Dismissed

Nehru Memorial Charitable & Educational Society v. State of Kerala

Kerala HC7 Jun 2012RSA/428/2012

Case brief

AI extract

What is this about?

This court dismissed a second appeal challenging the auction sale of property under the Revenue Recovery Act. The court held that the sale was valid despite the appellant's objection regarding penal interest, as the objection did not pertain to the specific arrears claimed for that property and the appellant failed to avail the exemption scheme.

What did the court decide?

Impugned sale of property registered as R.S.No.237/7 and assessment of penal interest were upheld.

Nehru Memorial Charitable & Educational Society Vs… — Execution and Attachment | Kerala HC (2012)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE THOMAS P.JOSEPH

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THURSDAY, THE 7TH DAY OF JUNE 2012/17TH JYAISHTA 1934

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RSA.NO. 428 OF 2012 ()

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AS.304/2008 OF II ADDITIONAL DISTRICT COURT, PALAKKAD OS.327/2003 OF PRINCIPAL MUNSIFF'S COURT, PALAKKAD

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APPELLANT/APPELLANT/PLAINTIFF:

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NEHRU MEMORIAL CHARITABLE & E EDUCATIONAL SOCIETY, KANNAMBRA ALATHUR TALUK REPRESENTED BY ITS SECRETARY KOMALAM P.N. W/O N.K.SIVARAMAN, NOKKARAHOUSE VELLAPARA,KAVASSERY I VILLAGE ALATHUR TALUK PALAKKAD

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BY ADVS.SRI.P.BABU KUMAR SRI.P.YADHU KUMAR

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RESPONDENTS/RESPONDENTS/DEFENDANTS:

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1. STATE OF KERALA, REPRESENTED BY THE DISTRIC TOCLLECTOR CIVILSTATION PALAKKAD 678001

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2. THE TAHSILDAR,

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ALATHUR TALUKOFFICE,ALATHUR P.O, 678541

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3. THE SECRETART, KHADIGRAMA VYAVASATA BOARD, VANCHIYOOR THIRUVANANTHAPURAM P.O

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4. PAUL

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S/O GEEVARGHESE RISHINARADHAMANGALAM KANNAMPARA P.O,ALATHUR TALUK PALAKKAD 678686.

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THIS REGULAR SECOND APPEAL HAVING COME UP FOR ADMISSION ON 07-06-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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THOMAS P.JOSEPH, J.

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==================================== R.S.A. No.428 of 2012

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==================================== Dated this the 07^th day of June, 2012

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J U D G M E N T

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Plaintiff in O.S. No.327 of 2003 of the court of learned Principal Munsiff, Palakkad is aggrieved by the dismissal of the suit as confirmed by the learned Second Additional District Judge, Palakkad in A.S. No.304 of 2008.

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The suit is for a declaration that the attachment and sale of the suit property conducted by respondents 1 and 2 without considering the objection preferred by the appellant under Section 34(2) of the Revenue Recovery Act (for short, “the Act”) is void and that appellant is entitled to get exemption from payment of penal interest of Rs.50,000/- as demanded by the 3^rd respondent.

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Appellant is a society and was sanctioned a loan of Rs.68,400/- by the 3^rd respondent, the Secretary of the Khadi Grama Vyavasaya Board. According to the appellant, it received Rs.67,900/- by way of loan. In the meantime the rice mill owned by the appellant ran into financial difficulties and it had to be closed down. The 3^rd respondent demanded Rs.1,65,639.15 as the amount outstanding in the loan account. Respondents 1 to 3

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R.S.A. No. 428 of 2012

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-: 2 :-

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realised Rs.13,000/- by sale of machinery and another sum of Rs.25,000/- by sale of 12 cents (in R.S. No.80/4 belonging to the appellant). Respondents sold another item of property belonging to the appellant comprised in R.S. No.237/7 in auction for Rs.71,000/- and that item was purchased by the 4^th respondent. Case of the appellant is that the said sale was conducted without considering the objection preferred by him to the 2^nd respondent under Sec.34(2) of the Act and hence the sale is void.

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Respondents 1 to 3, apart from other contentions pleaded that it is not correct to say that respondents 1 and 2 had not considered the objection preferred by the appellant under Sec.34(2) of the Act. The benefit of exemption from payment of penal interest is a time scheduled scheme for making payment in lump. Appellant had not availed that opportunity on time. The 3^rd respondent rejected the claim of appellant for exemption from payment of penal interest. That fact was intimated to the appellant as per notice dated 16.11.2000. The 4^th respondent also raised contentions opposing the prayer in the suit.

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Trial court found that contention of appellant is not correct and dismissed the suit. That was confirmed by the first appellant court.

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R.S.A. No. 428 of 2012

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-: 3 :-

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Learned counsel (for appellant) contended that the claim for penal interest is unconscionable and placed reliance on

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the decision in Central Bank of India v. Ravindra ([2002] 1 SCC 367) and in particular the observations in paragraph 38 where it is stated that penal interest can be charged only for one period of default and therefore cannot be permitted to be capitalized. Learned counsel submitted that as against the normal interest rate of 4%, the 3^rd respondent has claimed penal interest at the rate of 6% which is illegal. It is further submitted by the learned counsel placing reliance on the

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decision in V.O.Vakkan & Sons v. State of Kerala

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(2010 [3] KHC 751) and in particular the observations in paragraph 29 that the sale conducted in violation of Sec.34(2) of the Act is invalid.

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The impugned sale was held on 04.06.2002. Exhibit A4(a) is the demand notice issued by the 2^nd respondent under Sec.34(1) of the Act. To that, appellant preferred objection under sub-sec.(2) of the said provision. Exhibit A5 is the copy of that objection. The original of that objection is Ext.X1(a). Courts below observed that Exts.A4 and A5 did not concern sale of property in R.S.No.237/7 on 04.06.2002 in favour of the 4^th

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R.S.A. No. 428 of 2012

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-: 4 :-

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respondent. Exhibits A4 and A5 concerned sale of 12 cents in R.S. No.80/4. Courts below also pointed out that a copy of the objection said to be preferred as regards sale of property in R.S. No.237/7 is not produced by the appellant. To Ext.A5, objection the 2^nd respondent gave Ext.A6, reply that he cannot do anything in the matter and that the appellant has to approach the 3^rd respondent, the Secretary of the Khadi Vyavasaya Board. That was followed by appellant making Ext.A8, representation to the 3^rd respondent. In answer to Ext.A8, appellant was asked to pay the entire amount due before 31.08.2000 to secure exemption from payment of penal interest but that direction was not complied. Exhibit A8, representation and reply thereto from the 3^rd respondent were all before sale of 12 cents in R.S. No.80/4.

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In the suit the challenge is only to the sale of property comprised in R.S. No.237/7 in favour of the 4^th respondents on 04.06.2002. So far as that sale is concerned, there is no case for the appellant that he was not served with a notice under Sec.34(1) of the Act. Exhibit A11 is the proceeding dated 27.09.2001 of the Tahsildar concerned. Exhibit A11 refers to the objection preferred by the appellant as regards sale of property in R.S. No.237/7. Exhibit A11 revealed that the Tahsildar

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R.S.A. No. 428 of 2012

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-: 5 :-

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passed order on the basis of representation made by the appellant on 24.07.2001 under Sec.34(2) of the Act. The sale of property in R.S. No.237/7 was held on 04.06.2002, i.e., much after the representation referred to in Ext.A11, proceeding was rejected by the Tahsildar on 27.09.2001. D.W.1, the Tahsildar gave evidence that Ext.A11 was passed by the 2^nd respondent after considering the objection of the appellant (under Sec.34(2) of the Act). An argument was advanced in the court below that the Tahsildar was not competent to issue Ext.A11, proceeding. Courts below observed that under Sec.73 of the Act District Collector is empowered to authorise any officer to discharge functions under the Act.

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The above circumstances revealed that so far as sale of property in R.S. No.237/7 is concerned, though appellant has preferred objection under Sec.34(2) of the Act pursuant to the demand notice served on him a copy of that objection is not produced and the said objection was considered and disposed of as per Ext.A11, proceeding dated 27.09.2001. It was much thereafter on 04.06.2002 that the suit property was sold in favour of the 4^th respondent.

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I must also notice that the objection of appellant is

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R.S.A. No. 428 of 2012

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-: 6 :-

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regarding collection of penal interest. Sec.34(1) of the Act says that before the District Collector or authorised officer proceeds to attach the property of the defaulter he shall cause a written demand on the defaulter specifying the amount of arrears of public revenue due on land for which attachment is being made. Under sub-sec.(2), the defaulter has a right to object to the “claim of arrears wholly or in part” and if any such objection is preferred the Collector or the authorised Officer shall enquire into the objection and record a decision before proceeding to attach the immovable property was initiated.

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I must notice that going by Sec.34(23) of the Act the objection relates to claim of arrears wholly or in part. Here, it is not an objection regarding claim of arrears. Contention of the appellant is that 3^rd respondent was not entitled to collect penal interest for whatever reason it is. I am not inclined to think that whether 3^rd respondent was entitled to collect penal interest or not, is not a matter required to be decided by the authorities under the Act. That is a matter which the 3^rd respondent has to decide. Function of the authorities under the Act is only to decide on the claim of arrears wholly or in part.

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Exhibit 11 refers to the representation made to the 3^rd

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R.S.A. No. 428 of 2012

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-: 7 :-

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respondent (though pertaining to the sale of 12 cents in R.S. No.80/4). It is not as if the said representation of the appellant was not considered by the 3^rd respondent. Appellant was asked to pay the entire amount before 31.08.2000 to secure exemption from payment of penal interest. Admittedly that direction was not complied. It is relevant to note that the said order of 3^rd respondent was also not challenged in appropriate proceeding.

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The decisions relied on by the learned counsel in the above circumstances have no application to the facts of the case.

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In the above circumstances appellant is not justified in contending, after sale of the property in R.S. No.237/7 on 04.06.2002 that the said sale is invalid for the reason that the amount involved penal interest he was found liable to pay. I do not find any infirmity in the finding of the courts below or involving any substantial question of law requiring decision by this Court.

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Second Appeal is dismissed.

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All pending Interlocutory Applications will stand dismissed.

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THOMAS P. JOSEPH, JUDGE.

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vsv

Nehru Memorial Charitable & Educational Society v. State of Kerala

Case brief

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Nehru Memorial Charitable & Educational Society v. State of Kerala

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