Case Note & Summary
The appeal arose from a suit to set aside an auction sale of land measuring 5.86 acres in Peddayyasamudram village, brought to sale on November 2, 1967 to recover government dues owed by one K. Sankaraiah. The appellant purchased the land in auction and obtained a sale certificate. The second respondent, a brother of Sankaraiah who had received the property in an earlier partition, filed a suit claiming that he was not a defaulter under Section 5 of the Andhra Pradesh Revenue Recovery Act, 1894 and therefore his property could not be sold. The trial court dismissed the suit and the District Judge affirmed. In Second Appeal No.632/77, a learned single Judge of the High Court decreed the suit, setting aside the sale, relying on Chatrati Srirama Murthi v. Official Receiver, Krishna. Aggrieved, the auction purchaser appealed to the Supreme Court by special leave. The admitted facts were that the debtor and the second respondent were members of a joint family and the property was joint family property hypothecated to the government for the loan taken by Sankaraiah. Under partition deed Ex.B-13, the second respondent had taken a bulk of the properties including the suit land with an undertaking to discharge all liabilities of the erstwhile joint family, including the government loan. Section 5 of the Act provides that whenever revenue is in arrear, the Collector may recover the arrear by sale of the defaulter's movable and immovable property. The Supreme Court held that the word 'defaulter' connotes the person who is liable to discharge the debt, not necessarily the original borrower. Because the second respondent had assumed the liability under the partition deed, he became a defaulter for purposes of Section 5, and the property was liable to be proceeded against. The Court distinguished C. Dhanalakshmi Ammal v. Income-Tax Officer, Madras, on facts, noting that there the property stood in the name of the wife as benamidar of the husband, whereas here the property was joint family property charged to the debt and the respondent had undertaken to pay it. Accordingly, the Supreme Court allowed the appeal, set aside the judgment and decree of the High Court, and dismissed the suit. The auction sale conducted on November 2, 1967 and the sale certificate were held legal and valid. No costs were awarded.
Headnote
A) Revenue Recovery - Defaulter under Section 5 of A.P. Revenue Recovery Act, 1894 - Sale of Hypothecated Joint Family Property - A co-sharer who received charged property in partition with an undertaking to discharge all liabilities including government loan became a defaulter for purposes of Section 5, making the property liable to sale for recovery of arrears - The Supreme Court held that the word 'defaulter' connotes the person liable to discharge the debt, not merely the original debtor, and that the auction sale and sale certificate were valid and binding on the respondent - Held that the High Court erred in setting aside the sale; appeal allowed and suit dismissed (Paras 1-3).
Issue of Consideration
Whether respondent who undertook liability under partition deed is a 'defaulter' under Section 5 of A.P. Revenue Recovery Act, 1894, and whether the joint family property charged to government debt could be sold for recovery
Final Decision
Appeal allowed; High Court judgment and decree set aside; suit dismissed; auction sale and sale certificate held valid and binding on second respondent; no costs.
Law Points
- Defaulter under Section 5 of A.P. Revenue Recovery Act
- 1894 includes any person liable to discharge debt
- not just original borrower
- property charged to government debt can be sold after partition if co-sharer undertakes liability
- joint family property hypothecated to government is liable for recovery
