TMI Blog1986 (11) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... OZA J.- This appeal arises out of a certificate granted by this court. The facts necessary for the disposal of this appeal are that respondent No. 1, Union of India, filed a suit against the petitioner [appellant]. The petitioner [appellant] is a public limited company. Respondent No. 2 which is also a public limited company was the assessee-company and the Union of India, respondent No. 1, had to recover a sum of Rs. 1,32,400-87 from the said assessee company on account of arrears of income-tax, excess profits tax and business profits tax. To recover this amount, a suit was filed on February 15, 1958, impleading therein besides the present appellant, the said assessee-company and others as defendants. It was alleged that the assessee-com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to the recovery proceedings undertaken by the competent authority under sections 46(2) and 46(5A) of the Act, the plaintiff had priority over all other unsecured dues and that the appellant-company was under an obligation to pay the amount of Rs. 1,32,400.87 under these circumstances. It was also alleged by the plaintiff-respondent (Union of India) that, notwithstanding the fact that the debt due by the appellant-company to the assessee-company was shown to the credit of the assessee-company in the books of account of the appellant-company, the appellant-company had subsequently set up a false theory that the assessee-company itself was liable to the appellant-company and that the appellant-company was not liable to pay dues of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the adjustment entries made by the appellant-company in its books of account were steps in this direction. Such entries or adjustments were illegal and they were not binding on the plaintiff inasmuch as the recovery proceedings had already been initiated against the assessee-company and that the adjustments and entries were false as was evident from the admissions made by the appellant-company in its letter to the plaintiff. A charge of fraud and collusion has been levelled against the appellant-company, the assessee-company and the other defendants. With these facts, the respondent, Union of India, instituted the present suit seeking a decree against defendants Nos. 1 to 5, i.e., the present appellant and the other defendants for an amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the appeal and maintained the decree passed by the trial court and on certificate against that judgment, the present appeal is filed in this court. The main contention advanced on behalf of the appellant was that a suit as filed by the respondent and the decree granted by the trial court was not permissible in law as it was contended that such proceedings for appointment of a receiver can only be contemplated in execution proceedings of decree against the original debtor. Facts are not in dispute. The learned judges of the High Court maintained the decree by coming to the conclusion that the amount of commission earned by the assessee-company was admittedly with the appellant. It was withheld by the appellant under the pretext that it had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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