IN THE HIGH COURT OF KERALA AT ERNAKULAM
SA.No. 400 of 1998(E)
1. THE EXCISE ASST.COMMISSIONER
1. KANIYANKANDI PADMANABHAN
For Petitioner :GOVERNMENT PLEADER
For Respondent :SRI.R.PARTHASARATHY
The Hon'ble MR. Justice P.S.GOPINATHAN
O R D E R
P.S. GOPINATHAN, J.
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S.A. NO. 400 OF 1998
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DATED THIS, THE 14TH DAY OF DECEMBER, 2010
J U D G M E N T
The second appeal was preferred by the defendants 1 to 3in O.S. 223
of 1990 on the file of the Munsiff's Court, Koyilandy. The first respondent
herein instituted the suit against the appellant and another (4th defendant)
seeking a decree of declaration that the revenue recovery proceedings
initiated against the first respondent is barred by limitation and to restrain
the appellants by a decree of permanent prohibitory injunction from
realising any amount from the first respondent by revenue recovery in
pursuance of Ext.A1 notice dated 2.5.1990.
2. The appellants, the State and their officials, contended that the
revenue recovery proceedings initiated were not at all barred by limitation
and that the suit is not maintainable because of the bar under Section 72 of
the Revenue Recovery Act and prayed for dismissal of the suit.
3. After raising the issues, the parties were sent for trial. During the
course of trial, the first respondent was examined as PW.1. The Excise
Inspector, Koyilandy, was examined as DW.1. On the side of the first
S.A. 400/1998 2
respondent, Exts. A1 to A4 were marked. On the side of the appellants,
Exts.B1 to B4 were marked. The learned Munsiff, on appraisal of the
evidence on record, arrived at a finding that since the recovery proceedings
were initiated within thirty years, it is not at all barred by limitation and that
the suit is hit by Section 72 of the Revenue Recovery Act. Consequently,
the suit was dismissed.
4. The first respondent took up the matter in appeal as A.S. 33 of
1993 before the Subordinate Judge, Koyilandy. The Subordinate Judge, by
the impugned judgment dated 7.2.1996, allowed the appeal on entering into
a finding that the period of limitation is only three years and hence revenue
recovery proceedings are barred by limitation and that since appellants 1 to
3 failed to initiate any action against the 4th respondent also, who is jointly
liable for the amount covered by Ext.A1, there is fraud and since there is
fraud on the side of the appellants, the suit is not hit by Section 72 of the
Revenue Recovery Act, as then it was. Consequently, the appeal was
allowed. Now the second appeal.
5. The following are the questions of law that arise for
i. Whether the liability due from the first respondent is barred by
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ii. Whether the failure of the appellants to initiate action against
the second respondent who is jointly liable with the first
respondent would amount to fraud?
6. The brief facts leading to the suit is as follows: Respondents 1
and 2 jointly bid the right to run two toddy shops bearing Nos. 19 and 22 of
Koyilandy Range for the year 1968-69 and 1969-70. After executing Exts.
B1 and B2 agreements, inter alia agreeing to remit the bid amount jointly
and severally, they run the above toddy shops for the relevant years. Since
the respondents failed to discharge the liability as per Exts. B1 and B2,
Ext.A1 demand notice was caused to the first respondent on 2.5.1990. The
first respondent in the plaint would contend that he was liable to pay only
half of the kist amount. According to him, he had paid the same and for the
balance half, the second respondent alone is liable and no revenue recovery
proceedings are sustainable against him.
7. Heard Sri. P.R. Jayakrishnan, learned Government Pleader
and the learned counsel for the respondents.
Point No. 1.
8. Article 112 of the Schedule of the Limitation Act would show
that the period of limitation for a suit on behalf of the State would be 30
years and not three years. Schedule 112 of the Limitation Act reads thus:
S.A. 400/1998 4
Description of suit Period of limitation Time from which period
begins to run
"Any suit (except a suit
before the Supreme Court
in the exercise of its
original jurisdiction) by Thirty years When the period of
or on behalf of the Central limitation would begin to
Government or any State run under this Act against
Government, including the a like suit by a private
Government of the State person."
of Jammu and Kashmir.
Learned counsel for the first respondent fairly conceded that the period of
limitation as against the State is 30 years as stipulated under Article 112.
He had also been fair enough to concede that the appellate court went wrong
in finding that the period of limitation is three years. In the above
circumstances, I find that the period of limitation for instituting a suit by or
on behalf of the Central Government or State Government is 30 years.
Since Ext.A1 notice is within that period the revenue recovery proceedings
are not at all barred by limitation.
9. Exts. B1 and B2 would show that the liability of the respondents
for the kist amount is joint and several. Ext.A1 would show that action was
initiated only against the first respondent. DW.1 had deposed that action
was initiated against the second respondent also for realisation of the
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amount due as per Ext.A1. But the learned Subordinate Judge rejected the
evidence of DW.1 in the light of the plea of the second respondent that no
action was initiated against him for realisation of the amount.
Consequently, it was found that since there is failure on the side of the
appellants to initiate action against the second respondent, there is collusion
in between the appellants and the second respondent. The learned
Subordinate Judge further observed that the appellants should not have
shown any discrimination between respondents 1 and 2. According to the
learned Subordinate Judge, the appellants did not act reasonably and fairly.
Hence it concluded that there is fraud and that when there is fraud, a suit
against the appellants is not at all barred under Section 72 of the Revenue
Recovery Act as then it was. For a correct appraisal of the law and facts, it
would be relevant to read Section 72 of the Revenue Recovery Act, which is
as follows: (Before the amendment by act 31 of 2007)
Section 72:- General bar to jurisdiction of
Civil Courts save where fraud alleged.--
Except as otherwise expressly provided in
this Act, every question arising between the
Collector or the authorized officer and the
defaulter or his representative or any other person
claiming any right through the defaulter, relating
to the execution, discharge or satisfaction of a
written demand issued under this Act or relating to
the confirmation or setting aside by an order under
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this Act of a sale held in execution of such
demand, shall be determined not by suit, but by
order of --
(i) the Board of Revenue, where the
Collector is a party to the question;
(ii) the Collector, in other cases:
Provided that a suit may be brought in a Civil Court in respect
of any such question on the ground of fraud."
A reading of the above provision would show that there is a general bar to
jurisdiction of the civil courts relating to execution, discharge or satisfaction
of a written demand issued under the Revenue Recovery Act except on the
ground of fraud. In view of the amendment made by Act 31/07 with effect
from 12.12.2005 there is absolute bar to the jurisdiction of the civil court.
10. It is not in dispute that by virtue of Exts.B1 and B2 executed by
the respondents, the liability of the respondents are joint and several. Since
the liability of the respondents are joint and several, it is for the State to
decide as to against whom action shall be initiated so as to have the arrears
levied at the earliest. The mere fact that there is failure on the side of the
appellants to initiate action against one of the defaulter would not in any
way amount to fraud mentioned under the proviso to Section 72. The
evidence of DW-1 would show that separate demand notice was served
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upon the second respondent for realisation of the dues. The evidence of
DW.1 on that aspect remains unimpeached. But the appellate court
disbelieved DW.1 for the reason that the second respondent in his
pleadings contended that no action was taken against him. The appellate
judge failed to note that the pleadings of the second respondent on that
aspect was disputed by the appellants and that no legal sanctity can be given
to the disputed pleadings to discredit a witness who withstood the cross
examination. The appellate court thus fundamentally erred in appreciating
the evidence of DW.1. The appellate court ought to have believed the
evidence of DW.1 that action was also initiated against the second
respondent. In this view of the matter, the reason stated by the appellate
court that no action was initiated against the second respondent, to find that
there was fraud, lacks evidentiary support and not sustainable. Adding to
the above, as mentioned earlier, the inaction on the side of the authorities
against one of the defaulter also would not amount to fraud so as to enable
the co-defaulter to challenge the revenue recovery proceedings in a civil
court alleging fraud. Fraud is not defined in the Kerala Revenue Recovery
Act. Since the revenue recovery action was initiated basing upon Exts. B1
and B2 agreements, it would be appropriate to read Section 17 of the
Contract Act which defines fraud as follows:
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" 17. 'Fraud' defined. -- 'Fraud'
means and includes any of the following acts
committed by a party to a contract, or with his
connivance, or by his agent, with intent to deceive
another party thereto or his agent, or to induce him
to enter into the contract:--
(1) the suggestion, as a fact, of that which is
not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one
having knowledge or belief of the fact;
(3) a promise made without any intention
of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law
specially declares to be fraudulent.
Explanation.-- Mere silence as to facts likely to
affect the willingness of a person to enter into a
contract is not fraud, unless the circumstances of
the case are such that, regard being had to them, it
is the duty of the person keeping silence to speak
or unless his silence, is, in itself, equivalent to
If the above definition is given regard, at no stretch of imagination, the
failure of the appellants to take action against the second respondent , if it
is so, would amount to fraud. In the Collins PaperBack English Dictionary
the meaning of the word 'fraud' is given as follows:
"1. deliberate deception, trickery or cheating
intended to gain an advantage.
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2. an act or instance of such deception.
3. Inf. a person who acts in a false or deceitful
Even by applying dictionary meaning, I find that the inaction of the
appellant would in no way amount to fraud. There is no deception,
trickery or cheating intended to gain an advantage. Probably, such inaction
can be termed as discrimination. In fact, there is no discrimination.
Whatever it be, revenue recovery proceedings are not liable to be assailed
in a suit on the ground of discrimination. There is no fraud established
against the appellants so as to invoke the jurisdiction of the civil court to
assail the revenue recovery initiated in pursuance of Ext.A1. The finding
of the appellate court is contrary to law and facts. The suit is misconceived
and hit by Section 72 of the Revenue Recovery act and not maintainable.
In the result, the appeal succeeds. While setting aside the judgment
and decree of the appellate court, the decree and judgment of the trial court
dismissing the suit is restored. The appellants are entitled to get their costs
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P.S. GOPINATHAN, J.
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S.A. NO. 400 OF 1998
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DATED: 14TH DECEMBER, 2010
J U D G M E N T