Kanshi Ram and Others vs The State of Punjab

Tek Chand, J.—This is a Plaintiffs'' appeal from a decision of the District Judge, Barnala, dismissing their suit on the preliminary issues which had been struck.

The facts of this case are that the Plaintiffs took on lease agricultural land measuring 4,105 bighas, 8 biswas, Kham for Kharif 2006 Bk. and Rabi 2007 Bk for Rs. 41,000. This land was owned by Sardarni Basant Kaur, deceased, widow of Narain Singh of village Bhadaur. The estate of the deceased lady was being managed by the Court of Wards and later on, in 1948, it was escheated to the State. The Plaintiff''s case is that out of 4,105 bighas, 8 biswas kham possession was given to the Plaintiff-lessee of only 3,793 bighas Kham and the possession of remaining 312 bighas, 8 biswas, was not delivered, to the Plaintiffs and, therefore, the lease money due to the State should have been reduced by Rs. 4,000. It was also maintained that a sum of Rs. 8,000 is outstanding against the Defendant in some other account and the Plaintiffs are entitled to adjust that amount in this lease. The Plaintiffs admitted having paid Rs. 27,000 towards the lease money. The Plaintiffs instituted the suit praying that a declaratory decree should be passed to the effect that the Defendant, that is the State of Punjab, is not entitled to recover Rs. 18,438 from Plaintiff No. 1 and that a permanent injunction be issued restraining the Defendant from attaching and auctioning the Plaintiffs'' own land. The Plaintiffs stated that statutory notice u/s 80 of the CPC had been served on the Defendant. In the written statement, it was said on behalf of the Defendant, that the possession of the whole land was delivered to the Plaintiffs and that no amount was outstanding as alleged. The Defendant maintained that a sum of Rs. 18,438 was recoverable from the Plaintiffs. The validity of the notice u/s 80 was contested and legal objections were made to the effect that the Civil Court had no jurisdiction in view of the provisions of Patiala Recovery of State Dues Act, 2002Bk. (Act No. IV of 2002 Bk). It was also contended that it was essential for the Plaintiff that they should deposit the outstanding lease amount in the Court. On 2nd July, 1958, the following two preliminary issues were framed:

(1) Whether this Court has no jurisdiction to try and determine this suit in view of the provisions of Section 11 of the Patiala Recovery of State Dues Act? O.P. on Defendant.

(2) It is incumbent upon the Plaintiff to deposit the amount of Rs. 18,438 u/s 4 of the Revenue Recovery Act before he is entitled to maintain the suit? O.P. on Defendant.

A third issue was added by the District Judge on 20th August, 1958, which runs as under:

(3) Whether the notice u/s 80, Code of Civil Procedure, is not in accordance with law, and there has been a departure from that notice in the plaint? O.P. on Defendant.

Issues on merits had not been framed in this case. On these preliminary issues neither of She parties led any evidence.

The trial Court after hearing arguments dismissed the Plaintiffs'' suit holding that the notice u/s 80 of the CPC was bad and that in view of the provisions of Section 11 of the Patiala Recovery of State Dues Act, the Civil Court is barred from trying the case. No decision was given on issue No. 2, as it was thought unnecessary.

The first issue has been contested before us seriously. In this connection, it will be proper to reproduce the relevant provisions of the Act and the rules made thereunder:

Section 3(1) defines "State Dues" as meaning "any amount due to the Rajpramukh of the State or the State or any department of the State from any person and shall include (a) debts due to the Patiala State Bank or the co-operative societies constituted in the State together with the amount of interest, if any, chargeable till the date of realisation; (b) dues of the Rajindra Gymkhana Club, and (c) such other dues as may from time to time be declared by the Government of the State to be State dues by a notification in the official gazette of the State." Section 3(4) defines "defaulter" a person from whom State dues are due and includes a person who is responsible as surety for the payment of any such dues." Section 4(1) provides that the "head of department shall determine in the prescribed manner the exact amount of State dues recoverable by his department from the defaulter." Section 5(1) provides that "State dues may be recovered by a department through (a) the Nazim who shall proceed to recover such dues as if these were arrears of land revenue, (b) the Accountant-General who shall proceed to recover such dues by withholding payment to the defaulter of any amount payable to him by the State and apply the same towards satisfaction of State dues.

Section 6 provides for the transmission of certificate to the Nazim or the Accountant-General. Section 11 runs as under:

No Civil Court shall have jurisdiction in any matter which the head of department, or any authority or officer authorised by the head of department is empowered by this Act or the rules made thereunder to dispose of, or take cognizance of the manner in which any such head of department, or authority, or officer exercises any powers vested in him or it by or under this Act or the rules made thereunder.

Section 12 confers the rules-making power upon the Government of the State for carrying out the provisions of the Act.

Patiala Recovery of State Dues Rules were made on 8th August, 1945, and Rules 3 to 9 are reproduced below:

[His Lordship read Rules 3 to 9 and continued--]

It will thus be seen that a detailed procedure is provided for determination of State dues. First hand notice is caused to be served on the defaulter in the prescribed manner and an opportunity is given to him to present a written statement of his defences. The head of the department or the inquiry officer, when the defaulter appears, has to examine the objections of the defaulter in his written statement and then he determines the exact amount of State dues recoverable from him. The defaulter then receives a notice from the head of department requiring him to pay the State dues within fifteen days of the date of the service. On his failure to pay the State dues recovery proceedings are started through the Nazim or the Accountant-General. The defaulter has a right of appeal from the order passed and in the event of the rejection of the appeal a revision is competent to the Ijlas-i-Khas. Thus, it will be seen that an elaborate procedure is provided for determination of the State dues and for their recovery.

Mr. Bhagat Singh Chawla, learned Counsel for the Appellants, has argued on the strength of a Single Bench decision that the jurisdiction of the Civil Courts where the liability is contested is not taken away. It was not his contention that there had been any non-compliance of the provisions of the Act or the rules made thereunder. The only question is whether in a case like the present the jurisdiction of the Civil Court has been taken away u/s 11. In State v. Rattan Singh (1959) 61 P.L.R. 753, Mahajan, J., expressed the view that the Patiala Recovery of State Dues Act or the rules made thereunder proceed from a point where admittedly there is a "defaulter" or a "surety". It is only qua a "defaulter" that the Managing Director can determine the liability or the quantum of the debt. He cannot determine complicated and disputed questions relating to the status of a person. According to the learned Single Judge the determination u/s 4 is of the exact amount due from a "defaulter", that is, a person from whom admittedly amount is due and the dispute is as to not that amount is but it cannot be determined whether a person in fact is a "defaulter" or not. According to the learned Single Judge the question whether a person is a "defaulter" is normally within the domain of the ordinary Civil Courts of the realm and cannot be entrusted to the Managing Director of the State Bank who may not have necessary qualifications or the judicial training necessary for the determination of such questions.

The language of the Act does not seem to me to justify an inference that the head of the department, u/s 4, is prevented from going into the question whether the person is a defaulter, that is to say, whether any State dues are recoverable from him. No doubt he is required to determine "the exact amount of State dues recoverable" but these words cannot be so narrowly construed as to suggest that the powers of the head of the department are restricted to calculation of the correct amount in cases where the liability is admitted though there is a dispute as to the quantum of money owed. I do not think that the "defaulter" means a person who admits himself to be so and not a person who contests his liability. Reference to the rules referred, to above makes it abundantly clear that the head of the department, after he has caused a notice to be served on the "defaulter", has to go into the defences which may be raised by the latter in his written statement. The rules provide for appeal and revision if the "defaulter" desires to question the decision of the head of the department. It is not readily conceivable that such an elaborate procedure should have been provided for those cases only where the liability was admitted and there was only dispute as to the exact amount due. The language of the Act and the Rules made thereunder do not lend themselves to the interpretation given by the learned Single Judge. It is true that the Act is drastic in its consequences and that it confers upon heads of departments wide powers in disputes which can more suitably be determined by Civil Courts. If, therefore, the language of the Act is clear, the possible injury which may result from the working of the Act is no ground for striking down the legislative enactment as unconstitutional or for bending the clear language of the Act in order to make its operation less drastic. If the interpretation sought to be given to the Act were to hold good a mere denial of liability should be sufficient to avoid its operation.

This matter came up for consideration before a Division Bench in Tilakram Rambaksh Vs. Bank of Patiala and Others, In that case the Petitioners were a joint Hindu family and admittedly had dealings with the Patiala State Bank and there was a transaction of loan; between the parties out of which the claim in suit had arisen. The Division Bench was of the view that the Act set up a machinery both for the determination of the amount due from a particular person and the recovery of that amount once it was determined. The Bench repelled the contention that the Act was in conflict with Article 19, Clauses (f) and (g) of the Constitution. The Bench expressed the view that there was no substance in the suggestion that the Act set up an unreasonable or arbitrary machinery for the determination of any liability. It was argued before the Bench that the Managing Director was not competent to settle the dispute where the Petitioners were not admitting their liability. It was observed:

There is nothing in this Act or the rules to lend the slightest support to this contention and it is perfectly clear that all disputes about the existence or the extent of the liability of a defaulter can be settled by the head of department. There is, therefore, no point in the suggestion that the Managing Director in this case could not have fixed the liability.

I am of the view that the validity of the Act cannot be successfully assailed and that according to the reasonable interpretation of the relevant provisions of the Act the jurisdiction of the head of the department or of the enquiry officer is not restricted to cases where liability as "defaulter" was not disputed. Section 11 takes away the jurisdiction of Civil Courts in a case like the present and the Plaintiffs cannot turn to a Civil Court for the relief prayed by them.

The trial Court non-suited the Plaintiffs also on the ground that the notice u/s 80 of the CPC was faulty. We have been taken through the statutory notice served by the Plaintiffs on the Defendant and in our view n does not suffer from any lacuna.

The Plaintiffs'' suit does not deserve to succeed on the first issue. The appeal fails and is, therefore, dismissed. In the circumstances of the case, the parties are left to bear their own costs.

K.L. Gosain, J.

I entirely agree.