RAJASTHAN HIGH COURT
Mahendra Bhushan Sharma, J.
Smt. Gulab - Appellant
Versus
State Of Rajasthan and Ors. - Respondent
S.B. Civil Writ Petition No. 785/80.
Decided On : 14-05-1982
LAND REVENUE ACT - SECTION 257 - SURETY - LIABILITY - DETERMINATION - NOTICE - NECESSITY - RECOVERY PROCEEDINGS - ATTACHMENT OF PROPERTY - VALIDITY.
Fact of the Case:
Kalu Ram stood surety for Madan Lal, an Excise Contractor, who was given a Country Liquor contract on a guarantee system. Due to a shortfall in the guarantee amount and a loss resulting from the re-auction of the liquor shop, Madan Lal's liability was determined to be Rs. 58051.41 ps. The District Excise Officer authorized the sale of Kalu Ram's property to recover the dues. Kalu Ram's widow, the petitioner, challenged the attachment and recovery proceedings, arguing that no notice was issued to Kalu Ram or herself, and that the recovery amount exceeded the surety amount of Rs. 15010/-.
Finding of the Court:
The court held that the recovery proceedings against Kalu Ram were initiated without determining his liability as a surety, in violation of the principles of natural justice. The attachment of Kalu Ram's property and the sale proclamation for the recovery of an amount exceeding the surety amount were deemed invalid.
Issues: 1. Whether the recovery proceedings against Kalu Ram were initiated without determining his liability as a surety? 2. Whether the attachment of Kalu Ram's property and the sale proclamation for the recovery of an amount exceeding the surety amount were valid?
Ratio Decidendi: 1. Under Section 257 of the Rajasthan Land Revenue Act 1956, a surety is liable to pay the amount due by the principal debtor if the latter fails to pay. However, the surety's liability must be determined after issuing a notice to the surety and providing an opportunity to be heard. 2. The recovery proceedings against Kalu Ram were initiated without issuing a notice to him or his legal representatives, violating the principles of natural justice. 3. The attachment of Kalu Ram's property and the sale proclamation for the recovery of an amount exceeding the surety amount were not justified, as Kalu Ram had only undertaken to be liable up to Rs. 15010/- under the surety bond.
Final Decision: The court allowed the writ petition, quashing the attachment of Kalu Ram's property, the sale proclamation, and the warrant of sale issued by the District Excise Officer Jodhpur. The authorities were permitted to take recovery proceedings against Kalu Ram's property in accordance with the law, considering the observations made by the court.
(i) That the certificate of recovery is against Madan Lal s/o Sheo Karan Tak of Borunda and on the basis of this certificate, recovery proceedings could not be started by the District Excise Officer against Kalu Ram, husband of the petitioner, without coming to the conclusion on the basis of legal proceedings under Section 257 of the Land Revenue Act 1956 that Kalu Ram the surety is liable to pay the amount as a, surety.
(ii) The Collector did not issue any notice to Kalu Ram during his life time and no notice was issued to the petitioner after the death of Kalu Ram. Thus without a notice they finding, even if any, of the Collector, that Kalu Ram is liable to pay the amount of surety is without jurisdiction.
(iii) That the recovery proceedings are being taken in the name of Kalu Ram deceased husband of, the petitioner and as such, being against a dead person, are nullity in the eye of law.
(iv) That the recovery proceedings are not only arbitrary but are also malafide in as much as thought Kalu Ram under the surety bond had made himself liable to the extent of Rs. 15010/-, but the attachment and sale of the property belonging to Kalu Ram has been affected for the recovery of Rs. 57236.97 ps. the entire amount payable by defaulter Madan Lal.
(v) That under Section 40 of the Rajasthan Excise Act 1950 (for short herein after referred to as "the Act") the amounts payable by any person or his surety are recoverable as arrears of the Land Revenue and hence under Section 257 of the Rajasthan Land Revenue Act 1956 (for short as "the Land Reveuue Act") the recovering authority is bound to hold a proper enquiry as to whether a person has become liable as a surety before proceedings for recovery can be initiated against him.
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