SA/31/1982 1/24 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SECOND APPEAL NO. 31 OF 1982 For Approval and Signature: HONOURABLE MR.JUSTICE R.H.SHUKLA ====================================== 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 ? ====================================== DHORAJI NAGARPALIKA - Appellant(s) Versus MOHANDI HADIBHAI BUDHWANI OF DHORAJI - Respondent(s) ====================================== Appearance : Mr. Mehul S. Shah for Mr. Suresh M. Shah for Appellant(s). Mr. B. P. Dalal for Respondent(s). ====================================== CORAM : HONOURABLE MR.JUSTICE R.H.SHUKLA Date : 29/02/2008 ORAL JUDGMENT 1. The present appeal has been filed by the appellant-Dhoraji Nagarpalika raising the substantial questions of law, as mentioned in SA/31/1982 2/24 JUDGMENT paragraph-5 of the memo of appeal, of which, at the time of admission, some of them were considered for admission as follows: (i) Whether the notice under Section 253 of the Gujarat Municipalities Act is required to be served before institution of the suit by the plaintiff? (ii) Whether the preparation of the assessment List and the valuation of the property of the galaxy Cinema made by the defendant is in any manner illegal, ultra vires, invalid, inoperative, null and void or without any effect? (iii) Whether the trial Court had jurisdiction to hear and try the suit? 2. The facts of the case briefly summarised are that Regular Civil Suit No.72 of 1976 was filed by the respondent-original plaintiff for challenging the assessment of tax levied by the Municipality on the basis of annual letting value on various grounds raised therein, inter alia, non- compliance of the procedure, as provided under Section 108 of the Gujarat Municipalities Act, 1963 (“the Act” for short), and that as the notice, as required under the law, was not issued, the assessment was illegal. The said suit came to be dismissed by the judgement and order dated 22nd January, 1980 by the learned Civil Judge (J.D.), Dhoraji, against which Regular Civil Appeal No.15 of 1981 came to be filed by the appellant-original plaintiff on various grounds, as contended in the SA/31/1982 3/24 JUDGMENT memo, inter alia, that the trial Court has erred in holding that the notice of the Municipality is illegal, ultra vires, null and void and also that the trial Court has erred in holding that individual notice is not mandatory and thereby has erred in appreciating the evidence and also appreciating the provisions of the Act. The said appeal came to be allowed by the learned Extra Assistant Judge, Rajkot District, Gondal vide the judgement and order dated 31st July, 1981. It is against this judgement and order that the present second appeal has been preferred by the appellant- Municipality raising the substantial questions of law as stated above. 3. Mr. Mehul S. Shah, learned Advocate for Mr. S.M. Shah, learned Advocate for the appellant, submitted that the lower Appellate Court has failed to appreciate, interpret and construe the provisions of Section 138 of the Act. He submitted that in view of the specific provisions of Section 138 of the Act, the jurisdiction of the Civil Court is barred and if the respondent was aggrieved with the assessment, further recourse could have been taken, as provided under the Act, and the civil suit would not have been maintainable unless the powers exercised were ultra vires or where the property was not liable for assessment of tax at all. Mr. Shah contended that it is not in dispute from a bare perusal of the records and proceedings that the property in question was liable for assessment of municipal tax. Therefore, the question as to whether the assessment of tax is made proper or it is excess or it is not as per the SA/31/1982 4/24 JUDGMENT procedure prescribed, can be adjudicated upon by adopting the further recourse, as provided under the Act, and not by filing the civil suit. In support of his contention, he has referred to a judgement of the Bombay High Court in the case of Gopal Mills Co. Ltd. vs. The Broach Borough Municipality, reported at 1955 B.L.R. 800 and submitted that the provisions of the Bombay Municipal Borough Act, as prevailed then, have been interpreted therein and it has been specifically observed by the Division Bench of the Bombay High Court that the jurisdiction of the Civil Court to decide the questions, which are to be decided by the Magistrate, is barred. He pointedly referred to the observations made with regard to the provisions of Section 111 of the Bombay Municipal Boroughs Act, 1925 as under: “Section 111 of the Bombay Municipal Boroughs Act, 1925 excludes the jurisdiction of the civil Court to decide questions which are to be decided by the Magistrate and ultimately in revision by the appellate Court. The jurisdiction of the Magistrate under s. 110 of the Act is limited to considering the question with regard to the quantum of taxation. It is not open to him to consider whether the tax that was imposed was valid or ultra vires the municipality. Therefore, to that limited extent the jurisdiction of the civil Court is excluded. It is open to an assessee to challenge the order itself of the Magistrate, but so long as that order stands, it would not be open to an assessee to have the quantum of tax reviewed by a tribunal other than the tribunal set up under the Act.” SA/31/1982 5/24 JUDGMENT Mr. Shah, therefore, submitted that the learned Appellate Court below has erred in decreeing the suit inasmuch as the Civil Court will not have jurisdiction and the order passed would be a nullity and also contrary to the provisions of the Act. 3.1 Mr. Shah, learned Advocate for the appellant, also referred to and relied upon a judgement of the Apex Court in the case of Jalgaon Borough Municipality vs. Khandesh Spinning & Weaving Mills Co. Ltd., reported at AIR 1953 Bombay 205. He also submitted that as it transpires from the judgement of the trial Court that the notice was issued, the findings given by the lower Appellate Court are contrary to the evidence on record. For that purpose, he has referred to the records and proceedings, which were called for, and contended that the lower Appellate Court has failed to appreciate that the notice, as required under Section 108 of the Act, has been published and therefore, the judgement and order passed by the lower Appellate Court requires to be set aside and the present appeal may be allowed. 4. Mr. B. P. Dalal, learned Advocate for the respondent, referred to the evidence on record from the records and proceedings and submitted that the assessment made by the appellant-Municipality is without authority and jurisdiction and therefore, the civil suit would be maintainable. It was submitted that the assessment made by the Officer SA/31/1982 6/24 JUDGMENT appointed by the State Government would be without authority and therefore, a nullity. For that purpose, he referred to the provisions of Sections 106, 107 and 108 of the Act and submitted that it is only the Chief Officer of the Municipality, who is empowered under the Act to make the assessment, whereas in the present case, the assessment is made by the Officer appointed by the State Government and therefore, such assessment is without authority and a nullity. Mr. Dalal specifically contended that even in the written statement filed by the appellant- Municipality, no contention has been raised that the powers have been delegated by the Chief Officer. 4.1 Mr. Dalal, learned Advocate for the respondent, also submitted that as per the provisions of Section 253 of the Act, it is mandatory to give the notice and as no such notice has been issued, the assessment is ultra vires, illegal and in breach of the provisions of law, and also in violation of the principles of natural justice. 4.2 Mr. Dalal strenuously submitted that as per the provisions of Section 108 of the Act, it is mandatory to issue a notice and it has not been issued to provide an opportunity of lodging any objection or hearing. Therefore, it was contended that as mandatory provision of issuing the notice has not been complied with, the entire assessment is a nullity and also in violation of the principles of natural justice. It was SA/31/1982 7/24 JUDGMENT submitted that if the notice could have been issued, then, the respondent could have an opportunity of filing the objections. However, he submitted that mere ex parte assessment without notice and without giving any opportunity of hearing or filing the objection, is in violation of the principles of natural justice and also contrary to the specific provisions of law and therefore also, it is ultra vires the powers and authority and the suit would be maintainable. Mr. Dalal strenuously submitted that even if the powers provided under the statute are not exercised in the manner provided, then, it is ultra vires the provisions of law, which can be challenged by way of a civil suit. 4.3 Mr. Dalal submitted that the trial Court has also failed in appreciating the evidence at the time of making the assessment inasmuch as while making the assessment, they have not appreciated the fact that the other theatre, to which comparison was made, was an air- conditioned theatre, and therefore, in fact, the annual standard rent should have been considered for the purpose of assessment of tax. It was further contended that the annual letting value has also not been properly fixed and it is only on the basis of the annual letting value that the assessment has been made. He submitted that when the annual letting value itself is not fixed properly, the entire exercise is contrary to SA/31/1982 8/24 JUDGMENT the provisions of law and therefore, the judgement and order passed by the lower Appellate Court is just and proper. For that purpose, he also referred to some of the paragraphs with regard to the contention raised and emphasised that it has been observed referring to the earlier judgement of this High Court in the case of Dr. D.N. Dholakia & Ors. vs. The State of Gujarat & Ors., reported in AIR 1974 Gujarat 209, with regard to the provisions of Sections 105, 108 and 111 of the Act and there has been specific observations made by the High Court in the said judgement. Similarly, it was submitted that if the powers exercised are ultra vires the statute and also in breach of the provisions of law like the Act, then, no notice is required to be issued before filing a suit. For that purpose, he referred to the observations made in the judgement of the lower Appellate Court, which has quoted the earlier judgement of this High Court reported in 3 G.L.T. 402. Therefore, in light of these submissions, it has been contended that the judgement and order passed by the lower Appellate Court is just and proper and the present appeal may be dismissed. 5. In rejoinder, Mr. Mehul Shah, learned Advocate for the appellant, submitted that the Civil Court will have the jurisdiction only if the powers exercised are ultra vires the provisions of the statute, that is, SA/31/1982 9/24 JUDGMENT beyond the scope of powers or there is total lack of power. However, the assessment in the present case is made in exercise of powers under the Act and it is not in dispute that the property in question was liable for the assessment of tax. Therefore, the question as to whether the assessment is proper and in accordance with the procedure prescribed or not, can be challenged by the aggrieved party by having a recourse, as provided in the Act, that is, by filing an appeal under Section 138 of the Act and further revision provided under the Act. He strenuously submitted that it is not in dispute that the property in question is not liable for assessment of tax; it is also not in dispute that the powers are not vested with the Municipality for the assessment of tax and the only contention, which has been raised, that only the Chief Officer of the Municipality should have published the notice himself, is required to be considered. For that purpose, he referred to the records and proceedings and pointedly referred to Exh.51, which is the public notice issued by the Chief Officer, and submitted that as it is evident, the Chief Officer has himself published the public notice, as provided under Section 108 of the Act. Mr. Shah further submitted that after the publication of notice, if the assessment is required to be revised, then, individual notice is required to be given, which is also given, for which he referred to Exh.58. He submitted that on the basis of these two notices, the resolution at Exh.59 was passed and thereafter, there was authentication after hearing all concerned, which is at Exh.55. Therefore, it is submitted that the SA/31/1982 10/24 JUDGMENT contention raised with regard to lapse or non-compliance of the provisions of the Act is misconceived. Mr. Shah submitted that Section 253 starts with the words, “No suit shall lie”, which refers to the fact that no suit can be filed either against any officer of the Municipality for the acts done in purported exercise of powers under the Act, nor a suit can be filed against the Municipality for any act or power exercised under the Act. He further submitted that there is no procedural irregularity, as sought to be canvassed, and therefore, all the substantial questions of law formulated at the time of admission of the second appeal may be answered in favour of the appellant and the present appeal may be allowed. 6. Mr. Dalal, learned Advocate for the respondent, in further rejoinder, referred to the deposition of the plaintiff at Exh.61 and submitted that he has specifically deposed that he purchased subsequently. He submitted that the notice, which is said to have been issued at Exh.58, does not disclose the name of the plaintiff and the name of the predecessor in title of the plaintiff has been shown and therefore, it cannot be said to be a proper notice. He also referred to the deposition of Sadaruddin Karmani Budhwani at Exh.62 and submitted that the provisions of law cannot be said to have been followed and no legal and valid notice can be said to have been issued/served. Therefore, SA/31/1982 11/24 JUDGMENT the judgement and order passed by the lower Appellate Court is just and proper and is required to be confirmed. 7. In view of the rival submissions made by the learned Advocates for the parties, it is required to be considered that whether the contention raised by Mr. Mehul S. Shah, learned Advocate for the appellant, regarding the bar of jurisdiction of the Civil Court in light of the provisions of Section-138 of the Act is required to be considered. At the same time, the contention raised by Mr. B. P. Dalal, learned Advocate for the respondent, about the procedural lapses or the assessment having been made without any jurisdiction or authority by the officer and therefore is a nullity, is also required to be considered. Further, the contention of Mr. Dalal about the notice having not been served and therefore, the assessment is in violation of the principles of natural justice, is required to be considered. 8. The first aspect with regard to the bar of jurisdiction of the Civil Court with reference to the provisions of Section 138 of the Act is required to be considered. For that purpose, the factual background, which is not in dispute, is required to be considered. It is not in dispute that the property in question is not liable for assessment of municipal tax levied by the Municipality. Therefore, it is not the case that the property is not liable to be taxed or that it has been wrongly covered for the SA/31/1982 12/24 JUDGMENT purpose of assessment. A close scrutiny of the evidence would suggest that the entire focus is with regard to the procedure and method for assessment of the tax, which has been challenged. Therefore, the moot question, which arises, is if the statute itself provides a specific procedure for adjudication of any issue or dispute, then, a civil suit can be filed without having recourse to the appeal or revision, as provided in the statute itself. The answer has to be in the negative because if that is accepted, then, the provision providing for further recourse under the special statute like the Gujarat Municipalities Act, would be rendered redundant. There is no quarrel with regard to the proposition that in light of the provisions of Section 9 of the Code of Civil Procedure, 1908, the jurisdiction of the Civil Court is not readily to be interfered with unless it is expressly barred. Therefore, the provisions of Section 138 of the Act has to be read and for the matters, issues or disputes provided therein like assessment of tax, etc., the aggrieved party is required to have the recourse of appeal or revision, as provided under the Act itself. 9. Section 138 of the Act provides for appeals to the magistrates, which reads as under: “(1) Appeals against any claim included in a bill presented under sub-section (1) of section 132 may be made to any Judicial Magistrate or Bench of such Magistrates by whom under the direction of the Session Judge such class of cases is to be tried. SA/31/1982 13/24 JUDGMENT (2) No such appeal shall be entertained unless- (a) xxx xxx xxx xxx (b) xxx xxx xxx xxx (c) xxx xxx xxx xxx (3) The decision of the Magistrate or Bench of Magistrate in any appeal made under sub-section(1) shall, at the instance of either party, be subject to revision by the Court to which appeals against the decision of such Magistrate or Bench ordinarily lie.” Therefore, when the scheme of the Act and in particular Section 138, provides for the remedy or recourse to the aggrieved party under the Act itself, that an appeal could be filed against the bill for tax and that a revision also lies against the order passed in appeal by the Magistrate or Bench of the Magistrate, as the case may be, then, such remedy has to be exhausted without filing the civil suit. It is a well settled law that unless the jurisdiction of the Civil Court is barred either expressly or by necessary implication, it cannot be said that the jurisdiction is altogether excluded. It is also well settled law that exclusion of the jurisdiction of the civil court is not readily inferred, but, such exclusion must either be explicitly expressed or clearly implied, as laid down in the case of Secretary of State vs. Mask & Company, reported in AIR 1940 PC 105. Following these guidelines in the judgement in the case of Firm Seth Radha Kishan vs. Ludhiana SA/31/1982 14/24 JUDGMENT Municipality, reported in AIR 1963 SC 1547, the Honourable Apex Court has considered this very issue regarding jurisdiction of the Civil Court, whether expressly barred in light of the provisions of Punjab Municipal Act with regard to the levy of terminal tax on salt. The Honourable Apex Court, while considering this aspect, referring to the provisions of Section 9 of the Code of Civil Procedure and the special provision made under the Punjab Municipal Act, 1911, observed that “a remedy is given to a party aggrieved in the enforcement of that liability. Against the order of the municipal committee levying terminal tax, an appeal lies under Section 84 to the Deputy Commissioner and a reference under Section 84(2) to the High Court. Applying the principle stated supra, the party aggrieved can only pursue the remedy provided by the Act and he cannot file a suit in a civil court in that regard.” 10. In short, the Act itself contains a self-contained code conferring a right, imposing the liability and prescribing a remedy for the aggrieved party. In such a situation, the question arises whether the Civil Court can entertain the suit for revision of tax wrongly collected from the assessee and if so, what are the limits of its jurisdiction. 11. It has been further observed that “the learned Counsel contends that if a municipal committee levies terminal tax on an article not liable to tax under the Act, a suit would lie and, therefore, the same SA/31/1982 15/24 JUDGMENT legal position should apply even to a case where the municipal committee levies the tax in respect of an article under an entry not applicable to it. We do not see any analogy between these two illustrations, in the former, the municipal committee does not act under the Act, but, in the latter it only commits a mistake or an error in fixing the rate of tax payable in respect of a particular commodity; one is outside the Act and the other is under the Act; one raises the question of jurisdiction and the other raises an objection as to a matter of detail. We, therefore, hold that in the present case, the mistake, if any, committed in imposing the terminal tax can only be corrected in the manner prescribed by the Act. The appellants have misconceived their remedy in filing the suit in the civil Court.” 12. In a subsequent judgement in the case of Dhulabhai etc. vs. State of Madhya Pradesh, reported in AIR 1969 SC 78, the Honourable Apex Court has also while considering this aspect has summarised the law and has laid down the principles regarding the exclusion of jurisdiction of the Civil Court in detail and principle-(6) provides that “questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case, the scheme of the particular Act must be examined because it is a relevant SA/31/1982 16/24 JUDGMENT enquiry”. 13. Therefore, it makes it very clear that when the statute provides for a remedy or recourse to the aggrieved party, then, it has to be exhausted and the Civil Court will not have jurisdiction. In the facts of the present case, the dispute is with regard to the assessment of tax and it is not disputed that the property is not liable for the tax, but, the contention has been raised with regard to the manner and method of levying the tax and also the procedural aspect. It has also been contended that levy of tax itself will be ultra vires as the officer has exceeded the jurisdiction inasmuch as only the chief officer could have issued the notice and taken the further steps whereas the procedure has been followed by the officer of the Government. However, in light of the discussion on the factual aspects, the submissions of the learned Advocate for the respondent are dealt with and therefore, the contention raised that the jurisdiction of the Civil Court would not be barred cannot be accepted. 14. Another facet of the argument, which has been raised by the learned Advocate for the respondent, that if the levy of tax itself is ultra vires the authority of the officer or ultra vires the provision of law, the civil suit would be maintainable. There is no quarrel on this aspect. However, it has to be first established that the assessment made under SA/31/1982 17/24 JUDGMENT the Act by an Officer is without jurisdiction or that he is not competent and/or the property in respect of which the assessment is made is