Divergent stands before Tax Authorities and Civil Courts on jural relationship constitute dishonest conduct warranting interim protection.

In brief

The question

1. Whether the appellant established a prima facie case for the grant of interim protection (injunction/attachment) based on the respondent’s acknowledgment of the debt via TDS certificates.

The court held

The Court held that a prima facie case was established by the TDS certificates.

It also directed

The Court set aside the dismissal and allowed the appeal.

The Court granted an interim injunction in terms of prayer (a) of the application and directed the respondent to file an affidavit-of-assets within a fortnight, specifically identifying bank balances as of April 27, 2026.

Case disposed of without costs.

01Facts

The appellant (plaintiff) lent and advanced money to the respondent (defendant).

¶ 3

The respondent acknowledged this jural relationship by depositing Tax Deducted at Source (TDS) on behalf of the appellant with the Income Tax authorities.

¶ 3, 12

However, in the suit for recovery, the respondent claimed that the loan was arranged by one Mr. Anil Chowdhury and was repayable to him, not the appellant.

¶ 6, 8

The appellant filed an application (IA No. GA/1/2023) for injunction and attachment before judgment, which the learned Single Judge dismissed on January 31, 2025.

¶ 2

This appeal challenges that dismissal.

02Issues

i.1. Whether the appellant established a prima facie case for the grant of interim protection (injunction/attachment) based on the respondent’s acknowledgment of the debt via TDS certificates.

¶ 12-14

ii.2. Whether the respondent's conflicting stands before the Income Tax authorities and the Civil Court disentitle them from resisting interim relief.

¶ 13-14

03Law Applied

The Court applied Order XXXVIII Rule 5 of the Code of Civil Procedure, 1908 (CPC), regarding attachment before judgment, noting the "twin requirements" established in Raman Tech. & Process Engg. Co. v. Solanki Traders (2008) 2 SCC 302—namely, the existence of a prima facie case and that the defendant is attempting to remove assets to obstruct the decree.

¶ 9, 15

The Court also applied the equitable principle against "approbate and reprobate," preventing a party from taking contradictory stands before different authorities based on the same transaction.

¶ 13

Provisions in the judgment · 1 · Linked ones open on LawLens

Code of Civil Procedure, 1908 Section 11

04Reasoning

The Court observed that the respondent’s TDS filings constituted an unconditional acknowledgment of a jural relationship and the debt for the purpose of the Income Tax Act, 1961.

¶ 12-13

The respondent’s defense—that the money was owed to a third party—was characterized as "dishonest" and "diametrically opposite" to their tax filings.

¶ 14

While the respondent argued that the requirements of Order XXXVIII Rule 5 were not met, the Court held that the overwhelming balance of convenience lay with the appellant due to the respondent’s shifting stances.

¶ 9, 17

The Court found that failing to grant protection would result in injury not compensable by money alone, thereby satisfying the necessity for interim injunction and an order for the disclosure of assets.

¶ 17, 19