IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWENTY SIXTH DAY OF JULY TWO THOUSAND AND TEN PRESENT: THE HON'BLE SRI JUSTICE B. SESHASAYANA REDDY WRIT PETITION No.23928 of 2006 Between: SVM Nonwovens Private Limited, rep. by its Director/ Authorized Signatory Mr.G.S. Raju ... PETITIONER a n d The State of Andhra Pradesh rep. by its Principal Secretary, Panchayatraj Department, Secretariat Buildings, Saifabad, Hyderabad and others … RESPONDENTS ORDER: This writ petition has been filed by SVM Nonwovens Private Limited, represented by its Director/ Authorized Signatory Mr.G.S. Raju with a prayer to issue a writ of mandamus declaring the notice bearing letter No.GPB/ Notice/II/2006 dated 01-07-2006 issued by Bonthapally Gram Panchayat as illegal, arbitrary and violative of Articles 14, 19 (1)(g), 21 and 300(A) of the Constitution of India. 2. M/s.Lamino Spinning and Weaving Mills Private Limited raised certain loans from the Andhra Pradesh Industrial Development Corporation Limited – third respondent and the Andhra Pradesh State Financial Corporation – fourth respondent. Consequent on failure of M/s. Lamino Spinning and Weaving Mills Private Limited in liquidating its liability, proceedings have been initiated under Section 29 of the State Financial Corporation Act, 1951 and its assets has came to be seized. 3. The third respondent issued notice on 05-08-2005 inviting tenders for sale of machinery, land and buildings ‘as is where is basis’ under Section 29 of the State Financial Corporation Act, 1951. The petitioner submitted its tenders for purchase of unit shown at serial No.4 of the said notice i.e., land and buildings of M/s. Lamino Spinning and Weaving Mills Private Limited. The offer of the petitioner to purchase the land came to be accepted and property came to be handed over to the petitioner over panchanama dated 07-12-2005. A registered sale deed bearing document No.649/2006 dated 21-01-2006 came to be executed by the respondents 3 and 4 in favour of the petitioner in respect of land and building of M/s.Lamino Spinning and Weaving Mills Private Limited. By virtue of the registered sale deed dated 21-01- 2006, the petitioner became absolute owner and possessor of land admeasuring Ac.4-02 gts., in Sy.No.221 with building existing thereon situated at Bonthapally village, Jinnaram mandal, Medak district, Gram Panchayat Bollaram. 4. Bonthapally Gram Panchayat – second respondent issued demanded notices under Rule 34 Schedule II of the Andhra Pradesh Gram Panchayat Act, 1964 on 01-06-2006 and 12-10-2006 demanding the arrears of property tax and liberty tax due for the years 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07. The petitioner submitted letter dated 22-06-2006 to second respondent stating that it is liable to pay the taxes only after 07-12-2005 and requested the second respondent for approval of the plans for the additional constructions proposed to be carried out by the petitioner over the schedule property. The second respondent by notice dated 01-07- 2006 under Section 136 of A.P. Panchayat Raj Act, 1994 demanded the petitioner to pay the arrears of property tax due up to the year 2006-07 to a tune of Rs.2,80,285/-. Hence, this writ petition. 5. Rule nisi came to be issued on 27-11-2006. An interim order came to be passed on 03-01-2007 and it reads as hereunder: “Heard the counsel on record. Sri Premsagar, the learned counsel representing the 2nd respondent would submit that in the light of the decision rendered by the Division Bench in District Panchayat Officer, East Godavari and another v. Mandana Krishnamurthy Manager, S.R.S.S. Temple[1] the limitation would commence to run only from the date of knowledge and hence the petitioner is bound to pay the total amount relating to which the demand is made. The counsel for the writ petitioner Sri Venkata Rangadas Kanuri, however, would submit that beyond a period of three years such claim cannot be made since the same would be barred by limitation. This question in elaboration may have to be gone into at the time of final disposal of the writ petition. In view of the facts and circumstances, the petitioner is permitted to proceed with the lawful construction of the compound wall of the premises bearing S.No.221 admeasuring Ac.4-02 guntas situated at Bonthapally village, Jinnaram mandal, Medak District, on payment of the rest of the amount due for a period of three years to the 2nd respondent, within a period of one week, but, however, it is made clear that this interim order is being made in the light of the respective stands taken by the parties without expressing any further opinion relation to the actual quantum which may be due from the petitioner to the 2nd respondent.” 6. It is stated in the counter-affidavit that the second respondent has the absolute power to recover the dues either from the owner or from the occupier of the properties under Section 61 of the A.P. Panchayat Raj Act, 1994. 7. The third respondent also filed counter-affidavit. It is stated in the counter-affidavit that tax due after seizer of the assets of the company has been paid. It is further stated that the tax dues payable for the earlier period that is upto the date of seizure of the assets by the third respondent corporation, the earlier industrial unit/owner of the property is liable to pay. It is also stated in the counter-affidavit that the second respondent Gram Panchayat is not liable to claim or recover any amounts towards tax dues as its claim is totally barred by limitation under Section 135 of the Andhra Pradesh Panchayat Raj Act, 1994. 8. Heard the learned counsel appearing for the petitioner and learned counsel appearing for the third respondent. No representation on behalf of second respondent. 9. Learned counsel appearing for the petitioner submits that the petitioner purchased the unit on 07-12-2005 and obtained registered sale deed on 21-01-2006. Therefore, it is liable to pay tax commencing from 07-12-2005. A further submission has been made that the period anterior to 07-12-2005, the tax due, if any, or payable either by the earlier owner of the unit namely M/s.Lamino Spinning and Weaving Mills Private Limited or the respondents 3 and 4 who seized the unit. 10. Learned counsel appearing for respondent No.3 submits that the tax due from the date of seizure i.e., 04-09-2004 to the date of sale has been paid and no amount is due for the said period. A further submission has been made that the tax due prior to 04-09-2004, it is only the owner of the unit who is liable to pay the tax. He would also contend that notice dated 01- 07-2006 demanding the tax due from 1991-92 to 2005-06 is hopelessly barred by limitation as provided under Section 135 of the Andhra Pradesh Panchayat Raj Act, 1994. 11. Learned counsel drew my attention to Section 135 of the Act, which reads as: “Limitation for recovery of dues:- No distraint shall be made, no suit shall be instituted and no prosecution shall be commenced in respect of any tax or other amount due to a gram panchayat under this Act or any rule, bye-law, regulation, or order made under it after the expiration of a period of three years from the date on which distraint might first have been made, a suit might first have been commenced as the case may be in respect of such tax or amount.” 12. It is evident from the above section that the gram panchayat is entitled to recover the dues within a period of three years from the date on which distraint might first have been made, a suit might first have been commenced as the case may be in respect of such tax or amount. The notice impugned in the writ petition is 01-07-2006. The gram panchayat can demand payment of arrears from 2003-06 and not anterior to 2003-2006 since the tax due if any prior to 01-07-2003 has been barred by limitation under Section 135 of the Act and therefore, the petitioner cannot be made liable to pay the same. 13. The material brought on record shows that the petitioner as well as the third respondent paid the dues from the year 2003-06. 14. In that view of the matter, the writ petition is allowed setting aside the demand notice dated 01-07-2006. There shall be no order as to costs. ___________________________ B. SESHASAYANA REDDY, J July 26, 2010. PN THE HON'BLE SRI JUSTICE B. SESHASAYANA REDDY WRIT PETITION No.23928 of 2006 July 26, 2010 [1] Andhra Pradesh Law Journal (1977 (2) (H.C.) 272)