ORDER
Basi Reddy, J.
1. This is a petition filed by one Challa Kistaiah under Section 491 of the Criminal Procedure Code and Article 226 of the Constitution, challenging the legality and propriety of his arrest and imprisonment in pursuance of a warrant issued on 3rd September, 1965, by the District Collector of Mahabubnagar under Section 48 of the Andhra Pradesh Revenue Recovery Act (Madras Act 2 of 1864) which will be referred to as 'the Act', and seeking a writ or direction in the nature of habeas corpus for his release. The circumstances which led to the arrest of the petitioner, as stated in the counter-affidavit filed by the District Collector of Mahabubnagar, are the following :-
The petitioner, Challa Kistaiah, was a registered dealer, under the Andhra Pradesh General Sales Tax Act (hereinafter called the 'Sales Tax Act') and was carrying on business in kirana and food-grains at Kosgi village under the name and style of Messrs Challa Ramaiah. On the basis of the returns submitted by the petitioner, assessments to sales tax were made by the concerned authority for the years 1956-57 to 1960-61. But, as a result of a surprise check conducted by the Special Commercial Tax Officer (Evasions), Hyderabad North, on 18th June, 1962, forty-two books of secret accounts relating to the business done by the petitioner, were recovered. Those books revealed huge suppressions by the petitioner of the turnover for the years 1956-57 to 1960-61. On the basis of that incriminating material, the Special Commercial Tax Officer issued notices to the petitioner to show cause why the assessments made previously should not be reopened and revised and, after considering the petitioner's objections, revised assessments were made in respect of the escaped turnovers for the said years under Section 14(4) of the Sales Tax Act and penalties were levied at one-and-half times the tax. Thus the total amount payable by the petitioner was Rs. 2,48,734.09 nP.
2. The petitioner was duly served with the assessment orders and demand notices in respect of the revised assessments. He did not choose to file any appeals against the assessment orders nor did he pay anything towards the revised assessments. Instead, he devised a scheme and adopted a course of conduct calculated to defeat and defraud the revenue. Soon after the secret account books were seized and even before the revised assessments were made, the petitioner began to alienate his properties situated in Kosgi village. Not content with that, he suddenly Stopped doing business in 1962 itself, but in the same business premises the kirana business is being run in the name of G. Veeriah, the paddy and rice business in the name of K. Sivappa and the -commission business in the name of B. Narasimhulu. These persons are all mere name-lenders and the petitioner himself is in fact running these businesses. Further, the petitioner owns two lorries, but they are not registered in his name. In paragraph 3 of his affidavit, the District Collector states :
All these fraudulent activities of the petitioner led me to believe that the petitioner is wilfully withholding payment of the arrears and also he has been guilty of fraudulent conduct in order to evade payment of tax.
3. The Collector also took note of the fact that the properties owned by the petitioner are too negligible to meet even a fraction of the dues payable by the petitioner.
4. On being satisfied upon the materials placed before him by the Sales Tax Authorities that this was a case of wilful and fraudulent nonpayment of arrears of public revenue to the tune of about 2| lakhs of rupees, the Collector, acting under Section 48 of the Act read with Section 16(4) of the Sales Tax Act, issued a warrant for the arrest of the petitioner and his confinement in the District Jail for a period of two years, unless sooner released by a subsequent order of the Collector. The arrest warrant was entrusted to the Deputy Superintendent of Police, Narayanapet, for execution. The petitioner was duly arrested and is now confined in the Central Jail, Musheerabad.
5. Here it will be convenient to read the aforesaid statutory provisions. Section 16(4) of the Sales Tax Act provides :
If the tax assessed or the penalty levied or interest payable under this Act or any instalment thereof, and the fees payable towards licence or registration, are not paid by a dealer within the time specified therefor, the whole of the amount then remaining unpaid may be recovered from him as if it were an arrear of land revenue.
6. Section 48 of the Act is in these terms :
When arrears of revenue, with interest and other charges as aforesaid cannot be liquidated by the sale of the property of the defaulter ..., and the Collector shall have reason to believe that the defaulter...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... not being a female, as herein after 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 Rs. 500, or for a longer period than three months, if the arrear does not exceed Rs. 50 provided that such imprisonment shall .not extinguish the debt due to the State Government by the defaulter ....
7. Section 49 of the Act, which lays down the procedure for arrest, provides as under :
The Collector shall issue his warrant for the arrest of the defaulter ...which shall specify his...name, the amount of revenue due and the date on which it became payable, and the warrant shall be signed and sealed by the authority by whom it was issued. The officer charged with the execution of the warrant shall thereupon arrest the defaulter...and convey him...to the district gaol, and deliver the warrant to the gaoler, which shall be sufficient authority to him to receive the prisoner.... A copy of such a warrant shall be retained by the gaoler, who shall forthwith despatch the original to the officer-in-charge of the gaol.
8. In support of this petition, the learned Advocate for the petitioner raised a number of points and submitted that the action taken by the Collector is illegal and unjust. Before dealing with the contentions raised on behalf of the petitioner, it will be useful to refer to a decision of the Supreme Court in Collector of Malabar v. E. Ebrahim A.I.R. 1957 S.C. 688, wherein the constitutional and other aspects of the Act came under their Lordships' scrutiny. In the first place, applying the ratio decidendi of the previous decisions of the Supreme Court, their Lordships held that Section 48 of the Act does not violate Articles 14, 19, 21 and 22 of the Constitution. Their Lordships then proceeded to consider the scope and effect of Section 48 of the Act and observed as follows (at pages 691 and 692):
The preamble of the Act clearly states that the laws relating to the collection of the public revenue should be consolidated and simplified and Section 5 provides for the manner in which the arrears of revenue may be recovered. It reads:
Whenever revenue may be in arrear, it shall be lawful for the Collector, or other officer empowered by the Collector in that behalf, to proceed to recover the arrear, together with interest and cost of process, by the sale of the defaulter's movable and immovable property, or by execution against the person of the defaulter in manner hereinafter provided.This section clearly sets out the mode of recovery of arrears of revenue, that is to say, either by the sale of the movable or immovable property of the defaulter, or by execution against his person in the manner provided by the Act.' Section 48 provides that when arrears of revenue cannot be liquidated by the sale of the property of the defaulter then the Collector, if he has reason to believe that the defaulter is wilfully withholding payment of the arrears or has been guilty of fraudulent conduct in order to evade payment of tax, can lawfully cause the arrest and imprisonment of the defaulter. This section read with Section 5 makes it abundantly clear that the arrest of the defaulter is one of the modes, by which the arrears of revenue can be recovered, to be resorted to if the said arrears cannot be liquidated by the sale of the defaulter's property. There is not a suggestion in the entire section that the arrest is by way of punishment for mere default. Before the Collector can proceed to arrest the defaulter, not merely must the condition be satisfied that the arrears cannot be liquidated by the sale of the property of the defaulter but the Collector shall have reason to believe that the defaulter is wilfully withholding payment, or has been guilty of fraudulent conduct in order to evade payment. When dues in the shape of money are to be realised by the process of law and not by voluntary payment, the element of coercion in varying degrees must necessarily be found at all stages in the mode of recovery of the money due. The coercive element, perhaps in its severest form, is the act of arrest in order to make the defaulter pay his dues. When the Collector has reason to believe that withholding of payment is wilful, or that the defaulter has been guilty of fraudulent conduct in order to evade payment, obviously, it is on the supposition that the defaulter can make the payment, but is wilfully withholding it, or is fraudulently evading payment.
In the Act there are several sections (e.g., Sections 16, 18 and 21) which prescribe, in unambiguous language, punishment to be inflicted for certain acts done. It is clear, therefore, that where the Act intends to impose a punishment or to create an offence, it employs a language entirely different to that to be found in Section 48. We are of the opinion, therefore, that where an arrest is made under Section 48 after complying with its provisions, the arrest is not for any offence committed or a punishment for defaulting in any payment. The mode of arrest is no more than a mode for recovery of the amount due.
There is nothing in Section 48 of the Act which requires the Collector to give the defaulter an opportunity to be heard before arresting him. It is true that the Collector must have reason to believe that the defaulter is wilfully withholding payment or has been guilty of fraudulent conduct in order to evade payment. The Collector, therefore, must have some material upon which he bases his belief-a belief which must be a rational belief-and a court may look into that material in appropriate cases in order to find out if the conditions laid down in the sections have been fulfilled or not.
9. We will now examine the contentions raised on behalf of the petitioner in the light of the above interpretation of Sections 5 and 48 of the Act. Firstly, it was contended by the learned Advocate for the petitioner that in the present case, the Collector had acted illegally in issuing a warrant of arrest without first bringing the lands of the petitioner to sale and ascertaining how much the lands would fetch. It was pointed out that the petitioner owns 20 acres of dry land and 8 acres of wet land in the village of Kothapalli, which is six miles from Kosgi. It was argued that Section 48 postulates that the Collector can order the arrest of the defaulter, only if the arrears of revenue cannot be liquidated by the sale of the property of the defaulter and this presupposes that the property must be actually brought to sale. We are unable to accept this argument. Section 5 of the Act prescribes two alternative modes of recovery of arrears of revenue-one by the sale of the defaulter's movable and immovable properties, and the other by execution against the person of the defaulter by arrest and imprisonment. No doubt under Section 48, before the Collector can proceed to order the arrest of the defaulter, he must be satisfied that the arrears of revenue cannot be liquidated by the sale of the defaulter's property. In our judgment, such satisfaction need not necessarily and invariably be arrived at by actually bringing the property of the defaulter to sale, but that could be done even without doing so where, as in the present case, the market value of the property is not even l/20th of the amount due by the defaulter, and the amount that may be realised by the sale of the property cannot possibly wipe off the arrears or even a substantial part thereof. This is what the Collector says in paragraph 4 of his counter-affidavit:
The property the petitioner alleges to possess, is not at all sufficient to liquidate the arrears of tax. Under these circumstances, I had to exercise my powers under Section 48 of the Revenue Recovery Act, the provisions of which are invoked for the realisation of the arrears of tax. The contention of the petitioner that without taking steps to realise the arrears by proceeding against the properties, Section 48 cannot be invoked has no substance, when the petitioner is guilty of fraudulent conduct by alienating his properties with the sole intention of keeping the properties beyond the reach of the collecting agency. Further, when the alleged landed properties of the petitioner are not at all sufficient to liquidate the tax arrears, it appeared futile to proceed against these properties for the realisation of the tax arrears.
10. We may add that with a view to satisfying ourselves as to the possible price that the petitioner's land might fetch, we called for a report from the Collector and the latter directed the Tahsildar, Kodangal, to visit Kothapalli village and make an on-the-spot enquiry as to the extent and value of the lands owned by the petitioner. Accordingly, the Tahsildar conducted an enquiry about the value of the petitioner's lands in the presence of the Mali Patel, the Revenue Inspector, and the Panchas and submitted a report to the Collector that the total estimated value of the petitioner's lands is Rs. 11,400, which figure was arrived at by adopting the highest prevailing market rate. It is manifest, therefore, that the lands of the petitioner cannot, by any process of reckoning, satisfy the tax demanded in full or even to an appreciable extent. In this situation it is idle to contend that the lands of the petitioner should be actually brought to sale before it could be said that the arrears of revenue cannot be liquidated by the sale of the property of the defaulter.
11. In support of his contention, the learned Advocate for the petitioner sought to rely on a decision of the Bombay High Court in Alt Ahmed v. Collector of Bombay A.I.R. 1950 Bom. 33. But that decision is readily distinguishable as the language of Section 13 of the Bombay City Land Revenue Act (2 of 1876), which the learned Judges were interpreting in that case, is not in pari materia with the language of Section 48 of the Act, with which we are concerned. Section 13 of the Bombay Act, so far as is material, reads as follows :
If the sale of the defaulter's property shall not produce satisfaction of the demand, it shall be lawful for the Collector to cause him to be apprehended and confined in the civil jail under the rules in force at the Presidency for the confinement of debtors....
12. In construing that section, the learned Judges observed that the scheme of Section 13 of that Act clearly is that the Collector should first proceed against so much of the property of the defaulter as is necessary to satisfy the Government demand, and if the sale of the defaulter's property does not produce an amount sufficient to satisfy the demand, then only can the Collector cause the defaulter to be apprehended and confined in civil jail. Thus they regarded the sale of the defaulter's property as a condition precedent. In our opinion, the above decision is of no assistance in construing Section 48 read with Section 5 of the Act.
13. The next contention on behalf of the petitioner was that there was no material upon which the Collector could reach the conclusion that the petitioner was wilfully withholding payment of the arrears or was guilty of fraudulent conduct in order to evade payment. This contention is devoid of force. As noticed supra, as soon as the books of the petitioner were seized, the petitioner went about selling his properties at Kosgi to his near relations and what is more, forthwith discontinued his business. The Sales Tax Authorities had information that he was really continuing the old business in other people's names. In the reply-affidavit filed by the brother of the petitioner it was averred that the petitioner had closed down his business, because he had sustained heavy loss. It is hard to believe this statement. A business which was flourishing till the secret account books were seized, could not have suddenly become a losing concern so as to necessitate its closure. In our opinion, the Collector was justified in believing that the discontinuance of the business under the old name was with a view to evade the payment of tax and defraud the revenue. The Collector also accepted the report of the department officials that the petitioner owned two lorries which were not registered in his name. There was thus ample material upon which the Collector could base his belief that the petitioner was wilfully withholding the payment of arrears of tax and had been guilty of fraudulent conduct in order to evade the payment. The Collector was therefore perfectly justified in passing the order of arrest and imprisonment of the petitioner.
14. The next point made by the learned Advocate for the petitioner was that the petitioner was not the defaulter inasmuch as it was the Hindu undivided family consisting of himself and his son that was the dealer and the defaulter; and in such a case, Section 48 of the Act cannot be resorted to for the arrest of the manager of the joint Hindu family. In answer to this contention the Collector states in paragraph 7 of his counter-affidavit that the stand taken by the petitioner that the business was that of a Hindu undivided family, is factually incorrect. He states :
The petitioner is a registered dealer who is running a business known as M/s. Challa Ramaiah. The petitioner himself had registered as a dealer under the provisions of the Andhra Pradesh General Sales Tax Act. The petitioner himself had been submitting the returns and the business was run by him. He is responsible for the payment of arrears of tax.
15. We have perused the relevant records and we are satisfied that the assertion of the petitioner that the business was a joint family business, is false. The records show that the Hindu undivided family was not registered as a dealer under the Sales Tax Act and the petitioner never described himself as the manager of a Hindu undivided family. The returns submitted by him show that it was his own business and not a joint-family business. Even assuming for the sake of argument that it was a joint family business, that will not avail the petitioner, because admittedly the business has been discontinued, and in such a case, Rule 22 of the Andhra Pradesh General Sales Tax Rules, 1957, comes into play and every member of the Hindu undivided family would be jointly and severally liable. Rule 22 is in these terms :
When any business carried on by a firm, a Hindu undivided family or an association has been discontinued or dissolved, every person who was at the time of such discontinuance or dissolution a partner of such firm or Hindu undivided family or association, shall be jointly and severally liable to assessment under Section 5, 5-A, 6 or 11 or any notification under Section 9(1) and for payment of the tax assessed and/or penalty levied.
16. The last contention on behalf of the petitioner was that the warrant of arrest should have been entrusted to a revenue official for execution, but inasmuch as in the present, case it was entrusted to a police official, namely, the Deputy Superintendent of Police, the latter had no jurisdiction to arrest the petitioner, and hence the arrest and detention are illegal. There' is no substance in this argument because Section 49 of the Act does not impose any such restriction upon the choice of agency for the execution of an arrest warrant.
17. It follows that the action taken by the District Collector under Section 48 of the Act is lawful and proper, and consequently this petition fails and is dismissed.