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The Income- Tax Act, 1995
Section 66 in The Income- Tax Act, 1995
Section 297(2)(i) in The Income- Tax Act, 1995
Section 297 in The Income- Tax Act, 1995
Article 226 in The Constitution Of India 1949
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Delhi High Court
Raja Ram Kumar Bhargava (Decd., By ... vs Union Of India (Uoi) on 28 July, 1972
Equivalent citations: 1973 92 ITR 312 Delhi
Author: A Behari
Bench: A Behari

JUDGMENT Avadh Behari, J.

1. The facts in this case are simple and undisputed. The plaintiffs have instituted a suit for the recovery of Rs. 1,29,640.98 against the Union of India. In brief, the allegations of the plaintiffs are that they formed a Hindu undivided family in respect of which assessment proceedings under the Indian Income-tax Act, 1922, were taken for the year 1946-47. The assessment was made for the assessment year 1946-47 by the Income-tax Officer under the Income-tax Act and Excess Profits Tax Act some time in 1951. An appeal was preferred to the Appellate Assistant Commissioner in 1952, and the order of the Income-tax Officer was partly varied and as a result the amount of tax was reduced. In March, 1955, the appeal of the plaintiffs to the Income-tax Appellate Tribunal was dismissed. In September, 1955, the income-tax department took coercive proceedings against the plaintiffs under Section 46(5A) of the Indian Income-tax Act of 1922 and attached the immovable properties of the plaintiffs situated at Lucknow. The plaintiffs borrowed the amount from the Central Bank of India, Lucknow, and paid a sum of Rs. 2,57,583.87 to the income-tax department on March 22, 1957. The plaintiffs allege that they paid interest to the Central Bank of India on this loan ranging between 6 per cent. and 9| per cent. Dissatisfied with the order of the Income-tax Tribunal (Delhi Bench), the plaintiffs under Section 66 of the Act of 1922 made a reference to the High Court of Allahabad in 1965 and this income-tax reference was registered as I.T.R. No. 81 of 1960. The reference was decided by the High Court of Allahabad on the 7th of April, 1966. The reference was answered in favor of the plaintiffs and the department was directed to refund the excess income-tax wrongfully realised by the income-tax department from the plaintiffs. On the 16th of September, 1966, the Income-tax Appellate Tribunal, Delhi, made a consequential order under Section 66(5) of the Indian Income-tax Act of 1922. On the 9th of December, 1967, a sum of Rs. 19,126.16 was refunded to the plaintiffs on account of excess profits tax, and on the 17th of December, 1966, a sum of Rs. 2,01,146'62 was refunded to the plaintiffs on account of excess income-tax realised from them. On the 17th of October, 1966, the plaintiffs in their letter to the Commissioner of Income-tax, U.P. II, Lucknow, made a claim for interest on the amount refunded to them under Section 66(7) of the Indian Income-tax Act, 1922. The plaintiffs' claim for interest was, however, rejected by the Commissioner of Income-tax. The plaintiffs, thereupon, made a petition dated the 20th of August, 1967, to the Deputy Prime Minister of India who was also holding the portfolio of Finance then, claiming that interest be paid to the plaintiffs at the rate of 6 per cent. from March 27, 1957, the date of payment, to the 17th of December, 1966, the date on which the refund under the Indian Income-tax Act of 1922 was allowed. The Central Government also rejected this petition. On the 15th September, 1969, the plaintiffs brought the present suit and in this suit they have claimed the following amounts :

 

Rs.

(a) Interest on Rs. 2,01,146.62 from March 27m 1957, to December 17, 1966, at the rate of 6 percent per annuam   1,17,358.87

(c) Interest on Rs. 19,126.16 from March 27, 1957, to December 9, 1967, at the rate of 6% per annum  12,282.11   1,29,640.98  

2. A sum of Rs. 1,17,358.87 is claimed as interest on the amount of excess income-tax realised from the plaintiffs and Rs. 12,282.11 on account of interest regarding excess amount realised from the plaintiffs in respect of excess profits tax. The plaintiffs have also claimed pendente life and future interest.

3. The Union of India resisted the claim. It is pleaded that the plaint did not disclose any cause of action inasmuch as the plaintiffs' claim to interest was not allowed by the Commissioner of Income-tax. It was pleaded that, as the Commissioner of Income-tax, U.P. II, Lucknow, has not been imp leaded as a party, Delhi courts have no jurisdiction to try the suit. The suit was said to be barred by limitation. On merits it was contended that the relevant provisions of law applicable to the facts of this case were contained in the Income-tax Act of 1961 and not in the Act of 1922. It was said that under Section 297(2)(i) of the present Act, as the assessment of the plaintiffs for the year 1946-47 was completed prior to the commencement of the present Act the refund in respect of such assessment fell due only on the 16th of September, 1966, upon the passing of the order by the Income-tax Appellate Tribunal (Delhi Bench) under Section 66(5) of the old Act. As the refund was paid to the plaintiffs within six months from the order of the Income-tax Tribunal dated the 16th of September, 1966, the defendants submitted that they were not liable to pay any interest to the plaintiffs as claimed. It was also submitted that the plaintiffs cannot claim interest in the present suit under Section 66(7) of the Act of 1922, inasmuch as interest under the said section can be allowed only by a statutory authority, namely, the Commissioner of Income-tax and the Commissioner of Income-tax has rejected the plaintiffs' claim to interest. In the replication filed by the plaintiffs it was submitted that Section 297(2)(i) of the Income-tax Act of 1961 has no application to the present case inasmuch as the assessment was not completed before the commencement of the present Act and that in view of the provisions contained in Section 297(2)(a) and (c) of the Act of 1961 and those of paragraph 2 of the Income-tax (Removal of Difficulties) Order, 1962, the plaintiffs' claim to refund was governed by the provisions of the Indian Income-tax Act of 1922.

4. On the pleadings of the parties the following issues were framed :

(1) Is the suit liable to be dismissed on the ground that the plaintiffs have not given their addresses within the jurisdiction of this court as required by Rule 3, Chapter III, of the Delhi High Court Rules ?

(2) Does the plaint disclose any cause of action against the defendant ?

(3) Whether the suit is bad for misjoinder of parties ? If so, what is the effect ?

(4) Whether this court has jurisdiction to try this suit ?

(5) Arc the plaintiffs entitled to have any interest on the sum refunded to them on account of income-tax and/or excess profits tax ?

(6) Whether the claim of the plaintiffs in the suit is governed by the provisions of the Income-tax Act, 1961, or under the provisions of the Indian Income-tax Act, 1922 ?

(7) Whether the plaintiffs are entitled to recover any amount from the defendant by way of reasonable compensation and/or interest for having been deprived of their money for the period in question ?

(8) Relief.

5. On behalf of the plaintiffs two witnesses were examined. The agent of the Central Bank of India, Lucknow, stated that Raja Ram Kumar Bhargava, the original plaintiff and Tej Kumar Bhargava executed a mortgage deed in favor of the bank. He also produced a copy of the loan account of the plaintiffs. Plaintiff No. 2 appeared as his own witness and stated that in 1951 they were assessed for the income tax year 1946-47. He then stated the various proceedings which were taken and which have been mentioned above. A sum of Rs. 2,57,000 was paid by the Central Bank to the income-tax department on account of income-tax dues from the plaintiffs. The bank paid this amount after the plaintiffs had mortgaged the property in favor of the bank. The bank charged interest from the defendants at the rate ranging from 6 to 9 1/2 per cent.

6. Issues Nos. 6 and 7:

7. First of all it has to be determined whether the Indian Income-tax Act of 1922 (referred to hereinafter as the old Act) or the Income-tax Act, 1961 (referred to hereinafter as the present Act), applied to the facts of this case.

8. Under the old Act it was provided in Section 66 that a reference may be made to the High Court on any question of law arising out of the order of the Appellate Tribunal. Sub-section (7) of Section 66 provided as under:

"(7) Notwithstanding that a reference has been made under this section to the High Court, income-tax shall be payable in accordance with the assessment made in the case :

Provided that, if the amount of an assessment is reduced as a result of such reference, the amount overpaid shall be refunded with such interest as the Commissioner may allow unless the High Court, on intimation given by the Commissioner within thirty days of the receipt of the result of such reference that he intends to ask for leave to appeal to the Supreme Court, makes an order authorising the Commissioner to postpone payment of such refund until the disposal of the appeal to the Supreme Court."

9. The sub-section, therefore, lays down that on the reduction of the amount of assessment as a result of reference, the amount overpaid shall be refunded to the assessed "with such interest as the Commissioner may allow."

10. In the present Act the relevant sections are Sections 240 and 244 which read as under :

"240. Refund on appeal, etc.--Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessed, the Income-tax Officer shall, except as otherwise provided in this Act, refund the amount to the assessed without his having to make any claim in that behalf.

244. Interest on refund where no claim is needed.--(1) Where a refund is due to the assessed in pursuance of an order referred to in Section 240 and the Income-tax Officer does not grant the refund within a period of six months from the date of such order, the Central Government shall pay to the assessed simple interest at nine per cent. per annum on the amount of refund due from the date immediately following the expiry of the period of six months aforesaid to the date on which the refund is granted.

(2) Where a refund is withheld under the provisions of Section 241, the Central Government shall pay interest at the aforesaid rate on the amount of refund ultimately determined to be due as a result of the appeal or further proceeding for the period commencing after the expiry of six months from the date of the order referred to in Section 241 to the date the refund is granted ."

11. According to Section 244 if refund is not granted by the Income-tax Officer within a period of six months from the date of the order passed in appeal or other proceeding under the Act, the Central Government shall pay to the assessed simple interest at 9 per cent. per annum on the amount of the refund due from the expiry of the period of six months to the date on which the refund is granted. By the Taxation Laws (Amendment) Act, 1970 (42 of 1970), the words "within a period of six months from the date of the order" were substituted by the words "within a period of three months from the end of the month in which such order is passed." In 1967, the rate of interest was 6 per cent. which was later on increased to 9 per cent.

12. It was contended by the learned counsel for the plaintiffs that this case was governed by the provisions of the old Act. It was urged that Sections 240 and 244 of the present Act govern appeal or proceeding under the present Act. But, if the appeal or reference is under the old Act, then Section 240 has no application and the relevant provision applicable is Section 66(7) of the old Act. It was further maintained that the reference to the High Court was pending when the present Act came into force. The present Act came into force on April I, 1962, and the reference was decided under Section 66 of the old Act on April 1, 1966. Reliance was also placed on the Income-tax (Removal of Difficulties) Order, 1962, and in particular on paragraph 2 of the said order which runs as follows :

"2. Registration and refund proceedings to be regarded as part of assessment proceedings.--For the purpose of Clauses (a) and (b) of sub-section (2) of Section 297 of the Income-tax Act, 1961 (XLIII of 1961) (hereinafter referred to as the repealing Act), proceedings relating to registration of a firm or a claim for refund of tax shall be regarded as a part of the proceedings for the assessment of the person concerned for the relevant assessment year."

13. Basing himself on the Removal of Difficulties Order it was contended by the plaintiffs' counsel that the claim for refund is a part of the proceedings and that Section 297(2)(a) of the present Act read with the Income-tax (Removal of Difficulties) Order applies to the facts of the present case. Section 297, in so far as it is relevant, reads as under :

"297. Repeals and savings.--(1) The Indian Income-tax Act 1922 (XI of 1922), is hereby repealed.

(2) Notwithstanding the repeal of the Indian Income-tax Act, 1922 (XI of 1922) (hereinafter referred to as the repealed Act),--

(a) where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed ;.........

(c) any proceeding pending on the commencement of this Act before any income-tax authority, the Appellate Tribunal or any court, by way of appeal, reference or revision, shall be continued and disposed of as if this Act had not been passed ;.,.......

(i) where, in respect of any assessment completed before the commencement of this Act, a refund falls due after such commencement or default is made after such commencement in the payment of any sum due under such completed assessment, the provisions of this Act relating to interest payable by the Central Government on refunds and interest payable by the assessed for default shall apply......"

14. The learned counsel for the plaintiffs argued that Section 297(2)(i) has no application to the present case. For his submission that the provisions of the present Act do not apply and that the case is governed by the provisions of the old Act reliance was placed on Raja Jagdambika Pratap Narain Singh v. Income-tax Officer, Faizabad, [1970] 76 I.T.R.6 19 (All.). In this case a Division Bench held that since the reference was pending before the High Court before the 1st of April, 1962, the date on which the new Act came into force, the reference should be deemed to have been disposed of by the High Court under the old Act as provided in Clause (c) of Sub-section (2) of Section 297 of the new Act. It was further held that the Commissioner was right in passing orders of refunds under the proviso to Sub-section (7) of Section 66 of the old Act. The contention of the income-tax department that the case was governed by the present Act was rejected.

15. In Pandyan Insurance Co. Ltd. v. Commissioner of Income-tax, [1969J 73 I.T.R. 12 (Mad.) and Hira Lal Jagarnath Prasad v. Commissioner of Income-tax, a contrary view was taken. In the first case it was held by a Division Bench of the Madras High Court that as the assessment was completed before the commencement of the new Act of 1961 and the refund, in consequence of the Supreme Court decision, fell due after the commencement of the new Act, Section 297(2)(i) of the Income-tax Act of 1961 applied. Therefore, the interest payable on such refund was governed entirely by the provisions of the new Act of 1961 relating to interest payable on refund, and as the refund was granted to the assessed within six months of the order directing refund, there was no liability on the part of the department to pay interest. Similarly, in the case of Hira Lal Jagarnath Prasad a Division Bench of the Allahabad High Court held that the petitioner became entitled to refund by virtue of the answer given by the High Court and by virtue of the consequential order of the Tribunal and as the dates, on which these orders were made, were after the 1961 Act came into force, the refund fell due after the commencement of the new Act and the provisions of the new Act relating to refund would apply in supersession to the provisions of the old Act. In this case what had happened was that the assessment to which the Income-tax Act of 1922 applied was carried to the High Court under Section 66(1) and the High Court answered the reference in favor of the assessed. Both when the High Court delivered its opinion and the Tribunal passed its consequential order the present Act had come into force. It will be seen that this Division Bench ruling was noticed in the case of Raja Jagdambika Pratap Narain Singh and it was distinguished.

16. On the other hand, the learned counsel for the Union of India maintained that the case was governed by Section 297 of the present Act and under the said Clause (2)(i) of that section as the assessment had been completed before the commencement of the present Act, the refund fell due after the commencement of the present Act. Therefore, the provisions of the present Act apply to the facts of this case. The refund became due as a result of the consequential order passed by the Tribunal on the 16th of September, 1966. The refund was made on the 17th of December, 1966, to the assessed. The Commissioner of Income-tax and the Central Government took this view. In this connection reference may be made to the order of the Income-tax Officer dated the 2nd of September, 1967. The relevant portion of that letter reads as under :

"......I have been directed to invite your reference to the provisions of Section 244(1) read with Section 297(2)(i) of the Income-tax Act, 1961, applicable to your case. The refund fallen due as a result of the Tribunal's order under Section 66(5) of Income-tax Act, 1922, having already been granted within a period of six months from the date of the said order, no interest is allowable in your case."

17. The Central Government in its letter dated the 13th of December, 1967, said this :

"The matter has been carefully examined. However, in view of the provisions of Sections 240 and 244(1) read with Section 297(2)(i) of the Income-tax Act, 1961, it is not possible to agree to your request for the grant of interest on the amount of refund for the period from March, 1957, to December, 1966, which proceeds on the erroneous presumption that the claim for interest has to be considered under the provisions of the Income-tax Act, 1922. The Board felt that the claim for interest in this case can be considered only under Section 244 of the Income-tax Act, 1961, and -as the refund order was issued by the Income-tax Officer within six months of the date of the Tribunal's order giving rise to the refund, no interest was payable in this behalf."

18. The counsel for the Union of India relied on the cases of Pandyan Insurance Co. Ltd. (Mad.) and Hira Lal Jagarnath Prasad, in support of his proposition.

19. In my judgment the present case is governed by the provisions of the old Act and I prefer to follow Raja Jagdambika Pratap Narain Singh v. Income-tax Officer, Faizabad, . In the cases of Pandyan Insurance Co. Ltd. and Hira Lal Jagarnath Prasad it will be noticed that the Removal of Difficulties Order was not brought to the notice of the court in those two cases. Sub-section (2)(c) of Section 297 provides that if any proceeding is pending on the commencement of the present Act before the income-tax authority, the Appellate Tribunal or any court, by way of appeal, reference or revision, the same shall be continued and disposed of as if this Act had not been passed. In the present case the reference was pending when the present Act came into force. The rights of the parties will, therefore, be governed by the provisions of the old Act and it cannot be said that the assessment had been completed. As observed by the Supreme Court in Kalawati Devi Harlalka v. Commissioner of Income-tax, the word "assessment" can bear a very comprehensive meaning; it can comprehend the whole procedure for ascertaining and imposing liability upon the taxpayer. It was further observed that Section 6 of the General Clauses Act would not apply because Section 297(2) evidences an intention 'to the contrary. In this connection the Supreme Court observed :

"It is true that whether a different intention appears or not, must depend on the language and content of Section 297(2). It seems to us, however, that by providing for so many matters mentioned above, some in accord with what would have been the result under Section 6 of the General Clauses Act and some contrary to what would have been the result under Section 6, Parliament has clearly evidenced an intention to the contrary. If Section 6 of the General Clauses Act is out of the way, there is no doubt that Parliament should not be credited with the intention of not providing for appeal and revisions, etc., against the assessment orders made under the 1922 Act. In this context, we must give the expression 'proceedings for the assessment of that person' in Clause (a) of Section 297(2) a very comprehensive meaning."

20. On a reading of the provisions of Section 297 with the Removal of Difficulties Order it seems to me that the intention of the legislature was that in case of assessment such as the present one the provisions of the old Act should apply.

21. The learned counsel for the plaintiffs argued that if it is held that the old Act does not apply to him and that the provisions of the present Act govern his case then, in that case, he submitted that the provisions of the Income-tax Act of 1961, namely, Section 297(2)(i) read with Sections 240 and 244, are bad and unconstitutional. His argument ran thus : Interest, according to him, is usufruct of the property. The Union has deprived the plaintiffs or has temporarily dispossessed them of money by an illegal exaction. Under Articles 19 and 31 of the Constitution of India if the plaintiffs have been deprived by the Government of their property, then under the Constitution even a temporary deprivation of the property has to be compensated. At the outset, it must be observed that there is no plea of ultra vires in the plaint (though these grounds are taken in the replication) and, therefore, this case of the plaintiffs that certain provisions of the Income-tax Act of 1961 are ultra vires cannot be entertained. Taxation is not deprivation of property and is not governed by Clause (1) of Article 31 of the Constitution, nor is it acquisition or requisitioning of property within the meaning of Clause (2)(ii). The object of taxation is to collect funds for the public treasury. A taxing statute will not fall within the purview of Clause (2). This position is made further clear by Clause (5)(b)(i),

22. The article applicable to taxation power of the State is Article 265. Under that article no tax shall be levied or collected except by an authority of law. As pointed out in Ramjilal v. Income-tax Officer, Mokindergarh, there was no provision corresponding to Article 265 in the Government of India Act of 1935. It collection of tax amounts to deprivation of property within the meaning of Article 31(1) then there was no point in making a separate provision again, as has been made, in Article 265. It, therefore, follows that Clause (1) of Article 31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax. The levying of tax is not deprivation of property and the Indian Constitution gives protection against taxation save by authority of law. In this case, the tax was imposed by authority of law. Tax imposed by a lawful authority is not taking away a man's property. If there is a wrong assessment it has to be corrected, set aside or modified in accordance with the provisions of law. If there is a reduction in the amount of assessment or tax as a result of an appeal or reference and the assessed becomes entitled to a refund it cannot be said that there was a temporary deprivation of his property without payment of compensation. The tax was not realised wrongfully. Tax was lawfully recovered. Similarly, the contention of the plaintiff that Section 297(2)(i) and Sections 240 and 244 constitute unreasonable restriction on the rights of the plaintiffs cannot be accepted. These provisions are not violative of Article 19 and there is no unreasonable restriction on the rights of the plaintiffs under Article 19(1)(f).

23. On issue No. 6, I, therefore, hold that the claim of the plaintiffs is governed by the provisions of the Income-tax Act of 1922. On issue No. 7, I hold that the plaintiffs are not entitled to recover any amount from the defendants by way of reasonable compensation and/or interest and they have not been deprived of their money for the period in question as claimed.

24. Issues Nos. 2 and 4:

25. The main question in this case is whether the civil court has jurisdiction to try the present suit. According to the learned counsel for the plaintiffs if wrong provisions of law are applied, the civil court has the power to correct the Commissioner of Income-tax and the Central Government. According to him, there is no bar to the jurisdiction of the civil court. The rate of interest can be determined by the civil court. The civil court, it was maintained, had power to enforce the civil remedy. Civil remedy is not barred in the facts and circumstances of the case. For his submission that the jurisdiction of the civil court is not excluded, the learned counsel for the plaintiffs relied on a number of decisions of the Supreme Court, namely, Addanki Tiruvenkata Thata Desika Charyulu v. State of Andhra Pradesh, , Provincial Government of Madras v. J.S. Basappa, , Commissioner of Income-tax v. National Storage Pvt. Ltd., , S. Kirpal Singh Duggal v. Municipal Board, Ghaziabad, and Union of India v. A. V. Narasimkalu, . On the other hand, Mr. R. M. Lal, the learned counsel for the Union of India, submitted that the jurisdiction to grant interest and the power to determine the rate of interest are invested in the Commissioner and that no suit is maintainable in this respect. It was a discretionary power under the old Act which was invested in the Commissioner of Income-tax and the civil court has no jurisdiction. Section 67 of the old Act provides that no suit shall be brought in any civil court to set aside or modify any assessment made under that Act. Section 67 reads as under :

"67. Bar of suits in civil court.--No suit shall be brought in any civil court to set aside or modify any assessment made under this Act, and no prosecution, suit or other proceeding shall lie against any officer of the Government for anything in good faith done or intended to be done under this Act."

26. In the present Act a similar provision is contained in Section 293 which lays down that:

"293. Bar of suits in civil courts.--No suit shall be brought in any civil court to set aside or modify any assessment order made under this Act, and no prosecution, suit or other proceeding shall lie against the Government or any officer of the Government for anything in good faith done or intended to be done under this Act."

27. The learned counsel for the Union cited a number of authorities in support of the proposition that where a right is created by the Act and a remedy is provided by the Act for the enforcement of that right then in that case it is not open to a litigant to file a civil suit in supersession of the remedy provided by the Act. In State of West Bengal v. Indian Iron and Steel Co. Ltd., the Supreme Court held that where a statute gives a finality to the orders of the special Tribunals in the matter of levy of tax, the civil court's jurisdiction must be held to be excluded, if there is adequate remedy to do what the civil court would normally do in a suit. It is true, as observed by Lord Thankerton in Secretary of State v. Mask & Co. that it is settled that the exclusion of jurisdiction of a civil court is not to be readily inferred, but that such exclusion must either be explicitly expressed or clearly implied. It is also well-settled, as observed by his Lordship, that even if the jurisdiction is so excluded, the civil courts have jurisdiction to examine into cases where the provisions of the Act have not been complied with or the statutory Tribunal has not acted in conformity with the fundamental principles of judicial procedure.

28. The Supreme Court has in a recent case, after discussing a number of leading cases on the subject, laid down the following principles regarding exclusion of jurisdiction of civil courts:

"(1) Where the statute gives a finality to the orders of the special Tribunal the civil courts' jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory Tribunal has not acted in conformity with the fundamental principles of judicial procedure.

(2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant, but is not decisive to sustain the jurisdiction of the civil court.

Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the Tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not.

(3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals.

(4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit.

(5) Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected a suit lies.

(6) Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is relevant enquiry.

(7) An exclusion of the jurisdiction of the civil court is not readily to be inferred unless the conditions above set down apply."

29. (See Sree Raja Kandregula Srinivasa Jagannadharao Panthulu Bahadur Garu v. State of Andhra Pradesh, ).

30. The learned counsel for the Union also cited Kalwa Devadattam v. Union of India, , Janda Rubber Works Ltd. v. Income-tax Officer, , Secretary of State for India v. V. M. Meyyappa Chettiar, , Richard Spooner v. Juddow, [1877] L.R. 4 I.A. 353 (P.C.), Dhulabhai v. State of Madhya Pradesh, and Kamala Mills Ltd. v. State of Bombay, . It is not necessary for me to examine all these rulings as the principles have authoritatively been set out in the case of Srinivasa. Jagannadharao Panthulu. It seems that the jurisdiction of the civil court to pass a decree for interest as claimed in the suit is barred. If the revenue fails to make a refund of the tax overpaid in terms of the proviso to subsection (7) of Section 66 of the old Act or interest thereon, the assessed may apply for a writ or order or direction under Article 226 of the Constitution to compel the payment of such refund or interest. The Supreme Court has ruled that the provisions of a statute cannot bar the jurisdiction of the High Court under Article 226 of the Constitution, for that is a power conferred on the High Court under the Constitution (Custodian, Evacuee Property, Punjab v. Jafran Begum, ). The High Court can issue a writ of mandamus or an order under Article 226 to compel the income-tax authorities to perform their statutory duties. In Liquidators of Pursa Ltd. v. Commissioner of Income-tax, the petitioner applied to the Commissioner of Income-tax for refund of the amount of tax over-paid together with such interest as the Commissioner may grant in the circumstances of the case. The Commissioner ordered that the excess amount of tax should be refunded, but declined to pay interest. Against this order the petitioners obtained a rule from the High Court calling upon the respondent to show cause why a writ under Article 226 of the Constitution should not be granted for quashing the order of the Commissioner of Income-tax and for directing him to deal with the claim of the petitioners in accordance with law. It was urged before the High Court in support of the rule that under Section 66(7) of the Income-tax Act, the Commissioner was bound, as a matter of law, not only to order refund of the amount of tax paid in excess, but also to pay reasonable amount of interest on the amount of tax paid in excess. The High Court accepted the contention of the assessed. The Division Bench (Ramaswami C.J, and Raj Kishore Prasad J.) observed as follows:

"On behalf of the assessed the contention was put forward that the true interpretation of the section is that the Commissioner is under a duty to pay the amount of tax over-paid together with some amount of interest. It was conceded that a discretion was vested in the Commissioner to fix the rate of interest, but it was contended that the Commissioner cannot say that no interest at all would be paid. In our opinion, the argument addressed by the learned counsel for the petitioners is correct. As a matter of construction we think that Section 66(7) contemplates that in a case where there is an excess payment of tax the assessed is entitled to refund of the amount of tax over-paid together with some amount of interest. It is not open to the Commissioner to say that no interest at all would be paid. It is of course a matter of discretion with the Commissioner of Income-tax to determine what should be the rate of interest. It is also clear that the discretion of the Commissioner to fix the rate of interest should be exercised reasonably in the background and circumstances of each particular case. To put it in other words, the discretion vested in the Commissioner of Income-tax must be exercised reasonably and in accordance with law.

For these reasons we hold that the order of the Commissioner of Income-tax dated the 8th October, 1955, refusing to pay interest to the petitioners is illegal and ultra vires and must be quashed by a writ in the nature of certiorari. We further direct that the Commissioner of Income-tax should reconsider the question of interest and decide the matter in accordance with law."

31. This ruling has a direct bearing on this case. The remedy of a civil suit, it seems to me, is misconceived, for the civil court has no jurisdiction to substitute its discretion to grant interest in place of the discretion vested in the Commissioner. Section 66(7) of the Act provides that the amount over-paid shall be refunded to the assessed "with such interest as the Commissioner may allow." Now, rate of interest may be anything between one per cent. and six per cent. In view of this statutory provision the discretion is vested in the public functionary created by the statute and the civil court in this suit has no power to override him and grant interest itself when the Commissioner has refused to grant interest. The learned counsel for the Union of India contended that if it is held that Section 66(7) applies to the case then this provision does not confer any jurisdiction on a civil court to grant interest to the plaintiffs. In my opinion, this contention is sound. It is worthwhile to mention here that all the three decisions reported as Pandyan Insurance Co, Ltd. v. Commissioner of Income-tax , Hira Lal Jagarnath Prasad v. Commissioner of Income-tax, and Raja Jagdambika Pratap Narain Singh v. Income-tax Officer, Faizabad were cases of writ petitions under Article 226 of the Constitution of India. The plaintiffs have not claimed a mandamus against the Commissioner of Income-tax, What has been claimed is a decree for money. The civil court will not have jurisdiction to grant interest at the rate of 6 per cent. as claimed by the plaintiffs as that power is only with the Commissioner of Income-tax. Faced with this difficulty, the learned counsel for the plaintiffs submitted that the remedy as provided in the old Act is a summary remedy and is not an adequate remedy and, therefore, the jurisdiction of the civil court has not been taken away. For this submission the learned counsel relied on Pabbojan Tea Co. Ltd. v. Deputy Commissioner, Lakhimpur, . In that case the employer's claim was that he had been called upon to pay wages and compensation to persons who are governed by the Notification under the Minimum Wages Act. The employer instituted a suit challenging the correctness of the decision given by the Authority under Section 20 of the Minimum Wages Act as to the applicability of the Notification under that Act to certain class of workers without following the provision as to hearing and enquiry contained in that Act. It was held that the civil court had jurisdiction to entertain such a suit. This ruling, to my mind, has no application to the facts of the present case and from the scheme of the old Act and the present Act and from the hierarchy of authorities created by those Acts and the express provision as contained in Section 67 of the old Act and Section 293 of the present Act it is sufficiently clear that the legislature wanted to oust the jurisdiction of the civil courts in a case such as the present one.

32. The learned counsel for the plaintiffs argued that he has claimed interest on equitable considerations and that equitable considerations, according to him, give way to a statute. In this connection he placed reliance on Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji, . In that leading decision the Privy Council laid down that in the absence of any usage or contract express or implied or of any provision of law to justify the award of interest on the decretal amount for the period before the institution of the suit interest for the period could not be allowed by way of damages caused to the respondent for the wrongful detention of their money by the railway company. The plaintiffs sued to recover from the Bengal Nagpur Railway Company a certain sum of money on account of the price of work done by them for the Railway. The plaintiffs claimed interest on the money for the period during which it was withheld from them by the Railway. The Privy Council held that the award of interest from the date of the institution of the suit is governed by Section 34 of the Code of Civil Procedure. On the question whether the court has authority to allow interest for the period prior to the institution of the suit, the Privy Council held that there must either be a usage or a contract or a provision of law to justify the award of interest on the decretal amount. The learned counsel for the plaintiffs argued that interest can also be awarded on equitable considerations and he relied upon the following passage in the judgment of Sir Shadi Lal:

"The Interest Act, however, contains a proviso that 'interest shall be payable in all cases in which it is now payable by law'. This proviso applies to cases in which the court of equity exercises jurisdiction to allow interest. As observed by Lord Tomlin in Maine and New Brunswick Electrical Power Co. v. Hart, [1929] A.C. 631 (H.L.). 'In order to invoke a rule of equity it is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction, as, for example, the non-performance of a contract of which equity can give specific performance. The present case does not, however, attract the equitable jurisdiction of the court and cannot come within the purview of the proviso."

33. In my view, this argument is unsound. There is no question of award of interest on equitable grounds in this case as there are statutory provisions regarding the grant of interest on refund contained in the old Act as well as the present Act and where the statute contains specific provisions equitable considerations have no place in the decision of the controversy.

34. The learned counsel for the Union argued that the plaint did not disclose the ground on which claim to interest was made and it was, therefore, submitted that the plaint was defective as it did not disclose a cause of action. The plaint does not contain any averment as to the ground on which interest has been claimed, namely, whether interest has been claimed by reason of a contract, compensation or in equity or by reason of a statutory provision or usage or trade. There is no doubt that the plaint is deficient in this respect. What can at best be, gathered from the plaint is that the plaintiffs seem to be aggrieved by the original order of imposition of tax. This order way subsequently modified on reference and it is on this ground that the plaintiffs consider themselves to be entitled to interest. It is nowhere stated in the plaint that the orders passed by the income-tax authorities were illegal or wrong or that the imposition of tax was wrongful. It is no doubt true that the plaintiffs have not stated clearly and distinctly in the plaint the ground on which they claim interest, but on a reading of the entire plaint and the replication it does appear that the ground on which the interest is claimed is that since the tax was recovered wrongfully from the plaintiffs which they were held finally not liable to pay, they are entitled to interest on the amount which has been unlawfully realised from them by the Government. It is on this assumption that the plaint seems to proceed but the question is whether the income-tax and the excess profits tax were recovered unlawfully. There can be no doubt that the tax was not realised wrongfully. The tax was lawfully imposed under the relevant provisions of the Indian Income-tax Act of 1922 and the Excess Profits Tax Act of 1940. The tax was imposed by virtue of the provision of law then in force. If there is a wrong assessment the assessed has his remedies under the income-tax law.

35. The amount of Rs. 2,01,146'62 was refunded on account of excess income-tax to the plaintiffs on December 17, 1966, and Rs. 12,126*16 were refunded to the plaintiffs on December 9, 1967, on account of excess profits tax realised from them. They became entitled to these refunds by reason of the consequential order passed by the Tribunal on September 16, 1966. If at all any claim on account of interest can be made by the plaintiffs, it can be only for the period from September 16, 1966, to December 17, 1966, in the case of income-tax and from September 16, 1966, to December 9, 1967, on account of excess profits tax. On the other hand, the plaintiffs have claimed interest in the plaint from March 27, 1957, to December 17, 1966, on Rs. 2,01,146.62 paid by them on account of income-tax and from March 27, 1957, to December 9, 1967, on Rs. 19,126'16 paid by them on account of excess profits tax. The plaintiffs cannot claim interest from the date of the payment of the amount till the date of refund. If at all any claim can be made it can be from the date of the order of the Tribunal dated September 16, 1966, till the date of refund. How the plaintiffs are entitled to interest from the date of the payment has not been stated in the plaint. In my opinion whether the old Act applies or the present Act governs this case, the plaintiffs are not entitled to interest from the date of payment, that is, March 27, 1957. An order of assessment will be held to be binding on the assessed until set aside, or modified in appeal or reference. It is the order passed on reference which entitled the plaintiffs to ask for refund. For any date anterior to the order of reference, there can be no claim as to interest as there is no provision in the statute for award of interest. The legislature has made it plain in Section 67 that tax shall be payable in accordance with the assessment notwithstanding that a reference has been made. If on reference the amount of tax is reduced the assessed shall be entitled to interest. From the legislative scheme, it appears that interest shall be paid from the date of the order of the Tribunal till refund is made.

36. It was also argued, under issue No. 4, that the High Court of Delhi has no jurisdiction to try the suit as the reference was heard by the Allahabad High Court and no part of the cause of action had arisen at Delhi and that the suit should have been filed at Lucknow. On the other hand, the learned counsel for the plaintiffs argued that as the order of the Central Government dated the 13th December, 1967, was passed at New Delhi, the civil courts at Delhi have jurisdiction to entertain the suit. My finding on issue No. 2 is that the plaint does disclose a cause of action and on issue No. 4, I hold that the civil courts have no jurisdiction to try the suit. In this view of the matter, no suit is maintainable or competent either at Delhi or at Lucknow. Issue No.1 :

37. The learned counsel for the Union of India did not press this issue. Otherwise also a suit cannot be dismissed merely on the ground that the plaintiffs have not given their addresses within the jurisdiction of the court as required by Rule 3 of Chapter 3 of the Delhi High Court Rules. This omission can always be corrected.

Issue No. 3 :

38. The learned counsel for the Union argued that the Commissioner of Income-tax has not been made a party to the suit and, therefore, the suit is defective. I do not agree with this contention. It is not necessary to make the Commissioner of Income-tax a party to the suit. The suit is properly constituted as the Union of India has been made a party to the suit.

Issues Nos. 5 and 8 :

39. For the reasons given above I hold that interest cannot be awarded to the plaintiffs by this court.

40. In the result, the plaintiffs' suit is dismissed with costs.