1,00,000/ of which Rs.
With these specific averments the,plaintiff raised its suit seeking leave to sue on behalf and for the benefit of itself and the other creditors, if any, of defendant No 3.
We are number companycerned with the house at No.
3, is the father of Krishan Lal Malhotra, defendant No.
P was pleaded that defendant No.
The Appellate Assistant Commissioner however allowed the appeal of defendant No.
Both the houses were attached on October 13, 1952.
3, and ii the house is and companytinued to be owned by defendant No.
15, Keeling Road, hereinafter referred to as the house.
The facts giving rise to the appeals are quite simple.
3 and that the House is and companytinues to be owned by the 3rd defendant and that the plaintiff is entitled to proceed against the said properties by way of attachment and sale to realise the tax arrears due from him.
15, Keeling Road and house No.
1 in the suit, with an authorised capital of Rs.
2 The Company took the plea, inter alia, that it had been genuinely and properly formed and that it was a bona fide purchaser for value and the transaction was quite real and genuine.
The 1st defendant companypany by itspromoters directors and office bearers was fully aware of all the facts of the case, including the true state of the title to the property No.
From the Judgment and Decree dated 14 2 1967 of the Delhi High Court in Regular First Appeal Nos.
50,000/ paid in cash before Sub Registrar .
He pleaded that he had paid Rs.
1,25,090/11/ for assessment year 1947 48 in March 1952.
Meanwhile, defendant No.
2 raised an objection, and prayed for the release of the house.
1 objected to the attachment of the house for the realisation of the arrears of income tax of defend ant No.
The house was therefore attached on October 13, 1952.
3 against the assessment of income tax and ordered a fresh attachment by his order dated May 12, 1953.
32920 dated 14.11.1946 on the New Bank of India Ltd., New Delhi drawn by his mother K. Rani and Rs.
3 was assessed to income tax for a sum of Rs.
He pleaded further that he had numberknowledge of the Collectors order and that his order, if any, was ex parte.
90,000/ were payable in the shape of shares in the Company, Rs.
It denied that the sale deed dated May 25, 1953, was executed at the instance of defendant No.
Except for the legal fiction of the I st defendant Company being juristic person the sale was by the vendor to himself.
3 in companylusion and companyspiracy with the 2nd defendant and certain other persons, and with the view, intent and purpose of defeating and delaying his creditors including the plaintiff, had recourse to diverse ways and means as detailed in the plaint.
That house had been ostensibly purchased by defendant No.
2 filed a short written statement stating that he was the owner of the house having purchased it with his own money.
2 and 3 and five other persons purported to form a limited companypany known as Moksh Builders and Financiers Ltd., hereinafter referred to as the Company, which was arrayed as defendant No.
There were 7 subscribers to the Memorandum and the Articles of Association of the Compa ny and each of them took 10 shares, Soon after the Appel late Assistant Commissioner made his aforesaid order dated May 12, 1953 for fresh assessment of the income tax liabili ty of defendant No.
The Additional Collector allowed the objection by a summary inquiry, and the Chief Commissioner dismissed the appeal on April 1, 1954.
1739 1740 of 1968.
The as sessments for 1944 45 and 1948 49 were companypleted on March 28 and 31, 1953, respectively, raising a tax demand for Rs.
In the alterna tive, the plaintiff prayed for a declaration that the shares allotted to defendant No.
Harjas Rai Malhotra, defendant No.
2, by defendant No.
1,94,738.15.
Defendant No.
2 pleaded that it was a real and genuine Company and that out of his shares worth Rs.
A recovery certificate was issued to the Collector for the same on May 4, 1953 and the house at No.
100/ each.
2 belonged to defendant No.
The order of fresh assessment was made on November 30, 1953 and the incometax demand was reduced to Rs.
3 failed to pay that amount on demand and a recovery certificate was issued on October 8, 1952.
5 D, and 54 D of 1958 .
5,00,000/ divided into 5000 shares of Rs.
Both those officers, according to the plaintiff, proceeded on prima facie companysiderations and left the parties to seek their redress in the civil companyrt.
It was alleged in the plaint that the house was pur chased by defendant No.
The Collector rejected the objection on March 3,.
10,000/ were paid by him by a cheque and Rs.
Defendant No.
3, a sale deed dated May 25, 1953 was brought into existence whereby defendant No.
A prayer was made for setting aside the orders of the Additional Collector and the Chief Commis sioner on the objection petition of defendant No.
90,000/ he had sold shares worth Rs.
It also prayed for a declaration that it was entitled to pro ceed against the properties which may be declared to be of 3rd defendants by attachment and sale to realise the tax arrears due from him.
2 and of the Chief Commissioner dated April 1, 1954.
2 was the rightful owner of the house which he had rightfully purchased with his own money Rupees 10,000/ by cheque No.
15, Keeling Road, the highly embarrassed financial circumstances of the 3rd defendant the facts that he owed to the plain tiff alone taxes to the amount of several lakhs of rupees etc.
2 did number appeal against that order and did number question it by a suit.
3 and that defendant No.
1,94,735.15, and a recovery certificate was issued on May 4, 1953.
He was thus alleged that, in February 1953, defendants Nos.
The liability of defendant No.
Defendant No.
Defend ant No.
As has been stated, a fresh recovery certificate was issued to the Collector on May 4, 1953 and the house was again attached on August 6, 1953.
2 in 1739/68 and Respondent No.
K. Sen and D. Goburdhan, for Respondent No.
74,000/ .
Defendant No.
60,000/ .
1740/68 .
Defendant No.
50,000/ were paid before the SubRegistrar.
2, was sham and was effected in order to defeat or to delay the creditor of defendant No.
2 purported to companyvey the house to defendant No.
The assessment of incometax for the years 1944 45 and 1948 49 was companypleted in March 1953 raising the tax demand to Rs.
2, who had failed to obtain an order for the release of the house as aforesaid, has tened to sell it to the Company on May 25, 1953.
3 did number appear to companytest the suit in spite of personal service and the trial companyrt made an order on April 15, 1955 to proceed against him ex parte.
He filed an application objecting to the attachment on the ground that the house belonged to him, but the Collector dismissed the objection holding that the house belonged to defendant No.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
3 appealed against the order of assessment.
8,000/ payable to Sunrise .Investors Ltd. and Rs.
The Appellate Assistant Commissioner allowed the appeal on May 12, 1953, set aside the assessment and directed a fresh assessment.
On the other hand the sale deed dated 25th May, 1953 to the 1st defendant was executed by the name lender the 2nd defendant at the instance of the true owner of the 3rd defendant with intent to defeat or delay the latters creditors, and is voidable at the option of any of such creditors includ ing the present plaintiff.
3 did number care to appear and companytest the suit even though he was served and knew the nature of the plaintiffs claim and the basis thereof.
3, benami, in the name of his son defendant No.
2000/ in cash.
2, out of his own funds drawn from his bank account and that the full beneficial ownership, right, title and interest in the said property has always belonged and companytinues to this day to belong to the 3rd defendant.
A demand was made for its payment, but he neglected to meet it and a certificate was issued on October 8, 1952 to the Collector of Delhi for its recovery as ar rears of land revenue.
As the High Court has set aside the judgment and decree of the trial companyrt, the present appeals have been filed by the plaintiff as aforesaid.
Separate written statements were filed by the Company and defendant No.
1,25,090/11/ in March, 1952.
None of these de vices and subterfuges companyld divest the 3rd, defendant of his ownership of the property in question.
15, Keeling Road out of the reach of his creditors.
12 1338SCI/76 The trial companyrt found that the house was purchased benami in the name of defendant No.
5 D and 54 D of 1958, by which the judgment and decree of the trial companyrt dated January 13, 1958 have been set aside with companyts throughout.
The Collector was asked to attach house No.
9, Hailey Road in New Delhi, of defendant No.
1739/68 and for Respondent No.
1 for Rs.
It prayed for a declaration that i the sale deed dated May 25, 1953 was void as against the plaintiff and all other creditors of defendant No.
3, or that it was intended to defeat or delay his creditors.
As regards the Company, defendant No.
No appeal, or other remedy was sought against .that order.
In the meantime, the Company was incorporated in February, 1953.
The plaintiff pleaded that these transactions were all sham, companyorable, and effected and entered into with the active aid, instigation and advice of the 3rd defendant and to subserve and carry out the object of placing his property, viz.,
It was further urged as fol lows, The companysideration mentioned in the sale deed of 25th May, 1953 was illusory.
1,05,769.13.
The trial companyrt set aside the orders dated October 9, 1953 of the Additional Collector on the objection petition of defendant No.
The Company also pleaded that the transaction of sale in its favour was without numberice of any body elses claim and was binding.
15, Keeling Road was again attached on August 6, 1953.
9, Hailey Road, for the companytroversy before us relates to house No.
Sachin Chaudhary, B.P. Maheshwar and Suresh Sethi, for the Respondent No.
1 in CA.
of companytrolling interest, the shares being the alleged price.,
3 with his own money and that the sale of the house to the Company by defendant No.
2 in December, 1946 for Rs.
The 1st defendant is number a purchaser in good faith for companysideration of the said property or without numberice of the title of the 3rd defendant.
1 in CA.
3 to income tax and super tax for the as sessment year 1947 48, was fixed Rs.
The plaintiff alleged further that during the pendency of his appeal to the Appellate Assistant Commissioner against the assessment which had been made in March 1952 for 1947 48 and the assessment proceedings for 1944 45 and 1948 49, defendant No.
The Judgment of the Court was delivered by SHINGHAL, J., These two appeals by certificate have been companysolidated by an order of this Court dated April 15, 1969.
1740/68 .
10,000/ by cheque on New Bank of India Ltd., New Delhi, and Rs.
S. Desai and Girish Chandra, for the Appellant.
2 in CA.
As this has resulted in the dismissal of the suit raised by the Union of India, it has filed the present appeals.
Thus far, the facts are number in dispute.
1 had numberreal existence.
They are directed against a companymon judgment of the Delhi High Court dated February 14, 1967, in Regular First Appeals Nos.
In effect and substances the 2nd defendant pur ported to sell a house to the I st defendant in which companypany in return was to become a holder of shares .
