Full Judgment Text
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PETITIONER:
INDU BHUSHAN GUPTA
Vs.
RESPONDENT:
STATE OF U.P. & ORS.
DATE OF JUDGMENT01/08/1979
BENCH:
SEN, A.P. (J)
BENCH:
SEN, A.P. (J)
UNTWALIA, N.L.
CITATION:
1979 AIR 1857 1980 SCR (1) 179
1979 SCC (4) 47
ACT:
U.P. Zamindari & Land Reforms Act 1950 Ss. 6, 289(1),
291(3)-Scope of-Taccavi loan taken by agriculturist-If could
be deducted from compensation payable to him for abolition
of Zamindaris.
HEADNOTE:
The appellant and the sixth respondent, who were
brothers, constituted a joint Hindu family. Though younger
in age than the sixth respondent, the appellant by virtue of
a settlement, became Karta. Of the joint family. The family
owned vast Zamindari properties. One of which was a Farm
known as Mukundpur Farm. For the improvement of the Farm the
appellant took taccavi loan by offering his half share in
the joint family property as security. On his failure to
repay the loan the Collector of the District ordered
attachment of the hypothecated property under s. 150 of the
U.P. Land Revenue Act, 1901. The appellant alleged that as a
result of the partition of properties between him and his
brother the hypothecated property fell to the share of his
brother, that under the compromise decree his brother
undertook to discharge the loan and that therefore it was he
who was responsible for repayment of the loan. (The
Government, however was not impleaded as a party to the suit
in which compromise was arrived at between the brothers.)
Sometime later the sixth respondent resiled from the
compromise decree and stated that he was not liable to repay
the loan because it was not taken by the appellant in his
capacity as Karta of the joint family but that it was taken
only in his (appellant’s) personal capacity and that,
therefore, he alone was liable to repay it. The Collector
made enquiries and held that the loan was taken by the
appellant in his individual capacity and not as Karta of the
joint family and held that he was personally liable to repay
the loan. Eventually it was decided that the realisation of
the dues should be made from the hypothecated property as
well as from his person and accordingly proceedings for
realisation of the principal and interest on the loan were
started.
The High Court rejected the appellant’s writ petition.
In appeal the following three questions were raised. ( I )
whether the taccavi loan was taken by the appellant as Karta
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of the joint family, and, therefore, had to be recovered
from the sixth respondent to whose share the hypothecated
property had fallen in the partition of the property; (2)
Whether the Collector was precluded from taking resort to
any one of other modes prescribed by s. 7(1) of the land
Improvement Loans Act, 1883 for recovery of the sum
remaining unrealised towards the taccavi loan; (3) Whether
the Government had no right to recover the outstanding
amount due except from the compensation amount in terms of
s. 6 (e ) thereof ?
^
HELD: 1. The loan in question was taken by the
appellant in his individual capacity and not as Karta of the
joint family. By the terms of the taccavi bond the appellant
had bound himself to discharge the liability from his
property. Even
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assuming that he took the loan as Karta, he was personally
and severally liable to pay. In the compromise suit the
Government was not made a part and therefore, was not bound
by the terms of the compromise decree; nor was the
Government bound by the alleged partition effected between
the. appellant and the sixth respondent. [185-D-E; 186C]
2.(a) Section 7(1) of the Land Improvement Loans Act
empowers the Collector to recover taccavi dues from the
defaulter as arrears of land revenue and the Collector could
have taken resort to s.289(1) of the U.P. Zamindari
Abolition and Land Reforms Act, 1950, for the recovery of
the unrealised amount of taccavi loan by attachment and
sales of properties belonging to the appellant. Section 289
applies only to those cases in which the provision of s.
243(1) have been made applicable and it is nobody’s case
that a notification contemplated by s. 243(2) was ever
issued. The question of s. 289(2) operating as a bar to the
recovery proceedings upon expiry of period of three years,
therefore, does not arise. If s. 289(2) is read in the
context of sub-s. (1) it will be clear that upon the expiry
of the period of three years the village has to be restored
free of claim on the part of the Government for any arrear
of land revenue due in respect thereof. The consequence that
ensures is that liability for payment of land revenue in
respect of the village or any area therein in respect of
which arrears are due stands discharged. But in regard to
other Sums of money recoverable as arrears of land revenue
the liability continues. [186D; G, 187E-F]
(b) As s. 291(3) contemplates that upon expiry of the
period of lease, the holding shall be restored to the
tenure-holder concerned free of any claim on the part of the
State Government for any arrears in respect of such holding.
In this case the period of the lease had not expired when
the recovery proceedings were initiated. [188A-B]
3. Section 6(c) provides that all amounts due under the
Land Improvement Loans Act shall become due forthwith upon
the vesting of the Zamindari right. It also provides that
such dues may, without prejudice to any other mode of
recovery provided therefor, be realised by deducting the
amount from the compensation money payable to such
intermediary. What it provides is an additional mode of
recovery for realisation of the dues. Under the scheme the
Government has the option and the mode indicated in the
section is not the one and the only mode available. The
recovery proceedings pending before the Collector were for
the remainder of the loan after such adjustment together
with interest. [188F-G]
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JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2371 of
1969.
From the Judgment and order dated 23-5-1968 of the
Allahabad High Court in Special Appeal No. 247/66.
G. L. Sanghi, Mrs. S. Bagga for the Appellant.
G. N. Dikshit and O. P. Rana for Respondents 1-5.
S. K. Bagga for Respondent No. 6
The Judgment of the Court was delivered by
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SEN J.-This appeal, by certificate, is directed against
a judgment of the Allahabad High Court dated May 23, 1968,
whereby it upheld a judgment of a Single Judge of that Court
dated March 16, 1966, dismissing the applicants writ
petition to quash recovery proceedings initiated by the
Collector, Azamgarh for realisation of the sum remaining due
on account of a taccavi loan under s.7 (1) of the Land
Improvement Loans Act, 1883.
The facts leading to this appeal, in brief, are as
follows: The appellant and his brother Shashi Bhushan Gupta
the sixth respondent, constituted a joint Hindu family
owning extensive zamindari properties, over several
districts in United Provinces including Azamgarh zamindari
comprising of 34 villages. They owned an agricultural farm
known as Mukundpur Farm situated in Azamgarh zamindari. It
is alleged that by virtue of a family settlement in 1940,
the appellant even though younger in age, became the karta
of the joint family.
By his application dated February 25, 1947 the
appellant applied for a taccavi loan of Rs. 1,22,000 in the
prescribed form for improvement of Mukundpur Farm, to the
Director of Agriculture, United Provinces through the
Collector, Azamgarh. The property offered as security for
advance of the loan was the zamindari rights in Azamgarh
zamindari comprising of the aforesaid 34 villages bearing a
land revenue of Rs. 11,000/-. During the verification
proceedings, the appellant by his application dated February
22, 1948, offered a security of his half share in Azamgarh
zamindari, which on enquiry by the Collector for the grant
of sanction for the loan, was evaluated at Rs. 1,43,869.66p.
The taccavi loan was duly sanctioned by the Government on
September 23, 1948.
The appellant having defaulted in payment of the loan,
the Collector, Azamgarh by his order dated March 24, 1952
directed that the entire ilaqa lying in Tahsil Sagri,
district Azamgarh forming part of the hypothecated property
be attached under s. 150 of the U.P. Land Revenue Act, 1901.
It, however, seems that no attachment of any land situated
in Tahsil Sagri forming part of the hypothecated property
had, in fact’, been effected either under s.150 of the U.P.
Land Revenue Act or s. 289 (1) of the U.P. Zamindari
Abolition and Land Reforms Act, 1950. It appears that some
plots at the Mukundpur Farm lying in two villages, Mahnajpur
and Ghaibipur, were later taken under the management of the
Collector under s. 290 of that Act and half share ’hereof
let out to tenants, and the proceeds were adjusted towards
the
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outstanding taccavi dues. It also appears that a sum of Rs.
38,951.8P representing the appellant’s half share of the
compensation money due ,, and payable to him were adjusted
under s.6 (e) of the Act towards the loan.
It is the appellant’s case that there was a partition
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between the appellant and his brother, the sixth respondent
in 1951, and the hypothecated property was allocated to the
share of the sixth respondent. This resulted in a compromise
decree between the appellant and his brother, the sixth
respondent, in Civil Suit No. 72 of 1952 under the terms of
which, the sixth respondent undertook upon himself the
liability to discharge the loan as the property offered in
security had fallen to his share. In compliance thereof, the
sixth respondent actually paid Rs. 16,012.50P. The
Government was admittedly not impleaded as a party to, the
suit.
On July 15, 1952, the sixth respondent resiled from the
terms of compromise and objected to the recovery proceedings
being taken against him on the ground that the loan in
question had not been taken by him nor had the appellant
borrowed it in the capacity as karta of the joint family.
He, indeed, denied the factum of partition. These objections
were, however, over-ruled by the Sales officer, Azamgarh on
October 22, 1952.
On May 15, 1953, the appellant applied to the State
Government for expunging his name from the debtor-sheet. The
application was forwarded by the Government to the
Collector, Azamgarh for enquiry and report. The appellant
raised an objection alleging inter alia that the loan had
been incurred by him in his capacity as karta of the joint
Hindu family and that since the hypothecated property had
fallen to . to the share of the sixth respondent, he was not
personally liable to repay the loan. The Collector by his
order dated January 18, 1955, after holding an enquiry held
that the appellant had taken the taccavi loan in his
individual capacity and not as karta of the joint family and
accordingly he was personally liable to repay the loan. He,
however, directed the Sales officer that the recovery be
made, in the first .. instance, from the hypothecated
property before proceeding against the appellant personally.
The action taken by the Collector was duly endorsed by the
Land Reforms Commissioner by his letter dated April 7, 1955,
and approved of the State Government by its order dated July
22, 1955. The recovery proceedings were accordingly
initiated against the appellant.
lt appears that the appellant was a Member of the
Legislative Assembly and apparently wielded considerable
influence. He appears
183
to have addressed a representation to the Chief Minister on
April 1(), A 1956. The State Government referred the matter
to the Commissioner, Gorakhpur Division, Gorakhpur who by
his letter dated October 19, 1956 stated that he was fully
in agreement with the Collector that the appellant must be
treated as having taken the loan in his individual capacity
and proceedings for its recovery had to be taken against the
hypothecated property as well as against him personally. The
latter also mentioned that the Collector had been asked, if
necessary, to explain the case personally to the Chief
Minister.
Evidently, the State Government after reviewing the
matter at all levels, by its order dated August 13, 1957
directed that the realisation of the taccavi dues
outstanding against the appellant should be made from the
hypothecated property as well as from his person
immediately. It further directed that ’all the modes for
recovery legally permissible should be adopted against him
simultaneously and pursued vigorously’.
Despite all this, the appellant has not paid a pie
towards the outstanding debt except through coercive
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process. On December 17, 1) 1957, the appellant addressed a
representation to the Board of Revenue although under the
taccavi rules no appeal or revision lay to the Board. It is
somewhat strange that the Addl. Land Reforms Commissioner,
contrary to the Government’s orders in that behalf,
submitted a report, on his own, upholding the appellant’s
contention that he had borrowed the loan in his capacity as
karta of the joint family, and recommending that the loan in
question should be recovered from the hypothecated property.
The state Government naturally did not act upon this
gratuitous advice. On June 19, 1959, the appellant has
informed of the Government’s decision. Thereafter, the
Collector started proceedings for realisation of Rs.
72,152.50P as principal and Rs. 23,689.81P as interest.
Thereupon, the appellant on August 4, 1959 moved the
Allahabad High Court under Art. 226. The appellant’s writ
petition was dismissed by a learned Single Judge. It appears
that the contention that the loan was incurred by him as
karta of the joint Hindu family was not raised before the
learned Single Judge, as he observes "It appears that
recovery proceedings were taken against the Mukundpur Farm,
which, it is not disputed, belongs exclusively to the
petitioner". He negatived the contention that the Collector
had let out a part of the Mukundpur Farm in 1952 and
therefore, after expiry of a period often years, the
Government was precluded by reason of s.291 (3) of the U.P.
Zamindari Abolition and Land Reforms Act from further
continuing the recovery proceedings. He held that this
involved a 13-475 SCI/79
184
disputed question of fact as according to the Government
certain plots of Munkundpur Farm were first let out in 1959-
60 and not in 1952, and therefore, the bar of s.291 (3) was
not applicable. As regards the contention based on s.6 (e)
of the Act that the Government had no power to make the
recovery except from out of the compensation amount, he held
that the provision did not debar the Government from
proceeding otherwise. On the question of accounting he held
that the submission calls for an accounting of the amount
received by such letting out and there was no material upon
which the decision of the Court could rest.
On appeal, the appellant for the first time raised an
objection as to his personal liability alleging that the
loan in question was incurred by him in the capacity of
karta, and, therefore, recoverable from the hypothecated
property alone. There was a difference of opinion on the
question between the learned Judges constituting the Bench
as to whether he had taken the loan as karta of the joint
family or in his individual capacity, but nonetheless the
appeal failed because they repelled all other contentions.
Four questions arise in this appeal: 1. Whether the
taccavi loan was incurred by the appellant as a karta of the
joint Hindu family and not in his individual capacity and,
therefore, the loan in question has to be recovered from the
sixth respondent, inasmuch as the hypothecated property had
fallen to his share in a family partition ? 2. Is the
Collector precluded from taking resort to any one or other
modes prescribed by s.7 (1) of the Land Improvement Loans
Act, 1883, for recovery of the sum remaining unrealised
towards the taccavi loan, by reason of s.289 (2) or s.291
(3) of the U.P. Zamindari Abolition and Land Reforms Act,
1950? 3. Have the Government no right to recover the
outstanding amount due except from the compensation amount
in terms of s.6 (e) thereof? 4. Was the Government bound to
render an account of the rents and profits derived from
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letting out of the plots of Mukundpur Farm?
Section 7 (1) of the Land Improvement Loans Act, 1883,
reads as follows:
"7 (1) Subject to such rules as may be made under
section ten, all loans granted under this Act, all
interest (if any) chargeable thereon, and costs (if
any) incurred in making the same, shall, when they
become due, be recoverable by the Collector in all or
any of the following modes, namely:-
(a) from the borrower-as if they were arrears of
land-revenue due by him;
185
(b) from his surety (if any)-as if they were
arrears of land- A revenue due by him; (c)
(c) out of the land for the benefit of which the
loan has been granted-as if they were arrears
of land-revenue due in respect of that land;
(d) out of the property comprised in the
collateral security (if any)-according to the
procedure for the realization of land-revenue
by the sale of immovable property other than
the land on which that revenue is due."
on the first point, we agree with one of the learned
Judges (Uniyal J.). The conclusion reached by the learned
Judge that ’the taccavi loan was taken by the appellant in
his individual capacity’ is the only conclusion possible.
The appellant maintained that the loan was incurred for
family purposes i.e., for improvement of Munkundpur Farm by
the appellant in his capacity as the karta and it having
fallen to the share of the sixth respondent in the family
partition, the recovery proceedings against the appellant
under s. 7 were not maintainable. We fail to see how can the
appellant escape liability on this account. The Government
was not a party to Civil Suit No. 72 of 1952 and was,
therefore, not bound by the terms of the compromise decree.
Nor was the Government bound by the alleged partition
effected between the appellant and the sixth respondent.
It matters little whether there was a partition or not
in 1951; and if so, whether the hypothecated property had
fallen to the share of the sixth respondent.
The appellant had bound himself by the terms of the taccavi
bond to discharge the liability from his property The
instrument is not on record. The document was, however,
before the High Court. Uniyal J. in the course of his
judgment, with regard to appellant’s personal liability,
observes:
"He pledged his half share in 34 villages of
Tahsil Sagri. After verification of the proprietary
rights of the appellant in the hypothecated property,
the Collector issued a certificate declaring that the
same as sufficient to cover the amount of taccavi loan.
Thereupon a formal document in the nature of taccavi
bond was executed by the appellant of the one part and
the Collector of the other part evidencing the
transaction of loan. A list containing particulars of
the immovable property was annexed to the bond, and it
was stated therein that a half share of the appellant
in the said zamindari property had been pledged by way
of security." (Emphasis supplied)
The correctness of this observation is not open to
question. The learned Judge then goes on to say:
186
"The naqsha maliyat attached to the taccavi bond
clearly mentioned the details of the hypothecated
property in tahsil Saygri consisting of one half share
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of the appellant."
He then rightly concludes, saying:
"It is of no consequence if the creditor proceeds
against the share of the Karta alone in the joint
family property hypothecated as security for the loan,
or from his person, or both."
We concur in the conclusion reached by the learned
Judge that the loan in question was taken by the appellant
in his individual capacity and not as a karta of the joint
Hindu family. Even assuming he took the loan as karta, still
he would be personally and severally liable to repay it.
The remaining points are equally devoid of substance.
The contention based on s. 289 (2) of the U.P. Zamindari
Abolition and Land Reforms Act, 1950 does not arise. No
doubt, the Collector is em powered under s. 7 (1) of the
Land Improvement Loans Act to recover all the taccavi dues
from the defaulter as arrears of land revenue, and by reason
of s. 288, the provisions of s. 289 are attracted. By s. 288
it is provided that the provisions of the Act with regard to
the recovery of arrears of land revenue shall apply to all
arrears of land revenue and’ ’sums of money recoverable as
arrears of land revenue’ due at the commencement of the Act.
The Collector could, therefore, have taken resort to s. 289
(1) for the recovery of the unrealised amount of the taccavi
loan by attachment and sale of properties belonging to the
appellant. But, the ilaka of Tahsil Sagri was not, in fact,
ever attached under s. 289 (1). In the instant case, no
previous sanction of the Board of Revenue was obtained under
s. 272(2). Consequently, the attachment could not be said to
be one made under s. 289 (1). Further, s. 289 applies only
to those cases in which the provisions of s. 243(1) have
been made applicable by the Government under a notification
issued under s. 243 (2) . It is nobody’s case that a
notification contemplated by s. 243 (2) was ever issued. The
question of s. 289 (2) operating as a bar to the recovery
proceedings after expiry of a period of three years,
therefore, does not arise.
There is also a fallacy in the argument. The provisions
of s. 289 run thus.
"289. Attachment of village for arrears of land
revenue.- (1) At any time after an arrear of land
revenue has accrued, the Collector may attach the
village or any area therein
187
in respect of which the arrear is due and place it
under his own A management or that of an agent
appointed by him for that purpose for such period as he
may consider necessary:
Provided that the period for which any village or
any area therein may be so attached, shall not exceed
three years from the commencement of the agricultural
year next following the date of attachment, and the
attachment shall be cancelled if the arrears are sooner
liquidated.
(2) Upon the expiry of the period of attachment,
the village shall be restored free of any claim on the
part of the Government for any arrear of land revenue
due in respect thereof."
When an arrear of land revenue has accrued, the
Collector may under s. 289(1) attach a village or any area
therein in respect of which the arrear is due and place it
under his own management or that of an agent appointed by
him for that purpose. The proviso to s. 289 (1), however,
interdicts that the period for which any village or any area
therein may be so attached, shall not exceed three years
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from the commencement of the agricultural year next
following the date of attachment, and the attachment shall
be cancelled if the arrears are sooner liquidated.
If s. 289 (2) is read in the context of sub-s. (1), it
will be clear that upon the expiry of the period of three
years the village has to be restored free of any claim on
the part of the Government for any arrear of land revenue
due in respect thereof. The consequence that ensues is that
liability for payment of land revenue in respect of the
village or any area therein in respect of which arrears are
due stands discharged. There is a distinction between
arrears of land revenue and other government dues
recoverable as if they were arrears of land Revenue. In
respect of other sums of money recoverable as arrears of
land revenue, the debtor is not discharged of his liability
for payment of such dues even after three years.
The next question is whether by virtue of s. 291 (3),
the appellant stood relieved of all liability for payment of
arrears of taccavi due after the expiry of ten years. We may
here read s. 291 (3). It is in these terms:
"291 (3) Upon the expiry of the period of lease
the holding shall be restored to the tenure-holder
concerned free of any claim on the part of the State
Government for any arrears in respect of such holding."
188
The High Court has relied upon the affidavit of the
Chief Revenue Accountant, Collectorate stating that certain
plots of Mukundpur Farm were for the first time let out in
the year 1959-60. It would, therefore, appear that the
period of ten years had not expired when the recovery
proceedings were initiated.
There remains the question whether the Government is
bound to recover the unrealised sum of taccavi loan from the
amount of compensation money and relying upon s. 6 (e) of
the U.P. Zamindari Abolition and Land Reforms Act it is
urged that is the only remedy left. The contention, we are
afraid, proceeds on a misconception of the purport and
effect of s. 6 (e) of the Act, which reads:
"6(e). all amounts ordered to be paid by an
intermediary to the State Government under Sections 27
and 28 of the U.P. Encumbered states Act, 1934, and all
amounts due from him under the Land Improvement Loans
Act, 1883, or the Agricultural Loans Act, 1884, shall,
notwithstanding anything contained in the said
enactments, become due forthwith and may, without
prejudice to any other mode of recovery provided
therefor, be realized by deducting the amount from the
compensation money payable to such intermediary under
Chapter III."
It is plain upon its terms, that the provisions of s.
6(e) are not obligatory. It is an enabling provision. It
provides that all amounts due under the Land Improvement
Loans Act, shall notwithstanding anything contained therein,
become due ’forthwith’, upon the vesting of the zamindari
rights. It then lays down that such dues may, with out
prejudice to any other mode of recovery provided therefor,
be realised by deducting the amount from the compensation
money payable to such intermediary. It, therefore, provides
an additional mode of recovery for realisation of the dues.
The word ’may’ in s. 6(e) clearly indicates that the
Government has the option to fall back upon the compensation
amount. It does not entail in the consequence that the mode
indicated in s. 6(e) is the one and the only mode available.
The High Court has observed that the entire amount of
compensation money which fell to the appellant’s share
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amounting to Rs. 38,951.8P had been adjusted towards the
loan, on the basis that the half share of the appellant in
the zamindari property had been hypothecated as security for
the loan. The recovery proceedings now pending before the
Collector is for the balance remaining after such adjustment
together with interest.
It was faintly argued by learned counsel for the
appellant that the Government was bound to render an account
of the rents and profits
189
realised from the letting of plots of Mukundpur Farm, but he
did not A pursue the argument any further and rightly so.
The High Court has observed that it had scrutinized the
accounts maintained by the Government and the same have been
maintained as required by the taccavi rules as per appendix
’A’ to Form VII. It was certainly not open to the High Court
to grant any such relief under Art. 226 of the Constitution
particularly when it involved consideration of disputed
question of fact.
The result, therefore, is that the appeal fails and is
dismissed with costs.
P.B.R. Appeal dismissed.
190