Bombay High Court
The Trustees Of The Port Of Bombay vs 1A) Safiza Begum A.B. Kadri And 7 Ors. And ... on 8 January, 2019
Author: G.S. Patel
Bench: G.S. Patel
32-NMS1701-17.DOC
Shephali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO. 1701 OF 2017
IN
SUIT NO. 517 OF 1966
The Trustees of the Port of Bombay ...Plaintif
Versus
Safiza Begum AB Kadri & Ors ...Defendants
And
Associate Corporation of Industries (I) Ltd & Ors ...Respondents
Mr VA Thorat, Senior Advocate, with Roop Basu, i/b M/s. The Law Point, for the Plaintiff.
Mr Denzil D'Mello, with Geeta Sonawane, for Respondent/Applicant. Mr DR Shetty, Court Receiver with A Patil, Section Officer, are present.
CORAM: G.S. PATEL, J
DATED: 8th January 2019
PC:-
1. This is a Motion by Respondent No. 1, Associate Corporation of Industries (I) Private Limited ("ACI"). It is not a party to the suit which was an eviction action between the Mumbai Port Trust ("MBPT") and the predecessor ("Kadri") of the present Defendants Nos. 1A to 1H ("the Kadri family"). The MBPT is the owner of a plot of land at Ballard Estate. It leased the land to Kadri.
Page 1 of 68th January 2019 ::: Uploaded on - 09/01/2019 ::: Downloaded on - 11/01/2019 00:27:13 ::: 32-NMS1701-17.DOC He is said to have constructed a structure known as Commerce House and given various portions of it out on rent including to ACI.
2. As between MBPT and Kadri there was an eviction action that resulted in an ejectment decree dated 15th November 1967. The MBPT has yet to recover possession. It must be noted, however, that this entire action is said to be one for recovery of the leased land. As Mr Thorat for the MBPT points out the law in India recognises dual ownership, distinct for land and for structures standing on it. In other words, MBPT says it was the lessor of the land while Kadri was the owner and landlord of the building that he has constructed on it, though as a lessee of the land from MBPT.
3. It seems that ACI gave out portions of the premises that it took on rent to Respondents Nos. 3 and 4. I am not at this stage concerned with the terms of that engagement but Respondents Nos. 3 and 4 used to pay some compensation to ACI. As between the Kadri and ACI there were no proceedings at all. It was the MBPT that moved this Court saying that ACI had parted with possession to Respondents Nos. 3 and 4 and obtained an order against Respondents Nos. 3 and 4 to deposit the compensation that they were paying with the Court Receiver. In the aggregate, ultimately, an amount of Rs.39,14,200/- (Respondent No. 3 Rs.36,14,200/- and Respondent No. 4 Rs. 3 lakhs), came in to the hands of the Court Receiver.
4. When the Respondent No. 1 ACI then applied that these amounts deposited by Respondents Nos. 3 and 4 should be paid over Page 2 of 6 8th January 2019 ::: Uploaded on - 09/01/2019 ::: Downloaded on - 11/01/2019 00:27:13 ::: 32-NMS1701-17.DOC to it, it was informed by the Court Receiver that of this deposit an amount of Rs.24,96,377/- had been paid out by the Court Receiver towards property taxes since the Court Receiver was collecting rent and that only the balance, a little over Rs. 12 lakhs, was available. On Mr D'Mello's application on behalf of the ACI, I directed the MBPT on 25th June 2018 to bring in to the hands of the Court Receiver this amount of Rs.24,96,377.
5. This requires some explanation, especially in view of Mr Thorat's submission today, one that I believe is completely correct in law. From the beginning I believe almost everyone has proceeded on the basis that there is a convergence or telescoping of interest in the land and interest in the building in Bombay Port Trust. This is reflected as long ago as 16th November 2015, when on the Court Receiver's report in paragraph 2 SJ Kathawalla said:
2. The above report has appeared before this Court from time to time. The Defendants are not appearing before the Court despite service. The Plaintiff who is the lessor of the Suit property and is required to initially pay the taxes and later recover it from the tenants., has sought and obtained several adjournments from this Court on the ground that the Plaintiff has filed a Complaint against revision of capital value of the Suit property from 1st April 2015. Today, the learned Advocate appearing for the Plaitniff has informed the Court that the capital value fixed by the Corporation has been confirmed and it is held by the Investing Officer that the liability of tax has been correctly fixed as contemplated under Section 146 (3) of Mumbai Municipal Corporation Act, 1888. the complaint is accordingly disposed of. In view of the above, the following order is passed:Page 3 of 6
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(i) The Plaintiff shall deposit with the Court Receiver an amount of Rs.48,79,762/- on or before 15th December 2015 to enable the Court Receiver to pay the arrears of property tax, repair cess and MTOB.
(ii) In the event of the failure on the part of the Plaintiff to deposit the above amounts with the Court Receiver, the Court Receiver shall submit his report before this Court seeking discharge after giving notice to all the parties.
(iii) A copy of this order shall be forthwith served on all the Defendants by the office of the Court Receiver.
6. Obviously, this is an order that is binding on subsequent Courts. MBPT, for reasons that I do not wish to speculate, let this slide and did absolutely nothing to rectify the position. It now finds itself the victim of its own lethargy. Such an observation might not have been made had the clarification made before me today been made before SJ Kathawalla J, and I should not then have been inclined to make my order of 25th June 2018 because even that order proceeds on precisely the same basis in describing MBPT as "the property owner", i.e., the owner of both the land and the structure.
7. The difficulty today is that the Receiver has paid out this property tax and nobody knows what portion of the property tax is attributable to the building and what portion, if any, to the land on which the building stands. Mr Thorat readily agrees that the initial liability to pay property tax of the land is that of the MBPT which it must then recover from its tenant. Equally, the property tax component attributable to the building is the responsibility of the Page 4 of 6 8th January 2019 ::: Uploaded on - 09/01/2019 ::: Downloaded on - 11/01/2019 00:27:13 ::: 32-NMS1701-17.DOC Kadri family which it must then recover from its tenants, namely the Respondents and others. However, in no circumstances can the amounts that were due to the 1st Respondent, ACI, be used to discharged the property tax liability of either the Kadris or the MBPT. If property tax is unpaid by the Kadris on the building, then the MCGM, levying the property tax, would be entitled in law to sell the building and recover its dues. That has not happened and now the MCGM has no cause to do so because the Receiver has paid the entire Municipal property tax demand.
8. In all this, of course, the Kadri family is getting away by doing precisely nothing and now the question is what is to be done with this amount of Rs.24,96,377.00 that the MBPT has deposited pursuant to my order of 25th June 2018. Mr Thorat says it must be returned to the MBPT. Mr D'Mello for ACI believes that it should be paid over to ACI. I can understand Mr Thorat's submission. Mr D'Mello's submission requires further investigation because I cannot see how this amount can be paid to ACI at the cost of MBPT which may not have any such liability to begin with.
9. The additional factor in all of this is that while Mr Thorat's submissions are, I believe, is correct in law, they are unsupported by any substantive application for remedial relief and I have no means of fashioning an appropriate order absent such an application to which of course ACI will have to be made a party and on which Mr D'Mello will have to be heard. I will also the Court Receiver to look into his records and explain if he is able whether there is any bifurcation in the property tax bills received between the tax on the structure and any property tax claims made for the land. Prima facie Page 5 of 6 8th January 2019 ::: Uploaded on - 09/01/2019 ::: Downloaded on - 11/01/2019 00:27:13 ::: 32-NMS1701-17.DOC it appears to me that if the property tax claim is entirely in regard to the Commerce House building then that must be the responsibility of the Kadri family.
10. In this, one will have to look at the original lease deed to see what exactly was put to a demise or lease; and also consider the property tax bills and the assessment records. Should those records show the MBPT as the owner of both land and building, then of course, the liability to pay the whole tax is that of MBPT. If however the assessment records show the Kadri family as owners of the building and the MBPT as the owner of the land, the considerations will be very diferent. At this stage, we are only in the realm of speculation.
11. Mr Thorat states that an appropriate application will be filed and served on or before 23rd January 2019. For the present I will list this matter along with any application that MBPT files for directions on 29th January 2019. Presently the Court Receiver is directed not to make any payment to ACI. I am keeping all contentions open and will consider the rival arguments on the next occasion.
12. Liberty to MBPT to join the MCGM as the Respondent to its application.
(G. S. PATEL, J) Page 6 of 6 8th January 2019 ::: Uploaded on - 09/01/2019 ::: Downloaded on - 11/01/2019 00:27:13 :::