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TMI Blog1986 (3) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... connected with or incidental to that of agriculture, Form No. 219 agreeing to pay interest at 2.05% per annum in addition to the nominal rate, executing the deed of hypothecation agreeing that the borrower's present and future plant and machinery, stock-in-trade lying at the business premises shall remain hypothecated. Defendants Nos. 2 and 3 also created an equitable mortgage by deposit of title deeds of the immovable property known as J-12, Green Park, New Delhi, in favour of the bank as security for repayment of all the loans advanced to the defendant. During the course of business transaction, the defendants failed and neglected to comply with the terms of the advance as a result of which the plaintiff had to file the present suit. Along with the suit, the plaintiff also filed an application I.A. No. 2974 of 1985 under Order 40, rule 1 read with Order 39, rules 1 and 2 of the Code of Civil Procedure. The plaintiff was granted ad interim temporary injunction restraining defendants Nos. 1 to 3 from alienating in any manner or parting with the possession or creating any charge on the property No. J-12, Green Park, New Delhi, as also the hypothecated plant and machinery, etc. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner is, therefore, not maintainable. (b) That the answering deponent is not a party to the litigation and is discharging his functions statutorily enjoyed under the Income-tax Act and this court is debarred from entertaining such like application. (c) That pursuant to the attachment effected under the Income-tax Act, the petitioner filed objections against the sale of the attached property which were duly dealt with by the answering deponent. The plaintiff, therefore, could avail of the statutory remedies rather than file the present application. On merits, almost the same objections were repeated except by further alleging that the income-tax dues have a priority over the property alleged to have been mortgaged which in this case was one subsequent to the accrual of rights to the Income-tax Department. The answering deponent is required under the law to realise the Government dues and as such is bound to enforce by way of sale of the immovable property of the defendants. The plaintiff, in these circumstances, has no prima facie case nor the balance of convenience lies in favour of the plaintiff and, as such, the application which is misconceived merits dismissal. After hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings; and even assuming that it was not competent, the application could be treated as an information of the existence of facts which would make it obligatory on the court to cease further execution of the decree; (ii) that the effect of rule 16 of Schedule II to the Income-tax Act, 1961, is that as soon as it was brought to the notice of the court that notice had been issued by the Tax Recovery Officer under rule 2 of the Schedule in relation to the property, it became the duty of the court to desist from any further process for realising the money sought to be realised in execution of the decree for the payment of money (iii) that, in view of the express provisions of rule 16 of Schedule II, it was not open to the court to adopt the alternative course suggested by the Commissioner, viz., to order sale of the property and utilise the sale proceeds firstly for paying the arrears of tax due from the judgment-debtors and then for meeting the liability under the decree." There is no quarrel with the proposition of law laid down in the above-cited authority but it is distinguishable from the facts of the present case. The judgment referred to above did not take into considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be strictly construed and no extended or wide meaning can be given to the language of rule 16(1). Rule 16 and in particular sub-rule (1) and the expression 'in execution of a decree for the payment of money' occurring therein must be given a restricted meaning. This expression is to be found in various provisions of the Code itself. On an examination of the same, vis-a-vis, certain other relevant provisions of the Code, it will, to my mind, be clear that the expression 'decree for the payment of money' does not include a decree passed under Order XXXIV, rule 5, for sale of a mortgage security." The law laid down in the above cited authority fairly and squarely applies to the facts of the present case. Learned counsel for the Department has not been able to distinguish this authority or to cite any contra authority. No other argument has been urged nor requires going into. I see no force in the objections. As already observed earlier, the order dated May 28, 1985, is hereby confirmed. JUDGMENT OF DIVISION BENCH The judgment of the court was delivered by D. K. KAPUR C.J.-We are hearing this appeal after a show-cause notice was issued. The interesting question is whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person who mortgages the property passes it to the mortgagee who has rights in the property which cannot be touched by the unsecured creditor. Faced with this situation, the bank was compelled to move an application to injunct anybody else from interfering with its security. This was why the application was moved for relief against the Income-tax Department who were not parties to the suit. As the security was in jeopardy, we feel that the law has to be construed in such a manner as to enable the court to safeguard the same. We are, therefore, of the view that, in these circumstances, section 151, Civil Procedure Code, has to be invoked in favour of the plaintiff even against the person who is not a party to the suit. Taking the reverse case, in the case decided by the Supreme Court in Builders Supply Corporation v. Union of India [1965] 56 ITR 91, the Union of India had appeared in the execution proceedings where the money was attached by the civil court in an execution case where the Union of India was not a party. The Union of India, in those proceedings, made an application under section 151, Civil Procedure Code, to claim that it has priority. The Union of India was the thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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