Tahsildar, Changanacherry v. N. A. Thomas — 1969 DIGILAW 1 (KER)

Judgment :- 1. This is an appeal against a judgment given by Govindan Nair, J. whereby he vacated a sale conducted under the Travancore-Cochin Revenue Recovery Act (VII of 1951), hereinafter called the 1951 Act, and thus allowed O. P. 839 of 1965 which was filed for that relief and the two questions arising for decision in the appeal are whether purchase of an item of land by Government for a nominal amount under S.36A (2) of the 1951 Act is permitted only when there is arrear of public revenue due on it and whether a land can be treated as one in respect of which there is arrear of public revenue if it is mortgaged to the State for taking a loan under the Travancore-Cochin State Aid to Industries Act, (XIX of 1952) hereinafter called the 1952 Act, and the person aided has defaulted to pay back the loan as contracted. 2. The relevant facts can be set out in a short compass. 25 cents of land belonging to the Respondent, who was the Petitioner in O. P. 839 of 1965 was mortgaged by him along with other properties to the State and he took from the State a loan of Rs. 32,000 under the 1952 Act for storing tannery works. The agreement was to pay back the amount borrowed in 40 half-yearly instalments. When some of the instalments were defaulted the land referred to above was put up for sale in public auction under the 1951 Act. In the notice regarding sale it was mentioned that the amount due to the State was Rs. 22,573-25 and interest. In the sab conducted on 25-2-1965 the Tahsildar, Changanacherry. purchased the property on behalf of the Government for 5 paise. It was then that the respondent filed O. P. 839 of 1955 for vacating the sale. 3. The rival contentions are these: The Advocate General appearing for the appellants, the State and its officers, the Collector, Kottayam, and the Tahsildar, Changanacherry, relies upon S.30 of the 1952 Act which authorises loans payable under that Act being recovered as if they were arrears of public or land revenue and submits that in the present case Government acted within its powers when it purchased the property under S.36A of the 1951 Act for a nominal amount. He contends that S.36A of the 1951 Act empowers purchase of one item of property for a nominal amount even if the arrear of public revenue for which the sale is conducted is for a different item. According to him even if that Section is not capable of that interpretation as the concerned property had been made security for the loan amount in the mortgage deed and the sale was for that amount it had to be taken that the sale was for arrear of public revenue due on that particular property. Counsel appearing for the respondent contends, on the other hand, that purchase for a nominal amount under S.36A of the 1951 Act can be resorted to only if there is arrear of public revenue due on the particular land purchased and that as the sale was not for kist due on that land it could not be deemed as sale for "arrear of public revenue due on land" as defined in S.2 (b) of the 1951 Act. According to him from the mere fact that the concerned land had been mortgaged for the loan and S.30(1) of the 1952 Act provided that loans payable under that Act could be recovered as if they were arrears of public or land revenue it could not be taken that the sale was for arrears of public revenue due on that land. 4. We pause here to observe that S, 36A was inserted in the 1951 Act by the Kerala Revenue Recovery Laws (Amendment) Act, 2 of 1964. The circumstances under which the amendment was made are as follows: In Ramrao v. State of Bombay AIR. 1963 S C. 827 the Supreme Court held a purchase by Government of 3 items of land for a nominal amount of Re. 1/- to be invalid. The sale in that case was under the Bombay Land Revenue Code. The Supreme court said in that case: "A sale for a predetermined nominal sum cannot, in our opinion, be held to bear "sale by public auction" in the absence of any provision for such sales in the statute." There was provision for such sales in the corresponding Bengal Revenue Sale Law Act, 11 of 1859. The Supreme court said in that case: "A sale for a predetermined nominal sum cannot, in our opinion, be held to bear "sale by public auction" in the absence of any provision for such sales in the statute." There was provision for such sales in the corresponding Bengal Revenue Sale Law Act, 11 of 1859. S.58 of that Act enacted: "When an estate is put up for sale under this Act for the recovery of arrears of revenue due thereon, if there be no bid the Collector or other officer as aforesaid may purchase the estate on account of the Government for one rupee " Before finding the sale of the 3 items of land for a nominal amount as invalid the Supreme Court observed that there was no provision in the Bombay Code corresponding to S.51 of the Bengal Revenue Sale Law. That decision was followed by this Court in O. P. 916 of 1963. It was on account of these decisions that Act 2 of 1964 was passed and S.36A was inserted in the 1951 Act. 5. Now we shall consider what is the correct interpretation to be put on S.36A. For that purpose we shall first read that Section. "36A. Postponement of sale and purchase by Government at the subsequent sale -- (1) When immovable property is put up for sale at the time and place specified in the notice under clause (2) of S.36 for the recovery of arrears of public revenue due thereon, if there be no bid, or, if the highest bid be insufficient to cover the said arrears and those subsequently accruing up to the date of sale, the officer conducting the sale shall postpone the sale to another date and give notice of the subsequent sale as required by clause (2) of S.36. (2) When the property is put up for sale on the date to which the sale was postponed under sub-section (1), at the time and place specified in the notice, if there be no bid, the officer conducting the sale may purchase the property on account of the Government for any nominal amount, or, if the highest bid be insufficient to cover the arrears of public revenue due on the property and those subsequently accruing up to the date of sale, such officer may purchase the property on account of the Government at the highest amount of bid; and in either case the Government shall acquire the property subject to the provisions of this Act. (3) The provisions of clauses (3), (4) and (5) of S.36 shall not apply to cases where immovable property is purchased on account of the Government under this section." For arrears of public revenue due on a land all the properties, movable and immovable, of the defaulter are liable to be proceeded against under S.6 of the 1951 Act which reads thus: "6. When public revenue due on land may be in arrear, such arrear, together with interest, if any, and costs of process, may be recovered by the sale of the defaulter's movable or immovable property or by all or any of these processes in the manner hereinafter provided." If the defaulter has 2 items of land, A and B, and kist is in arrear only for the land A the other land B can also be sold for the same. Although both of them can be proceeded against for the arrears of public revenue only the land A is security for the public revenue. It is S.3 of the 1951 Act which makes the land is respect of which there is arrear of public revenue security for the same and it reads thus: "3, The land, the buildings upon it and its products shall be regarded as security for the public revenue on such land." 6. A clear distinction is made in the 1951 Act between the land of the defaulter in respect of which there is arrear of public revenue and his other lands. A clear distinction is made in the 1951 Act between the land of the defaulter in respect of which there is arrear of public revenue and his other lands. Thus S.24 of that Act which deals with the steps to be taken before attachment of the properties of the defaulter provides that in the written demand to be served on the defaulter the land in respect of which the revenue is claimed should be specified. S.44 of the Act which provides for sale free of encumbrances applies only to a sale of land in respect of which there is arrears of public revenue. Prior encumbrances on land B are not extinguished when it is sold for arrear of public revenue due in respect of land A. That is so because although both the lands, A and B, are liable to be proceeded against for the arrears of revenue only the land A is security for the arrears of revenue. With this perspective when we examine S.36A what we find is that the provision in it which authorise the Government to purchase lands for nominal amounts and so are extraordinary in nature, apply only to land A in the illustration mentioned above and not to the land B, that is, it applies only to the land of the defaulter for which public revenue is in arrear and not to his other lands. 7. S.36A (2) deals only with property put up for sale under S.36A (1). S.36A (1) deals only with cases where immovable property is put up for sale "for the recovery of arrears of public revenue due thereon." Mark the words "immovable property" and "arrears of public revenue due thereon" in that subsection. Just like those words in S.36A (1) the use of the definite article "the" before the word "property" wherever that word occurs in S.36A (2) is also important. That shows that the property mentioned in S.36A (2) is the identical property that is referred to in S.36A (1). The property dealt with in S.36A (1) is only that in respect of which public revenue is in arrear. The latter portion of S.36A (2) authorises the Government to purchase the property at the highest amount of bid if that is insufficient to cover the arrears of public revenue due on that property and those subsequently accruing due upto the date of sale. The latter portion of S.36A (2) authorises the Government to purchase the property at the highest amount of bid if that is insufficient to cover the arrears of public revenue due on that property and those subsequently accruing due upto the date of sale. That also shows that the property contemplated there is the one in respect of which public revenue is in arrear. It follows therefore both from the plain language of the Section and the scheme of the Act that Government can purchase land for a nominal amount under S.36A (2) only if in respect of it there is arrear of public revenue. 8. We now turn to the 2nd question. If a property is mortgaged to Government for taking a loan under the 1952 Act, the mortgagor defaults to pay back the amount borrowed and the Government takes steps under the 1951 Act for sale of the property mortgaged can that property be treated as one in respect of which there is arrear of public revenue. Under S.30 (1) of the 1952 Act if a loan given by the Government becomes payable under that Act it can be recovered as if it is arrear of public or land revenue due from the defaulter. Now we shall read that sub-section: "30. (1) All loans and other sums payable or recoverable under this Act including any interest chargeable thereon and costs if any incurred if not paid when they are due shall be recoverable under the law for the time being in force as if they were arrears of public or land revenue from the person aided and his surety if any and the assets of the industry aided." A legal fiction has been created there. What is its effect? In East End Dwellings Co. Ltd.v. Finsbury Borough Council 1952 Appeal Cases 109, Lord Asquith said: " If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs". This passage has been quoted with approval and the rule laid down there followed in Venkatachalam, I. T. O. v. Bombay D. & M. Co. Ltd. AIR. 1958 SC. 875, /. T. Commissioner v. S. Teja Singh AIR. 1959 SC. 352, Easwari Amma v. Meenakshi Amma 1963 KLT. 920 (FB.) and Govinda Kymal v. Velu ILR.1962 Kerala Vol.1 page 143. No doubt in applying that rule the fiction in S.30 (1) of the 1952 Act that loans payable under that Act can be deemed to be arrear of public or land revenue due under the. 1951 Act must mean that all those facts on which alone there could be arrear of public or land revenue existed and that the Government was entitled to recover the same under the 1951 Act. But that by itself is not sufficient to entitle the State to succeed on the position taken on its behalf because the use of the fiction can be made only to the extent permitted by the 1952 Act and to the limit to which the 1951 Act goes. S.30(1) of the 1952 Act does not say that the loan can be recovered as if it is arrear of public revenue due on the property mortgaged. On the other hand, it only says that it can be recovered as if it was arrear of public or land revenue from the person aided. What it means is only that he can be treated as a defaulter under the 1951 Act. It only indicates that the same procedure is to be followed for recovery of the arrears. If the person aided under the 1952 Act is treated as a defaulter under the 1951 Act all his lands can be proceeded against for the arrears of public revenue but under S.36A of the 1951 Act the Government can purchase a land for a nominal amount only if there is arrear of public revenue due in respect of it. Now what is an arrear of public revenue due on land? Now what is an arrear of public revenue due on land? That is defined in S.2 (b) of the 1951 Act as follows: "2. (b) 'An arrear of public revenue due on land' is the whole or any portion of any kist or instalment of such revenue not paid on the day on which it falls due according to the kistbandyor any engagement or usage." The State has no case that in respect of the land involved in the present case kist was in arrear. A land in respect of which kist is not in arrear cannot be treated as one for which public revenue is in arrear from the mere fact that it is mortgaged for taking a loan under the 1952 Act and the person aided has defaulted to pay the amount taken on loan. 9. Our conclusion on both the points raised by the learned Advocate General being against the appellants we dismiss this appeal with costs. Dismissed.