1 WP5212.10 Ash IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.5212 OF 2010 Ispat Industries Ltd. & Another. .. Petitioners Vs Group Gram Panchayat, Karav, at Karav, Taluka Pen, Dist. Raigad & Others. .. Respondents ­­ Shri P.K. Dhakephalkar, Senior Advocate, with Ms Manorama Mohanty i/by S.K. Srivastav & Co. for the Petitioners. Shri S.S. Patwardhan for Respondent Nos.1 to 3. Shri C.G. Gavanekar for Respondent Nos.4 and 5. Shri R.M. Patne, AGP for Respondent No.6. ­­ CORAM : A.S.OKA, J. DATE : 17TH SEPTEMBER, 2010 P.C: Heard learned Senior Counsel appearing for the Petitioners. Heard learned counsel appearing for the 1st to 3rd Respondents, the learned counsel for the 4th and the 5th Respondents and the learned AGP for Respondent No.6. 2. With a view to appreciate the submissions made by the learned counsel appearing for the parties, it will be necessary to briefly advert to the controversy involved in the Petition. A notice of demand was issued by the 1st Respondent on 16th March, 2009 to the Petitioners. By the said notice, a demand was made for balance house tax amount of Rs. 2,94,95,033/­ payable towards the years 2000­2001 to 2009­2010. Being 2 WP5212.10 aggrieved by the said demand, the 1st Petitioner preferred an appeal under Sub­section (5) of Section 124 of the Bombay Village Panchayat Act, 1968 ( hereinafter referred to as “the said Act” ) before the Panchayat Samiti. In the appeal, a contention raised by the Petitioners was that there were agreements executed by and between the 1st Petitioner and the 1st Respondent for the payment of lump sum contribution in lieu of taxes in accordance with the provisions of the Maharashtra Village Panchayats ( Payment of Lump Sum Contribution by Factories In Lieu of Taxes ) Rules, 1961 ( hereinafter referred to as “the said Rules ”). It was contended that the agreements were for the years 2000­2001 till 2006­2007 and, therefore, a demand could not have been made for the said period exceeding the amounts mentioned in the agreements. 3. The Panchayat Samiti heard and decided the appeal in the meeting held on 20th June, 2009. The Panchayat Samiti held that the agreements were executed for payment of lump sum amounts for the years 2000­2001 to 2009­2010 without obtaining necessary permission and the provisions of the said Rules have not been followed. Therefore, while disposing of the appeal, a direction was issued to the 1st Respondent to comply with the requirement of making assessment of the property from the years 2000­2001 to 2009­2010 and to recover 100% taxes. Further the appeal was preferred by the Petitioners before the Zilla Parishad. The appeal was dismissed by an order dated 9th June, 2010. 4. The challenge in this Writ Petition is to the order dated 9th 3 WP5212.10 June, 2010. A prayer is made for issue of a writ restraining the 1st to 3rd Respondents from taking action under Section 129(4) of the Bombay Village Panchayat Act, 1958 and action in pursuance of the writ/notice dated 31st March, 2009 issued under Section 129(4) of the said Act. 5. Learned Senior Counsel appearing for the Petitioners invited attention of the Court to the relevant provisions of the said Rules . He pointed out that even the order passed by the Panchayat Samiti makes a reference to the agreements executed by the 1st Respondent under the said Rules. He submitted that the default is on the part of the 1st Respondent. He submitted that within one month from the date of execution of the agreements, the 1st Respondent ought to have submitted the said agreements to the Chief Executive Officer. He submitted that after having executed the agreement, the 1st Respondent did not perform its duties under the Rules and now the 1st Respondent cannot act contrary to the agreements and claim 100% recovery from the 1st Petitioner. He submitted that the impugned orders are illegal inasmuch as binding agreements have not been taken into consideration. In any event, he submitted that the 1st Respondent is trying to recover house taxes without following the procedure under the said Act and the said Rules and without issuing bills. The submission is that the 1st Respondent cannot take advantage of its own wrong of not complying the said Rules . 6. Learned counsel appearing for the 1st Respondent has 4 WP5212.10 tendered an affidavit dated 6th September, 2010 of its Gram Sevak. In the said affidavit, it is stated that in terms of an order dated 4th June, 2010 passed by the Panchayat Samiti, the 1st Respondent has made compliance of the deficiencies and now the 1st Respondent will issue necessary bills. There is a further affidavit dated 9th September, 2010 filed by the Gram Sevak clarifying the position by contending that earlier affidavit also refers to the year 2009­2010 and fresh a bill for the said year will be issued by the 1st Respondent. The learned counsel submitted that even the 1st Petitioner could have taken benefits under the said Rules. He submitted that the fact remains that there is no valid sanction for the agreements relied upon by the 1st Respondent, and therefore, the said agreements are not enforceable. The learned counsel appearing for the Panchayat Samiti and Zilla Parishad have supported the impugned orders. 7. I have considered the submissions. Execution of the agreements under the said Rules is not in dispute. Under Rule 3 of the said Rules , an occupier of a factory desiring to arrive at an agreement has to make an application to the Village Panchayat. The said application has to be considered by the Village Panchayat within the time specified. Rule 5 of the said Rules reads thus: ­ “5. Execution of agreement between panchayat and occupier and its submission to [Chief Executive Officer].­­ Where the panchayat agrees to accept the lump sum amount proposed by the occupier under clause (d) of Rule 3, an agreement in Form ‘A’ appended to these rules shall be executed between the panchayat and the occupier and the panchayat shall [ submit to the Chief Executive Officer such agreement within one month from 5 WP5212.10 the date of its execution ] along with the following documents that is to say:­ (a) the application submitted by the occupier. (b) the resolution passed by the panchayat. After receiving the agreement , the Chief Executive Officer is required to forward the same with the remarks of the Standing Committee of the Zilla Parishad to the Commissioner who is required to submit the same with his comments to the State Government for its sanction. 8. Rules 8 and 9 of the said Rules of 1961 are also relevant. They read thus:­ “8. Duration of validity of agreement. ­­ The agreement shall be effective from the financial year in which it has been entered into and shall be valid for a period of three years and may, with the sanction of the State Government, be renewed for a further period not exceeding three years : Provided that, if during the period the agreement is effective, the panchayat enhances the rate of any taxes or imposes any new taxes or if the occupier constructs a new building in his premises or makes material alterations in any existing building, the agreement shall be subject to revision with the like sanction of the State Government. 9. Manner of referring dispute in reaching agreement. ­­ The event of failure on the part of a panchayat and the occupier to arrive at an agreement, the matter shall be referred either by the panchayat or the occupier to the State Government through the Chief Executive Officer concerned, who shall submit the same after obtaining the views of the Standing Committee of the Zilla Parishad to the State Government for decision through the Commissioner with all the necessary documents.” 6 WP5212.10 9. Under Rule 9 of the said Rules, in the event, there is a failure on the part of a Panchayat and the occupier to arrive at an agreement, the matter can be referred to at the instance of both of them to the State Government for its decision. Rule 10 again indicates that an agreement in terms of the provisions of the said Rules requires sanction of the State Government. Rule 10 also contemplates refusal of sanction by the State Government. Thus the agreements become enforceable only on sanction by the State Government. The fact remains that there is no sanction to the agreements relied upon by the 1st Respondent. If according to the 1st Petitioner, the 1st Respondent has not performed its obligation under the said Rules of submitting the agreements for sanction , it is for the Petitioner to take appropriate legal action in that behalf. As of today, it is not necessary to consider the effect of the alleged default on the part of the 1st Respondent as the fact remains that there is no sanction to the agreements and, therefore, as of today, the same are not enforceable. However, it is for the Petitioner to take appropriate steps in that behalf. 10. In absence of the agreements having been sanctioned, it is very difficult to find fault with the order of Panchayat Samiti. The effect of the order of Panchayat Samiti is that the 1st Respondent is required to assess the property for payment of taxes in accordance with the law and thereafter to issue a demand in the form of bills in accordance with the law. Therefore, it is not possible to find fault with the said order. It is obvious that unless the bills are issued and served to the Petitioners, no recovery proceedings 7 WP5212.10 can be initiated by the 1st Respondent for recovery of taxes for the years 2000­2001 to 2009­2010. Therefore, there is no basis for the apprehension that without issuing the bills, steps will be taken for recovery by the 1st Respondent. The statements made by the 1st Respondent in the affidavits dated 6th September, 2010 and 9th September, 2010 are accepted. Hence, it is obvious that now the liability of the Petitioners to pay property taxes will have to be determined by the 1st Respondent in accordance with law. After the bills are issued, if the Petitioners are aggrieved, a remedy of preferring an appeal under the Act is available to the Petitioners. 11. The Petitioners had furnished bank guarantee in terms of the Order dated 23rd November, 2009 passed by this Court in Writ Petition No. 9782 of 2009. The bank guarantee was to remain valid pending the appeal before the Zilla Parishad. Now the appeal has been disposed of and therefore, it will be open to the Petitioners to cancel the bank guarantee and it is not necessary to keep the said bank guarantee alive. 12. It is clarified that disposal of this Petition will not preclude the Petitioners from taking appropriate steps on the basis of the agreements entered into in the purported exercise of power under the said Rules. 13. Subject to what is observed above, the Petition is disposed of by passing the following order :­ 8 WP5212.10 (a) The impugned orders dated 4th June, 2009 and 9th June, 2010 are hereby confirmed. (b) the statements made in the affidavits dated 6th September, 2010 and 9th September, 2010 are accepted. In view of the statements made, no recovery of taxes can be made by the 1st Respondent from the Petitioners for the years 2000­2001 to 2009­2010 without serving bills. (c ) As and when the bills are issued by the 1st Respondent for the aforesaid period, it will be open for the Petitioners to adopt appropriate remedy under the said Act for challenging the demand. (d) As pointed out earlier, the bank guarantee stands discharged and it is not necessary for the Petitioners to keep the bank guarantee alive. (e) There will be no orders as to costs. (A.S.OKA,J)