a document styled as written
statement filed, this may not constitute a ex-parte decree. The effect,
however, is indistinguishable. The result is that the plaintiff must
succeed. There will, therefore, be a decree in favour of the plaintiff in
terms of prayer clauses (a) (b) and (c) which read as follows:

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(a)It be declared that the plaintiff has interest in and is
possessed of the suit flat being flat no. 12-C, Atlas
Apartment, 11, (J.M. Mehta Marg) Harkness Road, Mumbai
– 400 006 since 5th August 1993 and was in lawful
possession of suit flat and had interest in suit flat on the
26th May 2005;

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(b)It be declared that the letters dated 26th May 2005
and order dated 26th Mach 2008 are null void and of no
effect and are not binding upon the plaintiff;

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(c) The defendants be restrained by an order and injunction
of this Hon’ble Court from in any manner proceeding
against the said flat No. 12-C Atlas Apartment, 11, (J.M.
Mehta Marg) Harkness Road, Mumbai 400 006 or the share
of the Plaintiff in the said flat, for recovery of dues of the
defaulting assessee Mr. B.M. Patel;

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18.It is clarified that the suit flat i.e. flat no.12-C, Atlas
Apartments, 11, Harkness Road, Mumbai - 400006, shall stand
discharged from all attachments levied by the defendants.

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19.Decree to be drawn accordingly. Sealing of the decree is
dispensed with.

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(G. S. PATEL, J.)

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Naman M. Patel v. Union of India and Anr.

Case brief

What is this about?

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Naman M. Patel v. Union of India and Anr.

Case brief

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What did the court decide?

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