SAMPATRAJ CHHOGALALJI Vs. V S PATEL SALES TAX OFFICER

JUDGEMENT

(1.) The petitioners are the trustees of the assets and properties of Messrs G. Bhagwandas Ramchand a firm which prior to December 31 1962 was carrying on business in cloth in the Sindhi Market at Ahmedabad. The firm became involved in financial difficulties having become indebted in an aggregate sum of Rs. 6 65 856 nP. By a deed of arrangement dated December 31 1962 made between the said firm of Messrs G. Bhagwandas Ramchand and the two partners thereof Narandas Aishiram and Govindram Aishiram on the one hand and the six petitioners on the other hand the petitioners were appointed trustees with powers to realise and sell the properties and other assets of the said firm set out in the schedules thereto and to pay from the sale proceeds thereof rateably the debts due by the firm to its creditors. Clause (1) of the said deed of arrangement provided that the debtors namely the said firm and the two partners thereof thereby assigned unto the trustees all their personal property mentioned in the first part of the first schedule to the deed as also immovable properties free-hold as well as lease-hold belonging to the debtors and described in the second part of the first schedule thereto. Under the said deed the trustees were to hold the said properties upon trust for the benefit of the said creditors. The deed directed the trustees to collect all the outstanding debts due to the debtors or any one or more of them to sell the properties described in the first schedule and convert the same into money at such time and in such manners as they by majority should think fit and out of the moneys so realised first pay and retain all costs charges and expenses of and incidental to the preparation and execution of the deed in the next place to pay in full all those debts due by the debtors which were by statute directed to be paid in priority to other debts in the distribution of the property of a bankrupt and lastly to divide and distribute the residue of the said monies among the creditors (a list of whom was attached to the said deed as and by way of the second schedule) rateably according to the amounts of their respective debts in like manner as if the debtors had been adjudged bankrupts on the execution of the deed and so that all debts which would have been provable against the estate of the debtors in bankruptcy shall be provable in like manner against their estate under the deed. The deed also in express terms provided that the arrangement should be deemed for the benefit of all those creditors who signed and accepted it within such time as the trustees may prescribe. The three assets which were assigned under the deed to the petitioners as trustees and set out more particularly in the first schedule to the deed were (1) the stock-in-trade outstandings and all movable properties belonging to and lying at the shop premises of the debtor firm namely Messrs G. Bhagwandas Ramchand (2) the stock-in-trade outstandings and all movable properties belonging to and lying in the shop premises and godown of Messrs Harsh Radio Corporation and (3) the stock-in-trade outstandings and movable properties lying in the business premises of two other concerns by the name of Jay Ambe Sahayak Vastra Bhandar and Union Radios.

(2.) The firm of Messrs G. Bhagwandas Ramchand consisted of two partners the said Narandas Aishiram and Govindram Aishiram. The firm of Harsh Radio Corporation consisted of three partners Narandas Aishiram Govindram Aishiram and their widowed mother Tejibai and the firm of Union Radios consisted of two partners Narandas Aishiram and Govindram Aishiram. The two partners Narandas and Govindram were thus common partners in all the three concerns. According to the petitioners the firm of Harsh Radio Corporation was indebted to Messrs G. Bhagwandas Ramchand in the sum of Rs. 61 867.7 nP. and in part consideration of this debt its stock-in-trade was assigned to the petitioners as trustees under the said deed of arrangement. The petitioners case was that they sold the stock-in-trade belonging to Harsh Radio Corporation and realised therefrom Rs. 40 0 The position taken up by the petitioners however does not seem to be correct for the deed of arrangement clearly shows that the stock-in-trade outstandings and all movable properties belonging to Messrs Harsh Radio Corporation were therein treated as properties belonging to Messrs G. Bhagwandas Ramchand and it was on that footing that these properties and assets were assigned to the petitioners who as trustees sold them and deposited the sale proceeds thereof in a bank account opened by them in the United Commercial Bank Ltd. Ahmedabad. As regards the Union Radios the petitioners case was that they were unaware of the nature and extent of the interest of the debtors in that firm and in any event they had not realised any amount from the stock-in-trade or outstandings of that firm. So far as Union Radios are concerned no amount by way of sale proceeds of the stock-in-trade or by way of outstandings appears to have been collected by the petitioners or deposited by them in the said bank account.

(3.) It appears from the affidavit in reply that Harsh Radio Corporation was a registered dealer under the Bombay Sales Tax Act 1959 for the period between April 1 1961 to March 31 1962 and April 1 1962 to December 31 1962 The aggregate amount of tax due by this firm under the assessment for these two assessment periods when ultimately assessed came to Rs. 5 184.78 nP. and under the notice issued for payment that tax was payable on or before September 28 1963 The firm of Union Radios likewise was registered as a dealer. The firm had failed to pay the tax amounting to Rs. 1560/in respect of the quarter ending December 31 1962 and upon such failure a requisition certificate was issued to the revenue authorities on July 5 1963 for the recovery of the said arrears. In the meantime the firm of Union Radios was assessed ex parte for the period from April 1 1961 to March 31 1962 and April 1 1962 to December 31 1962 and as a result of this assessment the tax amount of Rs. 7 309.16 nP. became due and payable. This amount was payable on or before October 8 1963.