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1969 Supreme(Mad) 311
Madras High Court
KRISHNASWAMI REDDY
A.Gnanasikhamony - Appellant
Versus
Palukal Panchayat - Respondent
Decided On : 09/11/1969
T. R. Ramachandran and T. R. Rajagopalan, for Petitioner; S. Padmanabhan, for Respondent; Addl. P. P., for State; C. F. Louis (Amicus Curiae).
The amount due under a contract between a Panchayat and a third party cannot be recovered by distraint and prosecution under Rule 32 of Notification No. 52 framed under Section 178(2)(XXII) of the Madras Panchayats Act, 1958, as it is not covered by the provision.
Headnote:
PANCHAYAT ACT - RECOVERY OF SUMS DUE TO PANCHAYAT - CONTRACTUAL OBLIGATION - NOT COVERED BY RULE 32 OF NOTIFICATION NO. 52 FRAMED UNDER SECTION 178(2)(XXII) OF THE MADRAS PANCHAYATS ACT, 1958 - PROSECUTION FOR DEFAULT NOT MAINTAINABLE.
Fact of the Case:
The petitioner, a contractor who had leased the right to collect fees from a public market from the Palukal Panchayat, defaulted on his payments. The Executive Officer of the Panchayat filed a complaint against the petitioner under Clause 22 of Subsection (2) of Section 178 of the Madras Panchayats Act, alleging that the petitioner had wilfully omitted to remit the market lease amount and had prevented distraint. The petitioner objected to the prosecution on the ground that the amount due under the contract could not be recovered by distraint or prosecution as there was no procedure laid down in the Madras Panchayat Act for such recovery.
Finding of the Court:
The court held that the amount due under the contract was not covered by Rule 32 of Notification No. 52 framed under Section 178(2)(XXII) of the Madras Panchayats Act, 1958, which provides for the recovery of sums due to the Panchayat. The court found that the rule specifically excluded the amount due under a contract from its purview, as it only included sums due under the Act or any other law or rules or by-laws made thereunder.
Issues: Whether the amount due under a contract between a Panchayat and a third party can be recovered by distraint and prosecution under Rule 32 of Notification No. 52 framed under Section 178(2)(XXII) of the Madras Panchayats Act, 1958.
Ratio Decidendi: The court interpreted Rule 32 of Notification No. 52 narrowly, holding that it only included sums due under the Act or any other law or rules or by-laws made thereunder. The court found that the amount due under the contract was not covered by this provision, as it was not due under the Act or any other law or rules or by-laws made thereunder. The court also noted that other statutes, such as the Madras City Municipal Corporation Act, 1919 and the Madras District Municipalities Act, 1920, specifically included the amount due under a contract in their provisions for recovery by distraint and prosecution, but that the Madras Panchayats Act did not. The court concluded that the omission of the amount due under a contract from Rule 32 was deliberate and that the Legislature did not intend to confer the power to recover such amounts by distraint and prosecution on Panchayats.
Final Decision: The court allowed the petition and quashed the proceedings before the Special First Class Magistrate, holding that he had no jurisdiction to entertain the complaint against the petitioner.
ORDER :- This petition has been filed by the accused in C. C. No. 15 of 1967 on the file of the Special First Class Magistrate, Kuzhithurai, against the order of the said Magistrate in overruling the preliminary objection raised by him on the ground that the complaint against him was incompetent as there was no procedure laid down in Madras Panchayat Act for the recovery of the amount due from him under the contract by way of distraint or prosecution.
2. It is necessary to note the facts very briefly for the purpose of appreciating the point raised by the petitioners: The right of collecting fees from Kannumamood public market in Palukal Panchayat was leased out to the petitioner by the Executive Officer, Palukal Panchayat, and a written agreement was entered into between the Executive officer of the Panchayat on one part and the petitioner on the other on 7th April 1966 by which the petitioner had to pay to the panchayat the kist amount in ten monthly instalments at Rs. 1,370.50 and the first instalment was to be paid on 31-1-1967. The petitioner defaulted to pay the instalments and had fallen in arrears to the tune of Rs. 6,320/-. The Executive Officer therefore, filed a complaint before the Special First Class Magistrate, Kuzhithurai alleging that the petitioner had wilfully omitted to remit the market lease amount of Rs. 6,320/- due to Palukal Panchayat for the year 1966-67 in respect of lease contract of the Kannumamood Market. It was alleged in the complaint that the petitioner wilfully prevented distraint. The complaint was instituted under Cl. 22 of Sub-section (2) of S. 178 of the Madras Panchayats Act and violation of condition as per para 3 of the agreement executed by the petitioner on 7-4-1966 and also under Notification No. 52 of G. O. Ms. No. 1248 dated 26-4-1961.
3. The petitioner raised an objection in the lower Court that the amount due under the contract cannot be recovered in the manner provided in Notification No. 52 of G. O. Ms. No. 1248 dated 25-4-1961 and that, therefore, the prosecution was not maintainable. The learned Magistrate by his Order dated 20-9-1967 overruled his objection by stating that the Panchayat Rules did not mention about any contracting party, but it simply says that any sum due to the Panchayat under the Panchayat Act should be recovered by a suit and ultimately held that he can take cognizance of the offence and proceed with the trial.
4. I sought the assistance of Mr. C. F. Louis, Advocate, to assist the Court as the point involved in this case may in the larger interest affect the rights of parties. The question which has to be considered is whether the Panchayat has got any right to prosecute a person for his failure to pay the Panchayat any amount which he agreed to pay as per the agreement entered into between him and the Panchayat. It therefore, becomes necessary to note the relevant provisions of the Madras Panchayats Act, 1958 (hereinafter called 'the Act'). The power to enter into contract is provided under Section 8 sub-section (3) of the Act which is as follows :
"Every Panchayat shall be a body corporate by the name of the village or town specified in the notification issued under Section 3, shall have perpetual succession and a common seal, and, subject to any restriction or qualification imposed by or under this Act or any other law, shall be vested with the capacity of suing or being sued in its corporate name, of acquiring, holding and transferring property, movable or immovable, of entering into contracts and of doing all things necessary, proper or expedient for the purpose for which it is constituted."
Sub-section (2) of Section 99 of the Act relates to levy of fees in a public market. Sub-section (2) of S. 99 runs thus:
"Subject to such rules as may be prescribed, the Panchayat............may after obtaining the previous written permission of the Inspector, "levy any one or more of the following fees in any public market at such rates, not exceeding the maxim
