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Issues: (i) Whether the High Court had territorial jurisdiction under Article 226(2) of the Constitution of India to entertain the writ petition challenging the attachment order. (ii) Whether the Tax Recovery Officer could validly attach the shares and decide the objection to title under the Second Schedule to the Income-tax Act, 1961.
Issue (i): Whether the High Court had territorial jurisdiction under Article 226(2) of the Constitution of India to entertain the writ petition challenging the attachment order.
Analysis: The order of attachment was required to be served to become effective, and the attached shares were situated at Calcutta. The service of the prohibitory order at Calcutta, together with the location of the property within the territorial limits of the Court, constituted a part of the cause of action. The Court held that the later decision in the ONGC matter did not displace the earlier principle that jurisdiction depends on the pleaded facts and that communication or service of an effective order may itself furnish jurisdictional facts.
Conclusion: The High Court had territorial jurisdiction to entertain the writ petition.
Issue (ii): Whether the Tax Recovery Officer could validly attach the shares and decide the objection to title under the Second Schedule to the Income-tax Act, 1961.
Analysis: The attachment proceedings were governed by the Second Schedule, under which service of the attachment order is integral to its effectiveness. The Court held that the Tax Recovery Officer was not competent to adjudicate finally upon title beyond the limited scope of the recovery proceedings, and that the relevant objections could not defeat the writ remedy in the facts of the case. The alternative-remedy objection was rejected in view of the conclusive nature of the order and the absence of an efficacious statutory appeal against the impugned order.
Conclusion: The attachment order could not be sustained on the objections raised and the writ petition succeeded.
Final Conclusion: The impugned attachment was set aside in substance, and the writ petition was allowed with consequential release of the attached shares upon compliance with the stated payment arrangement.
Ratio Decidendi: Where an attachment order becomes effective only upon service, service within the territorial jurisdiction of the High Court and the location of the attached property within that jurisdiction form part of the cause of action under Article 226(2); further, the recovery authority cannot finally determine title beyond its limited statutory function under the attachment schedule.
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