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2018 DIGILAW 93 (KER)

Muhammed Farook v. District Collector, Thrissur

2018-01-25

SHAJI P.CHALY

body2018
JUDGMENT : 1. This writ petition is filed by the petitioner seeking direction to respondents 1 and 2 from proceeding against the petitioner under Sec.44 of the Kerala Revenue Recovery Act, 1968 [for short, 'the Act, 1968'] and to declare that the property of the petitioner covered by Exts.P1 and P2 cannot be proceeded for realizing the debt of the 3rd respondent. Petitioner also seeks to quash Ext.P9 order dated 15.10.2014, stipulating that, only if an amount of Rs.1,24,512/- on account of the order of the Motor Accidents Claims Tribunal, Irinjalakuda in E.P.No.119/2012 in O.P.(MV) No.63 of 2007 is paid, the liability will stand discharged, and that the recovery action is maintainable against the property purchased by the petitioner from the 3rd respondent judgment-debtor in the award. 2. Material facts for the disposal of the writ petition are as follows: 3. Petitioner as per Exts.P1 and P2 sale deeds dated 05.07.2011 and 06.07.2011 purchased an extent of 30 cents of property from the 3rd respondent. There were two claim petitions pending against the 3rd respondent before the M.A.C.T., Irinjalakuda, Thrissur District, as O.P. (MV) Nos. 62/2007 and 63/2007. On 17.12.2010, judgments were pronounced in O.P.(MV) No. 62/2007 and O.P. (MV) No. 63/2007, evident from Exts.P3 and P4 proceedings sheet, imposing liability against respondents 3 and 4. 4. Apparently, as per the directions of the M.A.C.T., 4th respondent Insurance company deposited the amount, and filed execution proceedings against the 3rd respondent by virtue of the directions contained in the respective awards, evident from Exts.P5 and P6 proceedings sheet. Thereupon, demand notice under Sec.34 of the Kerala Revenue Act was issued by the 2nd respondent, evident from Ext.P7, and Ext.P8, notice of hearing. On the basis of Ext.P8, petitioner appeared before the 2nd respondent and submitted that he is a bonafide purchaser of the property for valuable consideration, that there is no relationship with the 3rd respondent, and that the property was purchased after securing encumbrance certificate of the property covered by Exts.P1 and P2. 5. On the basis of Ext.P8, petitioner appeared before the 2nd respondent and submitted that he is a bonafide purchaser of the property for valuable consideration, that there is no relationship with the 3rd respondent, and that the property was purchased after securing encumbrance certificate of the property covered by Exts.P1 and P2. 5. Thereafter, on 15.10.2014, petitioner received Ext.P9 order, evidently in reply to the objection submitted by the petitioner against the recovery action, stating that unless and until the amounts due towards the awards passed by the M.A.C.T along with interest and cost are not paid, the encumbrance cannot be removed and the recovery action will be proceeded against the property purchased by the petitioner as per Exts.P1 and P2. It is thus seeking to quash the recovery action, this writ petition is filed. 6. Second respondent has filed a counter affidavit refuting the allegations and claims and demands raised by the petitioner. Other contentions are raised justifying the action initiated by the 2nd respondent under the Kerala Revenue Recovery Act. It is also stated thereunder that, the properties were transferred by the 3rd respondent during the year 2011, whereas the awards were passed by the Tribunal on 17.12.2010. Therefore, the 3rd respondent, who had knowledge with respect to the passage of the awards, has transferred the property with intent to defeat the creditor. 7. I have heard Sri. K. Gopalakrishna Kurup, learned Senior Counsel for the petitioner and Sri. Santhosh Peter, learned Senior Government Pleader appearing for respondents 1 and 2. Perused the documents on record and the pleadings put forth by the respective parties. 8. The question to be decided in this writ petition is, whether the property purchased by the petitioner as per Exts.P1 and P2 from the 3rd respondent during the year 2011 can be proceeded with, in order to recover the amounts due under the awards passed by the M.A.C.T during the year 2010, invoking Sec.44 of the Kerala Revenue Recovery Act. The paramount contention advanced by learned Senior Counsel is based on Sec.44 of the Kerala Revenue Recovery Act, dealing with effect of engagements and transfers by the defaulter, which read thus: “44. The paramount contention advanced by learned Senior Counsel is based on Sec.44 of the Kerala Revenue Recovery Act, dealing with effect of engagements and transfers by the defaulter, which read thus: “44. Effect of engagements and transfers by the defaulter.- (1) Any engagement entered into by the defaulter with any one in respect of any immovable property after the service of the written demand on him shall not be binding upon the Government. (2) Any transfer of immovable property made by a defaulter after public revenue due on any land from him has fallen in arrear, with intent to defeat or delay the recovery of such arrear, shall not be binding upon the Government. (3) Where a defaulter transfers immovable property to a near relative or for grossly inadequate consideration after public revenue due on any land from him has fallen in arrear, it shall be presumed until the contrary is proved, that such transfer is made with intent to defeat or delay the recovery of such arrear, and the Collector or the authorised officer may, subject to the order of a competent Court, proceed to recover such arrear of public revenue by attachment and sale of the property so transferred, as if such transfer has not taken place: Provided that, before proceeding to attach such property, the Collector or the authorised officers shall- (i) give the defaulter an opportunity of being heard; and (ii) record his reasons therefor in writing. Explanation.-For the purposes of this section, “near relative” includes husband, wife, father, mother, brother, sister, son, daughter, step son, step daughter, uncle, aunt, son-in-law, daughter-in-law, brother-in-law, nephew or niece of the transferor.” 9. According to the learned Senior Counsel, the rigour of the provisions contained under Sec.44 comes into play only when a written demand is raised in respect of the amounts due. Even though in the case on hand, awards were passed, there was no written demand under the provisions of Sec.44 of the Act, 1968, so as to construe the property in question as a property transferred to defeat or delay the recovery of arrears due. In that regard, learned Senior Counsel also submitted that, Sec.2(e) of Act, 1968 defines “defaulter” to mean; a person from whom an arrear of public revenue due on land is due, and includes a person who is responsible as surety for the payment of any such arrear. 10. In that regard, learned Senior Counsel also submitted that, Sec.2(e) of Act, 1968 defines “defaulter” to mean; a person from whom an arrear of public revenue due on land is due, and includes a person who is responsible as surety for the payment of any such arrear. 10. Learned Senior Counsel has also relied on Sec.2(j) of Act, 1968, dealing with “public revenue due on land”, to mean; the land revenue charge on the land and includes all other taxes, fees and cesses on land, whether charged on land or not and all cesses or other dues payable to the Government on account of water used for purposes of irrigation. Learned counsel has also relied on Sec.174 of the Motor Vehicles Act, 1988, dealing with recovery of money from insurer as arrear of land revenue, which read thus: “174. Recovery of money from insurer as arrear of land revenue.--Where any amount is due from any person under an award, the Claims Tribunal may, on an application made to it by the person entitled to the amount, issue a certificate for the amount to the Collector and the Collector shall proceed to recover the same in the same manner as an arrear of land revenue.” 11. Therefore, learned counsel submits, taking into account Sections 2(e) and 2(j) of the Kerala Revenue Recovery Act, read along with Sec.174 of the Motor Vehicles Act, a demand comes into play only when recovery is initiated, and on issuance of notice accordingly. In that view of the matter, according to the learned Senior Counsel, the proceedings initiated against the property in question, evident from Exts.P5 and P6 proceedings sheets, only on 18.03.2013 and 24.10.2013, under Sec.44 of the Kerala Revenue Recovery Act, subsequent to the purchase of the property by the petitioner during 2011 cannot be sustained under law. 12. On the other hand, learned Senior Government Pleader submitted that, as provided under sub-section (2) of Sec.44 of Act, 1968, any transfer of immovable property made by a defaulter after public revenue due on any land from him has fallen in arrear, with intent to defeat or delay the recovery of such arrear, shall not be binding upon the Government. Learned Government Pleader also pointed out that, subsections (1) and (2) of Sec.44 operates on different fields, and therefore, in the case on hand, the stipulations contained under sub-section (2) alone will apply. Learned Government Pleader also pointed out that, subsections (1) and (2) of Sec.44 operates on different fields, and therefore, in the case on hand, the stipulations contained under sub-section (2) alone will apply. Apparently, it is contended, the properties were transferred by the 3rd respondent after the awards were passed by the Tribunal in the year 2010, and therefore, it was with the intention of defeating the recovery of the amount due to the 4th respondent. 13. I have anxiously considered the rival submissions made across the Bar. On an evaluation of sub-section (1) of Sec.44, it is clear that, it operates on a different field, and deals with engagement if any entered into by the defaulter with any one in respect of any immovable property after the service of the written demand on him which shall not be binding upon the Government. Therefore, it is clear that the engagements made thereunder after service of a written demand alone shall not be binding upon the Government, whereas, as per sub-section (2), any transfer of immovable property made by the defaulter, after public revenue due on any land from him has “fallen in arrear”, with intent to defeat or delay the recovery of such arrear, shall not be binding upon the Government. 14. The requirement with respect to issuance of a demand is not contemplated under sub-section (2), which is a clear distinction from the provisions of sub-section (1). In the case on hand, there is no case for the petitioner that the defaulter was not aware of the awards passed by the M.A.C.T during the year 2010, or that the defaulter has other properties left, having sufficient value to render the alienation of property in question immaterial for the creditor. In my considered opinion, when the award is passed, the amount has fallen in arrear susceptible to recovery under Sec.44(2) of the Kerala Revenue Recovery Act by virtue of Sec.174 of the Motor Vehicles Act, 1988. Therefore, the contention advanced by learned Senior Counsel that the arrear only falls due when an action is initiated under Sec.174 of the Motor Vehicles Act, 1988 alone, cannot be sustained under law. Therefore, the contention advanced by learned Senior Counsel that the arrear only falls due when an action is initiated under Sec.174 of the Motor Vehicles Act, 1988 alone, cannot be sustained under law. Section 174 of the Motor Vehicles Act only deals with recovery of the money and issuance of certificate for the amount to the Collector in order to recover the same in the same manner as an arrear of land revenue, which thus also means, the arrears fallen due on the date of the awards, is recoverable in the same manner as an arrear of land revenue by issuing a certificate to the Collector. This is more clear from the terms employed in Sec.174 of the Motor Vehicles Act, “where any amount is due from any person under an award”. 15. I am also of the view that, by virtue of the provisions of Sec.174 of the Motor Vehicles Act, the amounts “fallen in arrear” on passage of the award recoverable as an arrear of land revenue, is under suspended animation till such time an application is filed by the person entitled to the amount seeking recovery certificate. To put it otherwise, the amounts under an award is a deemed public revenue as on the date of the award, passed by the Tribunal, to be recovered in accordance with the provisions of the Kerala Revenue Recovery Act. But in reality, it is never a public revenue due on land, but by a legal fiction the amounts fallen in arrear are treated so and is recovered by virtue of Sec.174 of the Motor Vehicles Act, 1988. 16. Learned Senior Counsel has invited my attention to the judgment in 'Jameela Bose v. State of Kerala' [ 2012 (1) KLT 258 ], which dealt with the written demand mentioned under Sec.44(1) of Act, 1968. However, as I have pointed out earlier, sub-sections (1) and (2) of Sec.44 operates on different fields, and therefore, the proposition of law laid down in the said judgment is distinguishable from the issue on hand. So also, the judgment in 'Thankamma Joseph and others v. State of Kerala and others' [2010 (1) ILR 378] is also pressed into service, wherein, the stipulations contained under Sec.44 of the Act, 1968 was considered, and held in paragraph 6 as follows: “6. So also, the judgment in 'Thankamma Joseph and others v. State of Kerala and others' [2010 (1) ILR 378] is also pressed into service, wherein, the stipulations contained under Sec.44 of the Act, 1968 was considered, and held in paragraph 6 as follows: “6. Obviously, the above provision is attracted only under three different circumstances as stipulated therein; where the involvement of the defaulter in relation to the transfer of immovable property in question is very much essential. In the instant case, admittedly since the defaulter is none other than Abu and since there is no case for the respondents that Abu had transferred the property to the petitioners or to the predecessor in interest (father of the 1st petitioner) so as to evade the payment of arrears, the reliance placed on the said provision is quite wrong and misconceived. To put it more clear, the situation contemplated under sub-section 1 is not attracted, since there is no question of any conveyance to the petitioner or the predecessor in interest after serving any written demand on Mr. Abu. Similarly, sub-section 2 is not attracted, since there is no finding or materials to show that Abu had transferred the land in question and that too, to defeat the payment of arrears. Coming to subsection 3, the same will be attracted only if the transfer of immovable property is to near relatives or for grossly inadequate consideration after public revenue due on land had fallen in arrears. In the above circumstances, the idea of the 2nd respondent as to the scope and ambit of the legal provisions is also not correct, if not deplorably poor in all respects.” 17. Therefore, on a reading of paragraph 6 of the said judgment, it is evident that, the issue in respect of sub-section (2) of Sec.44 of Act, 1968 was never under consideration in the said judgment also. Learned Senior Counsel has also invited my attention to a Division Bench judgment of this Court in 'Valsamma v. District Collector, Ernakulam and others' [2016 (1) KHC 585], wherein the consideration was in respect of purchase of the property vis-a-vis the statutory charge as per Sections 23, 26A and 26B of the General Sales Tax Act, 1963, and held in paragraphs 24 and 26 as follows: “24. The primary question to be considered is whether there was any notice of demand on the defaulter for arrears of tax under the K.G.S.T. Act at the time when he effected sale of property. The materials available on record clearly indicates that he sold the properties during 1990. There had been demand for sales tax arrears as per assessment orders dated 18.09.1987, 02.04.1988, 03.04.1989, 27.09.1990 and as evident from the report submitted by the Deputy Superintendent of Police, demand notices were issued on 18.12.1987, 22.05.1989 and 27.08.1989. It is therefore apparent that the properties were sold in the year 1990, that is even after the demand had been made. Hence, these are instances where a charge had been created on the property, the moment a demand for sales tax is made and once the charge is created, unless the liability is settled by payment, any sale by the defaulter will only be subject to the charge. Therefore, even if Section 26A and 26B cannot be made applicable to the fact situation, still Section 23(1) was very much available under the Statute which created a charge on the property of the defaulter and it remains until the liability is settled. Further section 44 of the R.R. Act also indicates that any engagement entered into by the defaulter in respect of immovable property after the service of the written demand and any transfer of immovable property made by a defaulter after public revenue due on any land from him has fallen in arrear, with an intention to defeat or delay the recovery of such arrear, shall not be binding upon the Government. Sub-section (3) of Section 44 gives a presumption that transfer made in favour of a relative is with the intent to defeat or delay the recovery of such arrear unless the contrary is proved. In these cases, it is evident that the transfer was effected after the demand was made by the sales tax authorities. In that view of the matter, the revenue authorities were justified in taking action against the petitioners. 26. It is argued on behalf of the writ petitioners that, in the present case also, they were not aware of the charge. In that view of the matter, the revenue authorities were justified in taking action against the petitioners. 26. It is argued on behalf of the writ petitioners that, in the present case also, they were not aware of the charge. It is not in dispute that Section 23(2)(a) of the K.G.S.T. Act clearly indicates that any tax assessed or any other amount due under the Act from a dealer or other person be recovered as if it were an arrear of land revenue. Arrear of land revenue is recovered by invoking the provisions of the R.R. Act and Section 44(1) of the Act clearly indicates that any engagement entered into by the defaulter with anyone in respect of any immovable property after the service of written demand on him shall not be binding on the Government. Further Section 44(2) indicates that any transfer of immovable property made by the defaulter after public revenue due on land has fallen in arrear, shall not be binding upon the Government, if the transfer is made with an intention to defeat or delay the recovery of such arrear. Though it is argued by the learned counsel for the petitioners that the defaulter was not served with any notice of demand prior to the sale being effected by him, there is no material to arrive at such a conclusion. All such issues are to be raised before the competent revenue authorities, who have to consider the same, in accordance with law. This Court cannot go into the factual circumstances involved in the matter to analyze as to whether there was a proper demand or not. From the materials available on record, especially Ext.P5 produced in W.P.(C) No.23327/2008, steps had been taken by the Tahsildar to recover amount from various parties in which it is stated that the sale had been effected by the defaulter deliberately to avoid payment of sales tax arrears and therefore steps are to be taken for recovering the amount by sale of properties.” 18. Therefore, it is clear, the subject matter of consideration in the afore-quoted judgment is in respect of the provisions of Sec.44 of the Act, 1968 vis-a-vis the provisions of the KGST Act, and the same is not having any bearing on the facts of the case on hand. Therefore, it is clear, the subject matter of consideration in the afore-quoted judgment is in respect of the provisions of Sec.44 of the Act, 1968 vis-a-vis the provisions of the KGST Act, and the same is not having any bearing on the facts of the case on hand. Other judgments rendered by this Court in W.P.(C) No.18801 of 2011 & connected cases, and the judgment in 'Abdul Raheem v. Special Thahsildar (RR)' [ 2017 (2) KLT 979 ] are also cited by the learned Senior Counsel, however, in my considered opinion, the proposition of law laid down thereunder will not apply to the facts and circumstances of this case. 19. Taking into account the provisions of law and the principles of law laid down in the judgments quoted above, and considering the facts and circumstances of this case, I am of the considered opinion that, the action initiated by the recovery authorities to recover the amount from the petitioner is in accordance with law. However, since the petitioner has raised objection to the revenue recovery action, the 2nd respondent ought to have considered the entire aspects of the objection in order to identify whether the transfer of the property made by the 3rd respondent was to delay or defeat the creditor. But, in Ext.P9 order, no findings are rendered as to whether the transfer was made with the intention of delaying or defeating the creditor. 20. Therefore, I quash Ext.P9 and direct the 2nd respondent to re-consider the matter taking into account the objections raised by the petitioner, after providing notice of hearing to the petitioner as well as the 4th respondent, and taking into account the findings and observations contained above, and attain finality at the earliest possible time, and at any rate, within four months from the date of receipt of a copy of this judgment. Coercive action pursuant to Ext.P7 or under any other provisions of the Kerala Revenue Recovery Act shall W.P.(C) No.37653 of 2015 15 be kept in abeyance till such time the above directives are complied with. The writ petition is disposed of accordingly.