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TMI Blog1971 (1) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... e defaulter or his representative-in-interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any civil court issue any process against such property in execution of a decree for the payment of money. " Although a pure question of law has been referred for opinion, it seems necessary to state the material facts very briefly. The respondent bank had advanced a certain sum of money to the Cawnpore Rolling Mills (Private) Ltd. Appellant No. 1, Suraj Prasad Gupta, at the relevant time was the managing director of the said company. Appellant No. 2 is his brother. To secure the loan which was advanced by the bank to the company, the two appellants stood sureties and mortgaged bungalow No. 14/26, Civil Lines, Kanpur, to the bank on April 21, 1964. The loan in question not having been paid, the bank filed Suit No. 25 of 1966, both against the principal debtor, that is, the company and the two sureties, namely, the present appellants. In the suit a compromise decree was passed on April 16, 1966. This was a decree for sale under Order XXXIV, rule 5 of the Civil Procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sale of the assessee's immovable property ; (c) arrest of the assessee and his detention in prison ; (d) appointing a receiver for the management of the assessee's movable and immovable properties. In the Income-tax Act itself there is no substantive provision for superseding or overriding the claim or rights of a secured creditor of the assessee. Schedule II mentioned in section 222 contains statutory rules in accordance with which the modes of recovery mentioned in the section have to be exercised. Schedule II clearly, therefore, relates to procedure only and does not deal with substantive rights. It is true that arrears of income-tax can be realised from the person and property of the assessee by following any of the modes mentioned in section 222 of the Act. The provision for recovery of tax by any of the modes specified cannot, in the absence of any specific statutory provision, take away the rights of any third party in whose favour a mortgage security had already been created. When a mortgage is created a definite right accrues to the mortgagee and he acquires an interest in the very property itself which has been mortgaged to him. This interest cannot be denied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any right to execute the same and to realise the money by any of the modes mentioned in section 51 of the Code. It is only when ultimately the judgment-debtor does not pay or deposit the requisite sum within the time allowed by the court that the decree-holder gets a right to apply for passing a final decree for the sale of the mortgaged property. It will thus be seen that there is a clear difference between a decree passed in favour of a simple creditor for recovery of money which can be executed at once and a preliminary decree under Order XXXIV, rule 4, in favour of a mortgagee. To my mind, rule 16(1) of Schedule II of the Income-tax Act covers a decree for payment of money passed in favour of a simple creditor and not a final decree for sale passed in favour of a mortgagee or a secured creditor under Order XXXIV, rule 5, of the Code. If that were not so, under certain circumstances, a simple creditor who has obtained a decree for payment of money, in his favour may be placed at a more advantageous position than a creditor whose loan to the debtor is secured by a mortgage. A simple creditor may obtain a decree which may be executed very expeditiously and he may even be able to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween decrees in suits for recovery of money other than suits filed on the of a mortgage by a mortgagee is also to be found in Appendix D of the First Schedule to the Code. Form No. 2 of Appendix D relates to a simple money decree ; whereas form No. 5-A relates to a preliminary decree to be passed under Order XXXIV, rule 4, of the Code. It, therefore, appears to me, that a simple money decree, that is, a decree for recovery of money simpliciter cannot be placed in the same category as a preliminary decree passed in favour of a mortgagee or a secured creditor under Order XXXIV, rule 4 of the Code. Far less can a final decree for sale passed under Order XXXIV, rule 5, of the Code, be equate wit a simple money decree. I have already referred to section 51 of the Code. I may futher refer to some other provisions thereof. The expression " decree for the payment of money " or words to that effect are to be found in sections 34, 55, 58, 67 and 73 of the Code. I may refer to rule 11 of Order XX of the Code which enables the court in the case of a decree for the payment of money, to order, for any sufficient reason at the time of passing the decree, the payment of the amount decreed by inst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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