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The Tahsildar Kottarakara and ors. Vs. N. Vishwanathan - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKerala High Court
Decided On
Case NumberWrit Appeal No. 207 of 1979
Judge
Reported inAIR1981Ker161
ActsKerala Revenue Recovery Act, 1968 - Sections 68
AppellantThe Tahsildar Kottarakara and ors.
RespondentN. Vishwanathan
Appellant AdvocateGovt. Pleader
Respondent Advocate P.C. Chacko, Adv.
DispositionAppeal allowed
Cases ReferredState of Rajasthan v. Raghubir Singh
Excerpt:
- - quilon undertaking to make good to the state government the full amount payable by thebidder by way of kist, tree tax, interest etc. universal marice 'agencies, 1980 ker lt 187 :(air 1930 ker 158). 6. it is no doubt well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a court or other adjudicatory authority. 54,474. what the petitioner is liable to make good to the government is the difference between the original bid amount of rs......dated 23-4-1971 before the assistant excise commissioner. quilon undertaking to make good to the state government the full amount payable by thebidder by way of kist, tree tax, interest etc., in respect of the aforesaid shop in the event of default being committed by the bidder in discharging such dues. the 3rd respondent defaulted payment of kist and kept it in arrears from june. 1971 onwards with the result that the shop was resold on 23-7-1971. at the resale the 4th respondent purchased the shop in reauction for a biennial rent of rs. 68,000/- and the sale was confirmed in her name by the board of revenue on 24-8-1971. the 4th respondent remitted to the department a sum of rs. 54,474/- being the proportionate amount payable in respect of the shop for the period from 25-8-1971 to.....
Judgment:

Balakrishna Eradi, C.J.

1. This appeal has been filed by the State of Kerala jointly along with the Tehsildar Kottarakara against the decision of a learned single Judge of this Court allowing O. P. No. 2502 of 1976 filed by the 1st respondent herein and quashing the demand notice issued to the petitioner as per Ext. P-1 under the provisions of the Revenue Recovery Act calling upon the petitioner to remit an amount of Rs. 17,816.92 being the arrears of abkari dues payable by him in respect of the period 1971-73.

2. The petitioner had stood surety for the 3rd respondent who was the successful bidder in respect of toddy shop No. 17 in Karunagapally range for the two years period from 1st April, 1971 to 31st March, 1973. The bid amount payable by the contractor for the said period was Rs. 90,500/-. The petitioner had executed a surety bond dated 23-4-1971 before the Assistant Excise Commissioner. Quilon undertaking to make good to the State Government the full amount payable by thebidder by way of kist, tree tax, interest etc., in respect of the aforesaid shop in the event of default being committed by the bidder in discharging such dues. The 3rd respondent defaulted payment of kist and kept it in arrears from June. 1971 onwards with the result that the shop was resold on 23-7-1971. At the resale the 4th respondent purchased the shop in reauction for a biennial rent of Rs. 68,000/- and the sale was confirmed in her name by the Board of Revenue on 24-8-1971. The 4th respondent remitted to the department a sum of Rs. 54,474/- being the proportionate amount payable in respect of the shop for the period from 25-8-1971 to 31-3-1973. The original bidder, namely, the 3rd respondent had remitted by way of kist only a sum of Rs. 18,324.33. Thus the total amount realised by the department by way of kist for the contract period from respondents Nos. 3 and 4 was Rs. 72,798.33/-. This fell short of the original bid amount of Rupees 90,500/- by Rs. 17,701.67/-. The said said sum together with interest thereon calculated up to 25-8-1971 amounting to Rupees 115/- was the subject-matter of the demand issued against the petitioner by the Tahsildar, Kottarakana as per the impugned notice evidenced by Ext. P-1.

3. On receipt of the aforesaid notice the petitioner submitted a representation before the State Government evidenced by Ext. F-2 contending that since the 4th respondent had bid the shop for Rs. 68,000/- the loss suffered by the department on account of the balance kist realisable by the department on the basis of the original bid of the 3rd respondent was only Rs. 4,175.67/-. Expressing his readiness to remit the said sum of Rs. 4,175.67/- the petitioner requested the State Government to stay the revenue recovery proceedings and to allow him to discharge the liability of Rs. 4,175.67/- in fifteen equal instalments. In reply to the said representation the petitioner was informed by the Special Secretary to Government, Revenue Department as per the letter Ext. P-3 dated 8-4-1978 that the District Collector Quilon had been given instructions to stay the revenue recovery proceedings taken against the petition provided the petitioner agreed to remit the entire arrears in fifteen monthly instalments commencing from 19th April, 1976. Thereupon the petitioner came up to this Court by filing the writ petition out of which this appeal has arisen seeking to quash Exts. P-1 and P-3.

4. The only point taken by the petitioner in the original petition is that his liability under the terms of the surety agreement was only to pay the difference between the amount of the original bid made by the 3rd respondent and the amount fetched at the resale which would represent the loss caused to the department on account of the default committed by the 3rd respondent and since the shop had been bid by the 4th respondent at the reauction for Rs. 68,000/- the petitioner could be held liable to pay only the sum of Rupees 4,175.67/-.

5. The learned single Judge allowed 'the writ petition holding that the claim that the Government has against the writ petitioner for breach of the terms of the surety agreement is only in the nature of a right to unliquidated dam-ages and so long as the sum recoverable by way of unliquidated damages remains undetermined it cannot be said that any amount is 'due' to the Government from the petitioner and hence steps cannot legally be initiated against him under the Revenue Recovery Act for recovery of the amount from the petitioner. In taking the said view the learned Judge relied on the decision of Vadakkel, J. in Universal Marine Agencies v. State of Kerala, 1977 Ker LT 949, and a later pronouncement by himself in Commissioner of Income-tax, Kerala-I v. Nenmony Investments Agencies Ltd., 1978 Ker LN 11: (1978 Tax LR 440). The decision reported in Universal Marine Agencies' case, 1977 Ker LT 949, was subsequently reversed on appeal and the appellate judgement is reported in State of Kerala v. Universal Marice ' Agencies, 1980 Ker LT 187 : (AIR 1930 Ker 158).

6. It is no doubt well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority. (See Union of India v. Bagwan Iron Foundry, AIR 1974 SC 1265). We are, however, of opinion that on the facts of the present case it will not be correct to characterise the claim that the State Government has against the writ petitioner asmerely one for unliquidated damages. It is not disputed by the petitioner that under the terms of the agreement he has undertaken liability for ensuring due payment to the State Government of the full amount of Rs. 90,500/- for which the shop had been bid by the 3rd respondent. The 3rd respondent had admittedly paid towards the said liability only a sum of Rs. 18,324.33/-. It is also admitted that immediately after the default was committed by the 3rd respondent the shop was resold and at the reauction it was bid by the 4th respondent for Rs. 68,000/-. The only contention put forward by the writ petitioner in his representation evidenced by Ext. P-2 was that the full amount of Rs. 68,000/- should go in reduction of the liability of the petitioner under the surety agreement. This was not accepted by the department because, according to them, the resale of the shop was of the right to conduct it for the full term of two years from 1-4-1971 to 31-3-1973 and the liability of the 4th respondent under the terms of the reauction was only to pay the proportionate kist for the period from 25-8-1971 to 31-3-1973 which amounted only to Rs. 54,474/- and that amount alone had been remitted by the 4th respondent. It was on this basis that the petitioner had been called upon to remit the balance sum of Rs. 17,701.67 with interest amounting to Rs. 115/-.

7. The contention raised by the writ petitioner in the original petition was only that his liability under the agreement was to pay only Rs. 4,175.67/-which represents the balance required to make up the original bid amount of Rs. 90,500/- after duly taking into account the amount of Rs. 18,324.33/- paid by the 3rd respondent by way of kist and the sum of Rs. 68,000/-, for which the shop had been bid by the 4th respondent at the resale. There was no plea at all taken by the writ petitioner that the claim that the State Government had against him was only one for unliquidated damages and hence revenue recovery proceedings could not be validly initiated against him.

8. The facts of the instant case being as set out above we are unable to regard the claim of the State Government against the writ petitioner as one for recovery of unliquidated damages which requires to be ascertained aftera process of adjudication either by a civil court or other competent authority. On the other hand, the claim is for payment of a sun which is ascertainable on a simple calculation made in accordance with the terms of the agreement. As pointed out by the Supreme Court in State of Rajasthan v. Raghubir Singh, AIR 1979 SC 852, the claim has to be regarded as one for 'a sum certain'. With respect, we find ourselves unable to agree with the view expressed by the learned single Judge that, on the facts of the present case, the right that the State Government has against the writ petitioner is only to sue for damages and that so long as the sum due remains undetermined it cannot be said that any amount is due from the petitioner to the State Government so as to warrant initiation of proceedings under the Revenue Recovery Act. In our opinion, the present case is one where the writ petitioner is liable to pay to the State Government 'a sum certain' which is ascertainable on a mere calculation made in accordance with the terms of the agreement.

9. The resale notification was produced before us by the learned Government Pleader and it is seen therefrom that the resale was of the right to conduct the shop for the full period of two years from 1-4-1971 to 31-3-1973. The liability of the 4th respondent under the said contract of resale can only be for the proportionate kist amount due for the period from 25-8-1971 (on which date the shop was entrusted to her) to 31-3-1973 which work out to Rs. 54,474. What the petitioner is liable to make good to the Government is the difference between the original bid amount of Rs. 90,500/-for which the 3rd respondent had bid the shop and the aggregate of Rupees 18,324.33/- remitted by the 3rd respondent by way of kist and Rs. 54,474/-realisable from the 4th respondent consequent on the resale. That works out to Rs. 17,701.67/- and the interest thereon for the period up till 25-8-1971 (the date of entrustment of the shop to the 4th respondent) comes to Rs. 115/-. These are the amounts that are sought to be realised from the writ petitioner by the impugned notice evidenced by Ext. P-1. The said action cannot be said to be in any way illegal or without jurisdiction. No interference with the proceedings evidenced by Exts. P-1and P-3 was, therefore called for under Article 226 of the Constitution.

10. In the result, we allow this writ appeal, set aside the judgment of the learned single Judge and dismiss O. P. No. 2502 of 1976. The parties will bear their respective costs.


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