PETITIONER:
LAKSHMANASAMI GOUNDER
Vs.
RESPONDENT:
C.I.T. SELVAMANI AND ORS.
DATE OF JUDGMENT01/11/1991
BENCH:
RAMASWAMY, K.
PANDIAN, S.R. (J)
CITATION:
1991 SCR Supl. (2) 181 1992 SCC (1) 91
JT 1992 (2) 298 1991 SCALE (2)956
ACT
Tamil Nadu Revenue Recovery Act, 1894:--
Sections 36 & Forms 7 and 7.4---Omission
of specification of place of sale----Sale
rendered irregular and invalid.
HEADNOTE
The appellant was alleged to have misap-
propriated a sum of Rs. 12,163.50 [though
acquitted of the charge of misappropriation]
and for the recovery thereof his 13.07 acres
of coffee estate was brought to sale under the
Tamil Nadu Revenue Recovery Act, 1894.
On March 30,1979 the sale by public auc-
tion was held by the Tehsildar. The first
respondent purchased the said estate for a sum
of Rs. 12,225 and deposited a sum of Rupees
2000 being 15% of the sale price. Under sec-
tion 36 of the Act, he should have deposited
the balance consideration within 30 days from
the date of the auction. This sale was con-
firmed on October 23,1981 and the balance
amount was deposited on November 4, 1981.
So the appellant filed an application to
set aside the sale but the Revenue Divisional
Officer overruled the objections and dismissed
the application. On appeal to Additional
District Collector on October 13, 1982, the
sale was set aside. So the first respondent
filed writ petition in the High Court and the
single High Court Judge quashed the order of
the Additional District Collector. The writ
appeal by the appellant to the Division Bench
was also dismissed. Hence the appellant came
to this Court.
The appellant urged that under section 36
of the Act it is mandatory that the date and
place of sale ’shall’ be published in the
Gazetee and that the publication did not
mention the place of sale so the sale is
invalid in law. It was further submitted that
it was equally mandatory that the balance sale
consideration of 85% should be deposited
within 30 days from the date of sale which was
done by the first respondent only on November
4, 1981 long after one year
182
and eight months of the date of sale and
therefore illegal. While the first respondent
contended that it was Form 7 and not Form 7A
that would be applicable to the facts of the
instant case and that Form 7 contains the
place o[ sale and that it was complied with.
Therefore, the said sale is not illegal. It
was further submitted that the deposit was
made after protracted correspondence and that
the non-deposit within 30 days from the date
of sale is not illegal since the deposit was
accepted by the authority. Therefore the
confirmation of the sale is not illegal.
Granting the special leave, dismissing the
writ Petition, setting aside the Judgment of
the High Court, and restoring the order of the
Additional District Collector, the Court
HELD: That in the instant case, the High
Court has wholly misconceived section 36 of
the Act. A reading of the said section mani-
fests that the word ’shall’ is mandatory in
the context. The publication is an invitation
to the intending bidders to prepare an partic-
ipate at the bid. Unless there is due publica-
tion of the date and the place of sale, the
intending purchasers cannot be expected to run
after the sale officer. The sale officer has a
statutory duty and a responsibility to have
the date and place of sale mentioned in the
notice giving due, publication in terms of the
Act and the Rules. Public auction is one of
the modes of sale intending to get highest
competitive price for the property and it also
ensures fairness in actions of the public
authorities or the sale officers who should
act fairly objectively and kindly. Nothing
should be suggestive of bias favouritism
nepotism or beset with suspicious features of
under bidding detrimental to the legitimate
interest of the debtor. [184 F, G 1 85 A]
Further it is settled law that the word
’shall’ be construed in the light of the
purpose of the Act or Rule that seeks to
serve. Even though the word ’shall’ be ordi-
narily mandatory but in the context or if the
intention is otherwise it may be construed to
be directory. The construction ultimately
depends upon the provision itself. Considered
from this prospective of non-compliance of
section 35 that is comission to mention the
place of sale would visit the deprivation of
the property to the debtor for an adequate
consideration due to absence of competing
bidders. Hence the specification of the date &
place of sale ’shall’ be mandatory. The forms
either 7 or 7A are only procedural and they
should be in conformity with section 36. The
form cannot prevail over the statute. The
omission of specification of the place of sale
in the form renders the sale not merely irreg-
ular but also invalid. [185 C; H - 186 B]
183
Equally the second objection is insur-
mountable. It is mandatory that the balance of
the sale amount shall be remitted within 30
days from the date of auction and if not the
earnest money deposited is liable to forfei-
ture. Section 36 mandates remittance of the
balance of 85% of the sale consideration
within 30 days from the date of auction. It is
obligatory on the purchaser to deposit the
amount within the period unless prevented by
an order of the Court or Tribunal. So the
confirmation of sale without compliance is
illegal and the sale is vitiated by manifest
error of Law & rightly set aside by the Addi-
tional District Magistrate. The High Court has
committed error in law in interfering with the
order of the appellate authority. [186 B-D]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
4380 of
1991.
From the Judgment and Order dated
10.4.1991 of the Madras High Court in Writ
Appeal No. 38 of 1991.
K. Parasaran, K.V. Vijaya Kumar and V.
Bala Chandran for the Appellants.
C.T. Selvamani and P.P. Tripathi for the
Respondents.
The Judgment of the Court was delivered by
K. RAMASWAMY, J. Special Leave is granted.
This appeal is against the judgment dated
April 4, 1991 of the Madras High Court. A sum
of Rs. 12,163.50 p. was alleged to have been
misappropriated by the appellant (now he was
acquitted of the charge of misappropriation)
and for the recovery thereof his 13.07 acres
of coffee estate situated in Semmanthaputhur
village was brought to sale under the Tamil
Nadu Revenue Recovery Act, 1894 (for short
’The Act’). On March 30, 1979 the sale by
auction was held by the Tahsildar. The first
respondent purchased for a sum of Rs. 12,225
and deposited a sum of Rs.2,000 being 15 per
cent of the sale price. Under Sec. 36 of the
Act, the first respondent should have deposit-
ed the balance consideration within 30 days
from the date of the auction. On October
23,1981 the sale was confirmed and the balance
amount was deposited on November 4, 1981. The
appellant filed an application but by proceed-
ing dated October 23, 1981, the Revenue Divi-
sional Officer overruled the objections and
dismissed the application. On appeal the Addl.
Distt. Collector, Salem set aside the sale on
October 13,1982. The first respondent filed
writ petition
184
No. 246 of 1984 in the High Court. The learned
Single Judge by judgment dated August 21, 1990
quashed the order of the Addl. Dist. Collec-
tor. On writ appeal, the Division Bench dis-
missed it. Thus this appeal.
The formidable objection raised by the
appellant is that it is mandatory under Sec.36
that the date and place of sale shall be
published in the Gazette and that the publica-
tion did not mention the place of sale. There-
fore, the sale is invalid in law. It is also
his further plea that it is equally mandatory
that the balance sale consideration of 85%
should be deposited within 30 days from the
date of sale which was done only on November
4, 1981 long after one year and eight months
of the date of sale. The sale and Confirmation
thereof are, therefore, illegal. The learned
Single Judge and the Division Bench held that
Form 7A of the forms prescribed under the Act
read with relevant provisions of the Board
Standing Order No.41 does not prescribe the
place of sale and that, therefore, the omis-
sion to specify the place of sale does not
render the sale invalid nor an irregularity.
Shri Selvamam, the first respondent-in-person
(himself a practising Advocate) contended that
it is Form 7 and not Form 7A that would be
applicable to the facts of the case. Form 7
contains the place of sale and that it was
complied with. Therefore, the sale is not
illegal. It is also contended that the deposit
was made after protracted correspondence and
that, therefore, the non-deposit within 30
days from the date of sale is not illegal. At
any rate, having accepted the amount, the
authority acquiesced to the deposit/Therefore,
the confirmation of the sale is not illegal.
We find no substance in either of the conten-
tions. The contention that Form 7 and not Form
7A would be applicable to the facts, is not
the case set up or argued either before the
authorities or the courts below. For the first
time he cannot raise that plea in this Court.
That apart specifically the High Court
(learned Single Judge and the Division Bench)
held that it is form 7A that is applicable and
that it does not prescribe publication of
place of sale and therefore, the omission
thereof does not render the sale invalid. The
High Court wholly misconceived of Sec.36. A
reading of Sec. 36 manifests that the word
’shall’ is mandatory in the context.
The publication is an invitation to the
intending bidders to prepare and participate
at the bid. Unless there is a due publication
of the date and place of sale, the intending
purchasers cannot be expected to run after the
Sale Officer to find out the date and place of
sale and to participate thereat. The Sale
officer has a statutory duty and a responsi-
bility to have the date and place of sale men-
tioned in the notice and given due publication
in terms of the Act and the Rules. Public
auction is one of the modes of sale intending
to get highest competitive price for the
property. Public auction also ensures fairness
in actions of the public authorities or the
sale
185
officers who should act fairly, objectively
and kindly. Their action should be legitimate.
Their dealing should be free from suspicion.
Nothing should be suggestive of bias, favouri-
tism, napotism or beset with suspicious fea-
tures of underbidding detrimental to the
legitimate interest of the debtor. The fair
and objective public auction would relieve the
public authorities or sale officers from above
features and accountability. Any infraction in
this regard would render the sale invalid.
It is settled law that the word ’shall’ be
construed in the light of the purpose the Act
or Rule that seeks to serve. It is not an
invariable rule that even though the word
’shall’ is ordinarily mandatory but in the
context or if the intention is otherwise, it
may be construed to be directory.The construc-
tion ultimately depends upon the provisions
itself, keeping in view the intendment of the
enactment or of the context in which the word
’shall’ has been used and the mischief it
seeks to avoid. Where the consequence of
failure to comply with any requirement of a
provision is provided by the statute itself,
the consequence has to be determined with
reference to the nature of the provision, the
purpose of enactment and the effect of non-
compliance thereof. In its absence the conse-
quence has to be determined with reference to
the effect of the non-compliance of the provi-
sion of the legislature. Mere use of the word
’shall’ need not be given that connotation in
each and every case that the provision would
be invariably interpreted to be mandatory or
directory. But given due consideration to the
object, design, purpose and scope of the
legislation the word shall be construed and
interpreted in that design and given due
emphasis. See.36 obligates the Sale Officer
(Tahsildar) that he shall publish the date and
place of sale.The object thereby is an invita-
tion to the public at large that the notified
property would be brought to sale at that
specified time and place and that they are
invited to participate, if they so desire. To
reiterate for emphasis and continuity that the
object of the sale is to secure the maximum
price and to avoid arbitrariness in the proce-
dure adopted before sale and to prevent under-
hand dealings in effecting sale and purchase
of the debtor’s property. As a responsibility
as sale officer and a duty towards the debtor,
the sale officer should conduct the sale
strictly in conformity with the prescribed
procedure under the statute and the rules as
the case may be. Such due and wide publicity
would relieve the debtor from the maximum
liability he owes and payable to the creditor.
This responsibility is not only salutory to
vouchsafe bonafides in the conduct of the sale
officer but also to ensure fairness in the
procedure adopted in bringing the property of
the debtor to sale. Considered from this
perspective the non-compliance of Sec.35 i.e.,
omission to mention the place of sale world
visit with deprivation of the property to the
debtor
186
for an inadequate sale consideration due to
absence of competing bidders. Thus, we hold
that specification of the date and place of
sale shall be mandatory. The forms either 7 or
7A are only procedural and they should be in
conformity with Sec. 36. The form cannot
prevail over the statute. The omission of
specification of the place of sale in the form
renders the sale not merely irregulate but
also invalid.
Equally the second objection is insur-
mountable. It is mandatory that "the balance
of the sale amount shall be remitted within 30
days from the date of auction" and if not the
earnest money deposited is liable to forfei-
ture. Confirmation of the sale should precede
the deposit of the sale amount. Sec. 36 man-
dates remittance of the balance of 85% of the
sale consideration within 30 days from the
date of auction. It is obligatory on the
purchaser to deposit the amount within
that period unless he is prevented by an order
of the court or tribunal from so making depos-
it. The ’non-compliance renders the 15% depos-
it liable to forfeiture. Therefore, the con-
firmation of the sale without compliance is
illegal. We hold that the sale is vitiated by
manifest error of law and rightly set aside by
the Addl. Dist. Collector, Salem (Appellate
Authority). The High Court, both the learned
Single Judge and the Division Bench committed
menifest error of law in interfering with the
order of the appellate authority. The appeal
is accordingly allowed. The writ petition
stands dismissed and that of the order of the
Addl. Distt. Collector, Salem restored, but in
the circumstances parties are directed to bear
their own costs throughout.
S.B.
Appeal allowed. 87