The Collector of Malabar Vs. Erimal
Ebrahim Hajee  INSC 35 (11 April 1957)
IMAM, SYED JAFFER DAS, SUDHI RANJAN (CJ) DAS,
MENON, P. GOVINDA SARKAR, A.K.
CITATION: 1957 AIR 688 1957 SCR 970
Income Tax--Arrears of--Wilfully withholding
and evading payment--Arrest of assessee to recover arrears--Whether
illegal--Indian Income Tax Act, s. 46 (2)--Madras Revenue Recovery Act (Mad. II
of 1864), s. 48-_Constitution of India, Arts. 14, 19, 21 and 22.
The Income Tax Officer forwarded a
certificate under s. 46(2) of the Indian Income Tax Act to the Collector for
recovering the arrears of Income Tax from the assesses as if they were arrears
of land revenue. The Collector proceeded under s. 48, Madras Revenue 971
Recovery Act, and had the assessee arrested and confined in jail. Upon a
petition for a writ of habeas corpus the High Court ordered the release of the
assessee holding that s. 48 of the Madras Revenue Recovery Act and s. 46(2) Of
the Indian Income Tax Act were ultra vires. The Collector appealed.
Held, that S. 48 Of the Madras Revenue
Recovery Act, and S. 46(2) of the Indian Income Tax Act were not ultra vires
and neither of them violated Arts. 14,19, 21 and 22 of the Constitution.
Where the personal liberty of a person is
lawfully taken away under Art. 21, i.e., in accordance with a procedure
established by a valid law, no question of the exercise of fundamental rights
under Art. 19(1)(a) to (e) and (g) can be raised.
A.K. Gopalan v. The State of Madras, (1950) S.C.R. 88, followed.
An arrest for a civil debt in the process of
or in the mode prescribed by law for recovery of arrears of land revenue does
not come within the protection of Art. 22.
State of Punjab v. Ajaib Singh (1953) S.C.R.
Section 46(2) of the Indian Income Tax Act
does not offend Art. 14 and there is no violation of Art. 21 where a person is
arrested under s. 48, Madras Revenue Recovery Act, in pursuance of a warrant of
arrest issued for the recovery of the demand certified under S. 46(2) of the
Indian Income Tax Act.
Purshottam Govindji Halai v. Shri B. M.
Desai, Additional Collector of Bombay, (1955) 2 S.C.R. 887, followed.
Section 46(2) of the Indian Income Tax Act
gives authority to the Collector to recover arrears of tax as if it were an
arrear of land revenue. Section 48 of the Madras Revenue Recovery Act read with
s. 5 make it clear that the arrest of the defaulter is one of the modes by
which the arrears of land revenue can be recovered, to be resorted to if the
said arrears cannot be liquidated by the sale of the defaulter's property. Such
an arrest is not for any offence committed or a punishment for defaulting in
Section 48 of the Madras Revenue Recovery Act
does not require the Collector to give the defaulter an opportunity to be heard
before arresting him. But 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. Such belief must be based upon some
material, which a Court may look into in appropriate cases, to find out if the
conditions laid down in the section have been fulfilled. The Collector has also
the power to release the defaulter if the amount due is paid.
CRIMINAL APPELLATE, JURISDICTION: Criminal
Appeal No. 145- A of 1954.
972 Appeal under Article 132(1) of the
Constitution of India from the Judgment and Order dated July 23, 1954, of the
Madras High Court in Criminal Miscellaneous Petition No. 922 of 1954.
Porus A. Mehta and R. H. Dhebar, for the
B. Pocker and B. K. B. Naidu, for the
1957. April 11. The Judgment of the Court was
delivered by IMAM J.-The appellant obtained a certificate from the Madras High
Court to the effect that the case involved a substantial question of law as to
the interpretation of the Constitution under Art. 132(1), in consequence of
which the present appeal is before us.
The respondent had filed a petition in the
High Court under s. 491 of the Code of Criminal Procedure praying that
directions in the nature of habeas corpus may be issued for his production
before That Court to be dealt with according to law and for his release from
The respondent had been arrested on June 1,
1954 in pursuance of a warrant issued on March 10, 1954 by the Collector of
Malabar under s. 48 of the Madras Revenue Recovery Act (Madras Act 11 of 1864)
(hereinafter referred to as the Act). The circumstances, as stated in the
affidavits filed by the Collector and the Income Tax Officer of Kozikhode in
the High Court, which led to the respondent's arrest, were, that he had been
assessed to income-tax for various assessment years and the total amount of tax
remaining outstanding against him, in round figures, was Rs. 70,000. Some
amount was recovered by the Collector in pursuance of a certificate issued by
the Income Tax Officer under s. 46(2) of the Indian Income Tax Act and bY the
Income Tax Officer himself under s. 46(5)A of the said Act. After deducting the
amount so realised the arrears of income-tax were about Rs. 61,668 and odd for
the assessment Years 1943-44, 1945 -46 to 1948-49. Meanwhile the Income Tax
Officer had made enquiries into the affairs of the respondent and had
discovered that he had sold certain properties of his between November 18, 1947
and March 25, 1948 to 973 the tune of about Rs. 23,100. Demand notice had been
served upon him on November 6, 1947 and the series of transactions of sale
started on November 18, 1947. Out of the said sum of Rs. 23,100, the respondent
paid arrears of tax to the extent of Rs. 10,500 only. Enquiries also revealed
that although the respondent had closed his business at Cannanore in August,
1947, he had set up a firm in 1948 at Tellichery carrying on an identical
business in the name of V.P. Abdul Azeez & Bros. consisting of his one
major and four minor sons. The respondent had alleged that the capital of this
firm was mainly supplied from the sale of jewels belonging to his wife, that
is, Abdul Azeez's mother. He denied that the above-mentioned firm belonged to
him. In the assessment proceedings before the Income Tax Officer concerning the
firm V.P. Abdul Azeez & Bros., the source of these jewels was gone into,
but it was found that the same had not been proved and it was held that the
business of V.P. Abdul Azeez & Bros. belonged to the respondent. All these
facts were communicated to the Collector by the Income Tax Officer who made
independent enquiries for himself and had reason to believe that the respondent
was wilfully withholding payment of arrears of tax and had been guilty of
fraudulent conduct in evading payment of tax. As a certificate had already been
issued to him by the Income Tax Officer under s. 46(2) of the Indian Income Tax
Act, the Collector proceeded under s. 48 of the Act to issue a warrant of
arrest against the respondent in consequence of which he was arrested and
lodged in Central Jail, Cannanore.
In the High Court, the petition under s. 491,
Criminal Procedure Code, was heard by Mack and Krishna. swamy Nayudu JJ. which
was allowed and they ordered that the respondent be set at liberty as his
arrest was illegal.
Mack J. thought that s. 48 of the Act was
ultra vires the Constitution as it offended Art. 22. He did not deal at length
with the argument that s. 48 offended Art. 21 as he was of the opinion that if
that section was ultra vires, then the respondent had not been arrested in
accordance with procedure, established by 974 Saw and his arrest and
imprisonment had been unlawful. On the other hand, if s. 48 was intra vires the
Constitution, then the respondent had been lawfully deprived if his personal
liberty. He was further of the opinion that s. 46(2) of the Indian Income Tax
Act was ultra vires as it offended Art. 14 of the Constitution.
Krishnaswami Nayudu J. was of the opinion
that s.46(2) of the Indian Income Tax Act read with s. 48 of the Act offended
Art. 14 of the Constitution. He was of the opinion that s. 48 of the Act
offended Art. 21 of the Constitution to the extent that it afforded no
opportunity to the arrested person to appear before the Collector by himself or
through a legal practitioner of his choice and to urge before him any defence
open to him and that it did not provide for the production of the arrested
person within 24 hours before a magistrate as required by Art. 22(2).
Relying upon the decision of this Court in A.
K. Gopalan v. The State Of Madras (1), he was of the opinion that the
contention that the provisions of Art. 21 had been infringed did not require
serious consideration because in so far as there was a law on the statute book
on which the Collector had acted that would be sufficient to support the
legality of the action taken by the Collector.
On behalf of the appellant, it was contended
that neither s. 48 of the Act nor s. 46(2) of the Indian Income Tax Act was in
violation of Arts. 14, 19, 21 and 22 of the Constitution. Section 46(2) of the
Indian Income Tax Act was a valid piece of legislation and under its provisions
the Collector was authorized to recover the arrears of income tax as land
revenue on receipt of a certificate from the Income Tax Officer. On behalf of
the respondent it was contended that these sections of the Act and the Indian
Income Tax Act did offend Arts. 14, 19, 21 and 22 of the Constitution. It was
further contended that on a proper interpretation of s. 46(2) of the Indian
Income Tax Act the authority given to the Collector on receipt of the
certificate from the Income Tax Officer was to recover the amount of arrears of
Income tax, but there was no authority there under in the Collector to arrest
(1)  S.C.R. 88.
975 the defaulting assessee. Even if the said
section could be interpreted to give the power of arrest, arrest could only be
made under s. 48 of the Act. A proper reading of s. 48 of the Act would indicate
that the defaulter should be given an opportunity to be heard in his defence,
previous to a warrant of arrest being issued against him, as the same could
only issue if the Collector had reason to believe that the defaulter was
wilfully withholding the arrears of tax or had been guilty of fraudulent
conduct in order to evade payment. Such a belief could not be entertained by
the Collector without first giving the defaulter an opportunity to be heard.
The warrant of arrest issued against the respondent without hearing him in his
defence wag invalid and the arrest of the respondent was illegal. The learned
Advocate for the respondent further drew our attention to the fact that in s.
48 there was no provision for the release of the defaulter if he paid up the
arrears of revenue.
What we have to consider in this appeal, at
the outset, is, whether either s. 48 of the Act or s. 46(2) of the Indian
Income Tax Act or both offend Arts. 14, 19, 21 and 22 of the Constitution. The
decisions of this Court in Gopalan's case, in The State of Punjab v.Ajaib Singh
(1) and in Purshottam Govindji Halai v.Shree B. B. Desai, Additional Collector
of Bombay(2) are to be borne in mind in deciding this question.
It was held by the majority of the learned
Judges in Gopalan's case that the right "to move freely throughout the
territory of India " referred to in Art. 19 (1) (d) of the Constitution
was but one of the many attributes included in the concept of the right to
" personal liberty " and when a person is lawfully deprived of his
personal liberty without offending Art. 21, he cannot claim to exercise any of
the right$ guaranteed by sub-cls. (a) to (e) and (g) of Art. 19 (1), for those
rights can only be exercised by a freeman.
In that sense, therefore, Art. 19 (1) (d) has
to be read as controlled by the provisions of Art. 21, and the view that Art.
19 guarantees the substantive right and Art. 21 prescribes a procedural
protection is incorrect.
(1)  S.C.R. 254. (2)  2 S.C.R.
976 The decision in Gopalan's case has been
followed in this Court in a series of cases and that decision must now be taken
as having settled once for all that the personal rights guaranteed by sub-cls.
(a) to (e) and (g) Of Art. 19 (1) are in a way dependent on the provisions of
Art. 21 just as the right guaranteed by sub-cl. (f) of Art. 19 (1) is subject
to Art. 31. If the property itself is taken;
lawfully under Art. 31, the right to hold or
dispose of it perishes with it and Art. 19 (1) (f) cannot be invoked.
Likewise, if life or personal liberty is
taken away lawfully under Art. 21 no question of the exercise of fundamental
rights under Art. 19 (1) (a) to (e) and (g) can be raised.
Under Art. 21 " Procedure established by
law " means procedure enacted by a law made by the State, that is to say,
the Union Parliament or the Legislatures of the States.
In the appeal before us, the principal
question, therefore, is whether the respondent was deprived of his personal
liberty in accordance with a procedure established by law, i.e., a valid law.
If the law is valid then he has been lawfully deprived of his personal liberty
and, in that situation, he cannot complain of the infraction of any of the
fundamental rights mentioned in Art. 19(1) (a) to (e) or (g).
In Ajaib Singh's case, a person was taken
into custody by the police and sent to the Officer-in-charge of the nearest
camp under s. 4 of the Abducted Persons (Recovery and Restoration) Act (Act LXV
of 1949) and it was submitted that the said Act contravened the provisions,
inter alia, of Art.
22 of the Constitution. None of these
submissions were found to be valid. It was held, so far as Art. 22 is
concerned, that the taking into custody was not arrest and detention within the
meaning of Art. 22. Krishnaswami Nayudu J. in his judgment, attempted to
distinguish the decision. With respect to the learned Judge the principle
emerging out of the decision in Ajaib Singh's case appears to us to be clear
enough. The decision did not attempt to lay down in a precise and meticulous
manner the scope and ambit of the fundamental rights or to enumerate
exhaustively the cases that come within the protection of Art. 22. What was 977
clearly laid down was that the physical restraint put upon an abducted person
in the process of recovering and taking that person into custody without any
allegation or accusation of any actual or suspected or apprehended commission
by that person of any offence of a criminal or quasi-criminal nature or of any
act prejudicial to the State or the public interest, cannot be regarded as an
arrest or detention within the meaning of Art. 22. In the present case, the
arrest was not in connection with any allegation or accusation of any actual or
suspected or apprehended commission of any offence of a criminal or
quasi-criminal nature. It was really an arrest for a civil debt in the process
or the mode prescribed by law for recovery of arrears of land revenue.
In Purshottam Govindji Halai's case, this
Court held that there was no violation of Art. 21 of the Constitution where a
person had been arrested under s. 13 of the Bombay Land Revenue Act 1876 in
pursuance of a warrant of arrest issued for recovery of the demand certified
under s. 46(2) of the Indian Income Tax Act, which did not offend Art. 14 of
the Constitution, inasmuch as such arrest was under a procedure established by
law, that is to say, s. 13 of the said Act constituted a procedure established
by law. Mr. Pocker, however, attempted to distinguish the case, because this
Court was dealing with s. 13 of the Bombay Act. The grounds stated in that case
for declaring that s. 46(2) of the Indian Income Tax Act was not ultra vires
the Constitution, as it did not offend Art. 14, are equally applicable to the
present case and we can find no true principle upon which we can distinguish
that case from the present one.
In our opinion, having regard to the previous
decisions of this Court referred to above, neither s. 48 of the Act nor s.
46(2) of the Indian Income Tax Act violates Arts. 14, 19, 21 and 22 of the
We now proceed to -consider the
interpretation sought to be put by Mr. Pocker on s. 46(2) of the Indian Income
Tax Act and s. 48 of the Act. He contended that s. 46(2) of the Indian Income
Tax Act merely authorised the Collector to recover the amount 126 978 of arrears
of Income Tax, but it did not give him any authority to arrest the respondent.
He submitted that the act of arrest was not a mode of recovery of the arrears
of tax, but it was a punishment for failure to pay. We are unable to accept
this interpretation. The authority given to the Collector by this section is to
recover the arrears of tax as if it were an arrear of land revenue. The
preamble of the Act clearly states that the laws relating to the collection of
the public revenue should be consolidated and simplified and s. 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 costs 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 s. 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
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
979 payment. When dues in the shape of money are to be realised by the procees
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. ss. 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 s. 48.
We are of the opinion, therefore, that where an arrest is made under s. 48
after complying with its pro- visions, 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 s. 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 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 section have been fulfilled or not.
From the affidavits filed in the High Court by the Collector and the Income Tax
Officer it is quite clear that there was material upon which the Collector
could base his belief that the respondent was wilfully withholding payment of
the arrears of -tax and had been guilty of fraudulent conduct in order to 980
evade payment. The Collector was, therefore, justified in arresting the
As pointed out by Mr. Pocker, s. 48 of the
Act does not in terms provide for the release of the defaulter if he pays up
the arrears, but it is to be remembered that in addition to the powers under s.
48 of the Act, the Collector has, under the proviso to s. 46(2) of the Indian
Income Tax Act, similar powers to that which a Civil Court has for recovery of
an amount due under a decree. It was held in Purshottam Govindji Halai's case
that the proviso is not an alternative remedy open to the Collector but only
confers additional powers on the Collector for the better and more effective
application of the only mode of recovery authorized by sub- see. (2) of s. 46
of the Indian Income Tax Act. Under s. 58 of the Civil Procedure Code a Civil
Court must release the judgment debtor if the amount due is paid. Accordingly, the
Collector has the power to release the defaulter if the amount due is paid and
there is no substance in the submission of the learned Advocate. Moreover, one
of the conditions precedent to action under s. 48 is the existence of arrears
of revenue. On payment of the arrears, that condition no longer exists and the
debtor must clearly be entitled to release and freedom from arrest.
It was urged that the respondent was a man of
about 70 years at the time of his arrest and a 'Person suffering from serious
ill health. Indeed, it is said, he is suffering from paralysis and that he
should not be sent back to jail custody. We cannot in the present proceedings
make such an order. The respondent may, if he is taken into custody again,
approach the Collector for his release who could do so, in the circumstances
set out in s. 59 of the Code of Civil Procedure, in the exercise of his powers
under the proviso to s. 46(2) of the Indian Income Tax Act.
The appeal is accordingly allowed with costs
and the judgment of the High Court is set aside. It will be open to the Income
Tax Officer of Kozikhode and the Collector of Malabar to take such steps
against the 'respondent according to law as they may be advised.