Bombay High Court
Indian Companies Act vs City Of Nagpur Corporation ... on 9 December, 2010
Bench: B. P. Dharmadhikari
1
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.
2. 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,
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
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
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
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,
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
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
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
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
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
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
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
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.
14. 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
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,
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
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
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
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
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*GS.
