Madras High Court
Kulithalai Municipality vs R.Jayalakshmi (Died) on 14 August, 2024
Author: V.Bhavani Subbaroyan
Bench: V.Bhavani Subbaroyan
S.A(MD)No.1126 of 2005
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 14.08.2024
CORAM
THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN
S.A(MD)No.1126 of 2005
Kulithalai Municipality,
Represented by its Commissioner,
Bazar Street,
Kulithalai,
Karur District. ... Appellant/Appellant/Defendant
Vs.
1.R.Jayalakshmi (died)
... 1st Respondent/1st Respondent/Plaintiff
2.S.Jayavel ... 2nd Respondent
(2nd respondent is brought on record as Lrs
of the deceased sole respondent vide order
dated 05.06.2024 made in C.M.P(MD)Nos.1742 to
1744 of 2024 in S.A(MD)No.1126 of 2005)
Prayer: Second Appeal filed under Section 100 of the Code of Civil
Procedure against the judgment and decree, dated 28.11.2003 passed
in A.S.No.24 of 2003, on the file of the Sub Court, Kulithalai,
confirming the judgment and decree dated 11.12.2002 passed in
O.S.No.239 of 1999 on the file of the District Munsif Court, Kulithalai.
For Appellant : Mr.AN.Ramanathan
For Respondent No.2 : Mr.G.Manikandan
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S.A(MD)No.1126 of 2005
JUDGMENT
The concurrent Judgments and decrees passed in O.S.No.
239 of 1999, dated 11.12.2002 on the file of the District Munsif Court,
Kulithalai and in A.S.No.24 of 2003, dated 28.11.2003 on the file of the
Sub Court, Kulithalai, are being challenged in the present Second
Appeal.
2.Originally, one R.Jayalakshmi as the plaintiff, instituted a
suit in O.S.No.239 of 1999, on the file of the trial Court as against the
Kulithalai Municipality seeking for the relief of declaration that the
increased assessment of property tax as per the notice dated
28.10.1999 is illegal, without jurisdiction, void non-est and
unenforceable and for the consequential relief of permanent injunction
restraining the defendant, its servant and agent from demanding and
collecting the property tax in respect of the suit property at the
enhanced rate.
3.Pending the Second Appeal, the first respondent/plaintiff
died. Hence, the second respondent herein is brought on record as the
legal representative of the deceased first respondent/plaintiff.
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4.For the sake of convenience, the parties are referred to
as, as described before the trial Court.
5.According to the plaintiff, the property belonged to her
and the same is situated at Kulithalai Municipal limits. The original
annual value for the purpose of assessment for the property tax was
Rs.3,822/- and the amount of tax levied on that annual value was Rs.
568/- for half year assessed for the year 1994-95. As per the special
notice dated 28.10.1999, the annual value and property tax have been
increased to Rs.17,567/- and Rs.2,609/-. The reason for the increase
in the notice was stated as 'on the basis of the rent estimated' and it is
further stated that Kulithalai Urban Co-operative Bank is functioning in
the building and the letter received by the Municipality from the Bank
dated 21.07.1999 indicated that the actual rent paid by the Bank for
the building is Rs.1,597/- and on that basis alone, the property tax was
assessed with effect from 01.10.1999. Further, according to the
plaintiff, the said procedure is illegal and the plaintiff did not apply its
mind to the provisions of the Tamil Nadu District Municipalities Act,
1920 (in short hereinafter referred to as 'the Act, 1920') and to the
rules framed thereunder. Hence, the plaintiff has filed the suit for the
abovestated relief.
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6.The defendant had filed a written statement stating that
it is an admitted fact the property belongs to the plaintiff and the same
was taxed on the annual value of Rs.3,822/- and the amount of tax
was Rs.568/- for the year 1994-95. The annual value for 1994-95 was
before revision ie., prior to October 1998. It is also an admitted fact
that the annual value as per the special notice dated 28.10.1999 was
increased to Rs.17,567/-. Admittedly, the suit property was a rental
building and the rent was Rs.1,597/-. The defendant stated that the
property tax was levied only on the basis of the above mentioned rent,
as per the rules framed by the Government. All procedural aspects
were correctly followed by the defendant. The averments made by the
plaintiff that the Commissioner did not apply his mind to the provisions
of the Act, 1920 and to the Rules are not correct. In fact, the suit
property is situated at the heart of Kulithalai Municipality and the
annual value may be more than the annual value fixed by the
defendant. The provisions of lease and rent control will not be
applicable for fixing the property tax. The Municipality has to follow the
instructions given by the Government then and there in fixing property
tax. Only after deducting for depreciation value, the property tax is
fixed. In fact, the assessment notice was served on 27.10.1999 and no
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revision petition nor appeal was preferred by the plaintiff, who prayed
for dismissing the suit.
7.Before the trial Court, on the side of the plaintiff, she
herself was examined as P.W.1 and Exs.A1 to A4 were marked. On the
side of the defendant, one Balakrishnan was examined as D.W.1 and
Exs.B.1 to B.7 were marked.
8.On the basis of the rival pleadings made on either side,
the trial Court, after framing necessary issues and after evaluating both
the oral and documentary evidence, has decreed the suit.
9.The trial Court was of the view that the Tamil Nadu
Buildings (Lease and Rent Control) Act, 1960 was not followed and
decided the same, based on the Judgment of this Court in the
R.C.Diocese of Madurai, through Procurator
Rev.Fr.A.Vedamanickam Vs. Srivilliputtur Municipality, through
its Commissioner reported in 2002 (1) MLJ 391. Further, it has
been stated when the defendant was not in a position to say what was
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the length and breadth of the said building and the type of the building
and when the defendant was not in a position to sell the same, they
have considered the aspect of the building as per the said Act and the
same has been done without following the said Act. Hence, the same
has not been properly assessed and the suit has been allowed as
prayed for.
10.Aggrieved by the Judgment and decree passed by the
trial Court, the defendant herein as appellant, had filed an Appeal Suit
in A.S.No.24 of 2003 on the file of the first Appellate Court.
11.The first Appellate Court, after hearing both sides and
upon reappraising the evidence available on record, has not applied its
mind, but blindly followed the Judgment of the trial Court and
dismissed the appeal suit.
12.Challenging the said concurrent judgments and decrees
passed by the Courts below, the present Second Appeal has been
preferred at the instance of the defendant/Municipality as appellant.
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13.At the time of admitting the present second appeal, this
Court had framed the following substantial questions of law for
consideration:
'1) Are not the courts below committed an error in
decreeing the suit, when the suit challenging the property
tax is not maintainable as per the Tamil Nadu District
Municipalities Act, 1920 and when the respondent has not
filed any revision challenging the Tax? Vide AIR 1995 SC
2) Whether in law the respondent can maintain the
suit when there is no malafide or infirmity, illegality in the
fixation of property tax?'
14.The learned counsel appearing for the
appellant/defendant would submit that the courts below erred in
granting a decree in favour of the plaintiff by declaring the property tax
demand as void and in this aspect, the trial Court failed to see that the
suit itself is not maintainable in law and if at all the plaintiff has any
remedy, she has to move the appellate authority constituted under the
Act and without approaching the authority, the suit is not maintainable.
The Courts below failed to see that the property tax was fixed on the
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basis of the rent received for the said building. The Courts below failed
to see that the application of the the Tamil Nadu Buildings (Lease and
Rent Control) Act, 1960 is not applicable for fixation of the value of the
building. The Courts below failed to see that the value of the building is
fixed as per Section 82(2) of the Act, 1920 and as such the defendant
cannot have any grievance and the judgment and decree of the Courts
below are substantially erroneous and liable to be set aside.
15.The learned counsel appearing for the
respondent/plaintiff relied on the Judgment in R.C.Diocese of
Madurai's case (cited supra), in which it is stated that the assessment
made by the respondent Municipality in respect of the building of the
appellant in question was not in accordance with the procedures
contemplated in law to arrive at the annual rental value. On the
contrary, the available evidence would be indicative of the fact that the
fixation of the annual rental value by the respondent Municipality was
only arbitrary and it has got to be necessarily set aside and the lower
Appellate Court without proper appreciation of the evidence adduced
and without following the correct settled proposition of law in that
regard has set aside the Judgment of the trial Court. Therefore, the
judgment and decree of the lower Appellate Court were set aside and
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the suit was decreed declaring that the assessment in respect of the
suit property, as found in the plaint is arbitrary and not in accordance
with law.
16.A reading of the decision of the Supreme Court in the
Guntur Municipal Council Vs. Guntur Town Rate Payers'
Association reported in (1971) 2 MLJ SC 7, would make it clear that
the basis of assessment should only be fair rent worked out as
provided in Section 4 of the Tamil Nadu Buildings (Lease and Rent
Control) Act. The mere fact that the Commissioner also took into
consideration the provisions of the Rent Control Act while arriving at
the annual value on the basis of actual rent received by the landlord
from the tenant would not suffice. In the absence of evidence to
indicate that the Municipality assessed the properties on the basis of
fair rent worked out under the provisions of the Tamil Nadu Buildings
(Lease and Rent Control) Act, the assessment cannot stand and it will
be contrary to the dicta laid down by the Supreme Court in the decision
referred to above.
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17.Heard the learned counsel appearing for the appellants
and the learned counsel appearing for the respondents and also
perused the records carefully.
18.It is to be seen that in Chapter VI, Taxation and Finance
wherein, under Section 78 of the Act, 1920, the enumeration of
ordinary taxes and power of control of State Government that every
municipal council may levy a property tax, a profession tax, a tax on
carriages and animals and a tax on cars and others.
19.According to the said Act, a notification has to be issued
while determining the basic property tax, additional basic property tax
etc by the Municipal Council. The basic property tax, additional basic
property tax and the concession, if any, with regard to the age, for
every building or land shall be determined by the municipal council
subject to the minimum and maximum rates prescribed by the State
Government.
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20.As per Section 79 of the Act, 1920, Special Taxation,
with the previous sanction of the State Government and the Central
Government; a tax on persons may be levied by the Council of any
Municipality which is resorted to by pilgrims.
21.As per Section 80 of the Act, 1920, when a municipal
council shall have determined subject to the provisions of Sections 78
and 79 to levy any tax for the first time or at a new rate, the Executive
Authority shall forthwith publish a notification in the District Gazette
and by beat of drum specifying the rate at which, the date from which
and the period of levy, if any, for which such tax shall be levied.
22.As per Section 82 of the Act, 1920, the method of
assessment of property.— (1) Every building shall be assessed together
with its site and other adjacent premises occupied as an appurtenance
thereto unless the owner of the building is a different person from the
owner of such site or premises. (2) The annual value of lands and
buildings shall be deemed to be the gross annual rent at which they
may reasonably be expected to let from month to month or from year
to year less a deduction in the case of buildings, of ten per cent of that
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portion of such annual rent which is attributable to the buildings alone,
apart from their sites and adjacent lands occupied as an appurtenance
thereto; and the said deduction shall be in lieu of all allowances for
repairs or on any other account whatever: Provided that — (a) in the
case of (i) any Government or railway building; or (ii) any building of a
class not ordinarily let the gross annual rent of which cannot, in the
opinion of the Executive Authority, be estimated, the annual value of
the premises shall be deemed to be six per cent of the total of the
estimated value of the land and the estimated present cost of erecting
the building after deducting for depreciation a reasonable amount
which shall in no case be less than ten per centum of such cost.
23.As per Section 23-A of the said Act, 1920, Taxation
Appeals Committee, notwithstanding anything contained in this Act (1)
for every municipality, there shall be a taxation appeals committee
which shall consist of the Chairman of the municipal council who shall
also be the chairman of the taxation appeals committee and four
councillors elected by the council and (2) the business of the taxation
appeals committee shall be transacted in accordance with the rules
made by the State Government in this behalf.
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24.Accordingly, when the plaintiff is of the view that the
said council has imposed more tax than what is to be required, the
plaintiff ought to have approached the revision committee and not
challenged the same directly before the Munsif Court, which has no
authority to decide the same. Further, the Courts below had committed
an error in decreeing the suit when the suit challenging the property
tax is not maintainable as per the Tamil Nadu District Municipalities Act,
1920 and the revision ought to have been filed by her.
25.It is to be seen that the appellant Municipality has fixed
the tax only as per the rent received by them which is a commercial
property and only based on the rent received, they increased the tax
as per the decision taken by the council and the plaintiff's claim that
the building has not been assessed properly by not inspecting the same
and the same has also been denied by the plaintiff and even though
the same has been denied, this Court is of the view that both the trial
Court as well as the Appellate Court had erred in decreeing the suit in
toto and issued permanent injunction against the defendant from
collecting any property tax which is erroneous and this Court is of the
view that the same has to be set aside. Since no proper assessment
has taken place, this Court is inclined to leave the second question of
law as open asking them to fix the property tax afresh.
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26.Accordingly, this Second Appeal is partly allowed and
the matter is remitted back to the defendant for assessing the property
in question and the defendant is hereby directed to assess the building
afresh based on the circulars pending as on date from the date of
demand from 1995 and periodical revision to be taken into account and
after giving an opportunity to the plaintiff and then pass appropriate
orders on the demand to be made against the plaintiff and the plaintiff
is hereby directed to follow the procedure and pay the said arrears of
amount, within a period of four months from the date of receipt of a
copy of this order. No costs.
14.08.2024
Index : Yes/No
Internet : Yes/No
ps
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To
1.The Sub Court,
Kulithalai.
2.The District Munsif Court,
Kulithalai.
3.The Record Keeper,
V.R. Section,
Madurai Bench of Madras High Court,
Madurai.
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V.BHAVANI SUBBAROYAN, J.
ps
Judgment made in
14.08.2024
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