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PETITIONER: THE COLLECTOR OF MALABAR

       Vs.

RESPONDENT: ERIMAL EBRAHIM HAJEE

DATE OF JUDGMENT: 11/04/1957

BENCH: IMAM, SYED JAFFER BENCH: IMAM, SYED JAFFER DAS, SUDHI RANJAN (CJ) DAS, S.K. MENON, P. GOVINDA SARKAR, A.K.

CITATION:  1957 AIR  688            1957 SCR  970

ACT: Income  Tax--Arrears  of--Wilfully withholding  and  evading payment--Arrest  of  assessee  to  recover  arrears--Whether illegal--Indian  Income Tax Act, s. 46  (2)--Madras  Revenue Recovery  Act  (Mad.  II of 1864),  s.  48-_Constitution  of India, Arts. 14, 19, 21 and 22.

HEADNOTE: The  Income  Tax Officer forwarded a  certificate  under  s. 46(2)  of  the Indian Income Tax Act to  the  Collector  for recovering the arrears of Income Tax from the assesses as if they were arrears of land revenue.  The Collector  proceeded under s. 48, Madras Revenue 971 Recovery Act, and had the assessee arrested and confined  in jail.  Upon a petition for a writ of habeas corpus the  High Court ordered the release of the assessee holding that s. 48 of  the  Madras  Revenue Recovery Act and s.  46(2)  Of  the Indian  Income  Tax  Act were ultra  vires.   The  Collector appealed.   Held,  that S. 48 Of the Madras Revenue Recovery Act,  and S.  46(2) of the Indian Income Tax Act were not ultra  vires and  neither of them violated Arts. 14,19, 21 and 22 of  the Constitution.   Where  the personal liberty of a person is lawfully  taken away  under  Art. 21, i.e., in accordance with  a  procedure established  by a valid law, no question of the exercise  of fundamental rights under Art. 19(1)(a) to (e) and (g) can be raised. A.K.  Gopalan  v.  The State of Madras,  (1950)  S.C.R.  88, followed.   An  arrest  for a civil debt in the process of or  in  the mode  prescribed  by  law for recovery of  arrears  of  land revenue does not come within the protection of Art. 22. State of Punjab v. Ajaib Singh (1953) S.C.R. 254, followed.  Section 46(2) of the Indian Income Tax Act does not  offend Art. 14 and there is no violation of Art. 21 where a  person is  arrested  under s. 48, Madras Revenue Recovery  Act,  in pursuance of a warrant of arrest issued for the recovery  of

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the demand certified under S. 46(2) of the Indian Income Tax Act. Purshottam  Govindji Halai v. Shri B. M.  Desai,  Additional Collector of Bombay, (1955) 2 S.C.R. 887, followed.   Section 46(2) of the Indian Income Tax Act gives authority to the Collector to recover arrears of tax as if it were  an arrear  of land revenue.  Section 48 of the  Madras  Revenue Recovery Act read with s. 5 make it clear that the arrest of the  defaulter is one of the modes by which the  arrears  of land revenue can be recovered, to be resorted to if the said arrears cannot be liquidated by the sale of the  defaulter’s property.   Such an arrest is not for any offence  committed or a punishment for defaulting in any payment.  Section  48  of the Madras Revenue Recovery  Act  does  not require  the Collector to give the defaulter an  opportunity to  be heard before arresting him.  But the  Collector  must have  reason  to  believe that  the  defaulter  is  wilfully withholding payment or has been guilty of fraudulent conduct in  order to evade payment.  Such belief must be based  upon some  material, which a Court may look into  in  appropriate cases,  to  find  out if the conditions  laid  down  in  the section  have  been fulfilled.  The Collector has  also  the power to release the defaulter if the amount due is paid.

JUDGMENT:   CRIMINAL APPELLATE, JURISDICTION: Criminal Appeal No. 145- A of 1954. 972 Appeal  under  Article 132(1) of the Constitution  of  India from  the  Judgment and Order dated July 23,  1954,  of  the Madras High Court in Criminal Miscellaneous Petition No. 922 of 1954.   Porus A. Mehta and R. H. Dhebar, for the appellants.   B. Pocker and B. K. B. Naidu, for the respondent.    1957.  April 11.  The Judgment of the Court was delivered by IMAM J.-The appellant obtained a certificate from the Madras High   Court  to  the  effect  that  the  case  involved   a substantial question of law as to the interpretation of  the Constitution under Art. 132(1), in consequence of which  the present appeal is before us.   The  respondent  had filed a petition in  the  High  Court under s. 491 of the Code of Criminal Procedure praying  that directions in the nature of habeas corpus may be issued  for his production before That Court to be dealt with  according to law and for his release from imprisonment.   The  respondent  had  been arrested on  June  1,  1954  in pursuance  of  a  warrant issued on March 10,  1954  by  the Collector  of  Malabar  under s. 48 of  the  Madras  Revenue Recovery  Act (Madras Act 11 of 1864) (hereinafter  referred to  as  the  Act).   The circumstances,  as  stated  in  the affidavits filed by the Collector and the Income Tax Officer of   Kozikhode  in  the  High  Court,  which  led   to   the respondent’s  arrest,  were, that he had  been  assessed  to income-tax for various assessment years and the total amount of tax remaining outstanding against him, in round  figures, was Rs. 70,000.  Some amount was recovered by the  Collector in  pursuance  of  a certificate issued by  the  Income  Tax Officer  under s. 46(2) of the Indian Income Tax Act and  bY the  Income Tax Officer himself under s. 46(5)A of the  said Act.  After deducting the amount so realised the arrears  of income-tax were about Rs. 61,668 and odd for the  assessment Years  1943-44, 1945 -46 to 1948-49.  Meanwhile  the  Income

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Tax  Officer  had  made enquiries into the  affairs  of  the respondent  and  had  discovered that he  had  sold  certain properties  of his between November 18, 1947 and  March  25, 1948 to 973 the tune of about Rs. 23,100.  Demand notice had been served upon him on November 6, 1947 and the series of  transactions of  sale started on November 18, 1947.  Out of the said  sum of  Rs.  23,100, the respondent paid arrears of tax  to  the extent  of  Rs. 10,500 only.  Enquiries also  revealed  that although the respondent had closed his business at Cannanore in August, 1947, he had set up a firm in 1948 at  Tellichery carrying on an identical business in the name of V.P.  Abdul Azeez  &  Bros. consisting of his one major and  four  minor sons.   The respondent had alleged that the capital of  this firm  was mainly supplied from the sale of jewels  belonging to his wife, that is, Abdul Azeez’s mother.  He denied  that the above-mentioned firm belonged to him.  In the assessment proceedings  before  the Income Tax Officer  concerning  the firm  V.P. Abdul Azeez & Bros., the source of  these  jewels was  gone into, but it was found that the same had not  been proved and it was held that the business of V.P. Abdul Azeez &  Bros. belonged to the respondent.  All these  facts  were communicated to the Collector by the Income Tax Officer  who made  independent  enquiries for himself and had  reason  to believe that the respondent was wilfully withholding payment of arrears of tax and had been guilty of fraudulent  conduct in  evading  payment of tax.  As a certificate  had  already been issued to him by the Income Tax Officer under s.  46(2) of the Indian Income Tax Act, the Collector proceeded  under s.  48 of the Act to issue a warrant of arrest  against  the respondent  in  consequence  of which he  was  arrested  and lodged in Central Jail, Cannanore.   In  the  High Court, the petition under s.  491,  Criminal Procedure Code, was heard by Mack and Krishna. swamy  Nayudu JJ.  which was allowed and they ordered that the  respondent be set at liberty as his arrest was illegal.   Mack J. thought that s. 48 of the Act was ultra vires  the Constitution  as  it offended Art. 22.  He did not  deal  at length  with the argument that s. 48 offended Art. 21 as  he was  of  the opinion that if that section was  ultra  vires, then the respondent had not been arrested in accordance with procedure, established by 974 Saw  and his arrest and imprisonment had been unlawful.   On the  other hand, if s. 48 was intra vires the  Constitution, then  the  respondent  had been  lawfully  deprived  if  his personal  liberty.   He was further of the opinion  that  s. 46(2)  of  the Indian Income Tax Act was ultra vires  as  it offended Art. 14 of the Constitution.   Krishnaswami Nayudu J. was of the opinion that s.46(2)  of the Indian Income Tax Act read with s. 48 of the         Act offended Art. 14 of the Constitution.  He was of the opinion that  s. 48 of the Act offended Art. 21 of the  Constitution to  the  extent  that  it afforded  no  opportunity  to  the arrested person to appear before the Collector by himself or through  a  legal  practitioner of his choice  and  to  urge before  him  any  defence open to him and that  it  did  not provide for the production of the arrested person within  24 hours  before  a  magistrate  as  required  by  Art.  22(2). Relying upon the decision of this Court in A. K. Gopalan  v. The  State  Of Madras (1), he was of the  opinion  that  the contention that the provisions of Art. 21 had been infringed did  not require serious consideration because in so far  as there  was a law on the statute book on which the  Collector

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had  acted that would be sufficient to support the  legality of the action taken by the Collector.   On behalf of the appellant, it was contended that  neither s.  48 of the Act nor s. 46(2) of the Indian Income Tax  Act was  in  violation  of  Arts.  14, 19,  21  and  22  of  the Constitution.   Section 46(2) of the Indian Income  Tax  Act was  a valid piece of legislation and under  its  provisions the  Collector  was  authorized to recover  the  arrears  of income tax as land revenue on receipt of a certificate  from the Income Tax Officer.  On behalf of the respondent it  was contended  that  these sections of the Act  and  the  Indian Income  Tax  Act did offend Arts. 14, 19, 21 and 22  of  the Constitution.   It  was further contended that on  a  proper interpretation of s. 46(2) of the Indian Income Tax Act  the authority   given  to  the  Collector  on  receipt  of   the certificate  from the Income Tax Officer was to recover  the amount of arrears of Income tax, but there was no  authority thereunder in the Collector to arrest  (1) [1950] S.C.R. 88. 975 the defaulting assessee.  Even if the said section could  be interpreted  to give the power of arrest, arrest could  only be  made under s. 48 of the Act.  A proper reading of s.  48 of the Act would indicate that the defaulter should be given an  opportunity  to be heard in his defence, previous  to  a warrant  of  arrest being issued against him,  as  the  same could only issue if the Collector had reason to believe that the defaulter was wilfully withholding the arrears of tax or had  been  guilty of fraudulent conduct in  order  to  evade payment.   Such  a belief could not be  entertained  by  the Collector without first giving the defaulter an  opportunity to  be  heard.   The warrant of arrest  issued  against  the respondent  without hearing him in his defence  wag  invalid and  the arrest of the respondent was illegal.  The  learned Advocate  for the respondent further drew our  attention  to the  fact  that  in s. 48 there was  no  provision  for  the release  of  the  defaulter if he paid  up  the  arrears  of revenue.   What  we have to consider in this appeal, at  the  outset, is,  whether  either  s. 48 of the Act or s.  46(2)  of  the Indian Income Tax Act or both offend Arts. 14, 19, 21 and 22 of  the  Constitution.   The  decisions  of  this  Court  in Gopalan’s case, in The State of Punjab v.Ajaib Singh (1) and in Purshottam Govindji Halai v.Shree B. B. Desai, Additional Collector  of Bombay(2) are to be borne in mind in  deciding this question.   It  was  held  by the majority of the  learned  Judges  in Gopalan’s case that the right "to move freely throughout the territory  of India " referred to in Art. 19 (1) (d) of  the Constitution was but one of the many attributes included  in the concept of the right to " personal liberty " and when  a person is lawfully deprived of his personal liberty  without offending  Art. 21, he cannot claim to exercise any  of  the right$ guaranteed by sub-cls. (a) to (e) and (g) of Art.  19 (1),  for those rights can only be exercised by  a  freeman. In that sense, therefore, Art. 19 (1) (d) has to be read  as controlled  by the provisions of Art. 21, and the view  that Art.  19  guarantees  the  substantive  right  and  Art.  21 prescribes a procedural protection is incorrect. (1) [1953] S.C.R. 254.      (2) [1955] 2 S.C.R. 887. 976 The  decision  in Gopalan’s case has been followed  in  this Court  in  a series of cases and that decision must  now  be taken  as  having  settled once for all  that  the  personal rights guaranteed by sub-cls. (a) to (e) and (g) Of Art.  19

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(1) are in a way dependent on the provisions of Art. 21 just as  the  right guaranteed by sub-cl. (f) of Art. 19  (1)  is subject  to  Art.  31.  If the  property  itself  is  taken; lawfully  under Art. 31, the right to hold or dispose of  it perishes  with  it and Art. 19 (1) (f)  cannot  be  invoked. Likewise, if life or personal liberty is taken away lawfully under  Art.  21 no question of the exercise  of  fundamental rights  under Art. 19 (1) (a) to (e) and (g) can be  raised. Under  Art.  21  "  Procedure established  by  law  "  means procedure  enacted  by a law made by the State, that  is  to say, the Union Parliament or the Legislatures of the States. In the appeal before us, the principal question,  therefore, is  whether  the  respondent was deprived  of  his  personal liberty  in accordance with a procedure established by  law, i.e.,  a  valid law.  If the law is valid then he  has  been lawfully  deprived  of  his personal liberty  and,  in  that situation,  he cannot complain of the infraction of  any  of the fundamental rights mentioned in Art. 19(1)    (a) to (e) or (g). In  Ajaib Singh’s case, a person was taken into  custody  by the police and sent to the Officer-in-charge of the  nearest camp  under  s.  4 of the  Abducted  Persons  (Recovery  and Restoration) Act (Act LXV of 1949) and it was submitted that the said Act contravened the provisions, inter alia, of Art. 22  of  the Constitution.  None of  these  submissions  were found  to  be  valid.  It was held, so far  as  Art.  22  is concerned,  that the taking into custody was not arrest  and detention  within  the  meaning of  Art.  22.   Krishnaswami Nayudu  J.  in his judgment, attempted  to  distinguish  the decision.   With respect to the learned Judge the  principle emerging  out of the decision in Ajaib Singh’s case  appears to  us to be clear enough.  The decision did not attempt  to lay  down in a precise and meticulous manner the  scope  and ambit of the fundamental rights or to enumerate exhaustively the cases that come within the protection of Art. 22.   What was 977 clearly  laid down was that the physical restraint put  upon an  abducted person in the process of recovering and  taking that   person  into  custody  without  any   allegation   or accusation  of  any  actual  or  suspected  or   apprehended commission  by that person of any offence of a  criminal  or quasi-criminal nature or of any act prejudicial to the State or  the public interest, cannot be regarded as an arrest  or detention  within  the meaning of Art. 22.  In  the  present case,  the arrest was not in connection with any  allegation or  accusation  of any actual or  suspected  or  apprehended commission  of any offence of a criminal  or  quasi-criminal nature.   It  was really an arrest for a civil debt  in  the process  or  the  mode prescribed by  law  for  recovery  of arrears of land revenue.   In Purshottam Govindji Halai’s case, this Court held  that there was no violation of Art. 21 of the Constitution  where a  person had been arrested under s. 13 of the  Bombay  Land Revenue Act 1876 in pursuance of a warrant of arrest  issued for  recovery of the demand certified under s. 46(2) of  the Indian  Income Tax Act, which did not offend Art. 14 of  the Constitution, inasmuch as such arrest was under a  procedure established  by law, that is to say, s. 13 of the  said  Act constituted  a  procedure established by law.   Mr.  Pocker, however,  attempted  to distinguish the case,  because  this Court was dealing with s. 13 of the Bombay Act.  The grounds stated  in  that  case for declaring that s.  46(2)  of  the Indian Income Tax Act was not ultra vires the  Constitution, as it did not offend Art. 14, are equally applicable to  the

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present case and we can find no true principle upon which we can distinguish that case from the present one.   In our opinion, having regard to the previous decisions of this  Court referred to above, neither s. 48 of the Act  nor s. 46(2) of the Indian Income Tax Act violates Arts. 14, 19, 21 and 22 of the Constitution.   We  now proceed to -consider the interpretation sought  to be  put by Mr. Pocker on s. 46(2) of the Indian  Income  Tax Act and s. 48 of the Act.  He contended that s. 46(2) of the Indian  Income  Tax Act merely authorised the  Collector  to recover the amount 126 978 of  arrears  of  Income Tax, but it did  not  give  him  any authority  to arrest the respondent.  He submitted that  the act  of arrest was not a mode of recovery of the arrears  of tax,  but  it was a punishment for failure to pay.   We  are unable  to accept this interpretation.  The authority  given to  the Collector by this section is to recover the  arrears of  tax  as  if  it were an arrear  of  land  revenue.   The preamble of the Act clearly states that the laws relating to the collection of the public revenue should be  consolidated and simplified and s. 5 provides for the manner in which the arrears  of revenue may be recovered.  It reads, "  Whenever revenue  may  be  in  arrear, it shall  be  lawful  for  the Collector,  or other officer empowered by the  Collector  in that behalf, to proceed to recover the arrear, together with interest   and  costs  of  process,  by  the  sale  of   the defaulter’s movable and immovable property, or by  execution against  the person of the defaulter in  manner  hereinafter provided."  This  section  clearly  sets  out  the  mode  of recovery  of arrears of revenue, that is to say,  either  by the  sale  of  the  movable or  immovable  property  of  the defaulter, or by execution against his person in the  manner provided by the Act.  Section 48 provides that when  arrears of revenue cannot be liquidated by the sale of the  property of  the  defaulter then the Collector, if he has  reason  to believe  that the defaulter is wilfully withholding  payment of  the arrears or has been guilty of fraudulent conduct  in order to evade payment of tax, can lawfully cause the arrest and  imprisonment of the defaulter.  This section read  with s.  5,  makes  it abundantly clear that the  arrest  of  the defaulter  is  one  of the modes, by which  the  arrears  of revenue  can  be recovered, to be resorted to  if  the  said arrears cannot be liquidated by the sale of the  defaulter’s property.   There is not a suggestion in the entire  section that  the arrest is by way of punishment for  mere  default. Before  the Collector can proceed to arrest  the  defaulter, not merely must the condition be satisfied that the  arrears cannot  be  liquidated by the sale of the  property  of  the defaulter  but  the Collector shall have reason  to  believe that  the defaulter is wilfully withholding payment, or  has been guilty of fraudulent conduct in order to evade 979 payment.  When dues in the shape of money are to be realised by  the  procees of law and not by  voluntary  payment,  the element  of coercion in varying degrees must necessarily  be found  at  all stages in the mode of recovery of  the  money due.  The coercive element, perhaps in its severest form, is the  act  of arrest in order to make the defaulter  pay  his dues.   When  the  Collector  has  reason  to  believe  that withholding of payment is wilful, or that the defaulter  has been guilty of fraudulent conduct in order to evade payment, obviously,  it is on the supposition that the defaulter  can make  the  payment, but is wilfully withholding  it,  or  is

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fraudulently evading payment.  In the Act there are  several sections  (e.g.  ss.  16, 18 and  21)  which  prescribe,  in unambiguous language, punishment to be inflicted for certain acts  done.   It  is clear, therefore, that  where  the  Act intends  to impose a punishment or to create an offence,  it employs a language entirely different to that to be found in s.  48.   We are of the opinion, therefore,  that  where  an arrest  is  made under s. 48 after complying with  its  pro- visions,  the arrest is not for any offence committed  or  a punishment  for  defaulting  in any payment.   The  mode  of arrest  is  no more than a mode for recovery of  the  amount due. There  is  nothing in s. 48 of the Act  which  requires  the Collector  to give the defaulter an opportunity to be  heard before  arresting him.  It is true that the  Collector  must have  reason  to  believe that  the  defaulter  is  wilfully withholding payment or has been guilty of fraudulent conduct in  order to evade payment.  The Collector, therefore,  must have  some material upon which he bases his belief-a  belief which must be rational belief-and a court may look into that material  in appropriate cases in order to find out  if  the conditions  laid down in the section have been fulfilled  or not.   From  the affidavits filed in the High Court  by  the Collector and the Income Tax Officer it is quite clear  that there  was material upon which the Collector could base  his belief that the respondent was wilfully withholding  payment of  the  arrears of -tax and had been guilty  of  fraudulent conduct in order to 980 evade payment.  The Collector was, therefore, justified in arresting the respondent. As  pointed out by Mr. Pocker, s. 48 of the Act does not  in terms provide for the release of the defaulter if he pays up the arrears, but it is to be remembered that in addition  to the powers under s. 48 of the Act, the Collector has,  under the  proviso  to  s. 46(2) of the  Indian  Income  Tax  Act, similar powers to that which a Civil Court has for  recovery of an amount due under a decree.  It was held in  Purshottam Govindji Halai’s case that the proviso is not an alternative remedy  open  to the Collector but only  confers  additional powers  on the Collector for the better and  more  effective application of the only mode of recovery authorized by  sub- see. (2) of s. 46 of the Indian Income Tax Act.  Under s. 58 of  the Civil Procedure Code a Civil Court must release  the judgment debtor if the amount due is paid.  Accordingly, the Collector  has  the power to release the  defaulter  if  the amount  due  is  paid  and there  is  no  substance  in  the submission  of the learned Advocate.  Moreover, one  of  the conditions precedent to action under s. 48 is the  existence of  arrears  of revenue.  On payment of  the  arrears,  that condition  no longer exists and the debtor must  clearly  be entitled to release and freedom from arrest.   It  was  urged that the respondent was a man of  about  70 years at the time of his arrest and a ’Person suffering from serious  ill  health.  Indeed, it is said, he  is  suffering from  paralysis and that he should not be sent back to  jail custody.  We cannot in the present proceedings make such  an order.   The  respondent may, if he is  taken  into  custody again,  approach the Collector for his release who could  do so,  in  the circumstances set out in s. 59 of the  Code  of Civil  Procedure,  in the exercise of his powers  under  the proviso to s. 46(2) of the Indian Income Tax Act.   The  appeal  is  accordingly allowed with  costs  and  the judgment of the High Court is set aside.  It will be open to the  Income  Tax Officer of Kozikhode and the  Collector  of

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Malabar to take such steps against the ’respondent according to law as they may be advised.                           Appeal allowed. 981