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PETITIONER: STATE OF KERALA & ANR.

       Vs.

RESPONDENT: RADHAMANY

DATE OF JUDGMENT:       23/08/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. G.B. PATTANAIK (J)

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Leave granted.      We have heard learned counsel on both sides.      This appeal  by special  leave arises from the judgment and order  of the  High Court  of Kerala  dated February 14, 1989 made  in Second Appeal No.77/83. The admitted facts are that one  Vasudevan was  an Abkari  contractor for  the year 1968-69. He  fell into  arrears in payment of Abkari dues as on April  1, 1969. For the recovery of a sum of Rs.35,497/-, proceedings  were  initiated  under  the  Kerala  a  Revenue Recovery Act,  1968 [for  short, the "Act"] on May 31, 1969. Ex.P-1, a  demand notice was issued on the defaulter on June 30, 1969 for 3 acres 97 1/2 cents of the agriculture land in favour of  his wife.  On February  22, 1969,  the  Tehsildar served a  notice of  attachment of the schedule property for recovery of  the dues. Challenging the notice of attachment, the respondent  filed Suit  O.S. No.94  of  1977  which  was decreed. On  appeal filed by the respondent, by the impugned order dated  February 14,  1989 the learned Single Judge has held that  only if  a demand notice under Section 7 had been served on  the  defaulter  and  the  transfer  was  followed thereafter, the  person becomes  defaulter and  the  arrears could be  recovered. Thus  service of  demand  notice  is  a condition precedent  for recovery of arrears. In the absence of such  a notice,  the  presumption  under  Section  44  is inapplicable is  valid in  law. The  question, therefore, is whether the view  taken by the High Court is correct in law?      Section 44  of  the  Act  reads  as      under:      "44.  Effect   of  engagements  and      transfers  by  defaulter-  (1)  any      engagement  entered   into  by  the      defaulter   with    any   immovable      property after  the service  of the      written demand  on him shall not be      bonding upon the Government.      (2)  Any   transfer  of   immovable

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    property made  by a defaulter after      public revenue due on any land from      his has  fallen  in  arrears,  with      intent  to   defeat  or  delay  the      recovery of such arrears, shall not      be binding upon the Government.      (3)  Where  a  defaulter  transfers      immovable  property   to   a   near      relative or  for grossly inadequate      consideration after  public revenue      due on  any land from has fallen in      arrears, it shall be presumed until      the contrary  is proved  that  such      transfer is  made  with  intent  to      defeat or  delay  the  recovery  of      such arrears  and the  Collector or      the authorised officer may, subject      to the orders of a competent court,      proceed to  recover such arrears of      public revenue  attachment and sale      of the  property so transferred, as      if  such  transfer  had  not  taken      place:      Provided that, before proceeding to      attach such property, the Collector      or the authorised officer shall-      (i) give  default an opportunity of      being heard; and      (ii) record his reasons therefor in      writing.      Explanation-  For  the  purpose  of      this   section,   "near   relative"      includes  husband,   wife,  father,      mother, brother,  sister, daughter,      stepson,  step   daughter,   uncle,      aunt, son-in-law,  nephew or  niece      of the transferor."      The  effect   of  engagements   &  transferors  by  the transferee has been enumerated in sub-sections (1) to (3) of the Act.  Each sub-section is independent of the transaction dealt with  by Section  44. As  regards sub-section (2), any transfer of  immovable property  made  from  him  defaulter, after public  revenue due on any land from him has fallen in arrears, sale  was  with  intent  to  defeat  or  delay  the recovery of such arrears, the sale shall not be binding upon the Government.  The crucial question of application of sub- section [2]  is as  to the  date when  the arrears have land over which  the recovery  could be  fastened. In view of the admitted fact  that arrears  had become  due as  on April 1, 1969 and  the lands came to be sold subsequent to said date, the  sub-section   [2]  stands   attracted  and,  therefore, transfer of immovable property was made by the defaulter was with an  intention to  delay or  defer the  recovery of such arrears.  Therefore,   such  a   sale  does   not  bind  the Government.      Sub-section [3] contemplates another situation; where a defaulter transfers immovable property to a near relation or for grossly  inadequate consideration,  after public revenue on any  land from  his has  fallen in  arrears, it  shall be presumed that  such transfer  was  made  with  intention  to defeat or  delay the recovery of such arrears. The Collector or authorised  officer may,  subject to  the orders  of  the competent authority,  proceed to  recover  such  arrears  by attachment and sale of the property, as if such transfer had not taken  place. The  sale must  be in  favour  of  a  near

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relation  or  for  grossly  inadequate  consideration.  This should be, if the public revenue is due on any land from the defaulter who  is in arrears, prior to sale. In such a case, it shall be presumed, unless contrary is proved, that such a transfer was  made with  intention to  defeat and  delay the recovery of  such arrears.  The State  is entitled to ignore the sale and would proceed to recover the arrears by sale of the said lands.      The question  in this  case is: whether without a prior notice of  demand, a notice of attachment having been issued under sub-section  [3] has  any application? In our view the High Court has committed grave error of law. Sub-section [3] does not  contemplate of  prior service of such a notice. It contemplates that  arrears should  become due  before such a sale was  made and  the sale  must  be  in  favour  of  near relation or  for grossly  inadequate consideration.  If  the consideration was  the statutory  presumption raised is that the transfer  was made  with intention  to  delay  or  defer recovery of  arrears. Such  a sale, therefore, does not bind the Government. The recovery official is entitled to proceed against that  property as  if such  transfer has  not  taken place. The  burden to prove contrary is on the defaulter and the transferee.  What is  a grossly inadequate consideration to a stranger would always be a question of fact each case.      Therefore, prior service of notice of demand of arrears or attachment  before sale  is note  a pre-condition to deny thee statutory  presumption available  under sub-section [3] of Section  44. The  High Court, therefore, was not right in its conclusion  that prior  notice of  demand of  arrears or attachment before sale is a pre-condition.      The appeal  is accordingly  allowed. The  judgment  and order of  the High  Court stands  reversed. We  restore  the decree of the appellate Court dismissing the suit. No costs.