Madras High Court
K.P.Khadar Hussain (Died) vs The Commissioner on 28 April, 2025
Author: C.Saravanan
Bench: C.Saravanan
W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 30.01.2025
Pronounced on 28.04.2025
CORAM :
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.No.29647 of 2012, W.P.No.12443 of 2013 and W.P.No.24775 of 2014
and
M.P.No.1 of 2012, M.P.No.2 of 2013 and M.P.No.1 of 2014
W.P.No.29647 of 2012
K.P.Khadar Hussain (Died)
S/o. Late K.P.Syed Mohamed Hussain
2.Badrunnisabegum,
W/o.K.P.Khadar Hussain
3.Sharmilabasha,
D/o.K.P.Khadar Hussain
4.Shakila Naushad,
D/o.K.P.Khadar Hussain
5.Shahida Ahamed Nasir,
D/o.K.P.Khadar Hussain
6.Syed Mohamed Ghouse,
S/o.K.P.Khadar Hussain
(P2 to P6 are substituted as Legal Heirs of
Deceased Sole Petitioner vide Order dated
06.01.2023 made in W.M.P.No.10632 of 2021
in W.P.No.29647 of 2012) ... Petitioners
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W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014
Vs.
1.The Commissioner,
Mettur Municipality,
Mettur, Salem District.
2.The Official Liquidator,
High Court, Madras,
Corporate Bhavan,
2nd Floor, No.29,
Rajaji Salai, Chennai – 600 001.
(R2 impleaded as per Order of this Court
dated 26.03.2013 in M.P.No.1 of 2013
in W.P.No.29647 of 2012) ... Respondents
Prayer in W.P.No.29647 of 2012: Writ Petition filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorarified Mandamus, to call
for the proceedings of the 1st respondent in Na.Ka.No.6295/1984/A1 dated
26.09.2012 and the consequential proceedings of the 1st respondent in
Na.Ka.No.3739/2008/A2 dated 08.10.2012 and quash the same as illegal and
ultravires the provisions of the Tamil Nadu District Municipalities Act and
consequently forbear the respondents from in any manner demanding
recovering the property tax as per the Impugned Proceedings dated 26.09.2012.
W.P.No.12443 of 2013
M/s.Jayalakshmi Pressings Private Limited,
Represented by its Managing Director
Mr.C.Subramanian ... Petitioner
Vs.
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W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014
1.The Commissioner,
Mettur Municipality,
Mettur Dam, Salem District.
2.The Official Liquidator,
High Court of Madras,
Corporate Bhavan,
Ministry of Corporate Affairs,
29, Rajaji Salai, Chennai – 600 001. ... Respondents
Prayer in W.P.No.12443 of 2013: Writ Petition filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorari, to call for the records
of the Impugned Demand Order in Na.Ka.No.6295/1984/A1 dated 26.09.2012
and its consequential Notice in Na.Ka.No.6295/1984/A2 dated 08.04.2013
passed by the first respondent and quash the same as illegal and ultravires of
the provisions of the Tamil Nadu District Municipalities Act, 1920.
W.P.No.24775 of 2014
K.P.Syed Firoze,
S/o.Syed Mohamed Hussain ... Petitioner
Vs.
1.The Commissioner,
Mettur Municipality,
Mettur Dam, Salem District.
2.The Official Liquidator,
High Court of Madras,
Corporate Bhavan,
Ministry of Corporate Affairs,
29, Rajaji Salai, Chennai – 600 001. ... Respondents
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W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014
Prayer in W.P.No.24775 of 2014: Writ Petition filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorari, to call for the records
of the Impugned Demand Order made in Na.Ka.No.2332/A1/2014 dated
23.06.2014 passed by the first respondent and quash the same as illegal and
ultravires of the provisions of the Tamil Nadu District Municipalities Act,
1920.
For Petitioners in
W.P.No.29647 of 2012 : Mr.P.Srinivas
For Petitioners in
W.P.No.12443 of 2013
and in W.P.No.24775 of 2014 : Mr.M.R.Jothimanian
For 1st Respondent in all W.Ps : Mr.L.P.Maurya
Standing Counsel
---
COMMON ORDER
By this Common Order, all the above three Writ Petitions are being disposed of.
2. These Writ Petitions have been filed for the following reliefs:-
(i) W.P.No.29647 of 2012 has been filed for issuance of writ of certiorarified mandamus, to call for the proceedings of the 1st respondent in Na.Ka.No.6295/1984/A1 dated 26.09.2012 and the consequential proceedings of the 1st respondent in Na.Ka.No.3739/2008/A2 dated 08.10.2012 and quash the same as illegal and ultravires the provisions of the Tamil Nadu District Municipalities Act and consequently forbear the respondents from in any manner demanding recovering the property tax as per the Impugned Proceedings dated 26.09.2012.
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(ii) W.P.No.12443 of 2013 has been filed for issuance of writ of certiorari, to call for the records of the Impugned Demand Order in Na.Ka.No.6295/1984/A1 dated 26.09.2012 and its consequential Notice in Na.Ka.No.6295/1984/A2 dated 08.04.2013 passed by the first respondent and quash the same as illegal and ultra vires of the provisions of the Tamil Nadu District Municipalities Act, 1920.
(iii) W.P.No.24775 of 2014 has been filed for issuance of writ of certiorari, to call for the records of the Impugned Demand Order made in Na.Ka.No.2332/A1/2014 dated 23.06.2014 passed by the first respondent and quash the same as illegal and ultra vires of the provisions of the Tamil Nadu District Municipalities Act, 1920.
3. In these Writ Petitions, the respective Petitioners have challenged the Impugned Demand Notices issued by the 1st Respondent the Commissioner, Mettur Municipality, Mettur Dam, Salem District, demanding them to pay the property tax. The extent of land purchased by the Petitioners and the details of the Demand Notices issued to the Petitioners in the respective Writ Petitions are as follows:-
Table-1 Sl. W.P.No. Date of Extent of land Amount demanded Demand towards property tax No. Notice and water tax from the Petitioners
1. W.P.No.29647 of 2012 26.09.2012 13.68 Acres for # Rs. 2,78,26,702/-
08.10.2012 Lot A ^ Rs. 8,76,638/-
* Rs. 2,87,03,340/-
----------------------
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W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 Sl. W.P.No. Date of Extent of land Amount demanded Demand towards property tax No. Notice and water tax from the Petitioners
2. W.P.No.12443 of 2013 26.09.2012 25 Acres for Lot # Rs. 95,92,965/-
08.04.2013 B
3. W.P.No.24775 of 2014 23.06.2014 33.30 Acres for # Rs. 42,46,696/-
Lot G ^ Rs. 4,88,591/-
* Rs. 47,35,287/-
----------------------------
# Property Tax
^ Water Tax
* Total (Property Tax + Water Tax)
4. The Petitioners herein are auction purchasers of the properties which originally belonged to the erstwhile owners of the Company viz., M/s.Mettur Textiles Industry Limited (company under liquidation). The said Company was ordered to be wound up by this Court vide order dated 02.07.1993 in C.P.No.125 of 1988.
5. The details of the properties purchased by the Petitioners are tabulated in Paragraph 3 of this Order. Lot-A consisting of 13.68 Acres was purchased by Mr.K.P.Khadar Hussain, (Petitioner in W.P.No.29647 of 2012), Lot-B consisting of 25 Acres was purchased by M/s.Jayalakshmi Pressings Private ____________ Page No. 6 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 Limited, (Petitioner in W.P.No.12443 of 2013) and Lot-G consisting of 33.30 Acres was purchased by Mr.K.P.Syed Firoze, (Petitioner in W.P.No.24775 of 2014) on 08.03.2012, that is the date of the auction pursuant to order dated 08.03.2012 in C.A.No.3013 of 2007 in C.P.No.125 of 1988 after the Company was ordered to be wound up on 02.07.1993.
6. During the period when the said Company was in existence, several Demand Notices were issued for Property Tax and Water Tax. However, those Demand Notices could not be enforced as the Company was under distress and later under liquidation pursuant to order dated 02.07.1993 of the Company Court in C.P.No.125 of 1988.
7. Meanwhile, the Company Court vide its order dated 02.02.2012 in C.A.No.3013 of 2007, directed the Official Liquidator to call for tenders by effecting Paper Publication for sale of properties belonging to M/s.Mettur Textiles Industry Limited (company under liquidation). ____________ Page No. 7 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014
8. Pursuant to the aforesaid order, a Court Auction was held on 08.03.2012 by the Company Court, in which, the respective Petitioners were declared as successful bidders. Consequently, Sale Deeds were executed in favour of the respective Petitioners by the Official Liquidator.
9. The case of the Petitioners appears to be that the demand raised by the 1st Respondent Commissioner, Mettur Municipality, Mettur Dam, Salem District during the year 2012 to 2014 were considered as time barred in terms of Section 345 of the Tamil Nadu District Municipalities Act, 1920.
10. Mr.M.R.Jothimanian, learned counsel for the Petitioner in W.P.No.12443 of 2013 and W.P.No.24775 of 2014 further submitted that demand has been made on the Petitioners directly without any assessment and therefore the Impugned Demand Notices are liable to be quashed as contrary to both Section 345 and Section 117A of the Tamil Nadu District Municipalities Act, 1920.
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11. Learned counsel for the Petitioners in W.P.No.12443 of 2013 and W.P.No.24775 of 2014 would also submit that out of 25 Acres, 6.3 Acres of land was sold to M/s.Sunbright Industries Private Limited, the 1 st Respondent Commissioner has demanded a sum of Rs.24,58,623/- from the said Company and the same was paid by M/s.Sunbright Industries Private Limited. The aforesaid amount of Rs.24,58,623/- encompasses the total demand of Rs.95,92,965/- made on the Petitioner (nominee). Hence, it is submitted that the Impugned Demands Notices are liable to be quashed.
12. It is further submitted that no notice was served on the Petitioners and therefore on this count also, the Impugned Demand Notices are liable to be quashed.
13. As far as the Petitioner in W.P.No.12443 of 2013 (M/s.Jayalakshmi Pressings Private Limited) are concerned, out of total extent of 25 Acres of land auctioned in Lot B, an extent of 6.3 Acres was purchased by M/s.Sunbright Industries Private Limited from M/s.Jayalakshmi Pressings Private Limited. ____________ Page No. 9 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014
14. As far as the Petitioner in W.P.No.24775 of 2014 is concerned, the total extent of 33.30 Acres of land was purchased by the said Petitioner namely K.P.Syed Firoze, and a sum of Rs.47,35,287/- (Rs.42,46,696/- as property tax for the Assessment Year 1984-1985 to 2014-2015 and Rs.4,88,591/- as water tax for the Assessment Year 1985-1986 to 2014-2015) was demanded from the Petitioner, which is again contrary to the above provisions of the Tamil Nadu District Municipalities Act, 1920. Hence, prays for quashing the Impugned Demand Notices and thereby allowing these Writ Petitions.
15. On the other hand, the learned Standing Counsel for the 1st Respondent Commissioner submitted that the Executive Officer/Municipal Commissioner, Mettur Muncipality had issued Notices to the Manager of M/s.Mettur Textiles Industry Limited (company under liquidation) way back in the year 1984, demanding to pay the arrears of property tax. Charge Sheet was issued to the erstwhile owners of M/s.Mettur Textiles Industry Limited (company under liquidation) and criminal proceedings were also initiated against the erstwhile owners of M/s.Mettur Textiles Industry Limited (company under liquidation) for failing to pay the property tax. ____________ Page No. 10 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014
16. The learned Standing Counsel for the 1st Respondent Commissioner further submitted that due to pendency of C.P.No.125 of 1988, no further steps could be taken although Charge Sheet was filed against the erstwhile owner of M/s.Mettur Textiles Industry Limited (company under liquidation) for failing to pay the property tax. In the terms and conditions of the Auction Sale Notice dated 23.02.2012, it was clearly stipulated that M/s.Mettur Textiles Industry Limited (company under liquidation) is in arrears of Municipality Tax, Property Tax and Water Tax to be paid to the 1st Respondent Commissioner, Mettur Municipality. The respective Petitioners knowing fully well that there were arrears of property tax by the erstwhile owners of the property and they were liable to pay the property tax and therefore, it is not open to the Petitioners to state that the demand was barred by limitation either under Section 345 or under Section 105A of the Tamil Nadu District Municipalities Act, 1920.
17. Learned counsel for the 1st Respondent also submits that Section 345 of the Tamil Nadu District Municipalities Act, 1920 was amended in the year 2008.
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18. By way of rejoinder, the learned counsel for the Petitioners in W.P.No.12443 of 2013 and W.P.No.24775 of 2014 submitted that the 1st Respondent Commissioner, Mettur Municipality had filed a Claim Petition before the Official Liquidator the 2nd Respondent herein pursuant to winding up of the Company i.e., M/s.Mettur Textiles Industry Limited (company under liquidation) and that part of the Claim in Claim No.1042/Claim/AR IV dated 31.03.2016 was taken on record for a sum of Rs.1,80,84,759/- and a sum of Rs.39,07,558/- was settled under Section 530(1) of the Companies Act, 1956 and therefore, the Petitioners cannot be saddled with past tax liability of the aforesaid Company namely M/s.Mettur Textiles Industry Limited (company under liquidation).
19. Adding further, the learned counsel for the Petitioners in W.P.No.29647 of 2012 would submit that the deceased Petitioner had purchased an extent of 13.68 Acres in Lot-A through Court Auction that was conducted on 08.03.2012.
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20. Learned counsel for the Petitioners in W.P.No.29647 of 2012 drew attention to Section 88 of the Tamil Nadu District Municipalities Act, 1920.
21. Learned counsel for the Petitioners in W.P.No.29647 of 2012 submitted that the duty was cast on the Official Liquidator to inform the 1st Respondent the Commissioner, Mettur Municipality regarding transfer and since no such notice was given, the liability on the respective Petitioners cannot be fastened under the provisions of the Tamil Nadu District Municipalities Act, 1920.
22. Specifically, it was submitted that burden was on the Office of the Official Liquidator to give the notice and therefore in addition to liability, every person who makes a transfer without giving such notice to the Executive Authority shall, in addition to any other liability which he incurs through such neglect, continue liable for the payment of property tax assessed on the premises transferred until he gives notice until the transfer shall have been recorded in the Municipal Registers.
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23. The submission of the learned counsel for the Petitioners in W.P.No.29647 of 2012 is that the aforesaid provision makes it clear that liability at best is to be fastened only on the Official Liquidator and not on the subsequent buyer, who have purchased the property in a Court Auction. It is further submitted that earlier period of limitation was only 3 years which has now been expanded to 12 years and therefore it is submitted that amendment to limitation would only prospectively and not retrospectively. Hence, prays for allowing W.P.No.29647 of 2012. At best, it is submitted that the demand can go up to 2005.
24. By way of rejoinder, the learned counsel for the 1st Respondent submits that in terms of Section 458A of the Companies Act, 1956, there is a saving of limitation.
25. Learned counsel for the 1st Respondent also drew attention to a Letter dated 08.10.2012 of the 1st Respondent Commissioner, Mettur Municipality addressed to the Petitioners in W.P.No.29647 of 2012 wherein, it has been stated that Official Liquidators' Office has already paid tax due for the period up to 02.07.1993 and the subsequent demand is only for the period between ____________ Page No. 14 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 1993-1994 and 2007-2008.
26. I have considered the arguments advanced by the learned counsel for the Petitioners in the respective Writ Petitions and the learned Standing Counsel for the Respondents.
27. The 1st Respondent Mettur Municipality represented by its Commissioner had also filed a Claim Petition for the arrears of property tax for the period prior to 25.09.2002 for a vide Claim No.1042/Claim/AR IV dated 31.03.2016 in Form No.66 under Rule 149 read with Rule 151 of the Company Court Rules, 1959.
28. Out of the aforesaid sum of Rs.1,80,84,759/-, a sum of Rs.39,07,559/- was admitted by the Office of the Official Liquidator. This would have been based on the records that may have been submitted by the 1st Respondent Mettur Municipality.
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29. Thus, a part of the demand vide Impugned Demand Notices dated 26.09.2012, 08.04.2013 and 23.06.2014 in the case of the Petitioners in W.P.No.12443 of 2013, W.P.No.29647 of 2012 and W.P.No.24775 of 2014 would have covered the tax liability of the Company under liquidation, between the date of presentation of the Company Petition in C.P.No.125 of 1988 up to 25.09.2002.
30. The aforesaid Claim Petition would have been filed after the Claim Petitions were invited from the Creditors of the Company under liquidation, which included the 1st Respondent Mettur Municipality. The liability for the period thereafter to the tax year 2013-2014 was also to be paid by the Office of the Official Liquidator.
31. In these cases, the demand for property tax is sought to be fastened on the Petitioners as a subsequent buyer of the property of the said Company, which was ordered to be wound up pursuant to an order dated 02.07.1993 in C.P.No.125 of 1988.
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32. The 1st Respondent the Commissioner, Mettur Municipality had a 1st charge over the properties of the Company in terms of Section 85 of the Tamil Nadu District Municipalities Act, 1920. As per Section 100 of the Transfer of Property Act, 1882, where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property, and all the provisions contained in the Transfer of Property Act, 1882 which apply to “Simple Mortgage” shall, so far as may be, apply to such charge.
33. The expression “Simple Mortgage” is defined in Section 58(b) of the Transfer of Property Act, 1882 i.e., where a mortgage is created without delivering possession of the mortgaged property whereby the mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee he shall have a right to cause the mortgaged property to be sold and the proceeds of the sale to be applied, so far as may be necessary, in payment of the mortgage-money.
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34. Thus, once a charge is created, the rights and liabilities of the parties have to be resolved in terms of the provisions of the Transfer of Property Act, 1882. The Office of the Official Liquidator, with whom the property/assets of the Company and the liquidation stood vested was entitled to initiate proceedings for redemption of the mortgage which was created in favour of the 1st Respondent the Commissioner, Mettur Municipality by operation of law in terms of the above provisions of the Tamil Nadu District Municipalities Act, 1920 and the Provisions of the Transfer of Property Act, 1882. Likewise, the deemed mortgagee, namely the 1st Respondent the Commissioner, Mettur Municipality concerned is entitled to file a Suit to bring the property mortgaged for sale in terms of Section 67 of the Transfer of Property Act, 1882. As a deemed mortgagee, the 1st Respondent the Commissioner, Mettur Municipality has a period of 12 years to enforce payment of money secured by a mortgage or otherwise charged upon immovable property. The time from which the aforesaid period of 12 years begins to run is when the money sued for becomes due.
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35. In this case, since the properties vested with the Office of the Official Liquidator, the 1st Respondent the Commissioner, Mettur Municipality had a 1st charge for the property in respect of the property tax due on the said property for the period in dispute. The Office of the Official Liquidator thus issued an advertisement for bringing the property to sale after effecting a Paper Publication in the Hindu/Daily Thanthi on 19.02.2014.
36. The terms and conditions of the sale of the property by the Office of the Official Liquidator pursuant to order dated 02.02.2012 in Company Application No.3013 of 2007 and the actual auction on 08.03.2012 was pursuant to the offer made by the respective Writ Petitioners agreeing to the terms and conditions of the sale pursuant to the Paper Publication/Advertisement dated 19.02.2012 for bringing the properties to sale on 08.03.2012.
37. As a response made to the tender form, the respective Writ Petitioners made an offer agreeing to the terms and conditions of sale of the land and building. In other words, the respective Writ Petitioners have agreed that they will pay the arrears of property tax due as on the date of the auction. ____________ Page No. 19 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014
38. As per Section 55 (1)(g) of the Transfer of Property Act, 1882, the seller is bound to pay all public charges and rent accrued due in respect of the property up to the date of the sale, interest on all encumbrances on such property due on such date, and, except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing. In this case, the properties were sold on 08.03.2012, subject to the encumbrances/1st charge over them in respect of the property tax due and payable on the property during the period in dispute. Therefore, the Petitioners cannot resile from their offer pursuant to which the sale was concluded in their favor during the auction held on 08.03.2012. Subsequently, each sale has been executed in favour of the respective Writ Petitioners on the following dates:-
Table-4 W.P.No.29647 W.P.No.12443 of W.P.No.24775 of 2012 2012 of 2014 Date of Auction 08.03.2012 08.03.2012 08.03.2012 Date of Sale Deed 25.06.2012 12.09.2012 10.10.2012
39. There is no dispute that the subject properties were purchased by the respective Petitioners on 08.03.2012, pursuant to order dated 02.02.2012 in C.A.No.3013 of 2007 in C.P.No.125 of 1988 after the said Company viz., M/s.Mettur Textiles Industry Limited was ordered to be wound up on ____________ Page No. 20 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 02.07.1993.
40. As far as the recovery of property tax and other charges under the provisions of the Tamil Nadu District Municipalities Act, 1920 are concerned, it is permissible under the said Act. The following provisions of the Tamil Nadu District Municipalities Act, 1920 are relevant for inquiry in W.P.No.12443 of 2013, W.P.No.29647 of 2012 and W.P.No.24775 of 2014:-
Table-3 Section 117A – Power to assess in Section 345 – Limitation for case of escape from assessment recovery of dues Notwithstanding anything to the No distraint shall be made, no suit contrary contained in this Act or shall be instituted and no the rules made thereunder if, for prosecution shall be commenced any reason, any person liable to in respect of any sum due to the pay any of the taxes or fee liable Municipal Council under this Act under this Chapter has escaped after the expiration of a period of assessment in any half-year or [twelve years] from the date on year at a rate lower than the rate which distraint might first have at which he is assessable, or in the been made, a suit might first have case of property tax, has not been been instituted, or prosecution duly assessed in any half-year or might first have been commenced, year consequent on the building or as the case may be, in respect of land concerned having escaped such sum. proper determination of its annual value, the Commissioner may, at any time, within six years from the date on which such person should have been assessed serve on such person a notice assessing him to ____________ Page No. 21 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 Section 117A – Power to assess in Section 345 – Limitation for case of escape from assessment recovery of dues the tax or fee due and demanding payment thereof within fifteen days from the date of such service; and the provisions of this Act and the rules made thereunder shall, so far as may be, apply as if the assessment was made in the half-
year to or year which the tax or fee relates.
Section 88 – Obligation of transferor and transferee to give notice of transfer (1) Whenever the title of any person primarily liable to the payment of property tax on any premises to or over such premises is transferred, the person whose title is transferred and the person to whom the same shall be transferred shall, within three months after the execution of the instrument of transfer or after its registration if it be registered or after the transfer is effected, if no instrument be executed, give notice of such transfer to the [Executive Authority] (2) In the event of the death of any person primarily liable as aforesaid, the person to whom the title of the deceased shall be transferred, as heir or otherwise shall give written notice of such transfer to the [Executive Authority] within one year from the death of the deceased.
(3) The notice to be given under this section shall be in such form as the [Executive Authority] may direct and the transferee or the person to whom the title passes, as the case may be, shall, if so required, be bound to produce before the [Executive Authority] any documents evidencing the transfer or succession. (4) Every person who makes a transfer as aforesaid without giving such notice to the [Executive Authority] shall, in addition to any other liability which he incurs through such neglect, continue liable for the payment of property tax assessed on the premises transferred until he gives notice or until the transfer shall have ____________ Page No. 22 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 Section 117A – Power to assess in Section 345 – Limitation for case of escape from assessment recovery of dues been recorded in the municipal registers but nothing in this section shall be held to affect -
(a) the liability of the transferee for the payment of the said tax; or
(b) the prior claim of the Municipal Council under Section 85.
41. As per Section 88 of the Tamil Nadu District Municipalities Act, 1920, an obligation is passed on the owner and the buyer of the property to give a notice of such transfer to the 1st Respondent the Commissioner, Mettur Municipality.
42. Since the property of M/s.Mettur Textiles Industry Limited stood vested with the Company Court i.e. under the control of the Official Liquidator attached to this Court, the transfer was made in favour of the Petitioners pursuant to Court Auction dated 08.03.2012 pursuant to order dated 02.02.2012 in Company Application No.3013 of 2007.
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43. Since the property stood vested with the Company Court, the 1st Respondent the Commissioner, Mettur Municipality could not have independently initiated any proceedings to recover the amount under the provisions of the Companies Act, 1956.
44. Section 345 of the Tamil Nadu District Municipalities Act, 1920 was amended in the year 2008. The period of limitation of 3 years that was prescribed in Section 345 of the Tamil Nadu District Municipalities Act, 1920 till 2008 was substituted with 12 years by virtue of the Third Amendment Act with effect from 25.06.2008 vide G.O. (Ms) No.116, Municipal Administration and Water Supply (MA & WS) Department dated 07.12.2021.
45. This was in consonance with the period of limitation prescribed for initiating proceedings under Article 62 of Part IV of 1st Division to the Limitation Act, 1963. Thus, an anomaly arising out of the special and limited period of limitation of 3 years in Section 345 of the Tamil Nadu District Municipalities Act, 1920 was modified in the year 2008, and the Tamil Nadu Municipal Laws (Third Amendment) Act, 2008 (Tamil Nadu Act 36 of ____________ Page No. 24 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 2008), came into force with effect from 25.06.2008 with issuance of G.O. (Ms) No.116, Municipal Administration and Water Supply (MA & WS) Department, prescribing the limitation is 12 years.
46. The issue therefore that arises for consideration is whether the aforesaid amendment to Section 345 of the Tamil Nadu District Municipalities Act, 1920, would have a retrospective operation or not. Dealing with an identical situation in the context of the Central Excise Act, 1944 and the Central Excise Rules, 1944, the Hon'ble Supreme Court in “Mysore Rolling Mills Private Limited Vs. Collector of Central Excise, Belgaum”, 1987 (28) E.L.T. 50 (S.C.), observed as under:-
“5. The only other submission of the appellant which remains for consideration is the tenability of the contention that the period of limitation under the old provision having expired the five year rule which has been applied was not available to be applied. Undoubtedly, the rule is intended to relate back and cover a period of five years from the date jurisdiction under the rule is invoked. The provision is, therefore, retrospective in operation. It is not the stand of the learned Counsel for the appellant that only when a period of five years has elapsed from the date of introduction of the rule, jurisdiction under the rule can be exercised in respect of that preceding period of five years. Once the rule comes into existence and jurisdiction under the rule is invoked, it has got to cover a period upto five years preceding the date of issue of notice. The Tribunal has endorsed such action of the departmental ____________ Page No. 25 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 authorities. The plea of limitation has no force.”
47. The demand of property tax spans over a period of time between 1994-1995 and 2012-2013 i.e., after the date of winding up order dated 02.07.1993 in C.P.No.125 of 1988.
48. The point for consideration in these Writ Petitions is whether the 1 st Respondent Mettur Municipality was justified in demanding arrears of property tax from the respective Petitioners who purchased the property of M/s.Mettur Textiles Industries Limited which was ordered to be wound up by the Company Court vide its order dated 02.07.1993 in C.P.No.125 of 1988.
49. The dispute pertains to the period between September 1994 and May 1997. The appellant therein had recovered a sum of Rs.6,00,000/- during the aforesaid period from its customer by issuing debit notes over and above the amounts recovered on the invoices raised for the supplies made earlier. This amount was towards the handling charges. The Department perceived the aforesaid recovery of the amount through debit notes was a non-disclosure of receipt and therefore issued a Show Cause Notice dated 13.10.1978, by which ____________ Page No. 26 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 time, Rule 9 and Rule 10 of the Central Excise Rules, 1944 as it stood during the period of the recovery prescribing the period of limitation as one year for the extended period of limitation in case of suppression of facts and three months under Rule 10 of the Central Excise Rules, 1944 for normal period of limitation, was substituted by six months and five years respectively under Section 11A of the Central Excise Act, 1944 with effect from 06.08.1977. The Hon'ble Supreme Court has upheld the invocation of the extended period of limitation under Section 11A of the Central Excise Act, 1944 even though the limitation prescribed under Rule 9 and Rule 10 of the Central Excise Rules, 1944 had already expired on the date of issuance of Notice dated 13.10.1978 for the period between September 1974 - May 1977. It is in this background, the Hon'ble Supreme Court in Paragraph 5 observed as mentioned herein.
50. Pursuant to the order of winding up on 02.07.1993, the assets of the aforesaid Company stood vested with the Company Court in terms of Section 456 of the Companies Act, 1956.
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51. As per Section 446 of the Companies Act, 1956, after the date of winding up of the Company, only the Company Court has jurisdiction to entertain any suit or proceeding by or against the Company or any claim made by or against the Company (including claims by or against any of its branches in India) and that only the Company Court has the jurisdiction in respect of such matters. For the sake of clarity, Section 446 of the Companies Act, 1956 is reproduced below:-
446. SUITS STAYED ON WINDING UP ORDER:
(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the [Tribunal] # and subject to such terms as the [Tribunal] may impose.
(2) The [Tribunal] * shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of –
(a) any suit or proceeding by or against the company;
(b) any claim made by or against the company (including claims by or against any of its branches in India);
(c) any application made under section 391 by or in respect of the company;
(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company;
whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such ____________ Page No. 28 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960. (3) 3 [***] (4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.” # Substituted for “Court” by the Companies (Second Amendment) Act, 2022 (with effect from a date yet to be notified).
* Substituted for “Court” by the Companies (Second Amendment) Act, 2002 (with effect from a date yet to be notified.) Omitted by the Companies (Second Amendment) Act, 2002 (with effect from a date yet to be notified). Prior to omission, sub-section (3) read as under:
“(3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that Court.”
52. After the said Company, viz., M/s. Mettur Textiles Limited was ordered to be wound up on 02.07.1993 in C.P.No.125 of 1988, the 1st Respondent the Commissioner, Mettur Municipality was free to initiate suit or proceedings against the said Company under Section 446(2)(a) of the Companies Act, 1956 with the view of the Court/Tribunal or in the alternative, file a Claim Petition before the Office of the Official Liquidator under Section ____________ Page No. 29 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 457(1)(a) of the Companies Act, 1956 read with Rule 151 of the Company Court Rules, 1959.
53. In this case, admittedly, the 1st Respondent the Commissioner, Mettur Municipality had also filed a Claim Petition in Claim No.1042/Claim/AR IV on 31.03.2016 before the Official Liquidator for a total sum of Rs.1,80,84,759/- out of which a sum of Rs.39,07,558/- was paid by the Office of the Official Liquidator.
54. Thus, the aforesaid Claim Petition would encompass a part of the property tax due from the said Company up to the 2nd half of 2001-2002 and perhaps a part of the property tax due for the 1st half of 2002-2003 up to 30.09.2002.
55. Thus, the balance of the dues for the period up to the aforesaid period was available to be recovered by the 1st Respondent Commissioner, Mettur Municipality from the Official Liquidator’s Office. ____________ Page No. 30 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014
56. As per Section 457(2A)(c) of the Companies Act, 1956, the Office of the Official Liquidator is required to give an advertisement, inviting bids for sale of the assets of the Company and within 15 days from the date of receipt of Valuation Report from the Valuer, Chartered Surveyor or Chartered Accountant referred to in sub-clause (b) to Section 457(2A) of the Companies Act, 1956.
57. As per Section 457(2E) of the Companies Act, 1956, every bidder shall, in response to advertisements referred to in Clause (c) of Section (2A), deposit his offer in the manner as may be prescribed within the stipulated time. As per Section 457(2F) of the Companies Act, 1956, the advertisement inviting bids shall contain the details mentioned therein. Sections 457(2E) and Section 457(2F) are reproduced below:-
Table-2 Section 457(2E) Section 457(2F) Every bidder shall, in response The advertisement inviting bids to advertisement referred to in shall contain the following clause (c) of sub-section (2A), details, namely:-
deposit, his officer in the manner (a) name, address of registered as may be prescribed, with office of the company and its liquidator or provisional branch offices, factories and liquidator, as the case may be, plants and the place where within forty-five days from the assets of the company are date of the advertisement and the kept and available for sale;
liquidator or provisional
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W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 Section 457(2E) Section 457(2F) liquidator shall permit (b) last date for submitting bids inspection of property and assets which shall not exceed in respect of which bids were ninety days from the date of invited: advertisement;
Provided that such bid may be (c) time during which the withdrawn within three days premises of the company before the last day of closing of shall remain open for the bid: inspection;
Provided further that the (d) the last date for inspection of property shall be withdrawing the bid; open for not more than five days (e) financial guarantee which before closing of the bid. shall not be less than one-
half of the value of the bid;
(f) validity period of the bids;
(g) place and date of opening of the bids in public;
(h) reserve price and earnest money to be deposited along with the bid;
(i) any other terms and conditions of sale which may be prescribed.
58. Sub-clause (i) to Sub-Section 457(2F) of the Companies Act, 1956, also makes it clear that the Petitioners are governed by the terms and conditions of the prescribed advertisement issued on this behalf by the Office of the Official Liquidator.
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59. The Office of the Official Liquidator thus filed Company Application No.3013 of 2007 before the Company Court for permission to sell the assets of the aforesaid Company which ordered to be wound up on 02.07.1993 in C.P.No.125 of 1988.
60. An order was also passed by the Company Court on 02.02.2012 in the Company Application No.3013 of 2007. Pursuant to the aforesaid order dated 02.02.2012, a Court Auction was held on 08.03.2012 in which the respective Petitioners participated.
61. The aforesaid Court Auction preceded an advertisement wherein it was clearly mentioned that the Auction Buyer, like the Petitioners, would be liable to pay the arrears of Property tax, Land tax, Municipal tax, and Betterment Levy et cetera if any. Thus, the Petitioners were bound by the terms of the Advertisement Notice that preceded the auction on 08.03.2012. The Petitioners therefore cannot be resiled from the Terms and Conditions of the auction as they had participated in the auction held on 08.03.2012 with open eye regarding tax liability on the property. Therefore, on this count alone, these Writ Petitions are liable to be dismissed.
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62. For computing the period of limitation prescribed for filing a Suit or an application in the name and on behalf of the Company which is being wound up by a Court under Section 458A of the Companies Act, 1956, the period from the date of commencement of winding up of Company to the date on which winding up order is made (both inclusive) and a period of one year immediately following the date of the winding up order shall be excluded. This is produced in Section 458A of the Companies Act, 1956. Thus, under Section 458A of the Companies Act, 1956, the computation of the period of limitation is not relevant.
63. The question of serving notice on the 1st Respondent the Commissioner, Mettur Municipality did not arise.
64. However, this Court in the case of Dr.R.Ramanarayanan Vs. Chidambaram Municipality, in S.A.No.1203 of 2019 in its Judgment dated 20.07.2021, has ordered otherwise, holding that the aforesaid provision would not have retrospective operation.
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65. It is noticed that in a Second Appeal arising out of a Judgment and Decree of the First Appellate Court in A.S.No.3 of 2012, the Court has ordered otherwise while dealing with a limitation under Section 345 of the Tamil Nadu District Municipalities Act, 1920. Though the decision of this Court rendered in S.A.No.1203 of 2019 on 20.07.2021 at a later point of time and has specifically dealt with limitation under Section 345 of the Tamil Nadu District Municipalities Act, 1920, the issue may require a fresh consideration by the larger Bench of this Court as and when issue arise, in the light of the decision of the Hon'ble Supreme Court in Mysore Rolling Mills Private Limited's case (cited supra).
66. In my view, the 1st Respondent Commissioner, Mettur Municipality is justified in pressing for recovery of the arrears of property tax due from 1993- 1994 to the 2012-2013 period in view of the amendment to Section 345 of the Tamil Nadu District Municipalities Act, 1920, as amended in the year 2008 as in force with effect from 25.06.2008 vide G.O. (Ms) No.116, Municipal Administration and Water Supply (MA & WS) Department dated 25.06.2008.
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67. Therefore, no merits in the challenge to the Impugned Demand Notices issued by the 1st Respondent the Commissioner, Mettur Municipality, Mettur Dam, Salem District to the respective Writ Petitioners. The Petitioners cannot approbate and reprobate their stand before the auction at the time of their offer and after the execution of the Sale Deed when notices were issued. The sale was conditional in their favour, having accepted to bind themselves to pay the arrears of property tax due on the property, the Petitioners cannot turn around and say that they are not liable to pay tax in terms of the limitation prescribed under the provisions of the Tamil Nadu District Municipalities Act, 1920.
68. In the light of the above discussion, these Writ Petitions are liable to be dismissed. Respondents are at liberty to initiate recovery proceedings in accordance with the law.
69. Since these Writ Petitions have been pending from 2012, the Respondents are given time to remit the property tax and surcharge, if any that may be demanded for the aforesaid period within a period of 30 days from the date of receipt of a copy of this order.
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70. These Writ Petitions are dismissed with the above observations. No costs. Connected Miscellaneous Petitions are closed.
28.04.2025 Neutral Citation : Yes / No mrr / arb / msm To:
1.The Commissioner, Mettur Municipality, Mettur Dam, Salem District.
2.The Official Liquidator, High Court of Madras, Corporate Bhavan, Ministry of Corporate Affairs, 29, Rajaji Salai, Chennai – 600 001.
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mrr / arb / msm W.P.No.29647 of 2012, W.P.No.12443 of 2013 and W.P.No.24775 of 2014 ____________ Page No. 38 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm ) W.P.Nos.29647 of 2012, 12443 of 2013 and 24775 of 2014 28.04.2025 ____________ Page No. 39 of 39 https://www.mhc.tn.gov.in/judis ( Uploaded on: 07/06/2025 08:24:53 pm )