Kerala High Court
The Excise Asst.Commissioner vs Kaniyankandi Padmanabhan on 14 December, 2010
Author: P.S. Gopinathan
Bench: P.S.Gopinathan
IN THE HIGH COURT OF KERALA AT ERNAKULAM
SA.No. 400 of 1998(E)
1. THE EXCISE ASST.COMMISSIONER
... Petitioner
Vs
1. KANIYANKANDI PADMANABHAN
... Respondent
For Petitioner :GOVERNMENT PLEADER
For Respondent :SRI.R.PARTHASARATHY
The Hon'ble MR. Justice P.S.GOPINATHAN
Dated :14/12/2010
O R D E R
P.S. GOPINATHAN, J.
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S.A. NO. 400 OF 1998
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DATED THIS, THE 14TH DAY OF DECEMBER, 2010
J U D G M E N T
The second appeal was preferred by the defendants 1 to 3in O.S. 223 of 1990 on the file of the Munsiff's Court, Koyilandy. The first respondent herein instituted the suit against the appellant and another (4th defendant) seeking a decree of declaration that the revenue recovery proceedings initiated against the first respondent is barred by limitation and to restrain the appellants by a decree of permanent prohibitory injunction from realising any amount from the first respondent by revenue recovery in pursuance of Ext.A1 notice dated 2.5.1990.
2. The appellants, the State and their officials, contended that the revenue recovery proceedings initiated were not at all barred by limitation and that the suit is not maintainable because of the bar under Section 72 of the Revenue Recovery Act and prayed for dismissal of the suit.
3. After raising the issues, the parties were sent for trial. During the course of trial, the first respondent was examined as PW.1. The Excise Inspector, Koyilandy, was examined as DW.1. On the side of the first S.A. 400/1998 2 respondent, Exts. A1 to A4 were marked. On the side of the appellants, Exts.B1 to B4 were marked. The learned Munsiff, on appraisal of the evidence on record, arrived at a finding that since the recovery proceedings were initiated within thirty years, it is not at all barred by limitation and that the suit is hit by Section 72 of the Revenue Recovery Act. Consequently, the suit was dismissed.
4. The first respondent took up the matter in appeal as A.S. 33 of 1993 before the Subordinate Judge, Koyilandy. The Subordinate Judge, by the impugned judgment dated 7.2.1996, allowed the appeal on entering into a finding that the period of limitation is only three years and hence revenue recovery proceedings are barred by limitation and that since appellants 1 to 3 failed to initiate any action against the 4th respondent also, who is jointly liable for the amount covered by Ext.A1, there is fraud and since there is fraud on the side of the appellants, the suit is not hit by Section 72 of the Revenue Recovery Act, as then it was. Consequently, the appeal was allowed. Now the second appeal.
5. The following are the questions of law that arise for consideration:
i. Whether the liability due from the first respondent is barred by limitation?S.A. 400/1998 3
ii. Whether the failure of the appellants to initiate action against the second respondent who is jointly liable with the first respondent would amount to fraud?
6. The brief facts leading to the suit is as follows: Respondents 1 and 2 jointly bid the right to run two toddy shops bearing Nos. 19 and 22 of Koyilandy Range for the year 1968-69 and 1969-70. After executing Exts. B1 and B2 agreements, inter alia agreeing to remit the bid amount jointly and severally, they run the above toddy shops for the relevant years. Since the respondents failed to discharge the liability as per Exts. B1 and B2, Ext.A1 demand notice was caused to the first respondent on 2.5.1990. The first respondent in the plaint would contend that he was liable to pay only half of the kist amount. According to him, he had paid the same and for the balance half, the second respondent alone is liable and no revenue recovery proceedings are sustainable against him.
7. Heard Sri. P.R. Jayakrishnan, learned Government Pleader and the learned counsel for the respondents.
Point No. 1.
8. Article 112 of the Schedule of the Limitation Act would show that the period of limitation for a suit on behalf of the State would be 30 years and not three years. Schedule 112 of the Limitation Act reads thus: S.A. 400/1998 4
Description of suit Period of limitation Time from which period begins to run "Any suit (except a suit before the Supreme Court in the exercise of its original jurisdiction) by Thirty years When the period of or on behalf of the Central limitation would begin to Government or any State run under this Act against Government, including the a like suit by a private Government of the State person."
of Jammu and Kashmir.
Learned counsel for the first respondent fairly conceded that the period of limitation as against the State is 30 years as stipulated under Article 112.
He had also been fair enough to concede that the appellate court went wrong in finding that the period of limitation is three years. In the above circumstances, I find that the period of limitation for instituting a suit by or on behalf of the Central Government or State Government is 30 years.
Since Ext.A1 notice is within that period the revenue recovery proceedings are not at all barred by limitation.
Point No.2.
9. Exts. B1 and B2 would show that the liability of the respondents for the kist amount is joint and several. Ext.A1 would show that action was initiated only against the first respondent. DW.1 had deposed that action was initiated against the second respondent also for realisation of the S.A. 400/1998 5 amount due as per Ext.A1. But the learned Subordinate Judge rejected the evidence of DW.1 in the light of the plea of the second respondent that no action was initiated against him for realisation of the amount. Consequently, it was found that since there is failure on the side of the appellants to initiate action against the second respondent, there is collusion in between the appellants and the second respondent. The learned Subordinate Judge further observed that the appellants should not have shown any discrimination between respondents 1 and 2. According to the learned Subordinate Judge, the appellants did not act reasonably and fairly. Hence it concluded that there is fraud and that when there is fraud, a suit against the appellants is not at all barred under Section 72 of the Revenue Recovery Act as then it was. For a correct appraisal of the law and facts, it would be relevant to read Section 72 of the Revenue Recovery Act, which is as follows: (Before the amendment by act 31 of 2007) Section 72:- General bar to jurisdiction of Civil Courts save where fraud alleged.--
Except as otherwise expressly provided in this Act, every question arising between the Collector or the authorized officer and the defaulter or his representative or any other person claiming any right through the defaulter, relating to the execution, discharge or satisfaction of a written demand issued under this Act or relating to the confirmation or setting aside by an order under S.A. 400/1998 6 this Act of a sale held in execution of such demand, shall be determined not by suit, but by order of --
(i) the Board of Revenue, where the Collector is a party to the question;
(ii) the Collector, in other cases:
Provided that a suit may be brought in a Civil Court in respect of any such question on the ground of fraud."
A reading of the above provision would show that there is a general bar to jurisdiction of the civil courts relating to execution, discharge or satisfaction of a written demand issued under the Revenue Recovery Act except on the ground of fraud. In view of the amendment made by Act 31/07 with effect from 12.12.2005 there is absolute bar to the jurisdiction of the civil court.
10. It is not in dispute that by virtue of Exts.B1 and B2 executed by the respondents, the liability of the respondents are joint and several. Since the liability of the respondents are joint and several, it is for the State to decide as to against whom action shall be initiated so as to have the arrears levied at the earliest. The mere fact that there is failure on the side of the appellants to initiate action against one of the defaulter would not in any way amount to fraud mentioned under the proviso to Section 72. The evidence of DW-1 would show that separate demand notice was served S.A. 400/1998 7 upon the second respondent for realisation of the dues. The evidence of DW.1 on that aspect remains unimpeached. But the appellate court disbelieved DW.1 for the reason that the second respondent in his pleadings contended that no action was taken against him. The appellate judge failed to note that the pleadings of the second respondent on that aspect was disputed by the appellants and that no legal sanctity can be given to the disputed pleadings to discredit a witness who withstood the cross examination. The appellate court thus fundamentally erred in appreciating the evidence of DW.1. The appellate court ought to have believed the evidence of DW.1 that action was also initiated against the second respondent. In this view of the matter, the reason stated by the appellate court that no action was initiated against the second respondent, to find that there was fraud, lacks evidentiary support and not sustainable. Adding to the above, as mentioned earlier, the inaction on the side of the authorities against one of the defaulter also would not amount to fraud so as to enable the co-defaulter to challenge the revenue recovery proceedings in a civil court alleging fraud. Fraud is not defined in the Kerala Revenue Recovery Act. Since the revenue recovery action was initiated basing upon Exts. B1 and B2 agreements, it would be appropriate to read Section 17 of the Contract Act which defines fraud as follows:
S.A. 400/1998 8
" 17. 'Fraud' defined. -- 'Fraud' means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:--
(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention
of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law
specially declares to be fraudulent.
Explanation.-- Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak or unless his silence, is, in itself, equivalent to speech."
If the above definition is given regard, at no stretch of imagination, the failure of the appellants to take action against the second respondent , if it is so, would amount to fraud. In the Collins PaperBack English Dictionary the meaning of the word 'fraud' is given as follows:
"1. deliberate deception, trickery or cheating intended to gain an advantage.S.A. 400/1998 9
2. an act or instance of such deception.
3. Inf. a person who acts in a false or deceitful way."
Even by applying dictionary meaning, I find that the inaction of the appellant would in no way amount to fraud. There is no deception, trickery or cheating intended to gain an advantage. Probably, such inaction can be termed as discrimination. In fact, there is no discrimination. Whatever it be, revenue recovery proceedings are not liable to be assailed in a suit on the ground of discrimination. There is no fraud established against the appellants so as to invoke the jurisdiction of the civil court to assail the revenue recovery initiated in pursuance of Ext.A1. The finding of the appellate court is contrary to law and facts. The suit is misconceived and hit by Section 72 of the Revenue Recovery act and not maintainable.
In the result, the appeal succeeds. While setting aside the judgment and decree of the appellate court, the decree and judgment of the trial court dismissing the suit is restored. The appellants are entitled to get their costs throughout.
sd/-
P.S. GOPINATHAN, (JUDGE) knc/-
S.A. 400/1998 10
P.S. GOPINATHAN, J.
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S.A. NO. 400 OF 1998
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DATED: 14TH DECEMBER, 2010
J U D G M E N T