Radhakishan Brijlal v. The Union Of India

Shelat, J.:— [His Lordship after stating the facts and rejecting the petitioner's application for amendment of the petition, proceeded:] Coming now to the petition itself, three points have been raised on behalf of the respondents as and by way of preliminary objections. They are (1) that the petitioner has not been candid in his statements in the petition, that he is guilty of having made misleading statements and, therefore, is not entitled to a discretionary remedy, (2) that lie has had an alternate adequate remedy and (3) that being admittedly a benamidar of respondent No. 4 in respect of the shares in question, the petitioner wag not entitled to maintain this petition.

2. Both Mr. Khambatta and Mr. Manekshaw did not press the first point and, therefore, no more need be said about it. They have, however, pressed the other two points. The first question that falls for consideration is whether a person, who is admittedly a benamidar of the property in question, can maintain a writ petition of this kind. Mr. Manekshaw conceded at the very outset that a benamidar can file a suit to protect the property which he holds benaini in certain circumstances. But Mr. Land argued that under ss. 80, 82 and 95 of the Trust Act, the position of a benamidar was in the nature of a trustee and urged that a benamidar has all the rights and obligations of a trustee. He argued, therefore, that under s. 13 of the Trust Act it would be the duty of a benamidar as a trustee to take steps to protect and preserve the trust, property, Now, it is true that under ss. 80 and 82 of the Trust Act a benanmidar holds the property for and on behalf of the real owner in consequence of which there would be a resulting trust in respect of the property in favour of the real owner. But then it would be fallacious to urge from those sections that the legal ownership in such property vests in the benamidar as it does in the case of a trustee. What those sections really mean is that a benamidar is in fiduciary relationship with the real owner and, therefore, has all the obligations of a person in such fiduciary position towards the real owner. A benamidar is no more than an ostensible owner of the property lie holds benami though his acts in certain circumstances would be binding upon the real owner. That is because the real owner holds him out to third parties as an owner of the property. It is, however, impossible to say as in the case of a trustee that any rights in the property either vest in him or that under s. 13 and the sections following thereafter of the Trust Act any obligations therein set out fall on him. In Our Narayan v. Skeolal Singli . 1918 I.L.R 46 Cal. 566, P.C, their Lordships of the Privy Council stated that so long as a benami transaction did not contravene the provisions of Law, the Courts were bound to give effect to it, but they made it clear also that a benamidar has no beneficial interest in the property that Stands in his name; he represents in fact the real owner, and so far as their relative legal position is concerned, he is a mere trustee for him. Their Lordships no doubt held that a bcncfruidar would be entitled to maintain a suit against a third party though he had no beneficial interest in it and that a suit filed by such a benamidar would be binding upon the real owner and the person beneficially entitled would be fully affected by the rules of res judicata. At p. 575 of the report their Lordships, however, took care to observe that in case of a contest between a benamidar and a real owner, other considerations would arise with which they were not concerned in the case before them. Even if, therefore, a benamidar is entitled to sue or take out a writ petition of this type, in the event of a contest between him and the real owner, the real owner can always take control of the proceedings and can even put an end to such proceedings if he so desired, Mr. Laud, however, went one step further and said that even if there was a conflict amongst the real owners, such as in this case, the benamidar would be entitled to take action for preservation of the property. In my view, that is not a correct position; for if it were to be otherwise, the result would be that any order passed in a proceeding taken out by a benamidar against the wishes of the real owners would be binding upon and would work as res judicata against the real owners. In a case where there is a conflict amongst the partners, as there is in this case, where there are certain partners who do not wish to enforce a particular claim in respect of which the benamidar files a proceeding, if Mr. Laud were to be right, it would result into an anomalous position inasmuch as such a decision in a proceeding, to which some of the partners are opposed, would still be binding upon them and a subsequent proceeding lodged by them would be barred by res judicata. Another equally anomalous result that would follow from the proposition urged by Mr. Laud would be that although a benamidar stands in the position analogous to that of a trustee, he would necessarily have to take sides with one party or the other amongst the partners amongst whom there is a conflict, of opinion.

3. The next question is, can a bemmidar file a suit or a proceeding when the real owners are before the Court? In other words, can lie file a suit or a proceeding when he is not supported by the real owners and where the real owners are opposed to maintaining it? The answer to these questions must be found in the negative for the obvious reason, such as the one I have already stated, that such a situation would be an anomalous one, a situation where a mere ostensible owner is opposed in interest to the real owners in whom only all the rights in the property vest. In those circumstances it cannot be said, as Mr. Laud tried to do, that a benamidar was trying by sueh an action to preserve the property he holds in benami. In Maung San Da v. Maung Shan Tha it was held that whilst a benamidar may, as against a stranger, maintain a suit in respect of property he holds benami, he may not do so when the real owner is not willing to maintain it to enforce a certain claim. The reason for this principle is that a benamidar is not exactly in the same position as a trustee; he is only the ostensible owner, an alias for the real owner, his name being held, out to the outside world by the real owner for a particular purpose. Obviously, therefore, he cannot maintain an action or a proceeding against the wishes of the real owner. Mr. Laud, however, pointed out that in a decision of the Madras High Court in Muhammad Sheriff v. Sayed Kasim . [1933] A.I.R Mad. 635. it has been said that a mere inference from the-evidence of the real owner would not justify non-suiting the benamidar. The disagreement, however, which the learned Judge in the Madras decision expressed was only limited to the proposition that a mere inference drawn from the evidence given by the real owner would not justify the dismissal of the suit filed by a benamidar. The Madras decision, however, does not at any stage express any disagreement with the principle laid down in the Rangoon case that a benamidar cannot file a suit in the teeth of opposition by the real owner. The situation in this petition, however, is not a simple one as it was in the Rangoon case, for there was only one real owner, the mother of the plaintiff, and she in her evidence seems to have opposed the suit. The complication in this petition arises because the real owners are several and are equally divided amongst themselves. The partners representing one-half interest in respondent No. 4 are in favour of this petition whilst the rest representing the other half are opposed to it. Now, it is admitted that the shares in question belonged to respondent No. 4 and that the petitioner holds them as their nominee. The petition is based, as I have already said, on this footing and the petitioner has also stated that he is prepared to argue this petition on that footing that he is no more than a mere benamidar of these shares. On that footing on the authority of Maung San Da v. Maung Chan Tha, with which I with respect concur, the petitioner would be out of Court once it were found that respondent No. 4 as a whole, who are the real owners and whom he has joined as respondents in this petition, are opposed to the petition.

4. But there are two other factors, which, I think, I should take into account before any decision is arrived at. The first is, that, the partners in the 4th respondent-firm are divided among themselves; and the second is that although the petitioner has admitted that he is a mere nominee, it is clear from the affidavit of Gopikison Naraindas, a dissenting partner represented by Mr. Manekshaw, that the petitioner was at all material times a partner in respondent No. 4. Though the firm is already dissolved, the winding up is not yet complete, and, therefore, it cannot be gainsaid that he has an interest, unascertained though it is, in the assets of respondent No. 4 which would include the shares in question. It is no doubt true that such an admission is not to be found in the affidavit filed on behalf of respondents Nos. 1 to 3, but in the affidavit filed on their behalf it is stated that the undivided Hindu family of which the petitioner is a member was a partner in respondent No. 4. That being so, even according to that affidavit, it cannot be said that the petitioner has no beneficial interest whatsoever in the assets of respondent No. 4 which would include the shares.

5. Even then can Mr. Laud urge that the petitioner can launch such a petition upon the footing that his rights under art. 19(1)(g) of the Constitution are infringed, however unascertained and however slight his interest might be in the shares in question? In Charanjit Lal v. Union of India, Fazl Ali, J. observed that no one except those whose rights are directly affected by a law can raise the question of the constitutionality of that law. He held on the facts in that case that a shareholder in a company whose property rights are alleged to have been infringed without compensation cannot maintain a petition challenging the impugned statute and that only the company can be said to be the party whose rights are affected. That decision was, it is true, grounded on the principle that a shareholder and a company are two distinct entities and, therefore, the rights alleged to be infringed would be those of the company and not of the shareholder. It is also true that a partnership firm is not a legal entity as a corporate body is. But then the question would still be whether one of the partners in a firm can maintain a petition where the partners do not see eye to eye with each other and where some of them representing half the interest in the firm are opposed to its filing. Even assuming, though the petitioner himself is prepared to base his claim on the footing that he is a mere benamidar, that he has however an interest in the property in question, it is not right nor proper to allow him to take out a petition which invokes the extraordinary jurisdiction of this Court, and to make that petition an arena to resolve the differences between the partners inter se. In my view, the conflict amongst the partners to prosecute the present petition is by itself a good ground to refer the petitioner to a comprehensive and, in the circumstances, to a more appropriate and efficacious remedy as a suit where questions of disputed facts can be gone into.

6. Assuming I am not right in that conclusion, there is still another hurdle that Mr. Laud would have to cross. It is urged by, Mr. Manekshaw that the petitioner has had other appropriate and efficacious remedies available to him and yet he has rushed to this Court to invoke its extraordinary jurisdiction. In these circumstances Mr. Manekshaw argues the petitioner is not entitled to an issue of the writ he has asked for. According to both Mr. Manekshaw and Mr. Khambatta the remedies available to the petitioner were (1) an application to the Collector and thereafter an appeal to the Bombay Revenue Tribunal under ss. 13A to 17 of the Bombay City Land Revenue Act of 1876, (2) a substantive suit for a declaration that the steps taken by respondent No. 2 under the provisions of that Act were invalid and (3) also a suit under O. XXI, r. 63, of the Civil Procedure Code to establish the illegality of the orders in question and to establish the fact that respondent, No. 4 not being the assessees their assets were not amenable for the recovery of the arrears of income-tax under s. 46(2) of the Income-tax Act. It was argued, however, by Mr. Laud at one stage in support of his application for amendment that in Purshottam Govindji v. Desai, the Supreme Court has held that on a certificate being issned under s. 46(2) of the Income-tax Act the Collector can proceed only “under the Bombay City Land Revenue Act and not under O. XXI, r. 46, and that, therefore, the orders issued under the Civil Procedure Code by respondent No. 2 were bad in law. With respect, that is not a correct reading of that decision. The question that arose before the Supreme Court was whether it was right to say as was done in Shaikh Ahmed v. Collr. of Bombay that the Collector had an alternative mode of recovery of the certified amount of tax, one under the City Revenue Act and the other under the Civil Procedure Code, and the Supreme Court disagreeing with the Bombay view held that decision did not appear to be right. At p. 501 of the report their Lordships in fact observed that the proviso to s. 46(2) of the Income-tax Act does not indicate a different and an alternative mode of recovery of the certified amount of tax but that it confers “additional powers” on the Collector for the better and more effective application of the only mode of recovery authorised by the body of sub-s. (2) of s. 46. Now, the words “additional powers” used in this context by their Lordships would seem to negative the contention of Mr. Laud. But then assuming that he is right even then he would have a right to file a suit under O. XXI, r. 63, of the Civil Procedure Code to establish that the Collector had no jurisdiction to pass the orders under O. XXI, r. 46, and that in any event respondent No. 4 not being the assessees, the Collector had no right of recovery from the property of respondent No. 4. In the alternative if the prohibitory orders in question were held to have been issued under the City Land Revenue Act, the petitioner had a right to file an application before the Collector and an appeal before the Bombay Revenue Tribunal.

7. On behalf of the respondents reliance was placed on the decision in Walchandnagar Ind. v. B'bay State . 1952 55 Bom. L.R 77., where after considering the views of the Calcutta and Allahabad High Courts, the learned Chief Justice and Bhagwati, J. held that the jurisdiction that the High Court exercised under art. 226 was an exceptional and a discretionary jurisdiction and this jurisdiction must be sparingly used. If a citizen can obtain an equally adequate, an equally efficacious, and an equally prompt remedy in the ordinary Courts of law, ordinarily the High Court would not exercise its discretion in his favour under art. 226. They, no doubt also, observed that there may be cases where even though an alternative adequate remedy may exist, the High Court under special circumstances may issue a writ or order or direction under art. 226. But on the particular facts before them they declined to issue the writ upon the ground that the petitioners could have paid under protest the tax challenged and then could have filed a suit for the recovery of the amount so paid. They also said that no prejudice was likely to he caused to the petitioners by the delay that might take place by the matter being decided by ordinary procedure rather than under art. 226. This principle has now been again affirmed by the Supreme Court in The State Of U.P v. Mohammad Nooh ., Noon, where a sharp distinction is drawn between a petition for certiorari and one for mandamus. It has there been observed that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy, and that provided all the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by the statute. Even in a case for a writ of certiorari, their Lordships remarked that the fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior Court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari, to quash the proceedings and decisions of the inferior Courts subordinate to it, and that ordinarily the superior Court will decline to interfere uutil the aggrieved party has exhausted his other statutory remedies, if any. Now, it is true that in the case of Walchandnagar Industries Ltd. the petitioners had been paying the tax or cess in question since 1949 and they had filed the petition as late as 1952. It may perhaps be that fact might have weighed in the minds of the Division Bench but that fact alone could not have made any difference to the principle laid down in that case.

8. Now, the facts before me are that upto the year 1950–1951 assessments were made from year to year against the managing agency firm on the footing of a registered firm. It is in the affidavit of respondent No. 3, and I must take for the purposes of this petition the facts stated there as being correct, that the Income-tax Department was told that though the ostensible partners in the assessee-firm were Bilasrai Joharmal and Banarasilal Meghraj, they were only the nominees of respondents No. 4 and Narandas Kedarnath. Upto the year 1950–1951 therefore although the assessments were made in the name of Bilasrai Banarasilal & Co., the two firms, viz. respondents No. 4 and Narandas Kedarnath, paid tbeir respective shares of the income-tax. Respondents No. 4 did not at any time protest against half the income of the managing agency firm being treated as forming part of the total income of respondents No. 4. Even after the year 1950–1951 when the assessee firm was treated as an unregistered firm, in the assessment orders, as stated in the affidavit of Govindram Shivnarayan, the half share in the income of Bilasrai Banarasilal & Co., viz. Rs. 91,525, was considered for the purpose of determining the rate in the assessments of respondents No. 4. Disputes and differences since then arose amongst the partners of respondents No. 4 which are the subject-matter of several litigations. It seems to me that the present petition is a result of these disputes rather than a protest against the prohibitory orders in question. As I have said, the partners represented by Mr. Manekshaw have all along and are still agreeable that the shares in question should be utilised, for the satisfaction of the arrears of income-tax in question. So far as the other partners are concerned, it was in August 1956 for the first time that they denied the liability of respondents No. 4 to pay these arrears.

9. Mr. Manekshaw has urged relying upon the decision in Wahhandnagar Ind. v. B'bay State that there being an alternative remedy available to the petitioner and also to those partners of respondents No. 4 respresented by Mr. Kania, the petitioner is not entitled to a remedy by way of high prerogative writ, Mr. Laud, on the other hand, has urged that even those remedies pointed out by Mr. Manekshaw either under O. XXI, r. 63, or a suit under the Specific Relief Act would not, be either an adequate or a prompt remedy. Relying upon ss. 13A and 14 of the City Land Revenue Act Mr. Laud argued that if the petitioner had a recourse to an application and thereafter an appeal provided therein, he would be required to furnish security and observe the conditions laid down in those sections such as, for instance, depositing the amount of the arrears of tax. He, therefore, urged that such a remedy would be both an onerous and a restrictive remedy and, therefore, not an adequate remedy. He also urged that if the petitioner were to file a suit, he would be required to give notice under s. 80 of the Civil Procedure Code and within the period of two months prescribed therein it was possible that the shares would be sold away by respondent No. 2, and that, therefore, even a suit would not be an adequate remedy. It must, however, be remembered that the orders challenged by the petitioner are orders merely restraining the petitioner, respondents No. 4 and the Vishnu Sugar Mills Ltd. from transferring the shares in question to any party. It is clear from the provisions of O. XXI, r. 64, of the Civil Procedure Code that even if respondent No. 2 wished to dispose of these shares, he must follow the procedure prescribed in that Order. He would have first to issue an order for sale and then, give the necessary proclamation as regards the proposed sale. Even if, therefore, the petitioner has to give a notice under s. 80 of the Civil Procedure Code, the orders being merely prohibitory orders, there is no possibility of the shares in question to be in any immediate jeopardy of being disposed of at a public auction. For that reason Mr. Laud is not justified in contending that by reason of s. 80 and the necessity of giving a notice thereunder a suit would not be an adequate remedy.

10. Mr. Laud relied upon the case of Himmatlal Harilal Mehta v. The State of Madhya Pradesh. There it has been observed that a threat to realise tax from the assessee without the authority of law by using the coercive machinery, of the impugned Act is a sufficient infringement of the fundamental right under art. 19(1)(g) and gives him a right to seek relief under art. 226 of the Constitution. It has also Seen observed there that the Act which requires a deposit to be made before a citizen can get relief provided thereunder cannot be said to be an adequate remedy, the remedy therein provided being onerous and burdensome. The decision in Himmatlal's case was, however, one where the Act under which the tax was levied was declared by the Supreme Court to be ultra vires. The impugned Act, therefore, having been held to be ultra vires the Legislature, a fortiori the tax sought to be levied thereunder was also invalid. It follows, therefore, that a remedy provided for by such a statute would obviously be neither a proper nor an adequate remedy for the simple reason that the provisions of the Act under which the tax was sought to be levied were themselves declared to be invalid. Before me, however, the fact is that neither the assessments made nor the procedure followed by respondent No. 2 in the recovery proceedings of the arrears of income-tax have been challenged as invalid. No question, therefore, of any infringement of any fundamental right by reason of any law being held ultra vires would seem to arise on the facts before me. The only objection is that these proceedings cannot be against the property of respondents No. 4. The case before me, on the contrary, is one of a henamidar who on his own showing has no benaficial interest in the shares in question. No question of any infringement of any fundamental right of the petitioner can arise especially when in the petition he admits of not having any beneficial interest but states categorically that he is no more than a benamidar of respondents No. 4. In these circumstances it is somewhat difficult to understand as to how the decision in Himmatlal v. The State of Madhya Pradesh can assist the petitioner.

11. The next decision relied upon by Mr. Laud was the one in S.C Prashar v. Yosatitsen. There the Income-tax Officer issued a notice under s. 34 of the Income-tax Act calling upon a firm to submit a return of its total income for the year ending March 31, 1943, The Income-tax Officer purported to issue this notice under the amended second proviso to s. 34(3) of the Act, which came into operation on April 1, 1952. The firm challenged the notice by a petition for a writ under art. 226 to restrain the Income-tax Officer from proceeding further pursuant to the notice, alleging inter alia that the notice was invalid, that the Income-tax Officer had no authority or competence to issue the notice and that the assessment proceedings which he proposed to initiate pursuant to the notice would be proceedings without any jurisdiction at all. The Income-tax Officer inter alia contended that the petitioner had no right to maintain the petition and obtain an appropriate writ against him. It was held that as the right to issue a notice to the petitioner under s. 34 of the Act was already barred to the Income-tax Officer at the date when the amended second proviso to s. 34(3) came into operation, this amended proviso could not revive the remedy by providing an extended period of limitation, that, therefore, the notice issued under s. 34 was one that was out of time and was, therefore, invalid, and further that as the Income-tax Officer had exceeded his authority in issuing the notice, the want of jurisdiction, pleaded by the petitioner was a patent one and, the Court under art. 226 could prevent the Officer from assuming jurisdiction which he patently did not possess. The learned Chief Justice, who delivered the judgment, pointed out that there were two exceptions to the rule that the Court would not grant relief by means of a writ when the petitioner can get the same relief by ordinary legal remedies available to him. One was that if the threat involved an encroachment upon the fundamental right of the petitioner, the Court would interfere and would not compel him to exhaust his legal remedies. The other exception which was equally well established was that if the authority against whom a complaint was made had violated rules of natural justice, the Court would interfere and protect the petitioner and not insist upon his going to a higher Tribunal for relief. It is clear from the facts of this case that there was a threat to assess income-tax under s. 34 by an Officer who patently had no jurisdiction and whose authority to do so had already been exhausted. Such a question does not arise before me. On the other hand, as I have already pointed out, there is no question of any infringement of any fundamental right of the petitioner arising in this case, inasmuch as the very basis of his petition is that he is merely a benamidar having no beneficial right in the property in question. It is obvious, therefore, that neither of the two exceptions stated in S.C Prashar v. Vasmtsen can apply to the facts before me. Besides, the decision reported in Walchandmgar Ind. v. B'bay State is binding upon me. As I have said, this Court cannot by way of a petition be made a ground for the resolution of disputes amongst the partners of respondents No. 4. It is obvious that no prejudice is likely to be caused to respondents No. 4 or the petitioner filing a regular suit to ventilate any grievances that they might have. It is not as if respondents No. 4 or even the petitioner are not in a position to pay the arrears of income-tax under protest and then file such a suit to recover it if they so desire. It may be that some delay might ensue by their resorting to the ordinary procedure, but then it is clear that delay is not likely to result in any prejudice either to respondents No. 4 or the petitioner. In these circumstances I am not prepared to agree with Mr. Laud's contention that by virtue of any statutory provision or by any of the decisions relied upon by him, the remedy by way of a suit would not be either an adequate or an efficacious remedy. The very fact that there has been and still is a radical conflict between the partners inter se, whose property the petitioner is alleged to be seeking to preserve and protect, coupled with the fact that the partners representing one-half interest in respondents No. 4 are opposed to the present petition would be a sufficient ground to hold that the proper remedy for the petitioner or the partners represented by Mr. Kania would be an ordinary suit.

12. For these reasons the preliminary contentions raised by Mr. Khambatta and Mr. Manekshaw must be upheld.

13. The result, therefore, is that the petition fails and is dismissed. Since the parties are agreed that there should he no order as to costs, I make no order.

Attorneys for the petitioner: Jeshtaram & Co.

Attorneys for the respondents: N.K Petigara; Motichand and Devidas: Kanga and Co.

14. Petition dismissed.