TMI Blog1975 (5) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... irections for filing affidavits were given and ultimately it appeared before me for hearing when I directed notices of this application to be served on all the accountable parties and also the purchasers at the Registrars of the properties mentioned in the application. Pursuant to such notices being given, affidavits have been filed by the auction purchasers. I may mention here that Prakash Krishna Mitter never appeared in spite of notice being served on him. The facts of this case appear to be somewhat interesting and give an idea how payment of large amount of revenue payable by way of estate duty can be delayed or avoided, taking advantage of the unsatisfactory machinery for realisation of the same. It appears that one Jiban Krishna Mitter of No. 2, Raja Raj Ballav Street, Calcutta, died on the 16th of September, 1955, leaving him surviving the defendant, Prakash Krishna Mitter, and one Sri Gopal Krishna Mitter two sons and Srimati Asalata Mitter, widow, since deceased. The said Krishna Mitter appears to have been a very wealthy person who left considerable movable and immovable properties including the premises No. 13, Arabinda Sarani, 40, Mahatma Gandhi Road, and 3(B), Nan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table persons preferred an appeal from the said assessment order dated the 30th of December, 1958, to the Central Board of Revenue and by an order dated the 29th of August, 1961, the Central Board of Revenue disposed of the said appeal by modifying the said order of assessment obviously reducing the liabilities of the said estate of Jiban Krishna Mitter. It is alleged by the petitioner that after giving effect to the said order of the Central Board of Revenue and after giving credit for the payments made up to 26th of March, 1974, a sum of Rs. 2,29,334.95 was found due and payable by the said accountable persons. A statement of the outstanding demands including statutory interest and penalty as on 26th of March, 1974, is set out in annexure " A " to the petition. It further appears that the said Srimati Asalata Mitter died on 23rd of November, 1961, leaving a will and the said Gopal Krishna Mitter and others were treated as accountable persons representing the estate of Srimati Asalata Mitter being the executors of her will. It is alleged by the plaintiff-company that in the usual course of its business the plaintiff-company lent and advanced diverse sums of money to the defendan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99,500 is now lying in the hands of the Registrar, Original Side, High Court. The petitioner alleges that the said properties belonged to the deceased, Jiban Krishna Mitter, and formed part of his estate after his death and as the accountable persons failed and neglected to pay the balance due on account of the estate duty payable in respect of the said estate, under section 74(1) of the Estate Duty Act, there is a first charge on the said properties and as such it is claimed by the petitioner that the said sale proceeds of the said properties being Rs. 99,500 is liable to be paid to the petitioner towards the pro tanto satisfaction of the outstanding estate duty liability of the estate of late Jiban Krishna Mitter and particularly the liability of Prakash Krishna Mitter in respect of the same. It is alleged that the said defendant, Prakash Krishna Mitter, either himself or through his authorised representative wanted time to clear all the dues of the said estate in respect of the estate duty payable. In fact, certificate proceedings have been initiated against the said Prakash Krishna Mitter, the defendant, but by some pretext or other, realisation has been held up and the Certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, 1974. Mr. Chakraborty drew my attention to the provisions of section 74(1) and (3) of the Estate Duty Act, and submitted that the first charge on the said properties was, never released by the Controller but only the liability of the estate was apportioned among the said five accountable persons according to their shares in the said estate of Jiban Krishna Mitter as set out in annexure " A" to the petition. Therefore, Mr. Chakraborty submitted that the said properties are still subject to the said statutory charge under section 74(1) and in any event the sale proceeds are liable to be paid to the petitioner towards pro tanto satisfaction of the outstanding estate duty payable by the said defendant, Prakash Krishna Mitter, in respect of the estate of late Jiban Krishna Mitter. Mr. Chakraborty also drew my attention to the provisions of Order 21, rule 52, of the Civil Procedure Code, and submitted that as the sale proceeds are lying with the Registrar, Original Side of this court, and the question of title or priority arising between the decree-holder and the petitioner who is not the judgment debtor but who claims an interest in the said mortgaged properties by virtue of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication is maintainable and order should be made as the court may think fit and proper for realisation of the statutory dues and charge payable by the said defendant as aforesaid. Mr. Somenath Chatterjee, appearing with Mr. R. N. Bajoria for the plaintiff-company, Calcutta Loans Private Ltd., submitted that the application is not maintainable as this is not the proper forum and neither is the application in the proper form. Mr. Chatterjee also referred to paragraph 13 of the petition where the petitioners themselves admitted and acknowledged the said consent decree passed in the partition suit on the 15th of May, 1958, whereby the said properties were allotted to the defendant, Prakash Krishna Mitter, and the liabilities of the said estate in respect of the said estate duty payable were apportioned according to the shares of the said accountable parties in the estate of Jiban Krishna Mitter. Therefore, Mr. Chatterjee submitted that the petitioner released the said first charge under section 74(1) of the Estate Duty Act, and held the accountable parties personally liable for payment of their respective shares of the estate duty payable in respect of the said estate of Jiban Kris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant provisions of the High Court Rules of the Original Side of this court. He referred to Chapter 27, rule 57, of the Original Side Rules, and submitted after drawing my attention to clause 10 of the conditions of sale that the purchaser has taken the property free from all statutory charges which were to be paid out of the sale proceeds, Therefore, Mr. Ghosh submitted that the purchasers' rights cannot be affected in any way in this application. Mr. Ghosh also submitted that the purchasers are not party to this application and no order can be made against them. Mr. S. C. Ukil appearing for Srimati Alaka Bhattacharyya, purchaser of the premises No. 40, Mahatma Gandhi Road, submitted after drawing my attention to the letter dated the 4th of May, 1974, annexed to the petition and marked with the letter " B " that the petitioner is only asking for a charge on the purchase money and in prayer " a " of the petition for payment of the purchase money which is lying with the Registrar, Original Side, is being asked for. Therefore, the petitioners are now estopped from contending that the said sale is void. The petitioners by its conduct has released the statutory charge and the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e estate duty authorities in the matter of realisation of outstanding estate duties in respect of the estate of Jiban Krishna Mitter is so glaring that I cannot resist myself from making the observation that collections of public revenue are at great jeopardy due to the laxity, inaction and inefficient working of the recovery machinery under the said Act, allowing the tax dodgers opportunity to take recourse to various subterfuges and dilatory tactics, thereby endangering the collection of public revenue promptly and efficiently. Further, I do not find any reasonable explanation for the petitioner not to take any notice of the series of advertisements in respect of the sale of the said three properties which are the subject-matter of this application in execution of the mortgage decree passed in this suit by public auction through this court. Further, I am unable to see any reason why the petitioner should claim payment of the sale proceeds which are lying in court after the said court sale of the said three properties which are the subject-matter of this mortgage suit. The statutory provisions for release by Controller of any charged property under section 74(3) of the Estate Duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of estoppel against statute or waiver of a mandatory statutory provision by any public officer. The Estate Duty Act is a fiscal statute and must be very strictly construed so that nobody can avoid the liability of payment of duties and taxes and likewise nobody who has not been made specifically liable to pay taxes can be brought into the net in the construction of fiscal statutes there is no room for equitable construction as equities are strangers for a construction of a taxing statute. " In a taxing Act one has to look merely at what clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing to be read in, nothing is to be implied. One can only look fairly at the language used. " See Law and Practice of lncome-tax by Kanga and Palkhivala, 6th edition, volume 1, page 2. It is true that there is a distinction regarding the rules of construction of charging sections and machinery sections of a taxing statute as the former should be strictly construed whereas the latter should not be subjected to rigorous construction but should not be construed in a manner that makes the machinery unworkable. Applying those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to a consent decree passed in a partition suit does not and cannot amount to a release of any part of the property from the said statutory charge by the Controller within the meaning of section 74(3) of the Estate Duty Act. It is well settled and is an elementary principle that there cannot be any estoppel against a statute and as such the estate duty authority cannot be said to have waived and/or released the said statutory charge on the said three properties. As I have already observed that a fiscal statute has to be construed very strictly and unless the Controller acts within the four corners of the said Act in terms of the provisions of section 74(3) of the Estate Duty Act, there cannot be any question of any release of the said properties from the said statutory charge created under section 74(1) of the Estate Duty Act. It is also unbelievable and highly improbable that the plaintiff, the mortgagee of the said three properties belonging to the estate of the deceased, Jiban Krishna Mitter, had no knowledge or at least could not have any knowledge of the said statutory charge under section 74(1) of the Estate Duty Act, on the said property, at the time the said mortgage was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to the statutory charge ; on the other hand, it appears that the property has been sold free from all encumbrances including the statutory charge in the court sale in execution of the mortgage decree passed in this suit and the auction purchasers are claiming to have purchased without notice of such statutory charges. But in my view when there is specific provision in section 74(1) of the Estate Duty Act making all private transfer void as against the claim of the estate duty in respect of the said properties, no question of protection of a bona fide purchaser for value without notice of the charge arises. It has been expressly provided in the said section 74(1) that all private transfers, which includes the mortgage of the said properties which is not subject to the statutory charge, is void and, therefore, anyone deriving title from such void transaction subsequently would not get any title free from the said statutory charge. See Ahmedabad Municipal Corporation of the City of Ahmedabad v. Haji Abdul Gafur Haji Hussenbhai, AIR 1971 SC 1201, paragraph 3, where on the construction of section 141 of the Bombay Provincial Municipal Corporation Act, 1949, it was held that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id consent decree in the partition suit or the sale in execution of the mortgage decree against the said properties : See Jayaram Mudaliar v. Ayyaswami, AIR 1973 SC 569, paragraph 18, at page 574. Any other construction of the said statutory provision under section 74(1) of the Estate Duty Act would lead to large scale evasions of estate duty by making the property belonging to the deceased free from the said statutory charge by the contrivance which has been adopted in this particular case. It appears that for strange reasons the estate duty authority in spite of the fact that final assessment of the estate duty and certificate has been issued for realisation of the arrears against the accountable parties to the estate of Jiban Krishna Mitter has failed to expedite the matter and enforce the said statutory charge against the properties of the deceased for such a long time and thereby enabled the said delinquent and dishonest defendant, Prakash Krishna Mitter, who has not appeared in this proceeding, in spite of notice being served, to deal with the property in collusion and conspiracy with the plaintiff-company. It is hardly believable or in any way acceptable that the plaintiff h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e title to the said property which have been purchased by the auction purchasers in court sale, I directed notice to be served on all of them so that they can take appropriate steps in the matter if the said court sale is declared to be void having regard to the statutory provisions of section 74(1) of the Estate Duty Act. The auction-purchasers appeared and made their submissions which I have noted before but in my view when the title of the mortgagor and the mortgagee is defective and the whole transaction of the mortgage is void under the provision of section 74(1) of the Estate Duty Act, consequent sale of the property must be held to be void and a nullity. The petitioner seems to be free to enforce the said statutory charge against the said properties by due process of law as I have held that there is no release by the Controller under section 74(3) of the Estate Duty Act of the statutory charge in respect of the said three properties which are alleged to have been sold in execution of the mortgage decree passed in this suit. But the question is whether the petitioner is entitled to the relief asked for by the petitioner in this application for payment of the purchase money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as against the petitioner's claim in respect of the estate duty of the deceased, Jiban Krishna Mitter. Therefore, so far as the petitioner is concerned, the said mortgage is a nullity as it is founded on a void mortgage so far as the estate duty is concerned and consequently the auction purchasers also cannot have any right under the said purchases, in the court sales so far as it relates to the claim of estate duty of the petitioner against the said estate of Jiban Krishna Mitter to whom the said three properties admittedly belong and subject to the statutory charge under section 74(1) of the Estate Duty Act. A decision of the Privy Council under the corresponding section 272 of the Civil Procedure Code, 1882, in Dinobundhu Shaw Chowdhry v. Jogmaya Dasi [1902] LR 29 IA 9 ; ILR 29 Cal 154 (PC) ; where it has been held that, so far as a mortgage created after attachment of the property of the judgment-debtor prejudiced the execution creditor, it is void as against him but the section does not render void a transaction which in no way prejudices him. On the facts of that case, it was held that the intention of the parties were to give the new mortgage the first charge and only char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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