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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • For Appellant/Petitioner/Plaintiff: K.D. Chatterji
  • Janardan Prasad Singh and K.N. Gupta
  • Advs.; For Respondents/Defendant: Uday Sinha
  • Adv.
Judges
  • N.L Untwalia, C.J
  • S.K Jha, J.
Acts
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • For Appellant/Petitioner/Plaintiff: K.D. Chatterji
  • Janardan Prasad Singh and K.N. Gupta
  • Advs.; For Respondents/Defendant: Uday Sinha
  • Adv.
Judges
  • N.L Untwalia, C.J
  • S.K Jha, J.
Acts
See more information ...
Smart Summary

Summary of Judicial Opinion

Factual and Procedural Background

The petitioner is a company incorporated under the Companies Act, 1956, owning a sugar mill at Harkhua in the district of Siwan. A large amount became due from the petitioner to canegrowers for cane supplied to the mill. Under the Bihar Sugarcane (Regulation of Supply and Purchase) Second Ordinance, 1972 (Bihar Ordinance 110 of 1972) arrears of the price of cane, with interest, were made recoverable as a public demand or as arrears of land revenue.

The Collector signed a certificate in Form No. 1 for realization of Rs. 1,37,736,158 P. on account of the price of cane due to the cane-growers; a certificate from the Certificate Officer, Chapra, was also appended. These documents are contained in Annexure 1/1. The petitioner obtained a rule in this Court under Articles 226 and 227 of the Constitution seeking quashing of the certificate proceedings, the certificate/requisition in Annexure 1/1 and the notice issued under Section 7 of the Bihar and Orissa Public Demands Recovery Act, 1914 (the Act).

A counter-affidavit was filed on behalf of respondents 4 and 5 (the Cane Commissioner, Bihar, and the Cane Officer) asserting that the certificate proceeding is valid.

The opinion was delivered by Untwalia, C.J.; S.K. Jha, J. agreed. The writ application was ultimately dismissed.

Legal Issues Presented

  1. Whether a requisition in Form No. 2 under Section 5 of the Act, verified in accordance with Rule 1 of the Rules in Schedule II, ought to have been sent to the Certificate Officer (as alleged by the petitioner).
  2. Whether arrears of the price of cane could be treated as dues payable to the Collector (i.e., whether they could be recovered as arrears of land revenue payable to the Collector) or whether such dues remained payable only to the cane-growers.
  3. Whether the certificate contained in Annexure 1/1 is invalid because it is not in accordance with Section 4 or Section 5 of the Act (including the contention that an incorrectly placed component of the form invalidates the certificate).

Arguments of the Parties

Petitioner's (Appellant's) Arguments

  • A requisition in Form No. 2 under Section 5 of the Act should have been sent to the Certificate Officer and verified in accordance with Rule 1 of the Rules appended as Schedule II to the Act.
  • The dues payable to the cane-growers could not be treated as dues payable to the Collector; therefore no certificate in accordance with Section 4 of the Act could be filed by the Collector.
  • The certificate contained in Annexure 1/1 is invalid because it is neither in accordance with Section 4 nor with Section 5 of the Act (the certificate included a portion which, the petitioner argued, belonged to the requisition form and so was defective).

Respondents' Arguments

  • Respondents (specifically respondents 4 and 5 — the Cane Commissioner and the Cane Officer) filed a counter-affidavit asserting that the certificate proceeding is valid. The opinion does not set out further detailed argumentation from the respondents beyond that assertion.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Dwarka Ram Jagatrenka v. State of Bihar (1963 BLJR 655) That an improperly placed or extra portion of a certificate form (i.e., a misplaced part of a form) may amount to a mere irregularity and does not necessarily invalidate the certificate or the proceedings. The court relied on this decision to treat the latter part of the recital in Annexure 1/1 (a portion appearing to belong to Form No. 2 but appended to Form No. 1) as a mere irregularity which could be ignored; thus the Annexure 1/1 certificate was treated as a valid Form No. 1 certificate under Section 4 of the Act.
The Padrauna Rai Krishna Sugar Works Ltd. v. Land Reforms Commissioner ((1969) 1 SCC 485 : AIR 1969 SC 897) The principle that providing for a mode of recovery of certain dues as arrears of land revenue does not necessarily convert the nature of those dues into arrears of land revenue for all purposes. The court noted that the argument of the petitioner (that recovery as arrears of land revenue could not make such dues payable to the Collector) had been advanced and repelled in that Supreme Court decision; the court used that outcome to reject the petitioner's contention that arrears of cane price could not be recovered by the Collector as arrears of land revenue.
Builders Supply Corporation v. Union of India (AIR 1965 SC 1061) That a statutory provision conferring a mode of recovery (for example, enabling recovery "as if" the arrears were arrears of land revenue) should not be read as converting the fundamental character of the arrear, but directs the Collector to proceed for recovery in the mode of land revenue. The court quoted Gajendragadkar, C.J.'s observation to show that such a provision directs the Collector to proceed to recover the arrears "as if" they were arrears of land revenue; the court relied on this to support the conclusion that the ordinance's provision for recovery as arrears of land revenue made those arrears recoverable by the Collector for the benefit of cane-growers.

Court's Reasoning and Analysis

The court's analysis proceeded in a stepwise fashion, grounded in the text of the applicable ordinance and the statutory scheme of the Act:

  1. The proceedings began under Bihar Ordinance 110 of 1972; clause 43 (consistent across subsequent ordinances, including the 1973 ordinance) made the occupier of a factory liable to pay the price of cane on supply, provided for interest, imposed criminal liability in some cases, and expressly provided that "any arrears of the price of cane, with interest thereon, if any shall be recoverable as public demand or arrears of land revenue."
  2. The court examined the Act's definition of "public demands" (Section 3(6)) and the items in Schedule I. Item 3 of Schedule I expressly covers "Any money which is declared by any law for the time being in force to be recoverable or realizable as an arrear of revenue or land-revenue or by the process authorized for the recovery of arrears of revenue..." — demonstrating that a law can declare money to be recoverable as an arrear of land revenue or as a public demand.
  3. If arrears of cane price are sought to be recovered as arrears of land revenue, they become a public demand payable to the Collector, falling squarely within item 3 of Schedule I. Therefore the petitioner's contention that a requisition under Section 5 (Form No. 2) verified under Rule 1 was mandatory in these circumstances was incorrect, because the Collector, seeking recovery as arrears of land revenue, qualifies as a certificate officer under Section 3(2) and may sign Form No. 1 under Section 4.
  4. The court inspected Annexure 1/1 and Form No. 1 appended to the Rules. The main part of Annexure 1/1 corresponded exactly to Form No. 1 (certificate of public demand under Section 4). Annexure 1/1 also contained a portion that, strictly speaking, should have been part of Form No. 2 (the requisition), but this misplaced portion did not invalidate the certificate. Citing Dwarka Ram Jagatrenka v. State of Bihar, the court treated the misplaced portion as a mere irregularity which could be ignored. The document bore the Collector's signature (the Collector being the certificate officer) and the signature of the officer appointed by the Collector; therefore the certificate was a Form No. 1 certificate valid under Section 4.
  5. Addressing the petitioner's reliance on Supreme Court authorities (Padrauna Rai Krishna Sugar Works Ltd. and Builders Supply Corporation), the court acknowledged the general principle that providing a mode of recovery as arrears of land revenue does not, for all purposes, convert the nature of the dues into land-revenue — but held that this principle, as considered by the Supreme Court, did not support the petitioner's position here. The court quoted Gajendragadkar, C.J. (Builders Supply) to the effect that such a statutory provision indicates that after receiving the certificate the Collector is to proceed to recover the arrears "as if" they were arrears of land revenue.
  6. The court reasoned that if the Padrauna line of reasoning were read to mean that arrears of cane price could not be deemed payable to the Collector when the ordinance expressly provided recovery as arrears of land revenue, there would be no effective mechanism left to recover such arrears as land-revenue arrears. The distinction between recovering a public demand not payable to the Collector and recovering arrears of land revenue payable to the Collector essentially relates to the different procedures for filing certificates (Section 4 vs. Sections 5 and 6). Accepting the petitioner's argument would collapse that distinction and undermine the statutory recovery scheme.
  7. For these reasons the court rejected the petitioner's contentions: the Collector could properly sign a Form No. 1 certificate to recover arrears of cane price as arrears of land revenue; the misplaced portion of Annexure 1/1 was a mere irregularity and did not invalidate the certificate; and the precedents the petitioner relied upon did not mandate nullification of the certificate in the present circumstances.

Holding and Implications

Holding: The writ application is dismissed. The Court held that the certificate contained in Annexure 1/1 was valid and could be treated as a Form No. 1 certificate under Section 4 of the Bihar and Orissa Public Demands Recovery Act, 1914, and that arrears of the price of cane could properly be recovered by the Collector as arrears of land revenue for the benefit of the cane-growers.

Implications:

  • The direct effect is that the petitioner's challenge to the certificate and certificate proceedings fails; the certificate and the recovery proceedings stood upheld.
  • The court ordered dismissal of the writ application and made no order as to costs.
  • The opinion applied existing authorities to the facts but did not purport to lay down a new, broader precedent beyond applying established principles (the decision relies on previous authority to treat form irregularity as curable and to construe statutory provisions as permitting recovery by the Collector in the manner described).

End of summary based exclusively on the provided opinion.

Show full summary ...

    M/S. Vishnu Sugar Mills Ltd. v. State Of Bihar And Others

    Untwalia, C.J:— The petitioner is a company incorporated under the companies Act, 1956, and owns a sugar mill situated at Harkhua in the district of Siwan. A large amount of money became due from the petitioner on account of cane supplied to its mill by canegrowers. Under the Bihar Sugarcane (Regulation of Supply and Purchase). Second Ordinance, 1972 (Bihar Ordinance 110 of 1972) arrears of the price of cane with interest thereon became recoverable as public demand or arrears of land revenue. The Collector therefore signed a certificate in Form No. 1 for realisation of Rs. 1,37,736,158 P. on account of price of cane due to the cane-growers. To this certificate was also appended a certificate from the certificate officer, Chapra, and both are contained in Annexure 1/1. The petitioner obtained a rule from this court under Articles 226 and 227 of the Constitution for the quashing of the certificate proceeding, the certificate or requisition contained in Annexure 1/1 and the notice (Annexure 1) issued under Section 7 of the Bihar and Orissa Public Demands Recovery Act, 1914 (hereinafter called the Act).

    2. A counter-affidavit has been filed on behalf of respondents 4 and 5, namely, the Cane Commissioner, Bihar, and the Cane Officer asserting that file certificate proceeding is valid.

    3. Mr. K.D Chatterji learned counsel for the petitioner, urged the following points to persuade us to invalidate the certificate and the certificate proceeding in this case. (1) that a requisition in Form No. 2 in accordance with Section 5 of the Act ought to have been sent to the Certificate officer verified in accordance with Rule 1 of the Rules mentioned in Schedule II appended to the Act; (2) that the dues payable to the cane-growers could not be treated as dues payable to the Collector and no certificate in accordance with Section 4 of the Act could be filed in this case; and (3) that the certificate contained in Annexure 1/1 is invalid, as it is neither in accordance with Section 4 nor with Section 5 of the Act.

    4. The proceedings were started when Bihar Ordinance 110 of 1972 was in force. It may be mentioned here, although no argument was advanced with reference to this fact, that the said ordinance was replaced by subsequent Ordinances, and the last one which was in vogue at the time of the hearing of the writ case was the Bihar Sugarcane (Regulation of Supply and purchase) Ordinance. 1973 (Bihar Ordinance No. 47 of 1973). Clause 43 of the Ordinance has been the same in all the Ordinances and provides for the payment of Price of cane.

    5. Sub-clause (2)(i) says that as soon as cane is supplied to a factory, the occupier of such factory shall be liable to pay the price of the cane so supplied. The factory is liable to pay interest at the rate specified in Section 51 from the date of the supply in accordance with sub-clause (2)(ii). Apart from the fact that the occupier of the factory has been made criminally liable under sub-clause (5) of clause 43 of the Ordinance, sub-clause (6) provides:

    “Any arrears of the price of cane, with interest thereon, if any shall be recoverable as public demand or arrears of land revenue.”

    6. “Public Demands” are of two kinds. The expression is defined in Section 3(6) of the Act to mean “any arrear or money mentioned or referred to in schedule I, and includes any interest which may by law be chargeable thereon up to the date on which a certificate is signed under Part II.” In schedule I, item 1 is any arrear of revenue which remains due in the circumstances narrated therein. Item 2 also is any arrear of revenue which is due from a farmer on account of an estate held by him in farm. Item 3 is important for our purpose: it says:

    “Any money which is declared by any law for the time being in force to be recoverable or realizable as an arrear of revenue or land-revenue or by the process authorized for the recovery of arrears of revenue or of the Public revenue or of Government revenue.”

    7. Then, item 4 is any money which is declared by any enactment for the time being in force to be a demand or public demand; or to be recoverable as arrears of a demand or public demand, or as a demand or public demand, or to be recoverable under the Bengal Land Revenue Sales Act, 1868. It would thus be seen that a law may declare any money to be recoverable or realisable as an arrear of land revenue or simply as a public demand. It is not disputed that arrears of land revenue are payable to the Collector. It is therefore, clear that the two expressions used in clause 43(6) of the Ordinance permit the recovery of the arrears of the price of cane as public demand or as arrears of land revenue. If it is simply a public demand, then the certificate holders will be either the canegrowers or may be officers of the Cane Department of the Government of Bihar. But if arrears of the price of cane are sought to be recovered as arrears of land revenue, then surely they are sought to be recovered as a public demand payable to the Collector — a demand which is squarely covered by item 3 of schedule I. That being so the argument put forward on behalf of the petitioner that there ought to have been a requisition for a certificate in accordance with Section 5 signed and verified, as required by Rule 1 of the Rules is not correct. Here, the arrears of cane price were sought to be recovered, it is clear, by the Collector as arrears of land revenue. The Collector is primarily a certificate officer within the meaning of S. 3(2) of the Act and the certificate officer, who really is in charge of the certificate proceedings is an officer appointed by the Collector with the sanction of the Commissioner to perform the functions of a certificate Officer under the Act. It is in this background that the certificate in this case contained in Annexure 1/1 has got to be judged.

    8. Form No. 1 appended to the Rules is a certificate of public demand in accordance with Section 4. The first and the main Part including all the columns of the certificate (Annexure 1/1) are exactly in this Form. At page 57 of the Bihar Certificate Manual, 1954, in Form No. 1 is also appended a certificate which is to be signed by the Certificate Officer, if a requisition is sent to him under Section 5 of the Act. Strictly speaking, this latter portion ought to have formed part of Form No. 2 which is the form of requisition for a certificate under Section 5. It seems that because of the wrong placing of the latter certificate in Form No. 1. Annexure 1/1 also contains a certificate in that form signed by the Certificate officer. But this does not invalidate the certificate or the proceeding, as in similar circumstances, it was held by a Bench of this court in Dwarka Ram Jagatrenka v. State of Bihar (1963 BLJR 655) that it is a mere irregularity. The certificate contained in Annexure 1/1 bears the signature of the Collector who is the certificate Officer and it also bears the signature of the Certificate Officer, who is an officer appointed, by the Collector to perform the functions of the Certificate Officer. In my opinion, therefore, the latter Part of the recital of the certificate can very well be ignored and treated as a mere irregularity, and the certificate contained in Annexure 1/1 is a certificate in Form No. 1 in accordance with Section 4 of the Act.

    9. Mr. Chatterji cited two decisions of the Supreme Court in support of his contention that even though arrears of cane price could be recovered as arrears of land revenue arrears of cane price could not be treated as arrears of land revenue for all purposes, and therefore, could not be treated as Payable to the Collector. The citations are The Padrauna Rai Krishna Sugar Works Ltd. v. Land Reforms Commr. ((1969) 1 SCC 485 : AIR 1969 SC 897) and Builders Supply Corporation v. Union of India (AIR 1965 SC 1061). It is no doubt true that providing for the mode of recovery of certain dues as arrears of land revenue cannot make the dues as arrears of land revenue. Such dues cannot be treated as arrears of land revenue for all purposes. Such an argument advanced before the Supreme Court in the case of The Padrauna Rai Krishna Sugar Works Ltd. (1969) 1 SCC 485 : AIR 1969 SC 897, was repelled Similar was the observation of the Supreme Court in paragraph 28 in the case of Builders Supply Corporation, AIR 1965 SC 1061 Gajendragadkar, C.J delivering the judgment on behalf of the court, said in that paragraph with reference to Section 46(2) of the Income-tax Act, 1922:

    “This provision cannot be said to convert arrears of tax into arrears of land revenue either; all that it purports to do is to indicate that after receiving the certificate from the Income Tax Officer, the Collector has to proceed to recover the arrears in question as if the said arrears were arrears of land revenue.”

    10. In my opinion, the observations of Gajendragadkar, C.J extracted above, repeal the argument put forward on behalf of the petitioner. If on the basis of the decision of the Supreme Court in the case of The Padrauna Rai Krishna Sugar Works Ltd. ((1969) 1 SCC 485 : AIR 1969 SC 897) it were to be held that even though arrears of cane price can be recovered as arrears of land revenue, still they cannot be deemed to be payable to the Collector, then nothing would be left for recovering the arrears of cane price as arrears of land revenue. The only distinction between the mode of recovery of a public demand simpliciter not payable to the Collector and arrears of land revenue payable to the Collector is between the different modes of filing the certificate, one under Section 4 and the other in accordance with Sections 5 and 6 of the Act. The difference in items 2 and 4 of Schedule I appended to the Act will vanish if the arguments on behalf of the petitioner were to be accepted as correct. I have, therefore, no difficulty in rejecting this argument and in holding that when the ordinance provides for the recovery of arrears of cane price as arrears of land revenue it provides that the arrears will be payable to the Collector who will recover it as arrears of land revenue for the benefit of the different cane growers.

    11. For the reasons stated above this writ application fails and is dismissed but in the circumsances there will be no order as to costs.

    S.K Jha, J.:— I agree.

    12. Petition dismissed.

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    Comments

    M/S. Vishnu Sugar Mills Ltd. v. State Of Bihar And Others
    (Aug 14, 1973)