R.M. Sahai, J. - (1.) FACED with the piquant situation of having lost title to property in consequence of a decree passed by this court in first appeal arising out of a suit for declaration, and yet an inclusion of the same in the determination of assets, under the E.D. Act, 1953, the petitioner came to this court under Article 226 of the Constitution of India in 1972 seeking the quashing of the order passed by the Asst. Controller, as far back as December 11, 1962.
(2.) BEFORE examining whether this court should refrain from exercising its extraordinary jurisdiction as the petitioner came to this court after a lapse of ten years, it is appropriate to narrate the background in which the events moved as it shall help not only in resolving the controversy on merits but shall assist in deciding the preliminary objection raised by learned standing counsel for the Commissioner of Income-tax. One Kamal Kishore Mall was the Raja of what was known as Majhauli Estate. After his death his widow, for brevity "Rani", continued in possession over the estate till 1937. On her death, Balbhadra Mall, the grandfather of the petitioner, a collateral of the Raja, entered into possession. In 1940, the mother-in-law of the Rani filed Suit No. 41 of 1940 for seeking declaration and possession over the property. Another suit was filed by one Pratap Kishore Mall claiming to be the adopted son of the Rani. The later suit, however, was dismissed and the judgment became final. Suit No. 41 of 1940 was contested by Balbhadra Mall. It was claimed that Majhauli Estate was an ancient impartible estate governed by the rule of male lineal primogeniture. The suit was dismissed in 1945. First appeal against this was allowed on January 29, 1971. And we are informed that an appeal against this decree has been dismissed by the Supreme Court. In between, the grandfather of the petitioner died on July 31, 1955. For the determination of estate duty, notices under Section 55 of the E.D. Act were issued to seven persons. No notice was issued to the petitioner. Yet he filed a statement of account in Form No. D-1 on November 15, 1961. It is not clear but it appears that after the death of the petitioner's grandfather, litigation started between his sons and heirs and Suit No. 72 of 1958 was filed. The Asst. Controller, after perusing the plaint of that suit, issued a show-cause notice to the petitioner to which he filed his reply on January 30, 1961. The Asst. Controller, after examining the claim made by the petitioner in the suit of 1958, held him liable to pay estate duty and the principal value of the estate which passed on the death of the deceased was determined at Rs. 9,43,348. Appeal against this order was dismissed as barred by time in 1963. In 1964, proceedings for reassessment were initiated under Section 59 of the Act. It was completed on November 26, 1969. On December 27, 1971, another notice under Section 58(4)/59 was issued by the Asst. Controller as there was a calculation error in the order, dated November 26, 1969. On January 13, 1972, an order under Section 61 was passed. While these proceedings were going on, the first appeal, as already stated, was decided by this court in 1971. Aggrieved by the orders, dated December 11, 1962, November 26, 1969, and January 13, 1972, passed by the Asst. Controller, the petitioner came to this court. From what has been stated above it is apparent that the assets of Balbhadra Narain Mall, the grandfather of the petitioner, were determined for the purposes of estate duty on a claim made by the petitioner in civil litigation. Suit No. 72 of 1958 was an off-shoot of Suit No. 41 of 1940. The petitioner was claiming the property of his grandfather on the strength of a decree of the civil court. In the counter-affidavit it is alleged that Suit No. 41 of 1940 was not dismissed. That is not very relevant as, in the appeal, the decree in favour of Balbhadra Narain Mall was modified. Effect of this, under law, was that he was not the owner of the property or shall not be deemed to have been the owner at least from the date the suit for declaration was filed. It is settled that a decree for declaration dates back to the date of the suit. Therefore, the grandfather of the petitioner was not the owner nor he could be deemed to be the owner of those properties at the time of his death in 1955. It was, therefore, not his estate. Under Section 4 of the E.D. Act, the levy could be made upon the principal value of property which passed on the death of a person. But if the property did not belong to the deceased at the time of his death, it could not form part of his estate. When the assessment was made, the civil suit was pending. On the date when the order was passed, on the basis of the claim in. the civil court and the decree passed in the suit for a declaration, probably no exception could be taken to it. But once the decree was set aside, the entire foundation for the order disappeared. The argument of the learned standing counsel based on the counter-affidavit that the order was passed as desired by the petitioner does not, in our opinion, make any difference. Even if the petitioner agreed for finalisation of the proceedings, it would not operate as an estoppel or debar him from challenging the order if it was wholly without jurisdiction due to a change of circumstances or of law.
(3.) LEARNED standing counsel for the Commissioner, however, vehemently argued that the petitioner having filed this petition after ten years of the date when the assessment order was passed was guilty of laches and this court should not issue writ in favour of a person who was not vigilant. He also urged that appeal against assessment order having been dismissed as barred by time and there being no error in that order, the petitioner was not entitled to any relief. According to the learned counsel, the Department being not a party in the civil suit or in the first appeal allowed by this court, it was not bound by it and the order passed by the Asst. Controller cannot be set aside on this ground. Taking up the last objection first, the decree in civil suit was not collusive or fraudulent. It was fought out tooth and nail up to the Supreme Court. It may not be binding on the Department as it was not a party but a judgment on contest is certainly relevant and can be looked into to find out what was decided therein. Not only this : determination of estate duty proceeded on a claim made by the petitioner in civil suit. No other basis has been mentioned in the order. If the basis of claim itself disappeared due to grant of decree in first appeal which arose out of basic suit, which, of course, gave rise to other suits, then the factual basis on which the order proceeded was rendered non-existent.;