Should the court summarily dismiss Municipal Appeal if the appellant fails to deposit property tax during the pendency of Municipal Appeal?

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

S.C. DHARMADHIKARI, J.

Dena Bank Anr.

Vs.

Municipal Corporation Of Gr. Mumbai Anr.

Writ Petition No.6816 of 2010

21st July, 2011

Citation: 2011(6) ALL MR 508

JUDGMENT :- Rule. Respondents waive service. By consent, rule made returnable forthwith. Heard parties.

2. By this petition under Article 227 of the Constitution of India, the petitioners are challenging the order dated 26th March 2010 passed by the Additional Chief Judge, Court of Small Causes, Mumbai below Exh.16 in Municipal Appeal No.230 of 2004.

3. The petitioner is a nationalised bank. Petitioner No.2 is its manager. The first respondent is Municipal Corporation of Greater Mumbai whereas respondent No.2 is the landlady and owner of the immovable property.

4. The petitioners approached the landlady and after due discussions and negotiations, the landlady created lease in their favour in respect of the ground floor premises admeasuring 2500 sq.feet in a building known as Shanti Sadan, Street No.3, Watcha Gandhi Road, Mumbai 400 007. A proper lease deed was executed between parties.

5. Petitioners filed the subject municipal appeal on the ground that the first respondent Corporation has enhanced rateable value by a notice dated 30th March 2001. The rateable value has been enhanced to Rs.3,23,065 and subsequently, the same was reduced to Rs.2,27,195/-. The petitioners filed the Municipal Appeal under section 217 of the Mumbai Municipal Corporation Act, 1888 (for short Act), challenging the bill raised on them dated 3rd April 2001 and an order passed on 27th November 2001 by the Assessing Officer.

6. During the pendency of the said appeal, the first respondent Corporation filed an application being Application Exh.16 seeking relief under section 217 (5) of the Act. Direction was sought against the petitioners to deposit a sum of Rs.24,98,930 being 80% of the outstanding bill after adjusting the amount received as part payment, failing which it was further prayed that the municipal appeal be dismissed.

7. When this miscellaneous application was served on the petitioners, it filed an affidavit in reply dated 31st August 2009 contending therein that in view of section 209(3) of the Act, the petitioner who is an occupier of the ground floor structure, cannot be called upon to pay the property tax for a period of more than one year. In other words, the arrears, if any, more than one year could not have been claimed and the liability of the petitioner to pay beyond this period does not arise on account of this legal provision.

8. On this application, arguments were heard and by the impugned order, the learned Additional Chief Judge was pleased to direct the petitioners to deposit the sum as demanded by the Corporation, as a pre-condition for hearing of appeal, failing which the municipal appeal was to stand dismissed.

9. While doing so, the learned Additional Chief Judge, relied upon the documents including bills that have been produced by the Corporation and the landlady and particularly an affidavit filed on her behalf. She pointed out that the demand was raised on the petitioners by the Corporation and it was called upon to pay the amount. However, the petitioner took a stand by a letter dated 9th February 2009 addressed to the Assessment Officer “D” Ward that it is not liable to pay the said property tax. While doing so, the petitioners accepted that the letters dated 6th June 2008 and 29th January 2009 addressed to their branch manager were duly received and the same were replied through their Advocate. It is in such circumstances, according to the respondents, the liability arises and the amount should be paid/ deposited. Relying upon these documents and the contents of the affidavit so also section 217(5) of the Act, that the impugned order has been made. It is this order which is challenged in the present petition.

10. Mr.Joglekar, learned Counsel appearing for petitioner bank contended that the petitioner bank is in use and occupation of the ground floor premises under a lease from the landlady. The rateable value has been revised in respect of the entire structure/ building. The liability to pay property tax proportionate to the share of the petitioners arises only on account of the refusal of the landlady to pay the same. In other words, it is the landlady who is primarily responsible for payment of taxes in terms of statutory provisions. It is in the event of default committed by the landlady that the occupier can be called upon to pay the same. The occupier also cannot be called upon to pay the sum which is outstanding for more than a year by way of property tax. If that is the legal provision and that is how the liability of the occupier/ tenant arises, then, the same cannot be ignored by taking recourse to section 217(5) of the Act. It is contended that section 217 and all its sub-sections would have to be read subject to section 209(3) of the Act and so read, there is no liability of payment of tax beyond the period prescribed in sub-section 3 of section 209 of the Act. In such circumstances, the learned Judge was in clear error in allowing the application and issuing the impugned directions. The order of the learned Judge ignores statutory provisions and the mandate flowing therefrom. For all these reasons, according to him, the impugned order should be set aside.

11. Mr.Joglekar in all fairness has brought to my notice a judgement of a learned Single Judge of this Court delivered in the case of Bhagwatiben Bhojwani Vs. B.M.C., reported in 1991 Mh.L.J. 583. He submits that this judgement may have been over-ruled by a Division Bench of this Court in Appeal No. 449 of 1991 (Municipal Corporation of Greater Bombay Vs. Bhagwanben Harilal Bhojani Ors.) decided on 11th August 1992 at the instance of the M.C.G.B., yet, the reversal is on the basis that the liability to pay tax arises on account of default noted by the learned Judges constituting the Division Bench. Therefore, there is no principle of law which can be culled out and applied to the instant case. For all these reasons the petition must succeed, is his submission.

12. On the other hand Mr.Walawalkar, learned Senior Counsel appearing for first respondent Corporation submitted that this is an appeal against the rateable value. The appeal is filed to challenge the bill that has been raised on the petitioner bank. The bill demands share of the petitioner bank in proportion to its occupation of the premises/ building. Bank’s share is demanded repeatedly and it is not as if the bills have not been raised pursuant to the revision of the rateable value. That the bills have been raised and the demand is made from time to time, is clear. In these circumstances, it cannot be said that section 217 and its sub-sections are in any way controlled by section 209 of the Act and particularly sub-section 3 thereof. Mr.Walawalkar has pointed out that the Court will have to make a clear distinction inasmuch as, the occupiers may be held liable for payment of property tax in terms of section 209. He submits that sub-section 3 of section 209 deals with recovery from the occupier. The entire section deals with recovery of property tax which remains unpaid after the bill for the same has been duly served on the person primarily liable for payment thereof and if the same person is not occupier for the time being of the premises in respect of which the tax is due, the Commissioner has discretion to serve the bill on the occupier of the said premises. That is how, the sub-section must be seen and it has no bearing on the liability to pay the tax during the pendency of municipal appeal. Section 217 deals with appeals against the valuation and tax. That in terms of sub-section 2 clause (d) thereof in the case of an appeal against a tax or in the case of an appeal made against the rateable value, the amount of disputed tax claimed by the appellant or the amount of tax claimed from the appellant or the amount of tax chargeable on the basis of the disputed rateable value, up to date of the appeal has to be deposited or else the appeal cannot be entertained. Similarly, the appeal may have been entertained but the learned Additional Chief Judge shall not hear and decide it unless the property tax payable, on the basis of original rateable value plus 80% of the property tax claimed from the appellant on the increased portion of the rateable value of the property, out of the property tax claimed under each of the bills, which may have been issued from time to time since filing of the appeal, is also deposited with the Commissioner within the period prescribed under the Act. This sub-section empowers the Chief Judge to dismiss summarily the appeal on getting an intimation from the Commissioner of a default committed by the appellant. The Corporation accordingly intimated the default committed by the learned Chief Judge. Once the default was reported the order has been passed. There is no question of any other provision being read into this mandate. In these circumstances, the petitioners cannot avoid their liability. It is not as if the deposit will in any way takes away their right of appeal or impair it inasmuch as if they succeed in their challenge, the amount will be adjusted or refunded in terms of the provisions. The refund also is with interest. In such circumstances, this petition be dismissed.

13. Mr.Walawalkar relies upon the following judgements in support of his above submissions :-

1. 2008 (6) ALL MR 519 (Peninsula Land Ltd. Vs. Brihan Mumbai Mahanagarpalika Ors);

2. 1955 Vol. LVIII BLR (Ramoji Raoji Palkar Vs. Amir Kasam Bhagwan);

3. A.I.R. 1981 Bombay 364 (The Children’s Educational Uplift Society and Anr. Vs. Mrs.Kaushalya Govindsing Moral);

14. Learned Counsel appearing for landlady supported Mr.Walawalkar and argued that in terms of the lease deed, the liability to pay taxes is that of the petitioner and further though the lease has expired, the petitioner is continuing to occupy ground floor portion. For all these reasons, this is not a fit case for interference in writ jurisdiction and the petition be dismissed.

15. For properly appreciating the rival contentions, section 209 and 217 of the Act need to be referred. They are reproduced hereinbelow:-

“209. When occupiers may be held liable for payment of property taxes. (1) if the sum due on account of any property tax remains unpaid after a bill for the same has been duly served on the person primarily liable for the payment thereof and the said person be not the occupier for the time being of the premises in respect of which the tax is due, the Commissioner may serve a bill for the amount on the occupier of the said premises, or, if there are two or more occupiers thereof, may serve a bill on each of them for such portion of the sum due as bears to the whole amount due the same ratio which the rent paid occupier bears to the aggregate amount of rent paid by them both or all in respect of the said premises.

“[1(A) Notwithstanding anything contained in sub-section (1), on and from the date of adoption of capital value as the base for levy of property taxes under section 140A, but subject to the other provisions of this Act, the Commissioner may, serve a bill for the amount of property tax on such occupier of the said premises, or, if there are two or more such occupiers thereof, may serve a bill on each of them for such portion of the sum due as bears to the whole amount of tax based on the capital value, due in the same ratio which the capital value of such portion of the premises of the occupier or occupiers bears to the aggregate amount of the tax based on the capital value, in respect of the said premises.”

(2) If the occupier or any of the occupiers fails within thirty days from the service of any such bill to pay the amount therein claimed, the said amount may be recovered from him in accordance with the foregoing provisions.

(3) No arrears of a property tax shall be recovered from an occupier under this section, which is due on account of any period for which the occupier was not in occupation of the premises on which the tax is assessed.

(4) If any sum is paid by, or recovered from an occupier under this section, he shall be entitled to credit therefore in account with the person primarily liable for the payment of the same.”

“217. Appeals when and to whom to lie:-

(1) Subject to the provisions hereinafter contained, appeals against any rateable value for the capital value, as the case may be, or tax fixed or charged under this Act shall be heard and determined by the Chief Judge of the Small Cause Court.

(2) But no such appeal shall be entertained by the said Chief Judge, unless-

(a) it is brought within twenty one days after the accrual of the case of complaint;

(b) in the case of an appeal against a rateable value or the capital value, as the case may be, a complaint has previously been made to the Commissioner under section 163, and such complaint has been disposed of;

(c) in the case of an appeal against any amendment made in the assessment book under section 167 during the official year, a complaint has been made by the person aggrieved within twenty one days after he first received notice of such amendment, and his complaint has been disposed of;

(d) in the case of an appeal against a tax, or in the case of an appeal made against a rateable value [or the capital value; as the case may be,] [the amount of the disputed tax claimed from the appellant, or the amount of the tax chargeable on the basis of the disputed rateable value, up to the date of filing of the appeal, has been deposited by the appellant with the Commissioner [and such appeal is accompanied by a receipt of full amount of tax to which appeal relates].]

[(2-A) Where the appeal is not filed in accordance with the provisions of clauses (a) to (d) of sub-section (2), it shall be liable to be summarily dismissed.]

[(3) In the case of any appeal entertained by the Chief Judge, but not heard by him, before the date of commencement of the Maharashtra Municipal Corporations (Amendment) Act, 1975, the Chief Judge shall not hear and decide such appeal, unless the amount of the dispute tax claimed from the appellant, or the amount of the tax chargeable on the basis of the disputed rateable value, as the case may be, up to the date of filing the appeal, has been deposited by the appellant with the Commissioner within thirty days from the date of publication of a general notice by the Commissioner in this behalf in the local newspapers. The Commissioner shall simultaneously serve on each such appellant a notice under sections 484 and 485 and other relevant provisions of this Act, for intimating the amount to be deposited by the appellant with him.

(4) As far as possible, within fifteen days from the expiry of the period of thirty days prescribed under sub-section (3), the Commissioner shall intimate to the Chief Judge the names and other particulars of the appellants who have deposited with him the required amount within the prescribed period and the names and other particulars of the appellants who have not deposited with him such amount within such period, on receipt of such intimation, the Chief Judge shall summarily dismiss the appeal of any appellant who has not deposited the required amount with the Commissioner within the prescribed period.

[(5) In the case of any appeal against any rateable value or property tax fixed or charged under this Act, which may have been entertained by Chief Judge before the commencement of the Act aforesaid or which may be entertained by him after the said date the Chief Judge shall not hear and decide such appeal unless the property tax, if any, payable on the basis of the original rateable value plus eighty per centum, of the property tax claimed from the appellant on the increased portion of the rateable value of the property out of the property tax claimed under each of the bills which may have been issued, from time to time, since the filing of appeal, is also deposited with the Commissioner within the period prescribed under the Act. In case of default by the appellant, on getting an intimation to that effect from the Commissioner at any time before the appeal is decided, the Chief Judge shall summarily, dismiss the appeal:

Provided that, in case the appeal is decided in favour of the Corporation interest at 6.25 per centum per annum shall be payable by the applicant on the balance amount of the property tax from the date on which the amount of property tax, was payable:

Provided further that, in case the appeal is decided in favour of the appellant and the amount of property tax deposited with the Corporation is more than the property tax payable by him, the Commissioner shall adjust the excess amount of the property tax with interest at 6.25 per centum per annum from the date on which the amount is deposited with the Corporation towards the property taxes payable thereafter].”

16. A bare perusal of section 209 would reveal that it falls under sub-heading “Collection of Taxes”. Under that subheading, sections 197, 199, 200 to 208 appear. All these provisions enable the Corporation to levy, assess and recover property taxes. As far as the levy and assessment is concerned, that is an aspect already covered by prior provisions whereas the collection of tax is in terms of section 197 onwards. How the collection is to be done inasmuch as how a bill is to be prepared and served; how the notice of demand must be raised and if there is a default, what could be done, including recovery by distress and attachment is provided in further sections. Section 206 deals with sale and section 207 and section 207A so also section 208 enable the Corporation to levy and recover fees and penalties for the warrants which have been issued to recover the property taxes. Then comes section 209 which provides that occupiers may be held liable for payment of taxes. If the bill has been raised for taxes on the person primarily liable but that person is not an occupier for the time being of the premises in respect of which tax is due, the Commissioner can serve a bill on the occupier and the occupier is liable to the extent of the portion of the sum due and payable and he has to pay it in the ratio, which is contemplated by sub-section 1 of section 209. Then comes sub-section 2 which provides that if the occupier or any of the occupiers fail to, within fifteen days, pay the amount claimed, the amount may be recovered by him in accordance with the provisions foregoing, means from section 201 to 208. However, arrears of taxes cannot be recovered from any occupier under section 209 if the same has fallen due for a period more than one year or which is due on account of the period for which the occupier was not in occupation of the premises and for which the tax is assessed.

17. As far as section 217 is concerned, it provides for an appeal against the valuation and taxes and the appeal lies to the Chief Judge of Small Causes Court and there is a precondition inasmuch as the appeal cannot be entertained unless the disputed tax which is mentioned in the appeal is deposited with the Commissioner. Sub-section 5 provides for a continuing liability inasmuch as it cannot be that the appellant assessee stops paying taxes which are due and payable in respect of the property, after the appeal under section 217(1). Therefore, after the appeal is filed and, during its pendency, the disputed amount has to be deposited or else the appeal can be summarily dismissed. This is a condition attached to the statutory right of appeal. It is well settled that appeal is a right created by Statute. The Statute can regulate and control exercise of that right. It is also well settled that imposition of condition of deposit of disputed tax for entertaining and hearing of the appeal cannot be held to be onerous, excessive or arbitrary (See Sham Charan Vs. Delhi Municipal Corporation – reported in A.I.R. 1992 S.C. 2279).

18. An amendment in section 217 was made inasmuch as sub-section 5 as was reading prior to the amendment came to be substituted by Maharashtra Act 10 of 1998, which is already reproduced above.

19. Therefore, payment of the amount of tax till the date of institution and filing of the appeal and the taxes which are due and payable during the pendency of the appeal have to be secured or else, the Corporation stands to lose by way of property tax, merely because legal proceedings are pending challenging the valuation and the assessment of the same. That would not be in public interest and that is how sub-section 5 of section 217 came to be inserted.

20. A Division Bench of this Court in the case of Peninsula Vs. B.M.C. Reported in 2008 (6) ALL M.R. 519 was considering a challenge to sub-section 5 of section 217 and while negativing it the Division Bench holds thus:-

“21. We have already noticed that challenge to certain provision of Section 217(5) of the Act does not survive for consideration. To that extent, part of the ground has been rendered infructuous. However, we still have to examine whether the provisions of Section 217(5) of the Act are per se arbitrary and place an unreasonable restriction upon the property tax payers’ right to prefer an appeal.

22. We have discussed in great detail that right to appeal is not an absolute or a constitutional right but is a statutory right which can be regulated by the statute providing for the appeal. The Division Bench of this Court in the case of Kohinoor Textiles Printing Press (supra) had rejected all the other contentions challenging constitutionality of the provisions of Section 217(5) except to the limited extent aforeindicated. In other words, the grounds agitated before us have already been rejected by the Division Bench judgment in Kohinoor’ case (supra) and we find no reason to differ with the view expressed to that extent by the Court.

23. The object and reasons of Act 10 of 1998 by which the provisions of Section 217(5) were amended, do not indicate in any detail any elaborate object behind the amendment so as to be of any help to the Court while dealing with the arguments raised. In fact, it was primarily with the object to revise the taxes and to streamline the procedure for levying of taxes. It is an accepted principle relating to interpretation of fiscal statute that in the fiscal or tax measures greater latitude is given to such statutes than to other statutes. All decisions in the economic and social spheres are essentially ad hoc and experimental. Since economic matters are extremely complicated, this inevitably entails special treatment for special situations. The State must therefore be left with wide latitude in devising fiscal or regulatory measures, and the Court should not, unless compelled by the statute or by the Constitution, encroach into this field or invalidate such law. The Supreme Court in the case of Government of Andhra Pradesh and Others vs P. Laxmi Devi, (Supra) , held as under :-

“72. As regards fiscal or tax measures greater latitude is given to such statutes than to other statutes. Thus in the Constitution Bench decision of this Court in R.K. Garg v. Union of India (1981) 4 SCC 675, this Court observed : (SCC pp. 690-91, para 8)

“8. Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straitjacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey v Doud (1 L.Ed 2d 1485) where Frankfurter, J. said in his inimitable style:

‘In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events – self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.’ The court must always remember that ‘legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry’; ‘that exact wisdom and nice adaptation of remedy are not always possible’ and that ‘judgment is largely a prophecy based on meager and uninterpreted experience’. Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The courts cannot, as pointed out by the United States Supreme Court in Secy. Of Agriculture v. Central Roig Refining Co. (94 L Ed 381), be converted into tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating the legislation, because it is not possible for any legislature to anticipate as if by some divine prescience, distortions and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortions and abuses. Indeed, howsoever great may be the care bestowed on its framing, it is difficult to conceive of a legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues.” (emphasis supplied).

73. All decisions in the economic and social spheres are essentially ad hoc and experimental. Since economic matters are extremely complicated, this inevitably entails special treatment for special situations. The State must therefore be left with wide latitude in devising ways and means of fiscal or regulatory measures, and the court should not, unless compelled by the statute or by the Constitution, encroach into this field, or invalidate such law.”

25. In light of this, we have to examine whether the condition attached for preferring appeals and the discretion contemplated under Section 217 are so unreasonable that the right of appeal itself would stand frustrated to such an extent that it will violate the constitutional mandate. The fact that a statute providing for an appeal imposes some kind of restriction for preferring of an appeal by itself cannot be termed as entirely arbitrary or unconstitutional restriction.

The right to appeal is to be regulated by the statute and once it provides for the remedy to be preferred in a particular way, the Court can hardly interfere in such prescription of pre-conditions to the entertainment or hearing of the appeal.

26. Quite some time back, the provisions of Section 217(5) of the Act came up for consideration of a Single Bench of this Court in the case of Ellora Construction Company vs Municipal Corporation of Greater Bombay and others, AIR 1980 Bom. C.R. 380 and the learned Single Judge upheld the validity of the provision. This case, though was noticed by the Division Bench of this Court in the case of Kohinoor Textiles Printing Works (supra), it took a different view. The Corporation did not prefer an appeal against Kohinoor Textiles Printing Works (supra), in view of the judgment of the Supreme Court in the case of Shyam Kishore (supra). It needs to be noticed that the Single Judge judgment of this Court in the case of Ellora Construction Company (supra) was approved with specific reference by the Supreme Court in Shyam Kishore (supra) and also in its recent judgment in the case of P. Laxmi Devi (supra). The Single Judge of this Court in Ellora’ case (supra) had referred to the amendment of Section 217 by an Ordinance and thereafter amended by the Amending Act of 1975. Its validity was challenged on the ground of being violative of Article 19(1)(f) of the Constitution of India as well as on the ground that imposition of precondition does not amount to reasonable restriction under Article 19(5) of the Constitution. The Court while taking the view that restriction imposed was in no way unreasonable and did not infringe any of these Articles clearly stated the principle that right of appeal is not inherent or fundamental right but is a creation of statute.

27. Argument is raised that provision regarding year to year demands being continued and in the event of default in deposit of 80% of the increase, the appeal shall not be heard is similar to the previous provision. As such the provision still be unconstitutional in terms of the Division Bench judgment in the case of Kohinoor Textiles Printing Press (supra) which would still stare the statute in face. It is a matter of common practice that tax on property is payable annually. It is also a known fact that property tax can increase and/or decrease every year depending on the fiscal law framed by the State in that behalf. It will be expected of the Corporation to inform the person liable to pay the tax due by issuing notice. It rather furthers the cause than it violates any constitutional mandate. The condition is neither so harsh nor unpurposeful so as to defeat the remedy. The remedy is to be taken recourse to and tax so paid is also duly protected under the provisions of the Section. We, therefore, do not find substance in the argument that the judgment in Kohinoor’scase (supra) still continue to render amended provision of Section 217(5) unconstitutional.

28. The Scheme in relation to liability and payment of property tax is to be traced in the provisions of Sections 156 to 165 of the Act which regulates the maintenance of assessment book and the manner in which it is to be completed, issuance of notice and time and manner in which the complaints could be filed. Section 167 of the Act imposes an obligation upon the Commissioner to amend the assessment book upon representation from any person concerned or upon any other information received during the year. This amendment could relate to insertion of the name, increase or reducing of amount of rateable value of the assessment and the property tax payable thereupon. Section 197 contemplates that each of the property tax shall be payable in advance in half yearly installments on each first day of April and each first day of October. Sections 200 and 201 of the Act require the service of bill upon the owner of the property as well as make it is obligatory upon the Corporation to serve a notice of demand in terms of Section 202 of the Act. It is only after the prescribed procedure under these provisions have been complied with that the Corporation would ultimately prepare a bill, serve the same upon the owner of the property whose liability to pay become certain with the issuance of the notice of demand. Thus, the Scheme of the Act clearly provides a due process of law for imposition of property tax, its payment and ultimately the manner in which the appeals are to be filed and to be dealt with by the Court of Chief Judge. The Scheme thus is in complete consonance with the constitutional mandate and does not suffer from vice of arbitrariness, unreasonableness or unconstitutionality.

29. We may also clarify that the proceedings before the Chief Judge are proceedings not of the original nature but are of appellate jurisdiction. The original proceedings are passed by the Assessing Officer. Against those original proceedings, an appeal in terms of Section 217 of the Act has been provided to the Chief Judge. This being an appellate proceedings, parties are at liberty to raise the questions of fact and law both before the Chief Judge. The Supreme Court in the case of Municipal Corporation of Brihanmumbai and another vs State Bank of India, (1999)1 SCC 123 : [1999(1) ALL MR 246 (S.C.)], has specifically stated that nature of proceedings under Section 217(1) are appellate proceedings.”

21. Mr.Joglekar does not dispute this legal position but submits that section 217(5) mandates deposit of property tax only if the same is payable and not otherwise. The tax is not payable in this case because sub-section 3 of section 209 states that arrears cannot be demanded and recovered for a period of more than a year. Thus, if recovery is not legally permissible, then, the Corporation cannot call upon the petitioner appellant to deposit the tax due and demanded by taking recourse to sub-section 5 of section 217 of the Act is the submission.

22. It is not possible to accept this submission. Section 209 as already clarified above, deals with the case of liability for payment of property taxes as far as occupiers are concerned. The bill is raised on the person primarily liable for payment of property tax. If the person primarily liable is not the occupier of the premises, then, the bill may be raised on the occupier and after it is served on him the recovery can be effected in accordance with section 199 to 209 of the MMC Act. While recovering taxes, the arrears cannot be recovered from such occupiers under section 209, if the same have remained due for more than one year. Thus, the recovery in terms of section 209 cannot be effected if the property tax has remained in arrears for more than one year. It is not possible to extend the provision and particularly sub-section 3 of 209 and read it into section 217(5) of the Act. It will be defeating the Legislative Mandate if such a reading of the provision is permitted. The word “payable” is used in sub-section 5 only to point out that after the appeal is filed the payment of property taxes which are due on the basis of the original and the increased rateable can be secured during the pendency of the appeal provided it is claimed from the appellant by issuing bills from time to time, since filing of the appeal. Therefore, to secure further sum till such time as the appeal is decided that sub-section 5 has been introduced in the Statute Book. In other words to enable and facilitate the corporation to effect recovery of property taxes levied and assessed at the original rate and to secure the claim on the basis of the revised or increased rateable value that this provision is made. Taxes are public dues and their recovery should not be hampered in any manner because challenge to the levy and assessment is pending before a court of law, is the intent in inserting sub-section (5) in the Act. That intent will be defeated if it is held that operation of this provision is controlled and restricted by section 209(3) of the MMC Act. That section serves another purpose. Once, the Legislature does not provide for any restriction and enacts the law in absolute terms full effect must be given to the provision or else the object and purpose of its insertion is defeated and frustrated. Once its introduction is understood in proper perspective, then, it is not difficult to reject the submissions of Mr.Joglekar.

23. It is not a case where sub-section 5 of section 217 has not been complied with by the Corporation. On the own showing of the petitioner, the bill was raised and the amount was demanded. A copy of the bill is annexed to the petition itself. Further, the letter dated 9th February 2009, a copy of which is at page 29 of the paperbook, makes it clear that the assessor and collector of the Municipal Corporation had called upon the petitioner bank to pay the property tax by letters dated 16th June 2008 and 29th January 2009. Admittedly, these letters are addressed after the appeal was filed and these deal with the demand, pursuant to service of bills for property taxes post institution of the appeal. Therefore, to secure the sum during the pendency of the appeal that the bills were forwarded and demand raised. On receipt of these letters, petitioners refused to comply with the requisitions thereunder on the ground that their liability is restricted and does not extend for more than a year as per the Act. Thus, the requirement of section 217(5) that the property tax should be claimed by issuing bill on the petitioner has been complied with. In these circumstances, when even prior to introduction of sub-section 5, the Division Bench of this Court in its decision referred to above had turned down some what identical pleas, then, reliance by Mr.Walawalkar on the said decision is apposite and appropriate. There also the argument was that the primary liability to pay the property tax is that of the lessor and failure to pay the same by him enable the Commissioner to recover the tax by service of bill on respondent Nos. 1 to 9 or the occupiers of plot and the structures thereon. While not disputing this liability, all that was argued was that the amount can be recovered only after proceedings are initiated against the lessor. While rejecting this argument, the Division Bench held that right to recover tax conferred on the Corporation is for service rendered to the property and the Corporation looks to the property for realisation irrespective of the fact as to who is the owner or occupier of the same or what is the character of that occupation. Once the occupier cannot take such a stand and particularly by saying that he was not served with the bills, the Division Bench rejected the argument based on sub-section 3 in the following words:-

“6. …… As mentioned hereinabove, the Corporation has right to proceed against the occupier by service of distress warrant in respect of moveable property and also attachment and sale of immovable property. What sub-section (3) prescribes is that the personal liability of the occupier to pay the property taxes is only for a duration of one year. The sub-section cannot be read as to provide that the liability of the property for payment of taxes is limited to one year. The distinction between the personal liability of the occupier to pay the taxes and the right of the Corporation to proceed against the property irrespective of who is in occupation should not be confused. The Corporation has an absolute right to proceed against the property for realisation of the property tax and to that right there are no restrictions prescribed by the Act. What sub-section (3) provides is merely a limitation to recover the property taxes personally from an occupier and the limitation is that taxes which had remained due for more than one year cannot be recovered. In our Judgement, the learned Judge was clearly in error in holding that sub-section (3) creates a bar to the Corporation to recover property taxes, remained due for more than one year from the property held by the occupier and consequently the warrant of attachment served on March 28th, 1984 was defective.”

24. To my mind, therefore, the learned Judge was in no error in allowing the application and issuing the subject directions. Mr.Joglekar in all fairness stated that the Corporation is liable to recover the taxes which fall in arrears within the period prescribed by sub-section 3 of section 209 and that the petitioner would be in any event be liable to deposit that amount but time for the same be granted. However, finding that the liability to deposit under sub-section 5 of section 217 of the Act, is absolute and free from any restriction, then, it is clear that the petitioner will have to deposit 80% of the arrears of tax of Rs.24,98,930/- or else, their appeal can be summarily dismissed. The learned Additional Chief Judge was, therefore, right in passing the impugned order and issuing the subject directions.

25. For the reasons aforesaid, there is no merit in this petition and it fails. Rule is discharged. No costs.

26. At this stage, learned Counsel for petitioners prays for stay of this order. This Court has protected the petitioner by a limited ad-interim order, by observing that the appeal will not be dismissed during the pendency of this petition. There cannot be any stay of recovery of taxes and particularly when I have found that the condition imposed is in accordance with law and meets the requirement provided therein. In such circumstances, the stay on recovery of tax cannot be granted. The prayer in that behalf is refused. However, for a period of four weeks from today, the appeal preferred by the petitioner shall not be summarily dismissed.

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!