The epitome and long and short of the relevant facts absolutely necessary and germane for the disposal of this application would run thus:
The plaintiff/Jayakumar filed the suit for partition and preliminary decrees were passed and the final decree is yet to be passed in the matter. While so, this Court vide the order dated 04.02.2008 passed common order in A.Nos.7105 and 7106 of 2007. The operative portion of the said order would run thus:
"8. In view of the aforesaid submissions, both the applications are allowed with the following directions:-
(a) The Registry is directed to liquidate the fixed deposit standing to the credit of C.S.No.776 of 1997 in the Indian Bank, High Court Branch, Chennai.
(b) After liquidation, the Registry shall issue a cheque in the name of the plaintiff for an amount equivalent to 1/6 share of the proceeds of the fixed deposit with accrued interest thereon.
(c) Similarly, the Registry is directed to issue a cheque in the name of the 2nd defendant for a sum equivalent to 1/6 share out of the proceeds of the fixed deposit with accrued interest.
(d)The balance amount shall again be invested in fixed deposit i the Indian Bank, High Court Branch, for a period of one year, renewable thereafter from time to time. It will be open to the other co-sharers to come up with applications for payment out.
(e)The 2nd defendant (applicant in A.No.7106 of 2007) is permitted to deposit the said amount in Rural Electrification Corporation Limited Bonds Series VII, as prayed for by him or in any other manner as he deems fit for the purpose of avoiding the incidence of Capital Gains Tax in tune with the provisions of Income Tax Act.
(f) If the parties to the suit are ultimately imposed with an obligation to pay Capital Gain Tax, on account of any of the parties not investing the share allotted to him/her in accordance with the provisions of the Income Tax Act, the other parties, who make investments in accordance with the provisions of the Income Tax Act are entitled to charge the liability so incurred, upon the party responsible for such incidence of tax. It will be open to such other parties to seek a charge on the property allotted to the share of such party whose action or failure results in such tax incidence."
2. Subsequently, this Court vide the order dated 12.08.2009, passed order in A.Nos.1508 and 5472 of 2008 and A.Nos.1323 to 1326 of 2009 in C.S.No.776 of 1997. It is therefore, just and necessary to extract hereunder the prayer in A.No.1325 of 2009:
"....... seeking permission to invest applicant's share of the sale proceeds of Rs.53,63,909.28 (Rupees fifty three lakhs sixty three thousand nine hundred and nine and twenty paise only) together with interest in any specified asset under Section 54 EC of Income Tax Act or in any other manner deem fit for the purpose of avoiding the incidence of capital Gains Tax in tune with the provisions of the Income Tax Act within six months from the date of receipt of the amount from this Hon'ble Court."
3. My learned Predecessor adhering to the earlier order passed on 04.02.2008, passed the common order dated 12.08.2009 and the operative portion of it is extracted hereunder for ready reference:
"... ... ... in the light of the similar lines indicated by this Court by an earlier order dated 04.02.2008 and referred to earlier, this Court passes the following order:
i) The plaintiff and the second defendant will withdraw 25.66% of the amount and D1,D3,D4 and D5 are entitled to withdraw 12.17% of the amount lying in the deposit of Indian Bank.
ii) The safeguard provided in the earlier order dated 04.02.2008 will also enure to the benefit as more particularly Para 8 (f) in the present case also.
8. In the light of the above, all the applications are allowed to the extent indicated above. A.Nos.1324 and 1325 will stand dismissed in the light of the safeguard set out in para 8(f) of the order dated 04.02.008 and also incorporated in the present order. Indian Bank, High Court Extension Counter, is directed to disburse the amount to the parties on the basis of the ratio provided therein from the amounts by calculating the interest up to the date of liquidation of the Fixed Deposit."
4. The present application has been filed by the Hindu Undivided Family with the following cause title:
"Hindu Undivided Family of Late Dr.C.Ranganathan Pan AAA HDO 144C Rep. By its Kartha R.Roop Kumar S/o Late Dr.C.Ranganathan No.66 (Old No.76) Dr.Alagappa Road Purasawakkam Chennai 600 084"
5. The learned counsel for the applicant in the present application No.4519 of 2009, placing reliance on the averments in the affidavit accompanying the application would submit that the deceased Dr.C.Ranganathan was the Kartha of the Hindu Undivided Family; the PAN number assigned to the Hindu Undivided Family is AAA HD0 144C; on the death of the said Kartha Dr.C.Ranganathan, his son Roop Kumar/D2 became the Kartha of the family; Hindu Undivided Family is still in existence and it has to discharge its tax liability and accordingly Hindu Undivided Family should be added as one of the parties to the suit.
6. Whereas, the plaintiff/R6 filed the counter denying and refuting the averments/allegations in the plaint to the effect that the earlier two orders passed by this Court would operate as against the very prayer in the application; this Court cannot be called upon to perform the task of an Income Tax Officer under the Income Tax Act; HUF is not at all interested in the present proceedings and fictitious party is sought to be added as one of the parties to the suit; the plaintiff received his share in the sale proceeds as per the preliminary decree. Accordingly, he prays for the dismissal of the suit.
7. The point for consideration is as to whether the Hindu Undivided Family is a necessary party to be impleaded in the suit at this stage, for the reasons set out in the affidavit accompanying the application?
8. The gist and kernel, the pith and marrow of the arguments of the learned counsel for the applicant could be stated thus:
(i) Hindu Undivided Family is still in existence, which is assessable to tax;
(ii) The earlier order dated 04.02.2008 is not relating to the Hindu Undivided Family property, but concerning the separate property of Dr.C.Ranganathan;
(iii) The subsequent order dated 12.08.2009 passed by this Court adhering to the earlier order dated 04.02.2008 was not correct and appeal has been filed as against the said order; and
(iv) The Income Tax Officials at any time may send notice to Roop Kumar/D2, who is the Kartha of the Undivided Family, to pay tax under the head 'Capital Gains' .
(v) For proper adjudication, HUF is a necessary party.
9. Tour d'horizon of the learned counsel for the plaintiff would run thus:
(i) The earlier orders dated 04.02.2008 and 12.08.2009 passed by this Court, would certainly operate as against the maintainability of the present application, as already this Court clearly and pellucidly, pointed out as to how the sharers who got their shares would be individually liable for tax, if any, payable by them.
(ii) He would also cite the decision of the Hon'ble Apex Court reported in AIR 1969 SC 682 [Kapurchand Shrimal v. The Tax Recovery Officer, Hyderabad and others], an excerpt from it would run thus:
"6. Counsel for the Revenue invited our attention to Section 140(b) and
Section 282(2) of the Income Tax Act, 1961, in support of his contention that when tax is assessed against the Hindu undivided family there is no distinction between the representative status of the manager of the family and his personal status. Section 140(b) authorises the manager in the case of a Hindu undivided family to sign and verify the return of income, and
Section 282(2) provides for the mode of service of notice or requisition issued under the Act, amongst others, against a Hindu undivided family. But because the manager of a Hindu undivided family is authorised to sign and verify the return of income and a notice under the Act could be served upon him when it is addressed to a Hindu undivided family and such service is treated as service upon the Hindu undivided family for the purpose of the Act, the manager cannot be deemed to be the assessee where the income assessed is of the Hindu undivided family. The expression assessee under
Section 2(7) means a person by whom any tax or any other sum of money is payable under the Act, and includes (a) every person in respect of whom any proceeding under the Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person; (b) every person who is deemed to be an assessee under any provisions of the Act; (c) every person who is deemed to be an assessee in default under any provisions of the Act. For purposes of clause (a) the person against whom any proceeding under the Act has been taken is deemed an assessee: but that necessarily postulates that the proceeding should be lawfully taken against the person before he could be deemed to be an assessee for the purpose of Section 222 or Rule 2 and Rule 73. There is no provision in the Act which deems the manager to be the assessee, for the purpose of assessment and recovery of tax, when the income of the Hindu undivided family of which he is the manager is assessed to tax. Nor is there any provision enabling the Income Tax Officer or the Tax Recovery Officer to treat the manager of the Hindu undivided family as an assessee in default under the provisions of the Act.
Section 160 provides for treating a person as a representative assessee, and Section 161 prescribes the liability of a representative assessee. Section 179 makes a special provision for rendering the Directors of private company in liquidation to be jointly and severaly liable for the payment of tax which cannot be recovered from the assets of the private company in liquidation. The Legislature has made no such provision for recovery of tax by reason to the personal property of the manager of the Hindu undivided family, or by his arrest and detention for default by the family in paying the tax due.
7.
Sections 276,276-A,277 and
278 on which reliance was placed by counsel for the Revenue in support of his argument also do not assist him. These sections occur in a chapter relating to penalties, and they seek to penalise failure to carry out specific provisions mentioned therein. We are unable to hold that the expression person in
Sections 276,276-A and
277 is used in the sense in which it is defined in
Section 2(31) of the Act. For each specific act which is deemed to be an offence under those provisions, an individual who without reasonable cause or excuse fails to do the acts prescribed by statute or acts in a manner contrary to the statute or makes a declaration on oath which he believed to be false or does not believe to be true, is made liable to be punished. Section
278 penalises the abetment or inducing any person to make and deliver an account, statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe to be true. In the context in which the expression person occurs in
Sections 276,276-A,277 and
278, there can be no doubt that it seeks to penalise only those individuals who fail to carry out the duty cast by the specific provisions of the statute or are otherwise responsible for the acts done. For the default of the Hindu undivided family, therefore. in payment of tax, the Karta cannot be arrested and detained in prison."
(emphasis supplied)
(iii) Placing reliance on the above judgment, the learned counsel for the plaintiff would submit that the applicant/D2 would not be liable as Kartha/Manager of the Hindu Undivided Family for arrest under the penal provisions of the Income Tax Act.
10. Whereas, the learned counsel for the applicant/D2 would try to distinguish between a 'Kartha' and a 'Manager' of H.U.F. and point out that the said decision is not applicable to this case. In my considered view, the said decision of the Hon'ble Apex Court would protect the Kartha also from arrest. The ratiocination adhered to by the Hon'ble Apex Court is that if an assessee is 'Hindu Undivided Family', the person representing the Hindu Undivided Family cannot be mulcted with arrest and such a verdict is applicable even to Kartha. Nowhere in the cited Apex Court's precedent, it is found at least adumbrated that what is applicable to Manager, is not applicable to Kartha of H.U.F., and no more elaboration in this regard is required as it is quite obvious and axiomatic.
11. The learned counsel for the plaintiff would submit that the earlier orders passed by this Court would certainly operate as against the maintainability of the present application.
12. I could see considerable force in his submission for the reason that my learned Predecessor in his order dated 12.08.2009, in respect of the application filed by the same Hindu Undivided Family, opined that paragraph 8(f) of the earlier order dated 04.02.2008 passed by this Court would amply come to the rescue of the individual co-sharers and in such a case, no order in favour of Hindu Undivided Family as prayed in A.No.1325 of 2009 would be necessary.
13. The very reasons found set out in the earlier A.No.1325 of 2009 to obtain orders in favour of Hindu Undivided Family are virtually found reflected in the present application, for getting the Hindu Undivided Family impleaded as a party and in such a case, I am at a loss to understand as to how the present application on the same grounds would be maintainable for the purpose of getting the Hindu Undivided Family impleaded as one of the parties to the suit.
14. The learned counsel for the applicant/D2 would submit that the present application is one under Order 1 Rule 10 of CPC and the earlier one was for a different purpose. No doubt, the present application is for getting impleaded the H.U.F. as a party to the suit and the earlier one was for a different purpose, but the very purpose of attempting to get the Hindu Undivided Family impleaded as one of the parties to the suit, was set out in the earlier A.No.1325 of 2009, and no other special reason is found exemplified in the present application so as to enable Hindu Undivided Family to get itself impleaded as one of the parties to the suit. It is also palpably and pellucidly, glaringly and plainly clear that in the suit already two preliminary decrees were passed and several properties were also sold and the plaintiff also obtained his share in the proceeds. No doubt, it seems that there are other properties yet to be divided.
15. The quintessence of the prayer for getting the Hindu Undivided Family impleaded is only to meet its liability to pay tax and in respect of it, the earlier two orders passed by this Court amply clarify the position and in such a case, this Court cannot take a different view from the one already taken by my learned Predecessor in the order dated 12.08.2009. No doubt, the earlier order dated 04.02.2008 was not in respect of Hindu Undivided Family property, but it is in respect of the self acquired property of Dr.C.Ranganathan; nevertheless, in the subsequent order dated 12.08.2009, my learned Predecessor ushered in the same ratiocination and rejected the prayer of Hindu Undivided Family concerning tax.
16. Now the present application, even though for getting impleaded the H.U.F. as a party to the suit, the reason found set out for getting impleaded is only the reason set out in the earlier application. Accordingly, in my opinion, this present application is untenable and the same is liable to be dismissed and accordingly dismissed.
17. I would also like to observe that in the event of the applicant succeeding in the appeal which he purported to have filed as against the order dated 12.08.2009 of this Court, it is for him to work out his remedy to get the Hindu Undivided Family impleaded as one of the parties depending upon the circumstances.
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