Sudip Kusarye & Anr vs The Kolkata Municipal ...
2022 Latest Caselaw 3009 Cal/2

           IN THE HIGH COURT AT CALCUTTA
               CONSTITUTIONAL WRIT JURISDICTION
                        ORIGINAL SIDE

Present:
The Hon'ble Justice Hiranmay Bhattacharyya


                              W.P.O. 557 of 2019

                          Sudip Kusarye & Anr.
                                   Vs.
                 The Kolkata Municipal Corporation & Ors.


Appearance:
For the petitioners     : Mr. Arindam Banerjee, Adv.
                          Mr. Chayan Gupta, Adv.
                          Mr. Hare Krishna Halder, Adv.
                          Mr. Koushik Bhattacharyya, Adv.

For the respondents     : Mr. Biswajit Mukherjee, Adv.

Ms. Tanushree Dasgupta, Adv.

Mr. Debangshu Mondal, Adv.

Judgment reserved on    : 23.09.2022.
Judgment Delivered on : 14.12.2022.


Hiranmay Bhattacharyya, J.:

1. The writ petitioners/assessees have prayed for a writ of Mandamus to

command the respondents to set aside and cancel the assessment

orders of the Hearing Officer -XIII KMC dated April 25, 2019 by virtue

of which assessments of premises No. 144A Rashbehari Avenue,

Kolkata-700029 were made for 4 periods starting from 3 rd Quarter

2001 till the period starting from 2 nd Quarter, 2013.

2. The writ petitioners claim to be the co-owners of the premises no.

144A Rashbehari Avenue, Kolkata-700029 (for short" the said

premises") which is a three-storeyed building. The petitioners further

claim that the said property is partly occupied by the tenants and the

remaining portion is occupied by the petitioners for their residential

purpose. Petitioners received the hearing notices containing the

proposals for enhancement of annual valuation of the said premises

in respect of four assessment periods. Petitioners filed Written

Objection against the proposed annual valuations and attended the

hearing through a learned advocate. The Hearing Officer passed the

orders dated April 25, 2019 thereby confirming the proposed annual

valuations.

3. Mr. Banerjee, learned advocate for the petitioners contended that the

authorities of the Kolkata Municipal Corporation (for short "KMC")

sought to revise the Annual Valuations for the periods starting from

3rd Quarter, 2001 till the beginning of 2nd Quarter, 2013 by issuance

of notices all dated January 21, 2019 when the same has become

time barred in view of the decision of the Hon'ble Division Bench of

this Court in the case of Sahujain Charitable Society and Others

vs. The Kolkata Municipal Corporation and Ors. reported at

2018 (3) CHN (Cal) 328. He also contended that the principles of

natural justice has been grossly violated as the writ petitioners did

not get an effective opportunity to file written objections to the

proposed Annual Valuations. By referring to the provisions of Section

174 of the Kolkata Corporation Act, 1980 (for short "the Act"), Mr.

Banerjee contended that the annual value is to be determined on the

basis of the gross annual rent at which such premises might be

reasonably expected to let from year to year. By placing reliance upon

the decision of the Hon'ble Supreme Court in the case of India

Automobiles (1960) Ltd. vs. Calcutta Municipal Corporation and

another reported at (2002) 3 SCC 388, Mr. Banerjee contended

that actual rent received cannot be the sole criteria for determination

of the annual valuation. He also relied upon the unreported decision

of the Hon'ble Division Bench in the case of Commissioner, Kolkata

Municipal Corporation & Ors. vs. Hastings Property & Ors in

APO No. 213 of 2004; WP NO. 1050 of 1996 delivered on 11th

February, 2011 with regard to the interpretation of the word

"reasonably expected rental" appearing in Section 174. Mr. Banerjee

submitted that the decision making process was vitiated as the

Hearing Officer did not take into consideration the aforesaid well-

settled legal position. Mr. Banerjee further contended that the

Hearing Officer erroneously clutched on to the jurisdiction by not

appreciating that the revision of assessment for the periods in

question cannot be made as it had become time barred. He placed

reliance upon the decision of the Hon'ble Supreme Court of India in

the case of Raza Textiles Ltd. vs. Income Tax Office, Ranpur

reported at (1973) 1 SCC 633 in support of his contention that the

petitioners are entitled to a writ of certiorari as the Hearing Officer

had clutched onto the jurisdiction by deciding the jurisdictional fact

erroneously. Mr. Banerjee concluded by submitting that the case on

hand falls within the exceptions carved out by the Hon'ble Supreme

Court of India in the case of Whirlpool Corporation vs. Registrar of

Trade Marks, Mumbai reported at (1998) 8 SCC page 1 and the

existence of alternative statutory remedy cannot be a bar in invoking

the jurisdiction of the High Court under Article 226 of the

Constitution of India. He also contended that the precondition for

deposit of the property tax as laid down under Section 189 (6) is also

onerous.

4. Per contra, Mr. Mukherjee, learned advocate for the KMC submitted

that the Hearing Officer passed the orders after considering the

objections filed by the petitioners and the various rental agreements

entered into between the petitioners/assessees with their tenants. He

further contended that since the assessee did not submit the return

in terms of Section 182 of the Act, KMC proceeded to determine the

Annual Valuation after procuring the tenancy agreements. Mr.

Mukherjee placed reliance upon a decision of the coordinate bench in

the case of Kanak Projects Limited and Another vs. Kolkata

Municipal Corporation & Ors. reported at 2020 SCC Online Cal

1710 in support of his contention that the decision in the case of

Sahujain (supra) cannot be applied to the facts of this case. Mr.

Mukherjee contended that the statutory appellate remedy provided

under the Act should not be byepassed on the ground that the

mandatory pre-deposit in terms of Section 189 (6) is onerous. In

support of such contention he placed reliance upon the decision of the

Hon'ble Supreme Court of India in the case of Calcutta Gujrati

Education Society & Anr. vs. Calcutta Municipal Corporation

and Others reported at (2003) 10 SCC 533.

5. Heard the learned advocates for the parties and considered the

material placed.

6. Record reveals that notices under Section 184 (3) / 184(4) / 184 (4)

read with Section 185 of the Act were issued on January, 2019

proposing the Annual Value under Anuual Ratable Value (for short

"ARV") system for the following periods.

        Date of Notice    Period For Annual Valuation

        21-01-2019        w.e.f. 3rd Quarter, 2001

        21-01-2019        w.e.f. 2nd Quarter, 2007

        21-01-2019        w.e.f. 4th Quarter, 2008

        21-01-2019        w.e.f. 2nd Quarter, 2013

The Hearing Officer passed orders dated April 25, 2019 thereby

assessing the Annual Value in respect of the aforesaid periods.

7. The contention of the petitioners is that the Annual Value of the said

premises had already attained finality in respect of the aforesaid

periods and the same cannot be revised by issuing notices dated

January, 2019 as the same was already time barred.

8. The writ petitioners being the owners of the said premises and the

persons liable to pay property tax thereon is under a statutory

obligation under Section 182 of the Act to furnish to the Municipal

Commissioner a return in the prescribed form within the stipulated

time limit to enable the Municipal Commissioner to revise the Annual

Value.

9. It has been specifically contended by the KMC that the petitioners

have not complied with such statutory requirement. It is also not the

case of the petitioners that they have filed such return under Section

182. It is the further case of the KMC that upon discovering the rent

of the said premises from the rental agreements, KMC proceeded to

revise the annual value for the aforesaid periods.

10. The learned advocate for the KMC would contend that non-filing of

statutory return under Section 182 of the Act amounts to suppression

of information which may be relevant for the purpose of revision of

assessment.

11. The Hon'ble Supreme Court of India in the case of Joint Collector

Ranga Reddy District & Anr. vs. D. Narsing Rao & Ors. reported

at (2015) 3 SCC 695 while dealing with the delayed exercise of

revisional jurisdiction, in paragraph 31 of the said reports, held that

in cases where the orders sought to be revised are fraudulent, the

exercise of power must be within a reasonable period of the discovery

of fraud.

12. Therefore, this Court is of the considered view that a factual enquiry

is necessary in order to ascertain whether non-filing of return under

Section 182 of the Act amounts to fraudulent act and, if so, when

such fraud was detected. It is also to be ascertained as to whether the

authority exercised its power to revise the annual valuation within the

reasonable period of the discovery of fraud or the same had become

time barred when the power of revision was exercised.

13. The sheet anchor of the case of the petitioners is the decision in

Sahujain (supra) wherein the vires of second proviso to Section 179

(2) (d) of the Act as well as the assessment made by the authority was

challenged. The Hon'ble Division Bench after noticing the provision

laid down under Section 573 observed that under second proviso to

Section 179(2), the proviso to Section 573 would be rendered otiose

by giving the Commissioner the power to collect unlimited tax by

unrestricted revision of the annual valuation of the premises for an

unlimited period of time. The Hon'ble Division Bench, accordingly

read down the proviso to the effect that the period for which valuation

of a property can be revised must not be more than 3 years before the

date of revising order.

14. The effect of breach of obligation under Section 182 by the assessee

vis-à-vis the power of the authority to revise the Annual Valuation

does not appear to be in issue in Sahujain (supra). Therefore,

Sahujain (supra) cannot be said to be an authority for the proposition

that even in case of breach of statutory obligation under Section 182

of the Act by the assessee, the authority would be denuded of its

power to revise Annual Valuation within a reasonable period of time

after discovering the materials and/or information relevant for

revision of Annual Valuation. However, in case of fraud, the date of

discovery of fraud may be a relevant consideration for deciding the

issue of limitation in view of the decision of the Hon'ble Supreme

Court in D. Narsing Rao (supra).

15. A coordinate bench in the case of Kanak Projects (supra), after

noticing the decision of Sahujain (supra), observed that several factual

aspects are to be considered before arriving at a finding on the

jurisdictional issue. The coordinate bench further observed that in

case the writ petitioners therein were found to have acted in breach of

the statutory obligations under Section 182, then its impact on the

annual valuation is also to be assessed.

16. Upon reading the impugned orders, it does not appear to this Court

that the aforesaid jurisdictional issue was raised before the Hearing

Officer. In view of the observations made hereinbefore, this Court

holds that the issue of limitation in the case on hand, is a mixed

question of law and fact which cannot be decided by this Court in this

writ petition. It does not appear to this Court at this stage that the

Hearing Officer clutched on to the jurisdiction by proceeding to revise

the annual valuation for the periods in question by deciding the issue

of limitation erroneously, as contended by the petitioners. Therefore,

the decision in the case of Raza Testiles (supra) is of no assistance to

the petitioners.

17. The next issue raised by the learned advocate for the petitioners is

that the "reasonable expected rent" and not the "actual rent" shall

have to be taken into consideration for determining the annual value.

In India Automobiles (supra) the issue that fell for consideration

before the Hon'ble Supreme Court was whether the total amount paid

by the subtenants to the tenant should also be taken into

consideration in assessing the annual valuation. While answering

such issue, the Hon'ble Supreme Court in paragraph 23 and 24 of the

said reports held thus :-

23. "....The 1980 Act, therefore, requires application of mind by the

municipal authorities to determine the rents on the basis of

reasonableness by keeping into account all relevant circumstances

including the actual rent received by the owner, hypothetical

standard rent, the rent being received by the tenant from his sub-

tenant and other relevant consideration, such as prevalent rate of

rent of lands and building in the vicinity of the property being

assessed. Only because the owner of the building is not getting the

same rent which the sub-tenant is paying to his lessor, cannot be

made a basis to deprive the corporations from determining the

annual valuation and taxing the land or building on that basis. If

such a plea is accepted, it would be against the provisions of the

statute which has been enacted to provide civic services in the form

of water, drainage, sewerage, collection, removal and disposal of

solid waste, fire prevention and fire safety maintenance of street

and public places etc., in the municipal area where such land or

building is situate.

24. ".... In appropriate cases the owner of the property may be in a

position to satisfy the authorities that the gross annual rent of the

building of which the annual valuation was being determined cannot

be more than the actual rent received by such owner from his

tenant. The municipal authorities shall keep in mind the various

pronouncements of this Court, the statutory provisions made in the

specified Municipal Acts, keeping in mind the applicability or non-

applicability of the Rent Act and the peculiar circumstances of each

case, to find out the gross annual rent of the building including

service charges, if any, at which such land or building might, at the

time of assessment, be reasonably expected to let from year to year

in terms of Section 174 of the 1980 Act."

18. The Hon'ble Supreme Court also observed that all the circumstances

including the rent actually received by the owner of the building and

the rent paid by the subtenant to his tenant are also to be taken into

consideration and in appropriate cases the owner may be in a position

to satisfy that the gross annual rent cannot be more than the actual

rent received.

19. India Automobiles (supra) is not an authority for the proposition that

the actual rent received /receivable from the tenant cannot be said to

be the reasonable expected rent under any circumstances. The action

of the Hearing Officer cannot be said to be arbitrary in the case on

hand as the petitioners failed to discharge their onus of establishing

that the reasonable expected rent in respect of the premises is

different from the actual rent received.

20. In Hastings Property (supra), the Hon'ble Division bench refused to

interfere with the findings of the learned Single Judge in entertaining

the writ petition as, on facts, it was found therein that the decision

making process was vitiated. The Hon'ble Division Bench decided not

to interfere with the discretion exercised by the Writ Court in

entertaining the writ petition.

21. There is, however, no quarrel to the proposition of law laid down in

Whirlpool Corporation (supra) that existence of statutory alternative

remedy could not operate as a bar where the writ petition has been

filed for enforcement of any of the fundamental rights or where there

has been a violation of the principles of natural justice or where the

order or proceedings are wholly without jurisdiction or the vires of an

Act is under challenge. It was further held therein that existence of

statutory alternative remedy is not a constitutional bar to the

jurisdiction of the High Court, but a self-imposed restriction.

22. The petitioner has challenged the jurisdiction of the Hearing Officer to

revise the assessments for the aforesaid periods in question. This

Court has already observed that for deciding such issue an

adjudication on facts is required. In view thereof, this Court is not

inclined to exercise discretion in favour of the petitioner. This Court,

therefore, refrains from returning any finding on the contention of the

petitioner on the principles of violation of natural justice as well as

other issues as the same might prejudice the parties before the

appropriate forum.

23. The orders passed by the Hearing Officer on April 25, 2019 are

appealable under Section 189 of the Act. However such appeal can be

entertained only if the requirement of mandatory predeposit of the

property tax is complied with. It appears to this Court that the writ

petitioners filed this writ petition only for the purpose of avoiding the

mandatory predeposit to be made for preferring an appeal as the

petitioners claim that such precondition is onerous.

24. The petitioners cannot be allowed to byepass the statutory alternative

remedy merely for such ground. The provision laid down under

Section 189 (6) was held to be intra vires in the challenge thrown to

the vires of the said provision. The Hon'ble Supreme Court in

Calcutta Gujrati Education Society (supra) observed that even the

tenants, subtenants and occupiers held liable for payment of a

portion of tax have a right of appeal on predeposit of a portion of tax

levied and made recoverable from them.

25. For all the reasons as aforesaid, this Court is not inclined to interfere

in this writ petition and the petitioners are left free to approach the

appropriate forum strictly in accordance with law. It is, however,

made clear that the observations made hereinbefore are only for the

purpose of disposal of this writ petition. The appropriate forum shall

be free to decide all points raised by the parties in accordance with

law if such forum is approached.

The writ petition being WP 557 of 2019 stands disposed of

accordingly.

There shall be, however, no order as to costs.

Urgent photostat certified copies, if applied for, be supplied to the

parties upon compliance of all formalities .

(Hiranmay Bhattacharyya, J.)

(P.A.- Saurav)