Y. K. Sabharwal, J. - (1.) The Stock Exchange, Ahmedabad, the appellant, admitted Rajesh Shah as its member on 19th February, 1988. He died on 7th February, 1994. On 12th February, 1994, heirs and legal representatives of Rajesh Shah wrote to the Stock Exchange that they were unable to meet the liabilties of the deceased. The Governing Board of the Stock Exchange is said to have passed a resolution dated 12th February, 1994 declaring Rajesh Shah, the deceased member, as a deemed defaulter and further resolving that his membership rights vested in Stock Exchange be disposed of by inviting offers within a minimum floor price of Rs. 25 lakhs.
(2.) A provisional attachment order dated 15th February, 1994 under Section 281B of the Income Tax Act, 1961 was issued by the Assistant Commissioner of Income Tax (Respondent) in respect of Stock Exchange Card in the name of Rajesh Shah and margin money and security deposits kept by him with the Stock Exchange. The Stock Exchange on 16th February, 1994 issued advertisement inviting claims from the member creditors and constituents of Rajesh Shah to lodge their claims with it within 30 days of the advertisement and also invited offers for purchase of membership with a minimum floor price of Rs. 25 lakhs. In respect of the order of provisional attachment, the stand of Stock Exchange is that under its Rules, Bye-laws and Regulations on the death or default of a member, member's right of nomination ceases and it vests in the exchange and belongs absolutely to the exchange free of all rights, claims or interests of such member or any person claiming through such member and the Governing Board is entitled to deal with or dispose of such right of membership as it may think fit. On 5th December, 1994, the Governing Board of the Stock Exchange passed resolution disposing of membership right of deceased Rajesh Shah vested in the Stock Exchange in favour of UTI Security Ltd. for Rs. 27 lakhs. A garnishee notice dated 14th June, 1995 under Section 226 (3) of the Income Tax Act, 1961 in the sum of Rs. 12,24,887 was also issued to the Executive Director, Stock Exchange by the respondent. In reply thereto, the Stock Exchange reiterated the stand that no amount was due from it to Rajesh Shah or his legal heirs and the exchange does not hold any money for and on behalf of Rajesh Shah or his legal heirs. The plea of the Stock Exchange was not acceptable to the respondent.
(3.) Under the aforesaid circumstances, the appellant-Stock Exchange filed a writ petition in the High Court challenging the orders of provisional attachment and the garnishee notice. The writ petition has been dismissed by the High Court which judgment is under challenge in this appeal.;