P L D 1963 (W (PLP)

"That the firm of Messrs Ahmad Abdul Ghani have paid income‑tax as demanded by the Income‑tax Department in respect of the profits of Messrs Ahmad Abdul Ghahi. It having been agreed between the plaintiff and defendants 20, 22 to 26, on one hand, and defendants 9, 28 and 44 to 50, on the other, that if any income‑tax including super‑tax is demanded in respect of the profits of the said firm or on account of interest on the accounts of the plaintiff or defen dants 20, 22 to 26 the same be paid and discharged by defen dants 9, 28, 44 to 50 and the plaintiff or defendants 20, 22 to 26 are not responsible for payment of the same. Similarly, if any refund becomes due and payable from the Income‑tax Department to the plaintiff the same do belong to the remaining partners of firm Ahmad Abdul Ghani and the plaintiff will not claim the refund. The plaintiff and defendants 20 and 22 to 26 do refund to defendents 9, 28 and 44 to 50 all sums of money drawn out by them from the Income‑tax Department originally paid by Messrs Ahmad Abdul Ghani in their names. Until such time as they have repaid the amount, the aforesaid sums of refund do carry interest at 6% as from the date of this com promise viz., 16‑2‑1961. This amount be deducted from the second or third installment. The plaintiff do sign any form or returns or applications that may require to be made in connection with the registration of the firm or renewal thereof or assessment of income‑tax or refund or for any other purpose. as may be required from time to time."

4. It will be seen that according to the stipulation embodied in the last part of clause 12, the plaintiff decree‑holder accepted the obligation of signing any forms or returns or applications that may be required to be made in connection with the registra tion of the firm or renewal thereof or assessment of income‑tax or refund or for any other purpose as may be required from time to time It is stated that the plaintiff attained majority in 1957 and thereafter became a partner to the firm. It was, therefore, necessary that the applications for renewal of registration should be signed by him along with the other partners. Accordingly, the defendants approached the plaintiff as well as defendant No. 20 and requested the plaintiff to sign applications for renewal of registration as well as assessment returns for the years 1958‑59 to 1962‑63, regarding income falling to the share of the plaintiff as a partner. It is alleged in the objections that the plaintiff, however, refused to sign these documents, simply for the reason that he wanted the defendants to be put to heavy loss. Lengthy correspondence ensued between the parties on this point with the result that ultimately the returns and rsgistration applications were deposited in the High Court, without the plaintiff having signed them. It is contended that the refusal of the plaintiff to sign these documents was deliberate and has resulted in a loss of over Rs. 10 lacs to the defendants for the reason that they will be assessed at a much higher rate of income‑tax.

5. It is contended by Mr. Dingomal, the learned counsel for the judgment‑debtors, that the consent decree, the execution of which is being sought, granted certain rights to both the parties, and that one of these rights accruing to the judgment /debtors was to have the Income‑tax documents relating to the firm signed by the plaintiff decree‑holder, and that this right was the nature of a consideration for their agreeing to pay the sum of Rs. 50 lacs to the decree‑holders. The learned counsel contends that the failure of the plaintiff to sign the documents in question has not only disentitled him to receive the balance of the decretal amount, but has also rendered him liable to pay compensation for the loss suffered by tile Judgment‑debtors on account of the higher assessment of income‑tax resulting from non‑registration of the firm.

6. On the other hand, Mr. Nurul Arfeen, the learned counsel for the plaintiff decree‑holder, contends that although it is one of the terms of the decree that the plaintiff shall sign the income tax document but the refusal of the plaintiff to do so was for a reasonable and sufficient cause, namely, the failure of the judgment debtors to show him the necessary papers so that he could satisfy himself that the returns were correct, as required by section 52 of the Income‑tax Act. Mr Arfeen submits that once it is held that the refusal to sign was justified, the question of the plaintiff becoming liable to pay any compensation or damages to the judgment‑debtors hardly arises, and in any case, such a question would be outside the purview of execution proceedings. Accord ing to Mr. Nurul Arfeen, such a question could not be agitated only by way of a separate suit.

7. There is no doubt that clause 12 of the decree clearly places an obligation upon the plaintiff to sign income‑tax returns and applications for registration of the firm under the Income‑tax Act, and it is clear, therefore, that any failure on his part to dog so would be a matter relevant to the execution of the decree.1 If a decn:e grants certain rights to both the parties, there can, be no doubt that those rights have to be enforced in the executions proceedings and not by a separate suit, as matters relating to the execution of such rights are matters relating to th,: cxtcuriort of the decree, See Rabindra Nath Roy Choudhary and others v.l Dhirandra Nath Roy Choudhry and another (A I R 1940 Cal. 82), Mani Shanker v.`r Niranian Swarup (A I R 1955 All. 686) and Murari Lal v. Debi Saran and another (A I R 1956 All, 555). I am of the view that the questions raised by Mr. Dingomal on behalf of the judgment‑debtors are questions which fall within the purview of section 47 of the Civil Procedure Code. I, there fore, proceed to consider whether the refusal of the plaintiff decree‑holder to sign the income‑tax documents was for sufficient and reasonable cause.

8. As already stated, the stand taken on behalf of the plaintiff decree‑holder is that under section 52 of the Income‑tax Act it was his responsibility to see that the returns which were to be signed by him were true, and for that purpose he requested the judgment‑debtors to show him the papers relating to the profit and loss account etc., of the firm, but the judgment‑debtors refused to do so. Section 52 of the Income‑tax Act provides that "If a person makes a statement in a verification mentioned in section 19‑A or section 20‑A or section 21 or section 22 or subsection (2) of section 26‑A or subsection (3) of section 30 or subsection (3) of section 33, which is false, and which he either knows or believes to be false, or does not believe to be true, he would be punishable with imprisonment which may extend to three years and with fine."

9. The stand taken by the plaintiff appears to me to be supported by documentary evidence. There is, for instance, a telegram sent by him on the 2nd the learned Advocate for the judgment‑debtors, referring to the latter's telegram of the 30th September 1961. In that telegram the plaintiff stated that the judgment‑debtors had submitted incomplete, blank, and some unnecessary papers for signatures and he had requested them to submit their trading and profit and loss account, and balance- sheets etc., and to explain the purpose of some other papers, but they never enlightened him on these points. In reply to this telegram the plaintiff was informed that under the terms of the compromise he had agreed to sign all the papers whenever required, without any accounts or statements being produced before him. He was further informed that he was not to pay any tax and he should not, therefore, ask for any further papers. This correspondence shows that the plaintiff was insisting to see the accounts on which the returns were based. It is true that there is no reference to section 52 of the Income‑tax Act in the telegram sent by the plaintiff to the judgment‑debtors, but there is no reason for not accepting the explanation given by Mr. Nurul Arfeen that the plaintiffs insistance on the production of the relevant accounts was based on his anxiety to see that he does not come within the mischief of section 52 of the Income‑tax Act. Mr. Dingomal has argued that in order to attract section 52 of the Income‑tax Act the prosecution has to prove mens rea and that in the case of the plaintiff it would not have been possible to do so for the reason that he was merely to sign the documents in pursuance of a consent decree and not for his personal benefit. This argument of the learned counsel for the judgment‑debtors, however, over‑look the well‑known saying that "Discretion is better part of valour". It was obviously much more advisable for the plaintiff to satisfy himself about the truth and accuracy of the return he was called upon to sign rather than to sign them blindly in the hope that he would be able to defend himself in the event of any prosecution being launched for submitting or signing a false return.

10. There is no doubt that in the terms of the decree, namely, clause 12, there is no mention of the fact that the plaintiff shall be entitled to examine the account books of the firm before signing the income‑tax returns, but it is clear to me that the decree cannot be interpreted in a matter so as to compel the plaintiff decree‑holder to act against the law of the land. If that were indeed the intention of the parties in incorporating the last part of clause 12 in the decree, then to that extent the decree would have to be held void as being based on a compromise or agreement which was contrary to law and public policy. But I think it is not necessary to go that far. It could not have been the inten tion of the parties that the plaintiff would be forced, under the terms of the decree, to sign any income‑tax returns even though they may be incorrect. In other words, I am of the view that the last part of clause 12 of the decree has to be interpreted in a reasonable manner, namely, that the plaintiff would be bound to sign income‑tax returns and other forms mentioned therein in accordance with the law applicable to the subject, and not contrary to that law. If, therefore, the plaintiff called upon the judgment‑debtors to show him the account books on which the returns were based, that was a reasonable demand, and was clearly intended to satisfy himself to the effect that he would not be violating the provisions of section 52 of the Income‑tax Act. As the judgment‑debtors failed to satisfy the plaintiff about the truth and correctness of the returns in question, the plaintiff was, in my judgment, justified in refusing to sign the same. The plaintiff's refusal to sign was, therefore, based on reasonable and sufficient cause, and cannot operate to disentitle him from the execution of the decree, nor to throw him open to any claim for damages or compensation by the judgment‑debtors. The result, therefore, is that there is no force in the first three points raised by Mr. Dingomal.

11. The forth point raised on behalf of the judgment debtors has again reference to some of the terms embodied in clause 12 of the decree, namely, "the plaintiff and defendants 20, 22 to 26 do refund to defendants 9, 28 and 44 to 50 all sums of money drawn out by them from the Income‑tax Department originally paid by Messrs Ahmed Abdul Ghani in their names. Until such time as they‑ have repaid the amount, the aforesaid sums of refund do carry interest at 6 % as from the date of this compromise, namely, 16‑2‑1961. This amount be deducted from the second or third instalments." In view of this provision in the decree, Mr. Nurul Arfeen was obliged to concede that the sum of Rs. 15,164‑11‑0 with interest at 6% be deducted from the balance of the decretal amount due to the decree‑holders, for the reason that the decree‑holders had drawn this sum by way of refund from the Income‑tax Department. This objection there fore, accepted and the amount in question shall be adjusted against the decretal amount.

12. As regards the question of assets, the relevant clause is clause 2 of the decree which lays down, among other things, that "The aforesaid sum of Rs. 50 lacs includes, covers and satis fies in full all the claims of the plaintiff as well as of defendants 20 and 22 to 26 against the firm of Ahmad Abdul Ghani in respect of all their accounts or claims whatsoever including all the profits of the said firm up to the date of this application, viz., 16‑2‑1961, and all the transactions, holding of shares and securities. investments of any kind, as well as in respect of the goodwill of the said firm and all assets, accretions and advant ages or benefits of the said firm, or any assets acquired in the name of the firm or the plaintiff or any of the defendants in such a manner that on payment of the said sum of Rs. Fifty Lacs, all claims of the plaintiff as well as of the defendants 20 and 22 to 26 against all the defendants or any of them of any kind whatsoever, do stand finally settled and closed." In paragraph 20 of the affidavit submitted by one of the judgment -debtors it is stated that the firm Ahmed Abdul Ghani had acquired in the name of defendant No. 20 a house bearing survey No. J.M‑3/618, Jamshed Quarters, Karachi, 90 shares of State Bank of Pakistan and plots of land in Blocks Nos. 43, 44, 45, 46, 52 and 53 in the names of plaintiff and defendants Nos. 20, 22 to 25 in Mania Housing Society Limited, Karachi. It is further stated that the decree‑holders are bound to return these assets before executing the decree for the balance of Rs. 10 lacs. On behalf of the decree‑holders, Mr. Nurul Arfeen asserted that the properties in question are the personal properties of the plaintiff and the other decree‑holders and were not purchased from the funds of the partnership firm, with the result that they are not governed by the terms of the decree. The question whether the properties mentioned in para. 20 of the affidavit of one of the judgment‑debtors were acquired from the funds of the firm or not is a question which cannot be decided on the basis of the material already on the record, and requires evidence for its determination.

13. The 6th and the 7th points raised by Mr. Dingomal can also be taken together. The prayer in the execution application is for attachment of the proportionate share and interest of the judgment‑debtors in the partnership firm. The learned counsel was unable to show as to how this was contrary to law. Similarly, as regards the shares of the concerns situated at Dacca, the attachment prayed for is not that of the concerns themselves but only of their shares and it is admitted that the shares are at Karachi with the persons named in the execution application.

14. For the reasons given above, all the objections raised on behalf of the judgment‑debtors are dismissed, except the following:‑ (a) A sum of Rs. 15,154‑11‑0 with interest at the rate of 6 % p.a. from the date of the decree shall not be adjusted against the decretal amount, as this is the aggregate of the funds received by the decree‑holders from the Income‑tax Department, which they are bound to restore to the judgment‑debtors under clause 12 of the decree, and (b) the question of the restoration of the properties mentioned in paragraph 20 of the affidavit of one of the judgment‑debtors shall be determined on the basis of evidence to be adduced by the parties.

15. The case shall now be fixed for evidence on the point mentioned above in the month of August 1963 when the Court reopens after the summer vacation. K. B. A. Order accordingly.