What did the collectors in charge of revenue collection in Deccan do when someone failed to pay the revenue?

Both options 1 and 2 are correct.

In areas of poor soil and fluctuating rainfall the problem was particularly acute. When rains failed and harvests were poor, peasants found it impossible to pay the revenue. However, the collectors in charge of revenue collection were keen on demonstrating their efficiency and pleasing their superiors. So they went about extracting payment with utmost severity. When someone failed to pay, his crops were seized and a fine was imposed on the whole village