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[Cites 19, Cited by 0]

Madras High Court

R.Karunanidhi vs The Revenue Divisional Officer on 25 June, 2008

Author: S. Manikumar

Bench: S.Manikumar

       

  

  

 
 
 IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED :     25.06.2008

CORAM

THE HONOURABLE MR.JUSTICE S.MANIKUMAR

W.P.Nos.12933 and 25194 of 2005
W.P.M.P.Nos.12933 and 25194 of 2005


1. R.Karunanidhi	      	 		... Petitioner in W.P.12933/2005
2. Kolanjiammal				... Petitioner in W.P.25194/2005

vs.

1. The Revenue Divisional Officer,
    Perambalur, Perambalur District.

2. The Divisional Excise Officer,
    Perambalur, Perambalur District.

3. The Tahsildar,
    Veppanthattai,
    Perambalur District.			

4. Mr.Ramasamy				  ... Respondents in all W.Ps.
				
Prayer in W.P.No.12933 of 2005:  Writ petition is filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorari to call for the records pertaining to the Public Auction Notice in Na.Ka.Aa1/300/81,  dated 11.03.2005 issued by the second respondent and quash the same.

Prayer in W.P.No.25194 of 2005: Writ Petition is filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorarified Mandamus to call for the records of the second respondent in Na.Ka.A1/300/81, dated 28.06.2005, quash the same and forbear the respondents, their men and agents from in any manner bringing the properties belonging to the petitioner for auction, situate at Mettupalayam South Village, Veppanthattai Taluk, Perambalur District, comprised in Patta Nos.786 and 789.

		For Petitioner in
		W.P.No.12933/2005    : Mr.S.Mani

		For Petitioner in
		W.P.No.25194/2005    : Mr.Parthasarathy for 
					      M/s.Sarvabhauman Associates

		For Respondents 1 to 3: Mr.A.Arumugam,
					      Additional Government Pleader

		For 4th Respondent      : Mr.U.Karunakaran

O R D E R

In W.P.No.12933 of 2005, the petitioner, has sought for a Writ of Certiorari to quash the public auction notice, dated 11.03.2005 issued by the Divisional Excise Officer, Perambalur District.

2. In W.P.No.25194 of 2005, the petitioner has sought for a Writ of Certiorarified Mandamus to quash the order of the Divisional Excise Officer, dated 28.06.2005 and forbear the respondents or their men and agents from bringing the properties, situate at Mettupalayam South Village, Veppanthattai Taluk, Perambalur District, comprised in Patta Nos.786 and 789 for public auction.

3. Both the Writ Petitions relate to recovery of notional loss said to have been caused by a former licencee of a Arrack and Toddy Shop, which were taken by way of an auction in the year 1972. As common questions of facts and law are involved in both the Writ Petitions, they are taken up together and disposed of by a common order.

4. Facts leading to W.P.No.12933 of 2005 are as follows:

The petitioner is the son of a former licencee, who have said to have caused notional loss to the Government, by running Arrack Shop at Valikandapuram Village and Toddy shop at Thevaiyur Village. When the officials of the second respondent approached the petitioner for payment of arrears of notional loss, he requested them to explain as to how the quantum was arrived at. But no explanation was given by the officials. Apprehending that his properties would be brought for public auction, the petitioner had remitted Rs.5000/- in the year 2004 and thereafter, nothing had happened. Suddenly, the respondents have brought the properties of the petitioner for public auction on 20.04.2005. When the petitioner approached the department, he was informed that his father was a successful bidder in respect of an Arrack Shop at Thevaiyur Village and Toddy shop in Valikandapuram for the year 1972-73 and a sum of Rs.56,180/- was due. In the impugned auction notice, the respondents have added 5% interest to the above said sum and demanded Rs.1,41,568/- for causing notional loss to the Government. The petitioner has further submitted that it is not known as to whether Rs.5000/- remitted by him was given credit or not. The petitioner's father died in the year 1988 and without any notice or explanation, the properties belonging to the petitioner are brought for auction and hence, the present Writ Petition.

5. Assailing the auction notice, the petitioner, has submitted that the impugned auction notice was not preceded by any proceedings against him. Whenever Revenue Recovery proceedings are taken, there should be a determination of the quantum of the amount and the person, whose liable to pay the amount, has to be given sufficient notice to put forth his case. In the instant case, the amount alleged to be due to the Government would have been paid by the petitioner's father and that is why, the respondents have not taken any action for so many years, since 1972-73. Even assuming that any amount is due and payable to the Government, the impugned auction notice is liable to be quashed, as it is hit by limitation under Article 112 of the Limitation Act, which prescribes a maximum period of 30 years for realisation of revenue due to the Government.

6. In the counter affidavit, the Divisional Excise Officer, second respondent has submitted that the petitioner's father, Thiru.Ramasamy, S/o. Muthusamy Udayar, was the successful bidder of Arrack Shop No.6 of Valikandapuram Village and Toddy Shop No.16 of Thevaiyur Village, auctioned on 20.07.1972 and 06.07.1972 respectively. He was given tree tapping licences for Toddy and licence for conducting Arrack Shops, after execution of the counter part agreement, by which, the highest bidder had accepted the sale conditions. It is further submitted that the petitioner's father also executed a mortgage deed, mentioning his immovable properties and agreed to pay interest at the rate of 9% percent per annum, on his failure to remit the kist amount on due dates. He had failed to pay the kist amount from October, 1972 for Arrack Shop No.6 of Valikandapuram Village and from November, 1972, in respect of Toddy Shop No.16 of Thevaiyur Village. Thus, he had become a defaulter in payment of kist amount in respect of Toddy and Arrack Shops. In view of his failure to fulfil the conditions of the auction sale, the above mentioned shops were brought for public auction. Once again, due to resale, the Government suffered a net loss of Rs.25,423.73 (Rs.19,593.60 + Rs.5,830.16) plus interest at the rate of 9% per annum. Even though the defaulter was put on notice to pay the said sum, he had failed to remit the loss caused to the Government and therefore, action was initiated to recover the above said sum by invoking the Revenue Recovery Act. Therefore, a suit in O.S.No.1006 of 1981 was filed by the defaulter before the District Munsif Court, Perambalur and by judgment and decree, dated 28.10.1981, the learned District Munsif restrained the defendants therein from invoking the provisions of the Revenue recovery Act for recovery of arrears by attachment and sale of properties of the defaulter, till the extent of liability was quantified. Subsequently, a suit was filed by the District Collector, Tiruchirappalli in O.S.No.47 of 1986 on the file of the Sub Court, Ariyalur, for quantifying the extent of liability. The said suit was decreed on 21.04.1987 in favour of the government and further action was taken to recover the notional loss amount of Rs.56,180/- plus interest at the rate of 5% per annum. In the mean time, the defaulter, former licencee died and the lands owned by him were transferred in the name of his heirs, viz., Smt.Kolanjiammal-wife (petitioner in W.P.No.25194 of 2005), petitioner and Thiru.Jayakamar (petitioner's brother). By resorting to the Revenue Recovery Act, action was taken to auction the immovable properties and sale notification was published in the Perambalur District Gazettee (No.3 of Page 13), dated 17.03.2005, notifying the date of auction as 08.02.2005, against which, the above Writ Petition has been filed by the petitioner.

7. Denying the contention of the petitioner that he did not know anything about the auction of Arrack and Toddy shops, the respondents have submitted that being a legal heir of the deceased-defaulter, notices were sent to the address of the petitioner on 16.02.2004, 03.03.2004, etc., mentioning the quantum of amount, that has to be paid. On receipt of the notices, the petitioner had voluntarily remitted Rs.1,000/- on 26.10.2004. The respondents have further submitted that when the proceedings for realisation was challenged before this Court in W.A.No.957 of 2005, a Division Bench, by order dated 03.05.2005, directed the petitioner to pay a sum of Rs.30,000/- and the said amount was also paid on 31.05.2005 in Indian Overseas Bank, Veppanthattai through the Tahsildar, Veppanthattai. The sale was conducted on 29.07.2005 and Thiru.D.Ramasamy, S/o. Duraisamy, Metturpalayam Village, Vempattha Taluk, perambular District, fourth respondent was declared as a successful bidder. When the proceedings for confirmation of the sale was pending, the petitioner has filed the present Writ Petition and this Court, in W.P.M.P.No.14155 of 2005, dated 19.04.2005 has stayed the order of confirmation. Though the petitioner and his brother are capable of paying the arrears, they are deliberately protracting the proceedings and therefore, the respondents have prayed for vacating the interim order and dismissal of the Writ Petition.

8. In W.P.No.25194 of 2005, Smt.Kulanjiammal, wife of late Ramasamy Udayar, ex-licencee, has stated that her late husband had inherited large extent of land comprised in various Survey Numbers in Metupalayam South village, under Patta Nos.789 and 786, from his parents. After the life time of his father, these lands were enjoyed by her husband and her mother jointly and after the death of her mother, her husband was managing her ancestral properties. In 1972, her husband had participated in an auction for Arrack Shop No.6 in Valikandapuram Village and Toddy Shop No.16 of Theyaivur Village and conducted business for one year. The petitioner has further submitted that her husband died on 06.04.1988, leaving behind herself and her daughters, viz., Selvarani, Maharani and Jayarani. She further submitted that her husband had a illicit relationship with one Maruthuammal. Jayakumar, Karunanidhi (petitioner in W.P.No.12933 of 2005) and Shanthi are the sons and daughter of said Maruthammal. When there was a dispute between the petitioner and the issues of the said Maruthuambal regarding partition of the properties, a suit in O.S.No.104 of 1988 was filed, on the file of the the Sub Judge, Ariyalur, wherein, a preliminary decree was passed and the matter is now pending on the file of this Court in A.S.No.1095 of 1993. The petitioner has further submitted that when the appeal is pending, the second respondent has sent a notice to her and the sons of the said Maruthambal, informing them of the proposed sale of properties of her husband by way of public auction to be held on 20.04.2005. She further submitted that though the alleged notional loss caused by her husband was for the year 1972, the respondents have come forward to auction their properties only after a period of 32 years, without even affording an opportunity to submit her objections.

9. The petitioner has further submitted that before she could file a Writ Petition, challenging the above said demand, Karunanidhi, son of Maruthambal, had filed W.P.No.12933 of 2005 to quash the auction notice of the second respondent, dated 11.03.2005. In the said Writ Petition, this Court in W.P.M.P.No.14155 of 2005, dated 19.04.2005, passed the following orders, "The auction may go on. Confirmation of auction alone is stayed on condition that the petitioner pays a sum of Rs.75,000/- within four weeks from today, failing which, the interim stay granted shall stand vacated automatically without any further reference to the Court and the respondents are at liberty to proceed further. Notice."

10. Aggrieved by the interim order, the said Karunuadhi had preferred an appeal in Writ Appeal No.957 of 2005 and a Division Bench of this Court, by order dated 03.05.2005, has modified the conditional order as, "Taking note of the above factual aspects and the submissions made, we are of the view that the ends of justice would be met by directing the Writ Petitioner/Appellant to pay a sum of Rs.30,000/- to the credit of the impugned proceedings before the Tahsildar, Veppanthattai, Perambalur District within a period of four weeks from today."

11. The petitioner has further submitted that the said Karunanidhi, petitioner in W.P.No.12933 of 2005, has complied with the orders of this Court, by depositing the said amount before the Tahsildar, Vepamthattai. In addition that, the petitioner and her daughters have remitted a sum of Rs.32,600/- on 31.05.2005, under four different challens, towards the amounts due under the notice dated 11.03.2005. It is the further submission of the petitioner that though the debt was time barred, the petitioner and other two persons were forced to deposit the above amount in order to save the property.

12. When the matter stood thus, the petitioner was shocked to receive a notice dated 28.06.2005 on 17.07.2005, informing her about the proposed auction sale in respect of the properties to be held on 29.07.2005. It is the contention of the petitioner that the later notice, dated 28.06.2005, amounts to flouting the order, passed by this Court in W.P.M.P.No.14155 of 2005. Aggrieved by the notice, the petitioner has preferred W.P.No.25194 of 2005.

13. The Divisional Excise Officer, Perambalur, in his counter affidavit, after narrating the events, till the grant of stay by this Court in W.P.No.14155 of 2005, has submitted that in W.A.No.957 of 2005 filed by the Karunanidhi, petitioner in W.P.No.12933 of 2005, the Division Bench has only modified the amount from Rs.75,000/- to Rs.30,000/- and as per the directions in W.P.M.P.No.14555 of 2005, auction was conducted on 29.07.2005, in respect of land, to an extent of 2.12.0 Hectares and that one Thiru.Ramasamy, was declared as the highest bidder. It is the contention of the respondents that since there were no irregularities in the conduct of auction and this Court has not stayed the auction proceedings, it is not necessary to issue fresh notices to all the legal heirs of the deceased defaulter, Thiru.Ramasamy Udayar. As per the directions of this Court, the confirmation of auction is still pending. The respondents have further submitted that there is no illegality in the subsequent auction notice and therefore, the Writ Petition No.25194 of 2005 deserves to be dismissed.

14. Pending disposal of the above Writ Petitions, the successful bidder, Mr.Ramasamy, has filed W.P.M.P.Nos.2704 and 2707 of 2007, for impleading himself in these Writ Petitions. In the supporting affidavits, the proposed party has submitted that in the auction conducted on 28.06.2005, he was declared as the successful bidder for Rs.1,61,000/- and he has also deposited the entire amount as per the terms and conditions of the auction notice. As he is a bona fide purchaser for value in respect of the properties, he is a necessary and proper party to be impleaded in the Writ Petitions and if any decision is rendered in these Writ Petitions in his absence, it would be prejudicial to his interest.

The submissions of the learned counsel appearing for the parties are as follows:

15. Referring to the decree passed in O.S.No.47 of 1986, dated 21.04.1987 passed by the learned Sub Court, Ariyalur, Mr.S.Parathasarthy, learned senior counsel appearing for the petitioner in W.P.No.25194 of 2005, submitted that as per the decree, the respondents can recover the arrears only by initiating execution proceedings before the Civil Court and the recovery proceedings ought to have been initiated within 12 years from the date of decree. He therefore, submitted that the respondents have no jurisdiction to invoke the provisions of the Revenue Recovery Act for bringing the properties for sale.

16. Learned senior Counsel further submitted that even assuming that the arrears of revenue can be realised, the maximum period provided under Article 112 of the Limitation Act, is 30 years and therefore, auction of the properties notified on 11.03.2005 for the notional loss said to have been caused by the husband of the petitioner is beyond 30 years and therefore, the demand is barred by limitation.

17. Learned senior counsel further submitted that the petitioners in both the Writ Petitions have not been issued any show cause notices before determination of the quantum and therefore, the impugned notice is in violation of the principles of Natural Justice. Lastly, he submitted that the appeal suit filed for partition of the properties between the petitioners and the sons of Maruthambal is still pending on the file of this Court in A.S.No.1095 of 1993 and therefore, till the properties are identified, the respondents cannot issue any auction notice to bring the properties for sale.

18. Mr.Mani, learned counsel appearing for the petitioner in W.P.No.12933 of 2005 adopted the arguments of the learned Senior Counsel for the petitioner in W.P.No.25194 of 2005.

19. Per contra, Mr.A.Arumugam, learned Additional Government Pleader, referring to Section 18(I) of the Tamil Nadu Prohibition Act, 1937 and the relevant provisions of the Tamil Nadu Revenue Recovery Act, 1864, submitted that the excise officials have the jurisdiction and powers to invoke the Revenue Recovery Act for realisation of any amount due to the State Government and that there is no time limit prescribed under the above said Acts, for initiating the Revenue Recovery Proceedings. He further submitted that after contest, in O.S.No.47 of 1986, the Sub Court, Ariyalur, had already determined the arrears of revenue payable by the ex-licencee and therefore, there is no need to issue any fresh show cause notice to the legal representatives of the deceased-licencee for determination of the amount.

20. Referring to the counter affidavit, learned Additional Government Pleader further submitted that even though demand notices were issued to the petitioners, they have deliberately delayed the payment of arrears. He further added that the pendency of inter-se dispute between the petitioners, cannot be a ground to extricate themselves of their liability to pay the arrears of revenue due to the Government, as patta of the lands, auctioned by the Government stood transferred in the name of Smt.Kulanjiammal, wife of the deceased (petitioner in W.P.No.25194 of 2005) and her two sons, Jayakumar and Karunanithi, petitioners in the other writ petition. There is no irregularity in the auction conducted on 29.07.2005 and as the proposed respondent, Ramasamy, S/o. Duraisamy had already deposited the entire amount, the sale has to be confirmed in his name and the Government be allowed to recover the loss.

21. Mr.Karunakaran, learned counsel appearing for the proposed respondent in both the Writ Petitions submitted that his client had participated in the auction conducted on 29.07.2005 and he was declared as the highest bidder for a sum of Rs.1,61,000/-. He further submitted that the entire amount has been deposited in terms of auction sale and therefore, the interim stay granted in Writ Petitions has to be vacated and that the respondents be directed to confirm the auction sale.

Heard the counsel appearing for the parties and perused the materials available on record.

22. Section 18(I) of the Tamil Nadu Prohibition Act, 1937 deals with the recovery of amount due to the State Government and it reads as follows:

"(i) Notwithstanding anything contained in this Act or in any other law for the time being in force and without prejudice to any other mode of recovery which is being taken or may be taken, any amount due to the State Government under any of the provisions of this Act or the rules made thereunder along with interest, at such rate as may be specified by the State Government, may be recovered, by the officer empowered by the State Government, -
(a) by deducting the amount due with interest from any money owing to the person which may be in the hands or under the control or disposal of any officer of the State Government; or
(b) by recovering the amount due with interest by attachment and sale of excisable articles belonging to the persons from whom such amount is due.
(2) If the amount due to the State Government with interest cannot be deducted or recovered in the manner provided for in sub-section (1) or the money so deducted or recovered is not sufficient to satisfy the amount and interest so due, the officer empowered may prepare a certificate signed by him specifying the amount with interest due or, as the case may be, the balance of the amount due from the person and send it to the Collector of the district in which such person resides or carries on business and the Collector, on receipt of such certificate, shall recover the amount with interest specified therein as an arrear of land revenue from the said person.
(3) Notwithstanding anything contained in any law for the time being in force and subject to the prior claim, if any, of the State Government in respect of land revenue, any amount due to the State Government with interest shall be a first charge upon the property or interest in the property of the person from whom the amount is due."

23. Before invoking the provisions of the Revenue Recovery Act, there should be an identification of the person from whom the recovery is sought to be made and determination of the extent of his liability. Though the determination or identification should be in the nature of a preliminary ascertainment, in view of the suit in O.S.No.1006 of 1981, filed by the ex-licencee in the District Munsif Court, Perambalur, restraining the defendants therein from invoking the Revenue Recovery Act, for the recovery of arrears of the revenue, till the extent of liability of the ex-licencee is quantified, the District Collector of Tiruchirappalli was constrained to institute a suit in O.S.No.47 of 1986 on the file of the Sub Court, Ariyalur, for quantifying the amount. On contest, the said suit was decreed on 21.04.1987 and it has reached its finality.

24. Tamil Nadu Revenue Recovery Act (II of 1864) was enacted to consolidate the laws for recovery of arrears of revenue in the Madras Presidency. The Preamble of the Act reads as follows:

"Whereas it is advisable that the laws relating to the collection of the public revenue should be consolidated and simplified;"

25. In A.R.A.Karuppiah Nadar v. Commissioner of Civil Supplies, Madras reported in 1972 (1) MLJ 99, this Court while considering the scope and applicability of the Madras Revenue Recovery Act, 1864, for recovering the value of the shortage of paddy, held that the Revenue Recovery Act is a law intended to enable the State to recover, with utmost expedition and without undue expense, amounts payable by the defaulter whose default cannot be challenged in any manner known to law in any Court of law. In fact there must be consensus ad idem between the State and the defaulter if the State intends to set the provisions of the Revenue Recovery Act into motion for recovery of such arrears found and payable by the defaulter. There are innumerable instances in which statutes have adopted the process specifically enumerated in the Revenue Recovery Act as part and parcel of their own for the easy recovery of the amounts due to the State in the circumstances mentioned in each of those statutes.

26. In the reported judgment, this Court has held that the Revenue Recovery Act, being the enabling Act it must also satisfy certain acid tests, the most important of which is that the arrears sought to be recovered under the Act are indisputable and cannot be challenged under law. This seems to be the sine qua non for the State to invoke the provisions of the Revenue Recovery Act. The State cannot summarily invoke the provisions of the Revenue Recovery Act on the footing that there is a clause to that effect in the agreement has been entered into.

27. The facts of the above reported case were that the petitioners were dealers in paddy and rice, licenced under the Madras Paddy and Rice Dealers Licensing Regulation Order, 1966, as procuring agents. At the time of loading, only a test checking of the consignment was made by the officers of the State Government. Pursuant to the notices, the petitioners therein were directed to pay certain sums for the value of the shortage of paddy found at the destination and the said sum was sought to be recovered under the Revenue Recovery Act. There were agreements with some of the petitioners and there was a clause in the agreement that any amount falling due to the Government from the procuring agent in the working of the agreement shall be recoverable as if it were an arrear of land revenue.

28. Section 5 of the Tamil Nadu Revenue Recovery Act, 1864, empowers the Collector or other officer empowered by the Collector in that behalf, to recover the arrears and the said Section reads as follows:

"Whenever revenue may be in arrear, it shall be lawful for the Collector, or other officer empowered by the Collector in that behalf, to proceed to recover the arrear, together with penalty and costs of process, by the sale of the defaulter's movable and immovable property, or by execution against the person of the defaulter in manner hereinafter provided."

29. The Tamil Nadu Revenue Recovery Act, 1864 and the Board Standing Orders set out the manner of recovery of the revenue due to the Government. After notice, distrained proceedings are taken against the cattle or goods, the officers are empowered to attach the movables/immovables. The Public Officer empowered under the Act can bring the property for public auction with a notice specifying the place, date and hour, in which, the seized movable/immovable property would be sold.

30. Section 25 of the Tamil Nadu Revenue Recovery Act deals with the demand to be served prior to attachment of land and mode of service, which reads as follows:

"Before a Collector, or other officer empowered by the Collector in that behalf, proceeds to attach the land of the defaulter or buildings thereon, he shall cause a written demand to be served upon the defaulter, specifying the amount due, the estate or land in respect of which it is claimed, the name of the party in arrear, the batta due to the person who shall serve the demand, and the time allowed for payment, which shall be fixed with reference to the distance from the land on which the arrear is due to the place at which the money is to be paid. Such demand shall be served by delivering a copy to the defaulter, or to some adult male member of his family at his usual place of abode, or to his authorised agent, or by affixing a copy thereof on some conspicuous part of his last known residence, or on some conspicuous part of the land about to be attached."

31. The Tamil Nadu Revenue Recovery Act sets out the procedure and the manner for realisation of the Revenue due to the Government. In the case on hand, for non-payment of kist, for Arrack and Toddy Shop, two shops were brought for re-auction and the Government was put to a net loss of Rs.25,423.73. In so far as the recovery of the Revenue loss caused due to resale of shops, Rule 21 of the Tamil Nadu Toddy and Arrack Shops (Disposal in Auction) Rules, 1981, empowers the Collector or the Sale Officer to dispose of the shop to augment the revenue of the Government. Rule 21 of the said Rules reads as follows:

"Rule 21. Resale of Shop:- (1) On the failure of any person to make a deposit or apply for a licence, or to comply with any requisition or to execute any bond, deed or agreement under these rules the shop may be resold under the orders of the Collector or, on a report from the Assistant Commissioner, the Sale Officer, he Collector may otherwise dispose of the shop. Resales under this rule shall be at the risk of the defaulting bidder, who shall forfeit all gain if any, that may secure by the resale and in the event of a loss by resale, the defaulting bidder shall be required to make good defiecincy between the total amount payable for the whole period under the terms of the original sale and by the total amount payable bythe successful bidder at the resale. In the latter case, the deposits already made by the defaulting bidder, excluding the amount of earnest money deposit, if any, forfeited to the State Government under Rule 15 shall be forfeited and deducted from the loss arising from the resale, and the balance of the loss, if any, shall be recoverable in the same manner as if it were an arrear of land revenue. Should, however, the deposits be greater than the loss by resale, only such part of the deposits as is necessary to cover loss by resale shall be forfeited and the balance refunded to the defaulter. The defaulting bidder shall be similarly liable if the shop is disposed of otherwise than by resale and such disposal results in loss to the State Government as compared with the original sale.
Explanation.-- For the purpose of this rule, Disposal otherwise than by resale includes closure.
(2) Where the successful bidder discontinues the privilege during the period for which it was granted or his privilege is cancelled, the shop shall be resold for the remainder of the period and the provisions of sub-rule (1) shall apply mutatis mutandis to such resale."

32. As per the terms and conditions of the sale, the licencees have to pay the monthly kist. The ex-licencee also executed a mortgage deed, offering his immovable properties as security. He had also agreed to pay interest at the rate of 9% per annum. However, he had failed to remit the kist amount on the due dates and therefore, he had defaulted in payment of kist, which resulted in resale of two shops.

33. A conjoint reading of Section 18(I) of the Tamil Nadu Prohibition Act and Rule 21 of the Tamil Nadu Toddy and Arrack Shops (Disposal in Auction) Rules, 1981, makes it clear that the statute itself has adopted the procedure enumerated in the Revenue Recovery Act as part and parcel of their own for the easy recovery of the amounts due to the State Government. Section 54 of the Tamil Nadu Prohibition Act, 1937, enables the State Government to make rules for the purpose of carrying into the effect the provisions of the Tamil nadu Prohibition Act. Section 18(I) of the Tamil Nadu Prohibition Act deal with the powers of the State Government or the Officer empowered by the Government to adopt the process or procedure set out in the Revenue Recovery Act for recovery, notwithstanding the provisions contained in the Prohibition Act or other law for the time being in force.

34. In T.A.Kuppuswami Chettiar v. State of Madras reported in (1971) 28 STC 570 (Mad.), this Court held that once a finality is reached in so far as the order of assessment is concerned, then it is not open to challenge when Revenue seeks to recover the arrears so reckoned and found in a final order of assessment by resort to the Madras Revenue Recovery Act. The proceedings contemplated under the Madras Revenue Recovery Act as the name itself indicates connote a method of recovery and the Civil Court or the executing Court has no power to challenge or correct the order sought to be executed through it, since other forums are open to the aggrieved party to obtain redress, so also, if proceedings are taken under the Revenue Recovery Act then it is equitable to a proceeding in execution and the aggrieved person cannot question its normal process and furtherance by stating that the order is not executable or enforceable as such since there are errors in it, either mathematical or otherwise.

35. In Har Shankar v. Dy. Excise and Taxation Commr., reported in 1975 (1) SCC 737, the Supreme Court held that the writ jurisdiction of the High Court under Article 226 was not intended to facilitate avoidance of obligations voluntarily incurred. It was observed that one of the important purposes of selling the exclusive right to vend liquor in wholesale or retail is to raise revenue. The licence fee was a price for acquiring such privilege. One who makes a bid for the grant of such privilege with a full knowledge of the terms and conditions attaching to the auction cannot be permitted to wriggle out of the contractual obligations arising out of the acceptance of his bid. Interpreting the provisions of the Punjab Excise Act, 1914 and of the Punjab Liquor Licence Rules, 1956, the Supreme Court held as follows:

"The announcement of conditions governing the auctions was in the nature of an invitation to an offer to those who were interested in the sale of country liquor. The bids given in the auctions were offers made by the prospective vendors to the Government. The Government's acceptance of those bids was the acceptance of willing offers made to it. On such acceptance, the contract between the bidders and the Government became concluded and a binding agreement came into existence between them.... The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who, had their venture succeeded, would have relied upon those very powers to found a legal claim. Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract. By such a test no contract could ever have a binding force."

36. To the same effect are the decisions of the Supreme Court in State of Haryana v. Jage Ram reported in 1980 (3) SCC 599 and State of Punjab v. Dial Chand Gian Chand & Co. reported in 1983 (2) SCC 503, where the Apex Court held that persons who offer their bids at an auction to vend country liquor with full knowledge of the terms and conditions attaching thereto, cannot be permitted to wriggle out of the contractual obligations arising out of the acceptance of their bids by a petition under Article 226 of the Constitution.

37. In State of Haryana v. Lal Chand reported in 1984 (3) SCC 634, the highest bidder, who participated in an auction for right to sale country liquor, failed to deposit the security deposit as required under the Punjab Liquor Licence Rules, 1956. He was served with a notice for re-auction. Anticipating the proposed re-auction, the respondents sent a letter to wriggle out the contractual obligation, in order to recover the deficiency in the re-auction, the sum representing the loss on account of re-sale. The High Court of Punjab and Haryana quashed the notice on demand. The Apex Court, while interpreting Article 299 (1) of the Constitution of India, at Paragraphs 10, 11 and 12 held as follows:

"10. There is a distinction between contracts which are executed in exercise of the executive powers and contracts which are statutory in nature. Under Article 299(1) three conditions have to be satisfied before a binding contract by the Union or the State in exercise of the executive power comes into existence: (1) The contract must be expressed to be made by the President or the Governor, as the case may be. (2) It must be executed in writing. And (3) The execution thereof should be by such person and in such manner as the President or the Governor may direct or authorize. There can be no doubt that a contract which has to be executed in accordance with Article 299(1) is nullified and becomes void if the contract is not executed in conformity with provisions of Article 299(1) and there is no question of estoppel or ratification in such cases. Nor can there be any implied contract between the Government and another person.
11. It is well settled that Article 299(1) applies to a contract made in exercise of the executive power of the Union or the State, but not to a contract made in exercise of statutory power. Article 299(1) has no application to a case where a particular statutory authority as distinguished from the Union or the States enters into a contract which is statutory in nature. Such a contract, even though it is for securing the interests of the Union or the States, is not a contract which has been entered into by or on behalf of the Union or the State in exercise of its executive powers.
12. ...........It was further held that the statutory duties and liabilities arising on acceptance of the bid at a public auction of a liquor contract may be enforced in accordance with the statutory provisions and that it was not a condition precedent for the recovery of an amount due under Section 28 of the Act, that the amount due and recoverable should be under a formally drawn up and executed contract. This is in recognition of the principle that the provisions of Article 299(1) of the Constitution are not attracted to the grant of such privilege to vend liquor under the Act."

38. In the State of Tamil Nadu, rep. by the Collector of Thanjavur and others v. V.Subramaniam reported by 1996 (1) LW 284, this Court considered the issue as to whether a suit for injunction restraining the Government from recovering the forfeiture amounts and damages suffered by the Government, at a re-auction of liquor shop is maintaible or not. In the said appeal, the respondent, former licencee of a Toddy shop, having participated in the auction and made an initial deposit, withdrew from the same and contended that there is no order of confirmation of the provisional bid. There was re-auction of the toddy shop and for the loss sustained by the Government, notice was issued by the Special Tahsildar (Excise), demanding the payment of the revenue loss. The bidder filed a suit for a permanent injunction against the State Excise, Tahsildar and others, not to comply with the provisions of the Revenue Recovery Act for realisation of the alleged arrears of revenue. Both the Courts have concurrently found that there was no concluded contract in accordance with Article 112 of the Constitution of India and granted relief in favour of the higgest bidder. On appeal, this Court, placing reliance on the judgments of the Supreme Court in Har Shankar v. Deputy Excise and Taxation Commissioner reported in AIR 1975 SC 1121 and State of Haryana v. Lal Chand reported in 1984 (3) SCC 634, reversed the judgment of the lower Court and dismissed the suit, thereby, upholding the power of the excise officials to recover the loss of revenue caused on account of re-auction of the Toddy Shops.

39. Admittedly, the patta lands which in the name of the deceased licencee were transferred to the petitioners and since the petitioners had evaded payment, despite the receipt of the notices dated 16.02.2004 and 03.03.2004 etc., they are deemed to be defaulters. This legal representatives of the deceased, who had defaulted in payment of revenue loss due to the Government, are liable to pay to the Government.

40. A combined reading of Section 18(i) of the Tamil Nadu Prohibition Act, 1937 and the provisions of Revenue Recovery Act, makes it clear that notwithstanding anything contained in the Tamil Nadu Prohibition Act, or any other law for the time being in force or without prejudice to any other mode of recovery which is being taken or may be taken any amount due to the State Government under any other provision of the Act or the Rules made thereunder along with the interest at such rate as may be specified by the Statement Government, may be recovered by the officer empowered by the State Government. Therefore, the District Collector or the authorised officer is empowered to bring the properties of the legal representatives of the ex-licencee for realisation of the amounts due to the Government.

41. As regards the contention of the learned senior counsel for the petitioner that the invocation of the Revenue Recovery Act, beyond 30 years is hit by Article 112 of the Limitation Act, it is worthwhile to refer a decision of this Court in T.S.Jothi Selvaraj v. State of Tamil Nadu, rep. By the Commissioner and Secretary to the Government, Department of Prohibition and Excise, Chennai, reported 2005 (3) LW 573. In the reported judgment, privilege of sale of Arrack shop was auctioned in the year 1984-85. The petitioner therein was a successful bidder. The excise Officer, Vandavasi, directed the petitioner to lift the normal full quota for arrack for April 1985 and pay the full kist. The said action of the Excise Officer, Vandavasi was challenged in a Writ Petition, which was ultimately dismissed. Thereafter, a memo, dated 08.11.1996 was issued by the Divisonal Excise Officer, Thiruvannamalai, directing the petitioner to pay Rs.43,052/- for the Excise year 1984-85. On his failure to pay, an order was passed calling upon the petitioner therein to pay such amount failing which, proceedings as contained in the Tamil Nadu Revenue Recovery Act, 1864 would be taken. The said order was challenged on the ground that the Revenue Recovery Act cannot be invoked to realise the arrears of notional loss caused to the Government. Answering the above question, this Court at Paragraph 12 of the judgment, held as follows:

"12. Rule 20 of the Tamil Nadu Toddy and Arrack Shops (Disposal in Auction) Rules, 1981, which has been made in exercise of power conferred under Section 54 of the Tamil Nadu Prohibition Act, 1937, provides for settlement of shops on the basis of auction. Rule 21 relates to resale of any shop on the failure of any person to make a deposit or to apply for a licence or to comply with any requisition or to execute any bond. In the case of resale of shops, the deposit already made by the defaulting bidder is to be forfeited and adjusted against the amount, and the loss arising from the resale, if any, is recoverable in the same manner as if it were an arrear of land revenue. As per the provisions of the Rules, the licensee is required to execute an agreement in a stamp paper. As per such agreement, any amount due is recoverable if it is an arrear of land revenue. In such view of the matter, it is futile on the part of the petitioner to contend that the amount payable by the licensee is not recoverable as an arrear of land revenue."

42. As regards the question of limitation, this Court at Paragraph 15, held as follows:

"The last contention of the petitioner relates to the question of limitation. It is the contention of the petitioner that even though the amount was payable for the period during 1984-85, proceedings were started only in the year 1997. This contention also is unacceptable, because it is apparent that Article 112 of the Limitation Act providing for a period of 30 years is applicable. It is contented that Section 58 of the Revenue Recovery Act excludes the jurisdiction of the Civil Court, and, therefore, Article 112, which relates to suits, is not applicable. The execlusion contemplated under Section 58 of the Tamil Nadu Revenue Recovery Act, 1864, is relating to question as to rate of land revenue and is not at all relevant."

43. Under the provisions of the Tamil Nadu Toddy and Arrack Shops (Disposal in Auction) Rules, 1981 and as per the conditions of auction sale, once bid amount is accepted by the bidder in an auction sale conducted by the authority, the completed contract comes into existence and the bidder, who makes the bid for grant of such privilege with knowledge of the terms and conditions attached to auction cannot be permitted to wriggle out the contractual obligations arising out of the acceptance of his bid. Further, once a finality is reached, in so far as determination is concerned, it is not open to the petitioners to challenge the recovery proceedings, when the revenue seeks to recover the arrears so determined. The procedure contemplated under the Revenue Recovery Act, connotes only a method of recovery. Having failed to comply with the judgment and decree, determining the quantum of notional loss, the Legal Representatives, who inherited estate of the deceased, who is defaulted in payment of revenue due to the Government, cannot challenge the normal course of recovery, by stating that the judgment and decree obtained as against the ex-licencee is inexecutable and unforceable.

44. As regards the contention of the petitioners that the legal heirs have not been served with the demand notice, it should be noted that the properties, said to have been brought for auction were mortgaged by the ex-licencees at the time of execution of Counter part agreement, while accepting the sale conditions. Consequent to the demise of the ex-licencee, the patta of the lands owned by him have been transferred in the name of the heirs of the second wife and first wife, viz., Kulanjiammal. The right of the Government to proceed against the property mortgaged as a security is unfettered and the Government cannot be hampered in the collection of the revenue to conduct any enquiry as to the ownership of the property or beneficiary. Registered holders of the properties are liable to discharge the revenue due to the Government. In such view of the matter, it is not necessary to give notice to all the legal representatives of the ex-licencee.

45. In so far as the contention that pending consideration of the first appeal in this Court and therefore, the revenue recovery proceedings cannot be initiated, it is purely an inter-se dispute between the beneficiaries and the authorities are not precluded from proceeding against the properties who stood in the name of the erstwhile licencee and transferred to his Legal Representatives.

46. As pointed out, the Tamil Nadu Revenue Recovery Act, 1864 was enacted with an object to consolidate the laws for the recovery of arrears of revenue in the Madras Presidency. The proceedings taken under the Revenue Recovery Act itself indicates the method of recovery equivalent to the proceedings in execution before the Civil Court. Only after determination of the revenue due and payable by the defaulter, the proceedings are initiated for recovery of the arrears together with the penalty and the cost of arrears for sale of the property of the defaulter. Therefore, even though the respondents have filed a suit in O.S.No.47 of 1986 on the file of the Sub Court, Ariyalur for quantifying the amount, resorting to recover the said amount by exercising the power under Section 18(I) of the Tamil Nadu Prohibition Act r/w. Rule 21 of the Tamil Nadu Toddy and Arrack Shops (Disposal in Auction) Rules, 1981, to recover the amount in the same manner as if it were an arrears of land revenue, cannot be said to be illegal or without jurisdiction. The mode of recovery prescribed under the Tamil Nadu Revenue Recovery Act can very well be applied for realisation of arrears of notional loss, as the provisions of the Tamil Nadu Prohibition Act and the Tamil Nadu Toddy and Arrack Shops (Disposal in Auction) Rules, have adopted the method of recovery as per the provisions of the Revenue Recovery Act.

47. Therefore, it is prerogative of the District Collector or the competent authority to invoke the provisions of the Revenue Recovery Act and he can adopt any mode of recovery for realisation of arrears of revenue due to Government. The contention of the learned senior counsel that the Government or its officers have to file only an execution petition within 12 years from the date of decree, i.,e in O.S.No.47 of 1986 on the file of the Sub Court, Ariyalur is not tenable in view of the statutory provisions.

48. In the light of Section 18(I) of the Tamil Nadu Prohibition Act, 1937 r/w. the provisions of the Revenue Recovery Act, the respondents are empowered to bring the properties for the public auction for realisation of the loss caused to the Government. From the affidavit filed in support of the impleading petition, it is evident that the proposed respondent has deposited the entire auction amount as per the condition and that the confirmation of the auction was kept in abeyance, pending disposal of the present Writ Petitions. As a bona fide purchaser of a property in an auction, he has got a legitimate right to be heard and therefore, the impleading applications in W.P.M.P.Nos.2704 and 2707 of 2007 are ordered. In view of the above, there is no illegality in the mode of recovery adopted by the respondents. Hence, the Writ Petitions are dismissed. Consequently, it is open to the respondents to take appropriate orders in respect of confirmation of the auction sale. No costs.

25.06.2008 NOTE TO OFFICE:

Issue order copy on 30.06.2008 skm To
1. The Revenue Divisional Officer, Perambalur, Perambalur District.

S. MANIKUMAR, J.

skm

2. The Divisional Excise Officer, Perambalur, Perambalur District.

3. The Tahsildar, Veppanthattai, Perambalur District.

W.P.Nos.12933 and 25194 of 2005 25.06.2008