Sainath Rajkumar Sarode And Others Vs State of Maharashtra And Others (Bombay High Court)
Sainath Rajkumar Sarode (Petitioner) has been filed seeking directions for the recovery of arrears due to the Petitioners under a Recovery Warrant dated October 15, 2018 passed by the Maharashtra Real Estate Regulatory Authority against Respondent Nos. 4 to 7.
In the instant case, the Respondents 4 to 7 were to pay payment under the Recovery Warrant to the Petitioner in terms of installments. Nevertheless, for the instalment due on July 20, 2021, Respondent Nos. 4 to 7 deducted 10% of the amount, as tax deductible at source (“TDS”) on the amount of interest under the Recovery Warrant and the Consent Terms.
The Petitioner contended that the amounts payable to the Petitioners under the Recovery Warrant is in the nature of a judgment debt, being compensatory amounts payable to the Petitioner, owing to the failure of Respondent Nos. 4 to 7 to satisfactorily discharge their contractual and statutory obligations under the Real Estate (Regulation & Development Act), 2016 (RERA Act).
The Respondent Nos. 4 to 7 had submitted that they deducted the said amount as TDS as per the provisions of Section 194A of the Income Tax Act, 1961 (“the IT Act”). They further stated that the TDS has not been filed before the concerned authority and that they have no objection to paying the amount deducted as TDS, to the Petitioners, so far as it is in compliance with the statutory provisions and no penalties are imposed upon these Respondent Nos. 4 to 7 due to non- payment of the same.
On perusal of all the facts and evidences in the case, the Honorable Bombay High Court adjudicated that the amount so payable is in the nature of a judgment debt, and the payment of which cannot establish a debtor-creditor relationship between the parties, therefore, the said sum or any part thereof cannot be liable to TDS under the relevant provisions of the IT Act.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. The Petitioners are individuals who between 2013 and 2016 entered into separate registered agreements with Respondent Nos. 4 to 7, for purchase of various flats in Respondent No.4’s building known as Gaurav Discovery, proposed to be constructed at Village Malvani, Malad (West), Mumbai Suburban district.
2. The present petition has been filed seeking directions for the recovery of arrears due to the Petitioners under a Recovery Warrant dated 15th October 2018 passed by the Maharashtra Real Estate Regulatory Authority against Respondent Nos. 4 to 7.
3. It is admitted by the Petitioners that Respondent Nos. 4 to 7 have previously paid the Petitioners an amount of Rs.1,80,00,000/- (Rupees One Crore Eighty Lakhs Only) as part payment under the Recovery Warrant.
4. Subsequently, in view of there being balance amounts due and payable by Respondent Nos. 4 to 7 under the Recovery Warrant, the Petitioners and these Respondent entered into consent terms dated 4th March 2021. By these Consent Terms, Respondent Nos. 4 to 7 undertook, jointly and/or severally, to pay the Petitioners a sum of Rs.2,75,00,000/- (Rupees Two Crore Seventy Five Lakhs Only) along with simple interest at 10.05% thereon. Such sums were to be paid in the form of instalments and in the following manner:
SCHEDULE OF PAYMENTS
