Tax Deduction at Source Certificates Establish Acknowledged Jural Relationship Precluding Subsequent Denial of Liability in Debt Recovery Suits

The appellant (plaintiff) filed a suit for recovery of money lent and advanced to the respondent (defendant).

The respondent had previously issued Tax Deducted at Source (TDS) certificates to the appellant, acknowledging the loan transaction and the interest generated therefrom to the Income Tax authorities.

However, in the civil suit, the respondent denied liability, claiming the loan was arranged by and repayable to a third party, Mr. Anil Chowdhury.

The Trial Judge dismissed the appellant’s application for injunction and attachment (IA No. GA/1/2023).

The appellant challenged this dismissal, asserting that the TDS deposits constituted a jural admission of the debt.

The court primarily applied Order XXXVIII Rule 5 of the Code of Civil Procedure (CPC), 1908, regarding attachment before judgment, noting that the plaintiff must prove both a prima facie case and that the defendant is attempting to remove assets to obstruct the decree.

It relied on the precedent Raman Tech. & Process Engg. Co. v. Solanki Traders (AIR Online 2007 SC 80), which established that these twin conditions must be simultaneously satisfied.

The court also invoked the doctrine of "approbate and reprobate," preventing a party from taking inconsistent stands before different legal authorities (Income Tax vs. Civil Court).

The court found that the respondent’s conduct was "dishonest" as they acknowledged the jural relationship and loan transaction before Income Tax authorities to benefit from tax filings, yet denied the same relationship in the civil suit.

This acknowledgment through TDS certificates established a strong prima facie case for the appellant.

Regarding the requirements for attachment, the court determined that the balance of convenience lay overwhelmingly with the appellant, who would suffer irreparable injury if protection were denied.

The court reasoned that the respondent cannot be allowed to take diametrically opposite stands before two adjudicatory bodies regarding the same transaction.

The Court held that the appellant was entitled to interim protection and granted an injunction in terms of the original application.

The Court further directed the respondent to file an affidavit-of-assets within a fortnight, specifically disclosing bank account balances as of April 27, 2026.

The appeal and connected applications were disposed of accordingly.