Kanhaiyya Lal And Others vs State Of U.P. & Ors. on 23 December, 2010

[Cites 38, Cited by 11]

Allahabad High Court

Kanhaiyya Lal And Others vs State Of U.P. & Ors. on 23 December, 2010

(Delivered by Hon'ble Ashok Bhushan, J) Heard Sri B.D. Mandhyan, learned Senior Advocate, assisted by Sri Satish Mandhyan for the petitioners, Sri M.D. Singh Shekhar, learned Senior Advocate, assisted by Sri Jamwant Maurya and Sri M.C. Gupta for respondent no. 4 and learned standing counsel representing the State respondents.

Counter and rejoinder affidavits have been exchanged between the parties and with consent of learned counsel for the parties, the writ petition is being finally decided.

By means of present writ petition, the petitioners who are small businessmen/traders of Nagar Panchayat Raya, District Mathura have challenged the vires of bye-laws namely; "Nagar Panchayat Raya Ki Seemantargat Vanijya Niyantran Hetu License Niyamawali" dated 13.8.2001.

The Petitioners' case in the writ petition is that the population of Nagar Panchayat Raya is not more than 30,000, the petitioners are carrying business in general merchandise, building materials, provisional stores, cloths etc. Citations dated 16.6.2010 have been issued by the Tahsildar against the petitioners for recovery of licence fee as arrears of land revenue. The Petitioners' case in the writ petition is that the procedure prescribed under the U.P. Municipalities Act, 1916 (hereinafter referred to as the Act) for framing of bye-laws have not been followed; the bye-laws have not been given effect to; the respondent no. 4 has not issued licence to any traders; the demand for licence fee is illegal; the rates fixed are totally arbitrary and have no relation to trade and calling of the persons. The petitioners have prayed for following reliefs in the writ petition:

" i. to issue a writ, order or direction in the nature of certiorari to quash the Byelaws known as "Nagar Panchayat Raya Seemantargat Vanijya Niyantran Hetu Licence Niyamawali" as published in the official gazette dated 13.8.2001 as ultravires to the U.P. Municipalities Act, 1916;

ii. to issue a writ, order or direction in the nature of certiorari to quash the citations dated 16.6.2010 issued by the respondent no. 5, filed as Annexure No. 2 collectively to this writ petition;

iii. to issue a writ, order or direction in the nature of mandamus directing the respondents not to give effect to the citations (Annexure No. 2) or recovery of the amounts as detailed in the said citation;"

Sri B.D. Mandhyan, learned Senior Advocate appearing for the petitioners in support of the writ petition had made following submissions:

(i) The impugned bye-laws dated 13.8.2001 have not been framed in accordance with the procedure prescribed under the U.P. Municipalities Act, 1916.

(ii) The bye-laws mention Section 118 of the Act and the notice which was published before framing of the bye-laws mentioned Section 131 of the Act but procedure for imposition of tax has not been followed.

(iii) The bye-laws do not provide any procedure for obtaining the licence, conditions of licence and the municipal board is charging the fee from the traders without requiring them to obtain licence.

(iv) For imposition of fee, it is necessary that there is regulation of the trade by the Municipal Board and the principle of quid-pro-quo would be involved to support the levy by the Municipal Board. The Municipal Board has to specify that the Regulation was necessary and for that purpose, the Municipal Board was incurring certain expenses to match the Regulation, as fee has to be equivalent to the service rendered by the Municipal Board.

(v) Licence fee cannot be recovered as arrears of land revenue and the citations issued by the Tahsildar are without jurisdiction.

Learned counsel for the petitioners has placed reliance on the judgments of the apex Court; (2007) 6 Supreme Court Cases 668 Bidhannagar (Salt Lake) Welfare Association Vs. Central Valuation Board and others. Three judgments of this Court; 1998 (89) R.D. 513 Ram Bilas Tibriwal Vs. Chairman, Municipal Board, Titri Bazar and others, 1992 All. CJ 115 Lachman Prasad Agrawal and another Vs. The District Magistrate, Kanpur, and 2003 (5) AWC 3479 Titu Singh, Mathura Vs. District Magistrate/Collector, Mathura and others.

Sri M.D. Singh Shekhar, learned Counsel appearing for the Municipal Board has submitted that the bye-laws have been framed under section 298 of the U.P. Municipalities Act, 1916 for collection of fee from various persons, who are carrying on different trades and callings as mentioned in the bye-laws. It is submitted that the petitioners have also paid licence fee for the year 2002-03, 2003-04 and subsequent years. He submits that receipts of payment have also been issued to various petitioners and they have filed the writ petition after nine years of enforcement of bye-laws. It is submitted that bye-laws have been framed in accordance with the Government order dated 16.12.1997 by which Government directed the municipal board to enhance the licence fee. It is submitted that the due procedures for framing of the bye-laws and imposing licence fee have been followed. The population of Nagar Panchayat Raya is more than 50,000. The demand notices were sent to various traders since they failed to pay the licence fee. It is stated that some inhabitants doing business of particular commodities have obtained licence and are paying the regular licence fee and since some have become defaulters, the demand notices have been issued. The licence fee charged by the Board is proportionate to the facilities provided by the Nagar Panchayat. Sri M.C. Gupta, who also appears on behalf of Municipal Board, submits that even if it is presumed that the imposition of licence fee is a tax, there is a substantial compliance of the procedure prescribed. He also placed reliance on the judgment of the apex Court in the cases of Municipal Board, Sitapur Vs. Prayag Narain Saigal, 1969 A.L.J. 1071, Secunderabad Hyderabad Hotel Owners Association Vs. Hyderabad Municipal Corporation, Hyderabad, 1999 AIR (SC) 635 and Doctor's Jan Kalyan Society, Mirzapur Vs. State of U.P., 1999 AWC (3) 2328.

We have heard learned counsel for the parties and have perused the record.

The first and second submissions of learned counsel for the petitioner is to the effect that procedure prescribed for framing the bye-laws under the Act has not been followed. Section 298 (1) provides that a Municipality by a special resolution may, and where required by the State Government shall, make, bye-laws consistent with the Act and the Rules. Sub-section (2) of Section 298 of the Act provides for specific items, where bye-laws may be framed without prejudice to the generality of the powers conferred by Sub-section (1). List 1 of Sub-section (2) refers to various headings and List 1 F refers to Markets, slaughter-houses, sale of food etc. Section 298(1) and 298(2) and List I-F which are relevant for the present case, are quoted herein below:

"298. Power of Municipality to make bye-laws.- (1) A Municipality by a special resolution may, and where required by the State Government shall, make, bye-laws applicable to the whole or any part of the municipal area, consistent with this Act and with any rule, for the purpose of promoting or maintaining the health, safety and convenience of the inhabitants of the municipal area and for the furtherance of municipal administration under this Act.

(2) In particular , and without prejudice to the generality of the power conferred by Sub-section (1), the Municipality, wherever situated, may, in the exercise of the said power, make any bye-law described in List I below and the Municipality, wholly or in part, situated in a hilly tract may further make, in the exercise of the said power, any bye-law described in List II below:

"F - Markets, slaughter-house, sale of food, etc.

(a) prohibiting, subject to the provision of Section 241, use of any place as a slaughter-house, or as a market or shop for the sale of animals intended for human food or of meat or of fish, or as a market for the sale of fruit or vegetables, in default of a licence granted by the Municipality or otherwise than in accordance with the conditions of a licence so granted;

(b) prescribing the condition subject to which the circumstances in which and the areas or localities in respect of which, licences for such use may be granted, refused, suspended or withdrawn;

(c) providing for the inspection of, and regulation of conduct of business, in a place used as aforesaid, so as to secure cleanliness therein or minimize any injuries, offensive or dangerous effect arising or likely to arise therefrom;

(d) providing for the establishment, and except so far as provision may be made by bye-laws under sub-head (c) for the regulation and inspection of markets and slaughter-houses, of livery stables, of encamping grounds of sarais, of flour-mills, of bakeries, of places for the manufacture, preparation or sale of specified articles of food or drink, or for keeping or exhibiting animals, for sale on hire or animals of which the produce is sold, and of places of public entertainment, or resort, and for the proper and cleanly conduct of business therein;

3 (dd) prescribing the conditions subject to which, and the circumstances in which, and the areas or locality in respect of which, licences for the purposes of sub-head (d) may be granted, refused, suspended or withdrawn, and fixing the fees payable for such licences, and prohibiting the establishment of business places mentioned in sub-head (d) in default of licence granted by the Municipality or otherwise than in accordance with the conditions of a licence so granted; and

(e) in a municipal area, where a reasonable number of slaughter-house has been provided or licensed by the Municipality, controlling and regulating the admission within limits of the municipal area, for purposes of sale, of the flesh (other than cured or preserved meat) and any cattle, sheep, goats or swine slaughtered at a slaughter-house or place not maintained or licensed under this Act."

Section 301 of the Act provides that the power of the municipality to make bye-laws under section 298 of the U.P. Municipalities Act, 1916 shall be subject to the conditions of the bye-laws being made after previous publication. Section 301 is quoted herein below:

"301. Regulations and bye-laws to be published.-(1) The power of the municipality to make bye-laws under section 298 shall be subject to the condition of the bye-laws being made after previous publication.

(2) The regulations made under Section 297 and U.P. Primary Education Act, 1919 and the bue-laws made under section 298 shall be published in the Official Gazette."

In the counter affidavit, the respondents have pleaded that the bye-laws were framed in pursuance of resolution dated 28.6.2001. Prior to the aforesaid resolution, a notice was published in the newspaper Dainik Jagaran on 14.2.1999, informing the proposal of framing the bye-laws and in the newspaper, the proposed bye-laws were published inviting objections. The notice, which has been filed as Annexure-2 to the counter affidavit refers to section 131(3). Section 131 (3) requires for publication of proposals for imposition of tax. The Municipal Board as well as the State Government do not claim that a tax has been imposed and pleadings on their behalf is that the license fee has been imposed by framing of bye-laws. Thus, mere mention of section 131 (3) in the notice which was published in the news papers is inconsequential. The publication of the notice under section 131 (3) in the newspaper for framing the proposed bye-laws, was for the notice of all concern by which objections were invited.

The bye-laws have been published in the U.P. Gazette dated 6.10.2001, copy of which has been filed as Annexure-4 to the counter affidavit, which is in compliance of section 301 of the Act. The Government order dated 16.12.1997 has been brought on record as Annexure-1 to the counter affidavit, which directs all the municipal boards to enhance the license fee to augment sources of income of the municipal boards. The Nagar Panchayat Raya thus, in compliance of the said Government order dated 16.12.1997 and in accordance with the provisions of Section 298 (1) of the Act, has framed the bye-laws with regard to certain items including licence fee. Thus, the submission of the learned counsel for the petitioner that bye-laws have not been framed in accordance with the procedure prescribed under the Act, cannot be accepted. The publication of the bye-laws in the official Gazette raises a presumption that procedure prescribed by the law has been compiled with as laid down by the apex Court in the case of Municipal Board Maunath Bhanjan vs Swadeshi Cotton Mills Co. Ltd. AIR 1977 S.C. 1055.

Learned Counsel for the petitioner placed reliance on 2007 (6) Supreme Court Cases 668 Bidhannagar (Salt Lake) vs Central Valuation Board & Ors. The said judgment was considering the validity of Rules framed by the Municipal Board namely; The West Bengal Central Valuation Board (Valuation of Lands and Building) Rules, 1984. The Apex Court struck down the the said Rules on the ground that in effect it took away right of an assessee of pre-decisional hearing and were arbitrary. In the said case, amendments in Rules were struck down. Due to the aforesaid reason, the said judgment has no application in the facts of the present case.

The third submission of learned counsel for the petitioner is that bye-laws do not provide for any procedure for obtaining licence or any conditions for grant of licence or any conditions for regulation of various trades. It has been pleaded in writ petition in paragraph 14 that Municipal Board till date has not issued any license to any traders which averments have been specifically denied in paragraph 24 of the counter affidavit. It was pleaded on behalf of the Municipal Board that several inhabitants doing business in a particular commodity have obtained licence and are paying regular licence fee. The receipt of licence fee deposited by the petitioners themselves in the earlier years, have been brought on the record along with counter affidavit. The petitioner no.1, Kanhaiyya Lal had paid the licence fee for the year 2003-04. The said receipt along with the receipts of certain other persons showing the deposit towards the licence fee have been filed as Annexure C.A.-6 to the counter affidavit, which indicate that the petitioners themselves had paid the licence fee for certain years. The Municipal Board has also filed notice, demanding the licence fee under section 168 of the Act, as Annexure-C.A.8 to the counter affidavit.

A perusal of the bye-laws Annexure-C.A. 4 indicate that the bye-laws had fixed the annual fee from those persons, who while residing in Nagar Panchayat Raya, carry on various trades and callings as mentioned in the schedule. The payment of licence fee as contemplated under the bye-laws is deemed as permission for carry on the business. Section 294 empowers the municipality to charge a fee fixed by the bye-laws for any licence which is entitled to require to grant by or under the Act. The payment of licence fee is a permission of the Municipal Board as contemplated under section 294 of the Act. Thus, the mere fact that bye-laws do not provide for any specific procedure for obtaining a licence or condition for obtaining a licence, cannot invalidate the bye-laws. It has been pleaded by Municipal Board in paragraph 24 that certain inhabitants have obtained licence. If so advised, the petitioners may also make an application to the Municipal Board for providing licence to them as has been claimed to have been issued to inhabitants of certain trades. Thus, the mere fact that the bye-laws do not provide detail provisions for method or manner of obtaining the licence, cannot invalidate the bye-laws.

The fourth submission of the learned counsel for the petitioners is that there is no quid pro quo by the Municipal Board and no services are being rendered by Board inter-alia for charging the licence fee. We have perused the writ petition. In the writ petition, there is no specific pleading that no services are rendered by the Board. The Board in its counter affidavit in paragraph 28 although have pleaded that population of the area is more than 50,000 and the licence fee charged by the Nagar Panchayat is proportionate to the facilities provided by it to the inhabitants. There is another reason due to which we are not persuaded to declare the bye-laws as invalid on the above submission. The fee which can be charged by a municipal board can be of two kinds. The licence may be either regulatory or compensatory. When a fee is charged for rendering specific services, certain element of quid pro quo must be there between the services rendered and fee charged. However, licence fee can also be regulatory when an activity is required to regulated or control. In Vam Organic Chemicals Ltd. and another Vs. State of U.P. and others, (1997) 2 Supreme Court Cases 715 following was laid down in paragraph 18:

"18. The High Court in the impugned judgment has drawn a distinction between fees charged for licences, i.e., regulatory fees and the fees for services rendered as compensatory fees. The distinction pointed out by the High Court can be seen in clause (2) of Article 110 :

"110.(2) - A Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services rendered, or by reasons that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes."

The High Court has quoted from this Court's decision in Corporation of Calcutta v. Liberty Cinema, "In fact, in our Constitution fee for licence and fee for services rendered are contemplated as different kinds of levy. The former is not intended to be a fee for services rendered. This is apparent from a consideration of Article 110(2) and Article 199(2) where both expressions are used indicating thereby that they are not the same."

The High Court has taken the view that in the case of regulatory fees, like the licence fees, existence of quid pro quo is not necessary although the fee imposed must not be, in the circumstances of the case, excessive. The High Court further held that keeping in view the quantum and nature of the work involved in supervising the process of denaturation and the consequent expenses incurred by the State, the fee of 7 paise per litre was reasonable and proper. We see no reason to differ with this view of the High Court."

Elaborating the two kinds of fee, the apex Court in Secunderabad Hyderabad Hotel Owners Association Vs. Hyderabad Municipal Corporation, Hyderabad (supra) had laid down following in paragraphs 9, 11 and 12:

"9. It is, by now, well settled that a licence fee may be either regulatory or compensatory. When a fee is charged for rendering specific services a certain element of quid pro quo must be there between the service rendered and the fee charged so that the licence fee is commensurate with the cost of rendering the service although exact arithmetical equivalence is not expected. However, this is not the only kind of fee which can be charged. Licence fees can also be regulatory when the activities for which a licence is given require to be regulated or controlled. The fee which is charged for regulation for such activity would be validly classifiable as a fee and not a tax although no service is rendered. An element of quid pro quo for the levy of such fees is not required although such fees cannot be excessive.

11. In the case of Corporation of Calcutta and Another v. Liberty Cinema ([1965] 2 SCR 477 at page 483), this Court after referring to the constitutional provisions making a distinction between a fee and a tax, also went on to say that in our Constitution fees for licence and fees for services rendered are contemplated as different kinds of levy. The former is not intended to be a fee for services rendered. This is apparent from a consideration of Article 110(2) and Article 199(2) where both the expressions are used indicating thereby that they are not the same. In other words, a distinction was made between fees for services rendered and fees which are regulatory. In Indian Mica & Micanite Industries Ltd. v. State of Bihar & Ors. (1971 Supp. SCR 319 at page 324), Om Parkash Agarwal etc. v. Giri Raj Kishori & Ors. etc. ([1986] 1 SCR 149) and The Municipal Council, Madurai v. R. Narayanan etc. ([1976] 1 SCR 333 at pages 339 to 400) the Court had considered a fee which was charged for services rendered. In all these cases the Court observed that when a fee is charged for services rendered an element of quid pro quo is necessary and there has to be a co-relationship of a general character between the cost of rendering such service and the fee charged. A number of other decisions were also cited in this connection. The position in respect of fees for services rendered is summed up in the case of Krishi Upaj Mandi Samiti and Ors. v. Orient Paper & Industries Ltd.([1995] 1 SCC 655 in paragraph 21).

12. In the present case, however, the fees charged are not just for services rendered but they also have a large element of a regulatory fee levied for the purpose of monitoring the activity of the licensees to ensure that they comply with the terms and conditions of the licence. Dealing with such regulatory fees, this Court in Vam Organic Chemicals Ltd. & Anr. etc. v. State of U.P. & Ors. etc. ([1997] 2 SCC 715 at page 726) observed that in the case of a regulatory fee no quid pro quo was necessary but such fee should not be excessive. The same distinction between regulatory and compensatory fees has been made in the case of P. Kannadasan & Ors. v. State of T.N. & Ors. ([1996] 5 SCC 670 in paragraph 36) as well as State of Tripura & Ors. v. Sudhir Ranjan Nath ([1997] 3 SCC 665 at 673)."

A Division Bench of this Court had occasion to consider similar grounds of challenge of licence fee imposed by Nagar Nigam Allahabad on the licence fee on retail vend of country liquor and beer at various places in the municipal limit of Nagar Nigam, Allahabad in writ petition No. 2435 of 2002, decided on 6.7.2007, Phool Chand Gupta and others Vs. Nagar Nigam, Allahabad and others. The licence fee was fixed at Rs. 6000/- from country liquor shops and Rs. 12000/- from foreign liquor shop by Nigar Nigam, which was challenged in the writ petition. The Division Bench, upholding the bye-laws, dismissed the writ petition. Following observations were made by the Division Bench:

"In the case of Doctors' Jankalyan Society (supra) this Court has upheld the levy of licence fee on nursing homes, clinics etc. by the Nagar Palika Parishad, Mirzapur under Section 298(1)/List I Section 1 item (h) of the Municipalities Act, 1916. The same view was taken by this Court in the case of Dr. Chakresh Kumar Jain (supra) wherein the licence fee has been held to be regulatory and reasonable.

In the case of United India Insurance Company Limited (supra) this Court following the decision in the case of Dr. Chakresh Kumar Jain (supra) has held that for a regulatory fee quid pro quo is not necessary. The Court has taken note of the fact that the Nagar Nigam is rendering a lot of service to the residents and due to business transaction of the petitioners they are crowded by the customers at their business place and there are sanitation problems disproportionate to the other areas and for this the Nagar Nigam bears extra cost. This Court has distinguished the decision of the Apex Court in the case of A.P. Bankers and Pawn Brokers Association (supra).

In the case of Durga Das Bhattacharya (supra) the Apex Court has held that the impostion of annual licence fees at the rate of Rs. 30/- on each rickshow owner and Rs. 5/- on each rickshaw driver by the Nagar Mahapalika, Varanasi cannot be justified as there is no sufficient quid pro quo. The Apex Court has not considered the question of being regulatory in nature.

In the case of Kamaljeet Singh(supra) the Apex Court has held that the expenditure incurred on maintenance of the connecting road and the nallah cannot be justified as quid pro quo for levy of toll tax by the Municipal Board from vehicle and other conveyance passing through the municipal limit.

In the case of A.P. Bankers and Pawn Brokers Association (supra) the Apex Court has struck down the levy of licence fee on money lending and pawn broking on the ground that there is no provision empowering the Municipal Corporation to either carry out inspections or to take any measures to ensure that such trade and operations are run properly and that exploitation is avoided nor the said trade is dangerous or likely to create nuisance. However, in the present case we find that certain obligations have been placed upon the persons engaged in the business of country liquor and beer/foreign liquor which are necessary in the maintenance of public health and safety. The fee of Rs. 6,000/- per year cannot be said to be unreasonable or highly excessive. The mere fact that the liquor trade is being controlled by the Excise Commissioner under the provisions of U.P. Excise Act, 1910 would not come in the way of the Nagar Nigam Authorities from levying licence fee as a regulatory measure for maintaining sanitation and other allied matters in the interest of general public residing in the locality where such shops are situate. Moreover, we find that this Court in the case of Radhey Charan Gupta and others vs. State of U.P. (supra) which involved similar controversy has been pleased to dismiss the writ petition by following the judgment of this Court in the case of Dr. Chakresh Kimar Jain (supra). The present cases are fully covered by the decisions of this Court in Dr. Chakresh Kimar Jain (supra) and Radhey Charan Gupta (supra). We are in respectful agreement with the view taken by this Court in the aforesaid decisions.

In view of the foregoing discussions, we do not find any merit in these writ petitions which are dismissed with costs."

Similar bye-laws framed by Nagar Panchayat, Mirzapur came for consideration in Doctor's Jan Kalyan Society, Mirzapur Vs. State of U.P. (supra). Nagar Panchayat Mirzapur has framed bye-laws for licence fee for nursing home, private clinic, pathology Centre, Dental Clinic, X-ray Clinic and Maternity Wards which bye-laws were framed by the Nagar Panchayat on the basis of the Government orders issued from time to time, The challenge to the bye-laws were repelled. The following was laid down in paragraphs 7, 8 and 12:

"7. Section 294 of the Act permits the Municipality to charge fee to be fixed by the bye-laws for any licence. The Municipality may make bye-laws under section 298 of the Act . But the bye-laws so framed have to be consistent with the Act and the Rules and should be for the purpose of promoting or maintaining the health, safety and convenience of the inhabitants of the Municipal area. The municipality may frame bye-laws in respect of item mentioned in the list under section 298(2) of the Act. This is without prejudice to the power conferred by Section 298(1) of the Act. List I deals with the Municipal area where as List II deals with Hill Municipal area. In the present case List I is applicable.

8. We have read the Bye-laws. They are for providing and maintaining the safety and convenience of the inhabitants of the Nagar Palika. They can be framed under section 298(1) of the Act. They can also be framed under List I Section I item(h). This entry deals with prohibiting or regulating with view to sanitation or prevention of diseases. Nursing homes, clinics etc are places were diseases are cured. But unregulated or unchecked on un-cared may spread infection. The Nagar Palika has power to frame the impugned Bye-laws.

12. The Bye-laws were framed on the direction of the State Government and not on its own accord. Section 298(1) of the Act says that the Municipality by a special resolution may and where required by the State Government shall make bye-laws applicable to whole or any part of the Municipal area. It contemplates two situations. One it may frame a bye-laws by special resolution and second it shall frame bye laws if required by the State Government. If a section of the Act uses 'May' at one place and 'shall' at other then the use of the language indicates that the one situation is discretionary and other obligatory/mandatory. Section 298(1) of the Act at one place uses word 'May' and other place uses the word 'Shall'. There is a change in the language. The change in language suggests the change of intention . This indicates that use of the word 'shall' in the second situation is mandatory while 'May' in first place is discretionary ."

The judgment of the Division Bench in the cases of Phool Chand Gupta and Doctor's Jan Kalyan Society (supra) fully supports the case of learned counsel for the respondents.

The last submission of learned counsel for the petitioner is that the license fee cannot be recovered as arrears of land revenue. U.P. Municipalities Act provides for recovery of municipal claims in Chapter VI. The demand notice issued under section 168 has been filed by the respondent no. 4 as Annexure-8 to the counter affidavit. In Chapter VI of the Act, Sections 166 to 173 provide for the manner of preparation of the bill, contents of bill, notice of demand, issue of warrant, execution of warrant, sale of goods under warrant, and application of proceeds and procedure in case of execution against property outside municipal area. Section 168 and 173 are quoted herein below:

168. Notice of demand - If the sum for which a bill has been presented as aforesaid is not paid into the municipal office or to a person empowered by a regulation to receive such payments, within fifteen days from the presentation thereof, the Municipality may cause to be served upon the person liable for the payment of the said sum a notice of demand in the form set forth in Schedule IV, or to the like effect.

173. Procedure in case of execution against property outside municipal area- (1) If no sufficient movable property belonging to a defaulter of being upon the premises, in respect of which he is assessed, can be found within the municipal area, the District Magistrate may, on the application of the Municipality, issue his warrant to an officer of his Court -

(a) for the distress and sale of any movable property or effects belonging to the defaulter within any other part of the jurisdiction of the Magistrate, or

(b) for the distress and sale of any movable property belonging to the defaulter within the jurisdiction of any other Magistrate exercising jurisdiction within Uttar Pradesh.

(2) In the case of action being taken under clause (b) of sub-section (1), the other Magistrate shall endorse the warrant so issued, and cause it to be executed, and any amount recovered to be remitted to the Magistrate issuing the warrant, who shall remit the same to the Municipality."

Section 173-A provides recovery of tax as arrears of land revenue. Section 173-A is quoted herein below:

"173-A. Recovery of taxes as areas of land revenue -(1) Where any sum is due on account of a tax, other than any tax payable upon immediate demand, from a person to a Municipality, the Municipality may without prejudice to any other mode of recovery apply to the Collector to recover such sum together with costs of the proceedings as if it were an arrear of a land revenue.

(2) The Collector on being satisfied that the sum is due shall proceed to recover it is an arrear of land revenue."

A perusal of the aforesaid provisions of Section 173 A indicate that where any sum is due on account of tax from a person of municipality, the municipality may, without prejudice to any other mode of recovery, apply to the Collector to recover such sum together with costs of the proceedings, as if it were an arrear of a land revenue. In the present case, the license fee imposed is claimed to be a fee and not a tax. Section 173-A thus is not clearly applicable. The judgments relied by learned counsel for the petitioner of this Court in Ram Bilas Tibriwal Vs. Chairman, Municipal Board, Titri Bazar and others, Lachman Prasad Agrawal and another Vs. The District Magistrate, Kanpur, Titu Singh, Mathura Vs. District Magistrate/ Collector, Mathura and others (supra) fully support the submission of learned counsel for the petitioner. In Titu Singh (supra) following was laid down in paragraph 6.

"6. From perusal of the aforesaid provisions of the Municipalities Act and Town Area Act, it is clear that the contention of the learned Counsel for the petitioner is well founded. Under Section 173-A of the Municipalities Act, it is provided that any sum due on account of tax, other than octrol or toll or any similar tax payable upon immediate demand, from a person to a board, the board may, recover as arrears of land revenue. In the instance case the amount in question became due from the petitioner as a result of default in payment of Theka money between the parties. Similarly Section 21 of the Town Areas Act provides that arrears of any tax imposed under this Act may be recovered and no other amount. Therefore, the provisions of Section 173-A of the Municipalities Act, and Section 21 of the Town Areas Act are not attracted. The amount in question is not a tax imposed under the aforesaid two Act and as such the amount due from the petitioner could not be recovered as arrears of land revenue. Besides the aforesaid decisions, there are two recent decisions also in Bisheshwar Singh @ Kalloo v. District Magistrate/Collector. Shahjahanpur and Ors., 2001 (4) AWC 2556 and Rakesh Shukla v. District Magistrate/Sub-Divisional Magistrate, Phoolpur, Allahabad and Anr., 2002 (3) AWC 2397. In these decisions also, the Division Bench found that the Theka money could not be recovered as arrears of land revenue. However, the Bench did not interfere on the ground that the equity was not in favour of the petitioner."

The aforesaid Division Bench judgment of this Court fully supports the contention of learned counsel for the petitioner. Thus, the citation issued by the Tahsildar impugned in the writ petition dated 16.6.2010 for recovery of licence fee as arrears of land revenue, cannot be sustained and is to be set aside.

In view of the foregoing discussions, the impugned Bye-laws dated 13.8.2001 are held to be intra-vires and the prayer of the petitioner to quash the Bye-laws is refused. The writ petition is however, partly allowed quashing the citation dated 16.6.2010, issued by the Tahsildar for recovery of the licence fee. It shall be however, open for the municipal board to recover the licence fee in accordance with the procedure as prescribed under Chapter VI of the Act namely; Sections 166-173 of the Act.

The parties shall bear their own costs.

Order Date :- 23.12.2010 LA/-

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