Writ Petition No.2391 of 2006

28th March, 2007

Petitioner Counsel: Mr. P. B. PATIL
Respondent Counsel: Mrs. B. H. DANGRE, Asstt. Govt. Pleader,Mr. A. V. BHIDE

Cases Cited:
Heavy Engineering Mazdoor Union Vs. State of Bihar, AIR 1970 SC 82 [Para 12]
Dat Pethe Vs. District Collector, Ernakulam, AIR 1976 Kerala 37 [Para 12,20]
Western Coalfields Ltd. Vs. Special Area Development Authority, Korba AND Bharat Aluminium Company Ltd. Vs. Special Area Development Authority Korba, AIR 1982 SC 697 [Para 12]
Calcutta State Transport Corporation Vs. Commissioner of Income Tax, West Bengal, AIR 1996 SC 1316 [Para 12]
B. Satyanarayana Vs. State of A.P., AIR 1981 AP 125 [Para 13,18]
State of Kerala Vs. V. R. Kalliyanikutty, (1999)3 SCC 657 [Para 13,19]
Ramanna Shetty's, AIR 1979 SC 1628 [Para 18]
Andhra Pradesh State Road Transport Corporation Vs. The Income Tax Officer, AIR 1964 SC 1486 [Para 20]
State Trading Corporation of India Ltd. Vs. Commercial Tax Officer, AIR 1963 SC 1811 [Para 20]

JUDGMENT

A. H. JOSHI, J.:- Rule. Rule is made returnable forthwith and is heard with consent.

2. Respondent Nos.2 and 3 is a Government Company and undertakes various activities. Its description as given in first para of Return reads as follows:-

"1. At the outset the respondents state that the respondent No.2 is a Government Company and is under total control of the State Government. Government has 100% shares of respondent No.2 Company. The main business of the company is to produce fertilizers and insecticides to the agriculturists and Agro Service Centres and retail and wholesale dealers dealing in sale and purchase agriculture produce. The respondents Nos.2 and 3 thus play a prime role in the matter of agricultural development. The Corporation has given 3% share in profits in Central Government and State Government. The corporation is functioning since 1-4-1989 and it sells fertilizers and insecticides on credit to the dealers like petitioner. ....."

[quoted from page 35 of the paper-book of the Writ Petition].

3. There is trade relationship between the petitioner and the respondent No.2/3, where the respondent No.2/3 had made supply of fertilizers, pesticides etc., to the petitioner and huge amount remained unpaid by petitioner to the respondent No.2/3.

4. The Respondent No.2/3, therefore, issued letter [Annex.A] dated 20th December, 2005 seeking recovery of Rs.6,53,166/- with interest at the rate of 18% per annum. Since it was not honoured, the respondent No.4 issued a Revenue Recovery Certificate dated 6th January, 2006 certifying recovery of Rs.11,68,393/- from the petitioner. This Recovery Certificate under Section 221 of the Maharashtra Land Revenue Code, 1966 was issued by Respondent No.4 and forwarded to the Naib Tahsildar, the Respondent No.5, for recovery of a sum of Rs.11,68,395-00 which is at Annex.1-C dated 20th January, 2006.

5. Thereafter, the respondent No.5 issued to petitioner a notice [Annex.A-1] dated 20th January, 2006 demanding a sum of Rs.11,68,393/- being the sum recoverable as arrears of land revenue, informing that if no reply was received within 20 days from receipt thereof, penalty upto 1/4th of dues could as well be ordered.

6. After the proceedings commenced, under Annexures-G and H respectively, the petitioner herein has paid the sum of Rs.5,28,439/- by cheque dated 22nd March, 2006 and again a sum of Rs.2,71,000/- by cheque No.5284483 dated 9th March, 2006 under protest, and prayed for time to pay the balance, subject to verification for which he had asked for time.

7. At this stage, the petitioner has filed present petition raising the challenge, namely :-

"14. Without prejudice to the aforesaid contentions, it is submitted that even otherwise there is no provision empowering the respondent No.3 to issue the revenue recovery certificate dated 06-01-2006. As per the provisions of Revenue Recovery Act, 1890, these powers are vested with the Collector. In the instant case, the basic contention of the petitioner is that no recovery certificate can be issued as the amount in dispute is neither a land revenue nor the sum recoverable as an arrear of land revenue. Therefore, the provisions which are referred by the respondents for issuing recovery certificate, i.e., Section 221 of MLR Code are not at all attracted therefore the whole action taken on the basis of recovery certificate dated 06-01-2006 is per se illegal, bad in law and, therefore, liable to be corrected at the hands of this Hon'ble Court."

"16. Without prejudice to the aforesaid contentions, the petitioner humbly submits that even otherwise the recovery of arrears of land revenue or the sums recoverable as land revenue is the jurisdiction of Collector, therefore, initiating action by the respondent No.4 Naib Tahsildar is had in law and liable to be quashed and set aside."

"19. The petitioner humbly submits that it is already pointed out that the issuance of recovery certificate by the respondent No.3 itself is without authority under law. Consequently, impugned order of the Collector and initiation of recovery proceedings by Naib Tahsildar are equally bad-in-law. Suffice to say the basic action itself is without jurisdiction. Therefore, it is necessary to stay the recovery proceedings else the petitioner will cause grave hardship and irreparable losses."

[quoted from pages 13, 14, 15 and 16 of the paper-book of the Writ Petition].

8. The contention of the petitioner is that the dues, if any, receivable by Respondent No.2/3, do not constitute any item referred to in Section 221 or any other item "Revenue" or recoverable thereunder based on any law as arrears of land revenue.

9. While approaching this Court for challenging the modalities adopted by the respondents for recovery of amount, which the respondent Nos.2 and 3 claim to be due, the petitioner has also challenged Government Resolution dated 5th October, 1995 about the modalities and procedure for recovery, and made following prayers :-

"(a) quash and set aside recovery certificate dated 06-01-2006 at "Annexure-B" issued by the respondent No.3 and consequential order dated 16-01-2006, passed by the Collector at "Annexure-C" and notice dated 20-01-2006 issued by the respondent No.4 at "Annexure-E" with further declaration that initiation of recovery proceedings bearing No.RRC/71/Nandura/1/2005-2006 are void and illegal;

(b) .......

(c) command the respondent Nos.2 to 5 to refund all amount recovered from the petitioner in Recovery Case No.RRC/71/Nandura/1/2005-2006 with interest at the rate of rupees 18 per cent per annum forthwith;

(d) hold and declare that Clause 1.1 of Government Resolution dated 05-10-1995 is ultra vires to the extent it is contrary to the provisions of Section 221 of the MLR Code read with Rule 17 of the MLR [Realisation of Land Revenue] Rules, 1967 and Article 14 of the Constitution of India;"

[quoted from pages 16, 17 and 18 of the paper-book of the Writ Petition].

10. Learned Advocate Mr. P. B. Patil urges that the recourse to issuance of Revenue Recovery Certificate by the Respondent No.2/3 is exercise of statutory power and jurisdiction which is not vested in him by any law.

Existence of any such power is not inferable by any interpretation, whatsoever.

11. The petition has been opposed on the grounds that the respondent No.2/3 is the Government Company, and if recovery is not done, ultimately, who shall suffer is the State. It is also urged that for all purposes, the respondent No.3 is an instrumentality of State.

12. Learned Advocate Mr. Patil placed reliance on following Judgments:-

(a) Heavy Engineering Mazdoor Union Vs. State of Bihar & others [AIR 1970 SC 82],

(b) Dat Pethe & another Vs. District Collector, Ernakulam and others [AIR 1976 Kerala 37],

(c) Western Coalfields Ltd. Vs. Special Area Development Authority, Korba & another AND Bharat Aluminium Company Ltd. Vs. Special Area Development Authority, Korba & others [AIR 1982 SC 697], and

(d) Calcutta State Transport Corporation Vs. Commissioner of Income Tax, West Bengal [AIR 1996 SC 1316].

These judgments are relied upon to demonstrate that the amount sought to be recovered by respondent No.2/3 does not answer the description of Government dues recoverable as arrears of Land Revenue.

13. While in answer, learned Advocate Mr. Bhide appearing for respondent Nos.2 and 3 relied upon following Judgments:-

(1) B. Satyanarayana & others Vs. State of A.P. & others [AIR 1981 AP 125], and

(2) State of Kerala & others Vs. V. R. Kalliyanikutty and another [(1999)3 SCC 657].

The State Government has passively supported the respondent No.2/3.

14. This Court finds that the case proceeds on admitted facts that what respondent Nos.2/3 have to recover from the petitioner is amount towards supply of goods sold-supplied by them to the petitioner for further sale to the agriculturists. The status of the respondent Nos.2/3 is that of a "distributor" as commercially understood, while status of the petitioner is that of a retailer trading in the products needed for agriculture like any other retailer. The Respondents have not brought on record any material to prove that these supplies were under "Public Distribution System", or were part and parcel of any Govt. grant flowing from revenue and exchequer of State and that the respondent No.2/3 was just an intermediate agency.

The Respondent Nos.2/3 only claim entitled to recovery of sums due to them as arrears of Land Revenue because it is a Government-owned Company.

15. As pointed out by learned Advocate Mr. Patil, the obligation to pay is arising out of commercial transaction. The goods are not delivered to the petitioner by the respondent Nos.2 and 3 in furtherance to any scheme of the State acting under any statute or any other policy of the Government for distribution of Govt. grants.

16. This Court finds that Section 221 of the Maharashtra Land Revenue Code, to which reference is made and reliance has been placed by the respondents needs to be quoted for ready reference. Section 221 is quoted below:-

"221. (1)(a) All sums due on account of land revenue, rent, quit-rents, nazranas, succession duties, transfer duties and forfeitures, cesses, profits from land, emoluments, fees, charges, fines, penalties, water rates, royalty, costs, payable or leviable under this Code or any enactment for the time being in force relating to land revenue;

(b) all moneys due by any contractor for the farm or any tax, duty, cess or fee or any other item of revenue whatsoever, and all specific pecuniary penalties to which any such contractor renders himself liable under the terms of his agreement;

(c) all sums declared by this Code or any Law for the time being in force or by any agreement of contract with the Government to be leviable as an assessment or as a revenue demand or as an arrear of land revenue, shall be levied under the foregoing provisions of this Chapter and all the provisions of this Chapter, shall, so far as may be, applicable thereof.

(2) In the event of the resumption of any farm referred to in clause (b) of sub-section (1), no person shall be entitled to any credit for any payments which he may have made to the contractor in anticipation."

17. Applying rule including liberal construction of the said Section 221, and items referred therein, none of the items for which the provision of revenue recovery may be applied, can be made to extend to recovery of price of goods supplied by a Government Company to its retail dealers.

18. The Full Bench Judgment of Andhra Pradesh High Court in case of B. Satyanarayana & others Vs. State of A.P. And others [AIR 1981 AP 125] consists of a restatement of law as laid down by the Hon'ble Supreme Court in Ramanna Shetty's case [AIR 1979 SC 1628] and the dictum therein needs no further discussion. By said analogy, the Respondent No.2/3 may become amenable to Writ jurisdiction. Moreover. this is not the issue involved in this case. However, the question is as its necessary fallout, the respondent Nos.2/3 get the status of being on par with State Government or any other authority which has been empowered to effect the recovery of the moneys which it is entitled to, or claims to be so, treating itself as a Government or any other analogous authority. While it is a fact that the stakes in the respondent Nos.2 and 3 are substantially of the Government, every transaction of the Government does not get covered by the term "revenue recovery" within Section 221 of the Maharashtra Land Revenue Code.

19. Another Judgment relied upon by learned Advocate Mr. Bhide, in fact, deals with a case of a totally different nature. In this case, namely State of Kerala & others Vs. V. R. Kalliyanikutty & another [(1999)3 SCC 657], the question, that had arisen for decision of the Hon'ble Supreme Court, proceeded on admitted facts that the State Government had permitted the recoveries of Kerala Financial Corporation and the Bank concerned, to make the recoveries of certain loans by taking recourse to the law pertaining to recovery of Land Revenue. It is in the aforesaid admitted background, the Court had to adjudicate the question as to whether the dues, which are barred by Limitation under general Law, should be so continued to be governed by a Law of Limitation. This Judgment of Hon'ble Supreme Court, which is based on admitted facts that the dues were recoverable as arrear of land revenue, and, therefore, this judgment does not serve the purpose of a precedent to govern the case on hand and help the respondent Nos.2 and 3 in any manner.

20. On the other hand, the Judgments relied upon by the petitioner do concurrently lay down a common thread as to who can be regarded to be a State or its agent or like authority. The direct judgment on this point is that of Dat Pethe & another Vs. District Collector, Ernakulam & others [AIR 1976 Kerala 37] where a Single Judge of Kerala High Court, relying upon reported Judgments in cases of Andhra Pradesh State Road Transport Corporation Vs. The Income Tax Officer [AIR 1964 SC 1486] and State Trading Corporation of India Ltd. Vs. Commercial Tax Officer [AIR 1963 SC 1811] and many others, recorded in paras 4 and para 5 of this Judgment, the dictum emerging from Supreme Court Judgments. What the learned Single Judge has recorded reads as below:-

".....The dictum laid down by the Supreme Court in all the decisions appears to be this : It may be that the investment in the Corporation is that of the Government, either of the Central of the State. The Government may have voice in the management, and even control, both administrative and financial, over the affairs of the companies or corporations; it may have the power to nominate members to the governing body and also depute officers for the day-to-day working of the concern. In spite of all these controls, a corporation cannot be considered to be a department of the Government or agent of Government; nor are their employees Government servants in the absence of any statutory provisions conferring such status on them. That a Minister appoints the members or directors of the Corporation and that he is entitled to call for information, to gave directions which are binding on the directors, and to supervise the conduct of the business of the Corporation, are certain characteristics relied on by the Government Pleader in support of his contention that the Corporation has the status of an agent of Government. I find this contention untenable."

In para 5 of the said Judgment, Hon'ble Supreme Court held that State Transport Corporation did not constitute to be "a Local Authority."

Thereafter, referring to the dues, the learned Judge further observed in para 6 as follows:-

"6. The amount referred to is what is due to the 'Corporation' as distinct from what was due to Government or the Collector. As the amount is not due to the Collector or to the Government the 5th respondent does not derive jurisdiction to issue the certificate for recovery of the amount as arrears of land revenue. All that the Section contemplates is that the amount is recoverable as arrears of land revenue; and that is possible only by adhering to the procedure prescribed in the Act."

21. Other Judgments relied upon by learned Advocate Mr. Patil need not be referred in detail.

22. The interpretation noted above reveals a general rule, namely that for enabling the recovery to be done under the provisions of law as a Revenue Recovery, there has to be a duty attached to the person liable to make the payment to pay it to the payee as "arrears of land revenue" per se or created by any provisions in law, and the dues have to be conferred the status of "Land Revenue."

23. This Court, therefore, reaches a conclusion that the petitioner has made out a case that the Maharashtra Agro Industries Development Corporation Ltd., which is described in the petition with the title " Maharashtra Krushi Udyog Vikas Mahamandal Maryadit", though is a Government Company, moneys recoverable by it, subject matter, are not per se the 'Land Revenue', and recoverable as such. The Recovery Certificate, in question, is, therefore, liable to be quashed and set aside.

24. The question then remains and needs to be decided is as to whether the amount paid under this Certificate should be ordered to be refunded. We find that while the petitioner has called for the details in his reply to notices of demand served by Tahsildar through Annexures-F & G and wanted verification of accounts. The petitioner has not disputed the transactions or liability. In this background, this Court finds that it is not necessary to direct any refund. It would be open to the parties to sit together and settle the accounts, and in the event of its failure, to take recourse to the measures of Alternate Dispute Resolution by way of conciliation, arbitration or otherwise, and resolve the controversy.

25. In this background, this Court finds that this Court would be required to issue a Writ of Certiorari and quash the Certificate of Revenue Recovery [Annex.B] dated 6th January, 2006, issued by the respondent No.2. This Court clarifies that the amount made over by the petitioner to the respondents need not be refunded, and shall be appropriated by the respondent Nos.2 and 3 towards its dues recoverable against supplies made. Parties may settle the accounts as to exact dues and if anything is found due in appropriate proceedings and recover it according to law unless mutually settled.

In the circumstances, we direct the parties to bear their own costs.

26. Rule is made absolute in terms of para 25 above.

Petition allowed.