Ram Taran Banerji v. Mrs. D.j. Hill

Ram Taran Banerji v. Mrs. D.j. Hill

(Federal Court)

.................... | 30-03-1949

Kania, C.J.:—

1. I have read the judgments prepared by Mahajan, J. and Mukherjea, J. I agree with the reasoning and conclusion of their judgments and have nothing to add.

 S. Fazl Ali, J.:—

1. I agree.

 Patanjali Shastri, J.:—

1. I. agree.

 Mahajan, J.:—

1. This appeal is directed against a remand order of a Division Bench of the Calcutta High Court, by which the decree of Subordinate Judge of the Fourth Court of Zilla 24:—Parganâs at Alipore in Original Suit No. 30 of 1942 was set aside.

2. Shortly stated, the facts are that, on February 24, 1933, one Mrs. D.J. Hill effected a mortgage of premises Nos. 19 and 20, Ekbalpur Lane, Kidderpore, 2A-Parganâs, in favour of Rai Ramtaran Banerji Bahadur in the sum of Rs. 10,000. An additional amount of Rs. 2,000 was borrowed on June 8, 1933, on the same security. On June 21, 1939) a suit was instituted to recover the amount due at the foot of these two transactions. A final decree was passed in the suit on April 12, 1940, for a sum of Rs. 19,755-15. Execution was then taken out and the mortgaged property was sold for Rs. 43,300 on July 19, 1940. The price fetched at the auction satisfied the amount due on the decree to the extent of Rs. 20,518-14-6 and the balance was deposited in court in the account of the judgment-debtor. The sale was confirmed on August 21, 1940, and possession to the auction-purchaser was delivered on August 24, 1940. The amount deposited in court was withdrawn by the judgment-debtor and her creditors on September 3, 1940, and the execution case was dismissed as finally satisfied on September 9, 1940.

3. It is thus clear that all essential proceedings in execution of the decree terminated before September 1, 1940, when the Bengal Money-lenders Act came into force. It is further apparent that the suit was instituted after January 1, 1939, the date fixed by the Act as a terminus a qua for application of some of the provisions of the Act.

4. On August 30, 1941, Mrs. Hill filed the suit, out of which this appeal arises, for relief against excess interest included in the final decree in contravention of the provisions of the Act. The suit was dismissed by the Subordinate Judge on the finding that decrees passed after January 1, 1939 could not be re-opened under s. 36 of the Bengal Money-lenders Act, and the reliefs provided for in that section were only available with respect to decrees passed before that date, provided these had not been fully satisfied till then. The High Court, on appeal, reached a contrary conclusion and held that the reliefs allowed by the section were available to the plaintiff in the case and there was nothing in s. 30 which took away the court's jurisdiction to grant them.

5. The question to decide in the appeal is whether a decree passed after January 1, 1939, can be re-opened under s. 36 of the Act and relief given to the judgment-debtor in respect of excess interest included in it against the provisions of the Act.

6. It was argued that decrees passed after January 1, 1939, could not be re-opened under s. 36 of the Act, in as much as the section had exempted all decrees from its scope, except those passed in suits to which the Act applied, provided they had not been satisfied before that date. It was urged that decrees passed before January 1, 1939, could alone be satisfied before that date and such were the only decrees within the contemplation of the section and no others. Decrees passed after January 1, 1939, could not be satisfied before that date and consequently they were outside the exception contained in the proviso. It was also contended that the reliefs provided for in s. 36, being available to the borrower in the suit itself, there was no necessity to touch the decrees passed in such suits and these were protected from attack by the rule of res judicata. As regards decrees passed between January 1, 1939, and September 1, 1940 the date of the coming into force of the Act, it was said that the legislature had by oversight failed to legislate about them.

7. The question canvassed in this Court was not seriously argued before the High Court. The learned counsel appearing for the respondents in that Court made no attempt to support the decision of the Subordinate Judge on this point. In such a situation we might have declined to go into this matter; but, as the point was ably argued and may have to be decided hereafter, we consider it proper to pronounce finally on it, even though we have not the advantage of a considered decision of the High Court on it.

8. The relevant provisions of the Bengal Money-lenders Act concerning this issue are contained in s. 2, cls. (21) and (22), and ss. 30 and 36. Section 2 is the interpretation section and cls. (21) and (22) run thus:—

(21) “suit” includes an appeal;

(22) “suit to which this Act applies” means any suit or proceeding instituted or filed on or after January 1, 1939, or pending on that date and includes a proceeding in execution—

(a) for the recovery of a loan advanced before or after the commencement of this Act;

(b) for the enforcement of any agreement entered into before or after the commencement of this Act, whether by way of settlement of account or otherwise, or of any security so taken, in respect of any loan advanced whether before or after the commencement of this Act; or

(c) for the redemption of security given before or after the commencement of this Act in respect of any loan advanced whether before or after the commencement of this Act.

9. Retrospective effect has been expressly given to the Act by including within its scope loans advanced before its enforcement. So far as loans advanced after the coming into force of the Act are concerned, they are obviously within the ambit of a suit to which the Act applies. The definition includes within its scope proceedings in execution and by way appeal. Briefly summarized, the definition contemplates the existence of the following classes of decrees:—

(1) Those passed before January 1, 1939, regarding which an execution proceeding may be pending.

(2) Those passed before January 1, 1939, an appeal against which is pending or is filed on that date or after that date.

(3) Those passed after January 1, 1939, and before September 1, 1940, in suits instituted or filed on or after that date or pending then.

(4) Those passed after September 1, 1940, the date of commencement of the Act, on loans advanced before or after that date.

10. It is apparent, therefore, that out of the four kinds of decrees that would be in contemplation of the legislature in the definition of the expression “A suit to which this Act applies” only classes (1) and (2) could be in existence before January 1, 1939, and classes (3) and (4) could only come into existence after January 1, 1939, and September 1, 1940. Some decrees in classes (1) and (2) could be such as may have been satisfied by payment even though proceedings in execution or appeal were pending. The definition also includes within its scope:—

A proceeding in respect of any application relating to the admission or amount of a proof of a loan advanced before or after the commencement of this Act in any insolvency proceedings.

11. Section 30 is in these terms:—

Notwithstanding anything contained in any law for the time being in force, or in any agreement.

(1) no borrower shall be liable to pay after the commencement of this Act—

(a) any sum in respect of principal and interest which together with any amount already paid or included in any decree in respect of a loan exceeds twice the principal of the original loan;

(b) on account of interest outstanding on the date up to which such liability is computed, a sum greater than the principal outstanding on such date;

(c) interest at a rate per annum exceeding in the case of—

(i) unsecured loans, ten per centum simple,

(ii) secured loans, eight per centum simple, whether such loan was advanced or such amount was paid or such decree was passed or such interest accrued before or after the commencement of this Act:

(2) no borrower shall; after the commencement of this Act, be deemed to have been liable to pay before the date of such commencement in respect of interest paid before such date or included in a decree passed before such date, interest at rates per annum exceeding those specified in sub-clause (c) of cl. (1);………….

12. Under this section, no borrower is liable to pay after September 1, 1940, interest at a rate exceeding eight per cent on secured loans, even if inducted in a decree passed before that date (September 1, 1940). This is the substantive law on the question of a debtor's liability. In express terms in sub-s. (2) it is stated that on decrees passed before September 1, 1940, interest has to be reduced to the rate allowed by the section, whether these decrees came into existence before January 1, 1939, or after January 1, 1939. Decrees passed after September 1, 1940, are obviously governed by the provisions of this section. Section 36(1)(c) and (d) provides as follows:—

The court shall exercise all or any of the following powers as it may consider appropriate, namely, shall—

(c) release the borrowsr of all liability in excess of the limits specified in cls. (1) and (2) of s. 30;

(d) if anything has been paid or allowed in account on or after the first day of January, 1939, in respect of the liability referred to in cl. (c), order the lender to repay any sum which the court considers to be repayable in respect of such payment or allowance in account as aforesaid.

13. Excess interest paid after January 1, 1939, and before September 1, 1940, and included in a decree is made refundable. It cannot be, therefore, argued that the legislature failed to provide for a relief regarding excess interest included in decrees passed between January 1, 1939, and September 1, 1940. Qua these it provided a larger relief (i.e., of refund) than provided for elsewhere in the Act.

14. The present case falls within s. 30(2), because the decree was made before the commencement of the Act, namely, September 1, 1940, and excess interest is included in it, which is not allowed by the Act. To determine the amount of the excess it is necessary to re-open it.

15. Section 36 is in these terms:—

(1) Notwithstanding anything contained in any law for the time being in force, if, in any suit to which this Act applies, or in any suit brought by a borrower for relief under this section, whether heard ex parte or otherwise, the court has reason to Believe that the exercise of one or more of the powers under this section will give relief to the borrower, it shall exercise all or any of the following powers as it may consider appropriate, namely, shall—

(a) re-open any transaction and take an account between the parties;

(b) notwithstanding any agreement, purporting to close previous dealings and to create new obligations, re-open any account already taken between the parties;

(c) release the borrower of all liability in excess of the limits specified in cls. (1) and (2) of s. 30;

(d)…………..

(e) set aside either wholly or in part or revise or alter any security……..

Provided that, in the exercise of these powers, the court shall not—

(i) ……….

(ii) do anything which affects any decree of a court, other than a decree in a suit to which this Act applies which was not fully satisfied by the first day of January, 1939, or anything which affects an award made under the Bengal Agricultural Debtors Act, 1935.

Explanation.—A decree shall not, for the purposes of this section, be deemed to have been fully satisfied so long as there remains undisposed of an application by the decree-holder for possession of property purchased by him in execution of the decree.

(2)(a) ……….

(b) ………..

(c) ………..

(d) ……….

(e) ……….

(3) ………..

(4) ………..

(5)………..

(6) Notwithstanding anything contained in any law for the time being in force,—

(a) the court which, in a suit to which this Act applies, passed a decree which was not fully satisfied by the first day of January, 1939, may exercise the powers conferred by sub-ss. (1) and (2)—

(i) in any proceedings in execution of such decree, or

(ii) on an application for review of such decree made within one year of the date of commencement of this Act, and the provisions of rr. 2 and 5 of O. XLVII of the First Schedule to the Code of Civil Procedure, 1908, shall not apply to any such application;

(b) any court before which an appeal is pending in respect of a decree referred to in cl. (a) may either itself exercise the like powers as may be exercised under sub-ss. (1) and (2), or refer the case to the court which passed the decree directing such court to exercise such powers, and such court shall after exercise thereof return the record with the additional evidence, if any, taken by it and its findings and the reasons therefor to the appellate court and thereupon the provisions of r. 26 of O. XLI of the First Schedule to the Code of Civil Procedure, 1908, shall apply.

16. This section indicates the reliefs a court can grant where a judgment-debtor has been made liable on a contract for interest in excess of that provided for in this Act. It confers jurisdiction on court to re-open a transaction and take an account between the parties and release the borrower of all liabilities for excess interest. It further confers powers on the court in certain cases to direct refund of the amount of excess interest. The court is also empowered to revise a contract made between the parties. The proviso to the section prohibits the doing of anything which affects any decree of a court, “other than a decree in a suit to which this Act applies and which was not fully satisfied by January 1, 1939”. The words of the proviso “which was not fully satisfied by January 1, 1939” have furnished a plausible argument to the appellant in so far as he contends that, as no decree passed after January 1, 1939, could possibly be satisfied by that date, such decrees are outside the scope of the exception to the proviso. The language of the proviso in plain terms means: (1) that there is no jurisdiction to re-open decrees passed in suits to which this Act does not apply, and (2) that decrees passed in suits to which the Act applies can he re-opened. Such decrees are of four classes, as already indicated, and all of them are within the exception to the proviso, barring those that have not only been passed before January 1, 1939, but have also been satisfied before then. The words of the proviso “which was not fully satisfied by January 1, 1939” are in the nature of an exception to an exception and this exception also is of a very limited nature. Out of decrees passed in suits to which this Act applies, a few may have been passed and satisfied before January 1, 1939, and an immunity was given to them from the provisions of s. 36; otherwise it would have affected all of them. The language used in the proviso on its first reading creates a little hesitation as to its correct meaning; but when read with the interpretation clause and in the light of s. 30(2) and s. 36 (5) and (6), the doubt disappears. Once it is held that all decrees passed in suits to which the Act has application are outside the proviso, then the only decrees that remain within it in such suits are those which may have been passed before January 1, 1939, and were fully satisfied by that date. The general exception contained in the proviso concerns decrees in all other kinds of suits. In other words, there is one general exception provided for in the proviso; qua decrees in suits other than those to which the Act applies and then there is a limited exception provided therein for certain decrees passed in suits to which the Act applies.

17. Sub-section (6) of s. 36 provides a summary and an alternative remedy regarding decrees passed but not satisfied by January 1, 1939. Instead of a resort to a regular suit, in such cases relief can be claimed in execution, or by preferring a review within one year, or by raising the question before the court of appeal, if an appeal is pending. The legislature, in its anxiety to give relief to debtors, provided facilities to obtain in all possible ways, and the power to review was also enlarged with this object. It seems to me that any other interpretation of the section would produce strange results and would result in anomalies. The words of the section “which were not fully satisfied by January 1, 1939,” if interpreted in the manner suggested by the appellant's learned counsel, would exclude all decrees passed in suits, pending on January 1, 1939, or instituted after that date from the scope of the exception, to the proviso, because decrees which can be satisfied by January 1, 1939, can only be those passed antecedent to that date. This construction would produce a repugnancy between the two parts of the same section, the latter part providing that only decrees that came into existence before January 1, 1939, are within it and the earlier part saying that decrees passed in suits filed after January 1, 1939, are also included in it. Such a construction has to he avoided and, if it is not possible to avoid it, then these words have to be ignored, because otherwise the enactment qua decrees passed in suits to which the Act applies becomes, to all intents and purposes, useless. Any reference to decrees passed in suits to which the Act applies would have been unnecessary in the section. The construction suggested by the appellants also creates an anomaly, inasmuch as the result of it is that older decrees can be re-opened under s. 36 if not satisfied, while more recent ones in which excess interest against the law is included become immune from attack. In a statute framed to relieve debtors from excessive interest, such a construction is unsustainable. The words of a remedial statute must be construed so far as they reasonably admit so as to secure that the relief contemplated by the statute shall not be denied to the persons intended to be relieved.

18. At one time in the Calcutta High Court, some doubts were expressed as to the true meaning of the proviso, but the matter was clarified in Sailabala Dassi v. Harish Chandra De((1942) 46 C.W.N. 875). It was there rightly held that s. 36(a)(1) of the Bengal Moneylenders Act applied to a case where the decree was passed subsequent to January 1, 1929, in a suit to which that Act applied.

19. Reference was made to a decision of their Lordships of the Privy Council in Renula Basu v. Manmatha Nath Basu(I.L.R. [1945] 2 Cal. 449 : L.R. 72 I.A. 156). That case concerned an assignee and no relief could be claimed against him by reason of sub-s. (5) of s. 36. Emphasis was laid on the following passage in that judgment:—

It will be observed that the sub-section does not specifically mention a judgment or decree as one of the matters which the Court may reopen, but it is abundantly clear that it is intended to give the Court that power. The drafting of the section is unfortunate and obscure, but inasmuch as by the second proviso to sub-s. (1) it is enacted that in the exercise of its powers the Court shall not “do anything which affects any decree of a Court, other than a decree in a suit to which this Act applies which was not fully satisfied by January 1, 1939,” and as sub-s. (2) contains a variety of provisions as to what the Court may and may not do on reopening a decree, it is clear that the legislature intended that the power of reopening a transaction should extend to reopening a decree obtained by a lender which had not been fully satisfied by January 1, 1939 Their Lordships are also unable to agree with the opinion of the learned Judge as to s. 30 having no retrospective effect. In one sense this is true, because, as already pointed out in this judgment, all that the section by itself does is to give the borrower a defence as to quantum when sued. But when that section is read with section 36 it appears to their Lordships to be clear that the relief given by the section can be granted where relief under the Act is sought by a judgment-debtor in respect of a decree which had not been fully satisfied by January 1, 1939, and which must, therefore, have been obtained before the Act came into force.

20. This quotation does not help the contention of the appellants; on the other hand, it negatives it, as indicated by the words in italics. From this passage it cannot be inferred that the Privy Council ruled that no relief could be given regarding decrees passed after September 1, 1940.

21. The result, therefore, is that the appeal fails and is dismissed. with costs.

Mukherjee, J.:—

22. I agree that this appeal should be dismissed and I would like to say a few words indicating briefly the reasons which have weighed with me in holding the decision of the High Court to be correct. The material facts of the case lie within a short compass and are not in dispute, and, as they have been set out fully in the judgment of my learned brother Mahajan, J., it is not necessary for me to state them over again.

23. The appeal arises out of a suit commenced by the mortgagor plaintiff, who is the respondent before us, for re-opening of a mortgage decree passed against her, and for other consequential reliefs under s. 36 of the Bengal Money-lenders Act; and the whole controversy between the parties, so far as this Court is concerned, centres round the point as to whether, on a proper construction of the language of prov. (ii) to s. 36 (1), Bengal Money-lenders Act, the decree in question is liable to be re-opened under the provisions of the Act. The High Court has decided the question in favour of the plaintiff, overruling the contrary view taken by the trial judge, and the sole point for our consideration is whether the interpretation put by the learned Judges of the High Court, upon the language of the proviso mentioned above, is correct.

24. The Bengal Money-lenders Act, as its preamble shows, was passed to regulate and control money-lenders and money-lending transactions in Bengal. The reliefs intended to be afforded to borrowers are provided for in Chaps. VI and VII of the Act. Chapter VI fixes the maximum rate of interest legally recoverable from borrowers and the total amount which could be claimed as principal and interest in respect to any loan. Chapter VII, of which s. 36 forms a part, makes detailed provisions for re-opening of transactions and previous adjustments and settlements for the purpose of giving reliefs to which the borrower is entitled under the Act. Section 36(1) gives power to the court to re-open any transaction and take an account between the parties, to re-open any account already taken in spite of an agreement between the parties by which they purported to close their previous dealings, to relieve the borrower from liability to pay interest in excess of the limits prescribed by s. 30 of the Act and to give other consequential reliefs. As was pointed out by the Judicial Committee in Renula Basu v. Manmatha Nath Basu (I.L.R. [1945] 2 Cal. 449 : L.R. 72 I.A. 156), although the drafting of the section is unfortunate and obscure, there is no doubt that it contemplates re-opening of decrees, and this is apparent from the provision of sub-s. (2) of the section as well as that of the second proviso attached to sub-s. (1), which concerns us materially in the present case. The prov. (ii) to sub-s. 1 lays down that, in exercise of the powers conferred by the different clauses of the sub-section, the court shall not “do anything which affects any decree of a court other than a decree in a suit to which this Act applies which was not fully satisfied by the first of January, 1939.” The proviso thus puts a limitation upon the powers of re-opening transactions which the court can exercise under sub-s. (1), and it seems that the intention of the legislature is to keep decrees of court beyond the pale of these ameliorative provisions unless they come within the purview of the exception which the proviso lays down. Thus, before a decree could be touched or affected, two conditions would have to be satisfied: first, it must be a decree in a suit to which this Act applies and, secondly, it must not have been fully satisfied by January 1, 1939.

25. The erpression “a suit to which the Act applies” has been defined in s. 2(22) of the Act as meaning any suit or proceeding instituted or filed on or after January 1, 1939, or pending on that date and includes a proceeding in execution, provided the object of such suit or proceeding is the recovery of loan advanced before or after the commencement of the Act, or the enforcement of any agreement or redemption of any security as laid down in cls. (b) and (c) of the sub-section. It is not disputed that the first condition has been fulfilled in the present case, because the mortgage suit in which the decree was passed was instituted after January 1, 1939. The controversy narrows down to the short point as to whether the other requirement has been satisfied. The second condition is negative in its terms and, in order to comply with it, it has got to be shown that the decree was not fully satisfied by January 1, 1939. Taking the clause in its natural meaning, it can certainly be said that the plaintiff has fulfilled the requirement of this clause, inasmuch as the decree itself was passed subsequent to January 1, 1939, and ex hypothesi it could not be satisfied by that date. The appellant's contention is that it is not appropriate in ordinary language to speak of a decree passed after January 1, 1939, that it was not satisfied before that date. The language is certainly not happy, but mere inappropriateness of language would, not justify us in adopting an interpretation which leads to anomalous results and frustrates the very object of the legislation. It is more reasonable to hold, as Maxwell says (Maxwell's Interpretation of Statutes, 9th Ed., p. 85) that the legislature expressed its intention in a slovenly manner than that a meaning should be given to the words which could not have been intended.

26. It would be clear from the different sections of the Act that the intention of the legislature was to make its provisions retrospective to a considerable extent. Under s. 30 of the Act, the relief against excess of interest is provided for in all cases whether or not the loan was contracted before or after the commencement of the Act. Section 30, however, as was pointed out by the Judicial Committee in the case of Renula Basu v. Monmatha Nath Basu (supra) by itself does not affect judgments already obtained. A judgment-debtor could obtain relief as is provided for in s. 30 of the Act only by re-opening the decree, for which provisions are made in s. 36. It appears from the very definition of the expression “a suit to which the Act applies” as given in s. 2(22) of the Bengal Money-lenders Act, as well as the detailed provisions embodied in s. 36, that in the matter of re-opening, of decrees the legislature has taken January 1, 1939, as the material date and a decree could be re-opened only if the suit or any proceeding in connection with the decree was pending on or after January 1, 1939, and the decree itself was not fully satisfied by that date. If the contention of the appellant is accepted and all decrees passed after January 1, 1939, are deemed to be outside the purview of s. 36, for the simple, reason that it could not he appropriately said of them that they must not be satisfied by January 1, 1939, the result will be just the reverse of what the legislature has contemplated; and holders of decrees passed after January 1, 1939, would be entitled to no relief under the Act, and they would be in a worse position than those who had obtained decrees prior to that date.

27. As has been said above, the prov. (ii) to s. 36(1) of the Bengal Money-lenders Act lays down two conditions, one of which is cast in an affirmative and the other in a negative form. To fulfil the first condition, the decree has got to be passed in a suit to which the Act applies. Normally such a suit is one which is pending on or is instituted after January 1, 1939, and a decree passed in such suit could not possibly be satisfied before that date. It is true that if execution proceedings in connection with a decree passed before January 1, 1939, are pending on or after that date, the decree would still be deemed to be made in a suit to which the Act applies; hut, having regard to the explanation attached to the proviso to s. 36(1) which lays down under what circumstance a decree would be deemed to be fully satisfied for purposes of the Act, the cases in which such decrees could be fully satisfied by January 1, 1939, must be extremely rare. Other exceptional cases can also be conceived of where a decree, though passed prior to January 1, 1939, might still he pending in an appeal after that date and there might not be any inherent impossibility in such a decree being fully satisfied before the material time. It may be that the legislature had in mind these and similar other exceptional cases when it introduced the second clause in the proviso, but it would be inappropriate to suggest that the operation of the proviso is confined to such cases only. The result of such interpretation would he to make the proviso unworkable for all practical purposes, one part of it being, in the majority of cases, contradictory to the other.

28. To me it seems that the object of the legislature in inserting the second clause in the proviso to s. 36(1) is not to exclude decrees passed after January 1, 1939, from the benefit of the section, but only to lay down an additional requirement which has to be fulfilled in cases where the decree, though passed prior to January 1, 1939, could still be deemed to be made in suit to which the Act applies as defined in s. 2(22) and was consequently capable of being satisfied before that date. There could be no doubt that the legislature intended that no relief by way of re-opening of a decree should be granted if the decree was fully satisfied by January 1, 1939; and to attract the operation of the proviso, it must be established as a fact in case of a decree passed prior to January 1, 1939, that it remained unsatisfied partially at least at this relevant date. When, however, the decree was one made subsequent to January 1, 1939, it would ex hypothesi remain unsatisfied on that date, and it would be clearly within the intendment of the legislature to bring such cases within the purview of the proviso. This seems to me to be the plain interpretation of the language that has been used in prov. (ii) to s. 36(1).

29. I may add here that it is quite in consonance with established rules of interpretation that, when a negative condition in the shape of non-existence of a certain fact is prescribed as an essential pre-requisite to a particular legal result, the condition is deemed to be satisfied if the existence of the fact has been rendered impossible by circumstances. The Privy Council in the case of Renula Basu v. Manmatha Nath Basu (supra) adopted the same principle of interpretation while construing cl. (5) of s. 36 of the Bengal Money-lenders Act. That clause protects an assignee, for value, of a loan from the operation of s. 36, if the court is satisfied that the assignment to him was made bona fide and he had not received the notice referred to in s. 28(1)(a) of the Act. It could not be appropriately said of a pre-Act assignee that he had not received a notice under the provision of the Act, and it was argued before the Judicial Committee that the operation of the clause was confined to cases where the assignment took place after the passing of the Act. This contention was repealed and their Lordships held that the effect of upholding such a contention would be that an assignee, to whom no notice could be given, would occupy as bad a position as one who had received notice. The identical line of reasoning, in my opinion, could be applied to this case.

30. In my opinion, therefore, the view taken by the High Court is right and this appeal must fail and should be dismissed with costs.

Advocate List
Bench
  • Kania, C.J.
  • S. Fazl Ali
  • Patanjali Shastri
  • Mahajan
  • Mukherjee
Eq Citations
  • ILR (1950) 1 Cal 517
Head Note

1. The question of whether the orders passed under Sections 201(1) and 201(1-A) of the Income Tax Act, 1961 are invalid and barred by time having been passed beyond a reasonable period is answered in the negative by the Income Tax Appellate Tribunal. 2. At the relevant time, there was a debate on the question of whether TDS was deductible under the Income Tax Act, 1961, on foreign salary payment as a component of the total salary paid to an expatriate working in India. 3. The controversy came to an end vide judgment of the Supreme Court in CIT v. Eli Lilly & Co. (India) (P) Ltd. 4. The question on limitation has become academic in these cases because, even assuming that the Department is right on the issue of limitation still the question would arise whether on such debatable points, the assessee(s) could be declared as assessee(s) in default under Section 192 read with Section 201 of the Income Tax Act, 1961. 5. The assessees have paid the differential tax. They have paid the interest and they further undertake not to claim refund for the amounts paid. 6. In Eli Lilly & Co. (India) (P) Ltd. vide para 21, the Supreme Court has clarified that the law laid down in the said case was only applicable to the provisions of Section 192 of the Income Tax Act, 1961. 7. Leaving the question of law open on limitation, these civil appeals filed by the Department are disposed of with no order as to costs.