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S. Thrimoorthy Chettiar and anr. Vs. the Deputy Tahsildar, Alwaye and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKerala High Court
Decided On
Case NumberO.P. No. 427 of 1982-K
Judge
Reported inAIR1982Ker319
ActsKerala Revenue Recovery Act, 1968 - Sections 71; Transfer of Property Act - Sections 100; Code of Civil Procedure (CPC) - Sections 68 - Order 34
AppellantS. Thrimoorthy Chettiar and anr.
RespondentThe Deputy Tahsildar, Alwaye and ors.
Appellant Advocate P.N. Sankaranarayana Pillai, Adv.
Respondent Advocate Govt. Pleader,; V. Rama Shenoi and; R. Raya Shenoi,
DispositionPetition dismissed
Cases ReferredDamadoran Nair v. Travancore Devaswom Board
Excerpt:
.....section 71 of kerala revenue recovery act, 1968 - petitioner was secured debtor of respondent - notification issued under section 71 for recovery of loan - petitioner contended that notification was not for secured debtors - section does not draw distinction between secured or unsecured debtors - notification applicable to secure debtors also - petitioner liable to pay debts. - - section 71 empowers the government by notification in the gazette to declare, if they are satisfied that it is necessary to do so in public interest that the provisions of the act shall be applicable to the recovery of amounts due from any person or class of persons to any specific institution or any class or classes of institutions and thereupon all the provisions of the act shall be applicable to any..........would contend that any notification issued under section 71 of the act can relate only to simple money loans and not to secured loans. the section itself does not seek to draw any distinction between loans of one category or the other. the reference in the section is to 'recovery of amounts due from', without limiting the same to recovery of amounts due under secured (simple money) loan. therefore contention that notified ion under section 71 can apply only to simple money loans does not appear to be sustainable.5. there is another and more important reason to reject this contention. the main purpose of the act is to provide machinery and procedure for recovery of public revenue. section 3 of the act itself declares that public revenue due on any land shall be the first charge on that.....
Judgment:
ORDER

U.L. Bhat, J.

1. The 1st petitioner, for the purpose of running a Dairy Farm, borrowed a sum of Rs. 50,000/- from the 4th respondent-Bank by executing a promissory note and both the petitioners creating an equitable mortgage over certain items of immovable properties to secure the loan. The loan was to be repaid at the rate of Rs. 100/-per day and should have been discharged by 5-6-1981. A part of the amount duewas paid and there has been long correspondence between the bank and the petitioners as is seen from the documents produced by the Bank. Ultimately, the Bank sought the assistance of the District Collector in getting the outstanding money recovered under the provisions of the Kerala Revenue Recovery Act, 1968 (for short 'the Act'), taking advantage of the Notification SRO 797/79 published in the Kerala Gazette No. 29 dated 17-7-1979 issued by the Government of Kerala under Section 71 of the Act. Under this notification, it has been declared that the provisions of the Act shall be applicable to the amounts due from any person to any bank on account of any loan advanced to such person by that bank for agriculture or agricultural purposes. Explanation (b) of the notification gives an inclusive definition of the words 'agriculture' or 'agricultural purposes' so as to include cattle breeding and dairy farming. The 1st respondent, Deputy Tahsildar, Alwaye who is evidently in charge of the revenue recovery proceedings, issued demand notices Exts. P2 and P3 to the petitioners on 6-1-1982 under Section 34 of the Act calling upon them to pay a sum of Rs. 36,258.60 being the arrears of Bank dues with future interest and bata due in respect of the notices within 10 days from the date of service of the notice and calling upon them to raise objections, if any, to the demand within the period specified. Petitioners have filed the present original petition under Article 226 of the Constitution of India challenging the legality of these two notices.

2. Learned counsel for the petitioners contends that the provisions of the Act can be applied only to simple money loan and cannot be applied to secured loan so long as the security is not exhausted. It is further contended that the resort to provisions of the Act would go against the provisions of the Civil P. C. and Section 68 of the Transfer of Property Act and therefore the notification cannot be interpreted to apply to secured loans and if it is to be so interpreted, it is unconstitutional. Learned counsel for the petitioners also submitted that Exts. P2 and P3 notices do not contain the relevant particulars mentioned in Section 34 of the Act and therefore without anything more the notices are invalid.

3. There is no dispute that the loan was taken from the Bank for the purpose of Dairy Farming. The borrower is a dairy farmer and the purpose of loan is dairy farming. This will attract the Notification No. 797 of 1979, issued by the State Government under Section 71 of the Act. Section 71 empowers the Government by notification in the Gazette to declare, if they are satisfied that it is necessary to do so in public interest that the provisions of the Act shall be applicable to the recovery of amounts due from any person or class of persons to any specific institution or any class or classes of institutions and thereupon all the provisions of the Act shall be applicable to any such recovery.

4. Learned counsel for the petitioners would contend that any notification issued under Section 71 of the Act can relate only to simple money loans and not to secured loans. The section itself does not seek to draw any distinction between loans of one category or the other. The reference in the section is to 'recovery of amounts due from', without limiting the same to recovery of amounts due under secured (simple money) loan. Therefore contention that notified ion under Section 71 can apply only to simple money loans does not appear to be sustainable.

5. There is another and more important reason to reject this contention. The main purpose of the Act is to provide machinery and procedure for recovery of public revenue. Section 3 of the Act itself declares that public revenue due on any land shall be the first charge on that land, the buildings upon it and on the produce thereof. In other words, public revenue, to provide machinery and procedure for the recovery of which the Act has been enacted, is a charge on land i. e., immovable property. To such charges Section 100 of the T. P. Act will squarely be attracted. Section 100 of the T. P. Act says, where immovable property of one person is by act of parties or operation of law made security or the payment of money to another and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge. Section 68 of the T. P. Act on which reliance is placed by the petitioner is certainly one of those provisions relating to simple mortgages which would necessarily apply to charges. Reading Section 3 of the Act along with Section 100 of the T. P. Act, it can be seen that public revenue is a charge on land or immovable property and for such a charge the relevant provisions of the T. P. Act will apply. It is to enable recovery of such public revenue that the Act itself has been enacted. In other words, it cannot be said that because public revenue is a charge on immovable property and the provisions of the T. P. Act provide for recovery of charged amounts through civil suits, the provisions of the Act cannot be applied. To accept such an argument would be to negate the very basis of the Act. The purpose of the Act is to enable the State to devise a simple, inexpensive and expeditious procedure to enable recovery of public revenue due to the State and to prevent a situation where the State is constrained to go through the tortuous process of civil litigation to recover public revenue dues. When this is the background and purpose of the Act, it is difficult to accept that what Section 71 enables is the issue of a notification only to enable recovery of simple money loans and not secured loans or that the notification attractsonly simple money loans.

6. I will now consider the argument basedon the provisions of the Civil P. C. and Section 63 of the T. P. Act. Order 34 of the Civil P. C. deals with suits relating to mortgages of immovable property. According to Rule 4, in a successful suit for sale, the Court shall pass a preliminary decree for sale as laid down in that rule. Rule 5 deals with the final decree to be passed in such a suit for sale. Rule 6 states that where the proceeds of the sale are insufficient to pay the mortgage amount, the Court may pass a decree i. e., a personal decree, for the balance amount. Rule 14 states that when a mortgagee has obtained such a decree for mortgage money, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage. These provisions, it is pointed out have been incorporated on repeal of Sections 90 and 99 of the T. P. Act. Besides these provisions, reference is also made to Section 68(1) and (2) of the T. P. Act. Section 68(1) states that the mortgagee has a right to sue for the mortgage money in the case mentioned therein and no others. Sub-section (2) states that where such a suit is brought under Clause (a) or Clause (b) of Sub-section (1) the Court may at its discretion, stay the suit and all proceedings therein until the mortgagee has exhausted all his available remedies against the mortgaged property or unless he abandons the security etc.

7. It is contended that these provisions exhaust the methods for recovery of secured loans and since these methods are prescribed by Central legislation, and the field is already occupied, the State Legislature has no competence to enact any legislation which will go contrary to the Central legislation. Item 6 of List III of Schedule VII of the Constitution refers to T. P. other than agricultural land and registration of deeds and documents. Item 3 of this list deals with Civil Procedure including all matters included in the Code of Civil Procedure, limitation and arbitration. Item 14 of List II of this schedule takes in agriculture and Item 30 takes in money lending and money lenders; relief of agricultural indebtedness. While there can be no doubt that Civil Procedure and Transfer of Property could be legislated upon by the Central Legislature and it had already so legislated and therefore the State Legislature may not be competent to enact against those provisions, it has to be seen that there is no such legislation contravening or impinging on the Central legislation occupying the field already. It will not be correct to say that the provisions of the Civil P. C. or of the T. P. Act referred to above provide that the procedure or the method contemplated therein alone shall be followed or shall be followed always and that no other procedure or method can in any contingency be followed for recovery of secured loans. That is not the effect of the provisions of the Civil P. C. or of the T. P. Act. Section 9 of this Civil P. C. which is the key to the Code only states that the Court shall have jurisdiction to try suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. It is this section which recognizes the jurisdiction of the Civil Courts to try suits of a civil nature. This does not mean that where the subject-matter of a claim could be brought for decision before a Civil Court by way of a civil suit, any other remedy open to the parties shall be barred. Similarly the provisions of Order XXXIV of the Civil P. C. do not have the effect of declaring that mortgage money cannot be recovered except through the instrumentality of a Civil Court. These provisions have only one effect namely, to declare that when suits are filed for recovery of mortgage money, those suits will have to be disposed of in accordance with the provisions of the Code subject to the rights and liabilities which may have been recognized in Order XXXIV. I state this because learned counsel for the petitioner stated that Civil P. C. cannot be said to be laying down only the procedure. Besides laying down the procedure, there may be provisions of the Code which recognize the existence of rights and liabilities in parties. It is also the enforcement of those rights and liabilities which is to be regulated by the provisions of the Code. Similar is the position with reference to Section 68 of the Transfer of Property Act. Section 68 begins by saying 'The mortgagee has a right to sue for the mortgaged money in the following cases and no others ... .. ...' The effect of the sectionis only that the right of suit, that is the right of approaching a Civil Court on the part of the mortgagee is regulated by the provisions of the section and nothing more. It does nut have the effect of declaring that if a mortgagee has right to recover the mortgaged money otherwise than through the instrumentality of the Civil Court, he cannot resort to those other methods or that when he resorts to other methods, he will be bound by the provisions of Section 68. That is because Section 68 applies only when he sues; where he does not sue, the provisions cannot be applied.

8. Learned counsel for the petitioner also submitted that the provisions of the Civil P. C. and the T. P. Act referred to above have vested certain rights in the mortgagee and those rights once vested in him by virtue of Central legislation cannot be taken away by any provisions of the State legislation or any notification issued by virtue of any provision in a State enactment. It is true that the provisions referred to above can be said if not to vest rights in a mortgagor or for that matter a mortgagee, at least to recognize certain rights in them. But, as already pointed out, these rights and liabilities are limited to the forum of a Civil Court and limited to the occasion of the parties approaching the Civil Court for remedies contemplated in these enactments. This cannot mean that neither the central legislature nor the state legislature can make any enactment providing for other remedies to parties to a mortgage; and this is precisely what has been done by Section 71 of the Act and by the State Government issuing a notification under Section 71 of the Act. I am not able to agree that this in any way contravence the provisions of the enactment passed by the Central legislature. There is no vice of unconstitutionality in the notification providing expeditious remedy to the banks in regard to certain types of loans.

9. The last argument is based on certain omissions in Exts. P-2 and P-3 notices. These notices mention the total amount due from the petitioners. The notices also providesufficient time for payment or for raising objections. There are two defects pointed out in these two notices. One is that the manner in which amounts due has been arrived at is not explained and the other is the mention in the notices that the amounts were due for the year 1979-80. There can be no doubt that the mention of the year 1979-80 is an error. The purpose of Section 34 of the Act insisting on a notice of demand to be issued as explained in the decision of Damadoran Nair v. Travancore Devaswom Board (1961 Ker LJ 37) is to put the parties concerned in saving the tenure from sale, in possession of the knowledge of what really they will have to do, if they desire to save the tenure. It is difficult to accept that the borrowers in this case would have been misled either by the omission or the mistake in the notices. The 4th respondent has produced before this Court the correspondence which passed between the parties. There are at least two documents produced where the petitioners have accepted the correctness of the demand made earlier by the bank. One of them is Ext. R-5 where it has been confirmed that the balance due as on 2-7-1981 was Rs. 40,656,05. In Ext. R-10 the balance due as on 30-9-1981 has been confirmed. It is clear that the parties would certainly not have been misled by the mention of 1979-80 in Exts P-2 and P-3. It is true that the notices do not give the details but the details are within the knowledge of the petitioners as evidenced by Exts. R-5 and R-10. It is therefore dear that the defects in Exhibits P-2 and P-3 notices do not have the effect of prejudicing the petitioners nor will they have the effect of misleading them. Even accepting that there are defects. 1 am not satisfied that considering the conduct of the parties in keeping huge amounts in arrears, this is a fit case for interference under Article 226 of the Constitution. The O. P. is dismissed but, under the circumstances, without costs.


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