Venkataswami, J. - (1.)THIS appeal by the Commissioner of Income-tax has come up before us on a reference by a learned single judge of this court and is directed against a judgment of the Civil Judge, Civil Station, Bangalore, in R.A. No. 80/1970. That appeal had been preferred by the plaintiff-1st respondent against the judgment and decree of the principal munsiff, civil station, Bangalore, in O.S. No. 326 of 1968.
(2.)THE facts relevant may be set out at some length and are as followd :
The plaintiff-1st respondent, Sundaram, and two other persons by name Balasubramaniam and Jayalakshmi constituted a partnership firm. The said firm having been dissolved, they were assessed to tax under the Indian Income-tax Act as an unregistered firm for the assessment year 1963-64. On such assessment, presumably at the instance of the partners, the total tax liability was apportioned between them for the purpose of convenience. The 1st respondent (plaintiff) and Jayalakshmi paid up the portions of the tax and the third partner, Balasubramaniam's liability remained undischarged. In the proceedings for recovery of the said balance of tax due, a printing machine, exclusively owned and belonging to the said Balasubramaniam, was attached, on or about April 1, 1966.

Subsequent to the said attachment one Suryanarayana, the 2nd respondent-3rd defendant, filed a suit on a mortgage dated October 10, 1963, and he had included the printing machine in question as one of the properties so mortgage and obtained a decree. In the meanwhile, the 3rd respondent-4th defendant put forth a claim for prior charge on the basis of a pledge before the civil court in the aforesaid proceedings, which was allowed. The machine, however, was permitted to be sold by the 3rd respondent-bank and the sale proceeds thereof were first appropriated towards the dues of the bank, and the balance came to be paid over in discharge of the decree held by the 2nd respondent, Suryanarayana.

In view of the aforesaid decree and further proceedings, a claim was preferred before the Tax Recovery Officer alleging that the said Balasubramaniam had no saleable interest in the attached printing machine. This was allowed. Hence the suit, out of which this appeal has arisen, came to be filed by Sundaram, the quondam partner and father of the said Balasubramaniam.

(3.)IT is alleged on behalf of the plaintiff that on the day the printing machine was mortgagee in favour of Suryanarayana, namely, April 1, 1963, the said Balasubramaniam had no subsisting interest in it and, therefore, the said mortgages was not entitled to include the same in the suit for the purpose of obtaining a decree for sale. Similarly, the pledge put forth by the 4th defendant-bank was not also valid. In the circumstances, the Tax Recovery Officer was not entitled to allow the claim of the 3rd respondent and release the machine from his custody, and he should, on the other hand, have asserted the department's "paramount claim or lien" and after arranging for the sale of the said machinery, entered full satisfaction or discharge of the tax dues of Balasubramaniam. IT is also alleged that the said claim proceedings had been gone through without notice to the owner, Balasubramaniam. IT is, however, admitted that on the day of the attachment in question Balasubramaniam was the owner of the said machinery. IT is to be remarked that Balasubramaniam and Jayalakshmi, the quondam partners, have not been made parties in these proceedings. In these circumstances it is contended that none of the partners of the dissolved firm would be liable to comply with the notice of the Tax Recovery Officer dated April 5, 1968, demanding the payment of the balance of tax due in a sum of Rs. 7,082.52.
For the purposes of disposal of this appeal, it is unnecessary to set out the defence of the defendants other than the Commissioner of Income-tax, the appellant herein. On behalf of the said defendant, it is mainly contended that such suit would not be maintainable, in the light of the bar of jurisdiction enacted in section 293 of the Income-tax Act, 1961.