Judgment:
R.K. Verma, J.
1. This order shall also govern the disposal of M.C.C. No. 426 of 1991 (Praveen Kumar Bagadia v. Assistant Commissioner of Income-tax).
2. By this petition, the petitioner sought review of the order dated November 11, 1991, passed in M. P. No. 1417 of 1991 (see : [1992]195ITR50(MP) ).
3. Briefly, the facts leading to this review are as follows :
The assets of the petitioner, i.e., jewellery and other valuable articles, were seized under Section 132 of the Income-tax Act and were retained by the respondents by virtue of the order made under Section 132(5) of the Act whereby the petitioner's liability to tax, interest and penalty for the years 1986-87, 1987-88 and 1988-89 were assessed, the heaviest liability being for the year 1988-89 amounting to over Rs. 55,00,000 on a summary assessment. The assets were released to the petitioner by respondent No. 1 acting under the proviso to sub Section 132(5) of the Act upon the petitioner furnishing bank guarantees equivalent to the value of the assets and giving a further undertaking to arrange deposit of the equivalent amount of cash within three months or else the amount would be recovered by enforcing the bank guarantees. The petitioner failed to deposit the cash amount and as such respondent No. 1 sought to encash the bank guarantees. As regards the petitioner's liability in respect of the assessment year 1987-88, which was determined on regular assessment by order dated July 10, 1991 and which is pending in appeal, the petitioner's application for stay of demand under Section 220(6) of the Act was also rejected by respondent No. 1.
4. In the aforesaid circumstances, the petitioner filed Writ Petition M. P. No. 1417 of 1991 (see : [1992]195ITR50(MP) ) for restraining respondent No. 1 from enforcing the bank guarantees and also from enforcing the demand under appeal in respect of the assessment year 1987-88.
5. After hearing the parties and considering the various rival contentions raised on either side and taking into account the whole conspectus of the matter, the following order was made while disposing of the writ petition on November 11, 1991 (see : [1992]195ITR50(MP) ) :
' Accordingly, we deem it just and proper to order and do hereby order that the amount of bank guarantees shall be encashed only to theextent of 50% for being retained by the Department in lieu of the assets and for the balance amount of 50%, the petitioner shall furnish a fresh bank guarantee by November .20, 1991, which shall be kept alive from time to time till the entire liability of the petitioner is determined after completion of regular assessment by renewing the same fifteen days before expiry of the period of guarantee, failing which the Department shall be at liberty to encash the guarantee so furnished.
Annexure P-9 is quashed and respondent No. 1 is directed to hear the petitioner and decide the application under Section 220(6) of the Act afresh.
This petition is disposed of accordingly with no order as to costs. The petitioner shall appear before respondent No. 1 on November 15, 1991, and on such further dates as respondent No. 1 may direct. '
6. The petitioner has sought review of the aforesaid order dated November 11, 1991, and has prayed that the enforcement of 50% of the bank guarantees by non-applicant No. 1 be deleted from the order and the direction to appear before the respondent/non-applicant No. 1 on November 15, 1991, and on subsequent dates during the pendency of the settlement application be modified.
7. The main ground for review is that the application under Section 245C of the Act filed by the applicant before the Settlement Commission on October 20, 1991, was filed before the order dated November 11, 1991, was passed in the Writ Petition (M. P. No. 1417 of 1991--see : [1992]195ITR50(MP) ) and that once an application before the Settlement Commission is moved then the Settlement Commission alone has the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Act in relation to the assessment year in question and thus, the order dated November 11, 1991, will be in conflict with the statutory provisions of Chapter XIX-A.
8. The ground raised is, in our opinion, unsubstantial. Under Section 245D(1) of the Income-tax Act, the Settlement Commission on receipt of an application has to proceed with the application or reject the application. Under Section 245F(2) of the Act, it has been provided that where an application made under Section 245C has been allowed to be proceeded with under Section 245D, the Settlement Commission shall, until an order is passed under Sub-section (4) of Section 245D, have, subject to the provisions of Sub-section (3) of that Section, exclusive jurisdiction to exercisethe powers and perform the functions of an income-tax authority under the Act in relation to the case. From these provisions, it is clear that the jurisdiction of the Settlement Commission to proceed with a settlement application commences only after an order is passed by the Settlement Commission to proceed with the application under Section 245C and it is not disputed in this case that the Settlement Commission has not passed any order to proceed with the application of the petitioner under Section 245C of the Income-tax Act. In this connection, learned counsel for the respondent cited a decision of the Delhi High Court in Deen Dayal Didwania v. Union of India : [1986]160ITR12(Delhi) in support of his submission that there is no bar on the Income-tax Officer from proceeding with the assessment in any pending case merely because an application for settlement has been preferred to the Settlement Commission in relation to that case and that the Income tax Act, 1961, does not contemplate stay of assessment proceedings during the period when the Settlement Commission is deciding whether to proceed or not to proceed with an application for settlement. This apart, there is no provision, and there could be none, to exclude the jurisdiction of this court under Article 226 of the Constitution of India and learned counsel for the petitioner does not dispute this position. But we do not mean to suggest that the Settlement Commission, when it decides to proceed with the petitioner's application for settlement of the case, is precluded from giving any or all the reliefs which it can give to the petitioner on the merits of the case.
9. Learned counsel for the petitioner, placing reliance on a decision of the Supreme Court in Aribam Titleshwar Sharma v. Aribam Pishak Sharma : 1979CriLJ908 has submitted that the power of review may be exercised by the High Court where some mistake or error apparent on the face of the record is found and it may also be exercised on any analogous ground but it may not be exercised on the ground that the decision was erroneous on the merits. Learned counsel has also cited another decision of the Supreme Court in Shivdeo Singh v. State of Punjab AIR 1963 SC 1909 to submit that the power of review inheres in the High Court to prevent miscarriage of justice or to correct grave and palpable errors committed by it.
10. After hearing learned counsel for the petitioner, we do not find any part of the impugned order suffering from grave or palpable errors or errors apparent on the face of the record so as to call for interference with the order under review. This petition for review is, therefore, liable to be dismissed.
11. Learned counsel for the petitioner has, however, prayed for extension of time for renewing the bank guarantees to the extent of the remaining amount of 50% of the original guarantees furnished by the petitioner in this case as well as by the other petitioner in the other connected case, M. C. C. No. 426 of 1991. Learned counsel for the Department, however, opposes the prayer and contends that non-compliance with the order under review in not furnishing the bank guarantees to the extent of 50% of the amount of original bank guarantees within the time allowed to the petitioner amounts to contempt of court. Considering the circumstances and the developments in this case and the interest of the Revenue, we deem it proper to grant extension of time to the petitioner in this behalf in both the cases and direct that the petitioner in this petition as well as the petitioner in the other connected petition (M.C.C. No. 426 of 1991) shall furnish bank guarantees to the extent of 50% of the amount of the original bank guarantees at least five days before the date of expiry of the corresponding original bank guarantees with the exception of one bank guarantee of the value of 50% of the original bank guarantee, No. 5 of 1991, for Rs. 15 lakhs, which shall be furnished before its date of expiry on March 30, 1992, and the conditions as to renewal of the guarantees shall remain as in the order dated November 11, 1991, in M. P. No. 1417 of 1991 (see : [1992]195ITR50(MP) ).
12. This review petition was filed on November 14, 1991, along with an interlocutory application (I. A. No. 5901 of 1991), for stay, praying that the operation of the order passed in M. P. No. 1417 of 1991 (see : [1992]195ITR50(MP) ) dated November 11, 1991, be stayed. The said I. A. No. 5901 of 1991 came up for hearing on November 15, 1991, when notice was ordered to be issued to the other side and it was also ordered that, meanwhile, the direction for encashment of 50% of the bank guarantee made in the order dated November 11, 1991, in M. P. No. 1417 of 1991 if not already encashed, shall remain stayed till the next date, i.e., November 21, 1991.
13. Thereafter, on November 12, 1991, learned counsel for the petitioner filed an application I. A. No. 5938 of 1991, for a further order stating that the Manager, Syndicate Bank, Ujjain, instead of encashing the bank guarantee, gave a demand draft dated November 15, 1991, for Rs. 20,00,000 drawn in favour of the Commissioner of Income-tax, Bhopal, P. D. Account, Bhopal, and that the said demand draft had not been encashed by the Syndicate Bank, Bhopal, and prayed for a direction that the said demand draft be not encashed till the decision of the review petition and the stay application.
14. On the prayer made by learned counsel for the petitioner, it was directed that the said demand draft dated November 15, 1991, shall not be encashed by the Syndicate Bank Branch, Bhopal, if the same had not yet been encashed.
15. The petitioner then filed the application in question, I. A. No. 6189 of 1991, which is an application for restoration and/or mandatory injunction for status quo ante under Order 39, rules 1 and 2 of the Code of Civil Procedure and Section 151, Civil Procedure Code, read with Article 215 of the Constitution of India wherein a grievance was made that the respondents did not obey the stay orders dated November 15, 1991, and November 18, 1991.
16. Learned counsel for the respondents has submitted that there was no disobedience of this court's order since, on November 15, 1991, when the direction staying encashment of the bank guarantee was made, the bank guarantee had already been encashed. The demand draft for Rs. 20 lakhs had been issued in favour of the Commissioner of Income-tax, M. P., Bhopal, P. D. Account, Bhopal. It has been submitted that the encashment of bank guarantee was, in law, effectuated as soon as the payment under the bank guarantee was made by delivering a demand draft in favour of the Commissioner of Income-tax on November 15, 1991. As such, there remained nothing to be stayed when the bank guarantee had already been encashed. Learned counsel for the respondents placed reliance on a decision of the Supreme Court in Rawlal Onkarmal Firm v. Mohanlal Jogani Rice and Atta Mills : [1965]3SCR103 in support of his submission that the tender of the said demand draft for an amount under the bank guarantee must be deemed as absolute payment of the amount payable under that bank guarantee.
17. Having heard learned counsel on the point, we are of the opinion that the issuance of the bank draft in favour of the Commissioner of Income tax by the Ujjain branch of Syndicate Bank, in respect of the bank guarantee in favour of the Commissioner of Income-tax and the further question of crediting the demand draft in the account of the Commissioner of Income-tax at the Bhopal branch is of little significance, so far as the encashment of the bank guarantee is concerned. In the circumstances, it is held that no case of contempt is made out against the respondents. The application I. A. No. 6189 of 1991 is, therefore, dismissed. Similar application filed in the other connected case, M.C.C. No. 426 of 1991, is also dismissed.
18. In the result, this petition as well as the connected petition, M.C.C. No. 426 of 1991, are dismissed with no order as to costs.