IMPORTANT POINT
Prior service of notice of demand of arrears of attachment before sale is not a precondition to deny the statutory presumption available under sub-section (3) of Section 44 of the Kerala Revenue Recovery Act.

ORDER

Leave granted.

We have heard learned counsel on both sides.

2. 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 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 17, 1969. Thereafter, it would appear that the defaulter executed a registered sale deed dated June 30, 1969 for 3 acres 97½ 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, it was reversed. In Second 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. Therefore, the sale made in favour of the respondent 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 one in respect of any immovable property after the service of the written demand on him shall not be binding upon the Government.

(2) Any transfer of immovable 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 his 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 by 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, daughter-in-law, brother-in-law, nephew or niece of the transferor."

3. The effect of engagements & transfers 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 by a defaulter, after public revenue due on any land from him has fallen in arrears, sale was made 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 fallen due and when sale has been effected of the 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 the said date, th