Bombay High Court
Indian Companies Act vs City Of Nagpur Corporation Through on 9 December, 2010
Author: B.P. Dharmadhikari
Bench: B.P. Dharmadhikari
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH
WRIT PETITION NO. 4520 OF 2010
Haldiram Foods International Limited,
A company duly incorporated under
Indian Companies Act, 1956, r/o 800,
Haldiram House, Small Factory Area,
Bhandara Road, through its Director. ... PETITIONER
Versus
1. City of Nagpur Corporation through
Municipal Commissioner, Civil Lines,
Nagpur.
2. The Objection Officer/ Assistant
Commissioner, Nagpur Municipal
Corporation, Laxminagar Zone,
Nagpur.
3. The Assessor/ Assistant Commissioner,
Nagpur Municipal Corporation,
Laxminagar Zone, Nagpur.
4. The Revenue Inspector, Ward No. 73,
Nagpur Municipal Corporation,
Laxminagar Zone, Nagpur. ... RESPONDENTS
Shri M.G. Bhangde, Senior Advocate with Shri R.M. Bhangde,
Advocate for the petitioner.
Shri C.S. Kaptan, Advocate for the respondents.
.....
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CORAM : B.P. DHARMADHIKARI, J.
DATE OF RESERVING THE JUDGMENT : NOV. 30, 2010.
DATE OF PRONOUNCING THE JUDGMENT : DEC. 09, 2010.
JUDGMENT :
This petition filed under Articles 226 and 227 of Constitution of India filed by an assessee challenges the order dated 06.09.2010 passed below Exh. 14 in Miscellaneous Appeal No. 167 of 2010 by District Judge - 3, Nagpur, refusing to grant stay to the assessment and levy of property tax by Nagpur Municipal Corporation. The said appeal has been filed by the petitioner under Section 130 of the City of Nagpur Corporation Act, 1948, (hereinafter referred to the Act) and is still pending.
On 16.09.2010, while issuing notices, the petitioner was directed to deposit an amount of Rs.18,67,320/- with the Registry of this Court and accordingly that amount has been deposited.
According to the petitioner, corrected tax works out to Rs.18,67,320/- and that was already paid by it. This amount was in addition to that amount already paid.
::: Downloaded on - 09/06/2013 16:41:05 ::: 32. Shri M.G. Bhangde, learned Senior Advocate with Shri R.M. Bhangde, Advocate for the petitioner has urged that refusal to grant stay on the ground that provisions of Section 130 of the Act does not confer that power upon the appellate Court is misconceived. In the alternative, the learned Senior Advocate has also contended that this High Court can in present writ petition grant such interim stay to the petitioner.
3. Shri Kaptan, Advocate for the respondents has not disputed the powers of this Court to grant stay in present matter in writ petition, however, according to him, such power is not available in the scheme of Section 130 of the Act. He, therefore, also requested that the appeal as filed should be directed to be disposed of within a period of 30 days from the date of order of this Court.
4. As the appeal is pending and Corporation has not challenged findings recorded by District Judge - 3, Nagpur, in the impugned order as also power with this Court to grant stay, ::: Downloaded on - 09/06/2013 16:41:05 ::: 4 controversy is only restricted to question whether under Section 130 of the Act, the power to grant stay is available to Court.
5. In this view of the matter, I find it proper to first note the findings which are recorded by District Judge - 3 in favour of the petitioner. District Judge - 3 found that grievance made before it that the order deciding objection raised by the petitioner was passed by Assessing Officer himself, was not in dispute and it was a significant fact revealing violation of principles of natural justice. It also found that the rental value of property since the year 2002 was shown to be increased in the years 2003, 2005 and 2008 and that increase was disproportionate as the said value determined was Rs.9,33,137/-, Rs.13,03,805/- and Rs.76,34,318/- respectively.
Hence, a prima facie case was made out that there was apparent mistake in assessment and levy of tax on the part of the respondent. It then noticed that the appellant before it (present petitioner) had also failed to produce some documents for correct assessment and levy before the respondent. It then ::: Downloaded on - 09/06/2013 16:41:05 ::: 5 noticed provisions of Section 130(6) of the Act and found that as per said proviso, filing of appeal did not operate as stay and after final decision of appeal in his favour, the assessee was entitled to refund of tax from Municipal Commissioner. It also noticed provisions of Section 164 of the Act and noted that for filing appeal against a notice of demand, the deposit of amount demanded was condition precedent.
6. The petitioner - assessee, after pointing out above facts has raised other challenges to show that the lease deed in favour of the petitioner was itself for a period from 01.10.2005 to 30.09.2020 as per revised arrangement between the parties.
Earlier said period was from 2003-04 to 2017-18. Prior to that lease when very same property was with Nagpur Improvement Trust, its annual letting value was assessed at Rs.2,050/- and tax demanded was to the tune of Rs.1,047/- per annum. It is contended that in this situation, impugned notice dated 25.02.2010 assessing tax from 2002 onwards under Section 127 of the Act was not proper. The notice under Section 127 of the ::: Downloaded on - 09/06/2013 16:41:05 ::: 6 Act enabled the petitioner and accordingly an objection was filed under Section 128 raising various grounds. But then simultaneously with said notice under Section 127 of the Act, a bill of tax under Section 154 of the Act also dated 25.02.2010 was served upon the petitioner for the sum of Rs.1,31,00,802/-
for the period from 01.07.2002 to 31.03.2010. The petitioner pleads that the levy is finalized only after considering the objections under Section 128 of the Act filed by the petitioner and thereafter the demand bill under Section 154 of the Act and then in default of compliance, a bill of demand under Section 154 of the Act is contemplated. Without deciding objection and without giving the petitioner an opportunity of hearing, service of demand under Section 154 of the Act simultaneously with show-cause notice under Section 127 of the Act is not warranted.
7. The petitioner has also invited attention to glaring mistake committed while determining annual letting value. He points out that total rate applied as per Bye-law No. 8 of Property Tax Bye-laws is Rs. 11.50 per square meter up to depth ::: Downloaded on - 09/06/2013 16:41:05 ::: 7 of 25 feet and for remaining area it has to be 50% of that rate.
But here for entire area, rate of Rs.11.50 per square meter has been used. While deducting 10% amount for repairs and maintenance from annual rent, again there is error. Annual rent worked out is Rs.5,77,599/- and while subtracting Rs.57,760/-
from it, product is shown as Rs.13,03,805/-. Same grievance is again made about "use factor". In these circumstances, the petitioner has pleaded that because of glaring mistakes, grant of stay in the matter is essential.
8. Inviting attention to provisions of Section 377 of the Act, the learned Senior Advocate points out that provisions of Order 41, Rule 5 of Civil Procedure Code are, therefore, directly applicable. Section 130(6) of the Act merely states that filing of appeal by itself does not operate as stay but then the power of stay conferred upon the appellate Court by Order 41, Rule 5 of CPC is not taken away. To substantiate this contention, he has relied upon the judgments in the case of Girish vs. Purushottam, reported at 1996 (1) Mh. L.J. 673; Pannalal vs. Rikhabsao, ::: Downloaded on - 09/06/2013 16:41:05 ::: 8 reported at 2005(3) Mh. L.J. 484; Rikhabsao Nathusao Jain vs. Corporation of the City of Nagpur, reported at (2009) 1 SCC 240;
Sakiri Vasu vs. State of U.P., reported at (2008) 2 SCC 409. To point out powers of this Court to grant stay in such matters, reliance is being placed upon the judgment of the Hon'ble Apex Court in the case of Public Services Tribunal Bar Association vs. State of U.P., reported at (2003) 4 SCC 104 and Government of A.P. vs. P. Laxmi Devi, reported at (2008) 4 SCC 720.
9. Shri Kaptan, Advocate has supported the impugned order by urging that as the challenge pertains to property tax, a well settled restraint or restriction on power to grant interim stay in such matters has been followed by District Judge - 3 and must be adopted by this Court. He has relied upon the judgment of the Hon'ble Apex Court in the case of State of Orissa vs. ION Exchange India Ltd., reported at (2000) 10 SCC 456. His contention is, the provisions of Section 130(6) expressly restrict power of appellate Court to grant stay and that restriction is well recognized by the appellate Court. He has invited attention to ::: Downloaded on - 09/06/2013 16:41:05 ::: 9 provisions of Section 169 of the Act to show that here also power of Appellate Court is taken away. The learned counsel states that provisions of Section 377 of the Act, therefore, need to be read in the light of provisions of Section 130 of the Act. As already noted above, the learned counsel did not dispute power of this Court to grant stay and requested that pending appeal should be directed to be decided within a period of one month by the appellate Court.
10. In his reply arguments, the learned Senior Advocate points out observations of the Hon'ble Apex Court regarding jurisdiction under Section 286 of the Act, not being plenary. In this background, he invites attention to Sections 287 and 385 thereof. The learned Senior Advocate states that Section 169(1) does not curtail jurisdiction available to District Court under Section 130 of the Act in any manner. Contention is Scheme of Section 169 of the Act is not pari materia with Section 287 thereof.
11. The provisions of Section 286 read with Section 287 ::: Downloaded on - 09/06/2013 16:41:05 ::: 10 of the Act were looked into by learned Single Judge of this Court in the case of Girish vs. Purushottam, (supra) and it was concluded that the jurisdiction of Civil Court was not barred. A person aggrieved by notice given by Municipal Corporation under sub-sections (1) and (2) of Section 286, therefore, can file a Civil Suit. Division Bench of this Court in the case of Pannalal vs. Rukhabsao, (supra) noted this judgment and observed that according to said judgment, District Court had power to direct removal or alteration of any building but has no power, authority and jurisdiction to prevent an illegal construction. The Division Bench found that learned Single judge held that relief in the nature of mandatory injunction in the form of directing removal/ demolition or alteration of building would be granted as final relief and as such, the situation would be that ordinarily, the District Court cannot pass an order of interim injunction. The Division Bench of this Court found itself unable to accept this proposition. At the end of para 18, it concludes that the legislature had chosen an existing Court i.e. District Court to try dispute under Section 286(5) of the Act and said Court would ::: Downloaded on - 09/06/2013 16:41:05 ::: 11 continue to possess the same jurisdiction and follow the same practice and procedure ordinarily followed by the District Court while adjudicating a civil cause. It was, therefore, held that above judgment did not lay down correct position of law. In para 19, the provisions of Section 377 of the Act were looked into and also observed that because of these provisions, District Court was competent to pass even interlocutory orders as demanded by facts before it. The District Court which was vested with wider jurisdiction of removal or demolition of a building, therefore, could have also exercised lesser jurisdiction and issued directions for alteration or to prevent an illegal on going construction. This judgment of Division Bench was then questioned before the Hon'ble Apex Court and the view of the Hon'ble Apex Court is in the case of Rikhabsao Nathusao Jain vs. Corporation of the City of Nagpur, (supra). Insofar as present discussion is concerned, observations in paras 24 to 28 therein are important. The Hon'ble Apex Court in para 24 noted that question before it was whether jurisdiction of District Court was limited or not. In para 25, it noticed that Court has all incidental ::: Downloaded on - 09/06/2013 16:41:05 ::: 12 powers to enable it to proceed in accordance with law but then it found it difficult to conceive its jurisdiction to be plenary in nature. Section 287 barred jurisdiction of Civil Court. Barring jurisdiction of Civil Court under Section 287 on one hand and reading in District Judge, all powers whether incidental or supplementary on the other hand, was found inconsistent with the intention of the legislature to bar such jurisdiction of Civil Court. Because of this position, the Hon'ble Apex Court held that jurisdiction of District Judge is limited. The jurisdiction was confined to grant of mandatory injunction and hence Court could exercise power to issue prohibitory injunction and Apex Court states that such power needs to be exercised having regard to the scope of limited jurisdiction in terms of Section 286(5) of the Act. It, therefore, found it difficult to comprehend that District Court had an implied power to grant mandatory injunction that too suo motu. In para 28, the Hon'ble Apex Court noted that District Court could direct Corporation to point out provisions of the Building Bye-laws which are allegedly violated so as to enable it to consider the merits of the application filed before it ::: Downloaded on - 09/06/2013 16:41:05 ::: 13 but then it would be different thing to say that District Court had jurisdiction to direct corporation to reconsider the matter of granting sanction of building plan without the defect pointed out by it rectified. The Hon'ble Apex Court also proceeded to assume that even such power was within the purview of jurisdiction of District Court and pointed out the doctrine of implied power.
The Hon'ble Apex Court states that implied power of Civil Court is conceived of having regard to interest of parties, as for example, power to admit appeal includes power to stay or power to grant maintenance includes power to grant interim maintenance but then the Hon'ble Apex Court also points out that power to grant injunction is a special power which may be found to be absent in certain jurisdictions. The Hon'ble Apex Court, therefore, reversed the findings of Division Bench of this Court and remitted the matter to District Court for consideration afresh in accordance with law.
12. In Sakiri Vasu vs. State of U.P., (supra), the Hon'ble Apex Court has considered the concept of implied powers. It is ::: Downloaded on - 09/06/2013 16:41:05 ::: 14 explained that when a power is given to authority to do something, it includes such incidental or implied powers which would ensure the proper doing of that thing. Such power is available even in absence of its special mention and all such powers which would render the grant of jurisdiction in that Court itself ineffective are presumed to be impliedly conferred upon it. In para 19, the Hon'ble Apex Court has quoted with approval observations of Crawford in his Statutory Construction (3rd Edition, page 267).
13. The provisions of Section 130 of the Act need to be looked into in the background of these authorities. Section 130 occurs in part IV of the Act. Part IV contains two Chapters.
Chapter XI deals with taxation while Chapter XII deals with recovery of Corporation claims. Section 114 onwards prescribe power of Corporation to impose property tax and other taxes and mode and manner in which those taxes are levied or assessed.
Section 119 stipulates how annual value of building or land is to be ascertained. Section 124 deals with assessment of annual ::: Downloaded on - 09/06/2013 16:41:05 ::: 15 value and duration of assessment. Section 125 requires owners and occupiers of properties to furnish returns of valuation.
Section 127 requires Corporation to issue notice to such owner or occupier when valuation made for the first time is increased.
Section 128 permits any person dissatisfied with such valuation to object to it. Section 129 of the Act contemplates investigation of objections by Commissioner after giving notice in writing to the Objector. Section 129(3) of the Act states that after determination of such objection, order passed on that objection is to be recorded in the register and if necessary, an amendment will be made in assessment list accordingly. Section 130(1) of the Act permits aggrieved person remedy of appeal to District Court and decision of District Court in appeal is made final.
Section 131 of the Act states that every valuation made by the Commissioner under Section 124 of the Act is final subject to provisions of Section 128, 129 and 130 of the Act. It also states that every order passed by the Commissioner under Section 129 of the Act is final subject to provisions of Section 130 of the Act.
::: Downloaded on - 09/06/2013 16:41:05 ::: 1614. The relevant provisions then contained are in Chapter XII. Section 154(1) requires the Commissioner to present to such person or occupier a bill for sum claimed as due. If this bill is not paid within 15 days, then a notice of demand can be issued under Section 155. If within 21 days of service of notice of demand, amount is not paid, Section 156 permits issue of warrant. Section 164 permits an appeal to Magistrate against notice of demand issued under Section 155(1) of the Act and its sub-section (2) requires appellant to deposit amount claimed from him before filing it. Section 169(1) then states that no objection can be taken to any valuation or assessment and liability of any person to be assessed or taxed cannot be questioned in any other manner or by any other authority than as provided in this Act. It is, therefore, obvious that Chapter XII beginning with Section 154 deals with recovery or execution while liability is fastened under Chapter XI by following procedure as stipulated till Section 131 therein. It is also obvious that jurisdiction of Civil Court in such matters is ousted and reference in this respect can be made to the judgment of the ::: Downloaded on - 09/06/2013 16:41:05 ::: 17 Hon'ble Apex Court in the case of Bata Shoe Company vs. Jabalpur Municipality, reported at AIR 1977 SC 955.
15. The provisions of Section 130(6) of the Act stipulate that pendency of an appeal before the District Court shall not operate to delay or prevent the levy of any tax or installment thereof according to the impugned order of assessment. If after final decision in appeal, the said amount is reduced or cancelled, the Commissioner has to refund to appellant the said amount or excess thereof. It is, therefore, obvious that provisions in Chapter XI and Chapter XII are complete code in itself and jurisdiction of Civil Court is barred in the matter. In the light of discussion in the judgment of the Hon'ble Apex Court in the case of Rikhabsao vs. Corporation of the City of Nagpur (supra), it is obvious that powers available to District Court under Section 130 cannot be treated as plenary powers. Section 377 on which learned Senior Advocate has placed reliance only states that for the purposes of any appeal under the Act, District Court may exercise all powers conferred on it by Code of Civil Procedure, ::: Downloaded on - 09/06/2013 16:41:05 ::: 18 1908, and Central Provinces and Berar Courts Act, 1917, as the case may be and shall observe the procedure prescribed in said enactments so far as it is not inconsistent with the provisions of the Act. The language of Section 130(6) is partly pari materia with the provisions of Order 41, Rule 5 of Civil Procedure Code.
Order 41, Rule 5 of CPC speaks of stay by appellate Court and its sub-section (1) declares that an appeal shall not operate as stay of proceedings under a decree or appeal. However, the appellate Court has been given power to order to the contrary by granting stay for sufficient cause. This later part which enables appellate Court under Order 41, Rule 5 of CPC to grant stay on sufficient cause being shown, does not find place in Section 130(6) of the Act. On the contrary, it contains a stipulation about obligation on the Commissioner to refund the amount of tax recovered either in whole or in part as per the decision in that appeal.
Section 164 of the Act permits appeal before Magistrate and that appeal is obviously after a liability is crystallized in the shape of a notice of demand. There , there is express application to deposit the amount claimed in Corporation office. When these ::: Downloaded on - 09/06/2013 16:41:05 ::: 19 provisions in Chapter XI and XII constitute complete Code for the petitioner and jurisdiction of Civil Court is barred, it is apparent that the power to grant stay not incorporated in Section 130(6) of the Act cannot be imported into it by taking recourse to Section 377 of the Act. Section 377 is a general provision and it is to be noted that the powers under CPC can be exercised to the extent not consistent with the provisions of the Act. It is, therefore, obvious that reading power to grant stay under Order 41, Rule 5 of CPC in the scheme of Section 130 of the Act because of Section 377 thereof is doing something which is not in consonance with the intention of the legislature and the spirit of the scheme. I, therefore, do not find any substance in the contention of the learned Senior Advocate that in appropriate cases, the District Court is empowered by the Act to grant stay in appeals entertained by it under Section 130(1) thereof. For same reasons, recourse to doctrine of implied power is also not open.
16. However, power to grant interim relief available to ::: Downloaded on - 09/06/2013 16:41:05 ::: 20 this Court is not in dispute. The findings recorded by the District Court prima facie in favour of the petitioner or then the contentions raised in the petition as filed, are not shown to be either erroneous or perverse. I, therefore, find that in present matter when this Court has already granted interim relief, the same can be continued further for a period of two months and the learned District Judge - 3, Nagpur, can be asked to decide the appeal itself on merits in the meanwhile. If the contentions raised in the petition are correct, it is clear that the assessment and levy is arbitrary and unsustainable. However, no finding in this respect is being recorded as appeal on merits is still pending before the appellate Court.
17. Interim order of this Court are operating since last two months. The amount claimed from petitioner is about 1.77 crores. I find that interest of Corporation can be safeguarded by directing the petitioner to furnish security to the satisfaction of District Judge - 3, for sum of Rs. 1.60 crores within three weeks from today. Subject to such deposit, the orders granting stay of ::: Downloaded on - 09/06/2013 16:41:05 ::: 21 coercive recovery passed on 16.09.2010 are continued further and the District Judge - 3, Nagpur is directed to decide Miscellaneous Appeal No. 167 of 2010 pending before it as early as possible and in any case within a period of two months from the date of communication of this order. The interim orders shall continue to operate till then. The amount of Rs.18,67,320/-
already deposited by the petitioner with the Registry of this Court is allowed to be withdrawn by the Respondent -
Corporation. Its appropriation shall be subject to final orders in Appeal by District Judge-3, Nagpur.
18. Writ Petition is thus partly allowed with above directions. Rule is made absolute accordingly. However, in the facts and circumstances of the case, there shall be no order as to costs.
JUDGE ******* *GS.
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