LPA/210/1994 1/8 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD LETTERS PATENT APPEAL No. 210 of 1994 For Approval and Signature: HONOURABLE MR.JUSTICE BHAGWATI PRASAD HONOURABLE MR.JUSTICE S.R.BRAHMBHATT ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= DCW LIMITED - Appellant Versus DHRANGADHRA MUNCIPALITY &1 & 2 - Respondents ========================================================= Appearance : MR MIHIR J. THAKORE, Senior Counsel with MS MINI M NAIR for Appellant MR HARIN P RAVAL for Respondent : 1, RULE SERVED for Respondent : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE BHAGWATI PRASAD and HONOURABLE MR.JUSTICE S.R.BRAHMBHATT Date : 25/08/2008 LPA/210/1994 2/8 JUDGMENT ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE BHAGWATI PRASAD) 1. This appeal arises out of the judgment and order dated 26th April, 1994 passed by the learned Single Judge of this Hon'ble Court in Special Civil Application No. 2633 of 1994. 2. It is the case of the appellant Company that it is a company incorporated under the Companies Act. In 1988, the company decided to undertake expansion of its factory situated at Dhangadhra and to modernize of its plants. For that purpose it imported raw materials between 1988 to 1993. On 8th February 1988, a letter was addressed by the appellant company to the Chief Executive Officer of the respondent No. 1 – Dhangadhra Municipality claiming exemption from octroi duty relying upon bye-law No.6(38) on the grounds mentioned therein. On 15th January, 1990, respondent No. 1 intimated the petitioner that a decision was taken on applicable made by the appellant claiming exemption that the appellant was not entitled to exemption as imports were made for modernization and not for expansion. It is the case of the appellant company that relevant factors have not been considered by the respondent Municipality that the imports were made not for modernization but for expansion. 3. In view of the controversy a meeting was held LPA/210/1994 3/8 JUDGMENT between the President of respondent No. 1 Municipality and its Chief Officer on one hand and President of the appellant Company on the other hand on 28th March, 1990. In the said meeting it was agreed between the parties that the appellant shall pay 50% of the octroi duty till final decision. According to the appellant even thereafter a joint meeting was held on 9th October 1992 with the Director of Municipalities which was attended by the responsible officers of the Municipality and also officers of the appellant Company and at the said meeting it was agreed between the parties that the petitioner will pay regularly on adhoc basis an amount of Rs.70,000/- per month, which is not liable for refund or adjustment against future payment of the octroi duty. It was also agreed between the parties that whenever a dispute of octroi payable on the basis of modernization and/or expansion will be decided the amount would be settled immediately and the amount payable by the appellant would be paid forthwith. Till further decision the ad-hoc payment of Rs.70,000/- will be made by the appellant from August, 1992. 4. It is further the case of the appellant that inspite of the fact that final decision was not taken and inspite of the agreement between the parties on 4th January 1992 a letter was addressed by the respondent No. 2 – LPA/210/1994 4/8 JUDGMENT Administrator of respondent No. 1 – Municipality calling upon the appellant to pay an amount of Rs.7,13,974/- octroi duty within three days from the receipt of the letter. It was followed by another letter dated 6th January, 1994 by which the appellant was called upon to pay an amount of Rs.40,33,238/-. It appears that the Administrator of Municipality cancelled the agreement dated 9th October, 1992 by a decision dated 8th February 1994 in view of the fact that the application made by the appellant company to the Government has not been disposed of since more than one year and if the Municipality will not be able to recover octroi from the appellant company day to day administration of the Municipality will suffer and there will be financial difficulties to the respondent Municipality. It will have to pay bills of the Gujarat Electricity Board as well as other bills of the Government and hence it was decided that huge amount of more than Rs.48 lacs due and payable by the petitioner company cannot be allowed to be continued. The matter was discussed with the District Collector, Surendranagar on 2nd February, 1994. It was therefore decided to cancel the agreement arrived at between the parties on 9th October, 1992. 5. Pursuant to the said decision, a notice came to be issued on 14th February 1994 calling upon the LPA/210/1994 5/8 JUDGMENT Company to pay an amount of Rs.43 lacs within 10 days from the receipt of the notice, failing which appropriate proceedings would be taken against the appellant company. 6. Being aggrieved and dissatisfied by the decision dated 8th February, 1994 and consequent notice dated 14th February, 1994, the appellant filed the Special Civil Application No. 2633 of 1994. The learned Single Judge of this Hon'ble Court, after hearing both the parties and after considering all the relevant documents, dismissed the Special Civil Application No. 2633 of 1994 vide order dated 26th April, 1994 on the ground that (i) there are disputed questions of facts – the reliefs prayed for are based upon investigation and adjudication of disputed questions of facts, which requires evidence to be led by the parties, appreciation of materials and findings recorded by the competent authority therefore it cannot be decided in exercise of the power under Article 226 of the Constitution of India (ii) the question of modernization and/or expansion also requires expert evidence and (iii) as per the affidavit-in-reply, the municipality is in financial crisis and it is not in a position to pay its dues to other public authorities and therefore, this Court in exercise of the extra ordinary discretionary and equitable jurisdiction will not prevent that authority from recovering dues to which it is LPA/210/1994 6/8 JUDGMENT otherwise entitled to collect. 7. Being aggrieved and dissatisfied by the above order dated 26th April, 1994 passed in Special Civil Application No. 2633 of 1994, appellant Company filed the present Letters Patent Appeal No. 210 of 1994 and also filed Civil Application No. 1259 of 1994 for stay of the order. This Hon'ble Court (Coram: B.N.Kirpal, CJ & R.K. Abhichandani, J.) vide order dated 5th May, 1994 stayed the realization of the demand till the next date of hearing subject to appellant Company paying a sum of Rs,5,00,000/- to the municipality within two weeks. But as per the statement made by the advocate for appellant company that today they have paid a further sum of Rs.12,00,000/-, the Court stayed any further realization. 8. Being aggrieved and dissatisfied by the above order dated 5th May, 1994, the Municipality filed Civil Appeal No. 4416 of 1994 before the Hon'ble Supreme Court of India. The Hon'ble Supreme Court of India disposed of the Civil Appeal with the following directions: “As on today, the outstanding demand after giving credit to the amounts already paid and excluding the interest component, is stated to be Rs.24 lacs. The respondent shall pay a sum of Rs.12 lacs within a week from today. They shall LPA/210/1994 7/8 JUDGMENT also furnish a bank guarantee for the balance of Rs.12 lacs. Immediately upon payment of Rs.12 lacs, the attachment effected shall be lifted and coercive processes dropped. The bank guarantee shall be furnished within two weeks from today. This order shall subsist during the pendency of the appeal before the High Court. We request the High Court to dispose of the appeal as expeditiously as possible. The payment now directed shall be subject to the final result of the appeal. The payment so far made of now ordered do not reckon the interest levied. If the respondent fails in the appeal, it shall be liable to and do undertake to pay the interest as demanded. With these observations, the civil appeal is disposed of.” 9. We have heard Learned Senior Counsel Shri Mihir J. Thakore with Mrs. Mini M. Nair, advocate for the appellant and Shri Harin P. Raval, advocate for respondent Municipality. We are in complete agreement with the order passed by the learned Single Judge of this Hon'ble Court dated 26th April, 1994. A decision regarding expansion and/or modernization can be decided on the basis LPA/210/1994 8/8 JUDGMENT of evidence to be adduced by the appellant which cannot ordinarily be permitted under Article 226 of the Constitution of India. 10.In view of the above, we do not find any substance in any of the contentions of the learned counsel for the appellant and the appeal is required to be dismissed. However, we are of the opinion that interest charged by the Municipality of Rs.24 lacs is excessive in view of the fact that there are no provisions to charge interest, full payment of octroi was made by the appellant in 1994, it is an old matter, levy of octroi duty is abolished now. In view of the above, we are setting aside the claim to the extent of Rs.12 lacs. Out of the impugned amount of Rs.24 lacs. The amount so reduced by us will be deducted from the final amount. Rest will be paid by the appellant at the earliest. With aforesaid directions, petition is disposed of. There will be no order as to costs. [BHAGWATI PRASAD, J.] [S.R.BRAHMBHATT, J.] pallav