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PETITIONER:

LAKSHMANASAMI GOUNDER

Vs.

RESPONDENT:

C.I.T. SELVAMANI AND ORS.

DATE OF JUDGMENT01/11/1991

BENCH:

RAMASWAMY, K.

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

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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-

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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-

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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

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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

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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