Dr.R.Ramanarayanan vs Chidambaram Municipality
2021 Latest Caselaw 14485 Mad

                                                                                  S.A.No.1203 of 2019




                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS
                                                  Dated : 20.07.2021
                                                        Coram
                                    THE HONOURABLE MR. JUSTICE M.SUNDAR

                                                 S.A.No.1203 of 2019

                  Dr.R.Ramanarayanan                                         .. Appellant

                                                           Vs.

                  Chidambaram Municipality
                  rep. By its Commissioner
                  Chidambaram                                                .. Respondent

                         Second Appeal filed under Section 100 of the Code of Civil Procedure,
                  1908 to set aside the judgment and decree dated 23.07.2012, made in
                  A.S.No.3 of 2012 on the file of the Sub Court, Chidambaram reversing the
                  judgment and decree dated 30.08.2011 made in O.S.No.27 of 2009 on the file
                  of the Principal District Munsif Court at Chidambaram.

                            For Appellant           :     Mr.Srinath Sridevan
                            For Respondent          :     Mr.V.J.Arul Raj
                                                          for Mr. M.Kirubakaran
                                                          Standing Counsel


                                                    JUDGMENT

One decade, two years and a few months is the age of the lis which has

led to the captioned second appeal. A plaint was presented on 26.02.2009 on

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

the file of 'Principal District Munsif's Court at Chidambaram' (hereinafter

'trial Court' for the sake of brevity) and this plaint was taken on file as

O.S.No.27 of 2009 by the trial Court. In this plaint, a notice pertaining to

property tax, namely a notice dated 29.01.2009 (Ex.A1) was called in

question primarily on two grounds, i) it is time barred and ii) it has been

issued in the name of a dead person. This property tax notice had been

issued by the 'Chidambaram Municipality', which shall hereinafter be

referred to as 'said Municipality' for the sake of convenience and clarity.

2. The 'appellant', who is the protagonist of captioned second appeal,

shall be referred to as 'plaintiff' for the sake of convenience and clarity. After

full contest, trial Court by judgment and decree dated 30.08.2011 decreed the

suit, 'said Municipality' carried the matter in appeal by way of a regular first

appeal under Section 96 of 'The Code of Civil Procedure, 1908' ('CPC' for

the sake of brevity) vide A.S.No.3 of 2012 on the file of 'Subordinate Judge's

Court, Chidambaram' (hereinafter 'first Appellate Court' for the sake of

convenience) and the first Appellate Court, after full contest, allowed the

first appeal in and by judgment / decree dated 23.07.2012.

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

3. The 'plaintiff', who shall also be referred to as 'Assessee' from

hereon and henceforth, has carried the matter in appeal to this Court, the

captioned appeal is obviously a second appeal and it is under Section 100

CPC.

4. Captioned second appeal is listed today under the cause list caption

'FINAL HEARING CASES'.

5. Mr.Srinath Sridevan, learned counsel for plaintiff/assessee and

Mr.V.J.Arulraj, learned counsel appearing on behalf of Mr.M.Kirubaharan,

learned Standing Counsel for said Municipality are before this Virtual Court.

Both learned counsel consented for captioned second appeal being taken up

for final disposal. Records from the District Judiciary have been received

and the same have been placed before this Court. Before proceeding further,

proceedings of this Court made on 15.04.2021 in C.M.P.No.7090 of 2021 in

captioned second appeal is of relevance and the same reads as follows:

'Mr.Srinath Sridevan, learned counsel on record for the petitioner/appellant and Ms.B.Nirmala, learned counsel representing Mr.M.Kirubaharan, learned counsel on record for the sole respondent are before this virtual Court. This Court is informed that Mr.M.Kirubaharan is the standing counsel for Chidambaram Municipality, which is the sole respondent.

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

2. Captioned main Second Appeal was presented in this Court on 21.11.2012. Learned counsel for appellant submits that it went through twists and turns in terms of case file being misplaced, papers being reconstructed and ultimately it was taken on file as SA.No.1203 of 2019.

3. Captioned Second Appeal was admitted by this Court by a Hon'ble Predecessor Judge on 10.07.2020 on three questions proposed as substantial questions of law by the protagonist of the second appeal and the admission order reads as follows:

'The second appeal is admitted on the following questions of law:-

i) Whether the Municipality can demand property tax for twelve years when the limited period to demand property tax is for only three years?

ii) Whether the limitation to collect the property tax for Municipalities is three years or twelve years?

iii) Whether the lower Appellate Court was right in concluding that the demand notice issued in the name of the dead person is valid?

                                          2.    Mr.M.Kirubakaran        appears     for     the
                                   respondent.'

4. In the aforementioned admission order, in question no.1, there is a typo and 'limited' has to be read as 'limitation'.

5. Captioned petition has now been moved stating that the respondent-Municipality is taking coercive steps to collect property

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

tax pursuant to 29.01.2009 notice, which is the epicenter of the entire litigation.

6. From the submissions made today, it comes to light that this matter turns heavily on Section 345 of 'The Tamil Nadu District Municipalities Act, 1920 (Tamil Nadu Act V of 1920)', which shall hereinafter be referred to as 'District Municipalities Act' for the sake of convenience and clarity. Section 345 of District Municipalities Act deals with limitation for recovery of dues and the period which originally read as 'three years' was amended and changed as 'twelve years' on and from 25.06.2008 vide 'Tamil Nadu Municipal Laws (Third Amendment) Act, 2008 (Tamil Nadu Act 36 of 2008)', which shall hereinafter be referred to as 'Third amendment Act' for the sake of convenience.

7. Questions 1 and 2 on which the captioned Second Appeal has been admitted can be rolled into one and reformulated as follows:

'Whether the Third Amendment Act is retrospective qua collection of tax dues in the light of Limitation not being a mere rule of procedure?'

8. Ms.B.Nirmala, learned counsel representing the standing counsel for Chidambaram Municipality requests that the above reformulation may please be considered in the next listing in the presence of her senior Mr.M.Kirubaharan. Request acceded to.

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

9. Learned counsel for petitioner/appellant makes a simple submission that 29.01.2009 notice which demands property tax for the period II/1999-2000 [from 01.10.1999] to I/2008-2009 (upto 31.03.2009) being the epicenter of the litigation cannot now be pressed into service when Second Appeal has been admitted and when this Court is in seizin of the matter where this notice was inter alia held to be invalid by the trial Court and reversed by the First Appellate Court at the instance of the respondent-Municipality.

10. Faced with the above situation, learned counsel representing the standing counsel for Municipality requests for a short accommodation.

List on 17.04.2021.'

6. Both the aforementioned learned counsel agreed that captioned

second appeal can be heard out on one substantial question of law that has

been formulated and set out in paragraph 7 of the aforementioned

proceedings. Therefore, this second appeal is now being heard out on the

aforementioned one substantial question of law.

7. To be noted, the short forms used in the aforementioned proceedings

shall continue to be used in this judgment.

8. Learned counsel for plaintiff/assessee opening the submissions,

submitted that four dates are relevant and they are

a) 25.09.2007 being the date on which a notice under Rule

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

29(4) of the Rules under the 'District Municipalities Act, 1920'

(hereinafter 'District Municipalities Act') [Ex.B1] was issued by

said Municipality;

b) 25.10.2007 being the date on which Ex.B1 notice was

served on the plaintiff/assessee;

c) 25.06.2008 when the Third amendment Act kicked in;

and

d) 29.01.2009 when Ex.A1 notice (hereinafter 'impugned

notice' for the sake of convenience and clarity) came to be issued.

9. Furthering his submissions in this direction, learned counsel

submitted that vide the Third amendment Act as captured in the

aforementioned earlier proceedings in CMP, the period of limitation which

was 'three years' had been extended and made 'twelve years', but this does not

apply retrospectively and on an extreme demurrer it can at best apply to tax

that had become due and payable as on 25.06.2005. Learned counsel also

highlighted that the impugned notice has been issued in the name of a dead

person and therefore, the same is liable to be declared null and void.

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

10. Learned counsel for said Municipality made four submissions and

a summation of the same is as follows:

a) There are no pleadings regarding limitation in the plaint

and arguments cannot be made without pleadings;

b) Section 85 of the District Municipalities Act is a first

charge on the property and this takes us to Section 100 of 'The

Transfer of Property Act, 1882 (4 of 1882)' ['TP Act' for the sake of

brevity] and therefore, the applicable Article would be Article 62 of

the Limitation Act, 1963 (36 of 1963) which by itself makes the

limitation 12 years from the date on which the money becomes due;

c) The said Municipality qualifies as 'State' within the

meaning of Article 12 of Constitution of India and therefore, the

applicable article would be Article 112 of the Limitation Act, which

means the period of limitation is 30 years for any like claim by a

non-State entity;

d) The plaintiff / assessee has only challenged the notice and

has not challenged the assessment.

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

11. This court now embarks upon the exercise of discussion and also

giving its dispositive reasoning.

12. At the out set, it is necessary to have a close look at Section 345 of

the District Municipalities Act. Section 345 post amendment by Third

amendment Act reads as follows:

'345. Limitation for recovery of dues.- No distraint shall be made, no suit shall be instituted and no prosecution shall be commenced in respect of any sum due to the municipal council under this Act after the expiration of a period of [twelve years] from the date on which distraint might first have been made, a suit might first have been instituted, or prosecution might have been commenced, as the case may be, in respect of such sum.

(underlining made to highlight

and for ease of reference)

13. In the aforementioned Section 345 of District Municipalities Act,

the words 'twelve years' which have been underlined read as 'three years'

prior to Third amendment Act or in other words, prior to 25.06.2008.

Whether this is retrospective is the central theme of the discussion qua the

aforementioned lone substantial question of law on which captioned second

appeal is now pivoted and being argued. Therefore, it is necessary to have a

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

very close look at Section 345. Section 345 talks about three actions and

they are a) making of distraint, b) institution of a suit and c) commencement

of prosecution. Limitation for these three actions was three years prior to

25.06.2008 and on and from 25.06.2008, it had became twelve years.

14. This takes us to the question as to what is the reckoning date qua

date of commencement of limitation. The answer lies in Section 345 itself in

the second limb. The answer is, reckoning date is the date on which a) the

distraint might have been first made; b) the suit might have been first

instituted and c) the prosecution might have been first commenced. To

identify this date with specificity, one has to go to Section 86 of District

Municipalities Act, which reads as follows:

'86. Property tax when payable._ The property tax shall be levied every half-year and shall, save as otherwise expressly provided in Schedule IV, be paid by the owner of the assessed premises within thirty days after the commencement of the half-year.'

15. A perusal of Section 86 makes it clear that property tax becomes

payable by an Assessee within 30 days of the commencement of a half year.

There is no disputation or disagreement before this Court that first half year

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

is the 6 month period from 1st of April to 30th of September in the English

calender and the second half year is from 1st of October of one Calender year

to 31st of March in the immediately succeeding English calender year.

Therefore, property tax for half years become payable by 29th April or 29th

October depending on whether it is for first half year or second half year. In

other words, for a given half year 30th April or 31st October (depending upon

whether it is the first or second half year) are the dates on and from which

said Municipality could have first made a distraint, first instituted a suit or

commenced prosecution. In this case, we are only concerned with one of the

three actions, namely distraint, because it is nobody's case that a suit had

been instituted by the said Municipality or that prosecution had been

commenced/launched though Ex.A1 does refer to launching of prosecution.

16. With the above prelude, if one goes into the question of

retrospectivity qua third amendment, learned counsel for Assessee pressed

into service K.Ratnam Pillai case [Municipal Council Vs. K.Ratnam Pillai

and Ors reported in AIR 1935 Mad 378] and Vijayalakshmi Ammal's case

[Corporation of Madras Vs. Vijayalakshmi Ammal reported in AIR 1961

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

Mad 390] to say that District Municipalities Act is a special statute and

therefore, it stands on a different footing.

17. On retrospectivity, a privy counsel judgment dated 07.07.1982 in

Yew Bon Tew Alias Yong Boon Tiew and another Vs. Kenderaan Bas Mara

reported in (1982) 3 WLR 1026 and this Court's Division Bench judgment in

N.K.C.Syed Mohammed Ravoother V. The Deputy Commercial Tax Officer

reported in AIR 1958 Mad 176 were pressed into service. This was for the

principle that such laws cannot be applied with retrospectivity.

18. With regard to the argument of property tax becoming first charge

on the property concerned and therefore twelve years becoming the period of

limitation, Gaurav Hargovindbhai Dave Vs. Asset Reconstruction

Company (India) Ltd., case reported in (2019) 10 SCC 572 was pressed into

service to say that no new lease of life could be given to debts which are

otherwise time barred.

19. Learned counsel for said Municipality placed reliance on a Full

Bench judgment of Hon'ble Delhi High Court in Palace Cinema case

[Municipal Corporation of Delhi Vs. Palace Cinema and another reported

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

in ILR 1972 Delhi 163] to press home his argument predicated on Article 62

of the Limitation Act.

20. Before proceeding further, this court, though obvious, deems it

appropriate to make it clear that Delhi High Court judgment and judgments

of other High Courts are not judgments of coordinate Benches and therefore,

they have a persuasive value qua this Court rather than serving as binding

precedents. Notwithstanding this position, learned counsel for plaintiff said

Palace Cinema case is distinguishable on the ground that it was not a case of

special law versus local law. Learned counsel for said Municipality pointed

out that Section 455 of the local law can be considered an equivalent, but

this does not deal with retrospectivity and therefore, this really does not carry

the matter far, but with regard to the argument predicated on Article 62 of

Limitation Act and Section 100 of TP Act, though this argument is ingenious

and comes across as a very attractive argument at first blush, on a closer

scrutiny, this Court is of the considered view that it does not hold water in

this case. The reason is, straight and simple. The reason is, Article 62

applies to cases where a mortgagee sues for money on the foot of the

mortgage. In this case, of the three actions contemplated, as alluded to

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

supra, we are concerned only with the first action i.e., distraint, as there was

no institution of suit and there was no launch of prosecution and this itself

takes the wind out of the sails. This applies in all force to Article 112 of the

Limitation Act argument also as even if said Municipality is construed as

'State' within the meaning of Article 12 of the Constitution of India, Article

112 of the Limitation Act applies to a case where a suit has been instituted.

This is not a case of institution of a suit. For the same reason, it takes the

wind out of the sails qua this argument also. Before proceeding further, it is

also necessary to capture (for completion of hearing trajectory) that a

judgment of Punjab-Haryana High Court in Municipal Corporation Vs.

Jaswant Rai and Others reported in (1990) 98 PLR 402 was pressed into

service, but that is more in the nature of Article 62 Vs. Article 113 of

Limitation Act. A Patna High Court judgment in Raj Kumar Prasad case

[Raj Kumar Prasad Vs. State of Bihar reported in AIR 1999 Pat 61] was

pressed into service, but that was a case where no specific period has been

prescribed under the Act in question for realization of dues and residuary

Article 113 of the Limitation Act was resorted to.

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

21. This takes us to the argument that there is no pleadings in the

plaint regarding Limitation. Responding to this argument of learned counsel

for said Municipality, learned counsel for plaintiff drew the attention of this

Court to paragraph 6 of the plaint. It is a rather longish paragraph, but there

is a mention in this paragraph that the impugned notice is both illegal and

time barred. However, this Court is of the considered view that it may not

even be necessary to delve more and dilate further on this qua pleadings in

the light of language in which Section 3 of the Limitation Act is couched.

Section 3 of the Limitation Act makes it clear that every suit instituted after

the prescribed period of limitation shall be dismissed although limitation has

not been set up as a defence. This aspect of law of limitation is too very well

settled and therefore, this Court is of the considered view that the argument

that there is no pleadings qua limitation in the plaint does not persuade or

impress this Court in the case on hand.

22. With regard to retrospectivity, learned counsel for plaintiff/assessee

pressed into service a judgment of a Division Bench of this court (Madras

High Court) penned by then Hon'ble Chief Justice of this Court in In Re:

Corporation of Madras reported in AIR 1954 Mad 944. This judgment, in

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

the considered and respectful view of this Court is epigrammatic and

therefore, this Court deems it appropriate to reproduce the two paragraph

judgment which reads as follows:

23. There was also a contention that fiscal laws have to be construed

strictly. There is no difficulty regarding this principle, but law of limitation

is based on public policy and law of limitation being based on public policy

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

has a clear overarching legal impact unless there is a specific provision for

retrospective application of an amendment and this is the principle we are

concerned with in the case on hand. A careful perusal of the Third

amendment Act makes it clear that the amending Act would kick in only on

the appointed date i.e., the date on which it is published in the Government

Gazette and as already alluded to supra, the date in the case on hand is

25.06.2008 and the relevant executive publication or the Gazette publication

is vide G.O.Ms.No.116 dated 25.06.2008.

24. This takes us to the argument of Ex.A1 impugned notice being

issued in the name of a dead person. There is force in this submission as the

fact that noticee was no more on the date of Ex.A1 notice is not disputed. If

this was a case of enforcement of a mortgage by predicating and positing the

claim on Section 85 of District Municipalities Act read with Section 100 of

TP Act by institution of a suit, then noticee being dead on the date of notice

argument may really does not matter much in the light of Section 88 of the

District Municipalities Act, which provides for obligations of transferor and

transferee including obligation to give notice to the executive authority of

the local body in the event of death of a person who is primarily responsible

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

for payment of property tax, but in the instant case, as already alluded to

supra, Ex.A1 impugned notice is under Rules 30 and 36 of Schedule IV to

the District Municipalities Act. To be noted, Schedule IV of District

Municipalities Act is Taxation Rules and it is a piece of subordinate

legislation containing fiscal laws qua property tax. Rule 36 deals with

prosecution and obviously dead person cannot be prosecuted and therefore,

this Court is of the view that notice issued in the name of a dead person also

buttresses and strengthens the argument that impugned notice is a nullity.

As already delineated supra, it was not a case of institution of suit for

enforcement of a mortgage and if that had been the case, the scenario well

may have been different. Therefore, the demurrer submission of counsel for

plaintiff regarding tax upto 25.06.2005 also gets subsumed and submerged in

this point. Ex.A1 i.e., impugned notice is not a demand notice and it is a

distraint notice and notice regarding commencement of prosecution.

Therefore, bifurcation of various half years set out in Ex.A1 does not arise as

would be delineated infra in the next paragraph as Ex.A1 does not mention

the commencing and concluding half years, but mentions only the ten

number two successive calender years one after the other. The number of half

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

years which Ex.A1 pertains to can be anything between 16 and 20. If Ex.A1

was a demand notice, there would be possibility of bifurcating these half

years qua those barred by limitation and those not hit by limitation, but

Ex.A1 is the distraint notice and a notice regarding commencement of

prosecution issued in the name of a dead person and therefore in answering

the lone substantial question of law on which captioned second appeal is

being heard, the answer can only be binary. In other words, bifurcation of

the half years is impracticable and answer to the lone substantial question of

law has to necessarily be binary. One of the two possible answers (which

will be set out infra in this judgment) to the lone substantial question of law

will subsume within it the argument regarding the point that Ex.A1 notice

has been issued in the name of a dead person.

25. This takes us to the period for which tax has been demanded vide

Ex.A1 which says 1999-2000 and 2008-2009. Interestingly and intriguingly,

it does not give the half year. Assuming that it is from the first half year of

1999 -2000 to second half year of 2008-2009, which one can assume at the

highest, tax for 1/99-2000 became payable on 29.04.1999. This was prior to

the aforementioned 25.06.2005. With regard to the portion of half years post

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

25.06.2005, the demurrer submission is subsumed by the dead person

argument, noticee being the dead person on the date of notice argument as

already alluded to supra. Learned counsel for respondent also pointed out

that the captioned second appeal has been presented in this Court on

21.11.2012, protagonist of the captioned second appeal has been extremely

lackadaisical as the second appeal was processed and numbered only in

2019. The case file brings to light that removal of objections has gone

through several twists and turns, but after being taken on file and after being

on Admission Board, the second appeal has been admitted by Hon'ble

predecessor Judge on 10.07.2020 and therefore, this argument is too late in

the day and it does not persuade this Court in its present legal drill of

answering the aforementioned lone substantial question of law. However, for

completion of facts, this Court deems it appropriate to record that learned

counsel for plaintiff/assessee pointed out that post plaint, tax has been paid

without any default and the prior proceedings in the case file reveals that this

position has not been disputed by Mr.M.Kirubaharan, learned Standing

Counsel for said Municipality, who in the earlier proceedings reverted this

Court post instructions from the Local Authority on this aspect of the matter.

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

26. In the light of the discussion and dispositive reasoning thus far,

answer to the aforementioned substantial question of law is not in the

affirmative. In other words, the answer is 'no'. If the answer is 'no', the

sequitur is, it is answered in favour of the protagonist of the captioned

second appeal i.e., appellant in the captioned second appeal who is being

referred to as plaintiff/assessee.

27. Before concluding, this Court deems it appropriate to set out that

(for the purpose of capturing hearing trajectory as comprehensively as

possible) learned counsel for plaintiff/ assessee drew the attention of this

Court to Gunasekaran's case [The commissioner, Chengalpattu

Municipality Vs. R.Gunasekaran] being a unreported judgment dated

22.08.2019 rendered in another second appeal i.e., S.A.No.11 of 2010. This

pertains to Chengalpattu Municipality and there are similarities qua facts, but

this Court deems it appropriate to not to delve into that judgement as the

interesting argument predicated and posited on Section 85 of the District

Municipalities Act and Section 100 of the TP Act had not been raised in that

case by learned counsel for Municipality. This Court deems it appropriate to

record that the discussion in the captioned second appeal had been elevated

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

to a much higher level by this interesting original thought argument that had

been raised by the learned counsel for said Municipality. If said

Municipality was on institution of suit, the dynamics and dimensions of the

captioned second appeal may have well been different.

28. In the light of all that have been set out supra, this Court sets out

its conclusion i.e., this Court finds for the appellant and holds that captioned

second appeal is allowed. This means that the judgment and decree of the

first Appellate Court dated 23.07.2012 made in A.S.No.3 of 2012 is set aside

and judgment and decree of the trial Court being decree dated 30.08.2011

made in O.S.No.27 of 2009 is restored / resuscitated. There shall be no order

as to costs.

20.07.2021

Speaking order: Yes Index: Yes gpa

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

To

1. The Sub Court Chidambaram

2. The Principal District Munsif Court Chidambaram

https://www.mhc.tn.gov.in/judis/ S.A.No.1203 of 2019

M.SUNDAR.J.,

gpa

S.A.No.1203 of 2019

20.07.2021

https://www.mhc.tn.gov.in/judis/