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TMI Blog1954 (7) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of the warrant. Nor does Section 48, Revenue Recovery Act, provide for any procedure by which a defaulter imprisoned under that section can make any representation or file any appeal. 2. In the affidavit filed on behalf of the Collector, who has been made the first respondent, details are set-out of the history of the assessment of Income Tax on petitioner who had a grocery business in Cannanore. According to a counter-affidavit by the Commissioner of Income Tax, he was assessed in 1943-44 to a tax of ₹ 66,227, in 1945-46 to ₹ 10,752, 1946-47 ₹ 5,583, in 1947-48 ₹ 15,002, and 1948-49 ₹ 4,341. He is alleged to have disposed of substantial property and to have diverted assets from his Cannanore business to an identical business in the name of his sons V.P. Abdul Azeez and Bros., which was started in Tellichery in 1948. We are not of course concerned in the disposal of this petition with the correctness of the assessment which we must regard as final. There is no order placed before us by the Collector setting out the material on which he was satisfied that petitioner was wilfully withholding payment and was guilty of fraudulent conduct. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector was armed with in addition to his power to imprison in accordance with Section 48, Revenue Recovery Act, and of course his powers of distraint of moveable and Immovable property belonging to the defaulter under other provisions of the Revenue Recovery Act, 23 of 1941, omitted certain words and gave the Collector all powers under the Code of Civil Procedure. It is interesting to note that under Section 278 of the then Civil P. C., 8 of 1859, imprisonment for a civil debt shall not be for a longer period than two years or for a longer period than six months, if the decree does not exceed ₹ 500 or for a longer period than three months if the decree does not exceed ₹ 50. Under the Civil P. C. of 1882, no person shall be imprisoned in execution of a decree for a longer period than six months or for longer than six weeks if the decree did not exceed ₹ 50. That is the legal position today under Section 58, Civil P. C It is sufficient here to say that since the Madras Revenue Recovery Act was passed in 1864, at a time when there was much more rigorous, enforcement of civil debts by imprisonment in England, there has been progressive, liberal and ameliorative legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any Statement of Reasons why the British Income Tax Act of 1952 omitted Section 165 of the old Act of 1918. But we have little doubt that this was due to the new orientation given to recovery of Crown debts and taxes by imprisoning on executive orders by the Crown Proceedings Act, 1947. This would also appear from Section 26, Clauses (2) and (3) of the Crown Proceedings Act, 1947. Section 26(2) makes Sections 4 and 3 of the Debtors Act of 1869 applicable to sums of money payable and debts duo to the Crown. I may reproduce here Mr. Bickford Smith's commentary on this Section: Section 4 abolishes imprisonment for debt, save in respect of debts of certain exceptional kinds of which the most important are penalties ...... debts recoverable summarily before justices (such as rates, Income Tax etc.) ...... debts arising from breach of trust ...... To these exceptions the proviso to this section adds default in payment of death duties and purchase tax, the addition being justified on the ground that the debtor has had the means of payment and his default is in the nature of a breach of trust. The maximum period of imprisonment in all the excepted cases is one year ...... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty of the defaulter, or of his surety, and the Collector shall have reason to believe that the defaulter or his surety is wilfully withholding payment of the arrears, or has been guilty of fraudulent conduct in order to evade payment, it shall be lawful for him to cause the arrest and imprisonment of the defaulter or his surety, not being a female, as hereinafter mentioned; but no person shall be imprisoned on account of an arrear of revenue for a longer period than two years, or for a longer period than six months, if the arrear does not exceed ₹ 500, or for a longer period than three months, if the arrear does not exceed ₹ 50; provided that such imprisonment shall not extinguish the debt due to (the State Government) by the defaulter, or his surety. If this section is carefully examined, it in fact embodies the ingredients of what is in substance a criminal offence involving wilful evasion of tax payment and fraudulent conduct, which are matters for enquiry in a court of law, :with facilities afforded to the person accused to defend himself. We have been referred to several constitutional decisions, both in Indian and American law, none of them directly in poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity given to the defaulter to defend himself and to show cause, appears to be correct. I have no hesitation in finding that Section 46(2), Income Tax Act, is 'ultra vires' in so far as it empowers a Collector to proceed under Section 48, Revenue Recovery Act, which clearly offends Article 22(1) and (2) of the Constitution. 9. The arrest and imprisonment of petitioner under Section 48 of this Act is also challenged as offending Article 21 of the Constitution under which No person shall be deprived of his life or personal liberty except according to procedure established by law. There appears to be no necessity for canvassing, this Article at length as there is a. law on the Statute Book, under which a Collector has acted. If the law is ultra vires there would be no procedure established by law and the imprisonment becomes unlawful; on the other hand, if it is 'intra vires' the petitioner has been lawfully deprived of his personal liberty. 10. The next Article invoked by Mr. Narabiar is Article 14 under which The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers under the Civil Procedure Code and sending him to prison under Order 21, Rule 46, ordered his further detention under Section 13. A 'habeas corpus' petition for his release was dismissed by the learned Bombay Bench who held they had no jurisdiction to interfere. If this petitioner was a resident of Bombay City, he would be liable under' the Bombay City Revenue Recovery Act to imprisonment for more than 61000 days if he did not pay his arrears, whereas under Section 48 of the Madras Revenue Recovery Act, the maximum detention a Collector could pass on him is two years. In Bombay City the Collector can sentence a defaulter to imprisonment when sale of defaulter's property is insufficient exercising the same wide powers as the General Commissioners under Section 165 of the British Income Tax Act of 1918 --powers taken away by the Act of 1952. So far as I am able to follow the doctrine of classification evolved to reconcile conflicts of fundamental rights and freedoms under the Constitution with Article 14, there is, in the present case, in so far as the Union Government is concerned, one wide class of Income Tax defaulters who wilfully default to pay Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Collector of Trichinopoly countersigned by the Collector of Madurai under Section 48. In view of a flaw in jurisdiction on the warrant, the release of the petitioner was ordered. The learned Bench did not pronounce any opinion as to whether Section 48, Revenue Recovery Act, was 'ultra vires' or 'infra vires'. In the domain of land revenue arrears, I also think that the procedure of the Collector issuing an arrest warrant under Section 48 without even giving a defaulter an opportunity of being heard has fallen, into disuse... 13. I would finally like to comment briefly on some lengthy arguments addressed to us as regards the difference in procedure between Section 48, Revenue Recovery Act, invoked under Section 46(2) and the alternative procedure open to the Collector under the proviso to that section to exercise powers of the Civil Procedure Code in recovering Income Tax arrears. Mr. Nambiar has stressed for instance, the difference between the two procedures. Under the Civil Procedure Code the debtor must be given an opportunity of being heard and the maximum sentence which can be imposed is six months under Section 58. The state of a debtor's h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation of his bond. Kuppuswami Naidu Veeraswami, J. 16. I had the advantage of perusing the judgment of my learned brother and I am in agreement with him in the order proposed to be made. In view of the constitutional importance of the case, I have preferred to give my own reasons in a separate judgment. 17. The petitioner has been arrested in pursuance of a warrant of arrest issued by the Collector of Malabar for non-payment of Income Tax and directed to be detained for a period of two years and he has been in detention in the Central Jail, Cannanore. The Collector purported to act under Section 46(2), Income Tax Act, read with Section 48, Madras Revenue Recovery Act, 2 of 1864. I need not reproduce these sections, which are set out in extenso in my learned brother's judgment. The validity of the warrant of arrest and the subsequent detention is challenged as absolutely illegal and unconstitutional and totally without jurisdiction as contravening Articles 14, 21 and 22 of the Indian Constitution. 18. It is urged that in so far as arrest and detention are concerned, the two enactments, namely, the Income Tax Act, proviso to Section 46(2), and Section 46 read with S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and the Court should be satisfied by reasons recorded in writing; (a) that the judgment debtor, with the object of obstructing or delaying the execution of the decree,-- (1) is likely to abscond or leave the local limits of the jurisdiction of the Court, or (2) has, after the institution of the suit in which the decree was passed, dishonestly transferred, concealed, or removed any part of his property, or committed any other act of bad faith in relation to his property; or (b) that the judgment-debtor has, or has had since the date of the decree, the, means to pay the amount of the decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same, ...... A Court before ordering execution by arrest of the judgment-debtor is bound to give him an opportunity and cannot order arrest unless it is satisfied that one or other of the conditions prescribed in the proviso to Section 51, Civil P. C., are fulfilled, and even after arrest he must be produced before the Court before detention, under Section 55 of the Code, and the maximum period of detention provided being six months under Section 58, and if he had served the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of Part III relating to fundamental rights. 21. The scope and extent of the right conferred under Article 14 came to be considered by the Supreme Court in relation to the West Bengal Special Courts Act 10 of 1950 in -- 'State of West Bengal v. Anwar Ali Sarkar',: 1952CriLJ510 (E), and the majority view was that it infringed the constitutional prohibition under Art, 14 of the Constitution. Fazl Ali J., after referring to the two earlier decisions of the Supreme Court, viz., -- 'Chiranjit Lal v. Union of India': [1950]1SCR869 'the State of Bombay v. F. N, Balsara', AIR 1951 SC 318(G), observed at p. 83: The principles laid down in those decisions have to be kept in view in deciding the present case. One of these principles is that Article 14 is designed to protect all persons placed in similar circumstances against legislative discrimination, and if the Legislature takes care to reasonably classify persons for legislative purposes and if it deals equally with all persons belonging to a well defined class, it is not open to the charge of denial of equal protection on the ground that the law does not apply to other persons. Mahajan J. (as he th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the executive authority is unfettered and the exercise of his discretion is not subject to any limitations imposed against him by the enactment. It is open to him to treat two defaulters placed in similar circumstances differently and there is nothing in the concerned enactments to guide him as to which of these procedures he should adopt. On the face of the impugned provisions, the Collector is the ultimate authority to decide the course he should adopt and, in such circumstances, there is always the scope for discrimination between two defaulters who are placed in the same position to the advantage of one and to the prejudice of an-other. 23. The learned Advocate General referred us to the later decision of the Supreme Court in: 1953CriLJ1621 , where Section 4, West Bengal Criminal Law Amendment (Special Courts) Act, 1949, was the subject of consideration as to whether it offended the Constitution, in particular Article 14 and the majority held that the section which provided for allotment by the State Government in its discretion to the Special Courts particular cases for trial was constitutionally valid. In particular, the learned Advocate General relied on the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions of the Supreme Court appears to me to be this. If the policy and object of the Act can be discovered within the four corners of that Act including the preamble, and discretion is vested in the Government to make a selection in furtherance of that policy and object for the application of the Act, then the provision conferring such power is not void as offending Article 14 of the Constitution. If such power is improperly exercised in any particular case, that is, not in furtherance of the policy and object of the Act, but arbitrarily, then the Court can strike down the exercise of such power on every such occasion. 24. The learned Advocate General argues that because a number of alternative remedies are provided which the executive authority can exercise in the case of persons placed in similar circumstances, it cannot be urged that there is denial of equality, for the Collector has to be satisfied that the assessee has been withholding payment or has fraudulently conducted himself and therefore the legislative provision empowering the executive authority to adopt either, of the two modes cannot be challenged, but that, in any particular case, where there has been hos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied that there is a wilful withholding of payment or fraudulent conduct -- of which he must be satisfied on proper material placed before him -- and that the Collector could be expected to exercise his judicial mind and come to a decision and as such the power conferred on the Collector is not likely to be abused. The test to judge whether a particular provision is discriminatory is not by finding as to whether it has been abused, but to see if, from the face of the enactment, there is a tendency or scope for discrimination in its ultimate operation. If the Collector chooses to proceed in respect of a particular defaulter under Section 48, the fact that there is another provision equally available which renders the issue of a warrant dependent upon certain facts and circumstances to be proved after hearing the assessee, is sufficient to hold that such a legislation is discriminatory, notwithstanding that in its actual exercise it is not shown that the authority acted in a hostile manner and discriminated against a defaulter. The existence of such a provision giving an unfettered and unhedged discretion to the Collector is enough to make it inoperative and void, as it would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a legal practitioner of his choice. There is also no provision for his being produced before a Magistrate. The warrant itself would disclose the grounds of arrest, the grounds being that he is withholding payment of the arrears and has been guilty of fraudulent conduct. So the first part of Article 22(1) may be held to be satisfied. But there was no opportunity given to the assessee to appear before the Collector by himself or by a legal practitioner of his choice and urge before him any defence open to him. The detention is to be for a period of two years, while the executive authority can under the Article only be entitled to detain him for 24 hours without further orders from a Magistrate. 29. In the -- 'State of Punjab v. Ajaib Singh': 1953CriLJ180 , the taking into custody by the executive authority under the Abducted Persons (Recovery and Restoration) Act, 65 of 1949, was held to be not an infringement among others of Article 22 of the Constitution on the ground that the taking of an abducted person into custody and delivery of that person to the officer in charge would not amount to arrest and detention and Article 22 was of no application to the case arising un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne can expect a judicial mind having been applied to the authority under 'which the arrest is made and it may be presumed that the proper procedure has been duly followed. Therefore warrants issued by a Court can ordinarily be excepted from the operation of Article 22(1) and (2) though the detention and the production before the Magistrate and the other conditions necessary to comply with the said Article have not been followed. In the present case, however, the warrant is by an executive authority and not by a Court. The Advocate General endeavoured to show that the Collector while acting under Section 48 must be deemed to be in the position of a Court as he was. obliged to give a finding before issuing the warrant that the defaulter had been withholding payment and had been guilty of fraudulent conduct. The mere circumstance that the Collector has to take a decision before issuing the warrant would not make him a Court, as he is not under the section empowered to exercise the other powers of the Court of hearing the assessee before coming to a decision as to his conduct and issuing the warrant after such an opportunity being given. The Collector, as defined in the General ..... X X X X Extracts X X X X X X X X Extracts X X X X
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