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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 ..... s 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 Code (hereinafter referred to as " the Code "). It appears that there was some mistake in the decree and an application was made by the judgment-debtors for correction of the decree on July 12, 1966. Thereafter, the decree appears to have been cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antive 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 to him unless a valid law is made in that behalf and, needless to say, such a law, if made, must not contravene article 31 of the Constitution. I am, therefore, of the opinion that nothing can be read in rule 16 of Schedule II of the Income-tax Act which m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lder 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 realise the decretal sum during the pendency of assessment proceedings against the judgment-debtor before any amount is found to be due from the judgment-debtor on account of income-tax and before any notice of demand on him has been served in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 instalments. This power which has been conferred on the court under the said rule cannot be exercised by the court in the case of a suit filed by a mortgagee or a secured creditor. This would also indicate that a suit for recovery of a simple debt and the decree ..... X X X X Extracts X X X X X X X X Extracts X X X X
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