State Of Gujarat & 3 ­ Defendants

1.0 Present Second Appeal under Section 100 of the Code of Civil Procedure has been preferred by the appellant herein­original plaintiff to quash and set aside the impugned judgment and decree dated 31.8.1998 passed by the learned Civil Judge (S.D.), Amreli passed in Regular Civil Suit No.125 of 1990 by which the learned trial Court has dismissed the said suit preferred by the appellant herein­original plaintiff as well as the impugned judgment and order passed by the learned Appellate Court –learned Joint District Judge­ 1st Fast Track Court, Amreli dated 30.4.2005 passed in Regular Civil Appeal No.47 of 1998 by which the learned Appellate Court has dismissed the said appeal preferred by the appellant herein­original plaintiff and has confirmed the judgment and decree passed by the learned trial Court dismissing the suit.

2.0 That the appellant herein­original plaintiff instituted Regular Civil Suit No.125 of 1990 in the Court of learned Civil Judge (S.D.), Amreli against the respondents herein –original defendants for declaration that the suit property in question is not liable for attachment and not liable to be auctioned in respect of the dues to the sales tax of one M/s. Pinakin Oil Mill and that order of attachment issued by defendant no.2 dated 22.11.1989 with respect to the suit property for the dues of the sales tax of M/s. Pinakin Oil Mill is illegal and without jurisdiction. It was the case on behalf of the plaintiff that all of them were partners of one partnership firm Shri Jalaram finance which was constituted on 19.11.1985. That the said firm was registered under the provision of Indian Partnership Act. That the said partnership firm was started from streedhan and the said firm continued their business for two years and thereafter all of them shifted from Amreli to Mumbai and thereafter they dissolved the said partnership firm and from the income of the said partnership firm and other property of streedhan, they purchased three plots in question for total consideration of Rs. 1,32,000/­ on 19.5.1987 from one M/s. Pinakin Oil Mill by registered sale deed and since then they are the sole owner and in possession of the suit land. That thereafter, the defendant no.2 –Sales Tax Officer passed an order dated 22.11.1989 to attach the suit property of the plaintiffs (the properties originally belonged to M/s. Pinakin Oil Mill which they have purchased by registered sale deed dated 19.5.1987), under the provision of Section 73 of the Sales Tax Act. It was the case on behalf of the plaintiffs that before passing said order the defendants have not given sufficient opportunity of being heard to the plaintiffs. That thereafter for the dues of the M/s. Pinakin Oil Mill towards sales tax and for the purpose of recovery of the same defendants have published a notification dated 20.3.1990 and fixed the date 5.5.1990 for public auction of the suit properties/lands. That thereafter, the defendants issued further order dated 29.3.1990 and attached the suit lands which belong to the plaintiff and therefore, the plaintiffs instituted the aforesaid suit for declaration and permanent injunction as stated above.

2.1. That the suit was resisted by defendants by filing written statement at Exh.11 denying the averments in the plaint. It was contended on behalf of the defendants that in view of Section 64 of the Sales Tax Act, the Civil Court has no jurisdiction to grant relief as prayed in the suit challenging the notice / order of attachment dated 21.3.1990; 29.3.1990 and 22.11.1989 respectively and that the Civil Court has no jurisdiction to restrain the Sales Tax Department from recovering the dues towards the Sales Tax. It was specifically contended on behalf of the defendants that the Sales Tax Department has to recover the dues from the partners of M/s. Pinakin Oil Mill and just to avoid to pay the liability of the sales tax, the partner of M/s. Pinakin Oil Mill has disposed of all their properties and sold out to the plaintiffs and therefore, the sale deeds executed in favour of the plaintiff are null and void.

2.2. That the learned trial Court framed the following issue at Exh.54:

1. Whether the plaintiffs prove that they are owner and in possession of the suit properties ?

2. Whether the plaintiffs prove that suit property is not liable for attachment and auction sale in respect of the dues of sales tax of Pinakin Oil Mill ?

3. Whether the plaintiffs prove that order passed by defendant no.2 dated 22.11.1989 is void, illegal and without jurisdiction ?

4. Whether the plaintiffs are entitled to relief as prayed for ?

5. Whether order and decree ?

6. Whether the defendants prove that the sale deed executed by the plaintiffs are fraudulent ?

7. Whether the defendants prove as per the provisions of Sales Tax Act, this Court has no jurisdiction to try the suit ?

2.3. That both the sides led the evidence oral as well as documentary. On behalf of the plaintiffs, plaintiff no.2 Pragnaben Pravinchandra has examined at Exh.65 and produced the documentary evidence with respect to the registration of partnership firm –Jalaram Finance etc. On behalf of the defendants, one Shashikant Amrutlal Doshi came to be examined at Exh.95 who was the Sales Tax Officer and produced documentary evidence at Exh. 95 to 105 as well as other documentary evidence at Exh.106 to 110. That on appreciation of evidence, the learned trial Court held issue nos. 1 to 4 and in negative and held issue no.6 in affirmative and held that the sale deed executed in favour of the plaintiffs are fraudulently with a view to avoid liability of Sales Tax of M/s. Pinakin Oil Mill and consequently by judgment and decree dated 31.8.1998 dismissed the suit.

2.4. Feeling aggrieved and dissatisfied with the judgment and decree passed by the learned trial Court dated 31.8.1998 in dismissing the Regular Civil Suit No. 125 of 1990, the appellants herein –original plaintiffs preferred Regular Civil Appeal No.47 of 1998 and the learned Appellate Court vide impugned judgment and order dated 30.4.2005 has dismissed the said appeal confirming the judgment and decree passed by the learned trial Court dismissing suit.

2.5. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by both the Courts below in dismissing the suit and not granting declaration and permanent injunction as prayed for, the appellant herein ­original plaintiff has preferred present Second Appeal under Section 100 of the Code of Civil Procedure.

3.0 Shri Dagli, learned advocate for the appellant has vehemently submitted that both the Courts below have materially erred in dismissing the suit and not granting declaration and permanent injunction as prayed for. It is submitted that both the Courts below have materially erred in holding that the notices issued for attachment of the suit property in question for the dues of M/s. Pinakin Oil Mills are legal and just. It is submitted that the plaintiffs purchased the suit lands by three registered sale deed dated 19.5.1987 from M/s. Pinakin Oil Mills on payment of full sale consideration of Rs. 1,32,000/­ and at the relevant time when the plaintiffs purchased the suit lands, no attachment order was issued by the Sales Tax Department and no Sales Tax proceedings were pending and in fact nobody knew that what would be the liability of M/s. Pinakin Oil Mills. It is submitted that the order of attachment has been issued only in the year 1989­90 much after the plaintiffs purchased the suit lands from M/s. Pinakin Oil Mills i.e. 1985­1987. It is further submitted that both the Courts below have materially erred in holding that the sale deed dated 19.5.1987 executed by the partner of M/s. Pinakin Oil Mills, was with a mala fide intention and was a fraudulent exercise on the part of the partners to save the property from the Sales Tax liability. By making above submission, it is requested to allow the present Second Appeal.

4.0 Present Second Appeal is opposed by Shri Dave, learned AGP appearing on behalf of the respondents­original defendants. It is submitted that as such there are concurrent findings of fact given by both the Courts that sale deed dated 19.5.1987 executed by partners of M/s. Pinakin Oil Mills in favour of plaintiffs was mala fide and with a view to avoid sales tax liability of the M/s. Pinakin Oil Mills and such findings of fact are on appreciation of evidence which are not required to be interfered with by this Court in exercise of powers under Section 100 of the Code of Civil Procedure.

4.1. It is further submitted by Shri Dave, learned AGP appearing on behalf of the respondents that it is factually incorrect to say that till notices for attachment were issued in the year 1989­90, no proceedings under the Sales Tax Act were pending. It is submitted that as such there were number of notices issued for sales tax for the period between 1981­82 onwards i.e. much prior to execution of sale deed dated 19.5.1987. It is submitted that despite the same the partner of M/s. Pinakin Oil Mills who are respective husbands of the plaintiffs transferred the suit property and executed the sale deed in favour of the plaintiffs solely with a view to avoid the liability to pay sales tax dues of M/s. Pinakin Oil Mills. It is submitted that as such the plaintiffs have also failed to prove the consideration paid to M/s. Pinakin Oil Mills towards purchase of suit land in question. Therefore, it is submitted that considering Section 73 of the Gujarat Sales Tax Act both the Courts below have held that the sale deed executed in favour of the plaintiffs are null and void with a view to avoid the sales tax liability and therefore, the both the Courts below have rightly dismissed the suit and rightly refused to grant declaration and permanent injunction as prayed for. By making above submissions, it is requested to dismiss the present Second Appeal.

5.0 While admitting the present Second Appeal the learned Single Judge framed the following the substantial question of law.

(i).Whether on the facts and circumstances of the case, the two courts below were justified in holding that the sale deed dated 19.5.1987 executed by the partners of M/s. Pinakin Oil Mills, was with a malafide intention and was a fraudulent exercise on the part of the partners to save the property from the Sales Tax liability ?

(ii). Whether on the facts and circumstances of the case, the two courts below could hold that the transaction dated 19.5.1987 was fraudulent, malafide, sham and bogus, without appreciating that prior to 19.5.1987, no attachment order was issued, the sales tax proceedings were not pending and nobody knew that what would be the liability of M/s. Pinakin Oil Mill ?

6.0 Heard the learned advocates for the respective parties at length and considered the impugned judgment and order passed by both the Courts below in detail and considered the documentary evidences from the record and proceedings which has been received from the learned trial Court. It is not in dispute that the Sales Tax Department issued the notices for attachment to attach the suit land which originally belong to Assessee ­ M/s. Pinakin Oil Mill towards its liability and dues payable from 1981­82 onwards. From the documentary evidences, it appears that number of notices were issued by the Sales Tax Department for the period of 1981­82 directing the M/s. Pinakin Oil Mill to pay sales tax which the Assessee ­ M/s. Pinakin Oil Mill is failed to pay and in between and during the pendency of the such recovery notices the partners of M/s. Pinakin Oil Mill transferred the suit properties of M/s. Pinakin Oil Mill in favour of the plaintiffs by registered sale deed dated 19.5.1987. It is required to be noted that partners of the Jalaram Finance ­plaintiffs herein in whose favour the suit properties have been transferred are family members and the plaintiffs / transferees are the wives of partners of M/s. Pinakin Oil Mill. It is also required to be noted that though in the sale deed dated 19.5.1987 Rs.

1,32,000/­ has been shown as sale consideration however the said sale consideration is alleged to have been paid by cash and plaintiffs have miserably failed to prove the payment of sale consideration by producing the three books of account and / or their source. Thereafter, in the year 1989­90 the defendants ­Sales Tax Officer has issued notice for attachment and for auctioning the suit property for the sales tax dues payable by the Assessee ­ M/s. Pinakin Oil Mill. As stated above, much prior to the execution of the sale deed in favour of the plaintiffs with respect to the properties of the Assessee there were already various notices issued to the Assessee for payment of sales tax dues. Therefore, merely because the order of attachment has been passed subsequently it cannot be said that the said property was not liable for attachment and / or sale for recovery of the dues of the sales tax liability of the Assessee when much prior to the transfer various notices were issued upon the Assessee to pay sales tax. As per the Section 73 of the Gujarat Sales Tax Act where a dealer after any tax has become due from him, creates change on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer whatsoever of any of his property in favour of any other person with the intention of defrauding the Government revenue, such charge transfer shall be void as against any claim in respect of any tax or any other sum payable by the dealer. In the present case, as stated above, transfer/ sale deed in favour of the appellant herein with respect to the property of Assessee is found to be mala fide with a view to defraud the sales tax/ government revenue and as stated abovesame is made in favour of the respective wives of the partners of Assessee Firm and consideration has not been proved, the transaction/ sale SA/13/2006 10/10 JUDGMENT deed in favour of the appellant are void. Under the circumstances, no relief can be granted to the appellant herein on the basis of such void transaction restraining the sales tax department from recovering sales tax by auctioning / selling the suit property. Considering the aforesaid facts and circumstances of the case, when during the pendency of the notice for recovery of the sales tax, the Assessee­ M/s. Pinakin Oil Mill transferred the property by registered sale deed dated 19.5.1987 and that too in favour of their family members ­wives and considering the aforesaid facts and circumstances of the case when the learned trial Court dismissed the suit refusing to grant declaration and permanent injunction as prayed for restraining the sales tax department from recovering the dues towards the sales tax liability of M/s. Pinakin Oil Mill by attaching and auctioning the suit land, it cannot be said that the the learned trial Court has committed any error and / or illegality which calls for the interference of this Court in exercise of powers under Section 100 of the Code of Civil Procedure. The learned Appellate Court has rightly dismissed the appeal and confirmed the judgment and decree passed by the learned trial Court dismissing the suit.

7.0 In view of the above and for the reasons stated above, present Second Appeal fails and same deserves to be dismissed and is accordingly dismissed. Consequently, Ad­interim relief granted earlier, if any, stands vacated forthwith. No costs.

kaushik sd/­ (M.R.SHAH,J.)