RSA No.3305 of 2005 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA No.3305 of 2005 (O&M) Date of Decision: 20.11.2009 Amrjit Singh & Anr. ....Appellants Versus Municipal Corporation Ludhiana ....Respondent CORAM: HON'BLE MRS. JUSTICE SABINA Present: Mr. A.K.Kalsy Advocate for the appellants. Mr.R.S.Bajaj, Advocate for the respondent. * * * Sabina,J.(Oral) Plaintiffs filed the suit for declaration and permanent injunction which was partly decreed and partly dismissed by the Civil Judge(Sr.Divn.) Ludhiana, vide judgment and decree dated 14.02.2002. Aggrieved by the same, defendants preferred an appeal and the same was accepted by the learned Additional District Judge, Ludhiana vide judgment and decree dated 22.04.2005. Hence, the present appeal by the plaintiffs. Brief facts of the case, as noticed by the lower Appellate Court in paras 2 to 4 of its judgment read as under:- “2. The facts, in brief, are that the respondent plaintiff Harbans Kaur filed a suit for declaration to the effect that the order dated 11.3.94 for the recovery of house tax arrears amounting to Rs.35,717/- is illegal, null and void and for RSA No.3305 of 2005 (O&M) 2 permanent injunction restraining the defendant from recovering the same and for mandatory injunction to adjust the amount of Rs.12,822/- towards house tax arrears for the year 1990-91, 91-92, 92-93 and 93-94 as the defendant could not under law adjust the said amount against the assessment year 1968-69 being beyond limitation. 3. It was submitted by the plaintiff that the plaintiff is owner of property bearing Unit No.B-XVIII/47-48, Mintgumery Chowk, Model Town, Ludhiana within the muncipal limits of Municipal Corporation, Ludhiana. Defendant served a notice dated 11.3.94 threatening to recover the arrears of house tax amounting to Rs.35,717/- by invoking provisions of Section 138(2) of the Punjab Municipal Corporation Act,1976(for short the Act) by attachment of property bearing unit no.B-XVIII/47-48 which relates to the year 1980-81, 83-84, 84-85, 85-86, 86-87, 87- 88, 88-89 to 1991-92. The whole procedure for finalising the assessment and levying the house tax followed by Municipal Corporation is illegal, null and void and for this reason the assessment and other proceedings for the recovery of house tax should be declared as ultra vires and quashed on the grounds as mentioned in para no.3 of the plaintiff. No notice was served upon the plaintiff for inviting the objections against proposed tax and house tax cannot be imposed without knowledge and at the back of a citizen. The RSA No.3305 of 2005 (O&M) 3 assessment lists for the year 1968-69 till 1993-94 have not been completed by the defendant before the relevant years of assessment commenced as laid down under the Act. The corporation has arbitrarily imposed house tax. The plaintiff is an illiterate lady and she has been paying the house tax on demand since 24.7.90 and the defendant has been issuing the receipt. The house tax for the year 1968-69 to 1974-75 recovered on 24.7.90 against receipts number 00998/0037 should have been accounted for the house tax of 1990-91 and the said amount was not legally recoverable. The recovery made vide receipt No.3614/22 dated 19.8.91 amounting Rs.1000/- is also not recoverable. The amount of Rs.2000/- in the year 1972-73 to 1976-76 vide receipt No.4331/17 and amount of Rs.2777-80 ps was not legally recoverable and as such, the same was beyond limitation and under law irrecoverable. The amount of Rs.12,822/- is liable to be refunded or adjusted for the year 1993-94 till 1990-91. The order dated 11.3.94 is illegal, ultra vires, void and arbitrary. 4. On notice, the defendant filed the written statement admitting the ownership of the property of the plaintiff. It was also admitted that a notice U/s 138(2) of the Act was served upon the plaintiff. The defendant is well within its right to recover the house tax from the plaintiff which is a charge on the property. The assessment was finalised after service of due notice and the plaintiff was also represented RSA No.3305 of 2005 (O&M) 4 and was heard in response thereto. The assessment made is legal and valid. The defendant is well within its rights to recover arrears of house tax for the last 12 years which is charge on the property. The property is being assessed for the last about 30 years and the last assessment was finalised in the year 1986-87. The defendant served notice u/s 103-D of the Act on the plaintiff and the assessment was finalised wherein the rental value was fixed at Rs.26,820/-. The objections were duly considered and decided according to the provisions of law. The house tax is imposed in accordance with the provisions of the Act and the plaintiff is liable to pay the same. Plaintiff cannot be allowed to gain for her own wrongs. The principle of law is that the time barred debt does not extinguish though the legal remedy is barred. In case a time barred due is paid then it cannot be said plaintiff has paid the amount on different occasions vide proper receipt. Other allegations have been denied and prayed for dismissal of the suit. On the pleadings of the parties, the following issues were framed by the trial court:- 1. Whether the civil court has no jurisdiction on to try the suit?OPD 2. Whether the demand is illegal and inoperative against the rights of the plaintiff?OPP. 3. Whether the suit is liable to be dismissed for want of service of notice U/s 396 of the RSA No.3305 of 2005 (O&M) 5 M.C.Act?OPD. 4.Whether the plaintiff is entitled to the declaration and injunction?OPP. 5. Relief.” The substantial question of law that arises in this case is as to whether the Municipal Corporation was entitled to seek recovery of time barred claim. After hearing the learned counsel for the parties, I am opinion of that the instant appeal deserves to be allowed. Plaintiffs had challenged the order dated 11.3.1994 for recovery of arrears of house tax. It is a settled preposition of law that where there is any violation of any of the provision of the The Punjab Municipal Corporation Act,1976(hereinafter referred to as Act) the jurisdiction of the civil court is not barred. Section 137 of the Act is read as under:- “Consequence of failure to pay tax within thirty days- If the person liable for the payment of any tax does not within thirty days from the service of the notice of demand under sub-section (2) or sub-section (4) of Section 135, or under Section 136, pay the same, the tax together with the costs of recovery shall be recoverable in the manner provided hereinafter.” The Municipal Corporation had issued notice under Section 137 of the Act regarding the period which was time barred and hence had violated the provision of Section 382 of the Act. RSA No.3305 of 2005 (O&M) 6 Section 382 of the Act is read as under:- “Mode of recovery of certain dues- In any case not expressly provided for in this Act or any bye-law made thereunder any sum due to the Corporation on account of any charges, costs, expenses, fees, rates or rent or on any other account under this Act or any such bye-law may be recoverable from any person from whom such sum is due as an arrear of tax under this Act. Provided that no proceedings for the recovery of any sum under this section shall be commenced after the expiry of three years from the date on which such sum becomes due." Ex.PG is the notice under Section 137 of the Act under challenge. A perusal of the same reveals that demand of Rs.35,712/- was made as arrears of house tax from the year 1983-84 to the year 1993-94. The defendants had failed to establish that any demand notice had been issued prior to the issuance of notice under Section 137 of the Act or that the plaintiffs had failed to make the payment of the said demand. There is nothing on record to suggest that the bill had been issued or that the arrears of house tax had become a charge on the property. In these circumstances, the limitation could not be said to have been enlarged for making the recovery within a period of 12 years. In Municipal Committee Bhatinda Vs. Jaswant Rai and others The Punjab Law Report 402, it has been held as under "21. In our considered view as well as from the law laid RSA No.3305 of 2005 (O&M) 7 down in the precedents cited above, with which we fully agree that limitation in case of recovery of a tax other than the tax in respect of any property of the owners, will be three years as provided by Article 113 of the Limitation Act. It was not refuted that there isno specifc provision under the Limitation Act providing limitation for recovery of the taxes. It was not disputed n the course of arguments and otherwise also as it cannot be disputed that in he absence of any specific provision under the Limitation Act or the statute, it wuld be Part X of the Schedule to the Limitation Act which provides limitation for the suits for which there is no prescribed period to govern the limitation. Undisputably, the limitation governing the arrears of tax other than the tax in the property would be governed by Article 113 of the Limitation Act, 1963, wherein a limitation of three years is provided for a suit to recover the amout of tax from the date the right to sue accrues. There is no gainsaying that right to sue with respect to tax accrued on the date the tax was imposed in terms of Section 80 and 81 of the Municipal Act. It is undisputed that in case the Municipal Committee decides to make the recovery under Sections 80 and 81, the period of limitation would be three years. The period of limitation only gets enlarged when the arrears of tax with respect to the property on account of their non-payment become a charge on the property. It is in the latter case only that it would be governed RSA No.3305 of 2005 (O&M) 8 by Article 62 of the Limitation Act which provides limitation of twelve years for the recovery of the amount due which is a charge on the property. Out view finds support from a Full Bence decision of the Delhi High Court reported in Municipal Corporation of Delhi Vs. M/s Palace Cinea. We fully agree with the reasoning adopted therein and nothing more an be added. 22. There is no controversy that the appellant issued a notice under Sections 80 and 81 of the Punjab Municipal Act, 1911 with respect to the tax due for a period beyond three years. The recovery notice of arrears beyond three years without any charge having been created in accordance with methodology provided by Municipal Act would be barred by time. 23. Thus, in our considered view the answer to the question is the period of limitation for issuance of bill for the amount as the demand notice would be three years and it is only after the respondents have failed to meet the demand that the arrears would come the arrears of tax on the propoerty and would be a charge on the property. When the arrears become a charge on the property, the limitation gets enlarged and the recovery would be made within twelve years. Similarly for recovering any taxes which may include even the tax from movable property would be three years from the time fell due as the limitation would be governed by Article 113 of the RSA No.3305 of 2005 (O&M) 9 Limitation Act." In the facts and circumstances of the present case, the demand of arrears of house tax made prior to the year 1991-92 was time barred. The learned Additional District Judge erred in holding that the jurisdiction of the civil court was barred or that the limitation for recovery of the house tax was 12 years. The learned trial court had rightly held that the recovery of house tax prior to the year 1991-92 was time barred. The substantial question of law stand answered accordingly. Hence, this appeal is allowed and the impugned judgment and decree of the learned Addl. District Judge are set aside and consequently, the judgment and decree passed by the trial court are upheld. 20th Nov.2009 (SABINA) Seema-II Judge