Chandrika Prasad v. State Of Bihar — 1969 DIGILAW 92 (PAT)

Judgment U.N.Sinha, J. 1. This application has been filed by the petitioner, under Articles 226 and 227 of the Constitution of India, praying that a writ of prohibition be issued for striking down and cancelling Certificate Case No. 69 of 1963-64, pending before the Certificate Officer, Siwan, in the district of Saran. The petitioner has further prayed for a writ of certiorari for quashing four orders dated the 9th September, 1963, 31st July, 1967, 25th January, 1968 and 1st May, 1968, passed by the Certificate Officer and authorities above him, terminating in the last order passed by the Board of Revenue. Copies of the aforesaid orders have been incorporated in Annexure 4, 5, 6 and 7 of the writ application respectively. A counter-affidavit has been filed on behalf of the State of Bihar and others and a reply to the counter-affidavit has been filed by the petitioner. 2. The relevant facts, mentioned in the application under consideration are as follows: It is stated that the petitioner was a dealer in foodgrains under the name and style of Messrs. Sheotahal Sah Harihar Prasad, doing business at Maharajganj in the district of Saran. At the request of the Subdivisional Officer of Siwan, he had agreed to work as a stockist of foodgrains on payment of commission at village Chainpur. [It appears that the petitioner had been appointed as a stockist on the 12th May, 1951]. It is stated that on account of some differences with the petitioner and on some adverse reports, the Relief Officer of the Stale of Bihar (opposite party No. 7) got the arrangment entered into with the petitioner cancelled without any notice. A protest petition had been filed by the petitioner, but nothing has been heard about it. According to the petitioner, after arrangement had been terminated, the local officers had seized the accounts maintained by him and his registers and had removed the entire available stock from the petitioners godown and all protests made by the petitioner were infructuous. It is stated that due to grudge against the petitioner, the Certificate Officer of Siwan (opposite party No. 3) has issued a certificate, purporting it to be one under the Bihar and Orissa Public Demands Recovery Act, 1914 (Bihar and Orissa Act No, 4 of 1914), on the basis of a written requisition submitted by the Subdivisional Officer, (opposite party No. 2), demanding Rs. 59,635.25 paise. 59,635.25 paise. A copy of the certificate received by the petitioner has been appended as Annexure 1 of the writ application. It is alleged that the arrangement entered into by the petitioner had been made at the verbal request of the Sub-divisional Officer and there was no contract made in accordance with the requirements of Article 299 of the Constitution of India, and as a matter of fact, no agreement in writing between the parties had been brought into existence. It is stated in the application that on receipt of the notice of demand in respect of the certificate, the petitioner had filed an objection, asserting, inter alia, that there could be no foundation for the proceeding in the absence of a written agreement. A copy of the objection has been appended as Annexure 3 of the application. It is alleged that in spite of all objections made by the petitioner, the Certificate Officer and the higher authorities have passed adverse orders against the petitioner on the mere surmise that there must have been a written agreement between the parties which could form the basis of the demand made in the Certificate case. As indicated later, the Certificate Officer by his order dated the 9th September, 1963 (Annexure 4) reduced the demand to Rs. 27,094.44 paise and this liability has been upheld upto the Board of Revenue. 3. The main point in the case being whether the dues, if any, from the petitioner can be realised as public demand, the relevant facts, mentioned in the counter-affidavit, may now be mentioned. It is stated that there is no record to show that at the mere request of the Subdivisional Officer, the petitioner had agreed to work as a stockist of food-grains on payment of commission. It is alleged that an agreement must have been executed in accordance with law, and the petitioner has himself admitted existence of , such an agreement in paragraph "4 (a) of the objection filed by him under Section 9 of the Public Demands Recovery Act (A copy of this objection has also been appended as Annexure A to the counter-affidavit). Paragraph 4(a) of the said objection runs thus: The bill for commission which was payable has not been paid. Paragraph 4(a) of the said objection runs thus: The bill for commission which was payable has not been paid. It is further stated that Annexure B of the counter-affidavit will indicate that the petitioner must have executed an agreement, agreeing to work as a stockist on payment of commission. The relevant portion of Annexure B is quoted below: To Shree Chandrika Prasad, Proprietor of the firm M/S Sheotahal Sah Hariliar Prasad, Maharajgung. You are appointed Government grain stockist for Chainpur. You are directed to deposit a cash security of Rs. 5.000/- (rupees five thousand) only in the Imperial Bank and submit the receipt thereof to me. You are further required to execute an agreement under Government instructions and report compliance to me. Manager, Imperial Bank of India, Siwan is being informed. Sd. Illegible, Subdivisional Officer, Siwan. H.H. 12-5-51. According to this counter-affidavit, Annexure C and D to it also indicate that a proper agreement had been entered into by the petitioner. These two annexures appear to be reports made to the Subdivisional Officer, Siwan by. the Supply Officers of Siwan and Raghunathpur, dated the 19th September, 1951 and 21st October, 1951 respectively. The other part of the counter-affidavit deals with the alleged facts of the case, mentioning that the petitioner had even paid certain amounts of money out of the claim made against him and mentioning also that certain amounts of money had been adjusted towards the dues from the petitioner. It is mentioned, further, that the petitioner had even appeared before the Certificate Officer and had prayed for payment by instalments, which had been allowed. 4. The copy of the certificate filed with the writ application shows that the sum of money indicated therein (Rs. 59,635.25 paise) was due to the Subdivisional Officer, Siwan and the Certificate Officers signature bears the date of 11th April, 1963. In order to appreciate the basis on which the Certificate Officer had passed his order dated the 9th September; 1963 (Annexure 4). 59,635.25 paise) was due to the Subdivisional Officer, Siwan and the Certificate Officers signature bears the date of 11th April, 1963. In order to appreciate the basis on which the Certificate Officer had passed his order dated the 9th September; 1963 (Annexure 4). It may be stated that the objection filled by the petitioner under Section 9 of the Public Demands Recovery Act had mentioned, over and above the fact that there was no written agreement between the parties, that, after the petitioners licence had been cancelled on the 16th December, 1951, he made representation to the District Magistrate, Chapra and Tie had filed objection to the audit report, taking various grounds and claiming deductions, and as these claims had never been decided, there was bona fide dispute about the petitioners liability and, therefore, the certificate filed was without jurisdiction. Apparently, this part of the objection was made in view of Boards Instruction No. 10, to which reference has been made by the Board of Revenue in its order dated the 1st May, 1968 (Annexure 7). The relevant part of Instruction No. 10 reads as follows: 10. Certificate procedure not to be used where there is any doubt of the. debtors liability.-Requiring officers should bear in mind that the certificate procedure is intended only for the recovery of sums regarding which there is no doubt of the liability of the debtor. Cases in which the debtor is likely, with some show of reason, to deny his liability should be reported with a view to the institution of civil suits. It is clear from the Certificate Officers order dated the 9th September, 1963 (Annexure 4) that he had taken into consideration certain facts and figures to compute the dues, without going into the question of Jurisdiction, and ultimately, he scaled down the dues and allowed the petitioner to pay by instalments. The Collectors order dated the 31st July, 1967 (Annexure 5) also deals with the calculations made by the Certificate Officer and upholding the same. It appears from the order of the Commissioner of Tirhut Division, dated the 29th January, 1968 (Annexure 6), that the question of law regarding the jurisdiction of the Certificate Officer to realise the alleged dues was brought into prominence at the stage of revision filed against the order of the Collector. It appears from the order of the Commissioner of Tirhut Division, dated the 29th January, 1968 (Annexure 6), that the question of law regarding the jurisdiction of the Certificate Officer to realise the alleged dues was brought into prominence at the stage of revision filed against the order of the Collector. The learned Commissioner has stated the argument advanced before him, in the following words: There was no agreement executed much less registered regarding this stockistship. Under Item 9 of Schedule I such can be recovered only if the dues are covered by a written instrument. Such instruments were also required to be registered prior to 1955. It is further stated that the Board of Revenue has held that there can be no retrospective: effect regarding registration. Accordingly it has been argued that if the certificate is not based on a written and registered document, it is ab initio void as held by the Board of Revenue in several cases. It has also been said that there can be no such presumption that there must have been some agreement in this case when no such paper is forthcoming. Even at the audit in 1957 it was found by the auditor that there was no agreement. To sum up, the case of the petitioner is, firstly, that the demand is not covered by any written and registered agreement, and secondly that the demand is not clear out and definite and hence it is hit by Instruction 10 at page 100 of the Certificate Manual. (The original provision for a registered agreement, mentioned in item no. 9 of Schedule I of the Bihar and Orissa Public Demands Recovery Act was amended by Bihar Act IV of 1956, by which the words "duly registered were omitted). The petitioners contention before the learned Commissioner was repelled by him in the following terms: These contentions, though prima facie plausible, do not appear to be based on good and reasonable grounds. A perusal of the objection petition dated 29-4-63 filed by the petitioner under Section 9 of the Bihar and Orissa Public Demands Recovery Act shows that the only ground taken for the cancellation of the certificate filed against him was the alleged existence of a bona fide dispute regarding the exact liability of the petitioner to the amount payable by him. It will thus be seen that the legality of the certificate was never challenged by the petitioner on the alleged ground of non-compliance with the provisions of item 9 of Schedule I to the Bihar and Orissa Public Demands Recovery Act. In fact, the reply to the points raised in the petitioners objection petition dated 29-4-63 given on behalf of the Requisitioning Officer asserted that a written agreement must have been executed though it could not be traced out during the course of audit. It was, therefore, in cumbent on the petitioner to insist for the production of the agreement in court. This was obviously not done. The existence of a written agreement is also proved by the fact that the petitioner himself claimed in paragraph 4(a) of his petition dated 29-4-63 that his bill for commission had net till then been paid to him. Evidently no such bills could have been prepared by the petitioner unless the rates for commission must have been settled and incorporated in a written agreement. On these reasonings and oh the assumption that the petitioner had accepted his legal liability by paying Rs. 3.000/-, before the disposal of his objection under Section 9 of the Act, the revision failed. The question of absence of any registered written agreement was again agitated before the Board of Revenue. As the order dated the 1st May, 1968 (Annexure 7) will indicate, it was urged on behalf of the petitioner before the Board that in the absence of any written agreement, much less a registered agreement, the alleged due could not be recovered by a certificate proceeding. As a matter of fact, this was the only argument advanced before the Board of Revenue, as the learned Member has stated, that, "No argument was advanced before me with regard to the previous conduct of the petitioner". The learned Member of the Board of Revenue dismissed the petitioners revision application summarily holding as follows: As a result of acceptance of the calculation, the petitioner also paid a sum of Rs. 3,000/- and wanted time to pay the balance in instalments. It is, therefore, clear that these terms could hot have been entered into unless there was an understanding with regard to the terms of the stockistship. The Commissioner has mentioned that there must be some agreement as a result of which this negotiation might have taken place. 3,000/- and wanted time to pay the balance in instalments. It is, therefore, clear that these terms could hot have been entered into unless there was an understanding with regard to the terms of the stockistship. The Commissioner has mentioned that there must be some agreement as a result of which this negotiation might have taken place. I also find that not only the certificate debtor agreed to negotiation but also took advantage of the terms of the agreement so far as it suited his interest and acquiesced by his conduct with regard to the amount to be recovered. Apparently, the real question raised by the petitioner before the Board of Revenue was ignored and the learned Member affirmed the petitioners liability to pay on the ground of the petitioner having already paid a sum of Rs. 3,000/- and on his prayer made before the Certificate Officer to pay the balance in instalments. 5. In this Court, learned Counsel for the petitioner has reiterated the contentions which had been raised before the Board of Revenue, with respect to non-existence of any written instrument, within the meaning of item No. 9 of Schedule I of the Act, It is urged that in the absence of any such written instrument, the alleged demand cannot be realised by a proceeding under the Public Demands Recovery Act. In my opinion, the contentions raised on behalf of the petitioner for terminating the certificate case and for quashing the orders incorporated in Annexure 4, 5, 6 and 7 are of substance and they must be accepted. "Public demand" has been defined in Section 3(6) of the Bihar and Orissa Public Demands Recovery Act, as follows: "Public demand" means any arrear or money mentioned or referred to in Schedule I, and includes any interest which may, by law, be chargeable thereon upto the date on which a certificate is signed under Part II; In this context, item No. 9 of Schedule I is relevant and it is reproduced below as it stands after the amendment mentioned above: 9. Any money payable to a servant of the Government or any local authority, in respect of which the person liable to pay the same has agreed, by a written instrument, that it shall be recoverable as a public demand. Explanation-This item shall not apply to any money or demand specified in items 3, 4 and 7. Any money payable to a servant of the Government or any local authority, in respect of which the person liable to pay the same has agreed, by a written instrument, that it shall be recoverable as a public demand. Explanation-This item shall not apply to any money or demand specified in items 3, 4 and 7. (Whether item No. 9 as it stood in 1951, when the petitioner is said to have become a stockist, or as it stood in 1963, when the certificate case commenced, is not of importance in this case, for the reasons given below. On the facts alleged by the petitioner before this Court and replied to by the counter- affidavit. I must conclude that there was no such written agreement at all, as is contemplated by item No. 9 of Schedule I. whether registered or unregistered, by which the alleged dues against the petitioner can be recovered as a public demand by a proceeding under the Public Demands Recovery Act. I have mentioned the clear and categorical denial of any written agreement made in the writ application and to the stand taken by the opposite parties in the counter- affidavit. It is difficult to accept what has been stated in paragraph 7 of the counter-affidavit to the effect that an agreement had been executed in accordance with law. Moreover, it is difficult to hold that the writ case can be decided on the footing that the petitioner had admitted execution of a valid written instrument in para-graph 4(a) of his petition of objection. Paragraph 4(a) of this objection has realty been misinterpreted on behalf of the opposite parties, as it was stated in paragraph 4 that, The petitioner filed objections to the audit report on the following among other grounds: (a) The bill for commission which was payable has not been paid. This can hardly be interpreted as an admission of execution of the necessary written agreement, even if this writ case can be decided on admission alone. The stand taken by the opposite parties in paragraph 7 of, their counter-affidavit to the effect that a written agreement had been executed in accordance with law, but the same could not be traced out in the course of the audit, has apparently been taken from the order of the Commissioner, quoted above. The stand taken by the opposite parties in paragraph 7 of, their counter-affidavit to the effect that a written agreement had been executed in accordance with law, but the same could not be traced out in the course of the audit, has apparently been taken from the order of the Commissioner, quoted above. But, this assertion is also untenable on facts, as a written agreement contemplated under item No. 9 of Schedule I, in the year 1951, would surely have been a registered document, as was the legal requirement then. Annexures C and D attached to the counter- affidavit filed by the State of Bihar and others can also hardly support the contentions raised by learned Counsel for the opposite parties. The entries in those two annexure to the effect that an agreement had duly been executed, are also followed by the expression that the security had not been deposited by the stockist. Therefore, on facts, the inference must be that there was no agreement in 1951 which can be taken to be a written instrument by which the petitioner had agreed that any money payable by him could be recovered as a public demand, as contemplated by item No. 9 of Schedule I. In my opinion, the approach to the question of law raised by the petitioner before the Commissioner and the Board of Revenue by these two authorities was an erroneous approach. 6 Sri Sarwar Ali appearing for the opposite parties has argued that, when the Certificate Officer stated that he was satisfied that the demand, from the stockist was recoverable, the matter is final and that this Court cannot hold in this case, that the certificate, case is without jurisdiction, the contention has to be stated to be rejected. The prerequisite of filing a certificate under Section 6 of the Act is existence of public demand payable to any person other than the Collector, as stated in See. 5 of the Act and this Court can certainty inquire as to whether there was any "public demand". Payable by the stockist- petitioner, even on the assumption that there were any dues from him on the arrangement entered into in 1951. 5 of the Act and this Court can certainty inquire as to whether there was any "public demand". Payable by the stockist- petitioner, even on the assumption that there were any dues from him on the arrangement entered into in 1951. The inquiry as to the existence of any written instrument contemplated by item No. 9 of Schedule I is matter of utmost simplicity and this Court must investigate and the fact on the allegations made by the petitioner in the writ case. The reply to the counter-affidavit filed by this petitioner has described the assertions made in para-graph 7 of the counter-affidavit of the State and others, with regard to any written agreement, as "fanciful" and no materials have been placed before us on behalf of the opposite parties, for a conclusion that the alleged dues from the petitioner can be considered as "public demand" for realisation by a proceeding under the Public Demands Recovery Act. 7. Sri Sarwar Ali has further urged that the petitioner had got the demand made against him scaled down and adjusted by the Certificate Officer and, therefore, he cannot now turn rounds and challenge the jurisdiction of the Certificate Officer. Here also in my opinion the contention is not valid. Absence of jurisdiction of the Certificate Officer to realise the alleged dues against the petitioner is patent and, therefore, acquiescence cannot be a ground for refusing relief. 8. In the result the writ Application must succeed and the Certificate Officer, Siwan is restrained by a writ of prohibition from proceeding with Certificate Case No. 69 of 1963-64 and to take any further proceeding under Part III of the Bihar and Orissa Public Demands Recovery Act, In consequence, the orders of the Certificate Officer as well as those authorities above him, incorporated in Annexure 4, 5, 6 and 7, are also quashed by a writ of certiorari. In the circumstances of the case, parties are directed to bear their own costs. Kanhaiyaji, J. 7 I agree.