1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.2002 OF 2010 AXIS Bank Limited ...Petitioner Versus Pune Municipal Corporation & Anr. ...Respondents ...... Mr.Anant B.Shinde i/b M/s.Anant B.Shinde & Associates for Petitioner. Mr.R.M.Pethe for Respondent No.1. Mr.S.R.Nargolkar, G.P. for Respondent No.2. ...... CORAM:- A.M.KHANWILKAR AND R.M.SAVANT, JJ. DATED:- MARCH 18, 2010. P.C. 1. Heard Counsel for the parties. 2. Rule. Rule made returnable forthwith, by consent. MrPethe waives notice for Respondent No.1. Mr.Nargolkar, G.P. waives notice for Respondent No.2. 3. As short question is involved, Petition is taken up for final disposal forthwith, by consent. 2 4. The short question that arises for our consideration is: whether in absence of institution of criminal action against the Petitioner in respect of import of certain goods without payment of octroi duty, it is open to the Corporation to levy compounded penalty and compel the importer to pay the same? It is not in dispute that the Petitioner imported gold coins within the jurisdiction of the Respondent Corporation. As a result, the Respondent Corporation issued notice to the Petitioner to provide the details of said import during the relevant period 1st April, 2006 to 31st August, 2009. On furnishing the said information, the Respondent Corporation calculated the octroi amount and raised demand vide notice dated 3rd October, 2009 for the period from year 2007 in the sum of Rs. 5,74,026/- and ten times penalty of Rs.57,40,260/-, total amounting to Rs. 63,14,286/- within seven days. It is not in dispute that the Petitioner deposited the amount as demanded on 8th October, 2009 under protest and without prejudice to their rights and contentions to challenge the same. 5. The Petitioners have, therefore, filed the present Petition on 23rd February, 2010 praying for quashing and setting aside the demand notice dated 3rd October, 2009 and for further relief of direction against the Respondent Corporation to refund the penalty of Rs.57,40,260/- already paid by the Petitioner vide receipt No.092502-R0001875. 3 6. Counsel for the Petitioner in support of his submission has pressed into service two decisions of our High Court. Firstly, in the case of M/s. Dhoot Agencies Pvt.Ltd. v. Aurangabad Municipal Corporation & Ors. reported in 2000 (1) All.MR 421 and secondly, on the unreported decision of Division Bench of Principal Bench in Writ Petition No.9343 of 2009 decided on November 17, 2009, in the case of Bank of Baroda vs. Pune Municipal Corporation. The question which has now been posed for our consideration, in our opinion, was the sole issue examined by the Division Bench of this Court in the latter decision. In paragraph 10, the Court articulated the question which arose for its consideration as follows :- “10. The question before us is whether before any prosecution is launched against the Petitioner or if launched, they are not convicted for the same, can respondent Corporation demand by way of compounding an amount equal to ten times of octroi as a fine as demanded by Respondent Corporation.” 7. After examining the provisions of Section 398 of the Bombay Provincial Municipal Corporation Act, 1949, as well as Rule 40 of the Bombay Provincial Municipal Corporation Rules, including former decision pressed into service by the Petitioner, and in the case of Maharashtra Chamber of Commerce vs. State of Maharashtra and Ors. reported in 2003 (4) All MR 32, the Court answered the issue against the 4 Corporation. This Court has opined that if the party refuses to compound the offence, the Corporation cannot demand compounding fine from such a party. Moreover, the question of demanding compounding fine would arise only if the Corporation were to launch criminal action and the same ought to result into conviction. In the present case, it is admitted position that no criminal action has been launched against the Petitioner. It is also admitted position that the Petitioner has already paid the amount towards compounding fine, but under protest. Applying the statement of law expounded in the above said decisions, we have no hesitation in acceding to the request of the Petitioner and grant relief in terms of prayer clause (a) as well as prayer clause (b) of the Petition. 8. Counsel for the Respondents, however, submits that the factual position in the above said case can be distinguished. In the present case, the Petitioner has already paid the entire amount as back as on 8th October, 2009 and have chosen to file the present Writ Petition only on 23rd February, 2010. As a result, the Corporation has been denuded of its option to launch prosecution against the Petitioner as it was under mistaken belief that the Petitioner has agreed to pay the compounding fine. That does not take the matter any further. The question to be considered is : whether compounding fine can be demanded from a party who is unwilling to 5 compound offence punishable under Section 398 of the Act read with Rule 40? That aspect has already been authoritatively answered by this Court in more than one decision to which reference has been made hither to. 9. In the circumstances, we leave the option to the Corporation to proceed against the Petitioner, if so advised. All questions in that behalf will have to be examined on its own merits. Whether institution of such action is barred by limitation or the limitation has been saved on account of the institution of the present Petition or otherwise are also matters which will have to be tested in the said proceedings. We express no opinion in that behalf. 10. Accordingly, Rule is made absolute in terms of prayer clauses (a) and (b) which read thus : “a. this Hon’ble Court may be pleased to issue a Writ of Mandamus or any other writ/order/direction thereby directing the Respondent No.1 to forthwith withdraw and/or cancel demand notices dated 03/10/2009 issued by the Respondent No.1, Pune Municipal Corporation annexed at Exh.C to this Writ Petition; b. this Hon’ble Court be pleased to direct/order the Respondent No.1 Pune Municipal Corporation to refund the Penalty of Rupees 57,40,260/- already paid to the Respondent No.1 Pune Municipal Corporation vide Receipt No.092502-R0001875 annexed at Exh.E to this Writ Petition. “ 6 11. Petition is disposed of on the above terms. No order as to costs. 12. At this stage, Counsel for the Corporation prays that the direction issued against the Corporation to refund the amount collected towards penalty being sum of Rs.47,40,260/- be kept in abeyance as the Corporation may consider of taking the matter in appeal. 13. In the circumstances, that part of the order shall remain in abeyance for a period of four weeks from today. (R.M.SAVANT, J.) (A.M.KHANWILKAR, J.)