Decided on March 22,1960



RENUPADA MUKHERJEE, J. - (1.) THE suit was contested by the union of India in the trial court. THE defence which is material for the purpose of the present appeal was that the certificates mentioned in the plaint were valid and binding upon the plaintiff and so the attachment of plaintiffs moveables which followed the execution of the certificates is valid. Some other issues of a rather technical nature were also raised in the court below at the instance of the contesting defendant. But they were not pressed on behalf of the appellant in this appeal. Upon the evidence adduced on behalf of both parties the court below made a declaration that the certificates in question were invalid and inoperative and not binding on the plaintiff and the attachment of the properties of the plaintiff was also declared to be void. This appeal was preferred by the Union of India from the above judgment and decree passed by the trial court.
(2.) THE facts which have given rise to the present appeal are more or less admitted. THEre was firm of the name and style of Messers. "Satyanarayan Khan-Kalicharan Sadhukhan" which carried on business in various kinds of oil. This was a partnership firm of which the component members were plaintiff Satyanarayan Khan, Kalicharan Sadhukhan and Bepin Behari Tat. THE firm was as unregistered one. By the income-tax authorities this firm was assessed for the years 1943-44, 1944-45 and 1945-46. THE amount of taxes payable for the assessment of the above income-tax years were respectively (1) Rs. 1,091-2-0, (2) Rs. 59,972 and (3) Rs. 71,930-8-0. THEse amounts were not paid by the firm although notice of demand under section 29 of the Income-tax Act was served on the assessee firm. THEreupon, action was taken by the Income-tax Officer under section 46(2) of the Income-tax Act, who certified that the taxes mentioned above were not paid. On receipt of this certificate the Certificate Officer of Alipore filed three certificates under section 4 of the Public Demands Recovery Act. THEse cases were Certificate Cases Nos. 1115 I.T. of 1948-49, 1130 I.T. of 1948-49 and 366 I.T. of 1948-49. Notices were issued under section 7 of the Public Demands Recovery Act and served upon the firm. THE taxes were not paid. THEre upon some movable properties belonging to the plaintiff-partner were attached. THE plaintiff raised on objection before the certificate Officer which was dismissed and an appeal preferred by him was dismissed by the Collector of 24 Paraganas on 18th July, 1950. THEreupon, the present suit was instituted by the plaintiff on 16th December, 1950, for the reliefs which we have already mentioned. The first and foremost question which calls for our determination in this appeal is whether the personal goods of the plaintiff respondent were liable to be attached in execution of a certificate which was signed and prepared against unregistered firm known as Satyanarayan Khan-Kalicharan Sadhukhan or which the respondent was one of the admitted partners during the relevant period. The firm has since been dissolved or discontinued. According to the statement made in the plaint the firm was dissolved since Baisakh, 1344 B.S., that is, corresponding to some time in April, 1947. It is not known at what exact time the fact of dissolution of the firm was brought to the notice of the income-tax authorities. But from a letter marked exhibit 2(c) in the trial court which bears the date of 3rd October, 1947, we may take it that the fact of dissolution or discontinuance of the partnership firm was brought to the knowledge of the Income-tax Officer who was dealing with these assessments on 3rd October, 1947, or shortly thereafter. It is at least clear the Income-tax Officer placed the matter before the certificate Officer under section 46(2) of the Income-tax Act, the fact of dissolution or discontinuance of the partnership was brought to his knowledge. The Certificate Officer prepared and filed the certificates in the name of the dissolved firm. When the matter, however, came to the execution of the certificates the personal belongings of the plaintiff respondent were attached. Mr.Meyer, learned counsel for the appellant, contended before us that although for the purpose of the Income-tax act the firm was a separate assessable unit or entity, in reality the firm had no separate or independent existence apart from its constituted members, namely, the partners. He, therefore, contended that the certificates which had been filed against the firm were capable of execution against the partners. In this connection Mr. Meyer drew our attention to a decision of the Supreme court reported in Dulichand Laxminarayan v. Commissioner of Income-tax. He particularly drew our attention to the following two passages of the judgment occurring at pages 541 and 542 of the report. The first passage runs to the following effect : "In other words, a firms name is merely an expression, only a compendious mode of designating the persons who have agreed to carry on business in partnership."
(3.) THE second passage runs to the following effect : "We need only refer to the case of Bhagwanji Morarji Goculdas v. Alembic Chemical Works Co. Ltd. where it has been laid down by the Privy Council that Indian law has not given legal personality to a firm apart from the partners. This view finds support from and is implicit in the observations made by this court in Commissioner of Income-tax v. A. W. Figgies & Co." Relying on the observations of the Supreme Court quoted above Mr. Meyer argued that although the assessment was made in the name of the firm and although the certificates were signed and filed under section 4 of the Public Demands Recovery Act showing the firm as the certificate debtor, the taxes based upon the assessments in question were recoverable from the partners of the firm inasmuch as the firm and the partners of the firm were inter-changeable terms for the purpose of realization of the income-tax. We shall presently examine how far there is any substance in this contention.;

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