9911796707
TMI Blog1990 (7) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... kept in interim custody pending inquiry by order dated December 30, 1989, passed by the same officer in exercise of his powers under rule 75 of the same Schedule. Ultimately, the final order was passed by the same officer against the petitioner under rule 76(1) of the same Schedule and that order is dated March 5, 1990, and, pursuant to that final order, the petitioner is detained in civil prison, Bhadra, Ahmedabad, under the said impugned order dated March 5, 1990, all throughout till date. In Special Criminal Application No. 157 of 1990, the petitioner has brought to challenge the order of his continuous detention, vide order dated December 30, 1989, which is an order passed under rule 75 of the Rules. He has challenged the mode of his incarceration pursuant to the said order by filing Special Criminal Application No. 387 of 1990, while he has challenged the final order of detention in civil prison dated March 5, 1996, by filing Special Criminal Application No. 721 of 1990. As all these three petitions are between the same contesting Parties and as they are concerned with the main question about the legality of the orders of interim arrest custody and detention in civil prison o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suant to the said order has become illegal as the petitioner can be detained in civil prison for a period of six months in all, as required by rule 77 of the Second Schedule and this period of six months will start not from March 5, 1990, the date of the final order, but from the date on which the petitioner's liberty was curtailed by ordering his arrest under rule 73(2) and which detention was continued under rule 75 from December 30, 1989. In short, it was contended that, in any case, six months' period of detention which is the maximum period of detention in prison contemplated by rule 77 should be counted from December 30, 1989. In that view of the matter, by June 30, 1990, six months' period has already come to an end and consequently, as on date, the petitioner forthwith be directed to be released from detention in civil prison. Replying to the aforesaid contentions, Mr. Raval, for the income-tax authorities, vehemently contended that the impugned order of March 5, 1990, when read in a comprehensive manner, does contain an implied satisfaction on the part of the Tax Recovery Officer that the requisite conditions under rule 73(1)(a) and (b) were satisfied and, hence, the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the impugned order dated March 5, 1990, at annexure 'A' to Special Criminal Application No. 721 of 1990 is null and void being de hors the provisions of rule 73(1) read with rule 76(l) of the Second Schedule to the Income-tax Act, 1961. (2) Whether the ceiling of six months for detention in civil prison as provided by rule 77 includes the periods during which the alleged defaulter remained in custody after arrest ordered under rule 73(2) and during the period he remained in interim custody of the officer as directed by the Tax Recovery Officer in exercise of his powers under rule 75 or whether the six month period will start only after the final order is passed under rule 76(1), viz., from March 5, 1990, onwards. (3) What appropriate final orders can be passed by this court in the present proceedings. Before we proceed to take up for consideration these points for determination, it would be appropriate to have a look at the background facts which are admitted or which are well-established on the record of the case and in the light of which these points for determination were pressed for our consideration by the rival parties. Background facts : As stated by the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax arrears from the petitioner but the certificate has become otiose in view of the quashing of the assessment orders in appeal. However, so far as assessment year 1984-85 is concerned, the petitioner was assessed to income-tax and the income-tax dues of Rs. 6,69,635 were held payable for the said assessment year. Mr. Kapadia submitted that the petitioner has already filed an appeal against the said assessment order for assessment year 1984-85 but the appeal is being delayed for one reason Or the other and is still not decided. In the meantime, the Income-tax Officer initiated proceedings for recovering income-tax for the year 1984-85 and issued tax recovery certificate dated October 16, 1989. The said certificate was received by the Tax Recovery Officer somewhere in the closing months of 1989. The Tax Recovery Officer, for the reasons recorded in writing dated December 5, 1989, passed an order of arrest of the petitioner under rule 73(2) of the Second Schedule on the ground that the petitioner who is a foreign national was likely to go away from the local jurisdiction of the Tax Recovery Officer resulting in delayed execution of the certificate. It appears that the said arrest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery Officer under section 222. " Execution " in relation to a certificate means recovery of arrears in pursuance of the certificate ; while " officer " means a person authorised to make an attachment or sale under this Schedule. Rule 4 in Part I in the said Schedule prescribes the mode of recovery and indicates the very same four modes mentioned in section 222 referred to above. The Second Schedule deals with different modes of recovery. We are concerned in the present case with recovery of tax under the certificate, by the mode of arrest and detention of the defaulter. That mode is dealt with in Part V of the Second Schedule. It starts with rule 73 and ends with rule 81. It would be necessary to refer to the relevant rules in this part. Rule 73(1) provides for notice to show cause and states that no order for the arrest and detention in civil prison of a defaulter shall be made unless the Tax Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to civil prison and unless the Tax Recovery Officer, for reasons recorded in writing, is satisfied: ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inquiry, the Tax Recovery Officer may make an order for the detention of the defaulter in civil prison and shall, in that event, cause him to be arrested if he is not already under arrest. Under the proviso to rule 76(1) in lieu of passing of an order of detention, the Tax Recovery Officer may give an opportunity to the defaulter to satisfy the arrears. Then occurs rule 77 which lays down the ceiling in connection with detention in civil prison. It states that every person detained in the civil prison in execution of a certificate may be so detained : (a) where the certificate is for a demand of an amount exceeding Rs. 250 for a period of six months, and (b) in any other case for a period of six weeks. Rules 78 and 79 deal with release of the defaulter after detention in contingencies provided in these rules. They further provide that if a defaulter is rearrested, the period of his detention in the civil prison shall not in the aggregate exceed that authorised by rule 77. Rest of the rules in this part are not material for our purpose and hence we need not mention them. The present controversy will have to be resolved in the background of the aforesaid statutory provisions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defaulter has failed to discharge the liability, I hereby order that the defaulter shall be committed to the civil prison situated in the city civil court compound, Bhadra, Ahmedabad, under rule 77 of the Second Schedule to the Income-tax Act, 1961, for six months from the date of his committal." The aforesaid satisfaction recorded in the order clearly indicates that the Tax Recovery Officer thought it fit to pass the impugned order under rule 76(1) only because he was satisfied that the conditions in rule 73(2) were satisfied. Now, what he is expected to decide was as to whether the conditions precedent as laid down in rule 73(1)(a) or (b) Were satisfied or not. Unless either, of these conditions or, both are satisfied, the Tax Recovery Officer will not have jurisdiction to pass the final order of detention under rule 76(1) read with rule 73(l). Such satisfaction is nowhere recorded in the impugned order. Mr. Raval for the Revenue was at pains to point out to us that such satisfaction can be said to be implicit in the order as he had noted the events that happened during the inquiry before him. That he has noted that the defaulter was called upon to furnish details about his ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould legitimately be satisfied that the defaulter was likely to leave the local limits of his jurisdiction and that will have effect of delaying the execution of the certificate. In fact, the effect would be that the execution of the certificate would be totally frustrated once the defaulter goes to Pakistan. But, Mr. Kapadia's submission was that there was no affidavit before the Tax Recovery Officer at the stage of passing of the arrest order under rule 73(2). However, rule 73(2) provides that even otherwise on any other available material, the Tax Recovery Officer can be satisfied and even order interim arrest. This was done by him as early as on December 22, 1989. But even if the circumstances then existing and which are existing till date might have enabled the Tax Recovery Officer to order interim arrest under rule 73(2), the satisfaction underlying that order had nothing to do with the requisite satisfaction required to be reached by the Tax Recovery Officer while ordering final detention of the defaulter in civil prison under rule 76(1). The affidavit-in-reply filed by the Tax Recovery Officer also avers that the requisite satisfaction arrived at by him for passing the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciples are well-settled and even the provisions of rule 73(1) read with rule 76(l) encompass the requisite conditions precedent to the satisfaction in a given case before a defaulter can be detained in civil prison. On the facts of the present case, these conditions are not held satisfied and hence the impugned order of detention in civil prison cannot be sustained. Mr. Raval contended, placing reliance on Collector of Malabar v. Erimmal Ebrahim Hajee, [1957] 32 ITR 124 ; AIR 1957 SC 688 and Ram Narayan Agarwal v. State of U. P., AIR 1984 SC 1213, that arrest and detention in civil prison for recovering tax arrears do not amount to either preventive detention or punitive detention but are only a mode of recovery of public dues and consequently, if some coercion is found to have been exercised against a defaulter, it would not vitiate the exercise. There cannot be any dispute on these propositions which are well-settled. However, the moot point is whether the impugned order is in accordance with the rules and regulations or it is de hors and ultra vires these rules. In the present case, the order is ex facie contrary to rule 73(1) as discussed earlier. Point No. 2 : This point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e detained; (ii) such detention must be in civil prison and (iii) such detention must be in execution of the certificate. Mr. Kapadia submitted that, in the present case, all the three conditions are satisfied. Mr. Raval submitted to the contrary. Let us, therefore, consider as to whether the aforesaid three conditions for applicability of rule 77(1) are satisfied in the present case. At the stage of issuance of the interim arrest order under rule 73(2), there was no question of detaining the petitioner in civil prison. That occasion, had not arisen. It was merely an interim arrest order lasting for 24 hours and its purpose was to bring him before the Taxing Officer as laid down by rule 73(4) read with rule 74. That interim arrest was for the purpose of procuring the presence of the defaulter before the Tax Recovery Officer so that hearing can be given to the defaulter in the inquiry against him. Consequently, the order of interim arrest cannot be said to be detention of the defaulter in civil prison in execution of the certificate. So far as interim custody as provided by rule 75 is concerned, Mr. Kapadia is right when he contends that rule 75 deals with detention, but in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erim custody pursuant to the orders passed under rule 75 or any time spent after interim arrest as per rule 73(2). We may mention at this stage the apprehension voiced by Mr. Kapadia. He submitted that if this construction is adopted on the applicability of rule 77(1), then in that case, a Tax Recovery Officer may deliberately or otherwise prolong the inquiry pending interim custody under rule 75 for more than six months and thereafter pass a final order of detention and the result would be that the defaulter may remain in detention for more than one year. This is neither here nor there. If it was the intention of the rule-making authority to avail of such a contingency and to club such period of interim custody with the period of final detention, rule 77(1) would have been suitably amended or drafted. But that has not been done. It is also pertinent to note that there was no provision like section 428 of the Criminal Procedure Code in rule 77. Even prior to the enactment of section 428, many times it used to happen that imprisonment as an under-trial prisoner used to exceed even the final period of sentence of conviction imposed upon the concerned offender. With a view to plugging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Supreme Court in the case of Comptroller and Auditor-General of India v. K. S. Jagannathan, AIR 1987 SC 537, that, in exercise of the powers under article 226 of the Constitution, we can pass the same orders which the subordinate authority can pass. In this connection, he invited our attention to the following pertinent observations made by <?xml:namespace prefix = st2 /> Madon I. , speaking for the Supreme Court (headnote) : " The High Courts exercising their jurisdiction under article 226 have the power to issue a writ of mandamus or a writ in the nature of mandamus or to pass orders and give necessary directions where the Government or a public authority has failed to exercise or has wrongly exercised the discretion conferred upon it by a statute or a rule or policy decision of the Government or has exercised such discretion mala fide or on irrelevant considerations or by ignoring the relevant considerations and materials or in such a manner as to frustrate the object of conferring such discretion or the policy for implementing which such discretion has been conferred. In all such cases and in any other fit and proper case, a High Court can, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That it appears that the petitioner is suppressing his real financial capacity and he is out to defraud the Revenue. Consequently, the interest of justice demands that we permit the Tax Recovery Officer to come to an appropriate finding as required by rule 73(1) read with rule 76(l). That such an exercise was never undertaken by the Tax Recovery Officer earlier. That this is not case in which an exercise was undertaken by reaching a finding under rule 73(1) in connection with the conditions precedent. If such an exercise was once undertaken by the Tax Recovery Officer and it was found to be unsustainable on records, the question of giving a second innings to the Tax Recovery Officer might arise but as we ourselves have held, the order shows that the Tax Recovery Officer addressed himself to rule 73(2) satisfaction and passed the final order under rule 76(1). Thus, he has, until now, not considered even once whether the conditions precedent for passing an order under rule 76(1) read with rule 73(1) had existed or not in the case of the petitioner and licence, that opportunity, if given in the interest of justice, on the peculiar facts of this case, would amount to giving such oppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 5, 1990, and it would stand exhausted accordingly. This fair concession on the part of the respondents allays any fear that the petitioner may have, viz., that if a fresh detention order is passed, he will be further detained for six more months. In fact, such a fear would be totally uncalled for in the light of the express language of rule 77 and the concession given by the learned advocate for the Revenue which is not only fair but is well-justified in the light of the statutory settings of the aforesaid provisions. Consequently, we deem it fit to pass the following order: (1) Even though the impugned order dated March 5, 1990, is quashed and set aside, the petitioner will not be released from civil detention but in the first instance, from the date of our present order, he will be treated to be in interim custody as per rule 75 of the Rules and the officer in charge of the civil prison at Bhadra, Ahmedabad, will keep the petitioner in custody pending further orders of the Tax Recovery Officer as indicated hereinbelow. This interim custody will be for a period of two weeks from our present order. In the meantime, the Tax Recovery Officer is directed to issue a show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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