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TMI Blog2016 (10) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial and Financial Reconstruction (BIFR), as per the provisions of the Sick Industrial Companies Act, 1985 (SICA), by invoking the provisions of the Income Tax Act, 1961, pursuant to a proceeding dated 20.01.2016 issued by the respondent. 3. Proceedings dated 20.01.2016 of the Assistant Commissioner of Income Tax, New Delhi reads as follows: " To The Principal Officer, M/s.Tecpro System Ltd., 202-204, Pacific Square Mall JMD Campus Sector-15, Gurgaon Sub:- Assessee deemed to be an assessee in default u/s 201 of the Income Tax Act, 1961- reg. Please refer the above In this regard, it has been observed that during the course of survey operation u/s 133A of the Income Tax Act, 1961 on 20.01.2016 in your case at the above mentioned premises, you have deducted TDS amount of Rs. 17,43,74,191/- for the F.Y.2013-14, F.Y.2014-15 and F.Y.2015-16, which has not been deposited into the Govt A/c till date. In view of the same, you are hereby held as an assessee deemed to be in default u/s 201 of the Income Tax Act, 1961. Therefore, you are required to discharge this TDS liability of Rs. 17,13,74,191/- and interest of Rs. 5,31,87,872/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r counsel appearing for the petitioner submitted that the petitioner is an assessee only in the New Delhi office and not at Chennai. The petitioner also submitted their Income Tax Returns only at New Delhi office and not at Chennai office. Merely because the petitioner is having an office at Chennai the same will not confer territorial jurisdiction to this Court to entertain the writ petition. That apart, deducting TDS by the petitioner at Chennai will not confer territorial jurisdiction at Chennai. When the petitioner is an assessee in the office of the Income Tax Department at New Delhi, only the Courts at New Delhi shall have jurisdiction. The ratio laid down in the judgment of the Honourable Supreme Court reported in 2002 (1) SCC 567 [Union of India and others v. Adani Exports Ltd. and another] is against the contentions raised by the petitioner in respect of territorial jurisdiction. 6. As per Article 226(2) of the Constitution of India the power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial jurisdiction, I am not going into the merits of the case. In these circumstances, the writ petition filed by the petitioner is rejected on the ground of territorial jurisdiction. No costs. Consequently, connected miscellaneous petition is closed." 7. Assailing the correctness of the order and inviting the attention of this court to the proceedings of the Registrar, Board for Industrial and Financial Reconstruction dated 14.07.2014, learned counsel for the petitioner/appellant submitted that a case has been registered under Section 15(1) of the Sick Industrial Companies (Provisions) Act, 1985, the petitioner/appellant has a legal right to claim protection under the provisions of the said Act. Placing reliance on the decision of the Hon'ble Supreme Court in Raheja Universal Limited v. NRC Limited and others reported in (2012) 4 SCC 148, learned counsel for the petitioner/appellant submitted that when BIFR proceedings are pending, coercive action taken by the respondent vide order dated 20.01.2016 would amount to infringement of the right, by the respondent and that therefore there is a direct nexus to the limited relief of mandamus sought for in the writ petition and in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d established a full-fledged Corporate office at Siruseri IT Park, where 70% of the permanent employees are working. He has also stated that 90% of the payments are processed only at Chennai, as a result of which, books of accounts are maintained at Chennai. TDS deduction is also made at Chennai. Therefore, a strong nexus has been established between Chennai office and the lis relating to the subject matter in the notice dated 20.01.2016 of alleged non-deposit of TDS amount of Rs. 17,30,74,191/- for the assessment years 2013-14, 2014-15 and 2015-16 respectively. 11. It is also his contention that though the High Court of Delhi has jurisdiction to maintain a writ petition, it cannot be contended that the court at Madras has no jurisdiction for the reason that the infringement of right may take place or threat thereof. Considering the fact that entire records and assets are within the jurisdiction of this court, a writ is maintainable and according to him, while dealing with the maintainability of writ petitions, courts have to consider principle of jurisdictional equilibrium and if done, the instant writ petition is maintainable. It is also his submission that the petitioner/appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner M/s.Tecpro System Limited, 202-204, Pacific Square Mall, JMD Campus, Sector-15, Gurgaon, has been issued with Tan number at Delhi viz.TANDELT03519F has not been disputed. Survey operation under Section 133-A of the Income Tax Act, 1961 has been conducted on 20.01.2016 at No.202-204, Pacific Square Mall, JMD Campus, Sector-15, Gurgaon, and the same has also not been disputed. Proceedings of the Assistant Commissioner, Income Tax, New Delhi dated 20.01.2016 reads as follows: " To The Principal Officer, M/s.Tecpro System Ltd., 202-204, Pacific Square Mall JMD Campus Sector-15, Gurgaon Sub:- Assessee deemed to be an assessee in default u/s 201 of the Income Tax Act, 1961- reg. Please refer the above In this regard, it has been observed that during the course of survey operation u/s 133A of the Income Tax Act, 1961 on 20.01.2016 in your case at the above mentioned premises, you have deducted TDS amount of Rs. 17,43,74,191/- for the F.Y.2013-14, F.Y.2014-15 and F.Y.2015-16, which has not been deposited into the Govt A/c till date. In view of the same, you are hereby held as an assessee deemed to be in default u/s 201 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be giving the cheque of Rs. 25.00 lacs which may please be withheld for 3/4 days and by tis time we shall be sending the amount by RTGS and shall take back the cheque of Rs. 25.00 lacs. As regards the balance payment plan, it may kindly be noted that considering the present cash flow problem faced by the company, the proposal for balance payment needs to be discussed with all respective departments/customers and shall revert back to you in 10/15 days. Alternatively, we shall also propose certain customers from where we have to get major payment and the liability against TDS amount may please be collected from our customers directly on our behalf. As this issue needs to be discussed with our Project/Tech. Deptt., we request you to kindly bear with us and we shall resolve the pending liability as early as possible. It may kindly be noted that our company has been registered under sick, Industrial Companies (Special Provisions) Act, 1985 and the same was communicated to you vide our letter TSL/BIFR/15-16/ dated 21.09.2015. With due respect, we would also like to highlight over here that during the course of operation of the business, our various customers have dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were sent/made at Ahmedabad. The credit of duty claimed in respect of exports were received at Ahmedabad and payments were also received at Ahmedabad. Non-granting and denial of utilisation of the credit in the passbook would affect the business of the petitioners at Ahmedabad, respondents 1 to 3 in the civil applications have Regional offices at Ahmedabad, substantial cause of action has arisen within the jurisdiction of the said court. The objection of Union of India/appellant before the Apex court was that passport licence was issued at Chennai, the designated authority was at Chennai, the transaction concerned was made from Chennai port and therefore the cause of action arose at Chennai. On the above facts and circumstances, the Hon'ble Apex court in Adhani Export Limited's case at paragraph Nos.16 and 17 held as follows: "16. It is clear from the above constitutional provision that a High Court can exercise the jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises. This provision in the Constitution has come up for consideration in a number of cases before this Court. In this regard, it would suffice for us to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itute a cause of action giving rise to a dispute which could confer territorial jurisdiction on the courts at Ahmedabad." 20. In Kusum Ingots & Alloys Ltd. vs. Union of India and Another reported in (2004) 6 SCC 254, the appellant company was registered under the Companies Act with the Registered office at Mumbai. It obtained a loan from Bhopal branch of State Bank of India. The bank issued notice for repayment. Questioning the vires of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, a writ petition was filed, which was dismissed on the ground of lack of jurisdiction. At paragraph 18, the Apex Court held as follows: "18. The facts pleaded in the writ petition must have a nexus on the basis whereof a prayer can be granted. Those facts which have nothing to do with the prayer made therein cannot be said to give rise to a cause of action which would confer jurisdiction on the court." However, at paragraph 30, the Apex Court observed as follows: "30. We must, however, remind ourselves that even if a small part of cause of action arises wihtin the territorial jurisdiction of the High Court, the same by itself may n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the territory of State of Bihar. One of the facts pleaded by the appellant before the Apex Court was that he was a permanent resident of Bihar, asserted his rights in the State of Bihar and all the communications with respect to rejection of his claims were made at his residential address in the State of Bihar. Thus on the above facts and circumstances and taking note of the insertion in clause 1A to Article 226 of the Constitution of India (XV Amendment Act 1963) and subsequently renumbered as Clause 2 by the Constitution (XLII Amendment Act, 1976), the Hon'ble Apex court has observed as hereunder: On a plain reading of the amended provisions in Clause (2), it is clear that now High Court can issue a writ when the person or the authority against whom the writ is issued is located outside its territorial jurisdiction, if the cause of action wholly or partially arises within the courts territorial jurisdiction. Cause of action for the purpose of Article 226 (2) of the Constitution, for all intent and purpose must be assigned the same meaning as envisaged under Section 20(c) of the Code of Civil Procedure. The expression cause of action has not been defined either in the Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FR and in the light of the dictum in Raheja Universal Ltds case, the revenue demand could be allowed pending BIFR and in such circumstances, if coercive steps are taken the assessee's right is likely to be infringed and therefore, when attention of BIFR proceedings was brought to the notice, the writ court ought to have entertained the writ petition, as the properties/assets are in Chennai and thus a part of cause of action has arisen within the jurisdiction of this court. It is the submission of the learned counsel that when there is a threat of infringement of a right, and to that extent facts are pleaded in the petition, as to how cause of action has arisen for filing the writ petition within the jurisdiction of this court, the writ court has failed to advert to the same. 25. In Mansarover Commercial Pvt. Ltd. & Anr. vs. Assistant Commissioner of Income Tax & Ors. reported in 1994 (209) ITR 0715 the registered Office of the company was in Gangtok, Sikkim they are carrying on business as Commission Agents of Cardamon and other agricultural produce, in Sikkim. It had no office or agent outside Sikkim. Income Tax authorities at Delhi issued notices alleging non-compliance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action arises wholly or in part, will have jurisdiction. This would mean that even if a small fraction of the cause of action (that bundle of facts which gives a petitioner, a right to sue) accrued within the territories of Andhra Pradesh, the High Court of that State will have jurisdiction. 10. In this case, the genesis for the entire episode of search, seizure and detention was the action of the security/intelligence officials at Hyderabad Airport (in Andhra Pradesh) who having inspected the cash carried by him, altered their counterparts at Chennai Airport that the appellant was carrying a huge sum of money, and required to be intercepted and questioned. A part of the cause of action therefore clearly arose in Hyderabad. It is also to be noticed that the consequential income tax proceedings against him, which he challenged in the writ petition, were also initiated at Hyderabad. Therefore, his writ petition ought not to have been rejected on the ground of want of jurisdiction." From the above judgment, it could be deduced that though seizure was effected in Chennai, when the proceedings under the Income Tax Act were initiated at Hyderabad, the Hon'ble Apex Court held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, though the petitioner has contended that the right under BIFR is likely to be infringed and that there is a threat if the respondent is not restrained by a writ of mandamus sought for, this court is not inclined to accept the said contentions for the reason that what is sought to be achieved indirectly is to nullify the effect of the order dated 20.01.2016 of the Assistant Commissioner of Income Tax, TDS, New Delhi, without there being any challenge to the same. It is well settled that what cannot be done directly, cannot be done indirectly, or permitted to be done. Averments made, are nothing but challenge to the proceedings of the Assistant Commissioner of Income Tax, New Delhi on the grounds of infrignement of right or threat thereof. Thus in the normal course, if the appellant had to challenge the orders, the same would have been done, at New Delhi, which the appellant, in a way has also admitted that, if there was any challenge to the orders and prayer made for certiorari, an objection as to maintainability of the writ petition on territorial jurisdiction, can be made. No materials have been placed before this court as to whether order dated 20.01.2016 has been challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issue directions, orders or writs to any Governments, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories 32. Reading of Sub-Article (1) of Article 226 indicates that every High Court has the power throughout the territories in relation to which it exercise jurisdiction namely, to issue any person or authority, including in appropriate cases any Government within those territories directions, orders or writ for the enforcement of any rights conferred by Part III and for any other purpose. Under sub-Article (2) of Article 226, High Court can exercise its power conferred by clause (1) if it is shown that cause of action wholly or in part has arisen within the territory within which it exercises jurisdiction notwithstanding the seat such Government or authority or residence of such person is not within those territories. Plain reading of Article 226 of the Constitution, it is manifestly clear that High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Board for Industrial and Financial Reconstruction (BIFR), as per the provisions of the Sick Industrial Companies Act, 1985 (SICA), by invoking the provisions of the Income Tax Act, 1961, pursuant to a proceeding, dated 20.01.2016, issued by the respondent, arises out of a survey operation, under Section 133A of the Income Tax Act, 1961, on 20.01.2016, conducted at the principal office, at Delhi and consequentially, the appellant has been informed to pay TDS deducted, failing which, recovery proceedings would be initiated by the competent authority at New Delhi. The petitioner/appellant may have a right to pursue his remedy before BIFR, at New Delhi. But on the facts and circumstances of this case, no part of cause of action has arisen, either wholly or in part, within the territorial jurisdiction of this Court, so as to enable this Court to examine, as to whether, the petitioner's legal right has been infringed. 36. Insofar as the action taken by the Assistant Commissioner of Income Tax, New Delhi, respondent herein, the same can be tested only by the Court, within the territorial jurisdiction, where cause of action has arisen. The actual lis or dispute involved, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clear that for the purpose of deciding whether facts averred by the petitioner appellant, would or would not constitute a part of cause of action, one has to consider whether such fact constitutes a material, essential, or integral part of the cause of action. It is no doubt true that even if a small fraction of the cause of action arises within the jurisdiction of the Court, the Court would have territorial jurisdiction to entertain the suit/petition. Nevertheless it must be a 'part of cause of action', nothing less than than." 40. Order of the learned single Judge does not call for any interference. This Court also taken note of the observation of the Hon'ble Supreme Court, at Paragraph 30 of the judgment in Kusum Ingot's case. On the facts and circumstances of this case, we are not inclined to accept the contention of the appellant that the Courts should on the doctrine of jurisdictional equilibrium. 41. In the light of the above discussion and decisions, this Court is of the considered view that the appellant has not made out a well considered case, for entertaining a writ petition, within the jurisdiction of this Court. 42. In the result, writ appeal is di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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