IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON FRIDAY, THE 11TH DECEMBER 2009 / 20TH AGRAHAYANA 1931 WP(C).No. 15871 of 2004(M) -------------------------- PETITIONER(S): --------------- 1. P.S.JAYAPRAKASH PRABHU, AGED 58 S/O.SREENIVASA PRABHU, NOW RESIDING AT IN PULLEPPADATH HOUSE, ERNAKULAM KOCHI -35. 2. P.J.JAYAPRASAD PRABHU, AGED 28, S/O.JAYAPRAKASH PRABHU, NOW RESIDING AT PULLEPPADATH HOUSE, ERNAKULAM, KOCHI - 35. 3. P.J.JAYAPRASHANTH PRABHU,AGED 24, S.I.JAYAPRAKASH PRABHU. NOW RESIDING AT PULLEPPADATH HOUSE, T.D.EAST, SANNIDHI ROAD, ERNAKULAM, KOCHI 35. BY ADV. SRI.R.D.SHENOY, SENIOR ADVOCATE SRI.S.VINOD BHAT RESPONDENT(S): --------------- 1. THE DISTRICT COLLECTOR, ERNAKULAM. 2. THE REVENUE DIVISIONAL OFFICER, FORT KOCHI. 3. THE TAHSILDAR, KANAYANNUR TALUK OFFICE, ERNAKULAM. GOVERNMENT PLEADER SRI.PRADEEP K.P. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 11/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) 15871/2004 APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 : COPY OF PARTITION DEED NO. 2305/1995 DATED 28.03.1995 ON THE FILE OF SRO, ERNAKULAM. EXHIBIT P2 : COPY OF SANCTION FOR BUILDING CONSTRUCTION DATED 31.08.1995 ISSUED BY THE CORPORATION OF COCHIN. EXHIBIT P3 : COPY OF AGREEMENT DATED 24.04.1996 BETWEEN THE PETITIONERS. EXHIBIT P4 : COPY OF DEMAND PROMISSORY NOTE DATED 02.09.1997 EXECUTED BY THE PETITIONERS IN FAVOUR OF GLOBAL TRUST BANK LTD. EXHIBIT P5 : COPY OF ORDER OF ASSESSMENT NO. B2-3712/2001 DATED 10.01.2003 ISSUED BY 3RD RESPONDENT. EXHIBIT P6 : COPY OF ORDER NO. K.DIS. 1613/03-G DATED 24.07.2003 PASSED BY 2ND RESPONDENT. EXHIBIT P7 : COPY OF ORDER NO. DIS. 47248/03/B10 DATED 22.03.2004 PASSED BY RESPONDENT NO. 1. /TRUE COPY/ P.A. TO JUDGE. P.R. RAMACHANDRA MENON, J. ----------------------------------------------- WP(C) No. 15871 of 2004 --------------------------------------- Dated, this the 11th day of December, 2009 J U D G M E N T The grievance of the petitioners is against the assessment of building tax pursued by the 3rd respondent/Assessing Authority and confirmed by the 2nd respondent/Appellate Authority and then by the 1st respondent/Revisional Authority, whereby the building constructed by the petitioners jointly availing the necessary funds from the common source, intending to have the same constructed, owned and occupied separately has been assessed as a 'single unit', imposing a huge tax liability of Rs.4,36,500/-. 2. Ext. P1 is the Partition Deed, whereby an extent of 36.535 cents of land came to the exclusive ownership, possession and enjoyment of the petitioners. The petitioners wanted to construct a multi storied building constituting basement, ground floor and three other floors, utilising the funds contributed by them jointly. In furtherance to the steps pursued in this regard, the petitioners submitted an application for necessary building permit and after considering the facts and figures, the local authority issued Ext.P2 permit jointly, in the name of the three petitioners. After securing the permit dated 31.08.1995, the petitioners WP(C) No.15871/2004 2 put the terms into writing, prescribing the relative rights and liabilities as shown in Ext.P3 agreement dated 24.04.1996. Contents of the said agreement clearly reveal that, on completion of the commercial complex as per the permit/sanction, the ownership of the respective floors will rest with the parties to the agreement in the manner specified therein; whereby the 'cellar' and ground floor were allotted in the name of the first petitioner, the first floor and 3rd floor in the name of the second petitioner and the second floor in the name of the 3rd petitioner (clause 3). By virtue of clause 5 of Ext.P3 agreement, it was stipulated that the total cost of construction of the building complex was to be borne separately by the different owners as specified in clause 3. It has further provided as per clause 6 that the parties agreed that they would bear the cost of maintenance and cost incurred for providing common amenities jointly; while clause 8 provided that the parties shall either jointly or severally borrow funds, for construction of the building from Banks, Financial institutions and such other agencies and that they could mortgage the property in favour of such Bank/Financial institutions for the funds borrowed jointly. The case of the petitioner is that, it was accordingly that they borrowed necessary funds from the Global Trust Bank Ltd. after executing the Promissory note for a sum of Rs.1.2 crores, which is sought to be substantiated by producing a copy of the 'promissory note' dated WP(C) No.15871/2004 3 02.09.1997 executed by the petitioners jointly in this regard. 3. The construction of the building was completed on 22.07.1999 and the date of occupancy is on 10.08.1999. On completion of the construction as above, the 3rd respondent proceeded with the steps for assessment of the building tax, leading to Ext.P5 Order dated 10.01.2003, assessing the building as a single unit at the hands of the petitioners and fixing the tax liability of Rs.4.365 lakhs. The assessment order was subjected to challenge by filing appeal before the 2nd respondent who declined interference as per Ext.P6, which led to the Revision Petition filed before the first respondent. It was observed by the 1st respondent that, as per the directions given by the Government, the agreement ought to have been executed on a date prior to the date of construction. In the instant case, it was observed that, Ext.P3 agreement was executed only after obtaining Ext.P2 permit and hence that the impugned orders passed by the Assessing Authority as well as Appellate Authority did not call for any interference. It was further observed by the Revisional Authority that, the share contribution for the construction of building was not substantiated by the parties concerned and further that the occupancy certificate was issued in the joint names of all the three petitioners. 4. The learned counsel for the petitioners submits that, by virtue WP(C) No.15871/2004 4 of the mandate under explanation II to Section 2(e) of the Building Tax Act, the petitioners being separate owners of the properties in question, who have constructed the concerned floors ear-marked to them separately as shown in Ext.P3 agreement, utilising funds jointly procured from the Global Trust Bank, as borne by Ext.P4 should have been assessed separately. The learned counsel also placed reliance on the decision of the Division Bench of this Court in Kurian George Vs. Tahsildar [1995 (2) KLT 457]. Referring to the declaration of law by this Court in paragraph 7 of the decision in Bhattathirpad Vs. Tahsildar [1994 (1) KLT 790], it was further contended by the learned counsel that the existence of the building with the occupancy certificate in the joint names cannot be a ground to arrive at an inference that the building does not belong to the petitioners separately. 5. The learned Government Pleader appearing for the respondents submits that the factual position in the instant case was very much examined by the Assessing Authority, Appellate authority and the Revisional authority; who arrived at a clear finding that the petitioner did not produce any document to substantiate the case as now put forth in the Writ Petition, so as to establish their separate ownership over the building in question and also as to the separate contribution of funds and the extent of share involved. The learned Government Pleader also placed WP(C) No.15871/2004 5 reliance on the report dated 01.07.2004 filed by the 3rd respondent, pursuant to the interim order dated 27.05.2004 given by this Court; wherein it is stated in paragraph 3 that the different floors stand in the joint names of the petitioners. However it has also been reported in paragraph 1 of the said report that each floor has got separate electric connection and separate meter. It is further pointed out that, despite the notice issued to the petitioners to produce the relevant records (such as documents showing the ownership of the building, construction agreement, records showing the source of income and cost of construction), the petitioners did not produce such records, except the construction agreement bearing No. 188/1996 of the SRO Ernakulam and it was in the said circumstance, that the proceedings were finalized by the concerned authorities, which does not call for any interference, submits the learned Government Pleader. 6. The scope of explanation II to Section 2 (e) of the said Act had come up for consideration on many a time before this Court and it is no more in fluid state, by virtue of the authoritative pronouncement of the legal position as explained in Kurian George Vs. Tahsildar [1995 (2) KLT 457] and the subsequent decisions on the point. The only question to be looked into in the present case is whether the petitioners have established that the different floors are owned by the petitioners WP(C) No.15871/2004 6 separately and whether they have constructed the building providing necessary funds from their pockets, putting the same to the common pool. Ext.P1 Partition Deed shows that the land in question belong to the petitioners jointly. Ext.P2 permit shows that the petitioners had taken a conscious decision to construct the building jointly, for which necessary application was submitted, leading to issuance of Ext.P2 permit. Ext.P3 construction agreement shows the manner in which the necessary funds are to be arranged and as to the separate extent of rights and liabilities in connection with the transaction involved. Ext.P4 copy of the promissory note stated as executed by the petitioners in connection with the loan of Rs.1.2 crores sanctioned by the Global Trust Bank shows the source from which the petitioner jointly procured the necessary funds. Eventhough the learned Government Pleader raised serious objections as to the acceptability of Ext.P4; the same having been not signed by all the persons concerned, besides the absence of any seal, it remains to be a fact that the factual particulars as raised in the Writ Petition have not been chosen to be rebutted from the part of the respondents by filing any counter affidavit. The documents now produced before this Court (which were stated as not produced before the assessing authority) rather support the case of the petitioner, as to the extent of ownership and nature of construction. However, a definite finding has to be arrived at by WP(C) No.15871/2004 7 the assessing authority, based on the said documents, which according to the learned Government Pleader were not available before the assessing authority when Ext.P5 assessment order was passed, or even before the 2nd and 1st respondents (appellate and revisional authorities respectively) when Ext.P6 and P7 orders were passed. In any view of the matter, Ext.P5 is not at all a 'speaking order', but a sterio-typed one, with manual insertion of the figures thereunder. Passing of such orders by the assessing authorities has been deprecated by this Court on many an occasion including in Tharu Vs. Tahsildar [2003 (1) KLT 219]. Ext.P3 occupancy certificate has been issued in the joint names of the petitioners; which however cannot be taken as a ground to arrive at a finding that the buildings are owned jointly. On coming to Ext.P7 Revisional order, the reason given is something more, i.e., placing reliance on the directions given by the Government, holding that the agreement should have been executed on a prior date to the date of permit. Pointing out that Ext.P3 agreement for construction was executed after Ext.P2 permit obtained in 1995 cannot be a valid reason at all. To put it short, the respondents were improvising the case from the stage of 'non speaking' order, to the appellate and revisional orders, offering a new grounds and explanations; which however are not sustainable on merits. What is to be looked into is the clear mandate under the statutory WP(C) No.15871/2004 8 prescription, i.e., Explanation II to Section 2 (e) of the Act. The respondents/statutory authorities are not bound by the Government circulars issued in this regard, made as clear in the decision reported in Prabhakaran Vs. Sulaikabi [2007 (2) KLT 103]. 7. This Court finds it fit and proper to have the matter re considered by the assessing authority, taking note of the observations made hereinbefore. Accordingly, Ext.P5, P6 and P7 are set aside and the 3rd respondent is directed to reconsider the matter with opportunity to the petitioners to substantiate their case by producing all the necessary documents including Exts.P1 to P4 produced before this Court. The matter shall be finalized as above, after hearing the petitioners, as expeditiously as possible, at any rate, within three months from the date of receipt of a copy of this judgment. The Writ Petition is disposed of accordingly P. R. RAMACHANDRA MENON JUDGE dnc