IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH MONDAY, THE 15TH FEBRUARY 2010 / 26TH MAGHA 1931 RSA.No. 152 of 2009() --------------------- AS.356/2003 of I ADDL. DISTRICT COURT, PALAKKAD OS.145/2000 of PRINCIPAL MUNSIFF COURT, PALAKKAD .................... APPELLANT/APPELLANT/PLAINTIFF ------------------------------------------------- BABU M.MATHEW, AGED 38 YEARS. S/O.M.T.MATHEW,BUSINESS, RESIDING AT XIII/1116, WALAYAR ROAD, PUDUSSERY EAST VILLAGE, PUDUSSERY AMSOM,PALAKKAD TALUK. BY ADV. SRI.M.V.PAULOSE RESPONDENT(S): RESPONDENTS -------------------------- 1. THE STATE OF KERALA,REPRESENTED BY THE DISTRICT COLLECTOR, CIVIL STATION, PALAKKAD. 2. THE TAHSILDAR,(REVENUE RECOVERY) PALAKKAD. 3. THE SALES TAX OFFICER,WC & LT, PALAKKAD. GOVERNMENT PLEADER SMT. P.N.SUMANGALA THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 15.2.2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: THOMAS P. JOSEPH, J. -------------------------------------- R.S.A.No.152 of 2009 -------------------------------------- Dated this the 15th day of February, 2010. JUDGMENT Admit. Following substantial question of law is framed for a decision: “Whether the entire joint ownership property can be fastened with liability of one of the joint owners and whether the entire property could be proceeded against as claimed by the respondents”. 2. Second Appeal arises from judgment and decree of learned First Additional District Judge, Palakkad in A.S.No.356 of 2003 confirming judgment and decree of learned Principal Munsiff, Palakkad in O.S.No.145 of 2000. Appellant claimed that the suit property was acquired by him as per Ext.A1, assignment deed No.1067 of 1999 dated 01.03.1999 executed by one K.N.Vijayan and his wife, Santhakumari and since the date of sale he is in possession and enjoyment of the said property as its absolute owner. While so, he received a demand notice dated 18.11.1999 stating that the said Vijayan is liable to pay Rs.88,573/- by way of sales tax arrears and hence the transaction in favour of the appellant as per Ext.A1 is null and void. As per the demand notice amount is stated as due by way of sales tax arrears from 1987-88 to 1993-94. Further case of appellant is that the said Vijayan colluded with officials of the sales tax department and received the entire sales tax collected by the company, M/s.Malabar Cements. Appellant sent reply to the recovery RSA No.152/2009 2 officer on 04.12.1999 stating that the said Vijayan had only half right in the property proceeded against. Notwithstanding that, he got notice dated 25.01.2000 putting up the property for sale on 18.03.2000. Hence the suit for declaration that proceedings initiated by respondents is not legal and proper and for injunction against sale of the suit property. Respondents contended that there is no collusion or fraud between the said Vijayan and sales tax authorities and that the suit is instituted at the instance of Vijayan. Vijayan had undertaken construction work of Malabar Cements and he was assessed for the period from 1987-88 to 1992-93. Notice was issued to the said Vijayan in form No.51 on 04.05.1994 and 11.08.1998. A pre-assessment notice was issued to Vijayan on 10.03.1999 and final order for all the assessment period was served on 18.04.1999. He did not pay the amount. Hence the demand notice. Recovery proceedings are initiated as per the recovery certificate dated 21.07.1999 for realisation of Rs.88,573/-. Sale of property to the appellant was on 01.03.1999. It is contended that departmental proceedings for recovery of sales tax arrears was pending from 04.05.1994 onwards and notice was issued to the defaulter on 11.08.1998. Thereafter the said Vijayan (defaulter) assigned suit property to the appellant to defeat the claim of department. According to the respondents, sale is hit by Section 26A of the Kerala General Sales Tax Act (for short, “the Act”). Trial court found that transfer of the suit property as per Ext.A1 is hit by Section 26A of the said Act, the transfer is void and hence appellant is not entitled to the reliefs prayed for. First appellate court has confirmed that finding of the trial court. That is under challenge in the Second Appeal on the substantial question of law framed above. RSA No.152/2009 3 3. According to the appellant contention raised by the respondents can only relate to the property belonging to the defaulter and assigned to the appellant but not to the property of wife of the defaulter, also conveyed to the appellant as per Ext.A1. Hence department could not proceed against share of wife of defaulter in the suit property for recovery of arrears due from the defaulter. Learned Government Pleader would contend that suit itself is not maintainable in view of Section 72 of the Revenue Recovery Act (for short, “the RR Act”). It is contended that assignment as per Ext.A1 is void in view of Section 26A of the Act. 4. Ext.A1 is the assignment deed relied on by the appellant to claim title and possession of suit property. Suit property is A schedule item in Ext.A1. It is seen from Ext.A1 that the said property belonged to Vijayan, defaulter and his wife, Santhakumari as per assignment deed No.1477 of 1991. Defaulter, Shri K.N.Vijayan had only half right in the suit property as per the said assignment deed and that half right together with remaining half right of his wife was assigned to the appellant as per the recital in Ext.A1. 5. So far as bar under Section 72 of the RR Act is concerned that provision stated that all questions relating to the execution, discharge and satisfaction of a written demand arising between the defaulter and the District Collector or such other officer mentioned therein shall be decided by the District Collector or the Board of revenue as stated therein and not by separate suit. Assuming that Section 72 of the RR Act applied that is only between defaulter or persons claiming under him. So far as Santhakumari, wife of the defaulter (Vijayan) is concerned, she has nothing to do with the sales tax liability of her RSA No.152/2009 4 husband. So far as the half right of Santhakumari acquired by the appellant as per Ext.A1 is concerned, it cannot be said that appellant is claiming under a defaulter. Hence to that extent suit is not hit by Section 72 of the RR Act. I hold that suit is maintainable so far as the half share of Santhakumari acquired by the appellant as per Ext.A1 is concerned. 6. Now the question is whether entire transaction as per Ext.A1 is hit by Section 26A of the Act. It is not disputed before me that so far as Vijayan is concerned, sales tax arrears had fallen due even before Ext.A1. So far as share of Vijayan, the defaulter in the suit property is concerned, as the transaction was made after sales tax arrears fell due, the transaction is void as against the department. As I stated earlier that provision can only concern the half right of defaulter in the suit property acquired by the appellant as per Ext.A1. Section 26A of the Act cannot apply to the remaining half right of Santhakumari in the suit property acquired by the appellant as per Ext.A1. If that be so, department could proceed against only the half right of Vijayan in the suit property acquired by the appellant as per Ext.A1. Courts below have not adverted to this aspect of the matter. Contention of learned Government Pleader that appellant was aware of liability of Vijayan at the time of execution of Ext.A1 and hence in the light of Section 26A of the Act entire transaction as per Ext.A1 is void cannot be accepted. Answering the substantial question of law framed above in favour of the appellant I hold that Section 26A of the Act has no application to the half right of Santhakumari in the suit property acquired by appellant as per Ext.A1. It follows that respondents cannot proceed against that right of appellant in the suit property. To that extent appellant is entitled to RSA No.152/2009 5 the declaration and injunction prayed for. Resultantly Second Appeal is allowed in part. Judgment and decree of the courts below dismissing the suit to the extent it concerned the half share of Santhakumari in the suit property acquired by the appellant as per Ext.A1 is set aside. Appellant is granted declaration and injunction as prayed for in respect of the half right of Santhakumari in the suit property acquired by him as per Ext.A1. I make it clear that respondents can proceed against the remaining half right of Vijayan, the defaulter in the suit property acquired by appellant as per Ext.A1. Parties are directed to suffer their respective cost in the appeal. I.A.No.271 of 2009 will stand dismissed. THOMAS P.JOSEPH, Judge. cks