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1990 DIGILAW 128 (KER)

Malabar P & R. Co. Ltd. v. Tax Recovery Officer

1990-03-13

RADHAKRISHNA MENON

body1990
Judgment :- The plaintiff in a suit for a decree restraining defendants 1 and 3 (respondents 1 and 3 herein) by a permanent injunction from evicting him from the building situated in the plaint schedule property otherwise than in accordance with the provisions of The Kerala Buildings (Lease and Rent Control) Act, 1965, is the revision petitioner. 2. The temporary injunction sought for was granted by the trial court. But it was reversed by the lower appellate court by the judgment under attack. 3. A resume of facts requisite and relevant to decide the dispute is given hereunder. The fourth defendant K.T. Thomas was declared a defaulter within the meaning of The Income-tax Act, for short The Act, on his failure to pay the tax within the stipulated period. The assessing authority thereupon forwarded to the Tax Recovery Officer a certificate within the meaning of S.222 of The Act specifying the amount of arrears of tax due from the defaulter and the Tax Recovery Officer, the first defendant (the first respondent herein) served the notice, contemplated under R.2 of The Second Schedule appended to The Act (procedure for recovery of tax) on the defaulter calling upon him to pay the amounts specified in the certificate within 15 days from the date of receipt of the notice. The defaulter failed to comply with the request contained in the said notice and therefore the Tax Recovery Officer got the building in dispute and the appurtenant land measuring 60 cents in extent attached under R.48 of the Second Schedule. This attachment must be deemed to have come into force on 6-3-1983 though the order of attachment was made only on 8-3-1985, in view of the provisions contained inR.51 of the Second Schedule. The building and the appurtenant land aforesaid were sold in public auction by the first respondent in execution of the certificate and purchased by the third respondent for a sum of Rs. 12,01,000. In the meantime) during the subsistence of the attachment, on 10-10-1984, the defaulter granted a lease of the building to the petitioner as is seen from the registered document No. 1962/84 of the Sub Registry Office, Calicut on a monthly rent of Rs.3500/-. 12,01,000. In the meantime) during the subsistence of the attachment, on 10-10-1984, the defaulter granted a lease of the building to the petitioner as is seen from the registered document No. 1962/84 of the Sub Registry Office, Calicut on a monthly rent of Rs.3500/-. Apprehending that the first respondent would dispossess the petitioner in enforcement of the certificate without recourse to the provisions contained in The Kerala Buildings (Lease and Rent Control) Act, the petitioner instituted the suit for permanent injunction. 4. The learned counsel for the first respondent Sri. P.K. Ravindranatha Menon argued that S.293 of The Act, the rules contained in the Second Schedule, particularly Rules 9,11 (3) and (6) thereof and also the Income-tax (Certificate Proceedings) Rules, 1962 (Certificate Proceedings rules), particularly Rule 47 thereof expressly bar the jurisdiction of the civil court from deciding the dispute because the same is between WKH defaulter and the Tax Recovery Officer and relating, to the execution, discharge or satisfaction of a certificate etc. and as such the suit is not maintainable. Touching upon the merits of the case he submitted that the petitioner has no right to continue in possession because the transaction under which she claims possession, is void as it is hit by the prohibition contained in R.16 of the Second Schedule. Assuming she is in possession, that possession must b» deemed, in the circumstances, to be the possession of the defaulter herself; the Tax Recovery Officer therefore, can ignore the said possession and deliver the property to the third respondent, the purchaser in public auction and if need be, by removing the petitioner in case she refused to vacate the same. That that is possible is clear from R.39 of the Certificate Proceedings Rules. However there was no need to have recourse to the said provision because there was no resistance from any quarter, much less from the petitioner when the purchaser went to the spot to take possession of the property. The learned counsel for the third respondent fully supports the above argument of Sri.P.K. Ravindranatha Menon. 5. On the other hand the learned counsel for the petitioner argues that the civil court has jurisdiction to consider the dispute and dispose of the same because the dispute will not fall within the mischief of the above provisions. The learned counsel for the third respondent fully supports the above argument of Sri.P.K. Ravindranatha Menon. 5. On the other hand the learned counsel for the petitioner argues that the civil court has jurisdiction to consider the dispute and dispose of the same because the dispute will not fall within the mischief of the above provisions. That the petitioner is in possession of the building cannot be disputed by the first respondent because the first respondent by Ext.A3(a) letter dated 24-10-1980 had directed the petitioner to pay the rent,to the Department although as per the lease deed the petitioner was bound to pay the rent to Mr.Thomas. If that be so, the counsel submits, the petitioner cannot be evicted from the building otherwise than in accordance with the provisions of the Kerala Buildings (Lease and Rent Control) Act. The appellate court without considering any of these aspects, the counsel says, has found that the petition is not maintainable. 6. The question thus arising for consideration is, can the plaintiff maintain the suit and get a decree restraining defendants 1 and 3* by a permanent injunction from evicting her from the building otherwise than in accordance with the provisions of the Kerala Buildings (Lease and Rent Control) -Act. The answer depends upon the view this court would take in regard to the maintainability of the suit. 7. Before we go into the merits of the case it is necessary to restate some of the principles well established by judicial pronouncements construing S.9 of the Civil Procedure Code. Those principles are: The exclusion of the jurisdiction of the Civil Court is not to be readily inferred. Where the power however is, by statute, vested in another tribunal with exclusive power over any subject-matter, the Civil Court cannot interfere with the same. The Civil Court nonetheless would get jurisdiction to examine into the case whether the provisions of the Act have not been applied or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. The jurisdiction of the Civil Court may be excluded expressly or by clear implication and therefore when the legislature sets up a special tribunal to determine questions relating to the rights or liabilities which are the creation of the statute, the jurisdiction of the Civil Court would be deemed excluded by implication. The jurisdiction of the Civil Court may be excluded expressly or by clear implication and therefore when the legislature sets up a special tribunal to determine questions relating to the rights or liabilities which are the creation of the statute, the jurisdiction of the Civil Court would be deemed excluded by implication. Similarly where the statute gives finality to orders of the special tribunals where the State gives finality to orders of the special tribunals the jurisdiction of the Civil Court must be held to be excluded. (See the decisions of the Supreme Court - Provincial Govt. of Madras v. Basappa, AIR 1964 S.C.1873, Noor Mohd.Khan v. Fakirappa, AIR 1978 S.C.1217, State of Kerala v. Ramaswamy Iyer, AIR 1966 S.G 1738 and Secy, of State v. Mask '& Co. AIR 1940 P.C.105). 8. Now let us see the scope of the provisions of The Income-tax Act and the Certificate Proceedings Rules, the learned counsel for the Department referred to in the course of his argument to sustain his plea that the civil court has no jurisdiction to maintain the suit. The effect of S.293 which bars suits in civil courts is that, even where the assessment or other proceeding is erroneous or wrong, no suit can be initiated in any civil court to set aside or modify the assessment unless it be that the assessment or other proceeding is taken under an ultra vires provision. Facts of the case however do not attract this section. We will now consider the scope of the other relevant provisions of The Income-tax Act and the Certificate Proceedings Rules. R.9 of the Second Schedule limits the jurisdiction of civil court to decide questions arising between the Income-tax Officer and the defaulter or the representatives, relating to the execution, discharge or satisfaction of the certificate duly filed under the Income-tax Act, or relating to the confirmation or setting aside by an order under the Act of the sale held in execution of such certificate. Such disputes shall be determined only by the order of the Tax Recovery Officer. The proviso added to this rule however, recognises the rights of a party to institute a suit before a civil court in respect of any such question upon the ground of fraud. What are the questions that can be determined by the Tax Recovery Officer after investigation are enumerated under Rule 11. The proviso added to this rule however, recognises the rights of a party to institute a suit before a civil court in respect of any such question upon the ground of fraud. What are the questions that can be determined by the Tax Recovery Officer after investigation are enumerated under Rule 11. This rule provides that where any claim is preferred, or any objection is made to the attachment or sale of any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer is bound to proceed to investigate the claim or objection. The proviso to clause (1) of Rule 11 empowers the Tax Recovery Officer to refuse to investigate into the claim or objection if he is of opinion that the claim or objection was designedly or unnecessarily delayed. Clause (3) and (4) make it clear that only on the claimant or the objector establishing that he has some interest in or was possessed of the immovable property attached or proclaimed for sale at the date of service of the notice under rule (2), he can get a verdict in his favour. The claimant or objector therefore has to establish that the property is not liable to be attached or sold in execution of a certificate. A reference in this connection to Rule 16 of the Second Schedule is profitable. This rule voids private alienations by creating mortgage, charge, lease etc. of the property belonging to the defaulter if they are transactions which admittedly came into being after the date of service of notice under Rule (2), and without the permission of the Tax Recovery Officer. An incidental question however would arise, Is it necessary for the defaulter to obtain the 'permission' before hand in order to create a valid lease, mortgage, charge etc. The negative or prohibitive words employed in the Rule namely "the defaulter or his representative in interest shall not be competent to mortgage, charge, lease etc." make it impossible for the defaulter or his representative in interest to create a valid mortgage, charge, lease etc. in respect of the property owned by him after the service of notice under. Rule 2. However, the Rule speaks of an exception and it is this: Such transactions would be valid provided they were made with the permission of the Tax Recovery Officer. in respect of the property owned by him after the service of notice under. Rule 2. However, the Rule speaks of an exception and it is this: Such transactions would be valid provided they were made with the permission of the Tax Recovery Officer. Obtainment of 'permission thus is a condition precedent. The Rule further provides that the civil courts shall not issue any process against such property of the defaulter in execution of a decree for payment of money. Sub-clause (2) of Rule 16, corresponding to S.64 of the Civil Procedure Code, says that any private transfer or delivery of such property etc. shall be void as against all claims enforceable under the certificate. It is also clear from this Rule that' unlike under S.281 it does not provide an exception to bona fide purchasers without notice. This being the scheme of Rule 16, the question as to whether it is possible for the Tax Recovery Officer to ratify private alienations by granting permission after the alienations, does not arise at all. In the absence of any such proof, the immovable property will be treated as belonging to and in the possession of the defaulter and the claim will foe disallowed. (Clause 5). A claimant who is aggrieved by such order can challenge the said order by instituting a suit in a civil court to establish his claim to the property in dispute and subject to the result of such suit the order of the Tax Recovery Officer would become conclusive (See Clause 6). On the order of the Tax Recovery Officer thus becoming conclusive, the sale certificate within the meaning of Rule 65 of the Second Schedule will be given to the purchaser. If the property sold is in the possession of a tenant within the meaning of rule 40 of the Certificate Proceedings Rules then, the purchaser can get only a symbolic delivery. But as per the order under Rule 11 of the Second Schedule if the defaulter is found to be in possession of the property, the Tax Recovery Officer is bound, on the application of the purchaser, to order delivery to be made by putting such purchaser or any person whom the purchaser may appoint to receive delivery on his behalf, in possession of the property, and if need be, by removing any person who refuses to vacate the same. So says Rule 39(1) of the Certificate Proceedings Rules. Forcible removal of the person in occupation however is subject to clause (2) of Rule 39. Since it is not relevant to be considered here, there is no need to deal with that provision. Rules 41,42 and 43 relate to the proceedings, the purchaser can initiate for the purpose of removal of resistance or obstruction to delivery of possession. These provisions correspond to Order 21 Rules 97,98 and 99 C.P.C. On enquiry if it is found that the obstruction was offered by any person other than the defaulter claiming in good faith to be in possession of the property on his own account or on account of some other person other than the defaulter, the Tax Recovery Officer shall dismiss the application for removal of resistance. Rule 44 however, provides that where any person other than the defaulter is dispossessed of immovable property sold in execution of a certificate by the purchaser thereof, he may make an application to the Tax Recovery Officer complaining of such dispossession! within thirty days of such dispossession. If on enquiry the Tax Recovery Officer was satisfied that the claimant under Rule 44 was in possession of the property on his own account or on account of some person other than the defaulter, he is bound to direct that the claimant be put in possession of the property. In other words a bona fide claimant is en titled to get restoration of possession. It is relevant in this context to note the scope of rule; 46 which says that nothing in Rules 43 and 45 shall apply to resistance or obstruction by a person to whom the defaulter has transferred the property after the service of notice under rule 2 of the Second Schedule or to the dispossession of any such person. Any party not being a defaulter against whom an order is made under Rule 42 or Rule 43 or Rule 45 has the right to institute the suit in a civil court to establish the right which he claims to the present possession of the property. So says Rule 47. 9. Any party not being a defaulter against whom an order is made under Rule 42 or Rule 43 or Rule 45 has the right to institute the suit in a civil court to establish the right which he claims to the present possession of the property. So says Rule 47. 9. It is clear from the scheme of the Rules that the civil court has only the limited jurisdiction namely to examining into the case whether the Tax Recovery Officer has or has not acted in accordance vith the law and the fundamental principles of judicial procedure. In other words 1 the jurisdiction of the civil court to the extent indicated in these Rules must be deemed to have been excluded. If that be the position the suit, to my mind, is not maintainable. 10. Now coming to the merits of the case: It is the common case of the parties that the Tax Recovery Officer gave the permission to take possession of the property including the building only after the disposal of the appeal by the lower appellate court. The appeal was disposed of on 22-12-1989. It is relevant in this context to note the letter No.TR.3/CLT/83/ETC/SOP/ of the Tax Recovery Officer dated 22nd day of December, 1989 authorising the third respondent to take possession of the property A The third respondent took delivery of the property, it is said, on the evening of 22-12-1989. That it is so can be seen from the letter of the third respondent addressed to the Tax Recovery Officer. It reads: "This is to inform you that as per your letter cited above, requesting us to take possession of the property following the orders of the additional District Judge Calicut in CMA/82/89 of OS No. 140/89 dated, 22-12-1989, we took possession of the above property on the evening of 22-12-1989. We did not experience any resistance from the so called unauthorised occupant and there was free entry into the compound and the building. We found no movable property inside the building. We have put up a sign board of Indian Express, locked the gages and doors and put a sentry on duty there. Repair work in the premises is in full swing, and we expect to start our office functioning from the building at the earliest". We found no movable property inside the building. We have put up a sign board of Indian Express, locked the gages and doors and put a sentry on duty there. Repair work in the premises is in full swing, and we expect to start our office functioning from the building at the earliest". On the application filed by the petitioner on 26-12-1989, the lower appellate court passed an order dt.27-12-1989 and it reads: "RI files counter. For counter of R2 & R3. Status quo as on today shall be maintained. According to R1 the property was delivered over on 22-12-1989 itself. Call on 30-12-89". This petition was later closed as is seen from the order dated 3-1-1990. It reads:-- "R2 & R3 filed counter to the effect that the third defendant in the suit has taken possession on 22-12-1989. The petitioner disputes this. In view of the order directing the parties to maintain status quo as on 27-12-1989, no further orders are called for. The petition is accordingly closed". 11. From the above proceedings it can be inferred that the first respondent put the third respondent in possession of the property in enforcement of the sale certificate. It is true that this statement is disputed by the petitioner. However the petitioner has not produced any material before the court from where it can be inferred that the petitioner continues to be in possession of the property. In .the absence of any such evidence it can be presumed that the first respondent in exercise of power vested in him under rule 39(1) of The Certificate Proceedings Rules, has put the third respondent in possession of the property in dispute. (See S.114, Illustration E of The Evidence Act). It is apt in this context to note the definite case of the first respondent that there was no resistance from any quarter much less from the petitioner when the third respondent went to the spot to take delivery of the property and therefore there was no need for him to put the third respondent in possession by removing the petitioner from the property. From these circumstances it is clear that the only remedy if any that is open to the petitioner is the one envisaged under rule 44 or 47 of The Certificate Proceedings Rules or Rule 11(6) of The Second Schedule. It is made. From these circumstances it is clear that the only remedy if any that is open to the petitioner is the one envisaged under rule 44 or 47 of The Certificate Proceedings Rules or Rule 11(6) of The Second Schedule. It is made. clear that any such proceedings if already initiated or yet to be initiated by the petitioner will have to be considered and disposed of uninfluenced by any of the observations or findings made in this order. The C.R. P. therefore is dismissed but in the circumstances no order as to cost.