Tax recovery notice bars civil execution against defaulter's property; later decree-holder attachment is ineffective under the statutory prohibition.

Service of a demand notice under rule 2 of the Second Schedule to the Income-tax Act, 1961 disables a civil court from issuing or continuing execution against the defaulter's property under rule 16(1). The statutory bar applies once notice is served, regardless of any separate encumbrance on the property or the subsistence of an earlier departmental attachment. A decree-holder's attachment obtained after the tax recovery notice is ineffective, and execution should be stayed when the prohibition is brought to the court's notice.

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Issues: Whether, after service of a demand notice under rule 2 of the Second Schedule to the Income-tax Act, 1961, a civil court can issue or continue execution against the defaulter's property in view of rule 16(1), and whether an attachment made by a decree-holder thereafter is void.

Analysis: Rule 16(1) was construed as imposing a statutory prohibition on the civil court's power to issue any process against the property of a defaulter once notice under rule 2 has been served. The restriction was held not to depend on whether the property had separately been encumbered, nor on whether an earlier departmental attachment continued in force. The later decree-holder's attachment, made after the tax recovery notice, was therefore ineffective, and the court below ought not to have proceeded with execution once the statutory bar was brought to its notice.

Conclusion: The attachment obtained by the decree-holder after service of the income-tax recovery notice was void and the execution proceedings were liable to be stayed in favour of the Revenue.

Ratio Decidendi: Service of notice under rule 2 of the Second Schedule to the Income-tax Act, 1961 disables a civil court from issuing execution process against the defaulter's property under rule 16(1), and any subsequent attachment in execution is void.

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