wp6816-10.doc 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.6816 OF 2010 Dena Bank & Anr. .. Petitioners Versus Municipal Corporation of Gr. Mumbai and Anr. .. Respondents Mr.Vaibhav Joglekar with Ibrahim Merchant i/b. K.V.Aiyar & Associates for petitioners Ms.Neena Shah and Niyati Jambaulikar i/b. Pandya & Co. for respondent No.2 Mr.N.V.Walawalkar, Senior Advocate with M.M.Malvankar for respondent No.1. CORAM : S.C.DHARMADHIKARI, J. DATE : 21st July 2011. ORAL ORDER:- 1] Rule. Respondents waive service. By consent, rule made returnable forthwith. Heard parties. 2] By this petition under Article 227 of the Constitution of India, the petitioners are challenging the order dated 26th March 2010 passed by the Additional Chief Judge, Court of Small wp6816-10.doc 2 Causes, Mumbai below Exh.16 in Municipal Appeal No.230 of 2004. 3] The petitioner is a nationalised bank. Petitioner No.2 is its manager. The first respondent is Municipal Corporation of Greater Mumbai whereas respondent No.2 is the landlady and owner of the immovable property. 4] The petitioners approached the landlady and after due discussions and negotiations, the landlady created lease in their favour in respect of the ground floor premises admeasuring 2500 sq.feet in a building known as Shanti Sadan, Street No.3, Watcha Gandhi Road, Mumbai 400 007. A proper lease deed was executed between parties. 5] Petitioners filed the subject municipal appeal on the ground that the first respondent Corporation as enhanced rateable value by a notice dated 30th March 2001. The rateable value has been enhanced to Rs.3,23,065 and subsequently, wp6816-10.doc 3 the same was reduced to Rs.2,27,195/-. The petitioners filed the Municipal Appeal under section 217 of the Mumbai Municipal Corporation Act, 1888 (for short Act), challenging the bill raised on them dated 3rd April 2001 and an order passed on 27th November 2001 by the Assessing Officer. 6] During the pendency of the said appeal, the first respondent Corporation filed an application being Application Exh.16 seeking relief under section 217 (5) of the Act. direction was sought against the petitioners to deposit a sum of Rs.24,98,930 being 80% of the outstanding bill after adjusting the amount received as part payment, failing which it was further prayed that the municipal appeal be dismissed. 7] When this miscellaneous application was served on the petitioners, it filed an affidavit in reply dated 31st August 2009 contending therein that in view of section 209(3) of the Act, the petitioner who is an occupier of the ground floor structure, cannot be called upon to pay the property tax for a wp6816-10.doc 4 period of more than one year. In other words, the arrears, if any, more than one year could not have been claimed and the liability of the petitioner to pay beyond this period does not arise on account of this legal provision. 8] On this application, arguments were heard and by the impugned order, the learned Additional Chief Judge was pleased to direct the petitioners to deposit the sum as demanded by the Corporation, as a pre-condition for hearing of appeal, failing which the municipal appeal was to stand dismissed. 9] While doing so, the learned Additional Chief Judge, relied upon the documents including bills that have been produced by the Corporation and the landlady and particularly an affidavit filed on her behalf. She pointed out that the demand was raised on the petitioners by the Corporation and it was called upon to pay the amount. However, the petitioner took a stand by a letter dated 9th February 2009 addressed to wp6816-10.doc 5 the Assessment Officer “D” Ward that it is not liable to pay the said property tax. While doing so, the petitioners accepted that the letters dated 6th June 2008 and 29th January 2009 addressed to their branch manager were duly received and the same were replied through their Advocate. It is in such circumstances, according to the respondents, the liability arises and the amount should be paid/ deposited. Relying upon these documents and the contents of the affidavit so also section 217(5) of the Act, that the impugned order has been made. It is this order which is challenged in the present petition. 10] Mr.Joglekar, learned Counsel appearing for petitioner bank contended that the petitioner bank is in use and occupation of the ground floor premises under a lease from the landlady. The rateable value has been revised in respect of the entire structure/ building. The liability to pay property tax proportionate to the share of the petitioners arises only on account of the refusal of the landlady to pay the same. In other words, it is the landlady who is primarily responsible for wp6816-10.doc 6 payment of taxes in terms of statutory provisions. It is in the event of default committed by the landlady that the occupier can be called upon to pay the same. The occupier also cannot be called upon to pay the sum which is outstanding for more than a year by way of property tax. If that is the legal provision and that is how the liability of the occupier/ tenant arises, then, the same cannot be ignored by taking recourse to section 217(5) of the Act. It is contended that section 217 and all its sub-sections would have to be read subject to section 209(3) of the Act and so read, there is no liability of payment of tax beyond the period prescribed in sub-section 3 of section 209 of the Act. In such circumstances, the learned Judge was in clear error in allowing the application and issuing the impugned directions. The order of the learned Judge ignores statutory provisions and the mandate flowing therefrom. For all these reasons, according to him, the impugned order should be set aside. 11] Mr.Joglekar in all fairness has brought to my notice a wp6816-10.doc 7 judgement of a learned Single Judge of this Court delivered in the case of Bhagwatiben Bhojwani Vs. B.M.C., reported in 1991 All M.R. 583. He submits that this judgement may have been over-ruled by a Division Bench of this Court in Appeal No. 449 of 1991 (Municipal Corporation of Greater Bombay Vs. Bhagwanben Harilal Bhojani & Ors.) decided on 11th August 1992 at the instance of the M.C.G.B., yet, the reversal is on the basis that the liability to pay tax arises on account of default noted by the learned Judges constituting the Division Bench. Therefore, there is no principle of law which can be culled out and applied to the instant case. For all these reasons the petition must succeed, is his submission. 12] On the other hand Mr.Walawalkar, learned Senior Counsel appearing for first respondent Corporation submitted that this is an appeal against the rateable value. The appeal is filed to challenge the bill that has been raised on the petitioner bank. The bill demands share of the petitioner bank in proportion to its occupation of the premises/ building. Bank’s wp6816-10.doc 8 share is demanded repeatedly and it is not as if the bills have not been raised pursuant to the revision of the rateable value. That the bills have been raised and the demand is made from time to time, is clear. In these circumstances, it cannot be said that section 217 and its sub-sections are in any way controlled by section 209 of the Act and particularly sub-section 3 thereof. Mr.Walawalkar has pointed out that the Court will have to make a clear distinction inasmuch as, the occupiers may be held liable for payment of property tax in terms of section 209. He submits that sub-section 3 of section 209 deals with recovery from the occupier. The entire section deals with recovery of property tax which remains unpaid after the bill for the same has been duly served on the person primarily liable for payment thereof and if the same person is not occupier for the time being of the premises in respect of which the tax is due, the Commissioner has discretion to serve the bill on the occupier of the said premises. That is how, the sub-section must be seen and it has no bearing on the liability to pay the tax during the pendency of municipal appeal. Section 217 deals with appeals wp6816-10.doc 9 against the valuation and tax. That in terms of sub-section 2 clause (d) thereof in the case of an appeal against a tax or in the case of an appeal made against the rateable value, the amount of disputed tax claimed by the appellant or the amount of tax claimed from the appellant or the amount of tax chargeable on the basis of the disputed rateable value, up to date of the appeal has to be deposited or else the appeal cannot be entertained. Similarly, the appeal may have been entertained but the learned Additional Chief Judge shall not hear and decide it unless the property tax payable, on the basis of original rateable value plus 80% of the property tax claimed from the appellant on the increased portion of the rateable value of the property, out of the property tax claimed under each of the bills, which may have been issued from time to time since filing of the appeal, is also deposited with the Commissioner within the period prescribed under the Act. This sub-section empowers the Chief Judge to dismiss summarily the appeal on getting an intimation from the Commissioner of a default committed by the appellant. The Corporation wp6816-10.doc 10 accordingly intimated the default committed by the learned Chief Judge. Once the default was reported the order has been passed. There is no question of any other provision being read into this mandate. In these circumstances, the petitioners cannot avoid their liability. It is not as if the deposit will in any way takes away their right of appeal or impair it inasmuch as if they succeed in their challenge, the amount will be adjusted or refunded in terms of the provisions. The refund also is with interest. In such circumstances, this petition be dismissed. 13] Mr.Walawalkar relies upon the following judgements in support of his above submissions:- 1. 2008 (6) All MR 519 (Peninsula Land Ltd. Vs. Brihan Mumbai Mahanagarpalika & Ors); 2. 1955 Vol.LVIII BLR (Ramoji Raoji Palkar Vs. Amir Kasam Bhagwan); 3. A.I.R. 1981 Bombay 364 (The Children's Educational Uplift Society and Anr. Vs. Mrs.Kaushalya Govindsing Moral); 14] Learned Counsel appearing for landlady supported wp6816-10.doc 11 Mr.Walawalkar and argued that in terms of the lease deed, the liability to pay taxes is that of the petitioner and further though the lease has expired, the petitioner is continuing to occupy ground floor portion. For all these reasons, this is not a fit case for interference in writ jurisdiction and the petition be dismissed. 15] For properly appreciating the rival contentions, section 209 and 217 of the Act need to be referred. They are reproduced hereinbelow:- “209. When occupiers may be held liable for payment of property taxes. (1) if the sum due on account of any property tax remains unpaid after a bill for the same has been duly served on the person primarily liable for the payment thereof and the said person be not the occupier for the time being of the premises in respect of which the tax is due, the Commissioner may serve a bill for the amount on the occupier of the said premises, or, if there are two or more occupiers thereof, may serve a bill on each of them for such portion of the sum due as bears to the whole amount due the same ratio which the rent paid occupier bears to the aggregate amount of rent paid by them both or all in respect of the said premises. “[1(A) Notwithstanding anything contained in sub-section (1), on and from the date wp6816-10.doc 12 of adoption of capital value as the base for levy of property taxes under section 140A, but subject to the other provisions of this Act, the Commissioner may, serve a bill for the amount of property tax on such occupier of the said premises, or, if there are two or more such occupiers thereof, may serve a bill on each of them for such portion of the sum due as bears to the whole amount of tax based on the capital value, due in the same ratio which the capital value of such portion of the premises of the occupier or occupiers bears to the aggregate amount of the tax based on the capital value, in respect of the said premises.” (2) If the occupier or any of the occupiers fails within thirty days from the service of any such bill to pay the amount therein claimed, the said amount may be recovered from him in accordance with the foregoing provisions. (3) No arrears of a property tax shall be recovered from an occupier under this section, which is due on account of any period for which the occupier was not in occupation of the premises on which the tax is assessed. (4) If any sum is paid by, or recovered from an occupier under this section, he shall be entitled to credit therefore in account with the person primarily liable for the payment of the same.” “217. Appeals when and to whom to lie:- (1) Subject to the provisions hereinafter contained, appeals against any rateable value for the capital value, as the case wp6816-10.doc 13 may be, or tax fixed or charged under this Act shall be heard and determined by the Chief Judge of the Small Cause Court. (2) But no such appeal shall be entertained by the said Chief Judge, unless - (a) it is brought within twenty one days after the accrual of the case of complaint; (b) in the case of an appeal against a rateable value or the capital value, as the case may be, a complaint has previously been made to the Commissioner under section 163, and such complaint has been disposed of; (c) in the case of an appeal against any amendment made in the assessment book under section 167 during the official year, a complaint has been made by the person aggrieved within twenty one days after he first received notice of such amendment, and his complaint has been disposed of; (d) in the case of an appeal against a tax, or in the case of an appeal made against a rateable value [or the capital value; as the case may be,] [the amount of the disputed tax claimed from the appellant, or the amount of the tax chargeable on the basis of the disputed rateable value, up to the date of filing of the appeal, has been deposited by the appellant with the Commissioner [and such appeal is accompanied by a receipt of full amount of tax to which appeal relates].] [(2-A) Where the appeal is not filed in accordance with the provisions of clauses (a) to wp6816-10.doc 14 (d) of sub-section (2), it shall be liable to be summarily dismissed.] [(3) In the case of any appeal entertained by the Chief Judge, but not heard by him, before the date of commencement of the Maharashtra Municipal Corporations (Amendment) Act, 1975, the Chief Judge shall not hear and decide such appeal, unless the amount of the dispute tax claimed from the appellant, or the amount of the tax chargeable on the basis of the disputed rateable value, as the case may be, up to the date of filing the appeal, has been deposited by the appellant with the Commissioner within thirty days from the date of publication of a general notice by the Commissioner in this behalf in the local newspapers. The Commissioner shall simultaneously serve on each such appellant a notice under sections 484 and 485 and other relevant provisions of this Act, for intimating the amount to be deposited by the appellant with him. (4) As far as possible, within fifteen days from the expiry of the period of thirty days prescribed under sub-section (3), the Commissioner shall intimate to the Chief Judge the names and other particulars of the appellants who have deposited with him the required amount within the prescribed period and the names and other particulars of the appellants who have not deposited with him such amount within such period, on receipt of such intimation, the Chief Judge shall summarily dismiss the appeal of any appellant who has not deposited the required amount with the Commissioner within the prescribed period. [(5) In the case of any appeal against any wp6816-10.doc 15 rateable value or property tax fixed or charged under this Act, which may have been entertained by Chief Judge before the commencement of the Act aforesaid or which may be entertained by him after the said date the Chief Judge shall not hear and decide such appeal unless the property tax, if any, payable on the basis of the original rateable value plus eighty per centum, of the property tax claimed from the appellant on the increased portion of the rateable value of the property out of the property tax claimed under each of the bills which may have been issued, from time to time, since the filing of appeal, is also deposited with the Commissioner within the period prescribed under the Act. In case of default by the appellant, on getting an intimation to that effect from the Commissioner at any time before the appeal is decided, the Chief Judge shall summarily, dismiss the appeal: Provided that, in case the appeal is decided in favour of the Corporation interest at 6.25 per centum per annum shall be payable by the applicant on the balance amount of the property tax from the date on which the amount of property tax, was payable: Provided further that, in case the appeal is decided in favour of the appellant and the amount of property tax deposited with the Corporation is more than the property tax payable by him, the Commissioner shall adjust the excess amount of the property tax with interest at 6.25 per centum per annum from the date on which the amount is deposited with the Corporation towards the property taxes payable thereafter].” wp6816-10.doc 16 16] A bare perusal of section 209 would reveal that it falls under sub-heading “Collection of Taxes”. Under that sub- heading, sections 197, 199, 200 to 208 appear. All these provisions enable the Corporation to levy, assess and recover property taxes. As far as the levy and assessment is concerned, that is an aspect already covered by prior provisions whereas the collection of tax is in terms of section 197 onwards. How the collection is to be done inasmuch as how a bill is to be prepared and served; how the notice of demand must be raised and if there is a default, what could be done, including recovery by distress and attachment is provided in further sections. Section 206 deals with sale and section 207 and section 207A so also section 208 enable the Corporation to levy and recover fees and penalties for the warrants which have been issued to recover the property taxes. Then comes section 209 which provides that occupiers may be held liable for payment of taxes. If the bill has been raised for taxes on the person primarily liable but that person is not an occupier for the time being of the premises in respect of which wp6816-10.doc 17 tax is due, the Commissioner can serve a bill on the occupier and the occupier is liable to the extent of the portion of the sum due and payable and he has to pay it in the ratio, which is contemplated by sub-section 1 of section 209. Then comes sub-section 2 which provides that if the occupier or any of the occupiers fail to, within fifteen days, pay the amount claimed, the amount may be recovered by him in accordance with the provisions foregoing, means from section 201 to 208. However, arrears of taxes cannot be recovered from any occupier under section 209 if the same has fallen due for a period more than one year or which is due on account of the period for which the occupier was not in occupation of the premises and for which the tax is assessed. 17] As far as section 217 is concerned, it provides for an appeal against the valuation and taxes and the appeal lies to the Chief Judge of Small Causes Court and there is a pre- condition inasmuch as the appeal cannot be entertained unless the disputed tax which is mentioned in the appeal is deposited wp6816-10.doc 18 with the Commissioner. Sub-section 5 provides for a continuing liability inasmuch as it cannot be that the appellant assessee stops paying taxes which are due and payable in respect of the property, after the appeal under section 217(1). Therefore, after the appeal is filed and, during its pendency, the disputed amount has to be deposited or else the appeal can be summarily dismissed. This is a condition attached to the statutory right of appeal. It is well settled that appeal is a right created by Statute. The Statute can regulate and control exercise of that right. It is also well settled that imposition of condition of deposit of disputed tax for entertaining and hearing of the appeal cannot be held to be onerous, excessive or arbitrary (See Sham Charan Vs. Delhi Municipal Corporation – reported in A.I.R. 1992 S.C. 2279). 18] An amendment in section 217 was made inasmuch as sub-section 5 as was reading prior to the amendment came to be substituted by Maharashtra Act 10 of 1998, which is already reproduced above. wp6816-10.doc 19 19] Therefore, payment of the amount of tax till the date of institution and filing of the appeal and the taxes which are due and payable during the pendency of the appeal have to be secured or else, the Corporation stands to lose by way of property tax, merely because legal proceedings are pending challenging the valuation and the assessment of the same. That would not be in public interest and that is how sub-section 5 of section 217 came to be inserted. 20] A Division Bench of this Court in the case of Peninsula Vs. B.M.C. Reported in 2008 (6) All M.R. 519 was considering a challenge to sub-section 5 of section 217 and while negativing it the Division Bench holds thus:- “21. We have already noticed that challenge to certain provision of Section 217(5) of the Act does not survive for consideration. To that extent, part of the ground has been rendered infructuous. However, we still have to examine whether the provisions of Section 217(5) of the Act are per se arbitrary and place an unreasonable restriction wp6816-10.doc 20 upon the property tax payers' right to prefer an appeal. 22. We have discussed in great detail that right to appeal is not an absolute or a constitutional right but is a statutory right which can be regulated by the statute providing for the appeal. The Division Bench of this Court in the case of Kohinoor Textiles Printing Press (supra) had rejected all the other contentions challenging constitutionality of the provisions of Section 217(5) except to the limited extent afore- indicated. In other words, the grounds agitated before us have already been rejected by the Division Bench judgment in Kohinoor' case (supra) and we find no reason to differ with the view expressed to that extent by the Court. 23. The object and reasons of Act 10 of 1998 by which the provisions of Section 217(5) were amended, do not indicate in any detail any elaborate object behind the amendment so as to be of any help to the Court while dealing with the arguments raised. In fact, it was primarily with the object to revise the taxes and to streamline the procedure for levying of taxes. It is an accepted principle relating to interpretation of fiscal statute that in the fiscal or tax measures greater latitude is given to such statutes than to other statutes. All decisions in the