Rowena Coelho and ors. Vs. State of Tamil Nadu - Court Judgment

Excerpt:
direct taxation - compounding of tax - section 65 of tamil nadu agricultural income tax act, 1955 and rule 31 of income tax rules, 1955 - agricultural income of partnership firm taxed at hands of partners of firm - firm dissolved - partners stated to have partitioned their lands - partners filed applications to compound tax under section 65 in respect of holdings held by them in middle of accounting year - income tax officer permitted for compounding of tax - commissioner set aside assessment order and directed to pass revised order - petition challenging such order - opting to file compounding application not permissible when return had been filed on income basis under act and part of income cannot be assessed on return basis and another on composition for relevant year in question - order of commissioner not suffering from infirmity calling for interference. - securitisation & reconstruction of financial assets & enforcement of security interest act, 2002 [c.a. no. 54/2002]section 17; power of tribunal to impose condition relating to deposit for grant of stay of auction held, there is no specific provision made under section 17 of securitisation act or under any other provisions of the said act empowering the tribunal to pass any interim order. but under sub-section (12) of section 19 of the recovery of debts due to banks and financial institutions act, 1993, the tribunal has been empowered to pass various interim orders. if sub-section (7) of section 17 of securitisation act is read along with sub-section (12) of section 19 of recovery of debts due to bank is and financial institutions act, it would be clear that the tribunal also has jurisdiction to pass interim orders under section 17 of the securitisation act in appropriate cases. the tribunal is empowered to grant interim stay subject to such conditions as may be deemed proper including condition of deposit. even under section 69 of the transfer of property act, the only remedy of the borrower whose mortgage has invoked section 69 of the transfer of property act, is to file a civil suit and in such suit the court has power to grant injunction and to impose condition for the grant thereof--section 17; [a.p. shah c.j., f.m. ibrahim kalifulla & v. ramasubramanian, jj] proceedings under section 17 power of the tribunal to pass any interim order held, once the possession of the secured asset is taken, there would be no occasion for the tribunal to order redelivery of possession till final determination of the issue. in other words, it is only when the tribunal comes to the conclusion that any of the measures, referred to in section 13 (4) taken by the secured creditor are not in accordance with the provisions of the act and the rules made thereunder, then only the tribunal can restore possession of such secured assets to the borrower. by virtue of sub-section (7) of section 17 of the securitisation act read with section 19 (12) of the recovery of debts due to banks and financial institutions act the tribunal undoubtedly possess ancillary power to pass interim orders subject to the conditions as it may deems fit and proper to impose, but it does not in any way override the special provisions contained in section 17(3) of the securitisation act. the statutory scheme of the securitisation act is such that the borrower could take recourse to application under section 17 only if one or other measure is taken by the secured creditor, and the tribunal can restore the status quo ante only if it comes to the conclusion that any of the measure taken by the secured creditor is not in accordance with the provisions of the act. the scheme cannot be bypassed by issuing a mandatory order for redelivery of the possession before conclusion of the proceedings under section 17--sections 17, 13 (4); [a.p.shah, c.j., f.m. ibrahim kalifulia &v. ramasubramanian, jj] scope of enquiry under section 17 held, the main purpose of the securitisation act, and in particular section 13 thereof, is to enable and empower the secured creditors to take possession of their securities and to deal with them without the intervention of the court. therefore, in an application under section 17, the tribunal is concerned only with the validity of the acts of the secured creditor in taking possession of the securities and dealing with the same under section 13. all such grounds, which would render the action of the bank/financial institution illegal, can be raised before the tribunal in the proceedings under section 17. it is for the tribunal to decide in each case whether the action of the bank was in accordance with the provisions of the act and legally sustainable. however, while considering the question of validity of the action of the bank, it is not necessary for the tribunal to adjudicate the exact amount due to the secured creditors. in other words, the purpose of an application under section 17 is not the determination of the quantum of claim per se as the tribunal is concerned with the issue of the validity of the measures taken by the banks/financial institutions under section 13(4)--sections 17(4), 13(4) ; [a.p. shan c.j.,f.m.ibrahim kalifulla & v. ramasubramanian, jj] appeal right of bank held, the right of the bank is not automatically suspended upon filing of an appeal by borrower under section 17 of the securitisation act and the bank as secured creditor can proceed to auction secured asset where no stay is granted by the tribunal. there is nothing in section 17 of the securitisation act which would indicate that the legislature intended that there would be automatic stay of recovery proceedings by bank under section 13(4) on filing an appeal by borrower under section 17. use of the expressions if and then under section 17 would not mean that the bank can take one or more measures laid down under section 13(4) only if the tribunal declares that the action taken already is in accordance with the provisions of the securitisation act and the rules made thereunder. use of the word if does not connote a condition precedent. it is a recognised rule of interpretation of statutes that expressions used therein should ordinarily be understood in a sense in which they harmonized with the object of the statute and which effectuate the object of the legislature. the provisions of section 17 must, therefore, receive such construction at the hands of the court as would advance the object and at any event not thwart it. in other words, the principle of purposive interpretation should be applied while construing the said provisions. the securitisation act is enacted to provide a speedy and summary remedy for recovery of thousands of crores which were due to the banks and financial institutions. janarthanam, j.1. silver cloud estates, gudalur, it is said, is a registered firm, consisting of several partners. being a registered firm, it appears, the agricultural income had been taxed at the hands of the partners of the firm. it appears the return of income for levying tax on income basis under section 17 of the tamil nadu agricultural income-tax act, 1955 (for short 'the act'), had been filed for the assessment year 1982-83.2. the firm was stated to have been dissolved on august 28, 1981. after dissolution of the said firm, the erstwhile partners were stated to have partitioned their lands and the respective partners filed applications to compound the tax under section 65 of the act on june 14, 1982, in respect of the holdings held by them in the middle of the accounting year.3. the agricultural income-tax officer, gudalur, had permitted the partners of the firm for composition of tax under section 65 of the act for the assessment year 1982-83 for the period after the dissolution of the firm.4. the commissioner of agricultural income-tax, chepauk, madras 5, in suo motu revision proceedings under section 34 of the act required the partners to show cause why action should not be taken to cancel the assessment orders passed by the agricultural income-tax officer, gudalur, under section 65 of the act. after considering the objections filed, the commissioner of agricultural income-tax set aside the assessment orders of the agricultural income-tax officer and directed him to pass revised orders according to law.5. the rational reasonings for passing such an order are two fold. they are :1. option to file a composition application for compounding the tax under section 65 of the act cannot be exercised, when already return of income for levying tax on the income basis under section 17 of the act had been filed for the assessment year in question ; and2. a part of the income cannot be assessed on return basis and another on composition.four of the partners of the firm, viz.,1. miss rowena coelho (petitioner in t. c. (r.) no. 481 of 1986).2. e. j. coelho (petitioner in t. c. (r.) no. 482 of 1986).3. m. b. t. coelho (petitioner in t. c. (r.) no. 483 of 1986) and4. mrs. m. a. coelho memorial trust (petitioner in t. c. (r.) no. 484 of 1986), aggrieved by the orders of the commissioner, resorted to the present actions--t. c. (r.) nos. 481 to 484 of 1986.6. from the pith and submission of mr. p. h. arvind pandian, learned counsel representing mr. subbaraya aiyar, learned counsel appearing for the revision petitioners-assessees, and mr. k. ravi raja pandian, learned special government pleader (taxes) representing the revenue, the one and only question that arises for consideration in all these actions is as to whether the order of the commissioner cancelling the individual assessment order and directing the assessing officer to pass fresh orders in accordance with law, on the facts and in the circumstances of the case, is sustainable in law ?7. the order of the commissioner cannot at all be stated to be suffering from any serious infirmity of law or perverse appreciation of facts, calling for interference.(a) sub-section (4) of section 65 of the act prescribes that every application under sub-section (1) thereof shall be submitted in such forms in such manner and within such time as may be prescribed,(b) sub-section (1) of section 65 provides for composition of agricultural income-tax.(c) rule 31 of the tamil nadu agricultural income-tax rules, 1955, provides for form of application for composition of agricultural income-tax and the manner of its presentation and disposal. the said rule prescribes that the application referred to in sub-section (4) of section 65 shall be in form no. viii and shall be verified in the manner indicated therein. it shall be sent to the agricultural income-tax officer by registered post or presented in person or through a duly authorised representative so as to reach him on or before june 15 of the year for which permission to compound the agricultural income-tax is required. the agricultural income-tax officer may admit an application presented within 90 days after the said date, if he is satisfied that the applicant had sufficient cause for not presenting it on or before the said date.8. certain special provisions had also been made in the said rule in relation to the filing of the composition application for the assessment years 1968-69 and 1979-80 with which we are not concerned, and so we have not relied upon those provisions here.9. it is crystal clear from rule 31 of the rules, that the application for composition must reach the assessing officer on or before june 15 of every year for which permission to compound the agricultural income-tax is required, and if there is any delay caused in filing such an application, the delay so caused cannot enure beyond the period of 90 days from the targeted date, viz., june 15, of the year, for which permission to compound the agricultural income-tax is required and the filing of such application during the extended period is permissible only if and when there is sufficiency of cause for the delayed presentation.10. admittedly, the accounting year in these actions commences from april 1, 1981, and ends with march 31, 1982. therefore, the year, in the instant cases for which permission to compound the agricultural income-tax is required to be made is the year commencing from april 1, 1981, and ending with march 31, 1982, and if that be the case, the compounding application ought to have been filed on or before june 15, 1981, and if not filed within the said date, the same could be filed within a further period of 90 days from the said date, provided there is sufficiency of cause for the delay so caused.11. in all the instant cases, there is no denial of the fact that the compounding applications had not been filed on or before the june 15, 1981, nor the same were filed within a period of 90 days from the said date on sufficient cause being shown for not presenting it on or before the said date. the sordid fact is that the individual compounding applications had been filed by individual revision petitioners-assessees on one and the same date, i.e., to say june 14, 1982, far beyond the permissible time, as contemplated by rule 31 of the rules. that being the real position, the order of the commissioner setting aside the individual orders passed by the assessing officer permitting the revision petitioners-assessees to file compounding applications and assess to tax accordingly cannot at all be stated to be not sustainable in law.12. the commissioner, without referring to rule 31 simply stated in his order, as already noticed, that opting to file compounding application is not permissible when especially the return had been filed for levying tax on income basis under the act and a part of the income cannot be assessed on return basis and another on composition for the relevant year in question. this sort of a rationale, according to us, is pregnant with meaning, if we take into account the charging provision, viz., section 3 and the compounding provision, viz., section 65. sub-section (1) of section 3 prescribes that agricultural income-tax at the rate or rates specified in part i of the schedule to this act shall be charged for each financial year commencing from the 1st april, 1955, in accordance with and subject to the provisions of the act on the total agricultural income of the previous year of every person.13. as such, it is crystal clear that the charge to agricultural income-tax is in respect of one year. if we turn to section 65, it is discernible that in lieu of the agricultural income-tax payable by the assessee, he is permitted to pay a lumpsum at the rate or rates specified in part ii of the schedule to the act. that means in lieu of payment of agricultural income-tax by the asses-see for one year, he is permitted to pay a lumpsum at the rate or rates specified in part ii of the schedule to the act. in other words, it could be said that the provisions of the act do not contemplate compounding for broken periods. the order of the commissioner thus looked at from any angle, cannot at all be stated to be not in accordance with law. we answer the point accordingly.14. in fine all the tax case revisions fail and are accordingly dismissed. no costs.