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2018 DIGILAW 345 (KER)

C. K. CHANDRASEKHARAN v. STATE OF KERALA

2018-04-13

ANTONY DOMINIC, DEVAN RAMACHANDRAN

body2018
JUDGMENT : Devan Ramachandran, J. When the hearing commenced in this appeal, we were under the impression that the primary issue herein involves a question as to whether the owner of a property, which is brought to sale under the provisions of Revenue Recovery Act ('the Act' for brevity) and bid on behalf of the Government, thus treating it as bought-in-land, can seek reconveyance of the same once the liability, against which revenue recovery action had been initiated, has been paid off subsequently either in full or under the terms of an Amnesty Scheme. The answer to this particular question is of course no longer res integra and is covered by several judgments of this Court, including State of Kerala and Others v. George Jacob ( 2010 (3) KLT 483 ), Laxmi Devi Tile Works v. District Collector, Thrissur ( 2009 (2) KLT 587 and Sibi Francis v. State of Kerala (2013 (2) KLT SN 82). 2. We notice that the learned Single Judge also proceeded to deal with the writ petition as if the only issue involved is as regards the re-conveyance of a bought-in-land and going by the settled principles of law, as enunciated in the above said judgments, went on to conclude in paragraph 7 as under: “Taking into consideration the aforesaid factual situation, there cannot be any situation where permission should be granted to re-convey the land merely for the reason that the amount has been subsequently remitted by the petitioner under the Amnesty Scheme. Hence I do not find any merit in the writ petition.” 3. In this appeal filed impugning the judgment of the learned Single Judge, a completely different question of law has been impelled based on the particular factual situation in this case. When we heard the matter, it became more or less apparent that the singular factual circumstances in this case would warrant consideration of issues relating to restitution of property rather than re-conveyance of the bought-in-land by the Government. 4. This will become apparent when the facts involved in this case are seen with some care. 5. We will, therefore, first state the most necessary facts. 6. The appellant/writ petitioner claims to have been the owner of certain extents of land comprised of in Sy.Nos. 695/1, 561/2, 560/9 and 550/17 in Block 49 of Pattancherry Village. 4. This will become apparent when the facts involved in this case are seen with some care. 5. We will, therefore, first state the most necessary facts. 6. The appellant/writ petitioner claims to have been the owner of certain extents of land comprised of in Sy.Nos. 695/1, 561/2, 560/9 and 550/17 in Block 49 of Pattancherry Village. According to him, he was a rice and paddy dealer and concedes that he had suffered an assessment order issued by the Commercial Tax Officer under the General Sales Tax Act for the years 1995-96 and 1996-97 for an amount of Rs.64,74,883/-. Since, as per him, the assessment was without basis, he filed statutory appeals against it, which were numbered as S.T.A.Nos.1975/2005 and 1976/2005 before the Deputy Commissioner, Commercial Taxes, Ernakulam. The records reveal that these appeals were dismissed, aggrieved by which the appellant submitted further appeals, numbered as T.A.Nos.501/2006 and 502/2006 before the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal, Additional Bench, Palakkad ('the Tribunal' for brevity). 7. It transpires that while the appeals were pending before the learned Tribunal, the Commercial Tax Officer, Chittur made a requisition under the provisions of the Act for recovery of the amounts found due under the assessment against the appellant. This led to demand notices under Sections 7 and 34 of the Act to be issued to the appellant and since he did not remit the alleged dues covered by those notices, his property, measuring 1.5320 hectares, comprised of in the survey numbers aforementioned, was proclaimed for auction. We see from the orders on record that when the sale was initially scheduled to be held on 20.07.2006, the appellant approached this Court by filing W.P.(C)No.18805/2006 and that this Court granted an interim order staying the sale of the property on condition that he pays Rs.5,00,000/-within a period of two weeks. However, since the appellant did not comply with the interim direction, the authorities scheduled the sale to be conducted on 23.08.2006, which was adjourned again for want of bidders and finally the sale was notified to 15.12.2006. 8. Since there were no bidders on that day either, an extent of 0.6416 hectares from the total extent was bid in favour of the Government and treated it as bought-in-land on the same day under the provisions of Section 50(2) of the Act. 8. Since there were no bidders on that day either, an extent of 0.6416 hectares from the total extent was bid in favour of the Government and treated it as bought-in-land on the same day under the provisions of Section 50(2) of the Act. This bid was confirmed in favour of the Government by the Revenue Divisional Officer, Palakkad by order 26.11.2007, a copy of which has been produced as Exhibit P2 in the writ petition. 9. While matters stood so, nearly a year after Exhibit P2 confirmation was made, the learned Tribunal allowed the appeals, namely T.A.Nos.501/2006 and 502/2006, pending before it by order dated 06.11.2008, a copy of which has been appended to the writ petition as Exhibit P1. The appellant says that as per this order of the learned Tribunal, the assessment orders had been set aside and remitted to the Assessing Officer for appropriate modification and consequential orders. He continues to assert that the assessment orders for the years 1995-96 and 1996-97 were accordingly modified by the Assessing Officer to a much lower amount and that he was allowed to pay the amounts covered by the modified assessment orders under the then available Amnesty Scheme, thus consequently causing the revenue recovery requisition against him to be withdrawn. 10. After the revenue recovery requisition was thus withdrawn, the appellant approached the District Collector, Palakkad with a representation dated 09.02.2009, a copy of which has been placed on record as Exhibit P4 in the writ petition, wherein his request was to 'return' the land bid by the Government and treated as bought-in-land as per Exhibit P2 order. This representation was, however, rejected through Exhibit P5 order stating that as per the provisions of the Act and the judgments of this Court, it is not possible for the owner of a land to claim return or re-conveyance of the bought-in-land merely because he had been allowed to pay off the dues covered by the requisition subsequently under the Amnesty Scheme. 11. 11. This prompted the appellant to issue a legal notice to the District Collector, with a copy marked to the State of Kerala represented by the Chief Secretary -the first respondent herein and on the allegation that no action was taken thereon by the first respondent, he filed the writ petition seeking the issuance of a writ of certiorari to quash Exhibit P5 order of the District Collector and also for a writ of mandamus directing respondents 1 and 2 to re-convey his property bid on behalf of the Government and treated as bought-in-land through Exhibit P2 order. 12. After noticing the factual situation as afore, the learned Single Judge, as we have already said above, dismissed the writ petition holding that once the sale is confirmed in favour of the Government, the right in respect of the property vests with the Government and therefore, that in view of the judgment of this court in George Jacob (supra), Laxmi Devi Tile Works (supra) and Sibi Francis (supra), it would not be possible to re-convey the land to the appellant/petitioner merely because he had settled the tax liability, for recovery of which revenue recovery requisition had been made, under an Amnesty Scheme. 13. We have heard Sri.K.Ramakumar, the learned Senior Counsel, assisted by Sri.S.M.Prasanth, appearing for the appellant and the learned Government Pleader for the respondents. 14. We are certain that we would not have obtained any reason to disturb any of the views and conclusions of the learned Single Judge in the impugned judgment, had the issue been confined to the question as to whether a person is entitled to re-conveyance of the bought-in-land on the ground that liability has been settled subsequently. The position of law is indubitably settled against such a claim for re-conveyance through the judgments we have already noticed above, which were also duly taken note of by the learned Single Judge. 15. However, the factual situation in this case travels on a completely different trajectory. What is relevant here is not whether the appellant is entitled to re-conveyance of the bought-in-land but whether the sale of his property in favour of the Government and treating it as a bought-in-land, as done through Exhibit P2 order, itself is valid or otherwise. 16. 15. However, the factual situation in this case travels on a completely different trajectory. What is relevant here is not whether the appellant is entitled to re-conveyance of the bought-in-land but whether the sale of his property in favour of the Government and treating it as a bought-in-land, as done through Exhibit P2 order, itself is valid or otherwise. 16. As has been contended by the learned Senior Counsel, even though at the time when the auction was conducted, the requisition against the appellant for an amount of Rs.64,74,883/-was valid because of a concluded assessment, by Exhibit P1 order of the learned Tribunal this assessment itself was virtually obliterated. The learned Tribunal, in Exhibit P1, has found the assessment to be contrary to law and has set aside several heads included in it is as being untenable and gave liberty to the Assessing Officer to conduct a further enquiry and pass a modified assessment. In effect, once Exhibit P1 order had been issued by the learned Tribunal, the very basis of the revenue recovery requisition and action stood effaced and the foundations on which the sale was conducted by the Government and confirmed by Exhibit P2 had been ablated. The specific contention of the learned Senior Counsel is that once the substratum of the action which led to sale had been so eroded, the sale itself would become illegal and untenable and therefore, should be construed to be void. According to him, the view of the learned Single Judge in the circumstances afore narrated would, therefore, obtain no sustenance in law and he reiterates that the relevant issue in these proceedings is not whether the appellant is entitled to re-conveyance of the land but whether the sale itself is bad and hence the appellant entitled to restitution. 17. The learned Government Pleader appearing for the respondents tried to support the judgment of the learned Single Judge by relying on the indubitable principles of law, which we also affirm, that no re-conveyance of bought-in-land is possible even if the owner pays off all the dues subsequently. She adds that the position of the appellant in these proceedings is much more weak since this is not a case where he had subsequently paid all the arrears in full but that he had availed the benefit of an Amnesty Scheme to settle the liability. She adds that the position of the appellant in these proceedings is much more weak since this is not a case where he had subsequently paid all the arrears in full but that he had availed the benefit of an Amnesty Scheme to settle the liability. According to the learned Government Pleader, as has been affirmatively settled by the Division Bench of this court in George Jacob (supra), such re-conveyance is impermissible and contrary to law. 18. It is now needless for us and we have already stated this earlier, that the view of the learned Single Judge would have been irreproachable had the factual situation been the way as the learned Government Pleader now tells us. However, we are cognizant that this is not so in this case and that the intervening event of Exhibit P1 order being issued by the learned Tribunal, has altered the position substantially, if not wholly. 19. We, therefore, certainly will have to now consider how Exhibit P1 order will impact the final resolution of the issues in this case. 20. The facts involved in this case are not in dispute since, in the counter affidavit filed on behalf of the first respondent State of Kerala, they have virtually conceded every assertion on facts made by the appellant. It is clear from the averments in the counter affidavit that Exhibit P1 order was passed after the sale was conducted and confirmed in favour of the Government. They also agree that, on account of the findings in Exhibit P1 order of the learned Tribunal, the order of assessment, based on which the sale was conducted, had been revised and that the demand therein stood attenuated to a much lower figure. The further assertion of the appellant that a modified assessment was made by the Assessing Authority pursuant to Exhibit P1 order and that the appellant was allowed to pay all such amounts under an Amnesty Scheme is explicitly conceded. It is also accepted that the revenue recovery requisition was thereafter withdrawn. The only contra contention taken by them in the counter affidavit is that notwithstanding this, once the sale had been confirmed and approved in favour of the Government and the property treated as a bought-in-land, the law would not permit reconveyance of the same, even if the amounts in arrears, had been paid by the appellant subsequently. 21. The only contra contention taken by them in the counter affidavit is that notwithstanding this, once the sale had been confirmed and approved in favour of the Government and the property treated as a bought-in-land, the law would not permit reconveyance of the same, even if the amounts in arrears, had been paid by the appellant subsequently. 21. We are certain, as we have already indicated more than once before, that the real issue is not with respect to the bought-in-land but whether the State is competent to hold on the land as bought-in-land when the very foundation of the sale had been taken away on account of Exhibit P1 order of the learned Tribunal. We are of the view that the maxim subla to fundament ocaditopus would apply in a case like this, since once the foundation itself is removed, the edifice of the action has to fall. 22. Our view as above is guided implicitly by the judgment of the Hon'ble Supreme Court in Mohan Wali v. Commissioner, Income-Tax, Varanasi and others ( AIR 2001 SC 3906 ). In that judgment, the Hon'ble Supreme Court was considering an issue as to whether the Tax Recovery Officer, under the Income Tax Act, could have confirmed the sale of property conducted on the basis of an assessment order, after such assessment had been reduced or set aside in appeal. The Hon'ble Court in paragraph 9 of the said judgment concluded, without any cause for doubt, that it cannot be so and the observations and conclusions of their Lordships are as under: “The term 'reduced' in sub-sec.(3) of S.225 would include a case where the demand consequent upon an appeal or any proceedings under the Income-tax Act has been reduced to (nil) also. The Tax Recovery Officer is obliged to give effect to such reduction in demand and accordingly amend or cancel the certificate. The scheme of Part III of Second Schedule indicates that the sale proceedings terminate on their becoming absolute whereafter all that remains to be done is the issuance of sale certificate. However, an order confirming the sale by the Tax Recovery Officer is a must. The efficacy of the sale by public auction in favour of the highest bidder has been made to depend on the order of confirmation by the Tax Recovery Officer by incorporating Rule 56 in the Schedule. However, an order confirming the sale by the Tax Recovery Officer is a must. The efficacy of the sale by public auction in favour of the highest bidder has been made to depend on the order of confirmation by the Tax Recovery Officer by incorporating Rule 56 in the Schedule. It is true that ordinarily if there is no application filed for setting aside sale under Rules 60, 61 or 62 and 30 days from the date of the sale have expired, the Tax Recovery Officer has to make an order confirming a sale. Nevertheless, an order shall have to be actually made. The combined effect of sub-sec.(3) of S.225 of the Act and Rule 56 and Rule 63 of Second Schedule is that if before an order confirming the sale is actually passed by the Tax Recovery Officer, the demand of tax consequent upon an order made in appeal or other proceedings under the Act has been reduced to nil, the Tax Recovery Officer is obliged to cancel the certificate and as soon as the certificate is cancelled, he shall have no power to make an order confirming the sale. The sale itself being subject to confirmation by the Tax Recovery Officer, would fall to the ground for want of confirmation.” 23. The above view of the Hon'ble Supreme Court, in our view, applies in all four to the factual circumstances in this case. This is because as is indubitable from the sequence of events involved herein the sale was conducted pursuant to an assessment order and when that assessment order stood set aside through Exhibit P1 order of the learned Tribunal, the basis of the sale itself stood extirpated and therefore, that the sale became untenable in law. Obviously, when the basis of the action itself was eroded, we are certain that the State could not have held on to the property contending that there is no legal provision for re-conveyance of bought-in-land. This is why we are certain in our mind that what is required by the State is not really re-conveyance of the bought-in-land but restitution or return of the land to its original owner, the appellant herein, once the assessment order was set aside. 24. The obligation of the courts to order restitution in such cases have been spoken to by the Hon'ble Supreme Court in several judgments before. 25. 24. The obligation of the courts to order restitution in such cases have been spoken to by the Hon'ble Supreme Court in several judgments before. 25. In South Eastern Coalfields Ltd. v. State of M.P. and Others ( (2003) 8 SCC 648 ) the Hon'ble Court has in paragraphs 26 and 27 held as follows: “26. In our opinion, the principle of restitution takes care of this submission. The word “restitution” in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order, what has been lost to him in execution of decree or order of the court or in direct consequence of a decree or order (see ZafarKhan v. Board of Revenue, U.P.). In law, the term “restitution” is used in three senses: (i) return or restoration of some specific thing to its rightful owner or status; (ii) compensation for benefits derived from a wrong done to another; and (iii) compensation or reparation for the loss caused to another (see Black's Law Dictionary, 7th Edn. p. 1315). The Law of Contracts by John D. Calamari & Joseph M. Perillo has been quoted by Black to say that “restitution” is an ambiguous term, sometimes referring to the disgorging of something which has been taken and at times referring to compensation for injury done: “Often, the result under either meaning of the term would be the same. Unjust impoverishment as well as unjust enrichment is a ground for restitution. If the defendant is guilty of a non-tortious misrepresentation, the measure of recovery is not rigid but, as in other cases of restitution, such factors as relative fault, the agreed-upon risks, and the fairness of alternative risk allocations not agreed upon and not attributable to the fault of either party need to be weighed.” The principle of restitution has been statutorily recognized in Section 144 of the Code of Civil Procedure, 1908. Section 144 CPC speaks not only of a decree being varied, reversed, set aside or modified but also includes an order on a par with a decree. The scope of the provision is wide enough so as to include therein almost all the kinds of variation, reversal, setting aside or modification of a decree of order. The interim order passed by the court merges into a final decision. The scope of the provision is wide enough so as to include therein almost all the kinds of variation, reversal, setting aside or modification of a decree of order. The interim order passed by the court merges into a final decision. The validity of an interim order, passed in favour of a party, stands reversed in the event of a final decision going against the party successful at the interim stage. Unless otherwise ordered by the court, the successful party at the end would be justified with all expediency in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it. The successful party can demand (a) the delivery of benefit earned by the opposite party under the interim order of the court, or (b) to make restitution for what it has lost; and it is the duty of the court to do so unless it feels that in the facts and on the circumstances of the case, the restitution far from meeting the ends of justice, would rather defeat the same. Undoing the effect of an interim order by resorting to principles of restitution is an obligation of the party, who has gained by the interim order of the court, so as to wipe out the effect of the interim order passed which, in view of the reasoning adopted by the court at the stage of final decision, the court earlier would not or ought not to have passed. There is nothing wrong in an effort being made to restore the parties to the same position in which they would have been if the interim order would not have existed. 27. Section 144 CPC is not the fountain source of restitution, it is rather a statutory recognition of a preexisting rule of justice, equity and fair play. That is why it is often held that even away from Section 144 the court has inherent jurisdiction to order restitution so as to do complete justice between the parties. In Jai Berham v. Kedar Nath Marwari. That is why it is often held that even away from Section 144 the court has inherent jurisdiction to order restitution so as to do complete justice between the parties. In Jai Berham v. Kedar Nath Marwari. Their Lordships of the Privy Council said: (AIR p. 271) “It is the duty of the court under Section 144 of the Civil Procedure Code to 'place the parties in the position which they would have occupied, but for such decree or such part thereof as has been varied or reversed'. Nor indeed does this duty or jurisdiction arise merely under the said section. It is inherent in the general jurisdiction of the court to act rightly and fairly according to the circumstances towards all parties involved.” Cairns, L.C. said in Rodger v. Comptoir D' Escompte de Paris (ER p. 125) “[O]ne of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors, and when the expression, 'the act of the court' is used, it does not mean merely the act of the primary court, or of any intermediate court of appeal, but the act of the court as a whole, from the lowest court which entertains jurisdiction over the matter up to the highest court which finally disposes of the case.” This is also on the principle that a wrong order should not be perpetuated by keeping it alive and respecting it (A.Arunagiri Nadar v. SPRathinasami). In the exercise of such inherent power the courts have applied the principles of restitution to myriad situations not strictly falling within the terms of Section 144.” This view was followed by the Hon'ble Supreme Court in State of Gujarat and Others v. Essar Oil Limited and Another ( (2012) 3 SCC 522 ) and held as follows: “The concept of restitution is virtually a common law principle and it is a remedy against unjust enrichment or unjust benefit. The core of the concept lies in the conscience of the court which prevents a party from retaining money or some benefit derived from another which it has received by way of an erroneous decree of court. Such remedy in English Law is generally different from a remedy in contract or in tort and falls within a third category of common law remedy which is called quasi-contract or restitution.” 26. Such remedy in English Law is generally different from a remedy in contract or in tort and falls within a third category of common law remedy which is called quasi-contract or restitution.” 26. As is indubitable from the afore-extracted view of the Hon'ble Supreme Court, this Court has inherent jurisdiction to order restitution to ensure complete justice between the parties. 27. The power of restitution of this Court is edificed on the acme principles of justice, equity and fair play and wherever it becomes necessary, this Court would not refrain from passing orders to ensure that litigants, who are illegally and unfairly divested of their properties, are restituted appropriately so that the allegation of unjust enrichment is not perpetrated. We are guided in our view in this area by the judgment of the Hon'ble Supreme Court in Indian Council for Enviro-Legal action v. Union of India and Others ( (2011) 8 SCC 161 ), wherein, the Hon'ble Court has emphatically declared that unjust enrichment occurs when one retains money or benefits which, in justice and equity, belongs to another. Their Lordships thereafter considered whether restitution is a necessary concomitant to set right such enrichment and answered it to the affirmative. The view of the Hon'ble Court, contained in paragraphs 159 to 161, in our view, needs careful reading and therefore, the same is extracted as under: “159. Unjust enrichment is basic to the subject of restitution, and is indeed approached as a fundamental principle thereof. They are usually linked together, and restitution is frequently based upon the theory of unjust enrichment. However, although unjust enrichment is often referred to or regarded as a ground for restitution, it is perhaps more accurate to regard it as a prerequisite, for usually there can be no restitution without unjust enrichment. It is defined as the unjust retention of a benefit to the loss of another or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another. 160. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another. 160. While the term “restitution” was considered by the Supreme Court in South Eastern Coalfields and other cases excerpted later, the term “unjust enrichment” came to be considered in Sahakari Khand Udyog Mandal Ltd. v. CCE & Customs. This Court said (Sahakari Khand cases, SCC p. 748, para 31) “31. … 'unjust enrichment' means retention of a benefit by a person that is unjust or inequitable. 'Unjust enrichment' occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.” 161. The terms “unjust enrichment” and “restitution” are like the two shades of green-one leaning towards yellow and the other towards blue. With restitution, so long as the deprivation of the other has not been fully compensated for, injustice to that extent remains. Which label is appropriate under which circumstances would depend on the facts of the particular case before the court. The courts have wide powers to grant restitution, and more so where it relates to misuse or non-compliance with court orders.” 28. In the case at hand, once the orders of assessment had been set aside by Exhibit P1 order of the learned Tribunal, there was no justification for the State to hold on to the property even though such sale was confirmed in their favour by the Revenue Divisional Officer through Exhibit P2 order. The conduct of the authorities in rejecting the request made by the appellant for return of his property, on the ground that the Act does not provide for such a course is, in our view, completely unfair and improper. There was no justification for the State to hold on to the property as bought-in-land and since they are refusing to return it, it would be enjoined on us, while acting under writ jurisdiction, to ensure restitution in favour of the appellant so as to obtain to him complete justice and equity. 29. There was no justification for the State to hold on to the property as bought-in-land and since they are refusing to return it, it would be enjoined on us, while acting under writ jurisdiction, to ensure restitution in favour of the appellant so as to obtain to him complete justice and equity. 29. This is more so because, when we pointedly asked the learned Government Pleader whether the value of the land was taken into account while the appellant was offered an opportunity to pay off the tax amounts assessed subsequent to the sale through the Amnesty Scheme, the learned Government answered in the negative and confirmed that the value of the land was not taken into account and that the appellant had paid all the liability under the Amnesty Scheme without the value of the property being set off against it. In such view of the matter, we allow this appeal vacating the judgment of the learned Single Judge and direct the first respondent to issue orders immediately and take action to return the property covered by Exhibit P2 order of the Revenue Divisional Officer to the appellant, after cancelling the sale and the orders of confirmation. This shall be done by the competent authority of the Government of Kerala as expeditiously as possible, but not later than two months from the date of receipt of a copy of this judgment.