Nandawathie v. Rajakaruna
RAJAKARUNA AND OTHERS
SHARVANANDA. C.J., COLIN-THOM&, J. AND ATUKORALE, J.
S.C. APPEAL No. 37/85.
C.A. APPLICATION No. 2045/80.
C.A. L.A. (S.C.) No. 8/85.
FEBRUARY 13, 1986.
Writ of Certiorari – Section 71 (S. 71 (2) (c))of the Finance Act, No. 11 of 1963 asamended by Law No. 16 of 1973 – Determination to acquire by People's Bank onapplication of transferor of a land on a conditional transfer and vesting order by Minister( – Statutory income – Jurisdictional error.
Where on an application made on 1 6.3.1 976 to the People's Bank by the transferor ofa land upon a conditional transfer the Bank at the inquiry held by it on 5.3.1 977 beingsatisfied that the applicant's statutory income did not exceed Rs. 10,000 in view of thecertificate issued by the Inland Revenue Department, recommended that determinationbe made to acquire the land whereupon the Minister sanctioned a vesting order –
The Court of Appeal erred in basing its decision on a certificate of 21.12.1977issued by the Assessor of the Department of Inland Revenue. Regional Office.Kurunegala stating the assessable income, as that could not have been the certificate ofthe Inland Revenue Department on which the People's Bank acted on 5.3.1977. –
The relevant years of assessment were 1 974/75, 1 973/74 and 1 972/73 and theaverage statutory income of the applicant being less than Rs. 10,000 per annum, shewas eligible to make the application and there was no jurisdictional error vitiating thedetermination of the People's 8ank or the vesting sanctioned by the Minister.
APPEAL from judgment of the Court of Appeal reported at –  1 SLR 393(Rajakaruna v. R.J. G. de Mel. Minister of Finance and Another).
J. W. Subasinghe, P.C. with Miss B. G. S. J. Nandadasa and G. D. S. de Silva for 3rdrespondent-appellant.
P. A. D. Samarasekera, P.C. with Miss k. Kumararatne and K. Abeypala forpetitioner-respondent.
Cur. adv. vult.
Sri Lanka Law Reports
(19861 1 SriL.R.
February 27. 1986.
Arnolis Appuhamy. the father of the 3rd respondent-appellanttransferred a paddy field to the petitioner-respondent, subject to thecondition that it would be retransferred to Arnolis Appuhamy onpayment of a certain sum of money within ten years as stated in theDeed of Transfer No. 8827 dated 14.6.1952. Arnolis Appuhamyfailed to repurchase the paddy field within the period of 10 years anddied on or about 1972 leaving the appellant as sole heir. Thereafter on16th March 1976 the appellant made an application to the 2ndrespondent, the People's Bank, in terms of section 71 of the FinanceAct. No. 1 1 of 1963 as amended by Law No. 16 of 1973 for theacquisition of the said field. The People's Bank held an inquiry into theapplication and made determination on 25.3.1977 to acquire the saidfield. At the inquiry the petitionwer-respondent objected to thisacquisition on the ground that the applicant's income exceededRs. 10.000. per annum. This objection is based on section 7 1 (2) (c)of the Finance Act as amended by Law No. 1 6 of 1973. This sectionreads thus:
"No premises shall be acquired under sub-section (1) unless theBank is satisfied that the average statutory income of the personmaking the application and of the other members of the family ofwhich he is the head, computed under the provisions of the writtenlaw relating to the imposition of income tax. for the three years ofassessment immediately preceding the date on which suchapplication was made by him. does not exceed a sum of tenthousand rupees."
At the inquiry held on 5.3.1977 into this objection, the inquiringofficer has recorded that-
"according to certificate issued by the Inland RevenueDepartment submitted by the applicant her average statutoryincome does not exceed Rs. 10,000. I disallow his objection andrecommend that determination be made to acquire the property."
Thereafter the respondeht-Bank made determination to acquire thefield and notified the determination to the 1 st respondent, the Ministerof Finance and the latter made Vesting Order and caused it to bepublished in the Gazette of 1 1.7.1 979.
Nandawathie v. Rajakaruna (Sharvananda. C. J.j
The petitioner-respondent by his application dated 29.9.1980 tothe Court of Appeal sought a Writ of Certiorari to quash the VestingOrder dated 1 1.7.1979 on the ground that the 3rd respondent wasreceiving an income in excess of the amount stipulated in section 71of the Finance Act, and that the Vesting Order was illegal and ultravires. The petitioner-respondent in his application did not give anyprecise facts to substantiate his application that the 3rdrespondent-appellant was in receipt of an income exceeding Rs.
per year. The 3rd respondent in her affidavit dated20.1.1981 filed in the proceedings s.tated "that the entire incomedoes not exceed the statutory income stated in the Finance Act No.
11 of 1967 as amended by Act No. 16 of 1973 and therefore thethird respondent is both eligible and is entitled to make this applicationin terms of the relevant provisions of the said Act". There is no counteraffidavit by the petitioner-respondent to these averments of theappellant in her affidavit. At the argument on 1 1.2.1985, before theCourt of Appeal it is recorded that "at the hearing before us thedocument upon which the second respondent-Bank was 'satisfied'that the applicant's statutory income did not exceed a sum of ten■ thousand was produced. This was a document dated 21.12.77issued by the Assessor of the Department of Inland Revenue, RegionalOffice, Kurunegala. This document sets out the 'assessable income'and the taxable income' of the 3rd respondent for the years ofassessment 1975/76, 1974/75 and 1973/74. There is not oneword in that document to indicate what the 'statutory income' of the3rd respondent was for the relevant years of1 assessment. 'StatutoryIncome' is a concept which is different from 'Assessable Income' and'Taxable Income' in terms of the scheme of the Inland Revenue Act
No. 4 of 1963 as amendedFlaving regard to this document
both Dr. Cooray, Counsel for the 2nd respondent-Bank and Mr.Premaratne, Deputy Solicitor-General, Counsel for the 1 st respondent,very properly conceded that the' 2nd respondent-Bank had, whiletaking into account an irrelevant matter, namely the 'AssessableIncome' or the 'Taxable Income' failed altogether to. consider therelevant matter, namely, 'Statutory Income' of the 3rd respondent. Inother words, the 2nd respondent-Bank had failed to consider a matterwhich the statute itself directed it to take into account and the result is ■that the purported determination of the 2nd respondent-Bank is anullity. There is little doubt that the error is one which goes to thejurisdiction of the tribunal (Bank).
Sri Lanka Law Reports
(19861 1 SnL.R.
This conclusion of the Court of Appeal is vitiated by the fact thedocument referred to in the order on which the Court held that there
was jurisdictional error could not ex facie have been the
certificate referred to by the Officer who held the inquiry into the 3rdrespondent's application on 15.3.1977. This document is dated21.12.77 and hence it could not have been the certifcate which wasproduced before the inquirer on the 15.3.1977. It is surprising as tohow all parties concerned had overlooked this vital fact. The Court hadbeen induced to accept this document by the concession made byCounsel for the Bank and by the Deputy Solicitor-General. The Courthad erred in holding that the document dated 21.12.77 was thecertificate on which the inquirer acted on 15.3.77 in overruling thepetitioner-respondent's objections.
Further in terms of section 7 1 (2)(c) of the Finance Act No. 6 of 1 963as amended by Act No. 1 6 of 1973 the relevant years of assessmentfor consideration are the years of assessment 1974/75. 1973/74and 1 972/73 as the application of the appellant to the Peoples' Bankin terms of section 71 of the Act is dated 16.3.1976. The Court ofAppeal was in error in taking into account in computing the statutoryincome of the appellant the year of assessment 1975/76
The appellant has filed with his petition of appeal, the relevantnotices of assessment for the year of assessment 1974/75.1973/74 and 1972/73. They show that the appellant's statutoryincome was Rs. 9.332. Rs. 4,590 and Rs. 14.471 respectively forthose years of assessment. Thus it will appear that the averagestatutory income of the appellant for the relevant period according tosection 71 (2)(c) of the aforesaid Act was less than Rs. 10,000 andthat it was competent for the appellant to make the application forrelief.
The objections of the petitioner-respondent that the average incomeof the appellant’exceeded Rs. 10,000 per year cannot be sustained.There is no jurisdictional error which would vitiate the determination ofthe 2nd respondent-Bank or the vesting order sanctioned by the 1strespondent-Minister.
I set aside the order of the Court of Appeal and allow the appeal ofthe 3rd respondent-appellant. The appellant is entitled to the costs inthis Court and in the Court of Appeal.
COUN-THOME, J.-l agree.
ATUKORALE, J.-l agree.