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2002 DIGILAW 348 (KER)

Chengannur Municipality v. Samuel

2002-06-06

M.R.HARIHARAN NAIR

body2002
Judgment :- M.R. Hariharan Nair, J. The challenge in the appeal is with regard to the judgment of acquittal passed by the Judicial First Class Magistrate's Court-II, Chengannur, in favour of the present respondent. In the complaint filed by the Revenue Inspector of the appellant Municipality, offences under Rules 32(2) and 39(1) of the Taxation and Finance Rules under the Kerala Municipalities Act, 1960 were alleged. The accused was acquitted in the case mainly on two grounds. They are : that the Municipality had not exhausted its remedy of distraint of the properties of the accused and secondly that the accused ad filed a civil suit and obtained a decree to the effect that he had sustained a loss of Rs. 27,900/- in the matter of collection of fees with regard to vegetables/fish farm and cattle market of the Chengannur Municipality based on bid made by him in an auction held by the Municipality for the year 1988-89. The accused had a plea that the Municipality had agreed to adjust the aforesaid amount out of the total dues of Rs. 68,601/- of which Rs. 50,000/- is the alleged arrears and the remaining amount interest. 2. On the arguments advanced in this case the points that arise for decision are : (1) Whether the prosecution under Rules 32(2) and 39(1) of the Taxation and Finance Rules of the Kerala Municipalities Act can be maintained before exhausting the remedy of distraint contemplated under the Rules ? (2) Whether the defence taken by the accused that there was an agreement to adjust a sum of Rs. 27,900/- towards the decree amount in the civil suit is correct ? (3) Whether the acquittal passed by the trial court is justified ? 3. Point No. 1 :- Sri. E.R. Venkiteswaran, who appeared for the appellant, submitted that Exts. P1 to P4 documents proved by P.W. 1 would show that there was distraint of movables attempted by the Municipality and such attempt having failed, the prosecution initiated was fully justified. (3) Whether the acquittal passed by the trial court is justified ? 3. Point No. 1 :- Sri. E.R. Venkiteswaran, who appeared for the appellant, submitted that Exts. P1 to P4 documents proved by P.W. 1 would show that there was distraint of movables attempted by the Municipality and such attempt having failed, the prosecution initiated was fully justified. The defence contention is that the attempt was not complete in so far as the accused had a depot dealing with sale of chemical manure run with the agency allowed by the FACT; that the stock in trade available in the godown and in the business place were worth than the amount allegedly due to the Municipality and that no attempt was made to attach and sell the stock in trade and other movables available in the business place. He would therefore contend that the prosecution initiated was premature. 4. Ext. P2 produced in the case shows that the bill demanding a sum of Rs. 68,600/- was issued to the accused herein and received by him on 26.12.1990. Ext. P1 produced in the case shows that a demand notice for the aforesaid amount and a sum of fifty paise as demand notice charge was demanded from the accused as per notice dated 16-1-1991 which was received by the accused on 19-1-1991. Ext. P3 is the distraint warrant issued to P.W.1, who was the Revenue Inspector of the Municipality directing recovery of a sum of Rs. 68,611/- of which Rs. 68,600/- was the arrears and interest already recovered by the previous bill and notice and a sum of Rs. 10.50 representing distraint fee and warrant fee. Ext. P4 is the mahazar prepared by P.W. 1 after attempting the attachment of the movables available in the house of the accused based on Ext. P3 distraint warrant. The said mahazar gives a graphic description of the movables available in the house and also makes mention of the fact that items 6 and 7 in the inventory which are an almirah and certain utensils were claimed as the exclusive property of the accused's wife and claimed to be exempt from attachment. It is also stated in Ext. P4 mahazar in which the accused has also signed that the movable items available in the house were worth only Rs. 3,100/- as against the total amount of Rs. 68,611/- which was to be realised. It is also stated in Ext. P4 mahazar in which the accused has also signed that the movable items available in the house were worth only Rs. 3,100/- as against the total amount of Rs. 68,611/- which was to be realised. It was noted that the value of the items available was not even worth 1/20th of the total arrears; and that the attempt to attach the movables was hence abandoned and the prosecution attempted. 5. P.W. 1 in his cross-examination admitted that the accused is a manure dealer working as an agent of the FACT for Chengannur Town and he did not try to find out the value of the assets available in the said manure depot. In view of the said admission, the present prosecution has been initiated without attempting the attachment of all the movables belonging to the accused. The question then is whether such prosecution is permissible under law. 6. The scheme envisaged in the Taxation and Finance Rules framed under the Kerala Municipalities Act with regard to the recovery of the amounts due may be examined in this regard. Rule 31(1) contemplates issuance of notice of demand of tax requiring the assessee to pay the tax together with a demand notice fee of fifty paise and the cost of service of the notice. Rules 32(1) and 39(1) of the Rules provide as follows : "32(1) If the amount due on account of any tax together with the demand notice fee and the cost of service of the notice is not paid within fifteen days from the service of the notice and if the person from whom the tax is due has not shown cause to the satisfaction of the commissioner may should not be paid, the commissioner may recover by distraint under his warrant and sale of the movable property of the defaulter, the amount due on account of the tax together with demand notice fee and cost of service, warrant fee and the distraint fee and with such further sum as will satisfy the probable charges that will be incurred in connection with the detention and sale of the property so distrained : Provided always that movable property described in the proviso to Sec. 60 of the Code of Civil Procedure, 1908 shall not be liable to distraint. (2) If for any reason the distraint or a sufficient distraint of the defaulter's property is impracticable, the commissioner may prosecute the defaulter before the Magistrate. X x x x x x x x x x x x x x x x x x x x x x x x X x x x x x x x x x x x x x x x x x x x x x x x 39(1). Every person who is prosecuted under sub-rule (2) of Rule 32 shall be liable, on proof to the satisfaction of the Magistrate that he willfully omitted to pay the amount due by him or that he willfully prevented distraint or a sufficient distraint, to pay a fine not exceeding twice the amount which may be due by him on account of - (a) the tax, the demand notice fee, the cost of service of the notice if sent by registered post, and the warrantee, if any, and (b) If distraint has taken place, the distraint fee and the expenses incidental to the detention and sale, if any, of the property distrained." It is clear from Rule 32(2) aforementioned that prosecution of the defaulter is contemplated only where the distraint or a sufficient distraint of thedefaulter's property is found impracticable. In otherwords, that is a condition precedent for initiating prosecution against the assessee. There is nothing in Rule 39(1) also which goes against the said requirement. Of course, under that Rule Magistrate would be justified in imposing fine if it is established that the accused willfully omitted to pay the amount due from him or that he willfully prevented distraint or sufficient distraint of its property. According to me, Rule 39(1) has to be read subject to the conditions in Rule 32(1) and not de hors of it. The mention of 'prevention of distraint or sufficient distraint' in Rule 39(1) fully justifies such a conclusion. It follows therefore that prosecution steps under the Rules would be maintainable only after the Municipality has exhausted the proceedings under Rules 31 and 32 including distraint of the movables of the defaulter. Such distraint necessarily implies distraint of all the properties of the defaulter and not merely a part of it. It follows therefore that prosecution steps under the Rules would be maintainable only after the Municipality has exhausted the proceedings under Rules 31 and 32 including distraint of the movables of the defaulter. Such distraint necessarily implies distraint of all the properties of the defaulter and not merely a part of it. What is obvious from the evidence of P.W.1 is that he attempted attachment of only the items available in the residential building of the accused and on finding that that was too insufficient to cover the full amount abandoned distraint proceedings. He should necessarily have pursued the attempt to attach the movables in the business place of the accused as well. The prosecution having been attempted; before exhausting the said remedy, it is obviously not maintainable and the court below has correctly come to the view that the accused is not liable to be convicted and fined. 7. Point No. 2 :- The contention that the accused had filed O.S. No. 145/88 in the Munsiff's Court, Chengannur, and obtained a decree against the Municipality with regard to recovery of compensation to the tune of Rs. 27,900/- is not proved through adequate evidence. Best evidence in the matter is the production of the relevant decree. No such document was produced and merely based on some admissions on the deposition of P.W. 1, the accused cannot successfully make out a case with regard to the fact that the amounts are due from the Municipality to him underthe decree of the court. That apart, there is no reliable evidence adduced to show that the Municipal council or the Secretary which is the competent authority had considered the question of adjustment of the amount due under any such decree towards the arrears in question and passed an order allowing the request of the accused for any such set off. As such, there is no sufficient evidence adduced by the accused to show that he was entitled to get a set off of alleged compensation amount towards the dues for which the prosecution was initiated. 8. Point No. 3 :- In view of my findings under Point Nos. 1 and 2, the prosecution has to fail being premature. In that perspective, the impugned judgment does not suffer from any defect. The appeal is found to be without merit and it is dismissed.