Excerpt
A Writ Petition was filed under Article 226 of the Indian Constitution, for issuing Writ of Certiorarified Mandamus. The objective was to call the records on the file of the Respondent under Tamil Nadu Revenue Recovery Act, 1864 read with Section 29 of the Tamil Nadu General Sales Tax Act, 1959. The prayer was to quash the same and direct the Respondent to raise the encumbrance created by intimation
Facts
The Writ Petition was filed to quash the order passed by the Respondent in ROC/Ref.3205/98-A3 in Form No.5, Form No.7 and Form No.7A dated 31.05.2002 under the Tamil Nadu Revenue Recovery Act, 1864 read with Section 29 of the Tamil Nadu General Sales Tax Act, 1959. Further, issued direction to raise the encumbrance created by intimation.
The petitioner’s husband applied for registration under Section 21 of the Act, as a proprietor for carrying on the business of buying and selling cotton waste. Under Section 21(1-A) of the TNGST Act, 1959, Respondent had directed to furnish security. The security would not exceed one and half of the tax payable on the estimated taxable turnover disclosed in the application for registration, which is only Rs. 2,500. The Petitioner executed a security bond by furnishing her property as security towards the amount due by the firm. The Petitioner was neither the partner of the firm nor participated in the business
The petitioner had purchased the property which was given as security from her savings. These savings belonged to her and was not inherited from any other person including the Proprietor. The security bond was executed only on a contractual basis and was not registered as the registered mortgage of the property of the land as security under Section 58 of TPA, 1882 and Explanation I to Rule 24(15-A) of TNGST Rules. Thus, the security given could not be subjected to revenue recovery under the provisions of the Revenue Recovery Act
Petitioner’s Arguments
The Petitioner submitted that under the Indian Contract Act, a ‘contract of Guarantee’ is a contract to perform the promise. In this case, the security bond was executed by the petitioner. However, such execution of Security Bond was for a limited purpose and not in respect of the entire property. Also, it was in respect of registration. Therefore, as per the Statute, now the respondent had no authority to bring the entire property for auction sale by invoking the provisions of the Revenue Recovery Act.
The Petitioner submits that as per Section 24(2) of the TNGST Act, read along with Rule 24(15-A) of the TNGST Rules, the registration of mortgage property, which was given by way of security was mandatory.
Respondent’s Arguments
The Respondent the other hand, contended that while registering the business, the Petitioner had executed a security bond. The nature of security was well enumerated in the security bond itself. The security bond was clear in terms. Hence, there was no ambiguity in the language adopted in the security bond as well as the undertaking given by the Petitioner, to recover the entire dues if not paid
The security bond was executed while registering the business under the provisions of the TNGST Act. Thus, it was a statutory registration for all purposes. Such registration of the business, as well as the security bond, was under the statutory provisions of the TNGST Act. There was no further necessity to register the mortgage of property under the provisions of the Registration Act.
The Respondent focusing on Section 17(2)(v) of the Registration Act, 1908, argued that the security bond given by the petitioner required no compulsory registration even under the Registration Act
The Respondent had no direct right to deal with the property, which was given by way of security, and admittedly, the petitioner was the owner of the immovable property mentioned in the security bond. She was empowered with the absolute right. Only in the eventuality of non-payment by the Proprietor of the business, the Respondent alone gets the right to invoke the provisions and initiate action to recover from the person, who has given security and against the immovable property.
Thus, there was no direct right vest on the Respondent to initiate action against the property given by way of security bond. Thus, the registration was not required and therefore, the contention raised by the petitioner was unsustainable.
Court’s Observation
The court observed that, in respect of certain documents, compulsory registration was not required. Registration was done to commence the business under the provisions of the TNGST Act. Such registration under the TNGST Act itself was a statutory registration.
The Petitioner in her capacity as a third person had executed a security bond only with an undertaking in the event of non-payment of dues. Thus, the Respondent was at liberty and had a right to initiate action under the provisions of the Act. Under these circumstances, when there was no direct right vested on the respondent to deal with the immovable property, the registration of mortgage of immovable property was not required. Therefore, the submission of the learned Counsel for the Petitioner was to be rejected.
The petitioner submitted the undertaking that in non-payment of statutory dues, the immovable property given by way of security can be attached. The Petitioner thus, cannot turn around and say that her liability was limited. The wife being Class I legal heir successor, was entitled to both right to acquire the property and liable to clear the dues under the Law. However, the said ground was unnecessary with reference to the facts of the case
It was clear that where the security bond was executed as an individual person and further as per Section 21(2-B) of the TNGST Act, where it appeared necessary to the authority granting a certificate of registration under this Section. In the present case, the security bond executed by the petitioner was sufficient enough to meet the dues to be recovered from the Proprietor of the business concerned. Hence, the question of obtaining additional security would not arise
Statutory dues were recoverable and no one could be allowed to escape from the payment of statutory dues. The Court was of an opinion that the provisions were to be interpreted pragmatically and constructively, so as to ensure that the purpose and object of the Statute were meted out and the public interest was protected.
Thus, certain Rules or guidelines formulated for implementing the provisions of the Act and time limits or certain procedures, guidelines contemplated were to be construed as directory. Thus, could not be held mandatory.
Certain guidelines, procedures, and rules were made for the convenience of the authorities to maintain consistency in the implementation of the provisions of the Act. Such procedures were to be interpreted with reference to the spirit of the provisions of the Act and the same could not be read in isolation.
Court’s Decision
The Court held that Constructive Interpretation was to be adopted for the Act, which would prevail over. The Petitioner was not entitled to relief. The Respondent has every right to initiate appropriate action for the recovery of the due as determined. The Writ Petition was devoid of merits and thus was dismissed.
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