1 ao.457.03 with wp.7568.02.doc ndm IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION APPEAL FROM ORDER NO. 457 OF 2003 Grampanchayat, Malkapur and another. ... Appellants Versus Krishna Charitable Trust and others. ... Respondents WITH WRIT PETITION NO. 7568 OF 2002 Krishna Charitable Trust and others. ... Petitioners Versus Grampanchayat, Malkapur and others. ... Respondents -------- Mr. U.R.Mankapure for the Appellants and for the Respondent No.1 and 4 in Writ Petition. Mr. R.V.Govilkar for the Respondent Nos.1 to 13 in Appeal from Order and for the Petitioners in Writ Petition. -------- CORAM : A.S.OKA, J. DATE ON WHICH SUBMISSIONS ARE HEARD : 3 rd May, 2011. DATE ON WHICH JUDGMENT IS PRONOUNCED : 6 th June, 2011. JUDGMENT : 1 The Appeal from Order and the Writ Petition were 2 ao.457.03 with wp.7568.02.doc ordered to be heard together by this Court on 7 th March, 2005 as the same arise out of the same suit. On the oral prayer made by the learned counsel appearing for the parties, order of dismissal passed on 2 nd May, 2011 is set aside and both the matters are restored for final hearing. 2 For the sake of convenience, the parties are hereinafter referred to with reference to their status before the trial Court. The Plaintiffs are the trustees of a Public Charitable Trust registered under the Bombay Public Trusts Act, 1950. They have filed the suit on behalf of the Public Charitable Trust. The Defendant No.1 is the village panchayat of Malkapur, which is duly established under the Bombay Village Panchayats Act, 1958 (hereinafter referred to as “the said Act”). The Defendant No.2 is the Zilla Parishad of Satara, which is duly established under the Maharashtra Zilla Parishads and Panchayat Samitis Act, 1961. According to the case of the Plaintiffs, they are rendering medical services and are running a medical 3 ao.457.03 with wp.7568.02.doc college, a nursing school and a hospital. The hospital has 700 beds. According to the case of the Plaintiffs, no property taxes are leviable on their lands and buildings as the Plaintiffs being a public charitable trust running hospital and educational institutions, are entitled to exemption. However, the Defendant No.1 claimed that only the building used for hospital will be exempted from the payment of taxes. It is stated that on 10 th March, 1990, 4 th May, 1993 and 2 nd July, 1996 agreements were executed by and between the Plaintiffs and the Defendant No.1 – village panchayat by which lumpsum contribution towards taxes was fixed in accordance with Section 125 of the Village Panchayats Act, 1958 (hereinafter referred to as “the said Act”). Under the said three agreements, lumpsum contribution towards taxes payable by the Plaintiffs for the period covered by the said three agreements was fixed. The case of the Plaintiffs is that their entire property is exempted in view of Rules framed under the said Act of 1958. It is contended that notwithstanding the exemption, the Defendant No.1 – Village 4 ao.457.03 with wp.7568.02.doc Panchayat recovered a total amount of Rs.10,95,000/- from the Plaintiffs under the illegal agreements. 3 The Defendant No.1 issued bill dated 10 th October, 2000 calling upon the Plaintiffs to pay sum of Rs.15,26,029/- towards taxes. Therefore, a civil suit was filed by the Plaintiffs in the Court of Civil Judge (Senior Division) at Karad for a declaration that the aforesaid bill dated 10 th October, 2000 issued by the Defendant No.1 is void ab-initio. Various other reliefs were claimed in the suit. 4 In the said suit, the Defendant No.1 made an application at Exhibit – 23 raising an issue of jurisdiction of the Civil Court to entertain and try prayer clause (b) of the plaint, which was for declaration that the bill dated 10 th October, 2000 was illegal and void ab-initio. On 28 th December, 2001, the Defendant Nos.1 and 4 gave undertaking in writing that till the decision on the issue of jurisdiction, no steps shall be taken by them for recovery of the amount 5 ao.457.03 with wp.7568.02.doc from the Plaintiffs on the basis of the said bill. The undertaking of the Defendant Nos.1 and 4 was accepted and on the basis of the said undertaking, the application for interim injunction was disposed of. By the judgment and order dated 28 th February, 2002, the objection raised by the Defendant No.1. to the jurisdiction of the Civil Court of entertaining the prayer clause (b) of the plaint was upheld and it was held that the Civil Court had no jurisdiction to entertain and try the suit in so far as prayer clause (b) was concerned. As far as other prayers in the suit are concerned, the suit was allowed to proceed. The Writ Petition No.7568 of 2002 has been preferred by the Plaintiffs for challenging the said judgment and order. It appears that for challenging the order, the Plaintiffs had earlier filed Civil Revision Application No. 801 of 2002 in this Court, which was admitted for final hearing. This Court stayed the proceedings of the suit till the disposal of the revision application. In view of 2002 amendment to the Code of Civil Procedure, 1908, the revision application was held as not maintainable and therefore, the said 6 ao.457.03 with wp.7568.02.doc Writ Petition has been filed in which rule has been issued. 5 Rule was issued in the civil revision application on 10 th July, 2002. On 27 th July, 2002, a further bill was issued by the Defendant No.1 in respect of the year 2001-2002. In the said bill, arrears payable on the basis of the bill dated 10 th October, 2000 were also incorporated. In August, 2002, the Plaintiffs made an application in the pending suit at Exhibit – 49 for grant of injunction in respect of further demand made on 27 th July, 2002. The said application was allowed on 23 rd August, 2002 and the Defendant No. 1 was restrained from taking action of recovery of taxes from the Plaintiffs till the decision of the civil revision application. An Appeal from Order was preferred by the Defendant No.1 against the said order. By order dated 20 th March, 2003, this Court allowed the Appeal from Order and the order below Exhibit 49 was quashed and set aside. In the meanwhile, the revision application pending in this Court was disposed of as not maintainable and the aforesaid Writ 7 ao.457.03 with wp.7568.02.doc Petition was filed. On 30 th January, 2003, this Court granted interim relief in the Writ Petition staying the proceedings of the suit till the disposal of the Writ Petition. On 24 th April, 2003, an application at Exhibit-60 was filed by the Plaintiffs purporting to be an application under Rule 11 of Order XXXIX of the said Code. It was contended therein that till the issue of jurisdiction of the Civil Court to entertain the suit was decided, no steps could have been taken for the recovery of the bill amount from the Plaintiffs. It was contended in the said application that the bill/notice dated 27 th July, 2002 was issued in breach of the undertaking of the Defendant No.1 dated 20 th December, 2001 in as much as on the date of the bill, the issue of jurisdiction of the Civil Court was pending in this Court in the form of civil revision application. By the impugned order dated 3 rd May, 2003, the learned trial Judge directed the Defendant No.1 to maintain status-quo and restrained the said Defendant from collecting arrears of taxes from the Plaintiffs till the decision on the issue of jurisdiction in Writ Petition No.7568 of 2002. Appeal from 8 ao.457.03 with wp.7568.02.doc Order No. 457 of 2003 has been preferred by the Defendant Nos.1 and 4 (Grampanchayat and Sarpanch) for challenging the said order dated 3 rd May, 2003. 6 There are Civil Application Nos.1068 of 2011 and 720 of 2011 filed by the Village Panchayat in Writ Petition and Appeal from Order respectively by which it was pointed out that a new Nagar Panchayat by the name Malkapur Nagar Panchayat has been formed and therefore, the Defendant No.1 Village Panchayat is no more in existence. The prayers in the said applications are for amendment of the cause title of both the proceedings. 7 The learned counsel appearing for the Plaintiffs submitted that prayer clause (b) was for declaration that the bill was nullity and void ab-initio. The learned counsel submitted that notwithstanding the fact that under the said Act of 1958, appeals are provided under Section 124 for challenging the tax, as a declaration was claimed that the recovery was nullity, the Civil Court will have 9 ao.457.03 with wp.7568.02.doc jurisdiction to entertain the suit. Relying upon the decision of the Apex Court in the case of Dhulabhai Vs. State of M.P. and another (AIR 1969 Supreme Court 78), the learned counsel submitted that there is no express bar created to the suit under the said Act. He submitted that the jurisdiction of the Civil Court is not ousted as the declaration of nullity has been claimed. He submitted that this aspect has been completely brushed aside by the learned trial Judge and he has committed a gross error. The learned counsel appearing for Defendant Nos.1 and 4 submitted that there are two successive appeals provided under Section 124 of the said Act for challenging a demand of taxes. He, therefore, submitted that jurisdiction of the Civil Court to entertain challenge to the bill was barred by necessary implication. The learned counsel appearing for the Plaintiffs submitted that the appeals have been provided not to any judicial or quasi judicial authority, but to Panchayat Samiti and Zilla Parishad, which do not possess any legal expertise. He submitted that the said Appellate Authorities have no expertise to 10 ao.457.03 with wp.7568.02.doc decide the complicated questions involved. 8 The learned counsel appearing for Defendant Nos.1 and 4 in support of Appeal from Order pointed out that the undertaking dated 28 th December, 2001 was to be in force only till the trial Court decided the issue of jurisdiction. He pointed out that the application at Exhibit-49 was allowed by the trial Court on 23 rd August, 2002 and temporary injunction was granted restraining the Defendant Nos.1 and 4 from recovering the amount set out in notice dated 27 th July, 2002. He pointed out that by the judgment and order dated 20 th March, 2003, this Court has set aside the said order and has dismissed the application at Exhibit – 49. He submitted that notwithstanding the said order of this Court, by the impugned order passed on a subsequent application at Exhibit – 60, a similar interim relief of temporary injunction was granted. He, therefore, submitted that the impugned order subject matter of challenge in the Appeal from Order is illegal. The learned counsel appearing for the 11 ao.457.03 with wp.7568.02.doc Plaintiffs submitted that as the issue of jurisdiction is pending in this Court in the form of a Writ Petition, the trial Court by the impugned order has restrained the Defendant Nos.1 and 4 from recovering the amount which was subject matter of challenge in the suit. He submitted that the order of trial Court is equitable and no interference is called for. 9 I have given careful consideration to the submissions. The first issue to be decided is the issue of jurisdiction. The issue of jurisdiction is required to be decided on the basis of the averments made in the plaint. Prayer clause (b) of the plaint reads thus: “(b) It be declared that, the Bill and it’s accompaniments dated 10-10-2000 are illegal and void ab-initio, and not enforceable at law being nullity.” 10 Perusal of the averments made in the suit show that it is alleged that the demand made by bill dated 10 th October, 2000 is illegal and void ab-initio. It is contended that the demand was 12 ao.457.03 with wp.7568.02.doc nullity. While passing the the order on the issue of jurisdiction, the learned trial Judge has considered the decision of the Apex Court in the case of Dhulabhai (supra). However, the learned trial Judge has not considered the averments in the suit and the prayer made that the bill was nullity and was void ab-initio. In the case of Dhruv Green Field Vs. Hukam Singh and others [(2002) 6 SCC 416), the Apex Court held that where the jurisdiction of a Civil Court is barred expressly or impliedly, the Court would nonetheless retain its jurisdiction to entertain and adjudicate the suit provided the order complained of is nullity. The specific case made out in the plaint is that under the Rules, the Plaintiffs are entitled to exemption from payment of property taxes and hence, the action of demanding of arrears was nullity. Therefore, the impugned order subject matter of challenge in the Writ Petition will have to be quashed and set aside. Whether the Plaintiffs are entitled to declaration of nullity or not is a matter to be decided by the trial Court on the basis of the evidence on record and all contentions of parties on that behalf are kept 13 ao.457.03 with wp.7568.02.doc open. 11 As far as the Appeal from Order is concerned, on plain reading of the undertaking given by the Defendant Nos.1 and 4 to the trial Court on 20 th December, 2001 it is obvious that the undertaking was to remain in force till the trial Court decided the issue of jurisdiction. As stated earlier, the trial Court decided the issue of jurisdiction by order dated 28 th February, 2002. It must be mentioned here that an application at Exhibit-49 was made by the Plaintiffs on 12 th August, 2002. The prayer made in the said application was as under: “By their High Court’s order dt.10.10.2002 is kept herewith. The order regarding prayer clause 17(b) is not sustained but is modified in toto by the ad-interim order dt. 10.7.2002, hence, this Application U/sec.144 r/w. 151 of C.P.C. is obligatory to restore the position as before 28.2.2002. And by virtue of undertaking an appropriate order are required to be passed. It is therefore, prayed that, until the disposal and decision of this Application. The plaintiffs are entitled for protective ad-interim order in term of undertaking dated 20.12.2001 and accepted by this court 10.1.2002 be 14 ao.457.03 with wp.7568.02.doc passed and execution of notice dt.27.7.2002 be stayed. Status quo may be granted.” The trial Court allowed the said application by order dated 23 rd August, 2002. Clause (2) of the operative part of the said order reads thus: “2. The Defendant No.1 Gran Panchayat, Malkapur, Karad is ordered to maintain status quo regarding recovery of the tax from the Plaintiffs Charitable Trust shown in the notice dated 27.10.2002 in the sense that it should refrain from making recovery of the amount under above notice from the Plaintiffs trust till final decision of the Hon’ble High Court of Judicature at Bombay which is expectedly going to be passed in the Civil Revision Application No.801/2002.” The said order was challenged in an Appeal from Order in this Court. By order dated 20 th March, 2003, the said order was set aside by this Court. In the judgment and order of this Court, it is observed thus: “This court therefore, is of the clear opinion that the learned Judge of the trial court did not appreciate this factual position and appeared to have been not aware that when this court had stayed the proceedings before the trial Court, it was not open for the learned Judge of the trial court to have proceeded with that matter in any 15 ao.457.03 with wp.7568.02.doc manner as he has done in the present case. In the opinion of this court therefore, the order passed by the learned Judge of the trial court at Exhibit-49 deserves to be set aside for this reason only. However, this court makes it clear that this court has intentionally refrained itself from dealing with the merits of the matter as it is yet open for the respondent to move an appropriate application before the High Court in Writ Petition seeking that very same relief which otherwise, the respondent sought for through Exhibit-49 before the learned Judge of the trial Court.” 12 The application at Exhibit-60 on which impugned order has been passed purports to be under Rule 11 of Order XXXIX of the said Code. Under Rule 11 of Order XXXIX of the said Code, the Court has power to strike out a defence of the Defendant, who has committed a willful breach of the undertaking. The prayer made in the said application reads thus: “In order to avoid penal consequences and other complications like striking of Defendants etc., the Plaintiffs humbly pray under Rule 1 and 2 of Order 39 r/w. Rule 11 and u/s.151 and any other rule under C.P.C. appropriate preventive orders directing the Defendants, till the final decision in respect of jurisdiction, from committing any breach in any manner whatsoever of the undertaking given on 20.12.2001 at Exh.35 and accepted by this Hon. Court on 10.01.2002.” 16 ao.457.03 with wp.7568.02.doc The operative part of the impugned order reads thus: “O R D E R I hereby issued order of status-quo directing Defendants Grampanchayat Malkapur to refrain itself from collecting any recovery of arrears or dues from Plaintiffs Krishna Charitable Trust as apprehended in this Application Exh.60 till decision of issue of jurisdiction in Writ Petition No.7568/2002 pending before Hon’ble High Court of Judicature at Bombay. No order as to costs.” 13 Firstly, it must be noted that though the application was styled as one under Rule 11 of Order XXXIX of the said Code, no relief which could be granted under the said Rule 11 was specifically prayed for therein. Reliance was placed by the Plaintiffs on undertaking of the Defendant Nos.1 and 4, which was filed during the pendency of the decision of the trial Court on the issue of jurisdiction. When the application at Exhibit-49 for injunction was filed, a civil revision application challenging the order on the issue of jurisdiction was pending in this Court. When the Appeal from Order 17 ao.457.03 with wp.7568.02.doc against the said order was taken up for hearing, the present Writ Petition was pending. Therefore, while setting aside the order passed below Exhibit-49, this Court observed that the Plaintiffs can always move an appropriate application in the Writ Petition claiming the same relief. Perusal of the prayer made in the Writ Petition shows that an injunction has been claimed by way of interim relief against the Defendant Nos.1 and 4 from recovering arrears as per the bill dated 10 th October, 2000. 14 On the face of the order of this Court dated 20 th March, 2003 passed by this Court, no temporary injunction could have been granted by the trial Court and in fact, this Court observed that the Plaintiffs must take out appropriate proceedings in the Writ Petition. No such proceedings was taken out in the Writ Petition. 15 The impugned order shows that the learned trial Judge was impressed by the fact that the Writ Petition challenging the 18 ao.457.03 with wp.7568.02.doc order on the issue of jurisdiction was pending in this Court. The earlier order passed below Exhibit-49 was on the ground of pendency of the revision application in this Court. The revision application was filed by the Plaintiffs challenging the same order on the issue of jurisdiction. Thus, between 20 th March, 2003 and the date of filing of the application at Exhibit-60, there was no change in the situation. 16 In earlier Appeal from Order No. 877 of 2002, this Court while setting aside the order passed below Exhibit-49, observed that the Plaintiffs will have to move appropriate application for interim relief in the Writ Petition. While passing the impugned order, the learned trial Judge has observed thus: “It is material to note that proceeding before this Court is not stayed by Hon’ble High Court of Judicature at Bombay in Writ Petition moreover it is needless to say that matter was kept for hearing by Hon’ble High Court of Judicature at Bombay in Writ Petition immediately after summer vacation and it is incumbent on Defendants to refrain themselves from enforcing the disputed recovery against the Plaintiffs during the period of summer vacation and 19 ao.457.03 with wp.7568.02.doc therefore, inhibitions are warranted with this discussion I pass following order” (Underline supplied) 17 In the light of the earlier order dated 20 th March, 2003 passed in Appeal from Order No.877 of 2002, an order of temporary injunction could not have been passed on the application at Exhibit-60. It is also important to note that the application at Exhibit-60 was not for grant of injunction, but it was essentially an application invoking Rule 11 of Order XXXIX of the said Code by alleging that the Defendant Nos.1 and 4 have committed a breach of the undertaking given by them before the trial Court. 18 In the circumstances, the order impugned in the Appeal from Order is patently illegal and will have to be quashed and set aside. In any event, the impugned order will work itself out as the same was to operate only till the disposal of the Writ Petition. However, to enable the Plaintiffs to take appropriate steps, the 20 ao.457.03 with wp.7568.02.doc protection granted under the impugned order will have to be extended for a reasonable period. 19 Hence, I pass the following order: i. Rule issued in Writ Petition No.7568 of 2002 is made absolute in terms of prayer clause (b) with no order as to costs ; ii. Appeal from Order No.457 of 2003 is allowed and the impugned order dated 3 rd May, 2003 is quashed and set aside and the application at Exhibit-60 is hereby dismissed ; iii. To enable the Plaintiffs to take appropriate steps, for a period of three months from today, the Defendant Nos.1 and 4 are restrained from taking any further steps for recovery of the amount payable under the bill dated 10 th October, 2000 ; iv. There will be no order as to costs in the Appeal from Order ; v. All contentions of the parties on merits of the 21 ao.457.03 with wp.7568.02.doc suit are kept open and the trial Court is directed to make an endeavour to dispose of the suit expeditiously. [ A.S.OKA, J ]