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HIGH COURT OF BOMBAY
CHAGLA, DIXIT, JJ.
Bank of India
Versus
John Bowman
O.C.J. Appeal No.108 of 1954 and Misc. Appln. No, 239 of 1954
Decided On : 02-12-1954
REVENUE RECOVERY ACT - SECTION 5 - BOMBAY CITY LAND REVENUE ACT - SECTION 11, 13 - CONSTITUTION OF INDIA - ARTICLE 14, 372 - COMMON LAW - PREROGATIVE OF THE CROWN - ATTACHMENT - VALIDITY - PRIORITY OF DEBTS DUE TO THE STATE - CONTRACTUAL DEBTS - EXECUTION PROCEEDINGS - JURISDICTION OF CIVIL COURT - SALE OF PROPERTY.
Fact of the Case:
The Bank of India advanced a loan to the National Tube Wells Company, which was guaranteed by respondent 3. The State of Bombay entered into an agreement with the Company to advance a sum of money, which was also guaranteed by respondent 3. The agreement provided that the amount payable by respondent 3 was recoverable by the State as arrears of land revenue. The State attached respondent 3's properties under Section 13 of the Bombay City Land Revenue Act, 1876, and issued a warrant of sale. The Bank of India filed a suit to realise the loan advanced by them and obtained a consent decree. The Bank attached respondent 3's properties in execution of the decree. The State claimed that it was entitled to sell the properties under Section 13 of the Act and that its claim had precedence over the decree obtained by the Bank.
Finding of the Court:
The Court held that the State was entitled to recover the amount due from respondent 3 under a contract and that by reason of that right a certain sum became recoverable within the meaning of Section 5, Revenue Recovery Act. The Court also held that the contract between the State and respondent 3 was valid and that respondent 3 was bound by that contract. However, the Court held that the State's claim did not come within the ambit of Section 11 of the Bombay City Land Revenue Act, which gave precedence to the State Government in respect of any claim which is recoverable under the provisions of that Act. The Court further held that the State could not override a decree of a competent Court or an execution taken out in respect of a decree unless specially empowered by law. The Court also held that the attachment of respondent 3's properties by the Collector was valid and that the Collector could not disturb the attachment or take the property out of the custody of the Court.
Issues: 1. Whether the State was entitled to recover the amount due from respondent 3 under a contract and that by reason of that right a certain sum became recoverable within the meaning of Section 5, Revenue Recovery Act? 2. Whether the contract between the State and respondent 3 was valid and that respondent 3 was bound by that contract? 3. Whether the State's claim came within the ambit of Section 11 of the Bombay City Land Revenue Act, which gave precedence to the State Government in respect of any claim which is recoverable under the provisions of that Act? 4. Whether the State could override a decree of a competent Court or an execution taken out in respect of a decree unless specially empowered by law? 5. Whether the attachment of respondent 3's properties by the Collector was valid and that the Collector could not disturb the attachment or take the property out of the custody of the Court?
Ratio Decidendi: 1. The Court held that the State was entitled to recover the amount due from respondent 3 under a contract and that by reason of that right a certain sum became recoverable within the meaning of Section 5, Revenue Recovery Act, because the State had the right to recover the amount due from respondent 3 under a contract and by reason of that right a certain sum became recoverable within the meaning of Section 5, Revenue Recovery Act. 2. The Court held that the contract between the State and respondent 3 was valid and that respondent 3 was bound by that contract because the parties who are sui juris can enter into any contract provided it is not opposed to public policy, and the Court saw no reason why it was not open to respondent 3 to agree with the State of Bombay that his debt should be recovered by a particular mode. 3. The Court held that the State's claim did not come within the ambit of Section 11 of the Bombay City Land Revenue Act, which gave precedence to the State Government in respect of any claim which is recoverable under the provisions of that Act, because the State's claim was not against its debtor, the claim of the State was against a third party, the Bank of India, and the claim of the State amounted to this that its claim against respondent 3 must have precedence and priority over the decree obtained by the Bank and the execution taken out by the Bank. 4. The Court held that the State could not override a decree of a competent Court or an execution taken out in respect of a decree unless specially empowered by law because it is not open either to private parties or even to the State contracting with a private party to deprive a third party of his rights under the law. 5. The Court held that the attachment of respondent 3's properties by the Collector was valid and that the Collector could not disturb the attachment or take the property out of the custody of the Court because the attachment was the real thing and that attachment itself is something separate from the mere order of attachment.
Final Decision: The petition was allowed. The order of the learned Judge below was set aside and the Court issued an order and direction upon the Collector not to proceed with the confirmation of the sale. The Court also directed the Court below to proceed with the execution application of the Bank of India in accordance with law. The State of Bombay, respondent 2, was directed to pay half the costs of the petition in the Court below and half the costs of this appeal. There was no order as to costs of respondents 1, 3, 4 and 5 of the petition or of the appeal.
CHAGLA, C.J.:- This is a petition by the Bank of India challenging an attachment levied by the Collector of Bombay under S.13, Bombay City Land Revenue Act, 1876, and also requiring the Court to prevent the Collector from selling the properties under attachment.
2. It appears that the Bank of India, the petitioners, advanced to the National Tube Wells Company a sum of Rs.2,50,000 on 14-2-1953. Respondent 3 guaranteed this loan. On 1-11-1951, a contract was arrived at between the State of Bombay and the National Tube Wells Company with regard to the National Tube Wells Company erecting 400 tube wells in the State of Bombay. Under this contract the tube wells had to be completed by 31-3-1953. On 12-6-1953, another agreement was arrived at between the State of Bombay and the National Tube Wells Company.
By this agreement the Government agreed to advance a sum of Rs.9,75,000 to the Company. This advance was guaranteed by the various directors of the National Tube Wells Company including respondent 3 and the extent of the guarantee of respondent 3 was Rs.2,56,125. Time for the performance of the contract was extended to 31-3-1955. The contract provided that the amount advanced by Government was to be repaid by a certain date.
There was default in payment of that amount. Now, under the agreement of 12-6-1953, respondent 3 along with the other directors had agreed that the sum payable by them was recoverable by the State as arrears of land revenue. On 7-10-1953, the sum of Rs.2,56,125 was demanded by the State. On 10-12-1953, the Collector of Bombay issued a warrant of attachment against three immoveable properties of respondent 3 under S.13, Bombay City Land Revenue Act.
On the same day notices intimating the date of the sale were pasted on these properties. On 5-1-1954, the Bank of India filed a suit in this Court to realise the loan advanced by them on 14-2-1953, and in this suit a consent decree was passed on 23-2-1954. By this consent decree respondent 3 along with others made himself liable to pay the decretal amount. On 16-2-1954, respondent 3 filed a petition challenging the warrant of attachment and the threatened sale by the Collector. The petition was dismissed by Tendolkar J.
Respondent 3 appealed to this Court and this Court upheld the decision of Tendolkar J., and concurred with him in dismissing the petition. This was on 7-4-1954. On 23-4-1954, the Bank of India, in execution of the decree they had obtained, obtained a warrant of attachment from this Court. On 30-4-1954, the Collector gave notice that he would sell the property on 25-5-1954. This sale was postponed to 22-6-1954. On 10-6-1954, the Bank of India obtained a warrant of sale in their execution proceedings.
On 21-6-1954, the Bank of India presented the present petition from which this appeal arises. The trial Judge on an ex parte application made by the bank refused to stay the sale, but issued an injunction against the Collector restraining him from getting the sale confirmed. The result was that the sale has taken place, but the sale has not been confirmed.
On the merits of the petition the learned Judge came to the conclusion that the attachment and the sale held by the Collector were valid and in accordance with law and that the execution proceedings taken out by the Bank of India could not in law prevent the Collector from realising the dues from respondent 3. It is against this decision of the learned Judge that this appeal is preferred.
3. Now, very strong reliance has been placed by the Advocate General on the decision of the Appellate Court in respondent 3s petition, and what has been argued by the Advocate General is that in that decision we held that the contract between the State and respondent 3, by which respondent 3 agreed to his debt being realised as arrears of land revenue, was a valid contract.
We also held that the State was entitled to proceed against respondent 3 under S.13, Bombay City Land Revenue Act and therefore that decision is bi
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