State of Kerala and Others vs C. M. Francis and Co

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 279 of 1959

Decision Date: 12 December 1960

Coram: M. Hidayatullah, J.L. Kapur, J.C. Shah

In this matter the State of Kerala and other persons filed a petition against C. M. Francis and Co. The appeal was heard by the Supreme Court of India on 12 December 1960. The judgment was authored by Justice M. Hidayatullah, who was joined on the bench by Justices J. L. Kapur and J. C. Shah. The case is reported in the 1961 volume of the All India Reporter at page 617 and in the 1961 Supreme Court Reports (Third Series) at page 181. Additional citations record the decision as 1961 SC 619, 1967 SC 295, and 1979 SC 1588. The statutory framework involved the Travancore‑Cochin General Sales Tax Act (XI of 1125 Malayalam Era), particularly sections 13 and 19, and the Code of Criminal Procedure, 1898, section 386(1)(b). The petition was presented by counsel for the appellants, while the respondents did not appear before the Court.

The respondents had been assessed sales tax under the Travancore‑Cochin General Sales Tax Act for the years 1950 to 1954, and the authorities initially commenced recovery proceedings under section 13 of that Act, treating the unpaid tax as arrears of land revenue. Those proceedings failed to yield payment, after which the authorities instituted a prosecution under section 19 of the Act against the partners of the firm. Several partners pleaded guilty, and the magistrate issued warrants pursuant to section 386(1)(b) of the Code of Criminal Procedure directing the district collector to recover the tax arrears as if they were a fine imposed by the court. Subsequently, the authorities again invoked section 13, read with the Travancore‑Cochin Revenue Recovery Act of 1951, and attached certain properties of the respondents. The respondents contended that because a prosecution under section 19 had already been pursued and warrants had been issued, the procedure provided by section 13 could no longer be employed. The central question before the Court was whether the provisions of section 19 were intended to prevail over those of section 13. The Court held that neither remedial provision extinguishes the other; unless the statute expressly or necessarily implies that one remedy excludes the other, both remedies remain available to the authorities, who may elect to use either one. This principle was affirmed by reference to the earlier decision in Shankar Sabai v. Din Dial, I.L.R. [1889] 12 All. 409, page 418, which the Court approved. The appeal, designated Civil Appeal No. 279 of 1959, was filed by special leave against the Kerala High Court’s order dated 18 November 1957 in Original Petition No. 87 of 1956. The judgment was delivered on 12 December 1960.

In this matter the State of Kerala together with the Tahsildars of Kottayam and Kanjirappally Taluks were the appellants, while C. M. Francis & Co., a partnership firm, was the first respondent and the individual partners of that firm were the remaining respondents. The partnership was engaged in the trade of hill‑produced commodities such as pepper, ginger and betelnuts, and the authorities had assessed sales tax on the firm under the Travancore‑Cochin General Sales Tax Act XI of 1125 (the Act) for the fiscal years 1950 through 1954. The total tax liability was fixed at Rs 1,01,716‑4‑3. In 1954 the revenue department initiated recovery proceedings under section 13 of the Act, a provision that allows the entire unpaid amount, or any part still due, to be reclaimed as if it were arrears of land revenue. Those proceedings did not succeed, and consequently a prosecution was launched under section 19 of the Act against the partners in the Court of the First‑Class Magistrate at Ponkunnam. Respondents numbered two to five entered guilty pleas, and on 18 October 1955 the magistrate issued an order sentencing each of them to a fine of Rs 50, with a default provision of one month’s imprisonment under section 1 of the Code of Criminal Procedure if the fine was not paid. The magistrate recorded that the partners admitted failure to pay, on demand, the sum of Rs 1,01,716‑4‑3 that was due as sales tax for the years 1950 to 1954, and directed that this amount be recovered from them jointly or severally, individually or collectively, under the criminal‑procedure rules governing the realisation of fines, as if a separate fine had been imposed on each accused as well as on them together. Execution warrants were then issued pursuant to section 386(1)(b) of the Code of Criminal Procedure and were sent to the Collector of Kottayam District for the purpose of recovering the tax arrears. After the issuance of those warrants the revenue authorities again invoked section 13 of the Act, read in conjunction with the Travancore‑Cochin Revenue Recovery Act, 1951 (VII of 1951), to recover the same amount by treating it as arrears of land revenue, and they proceeded to attach certain properties of the respondents that fell within the jurisdiction of the two Tahsildars. In response the partnership filed a petition under article 226 of the Constitution seeking a writ of prohibition or any other appropriate order to set aside the proceedings for recovery under the Revenue Recovery Act. The petitioners argued that the prosecution under section 19 of the Act and the subsequent issuance of warrants by the magistrate rendered the recovery mechanism provided in section 13 unavailable. They further contended that, under section 386 of the Code of Criminal Procedure, a warrant is to be regarded as a decree and must be executed in accordance with the civil‑procedure rules applicable to the execution of decrees, and therefore the procedure under section 19 could no longer be pursued.

In the earlier proceedings, the respondents maintained that because a magistrate had already issued warrants under section 19 of the Act, the procedure provided in section 13 could no longer be invoked. They further contended that, pursuant to section 386 of the Code of Criminal Procedure, a warrant is deemed to be a decree and therefore must be executed according to the civil‑procedure process applicable to the execution of decrees under the Code of Civil Procedure. On that basis they submitted that the procedure under section 19 was closed and could not be pursued. For completeness, the respondents reproduced the material part of section 19, which reads: “Any person who … (b) fails to pay within the time allowed any tax assessed on him under this Act, or (d) fraudulently evades the payment of any tax assessed on him … shall on conviction by a Magistrate of the first class be liable to a fine which may extend to one thousand rupees and in the case of a conviction under clause (b), (d) the Magistrate shall specify in the order the tax which the person convicted has failed or evaded to pay and the tax so specified shall be recoverable as if it were a fine under the Code of Criminal Procedure for the timebeing in force.” The learned judges of the High Court, in dealing with the question, regarded section 13 as a general law and held that the special procedure prescribed by section 19 read with section 386 should prevail. However, they observed that all processes available under section 19 were also available under section 386, and therefore they did not find it necessary to decide what would happen if proceedings under section 386 produced no result, stating only that they would consider such an issue if it arose. The High Court granted the writ of prohibition, and the respondents did not appear before this Court. Counsel for the appellants was heard and drew attention to the relevant statutory provisions. The question that now arose was whether section 19 must be given priority over section 13. Both sections provide a mode of recovery of tax arrears and, as the High Court noted, both lead to the attachment and sale of movable and immovable property belonging to the tax evader. It could not be said that one proceeding was more general than the other because the modes of recovery are substantially similar. Section 19, in addition to authorising recovery of the tax amount, empowers the magistrate to convict and to impose a fine or, in default of fine, imprisonment. In the Court’s opinion, neither remedy extinguishes the other; when two remedies are available, the authorities may resort to either at their discretion. The Court referred to the observation of Mahmood J. in Shankar Sahai v. Din Dial that where the law provides two or more remedies, there is no reason to think that one bars the other unless the statute expressly or by necessary implication provides otherwise. Consequently, in the absence of any such limiting provision, both remedies remained open to the authorities, who could elect either one for recovery.

In this case the Court held that both remedies must be understood to remain open to any person who claims a remedy. The Court explained that unless the statute, either by express words or by necessary implication, laid down that one remedy excluded the other, the observations of Mahmood, J. quoted earlier continued to apply. The Court further expressed its opinion that, in the absence of any such provision in the (1) I.L.R. (1889) 12 All- 409 (F.B.), 418. Act, both remedies were open to the authorities, and the authorities could resort to either one at their option. Accordingly, the Court allowed the appeal and set aside the judgment of the High Court. Although the respondents did not appear, the Court considered that, given the circumstances of the case, an order should be made that the respondents bear the costs of both the present proceedings and the earlier proceedings in the High Court. The appeal was therefore allowed.