SURABHI WOODS vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX-CENTRAL,
What did the High Court hold?
The High Court of Kerala, while considering the writ petition, directed the Principal Commissioner of Income Tax (1st respondent) to consider and pass appropriate orders on the petitioner's representation (Ext.P14). The representation sought the release of one or more properties sufficient to satisfy the petitioner's claim. The court emphasized that the interest of justice demanded such consideration. The 1st respondent was instructed to afford an opportunity of hearing to the petitioner and to pass orders expeditiously, within two months from the date of receiving a copy of the judgment. The court did not decide on the merits of whether properties should be released, but rather on the procedural necessity of the authority considering the petitioner's request. The core principle is that a representation seeking partial release of attached property, when the value of attached property far exceeds the liability, warrants consideration by the competent authority after due hearing.
What were the facts?
The petitioner, Surabhi Woods, is a decree holder in a suit (OS No.98/2017) before the Sub Court, Ernakulam, having obtained a decree for Rs. 5,59,75,171/- against the 4th respondent, V.P. Rasheed. While attempting to execute this decree, the petitioner discovered that all properties of the 4th respondent were under attachment by the Income Tax Department. The petitioner estimates the value of these attached properties to be over Rs. 150 Crores, significantly exceeding the alleged Income Tax liability of around Rs. 68 Crores. The petitioner filed a representation (Ext.P14) before the Principal Commissioner of Income Tax (1st respondent) seeking the release of some attached properties to satisfy their decree, but received no response. The petitioner apprehends irreparable hardship due to potential securitisation proceedings by banks.
What were the issues?
1. Whether the petitioner, as a decree holder, has a right to seek the release of properties attached by the Income Tax Department, which are valued significantly higher than the tax liability, to satisfy their civil decree? (Question of law and fact, concerning the priority of claims and the extent of attachment under the Income Tax Act). Assessee's Contention: The petitioner argued that releasing some of the attached properties, which are in excess of the tax liability, would not prejudice the Income Tax Department and would enable the petitioner to recover their decreed amount. They also highlighted the threat of securitisation proceedings by banks. The petitioner relied on their representation (Ext.P14) filed before the 1st respondent. Revenue's Contention: The judgment does not record any specific arguments made by the revenue (respondents 1 to 3) in opposition to the petitioner's plea. The revenue's counsel appeared before the court.
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT Petitioner is a decree holder in OS No.98/2017 before the Sub Court, Ernakulam. The suit was decreed for an amount of Rs.5,59,75,171/-. The judgment debtor is the 4th respondent. While the petitioner initiated proceedings for execution against the 4th respondent, it was realised that all properties of the 4th respondent are under attachment with the Income Tax Department. According to the petitioner, though the liability due to the Income Tax Department was allegedly around Rs.68 Crores, on a cursory valuation of the properties attached, petitioner assumes the same to be having a value of more than Rs.150 Crores.
Petitioner contends that if any item of property is released from the attachment it can enable the petitioner to proceed in execution. No prejudice would be caused to the Income Tax Department while petitioner could be saved from the threat of proceedings under the Securitisation and Reconstruction of Financial
WP(C) NO. 23021 OF 2021 4 Assets and Enforcement of Security Interest Act, 2002 being initiated by the Banks.
Seeking the release of property or properties from attachment, petitioner had been knocking at the doors of the 1st respondent by filing Ext.P14. However, no response could be elicited from the 1st respondent till date and the petitioner apprehends irreparable hardships to him due to the threat of securitisation proceedings.
I have heard Adv.Rajesh Narayanan, learned Counsel appearing for the petitioner, Sri.Jose Joseph, learned Standing Counsel appearing for respondents 1 to 3, Adv.Sunil.K. learned Counsel appearing for the 4th respondent and the learned Government Pleader appearing for respondents 5 and 6. 5. After bestowing my anxious consideration, I am of the view that interest of justice demands that the 1st respondent consider and pass appropriate orders on Ext.P14 petition filed by the petitioner, seeking release any one or more of the properties sufficient to satisfy his claim. Accordingly, there will be a direction to the 1st respondent to consider and pass appropriate orders on Ext.P14, after affording an WP(C) NO. 23021 OF 2021 5 opportunity of hearing to the petitioner, as expeditiously as possible, at any rate, within a period of two months from the date of receipt of a copy of this judgment. The writ petition is disposed of accordingly. BECHU KURIAN THOMAS
JUDGE jm/
WP(C) NO. 23021 OF 2021 6
Appendix — schedule of exhibits
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