Crp/4443/2006 Of Gangavarapu Thirupathi Rao v. The Incometax Officer

THE HONOURABLE SRI JUSTICE B.PRAKASH RAOC.R.P.No.4443 of 2006 ORDER: The petitioner herein is defendant No.1, who files this revision underArticle 227 of the Constitution of India, assailing the order in O.S.No.11 of2000 dated 4-7-2006 on the file of the Principal Junior Civil Judge,Kandukur rejecting an objection raised by them to hold that the present suitas has been filed and framed is not maintainable and barred under theprinciples of res judicata in view of the earlier judgment and decree in O.S.No.10 of1988 which is marked as Ex.B.3. Heard Sri M.Ravindranath Reddy, learned counsel for petitioner and Sri B.Narasimha Sarma, learned counsel for respondents. The plaintiff/first respondent herein i.e., Income Tax Officer, filed a suitfor declaration that the agreement of sale deed dated 11-12-1981 andconsequential sale deed dated 6-3-1982 as null and void. The said suithas been contested by the petitioner on various grounds including as to themaintainability. Accordingly, the issues have been framed pertaining tomaintainability and also on whether the decision in O.S.No.10 of 1988dated 10-9-1999 of the Senior Civil Judge’s Court, Kandukur operates as res judicata, apart from other issues pertaining to limitation etc., on merits. The case of the petitioner was to the effect that having regard to the earliersuit filed in O.S.No.10 of 1988, the present suit is squarely barred. TheCourt below after taking into consideration the respective submissions andon the pleas and objections held that the issues which are covered in thepresent suit are not decided finally nor there is any adjudication and thedepartment has to file a separate suit and hence, the suit now filed ismaintainable, therefore, does not constitute res judicata. Hence, therevision. Having heard the counsel and on perusal of the material in detail fromboth sides, the point which arises for consideration is as to the whether inthe facts ad circumstances, the present suit is barred under the principles of res judicata, in view of the earlier proceedings between the parties. Before taking up the said question, it is needless to reiterate the widerspectrum as provided under Section 11 of Civil Procedure Code, where abar is created in respect of subsequent proceedings and it has been heldthat to invoke such a bar, necessarily the parties in the present suit shouldbe parties to the earlier suit and there should be a decision and finaladjudication on the question in issue apart from other incidental or ancillaryquestions, which might arise. Keeping in view the said provision and thewell laid principles it now necessitated at the first instance to consider thenature of suit and decision given therein on the earlier round. The suitO.S.No.10 of 1988 is filed by the petitioner herein for declaration of theright, title in respect of the suit schedule property and that the proclamationof the sale dated 9-2-1988 in pursuance of attachment as illegal and voidand for permanent injunction restraining the Income Tax Authorities frombringing the property to sale on 14-3-1988 in pursuance of the notice in I.T.C.P.No.16 or any subsequentdate and for costs. The averments in the plaint as it ran, mainly centered on theprocedure to be followed before any property is put to sale, apart fromassertion by the petitioner that he is a bonafide purchaser for value. Thesaid suit was contested by the Department by filing a comprehensivewritten statement denying all such pleas and thereafter the issues havebeen framed, which reads as under: i)Whether the plaintiff is entitled to the suit property? ii)Whether the proclamation of sale dated 9-2-1988 is pursuanceof attachment effected in March, 1987, is illegal and void?of attachment effected in March, 1987, is illegal and void? iii)Whether the plaintiff is entitled for permanent injunction, restraining D.2 from bringing suit schedule property to sale? iv)Whether the transaction of sale is hit by provisions of IncomeTax Act?Tax Act? i)Whether the plaintiff is entitled to the suit property? ii)Whether the proclamation of sale dated 9-2-1988 is pursuanceof attachment effected in March, 1987, is illegal and void?of attachment effected in March, 1987, is illegal and void? iii)Whether the plaintiff is entitled for permanent injunction, restraining D.2 from bringing suit schedule property to sale? iv)Whether the transaction of sale is hit by provisions of IncomeTax Act?Tax Act? v)Whether the plaintiff is entitled for declaration as prayed for? vi)To what relief? On an examination of the aforesaid evidence and material on record,while decreeing the suit the Court taking up the issues 1 to 5 together andafter referring to the depositions of the witnesses produced on behalf of theplaintiff, took note of the commencement of the proceedings by the taxauthorities on 29-12-1981 and the Assessment orders passed on 6-3-1986and 10-4-1987, but the suit document therein Ex.A.1, the Agreement ofSale came into existence on 14-12-1981, and observing specifically thatthe department has to institute a separate suit against the 3[rd] defendant toprove that intentionally in order to evade the payment of arrear suchdocument was nominally executed in favour of the plaintiff. However,taking note of the objection filed by the plaintiff which was rejected and thesaid transfer by way of sale is not hit by the provisions of the Income TaxAct, and thus held the tax recovering officer is not empowered to declareabout the alienation of the property as void under Section 281 of theIncome Tax Act. Therefore, it was found that the proclamation of sale dated9-2-1988 in pursuance of the attachment effected in the month of March,1987 is illegal and void and thus the plaintiff is entitled to file the said suitfor declaration and perpetual injunction. The said Judgment having notappealed has become final and conclusive. From the aforesaid categorical findings and the observations made, itcannot be said that though all such claims and questions which are soughtto be raised in the present suit, no doubt could have formed part of theearlier proceedings and all these pleas might and ought to have beenraised and decided also by the Court. However, there is total restraint onthe part of the Court while disposing of the said earlier suit in doing so andwhich is quite evident from the very observations made therein where thedepartment is left with liberty to opt for the appropriate remedies ascontemplated at later stage assailing the very transfer. According to the learned Standing Counsel appearing for therespondent the present suit squarely falls, hence, under Rule 11 (6) of theIncome Tax Rules which contemplates filing of a regular suit ofcomprehensive nature as and when the department refuses to upheld the steps taken by it. At this juncture, it is not necessary to fall back on the well laidprinciple of res judicata as contemplated under Section 11 of the Code ofCivil Procedure as in the present case the earlier suit was not and couldnot have been a suit as contemplated on the aforesaid Rule 11 (6) of theRules nor there could have been any decisions on all the counts in respectof the very title or correctness of the transfer as such. In the aforesaid circumstances, this Court does not find any merit inthe contention urged on behalf of the petitioner to say that the decision inO.S.No.10 of 1988 will operate as resi\ judicata in the presentproceedings. There are no merits in the revision and it is accordingly dismissed. No costs. __________________ B.PRAKASH RAO,J Date: 23-07-2010Grk THE HONOURABLE SRI JUSTICE B.PRAKASH RAO C.R.P.No.4443 of 2006 Dated: -07-2010 THE HONOURABLE SRI JUSTICE B.PRAKASH RAO P.D Judgment in C.R.P.No.4443 of 2006