Sujir Suresh Nayak and others v. Government of Kerala and Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY, THE 8TH DAY OF JANUARY 2018 / 18TH POUSHA, 1939 ## **W.A.No. 155 of 2017 IN W.P(C). 21468/2014** AGAINST THE ORDER/JUDGMENT IN WP(C) 21468/2014 DATED 08-11-2016 OF HIGH COURT OF KERALA. -------------------------- ## **APPELLANTS/PETITIONERS** :- - 1 SUJIR SURESH NAYAK S/O.LATE SUJIR KESAV NAYAK, CHURCH GATE, RECLAMATION, KASTHOORI BUILDING, MUMBAI - 400 020. - 2 SUJIR DINESH NAYAK, S/O.LATE SUJIR KESAV NAYAK, CHURCH GATE, RECLAMATION, KASTHOORI BUILDING, MUMBAI - 400 020. - 3 SUJIR ANANTH NAYAK, S/O.LATE SUJIR KESAV NAYAK, CHURCH GATE, RECLAMATION, KASTHOORI BUILDING, MUMBAI - 400 020. - 4 SUJIR SAROJINI NAYAK, W/O.LATE SUJIR KESAV NAYAK, CHURCH GATE, RECLAMATION, KASTHOORI BUILDING, MUMBAI - 400 020. (PETITIONERS ARE REPRESENTED BY THEIR CONSTITUTED POWER OF ATTORNEY, N. RAMANKUTTY NAIR, S/O. NARAYANAN NAIR, NOW RESIDING AT 48, VRINDAVAN NAGAR, KADAPPAKKADA P.O KOLLAM - 8) BY ADVS.SRI.T.M.CHANDRAN SRI.S.SUJITH ## **RESPONDENTS/RESPONDENTS:** -: 1. GOVERNMENT OF KERALA REPRESENTED BY SECRETARY, REVENUE (S) DEPARTMENT, THIRUVANANTHAPURAM - 695 001. 2. THE COMMISSIONER OF LAND REVENUE, THIRUVANANTHAPURAM - 695 001. ## **W.A.NO.155 OF 2017 ::2::** 3. THE DISTRICT COLLECTOR, KOLLAM - 691 001. 4. THE REVENUE DIVISIONAL OFFICER, KOLLAM - 691 001. 5. THE TAHSILDAR (RR), KOLLAM - 691 001. 6. THE ASSISTANT COMMISSIONER (ASSESSMENT), COMMERCIAL TAXES, KOLLAM - 691 001. 7. GEETHANJALI PAI, SUJIR VILLA, NOW RESIDING AT 18 FORDS ROAD, RANDOLDH, NEW JERSY - 07869, U.S.A., REPRESENTED BY HER POWER OF ATTORNEY P.G.GOPALAKRISHNA PILLAI, PULIMOOTTU PUTHEN VEEDU, KANNIMEL CHERRY, KILIKOLLOOR, KOLLAM - 691 004. 8. JAISON G. OOMMEN, VAROORMADHATHILAZHIKATHE VEEDE, PUTHOOR P.O., KOLLAM - 691 507. 9. K.R.USHASREE, SAI EXPORT ENTERPRISES, MANGAD P.O., KOLLAM - 691 015. R1-R6 BY GOVERNMENT PLEADER SRI. RENIL ANTO KADAMKULATHY. R7 BY SRI.K.SUBASH CHANDRA BOSE R8 BY SENIOR ADV. SRI.S.SREEKUMAR R8 BY ADV. SRI.P.MARTIN JOSE R8 BY ADV. SRI.P.PRIJITH R8 BY ADV. SRI.THOMAS P.KURUVILLA R9 BY SENIOR ADV. SRI.T.KRISHNANUNNI R9 BY ADV. SRI.N.D.PREMACHANDRAN R9 BY ADV. SRI.D.AJITHKUMAR THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 08-12-2017, THE COURT ON 08-01-2018 DELIVERED THE FOLLOWING:- jma/- ## K. Vinod Chandran & Ashok Menon, JJ. ------------------------------------------------------- W.A.No.155 of 2017 ------------------------------------------------------Dated, this the 08[th] day of January, 2018 ## **JUDGMENT** ## Vinod Chandran, J: The petitioners, legal heirs of one of the partners of a partnership firm, whose liabilities under the Kerala General Sales Tax Act, 1963 [for brevity “KGST Act”] were liquidated by the sale of two properties under the Kerala Revenue Recovery Act, 1968 [for brevity “RR Act”], challenge the judgment of the learned Single Judge confirming the sale made by the Revenue Recovery authorities. 2. Two brothers, Sujir Kesav Nayak, whose legal heirs are the petitioners and Sujir Ganesh Nayak, whose legal heir is the 7[th] respondent, were carrying on a partnership firm in the name and style of “M/s.Sujir Ganesh Nayak and Co., Kollam”. The dues that were created under the KGST Act and its quantum are not in dispute and the issue involved in the present proceedings is the sustainability of the sale to liquidate the said dues. The sale carried out by the Revenue Recovery authorities was of two properties; one in Vadakkevila Village [item No.1 in Exhibit P1 having an extent of 35.33 - 2 - W.A.No.155 of 2017 Ares] and the other in Mundakkal Village [Item No.2 in Exhibit P1 having an extent of 21.83 Ares]. The respondents 8 and 9 respectively purchased the said properties in the auction. 3. The sale is challenged on the ground of violation of Sections 49, 74 and 75 of the RR Act: (i) the notice having not been published in the manner provided, (ii) there being no attachment of the properties effected prior to the sale, (iii) the notices issued under Form-16 in the name of one of the partners and the firm, being after the death of that partner who was the owner of the said properties' (iv) the legal heir; of Sujir Ganesh Nayak (the deceased partner), the 7[th] respondent and the surviving partner were not put to notice (v) the valuation being lesser than the actual market value (vi) non-consideration of Section 62. As to the irregularities in publication of notice it is further alleged that Form-16 notice as contemplated under the RR Act; did not contain the valuation of the property and the valuation itself was arrived at just prior to the sale. The attachment was also on 03.03.2007, after the notice at Exhibits P3 and P4 were issued. The publication at Exhibit P1 was not made with a gap of 30 days from the date on which the sale was fixed. 4. The learned Counsel for the petitioner took us through - 3 - W.A.No.155 of 2017 the notices issued at Exhibits P3 and P4 to contend that there was no effective notice on the surviving partner or the legal heirs of the deceased partner who owned the property. The liability shown in Exhibits P3 and P4 is Rs.60,46,805/- and the dues were much more at that point of time. It is also contended that the excess amounts received were apportioned to a claim of gratuity, which claim was pending appeal before this Court. Section 49(2) of the RR Act was specifically read, to indicate that the details as required therein were not complied with in the publication. At any rate, the defect of clear notice of 30 days was not complied with. Sujir Ganesh Nayak died on 09.03.2006. The notices at Exhibits P3 and P4 in his name and the firm's name were issued on 20.02.2007. The sale, hence, was after the death of the owner of the property and it could not have been carried out without notice to the legal heir and also the predecessorin-interest of the appellants, who was the surviving partner, substantially interested in the partnership properties. 5. On the background facts, it is submitted that the liabilities were created by reason of the misdeeds of Sujir Ganesh Nayak and there was a suit filed by Sujir Kesav Nayak, the predecessor-in-interest of the appellants herein; which concluded with - 4 - W.A.No.155 of 2017 Exhibit P12 judgment. The suit was one filed for settlement of accounts and though posted for trial; in the meanwhile the parties entered into a compromise. As per the compromise, three properties which were brought into the common stock of the partnership firm were set apart to the exclusive enjoyment of Sujir Ganesh Nayak. Some of the properties were apportioned to the share of Sujir Kesav Nayak. The properties in A Schedule were kept specifically for liquidating the dues of the partnership firm, two out of which are the subject matter of the impugned sale. The partnership was deemed to have been dissolved with effect from 1982, as per the compromise. The appellants/petitioners, as legal heirs of one of the partners; who was alive at the time of sale and on whom no notice of sale was issued are substantially interested in the property is the contention. 6. The learned counsel appearing for the petitioner submits that there was no notice issued on the predecessor-in-interest of the appellants Sri.Sujir Kesav Nayak, who was also one of the partners. Notice was issued only in the name of the partnership firm, which stood dissolved from the year 1982 and also in the name of the other partner, who was deceased by the time of issuance of notice. The legal heir of the said partner, the 7[th] respondent, was also not - 5 - W.A.No.155 of 2017 issued with a notice. The learned Single Judge perused the files and found that the notice has been issued in time in compliance with Section 49 of the Act. However there is nothing to indicate that a proper notice was issued. The finding of the learned Single Judge that a notice was served on the partnership firm cannot be sustained, especially since the partnership firm stood dissolved as per the mutual agreement of the parties and in any event on the death of Sri.Sujir Ganesh Nayak. 7. Section 49 of the R.R. Act speaks of sale; in accordance with the provisions, of an immovable property attached under the Act. There was no attachment prior to the sale notice being issued. Section 74 of the Act speaks also of issuance of notice by registered post, which has not been done. As per the mode of publication of notice under Section 75(2), the Collector has to either publish the notice in the Gazette or one or two newspapers having circulation in the area. The discretion as spoken of in Section 75(2) is only with respect to the publication being made in the Gazette or in the newspapers. The District Collector having opted to make a paper publication as seen from Ext.P1, which is mandatory, there should have been clear notice of 30 days before the sale. The sale should fail - 6 - W.A.No.155 of 2017 for reason of it having been scheduled within 30 days, which is against the provisions of Section 49. The finding of the learned Single Judge that the notice made by affixture would suffice cannot be sustained, argues learned Counsel. 8. The learned Single Judge having found that the property is a partnership property pointedly refused to consider the contention raised by the 9[th] respondent, that the 7[th] respondent, legal heir of Sri.Sujir Ganesh Nayak had not challenged the sale. Despite that, the learned Singe judge ignored the fact that there was no notice issued to the surviving partner when proceedings were taken for sale of a property, which though stood in the name of the deceased partner, the Revenue Records [BTR] evidenced payment of tax having been made by the partnership firm. 9. The learned counsel appearing for the official respondents would seek to sustain the sale, especially on the basis of the findings rendered by the learned Single Judge, after perusing the file. There is absolutely no cause to interfere with the sale which settled substantial dues to the State. The proceedings of the sale were adjusted towards sale tax dues as also the gratuity dues payable to the workmen. - 7 - W.A.No.155 of 2017 10. The respondents 8 & 9 contended that the predecessor-in-interest of the appellants, the surviving partner, at the time of sale could not have any objection to the sale, since the properties which were sold, were by consent of the partners kept apart to satisfy the liability of the State. There was absolutely no ground taken of a substantial injury having been caused to the surviving partner; especially since he is a beneficiary in so far as the entire sale tax and gratuity dues being settled from the sale of properties owned by the other partner. 11. On the question of substantial injury, the learned Senior Counsel appearing for respondents 8 & 9 placed reliance on _**Dhirendra Nath Gorai and Subal Chandra Shaw & Others v. Sudhir Chandra Ghosh & Others**_ **[AIR 1964 SC 1300],** _**Chilamkurti Bala Subrahmanyam v. Samanthapudi Vijaya Lakshmi**_ **[AIR 2017 SC 2443]** _**, C.C. Sivaprasad v. K.Sasidharan & Another**_ **[AIR 2006 Ker 167]** _**.**_ It is argued that there is absolute necessity to plead substantial injury, absence of which would be fatal. The provisions under the R.R Act for setting aside a sale is akin to that found in Order XXI Rule 90 and without a pleading of substantial injury, there could be no application filed and maintained before the authority. - 8 - W.A.No.155 of 2017 12. The respondents also contend that the predecessor-ininterest of the appellant had notice of the sale, as found by the learned Single Judge; which is revealed from the writ petitions filed before this Court. The _locus standi_ of the predecessor-in-interest of the appellants is also seriously challenged on the ground that the property belonged to Sri.Sujir Ganesh Nayak, whose only legal heir was the 7[th] respondent; who did not challenge the sale. It is contended that the property being in the ownership of Sri.Sujir Ganesh Nayak, there was no requirement for a notice to the other partner. The 7[th] respondent, the only legal heir of the owner of the property had acquiesced to the sale proceedings by seeking exclusion of one of the properties brought for sale in Ext.P1. 13. The learned counsel appearing for the appellant/writ petitioner in reply to the contention of _locus standi_ relies on the decisions reported in _**Saligram Ruplal Khanna & Another v. Kanwar Rajnath**_ **[AIR 1974 SC 1094]** _**, M/s. Malabar Fisheries Co., Calicut v. Commissioner of Income Tax, Kerala**_ **[(1979) 4 SCC 766]** _**, Abdul Salim v. Mugal Theatre & Padiyans Complex**_ **[2012 (4) KLT 644]** and _**Hassankutty v. S.T.A.T. & Others**_ **[1987 (2) KLT 630]** to assert that as a partner, the predecessor-in-interest of the - 9 - W.A.No.155 of 2017 appellants had substantial interest over the property and that there was a requirement for a notice. 14. We have perused the records and read through the elaborate judgment of the learned Single Judge. The learned Single Judge has perused the files with respect to the sale and found that the sale has been carried out properly after issuance of notice by affixture, which notice had clear gap of 30 days from the scheduled sale. We are also inclined to agree with the learned Single judge that the requirement under Section 49(2) is only that the notice shall be duly served at least 30 days before the date of sale. The notice was issued on the owner of the property and partnership firm as was admitted by the appellants also. Section 74 speaks of service of notice, which service is either by delivery to the person concerned, or where such delivery is not possible, to an adult male member of his family or by affixture of a copy of the notice on the outer door of his usual place of residence. The specific finding of the learned Single Judge is that the notice was affixed on the premises of the partnership firm, the address of which was available with the Revenue Recovery authorities. The assessee/defaulter being the firm the affixture made was due service. We do not find any imperative requirement for - 10 - W.A.No.155 of 2017 publication of the notice by the Collector in the Gazette or in one or two newspapers. Sub-section (2) of Section 75 does not mandate the publication either in the Gazette or one or two newspapers, but only confers the discretion on the Collector to make such publication, in the Gazette or one or two newspapers. 16. Considering the issue on the backdrop of the allegations raised, a perusal of the judgment in OS No.137 of 1983 assumes significance, which is produced at Ext.P12. The judgment was based on a compromise, the terms of which have been appended to that judgment. The suit was one filed by Sri.Sujir Kesav Nayak, predecessor-in-interest of the appellants against Sri.Sujir Ganesh Nayak; his brother and the other partner. The plaintiff and the defendant, the partners, agreed that the partnership between the plaintiff and defendants styled as Sujir Ganesh Nayak & Co. having its Head Office at Kadappakkada, Kollam and its Branch Office at Bombay shall be deemed to have been dissolved from 29.12.1982. Going by the terms of the agreement, it is seen that the plaintiff and the defendant apportioned the properties of the firm agreeing to separate possession, except of certain items. As to the liability of the firm existing towards the Bank & the Sales Tax Department, it was - 11 - W.A.No.155 of 2017 agreed to be borne equally as per Clause (F) of paragraph 2 of the compromise. The plaint A schedule properties, except the three apportioned to Sujir Ganesh Nayak, were agreed to be kept in common **,** for settling the liabilities of the Bank and the Sales Tax Department. The decision was to settle the liabilities to the Bank and the Sales Tax Department by sale of the properties. Whatever proceeds remained or the properties if any left, after settling the liabilities of the firm, would be shared equally. 17. Before proceeding further, the earlier proceedings with respect to the impugned sale, by the various parties are also to be looked at, which is discernible from Exhibit R8(b) judgment, which disposed of five cases. W.P.(C) No.10089 of 2007 was filed by Sujir Kesav Nayak; later substituted by his legal heirs, challenging the sale scheduled on 22.03.2007, 28.03.2007 and 29.03.2007. The writ petition was filed and came up for admission on 23.03.2007, upon which there was a stay granted of confirmation of sale. The allegations raised were identical as raised herein and raised before the District Collector on 20.03.2007, prior to the sale. W.P.(C) No.10269 of 2007 was filed by a total stranger, claiming possession of the properties. W.P.(C) No.29072 of 2008 was filed by the petitioners - 12 - W.A.No.155 of 2017 herein seeking consideration under the Amnesty Scheme for settlement of the sales tax dues. W.P.(C) No.13566 of 2007 was filed by the daughter of Sujir Ganesh Nayak, the 7[th] respondent herein. She sought for avoiding the sale of the 3[rd] item of property, since the same was settled in her name by her father. She challenged only the notices of sale with respect to the third item of property. She did not challenge the sale of the remaining two properties. W.P.(C) No.10285 of 2007 was filed by the Bank challenging the sale, on the ground of having mortgage over the properties. 18. The writ petition filed by the stranger [W.P.(C) No.10269 of 2007] and the one filed by the appellants/petitioners claiming amnesty [W.P.(C)No.20972 of 2008] stood rejected. W.P.(C) No.10089 of 2007 filed by the appellants and W.P.(C) No.10285 of 2007 filed by the mortgagee-Bank were disposed of directing them to raise their contentions before the District Collector under Section 52 of the RR Act. With respect to W.P.(C) No.13566 of 2007, it was noticed that property No.3 notified in Exhibit P1 was not sold. The liability to the Revenue stood settled by the sale of the other properties and, hence, W.P.(C) No.13566 of 2007 was dismissed as infructuous. What is pertinent is that the only legal heir of Sujir Ganesh Nayak - 13 - W.A.No.155 of 2017 challenged the sale to save item No.3 property. When that was saved, she remained silent and did not challenge the sale of the other two items. 19. At the time of hearing itself we raised a question insofar as the right of the appellants to challenge the sale when notice was issued to the partnership firm and the owner of the property. It is an admitted fact that the property stood in the name of Sujir Ganesh Nayak, one of the partners; which was brought into the common stock of the partnership and land tax was paid in the name of the firm; ie: M/s.Sujir Ganesh Nayak and Co. The partnership firm was also registered as a dealer under the KGST Act. The appellants' claim is that the partnership was dissolved by the deed of compromise deeming such dissolution from 1982. At any event on the death of one of the partners, the firm stands dissolved and there should have been a notice issued to the other partner. Despite the dissolution the surviving partner retains his interest in the property, is the compelling argument. There are a few decisions relied upon to buttress this contention, which are to be examined at the outset. 20. _**Saligram Ruplal Khanna**_ was concerned with a partnership formed by persons; industrialists, displaced from Pakistan - 14 - W.A.No.155 of 2017 to carry on the business of a Mill, which was in the possession of the Custodian, being evacuee property. The partnership took over the property on lease; subject to their right to purchase the same, the price being adjusted to the extent their compensation as displaced persons are determined. Even before purchase was effected, for reason of violation of terms, the lease was determined. While proceedings against determination of lease were pending, one of them, the respondent, purchased the property. Whether the partnership subsisted and could there be a claim of rendition of accounts were the issues dealt with in an appeal from concurrent dismissal of a suit filed by the other partners. We do not see any assistance for the petitioners from the aforesaid decision. On the contrary the following declaration stands against them: “The proposition, in our opinion, cannot be disputed that after dissolution, the partnership subsists merely for the purpose of completing pending transactions, winding up the business, and adjusting the rights of the partners;' and for these purposes, and these only, the authority, rights, and obligations of the partners continue” (see page 573 of Halsbury's Laws of England Third Edition Vol.28). Here the partnership was dissolved by volition and certain properties were set apart to settle the liabilities; the rights if any arise only after - 15 - W.A.No.155 of 2017 the liabilities are settled and that is between the partners; here between the legal heirs. 21. _**Malabar Fisheries Co.**_ decided whether the withdrawal of development rebate allowed to a partnership firm; on its dissolution and taking over of the various business by the different partners and one receiving cash in lieu of his shares, was proper. The question was confined to whether the transfer of assets as contemplated in the Income Tax Act, 1961 embraces the apportionment of the partnership assets on dissolution of a partnership firm. The Court reiterated the well heeled principle of the partnership having no separate entity as distinguished from its partners and the assets being held jointly and in common. Hence on dissolution, after adjustment of the liabilities, when the assets are distributed, apportioned, divided or allotted that does not constitute a transfer and merely results in a mutual adjustment of rights was the finding. As was noticed earlier the adjustment of rights arise only after the settlement of liabilities. 22. _**Hassankutty**_ applied for a permit for a stage carriage vehicle standing in his name, which was declined for reason of not having produced a tax clearance certificate of another vehicle which W.A.No.155 of 2017 - 16 - was registered in the name of a partnership firm, in which the applicant was a Managing Partner. The STAT directed the grant on the premise that the other vehicle stood in the name of a firm, as distinct from the individual. The Division Bench affirmed the reversal of the order of the STAT, in the writ petition, again on the premise that the firm has no existence as distinct from that of the partners, and the individual who applied for the permit, as a partner had joint and several liability to satisfy the tax dues of that other vehicle. 23. _**Abdul Salim,**_ was a revision by a tenant from an order of the Rent Control Court ordering eviction for _bonafide_ need of the landlord. The landlord was a partnership firm, and the tenant contented that the firm which sued for eviction was not the one which executed the lease deed. The Division Bench on examination of the various documents found that the original partnership underwent several reconstitution and eventually both the names were interchangeably used to describe the firm. A subsequent event of dissolution was also found to be of no consequence since the partners had agreed to the property reverting back to the Managing Partner who originally owned the said property. The fulcrum on which the decision turned was Section 47 of the Partnership Act, which, - 17 - W.A.No.155 of 2017 notwithstanding the dissolution of the firm, permits the continuance of the authority of each of the partners to bind the firm and the other mutual rights and obligations of the partners. 24. There can be no dispute that the surviving partner's rights over the partnership assets, subsists, even after dissolution subject only to the priority in so far as settlement of the liabilities of the firm. The liabilities of the firm could also be challenged by the surviving partner since if the liabilities are reduced or extinguished he gets to share in the assets so preserved. In this context it is to be noticed that the Revenue initiated the sale on the basis of the requisition made by the Sales Tax Department. Apposite here, would be reference to _**C.I.T Vs. R.M. Chidembaram A.I.R 1977 SC 489**_ , relied on in _**Hassankutty.**_ The issue therein was the rate to be employed for taxing a partners salary paid by the firm. The Court held that it is to be taxed as the profits and gains of the firm especially since the Income-tax Act, treats the salary to be the income of the firm. The reasoning was as below: “Here the first thing that we must grasp is that a firm is not a legal person even though it has some attributes of personality. Partnership is a certain relation between persons, the product of agreement to share the profits of a - 18 - W.A.No.155 of 2017 business 'Firm' is a collective noun, a compendious expression to designate an entity, not a person. In income-tax law a firm is a unit of assessment, by special provisions, but is not a full person; which leads to the next step that since a contract of employment requires two distinct persons, viz., the employer and the employee, there cannot be a contract of service, in strict law, between a firm and one of its partners”. 25. As in the Income-tax Act, so in the KGST Act, a partnership firm is recognised as a dealer and is so registered and assessed. The Sales Tax Department proceeds for recovery against the defaulting assessee; from the address shown in its records. The partnership firm does not have a separate existence from its partners, but the service of notice on the firm is deemed to be service on all the partners. There is nothing on record to show that the partners had informed the Department about the dissolution of the firm as was agreed upon by them in the suit. The compromise entered into between themselves, validated by Exhibit P12 judgment of the Civil Court, is not seen communicated to the Sales Tax Department. Yet again the dissolution deemed to have effect from 1982 cannot be sustained since the dues of sales tax were for the period 1958-59 to - 19 - W.A.No.155 of 2017 1989-90. Sujir Kesav Nayak, the surviving partner at the time of sale, also does not have anything to say as to whether a communication was issued to the Sales Tax Department about the dissolution effected on the death of one of the partners. 26. The requirement to inform a death or the dissolution of a firm to the Sales Tax Department is available in Rules 48 and 50 of the KGST Rules, which reads as under:- **“48. Sending of report in case of death of a dealer.-** When a dealer dies, his executor, administrator or other legal representative shall, within thirty days of the death of the dealer or within thirty days of his taking charge as such executor, administrator or other legal representative whichever is later shall send a report of his having done so to the registering authority concerned and shall apply for registration as provided in sub-rule (7) of Rule 5. **50. Report of dissolution of partnerships.-** If a partnership is dissolved, every person who was a partner shall send within thirty days of such dissolution a report of the dissolution to the registering authority concerned along with a copy of the deed of dissolution”. 27. The Revenue could not have issued a notice on the surviving partner, since the Revenue or the Taxes Department was - 20 - W.A.No.155 of 2017 never informed of the death of one of the partners and of the dissolution of the partnership. As is discernible from the judgment of the learned Single Judge, who perused the files with respect to the sale, there was an affixture of notice carried out at the premises of the partnership firm. The appellants themselves have produced two notices dated 20.02.2007, Exhibits P3 and P4; the former issued in the name of Sujir Ganesh Nayak, the owner of the property; and the latter issued in the name of Sujir Ganesh Nayak and Co., Kollam, the partnership firm. In such circumstances, there was no requirement for a notice on the other partner Sujir Kesav Nayak, whose legal heirs are the appellants herein. Even then, there could be a contention raised that there was necessity for a notice as against the legal heir of Sujir Ganesh Nayak, who owned the property. As was noticed, the legal heir had not challenged the sale and was satisfied with the 3[rd] property having been excluded. 28. It is pertinent that the present application to set aside the sale was not filed by the legal heir of Sujir Ganesh Nayak. The 7[th] respondent herein, Geethanjali Pai, who was sole legal heir of Sujir Ganesh Nayak, had challenged only the sale of the properties settled on her; which was excluded. We had called for the Judges Papers of W.A.No.155 of 2017 - 21 - W.P.(C) No.13566 of 2007, which indicate that the challenge was against the sale of 2[nd] and 3[rd] items shown in Exhibit P1 which were re-auctioned by notices dated 29.03.2017 [Exhibits P7 and P8 produced in W.P.(C) No.13566 of 2007]. Exhibit P7 produced in W.P.(C) No.13566 of 2007 was with respect to 12.13 Ares of property in Block No.145 of Survey No.37 and Exhibit P8 was with respect to 4.69 Ares in Block No.145 of Survey No.34; both in Mundakkal Village. On the Government filing a counter affidavit that the amounts were realized by the sale of the other two properties, the writ petition was dismissed as infructuous by the common judgment. No challenge was taken therefrom; nor is an application filed to set aside the sale of the other two properties. It is also seen from the order of the District Collector, produced at Exhibit P13, that the only legal heir of Sujir Ganesh Nayak was served with a notice, though the exact date is not specified. We need not delve upon it, since as of now there is no challenge from that person. We have also found that there is no requirement to serve a notice on a surviving partner, since the Revenue had served notices on the partnership firm, the dissolution of which was not informed to the Sales Tax Department, on whose requisition the sale was proceeded with. The title as revealed from the - 22 - W.A.No.155 of 2017 revenue records was also with Sujir Ganesh Nayak, the extract of the Tandaper Registers having been produced as Exhibit R1(g) to Exhibit R1(j) in the counter affidavit dated 21.08.2008 filed by the Revenue in W.P.(C) No.13566 of 2007, as seen from the Judges Papers 29. Though we have found that there is no requirement for a notice to Sujir Kesav Nayak, it cannot be said that he has no interest in the property; since it belonged to the partnership firm. The compromise decree also indicates that the properties now sold were set apart for settlement of the liabilities of the firm and it was also agreed upon that after such settlement, if anything is left, the same would be shared among the partners. Hence, Sujir Kesav Nayak definitely had a right to challenge the sale, which was permitted by Exhibit R8(b) judgment. The challenge so made was rejected by the District Collector as per Exhibit P13 and confirmed by Exhibits P22 and P25, respectively by the 2[nd] respondent and the Government. The application was filed under Section 53 of the RR Act and the ground raised is of irregularity insofar as the procedure prescribed for sale. The District Collector’s order at Exhibit P13 has noticed the grounds on which the sale was challenged. They are: “(1) The notice dated 20/02/07 published in Kerala Kaumudi - 23 - W.A.No.155 of 2017 dated 19/03.2007 is not in compliance with the statutory and mandatory provision of Sec.49 of the Kerala Revenue Recovery Act. The improvements in the above property are not mentioned in the auction notice. The amount or revenue assessed on the land or its different section is also not shown in the notice. Again, the amount to be recovered for which the sale is ordered is not shown in the notice. The notice is silent regarding the proportion of the public revenue due during the reminder of the current financial year. - (2) The notice shall be duly serve and published at least thirty days before the date of sale. The time granted is only below 10 days from the date of publication of notice and the date of auction. - (3) The notice as provided in the Section 49 of the Act has not been served to the petitioner or to the only legal heir of Sri.Sujir Ganesh Naik, who was a partner of M/s.Sujir Ganesh Naik and Company along with the Petitioner. The Revenue Recovery office has also not served notice to the concerned parties as provided u/s.74 and 75 of the Act. - (4) In the absence of publication of notice as provided in the Act, the Public or other intending purchasers could not participate in the auction of the property. In order to attract purchaers, full details as provided in the Act has to be mentioned in the notice. - (5) The authorities have not considered section 62 of the Act. The whole property for the alleged liability need not be auctioned. If a portion of their said property is auctioned for the alleged liability, the Petitioner and other Partner/legal heir can save the remaining property. - (6) The auction amount is very low considering the importance of the area where the properties are situated”. The District Collector _inter alia_ found that there was no pleading of substantial injury in the petition filed under Section 53 of the RR Act, - 24 - W.A.No.155 of 2017 which itself warrants rejection of the application. Before we look at that contention, we would first look at the aspect of irregularity as pointed out in the petition under Section 53 of the RR Act. 30. We have already found that publication in the Gazette or the newspaper is not a mandatory requirement. The notice is issued on 20.02.2007 and the sale is fixed on 27.03.2007, with more than 30 days notice. The learned Single Judge has also perused the files and found that the notice has been served by affixture on the premises of the partnership firm. The District Collector, according to us, rightly accepted the contention that the notice on 19.03.2007 published in a vernacular daily, Kerala Kaumudi, was only to attract more bidders. The service of notice being in accordance with the provisions of the RR Act, there can be no material irregularity alleged on that count. We also see from the counter affidavit filed by the State that on 27.03.2007 with respect to the 1[st] item of property in Exhibit P1 situated in Vadakkevila Village there were 16 bidders who participated in the auction. On 21.04.2007 with respect to the 2[nd] item of property in Mundakkal Village there were 14 bidders who participated. 31. The 1[st] property having 35.33 Ares was put up for auction on a total valuation of Rs.65 lakhs. In the auction on W.A.No.155 of 2017 - 25 - 27.03.2007, the price fetched was Rs.1,16,00,000/-, about Rs.51 lakhs in excess of the upset price fixed. The 2[nd] property having an extent of 21.83 Ares had an upset price of Rs.38,20,250/-; which, on auction, fetched Rs.1,15,40,000/-, more than Rs.77 lakhs in excess. It is also seen from the counter affidavit that when a valuation report was prepared about an year and four months prior, by the Bank the valuation with respect to the properties at Vadakkevila Village and Mundakkal Village were respectively Rs.1,09,00,000/- and Rs.1,12,00,000/-; both below the price fetched at the auction. The allegation that Section 62 has not been considered, was also met by the District Collector insofar as finding that the sale of the two properties having satisfied the entire dues, the 3[rd] property was released from the attachment. We see that all the grounds on material irregularity have been sufficiently met by the District Collector and there is no evidence produced by the applicant to show that the property would have fetched a higher value. 32. What remains is only the absence of the details, as required under the statute to be included in the notice. The improvements in the properties, the revenue assessed on the land and the actual amount to be recovered for which the sale is ordered - 26 - W.A.No.155 of 2017 were not shown in the notice. This is an irregularity; but, however, it cannot by itself vitiate the sale since as has been found by the District Collector, there is no pleading of substantial injury and there is also no pleading or evidence as to the injury caused to Sujir Kesav Nayak, the surviving partner whose legal heirs are the applicants. 33. Section 53 of the RR Act, as was argued by the respondents 8 and 9, is akin to Order XXI, Rule 90 of CPC. The difference is only insofar as the ground available under Section 53 of the RR Act to challenge a sale is an irregularity or mistake or fraud whereas in Order XXI Rule 90 CPC, it is an irregularity or fraud. Both mandate that such grounds can lead to setting aside of the sale only if there is a pleading of substantial injury. We are in agreement with the above proposition and are fortified by the decisions placed before us. 34. _**Dhirendra Nath Gorai**_ was a case in which a sale was challenged on the ground that Section 35 of the Bengal Money Lenders Act, 1940 was not complied with. The execution Court rejected the plea, but a Division Bench of the High Court found that though there had been no substantial injury, the provisions of Section 35 were mandatory. The Hon’ble Supreme Court reiterated the distinction between irregularity and nullity and found that a sale can be - 27 - W.A.No.155 of 2017 set aside under Order XXI Rule 90 only if the irregularity or fraud alleged has caused substantial injury to the applicant. The mere fact that there was an irregularity would not result in the sale being declared a nullity was the finding. The famous words of Justice Coleridge in _**Holmes v. Russel**_ **(1841) 9 Dowl.487** was extracted, as follows: “It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity”. Section 35 of the Bengal Money Lenders Act provided for the proclamation of the intended sale of property in execution of a decree passed in respect of a loan, to specify only so much of the property of the judgment-debtor as the Court deems to be sufficient to satisfy the decree and further provided that the sale shall not be at a price which is less than the price specified in the proclamation. This was a provision to protect the interest of the judgment debtor, which could be waived by the judgment debtor and the non-compliance would only result in an irregularity having been committed. The judgment debtor in the said case though received a notice of the valuation under Order - 28 - W.A.No.155 of 2017 XXI Rule 66 CPC, did not file an objection to the valuation and had also got the sale adjourned on a promise to pay the decreetal amount, which he failed to do. It was found that there was no substantial injury caused and, hence, despite the irregularity there could be no setting aside of the sale. 35. In _**C.C.Sivaprasad**_ , a Division Bench of this Court was considering a challenge against an order made by the execution Court reviewing its earlier order rejecting an application under Order XXI Rule 90 CPC finding that there was no proclamation made of the property. The learned Judges found that the power of review could not be exercised and also held that “ _even if there was any material irregularity or fraud either in publishing or conducting the sale that by itself is not a ground to setting aside the sale. In addition to such material irregularity or fraud, the Court has to satisfy that the applicant has sustained substantial injury by reason of such irregularity or fraud. Unfortunately the question whether first respondent has sustained any injury much less substantial injury by reason of the alleged irregularity in publishing or conducting the sale was not considered by the Court below at all. Instead finding that there was no settlement of proclamation the sale was set aside. The order on the_ - 29 - W.A.No.155 of 2017 _face is illegal as it violates the mandatory provision of subrule (2) of Rule 90_ ” (para 12). ## 36. _**Chilamkurtiu Bala Subrahmanyam**_ was a similar challenge as in the instant case, on four grounds, being (i) no clear notice of 15 days given for the sale, (ii) the valuation of the property not properly shown in the document to understand the valuation prevailing on the date of sale, (iii) the market value of the property on the date of auction was much more than the price fetched in auction and (iv) no publication of notice, including beating of drum, was made before the date of auction. The executing Court was found to have dealt with all the four objections and held that none of the objections had any merit. It was further held so in paragraph 24: “24. The law on the question involved herein is clear. It is not the material irregularity that alone is sufficient for setting aside of the sale. The judgment debtor has to go further and establish to the satisfaction of the Court that the material irregularity or fraud, as the case may be, has resulted in causing substantial injury to the judgment debtor in conducting the sale. It is only then the sale so conducted could be set aside under Order 21 Rule 90(2) of the Code. Such is not the case here”. - 30 - W.A.No.155 of 2017 37. The learned Counsel for the appellants, however, relied on the decision in _**Laxmi Devi v. Mukund Kanwar and Others**_ **[AIR 1965 SC 834],** a four-Judge Bench decision. _**Chilamkurtiu Bala Subrahmanyam**_ relied on _**Saheb Khan v. Mohd. Yousufuddin & Ors**_ **. [(2006) 4 SCC 476],** which is specifically noticed as a three-Judge Bench decision. _**Laxmi Devi**_ , who was a mortgagee of a property, participated in a sale pursuant to a decree for recovery of money obtained by another against the mortgagor. She purchased the property and also the equity of redemption vesting on the 3[rd] respondent, the judgment debtor. The judgment debtor had executed, in favour of his mother, a document whereby maintenance to the mother was guaranteed by creating a charge over the said properties. The mother challenged the sale on the ground that proclamation did not show the charge on the property without any allegation of a substantial injury having been suffered. The finding of the Supreme Court is seen at paragraph 10, which is as under: “(10) It is true that before an application made under O.21 R.90 can succeed, the applicant has to show that the impugned sale was vitiated by a material irregularity or fraud in publishing or conducting it, and as required by the proviso, it is also necessary that he should show that in - 31 - W.A.No.155 of 2017 consequence of the said irregularity or fraud, he had sustained substantial injury. Therefore, Mr.Bishan Narain is right when he contends that the application made by respondent No.1 ought to contain an allegation in regard to the material irregularity as well as an allegation as to substantial injury. But, in our opinion, in a case like the present where substantial injury is alleged to be implicit in the material irregularity set out in the application, it would be too technical to hold that the application should be dismissed on the preliminary ground that no specific or express averment has been made as to substantial injury suffered by respondent No.1”. (underline supplied) We are of the opinion that the said finding is on the peculiar facts and would have no general application. 38. The finding of the District Collector that there is no allegation of substantial injury having been caused for reason of the irregularity alleged, is correct. The irregularities are also insofar as the notice having not disclosed the revenue assessed on the land, the improvements in the property and the amounts to be recovered for which the sale is ordered. There is nothing indicated as to how the said irregularities resulted in a substantial injury to the applicant and any prejudice having been caused to him. We do not see any reason - 32 - W.A.No.155 of 2017 to interfere with the sale. While agreeing with the learned Single Judge on the grounds on which the writ petition was rejected, we, on the additional grounds stated above, decline to interfere in the sale carried out in the year 2007 for the recovery of sales tax dues, of a partnership firm, for the period 1958-59 to 1989-90. The Writ Appeal stands dismissed, with no order as to costs. Sd/K.Vinod Chandran Judge Sd/Ashok Menon Judge vku/- [ true copy ]