Madras Can Factory,a Unit of Cochin Tin Factory v. The Madras Metropolitan Water Supply and Sewerage Board

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 10.7.2007 CORAMTHE HON'BLE MR.JUSTICE M.JAICHANDRENSecond Appeal No.1311 of 1996Madras Can Factory,a Unit of Cochin Tin Factory,represented by its ManagerC.R.Devanand .. Appellant/ Plaintiff vs. 1. The Madras Metropolitan Water Supply and Sewerage Board rep. by its Chairman and Managing Director2. The Special Deputy Tahsildar, Madras Metropolitan Water Supply and Sewerage Board .. Respondents/ DefendantsPRAYER : The Second Appeal has been filed against the judgment anddecree passed in A.S.No.54 of 1995, by the III Additional Judge,City Civil Court, Madras, dated 17.4.1995, confirming the judgmentand decree of the III Assistant Judge, City Civil Court, Madras,made in O.S.No.5775 of 1992, dated 30.9.1993. For Appellant : Mr.K.Mani For respondents : Mr.S.Rajendran J U D G E M E N TThe second appeal has been filed against the judgment anddecree, dated 17.4.1995, made in A.S.No.54 of 1995, on the file ofthe III Additional Judge, City Civil Court, Madras, confirming thejudgment and decree, dated 30.9.1993, made in O.S.No.5775 of 1992,on the file of the III Assistant Judge, City Civil Court, Madras.2. The plaintiff in the suit O.S.No.5775 of 1992, is theappellant in the present second appeal. The plaintiff had filed thesuit on the file of the III Assistant Judge, City Civil Court,Madras, praying for a decree of declaration to declare that thedistraint notice of demand bearing No.P.R.I/83/92, dated 12.5.1992,issued by the second defendant as illegal and unenforceable and for https://hcservices.ecourts.gov.in/hcservices/ a permanent injunction restraining the defendants and others fromenforcing the said distraint notice of demand and for costs.3. The brief facts of the case, as stated by the plaintiff,are as follows:The plaintiff's property was assessed by the Corporation ofMadras for the year 1979-80. During the said period, the CityCorporation had extended its area to Villivakkam Panchayat. Theplaintiff's property was assessed on an annual value of Rs.6,500/-and the plaintiff had been called upon to pay Rs.776.75 as propertytax. Subsequently, the property tax had been increased during thesecond half year of 1989-90 and it had been increased toRs.4,766.50. Even though the plaintiff has been assessed for theproperty tax, there was no water or drainage connection to theplaintiff's property at No.274, M.T.H.Road, Villivakkam, Madras-49,from the assessment year, 1979-80 upto 1991-92. Therefore, theplaintiff has not utilised the service rendered by the defendantBoard during the relevant period. Since there was no water supplyand drainage connection to the plaintiff's property, the plaintiffis not liable to pay the water and drainage charges. 4. The second defendant had issued a demand notice, dated14.3.1992, without an assessment order, calling upon the plaintiffto pay the water and sewerage charges for the year 1979-80 to 1991-92 amounting to Rs.36,271.30. Thereafter, another demand was madein Form I which had been issued, on 12.5.1992, calling upon theplaintiff to pay a sum of Rs.11,752.75 for the assessment year1979-80 to 1991-92. The demand made by the second defendant is notin order, as it is not in accordance with the rules and regulationsof the Board. 5. According to the plaintiff, there should be an assessmentand only thereafter, the defendant can make a demand to pay thewater and drainage charges. Since there was no order of assessmentpassed by the defendant Board, the demand made by the seconddefendant is not maintainable as it is illegal as being contrary tothe provisions of law. The second notice, dated 12.5.1992, is adistraint order for which the plaintiff had sent a reply, on10.6.1992, stating that there was no water or drainage connectionprovided in the plaintiff's premises at No.274, M.T.H.Road,Villivakkam, Madras-49, and that there was a difference in theamount demanded in the first and the second notices. The seconddefendant cannot take coercive action against the plaintiff by wayof distraint proceedings as the plaintiff is not liable to pay theamount demanded. Further, the demand is barred by limitation andtherefore, it is illegal and unsustainable in law. 6. The averments in the written statement filed by thedefendants are as follows:The plaintiff's property, which is situated at No.274,M.T.H.Road, Villivakkam, Madras-49, was formerly within the https://hcservices.ecourts.gov.in/hcservices/ Villivakkam Panchayat. Later, it was taken over by the Madras CityMunicipal Corporation, on 1.6.1978. The demands for the propertytax have been raised from the date of taking over by the MadrasCity Municipal Corporation. On the request made by the defendantBoard, the Corporation of Madras furnished assessment particularsof the properties in the area in order to raise water and seweragetax demands from I/1979-80 or from the date of assessment by theBoard at 7% per annum on the annual value fixed by the Corporationof Madras leaving 23% as the property tax. Under Section 34(1) and(2), read with the proviso thereunder of the Tamil Nadu Act XXVIIIof 1978 (The Madras Metropolitan Water Supply & Sewerage Act,1978), the Government had permitted the Board to levy tax, by wayof water and sewerage tax, to the extent of 20% in relation towater tax and 10% in the case of sewerage tax. 7. However, the Government in G.O.Ms.No.1604, RuralDevelopment and Local Administration Department, dated 19.10.1978,have permitted the Board to levy 7% on the annual value fixed bythe Corporation of Madras as Water and Sewerage Tax, effective from22.7.1978. The defendant Board had started levying the tax fromI/1979-80 onwards. Due to the above mentioned arrangement, theCorporation of Madras reduced 7% towards water and sewerage tax outof 30% from its property tax based on the annual assessment valuefrom 1979-80 onwards. The water and sewerage tax is not an extratax but forms part and parcel of the previously levied property taxby the Madras Corporation.8. The defendant Board is empowered to collect water andsewerage tax from the property owners within the jurisdiction ofthe Board irrespective of the fact whether the facilities areprovided or not and whether the facilities are availed of or not. 9. The defendant had further submitted that the water andsewerage tax is based on the value of annual assessment of thepremises, though it is called water and sewerage tax. Thedefendant Board have been powered to collect the water and seweragetax at 7% of the assessed annual value of the premises, with effectfrom 22.7.1978, i.e., from the formation of the Board as perG.O.Ms.No.1604, Rural Development and Local AdministrationDepartment, dated 19.10.1978 and the tax has to be paid by all theresidents. Hence, the question of payment of water and sewerage taxbased on the facilities provided by the Board does not arise. 10. The defendants had further submitted that the water andsewerage tax is not an additional tax but it is a component of theproperty tax levied by the Corporation of Madras. The Board is wellwithin its rights to collect water and sewerage tax from the ownersof the house properties dwelling within its jurisdictionirrespective of the fact whether the facilities are provided andwhether the same is availed of or not by the owners of theproperty. https://hcservices.ecourts.gov.in/hcservices/

11. The defendants had submitted that the payment ofRs.36,271.30, representing 26 half years demand, based on theannual assessment value of Rs.39,858.00 as per the summon statementset out below is in order and the same came to be revised as perthe assessment details furnished by the Corporation of Madras.Sl.No.PeriodAnnual ValueAmount of Water andSewerage Tax.1.I/79-80 to I/89-90Rs.6,500.00 Rs.4,777.50 (at Rs.277/50 x 21).2.II/1989-90 to II/1991-92 (5H/Y)Rs.39,858.00 Rs.6,975.25(at Rs.1,395.05 x5) Totaling Rs.11,752.7512. The above revision was also intimated to the plaintiff andthey were requested to pay Rs.11,752.75 vide letterNo.SDT/AreaV/92, dated 25.6.1992. The Board does not, independentlyand of its own accord, assess the water and sewerage tax. The waterand sewerage tax is computed on the assessment of the Annual Valueof the premises as fixed by the Corporation. There is no questionof the defendants threatening the plaintiff as alleged. Thedefendant Board has been taking necessary action only in accordancewith the existing rules. There is no question of the claim beingbarred by time. In view of the decision in W.P.No.13894 of 1990,Section 74 of The Madras Metropolitan Water Supply and SewerageBoard Act, 1978, clearly gives the right to the Board to recoverthe amount as against the plaintiff. Therefore, the suit has to bedismissed.13. Based on the rival contentions of the parties concerned,the trial Court had framed the following issues for consideration:"1. Whether the plaintiff is entitled to the reliefof declaration as prayed for in the plaint?2. Whether the plaintiff is entitled to the reliefof permanent injunction as prayed for in the plaint?"14. On analysing the oral and documentary evidence, the trialCourt had found that the defendants had the authority andjurisdiction to impose on the plaintiff the liability of paying thewater and sewerage tax as provided under the relevant provisions oflaw. The trial Court had accepted the claim made on behalf of thedefendant Board that the water and sewerage tax is levied based onthe property tax payable by the plaintiff. 15. It was also held that the contention of the plaintiff thatthe water and sewerage tax cannot be imposed, if no water orsewerage connection is provided in the property belonging to theplaintiff, cannot be held to be valid, since water charges are https://hcservices.ecourts.gov.in/hcservices/ different from water tax. While water charges are levied based onthe actual quantum of water used, the water tax is based on theproperty tax payable by the plaintiff. It was also held that thedefendant Board is entitled to collect the water and sewerage taxin accordance with the provisions enshrined in The MadrasMetropolitan Water Supply & Sewerage Board Act, 1978. Since thequantum of water and sewerage tax payable by the plaintiff is to bedecided based on the value of the plaintiff's property, as providedby the Corporation of Madras, there was a difference in the claimsmade by the defendant Board. The earlier claim of Rs.36,271.30 wasrevised and the defendant Board had claimed Rs.11,752.75 as the taxpayable by the plaintiff as the revised claim. 16. From the exhibits marked in support of the claims made bythe plaintiff, it was found that the claim has been made by thedefendant Board directing the plaintiff to pay Rs.36,271.30 underExhibit A.3, dated 13.3.1992, for the relevant period, as water andsewerage tax from the first half 1979-80 to the second half 1991-92. 17. From Exhibit A.2, dated 12.5.1992, the trial Court hadfound that the defendant Board had claimed a sum of Rs.11,752.75 asthe tax payable by the plaintiff stating that distraint proceedingswould be initiated against the property of the plaintiff, if therewas a default in paying the arrears of tax. Based on suchfindings, the trial Court had dismissed the suit filed by theplaintiff.18. Against the said judgment and decree of the trial Court,the plaintiff had preferred an appeal in A.S.No.54 of 1995, on fileof the III Additional Judge, City Civil Court, Madras. The lowerappellate Court had framed the following points for consideration: "(1) Whether the judgment of the trial Court has to beset aside? (2) Whether the demand notice has to be declared asnull and void?"19. The lower appellate Court had found that the appellant'sproperty was situated within the Panchayat limits of Villivakkam.Villivakkam Panchayat was taken over by the Corporation of Madrasand thereafter, the Corporation had issued a demand notice to theowners of the properties situated within its jurisdiction. Whileso,the Madras Metropolitan Water Supply and Sewerage Board had beenformed and the Government had given powers to the said Board tocollect 7% of the property tax collected by the Corporation ofMadras as the water and sewerage tax. 20. The lower appellate Court had found that the maincontention raised on behalf of the plaintiff was that since theplaintiff had not been provided with the water and sewerage https://hcservices.ecourts.gov.in/hcservices/ connection, it is improper on the part of the defendant Board toimpose the water and sewerage tax on the plaintiffs by issuing ademand notice No.P.R.I/83/92, dated 12.5.1992. The lower appellateCourt had also found that the defendant Board was entitled to levythe tax on the plaintiff even though the water and seweragefacilities were not provided to the plaintiff as the water andsewerage tax payable is based on the value of the property of theplaintiff. Therefore, the lower appellate Court, by its judgmentand decree, dated 17.4.1995, made in A.S.No.54 of 1995, hadconfirmed the judgment and decree of the trial Court. Hence, thepresent second appeal.21. Heard Mr.K.Mani, the learned counsel appearing on behalfof the appellant and Mr.S.Rajendran the learned counsel appearingon behalf of the respondents.22. The second appeal had been admitted on the followingsubstantial questions of law: "1.Whether the defendant is entitled to claim thewater and sewerage charges for the period 1979-80 to1991-1992 as per Exhibit A.3?2. Is G.O.No.1604, Rural Development and LocalAdministration Department, dated 19.10.1978, issued bythe Government over ride the provisions of the M.M.W.S&SBoard Act 1978 (TN Act 18 of 1978)?" 23. The learned counsel appearing on behalf of the appellanthad contended that the respondent Board cannot issue the impugneddistraint order, dated 12.5.1992, marked as Exhibit A.2 before anassessment is made and a demand notice issued to the appellant.Since no assessment was made and no demand notice was issued, theappellant was not in a position to pray for exemption in accordancewith the provisions of The Chennai Metropolitan Water Supply andSewerage Act, 1978. 24. The learned counsel appearing on behalf of the appellanthad also contended that the appellant could have challenged theassessment and the consequent demand by filing an appeal under theprovisions of the Act if the proper procedures had been followed bythe respondent Board. However, such an opportunity was notavailable to the appellant. Therefore, the distraint order passedby the respondent Board under Exhibit A.2, dated 12.5.1992, isillegal and void. The Courts below have committed an error indeclining to declare the said order as illegal and unenforceable. 25. The learned counsel appearing on behalf of the respondentshad contended that the water and sewerage tax has been levied onlyin accordance with the provisions of law based on the value of theproperty of the appellant. A demand notice had been issued to theappellant by the respondent Board under Exhibit A.3, dated https://hcservices.ecourts.gov.in/hcservices/

13.3.1992, and only thereafter, the impugned distraint order waspassed under Exhibit A.2, dated 12.5.1992.26. The learned counsel appearing on behalf of the respondentshad also contended that the appellant has an alternative remedy ofchallenging the levy of tax by way of an appeal under Section 71 ofthe Act. Therefore, the contentions of the plaintiff cannotaccepted. 27. On analysing the records available before this Court andbased on the contentions raised on behalf of the appellant as wellas the respondents, it is found that a demand notice had beenissued to the appellant by the respondent Board under Exhibit A.3,dated 13.3.1992, levying a tax of Rs.36,271.30 and granting sevendays time to pay the said amount and stating that on failure tocomply with the demand distraint proceedings could be initiatedagainst the appellant. Thereafter, under Exhibit A.2, dated12.5.1992, the distraint order has been issued for a sum ofRs.11,702.75, revising the earlier demand, based on the value ofthe property as assessed by the Corporation of Madras. It is seenthat an appeal remedy has been provided under Section 71 of TheChennai Metropolitan and Sewerage Act, 1978, to file an appealagainst the decision or determination fixing the rate of water andsewerage tax or demanding the payment of such tax under theprovisions of the Act. It was held by this Court in TAMIL NADUELECTRICITY BOARD REPRESENTED BY EXECUTIVE ENGINEER (OPERATION ANDMAINTENANCE), PANTRUTI AND OTHERS Vs. CHAKKARAVARTHY ((2005) 2M.L.J. 426), that the suit filed challenging the order passed by anauthority of the defendant department cannot be maintained, in viewof the specific provision for appeal provided under the relevantlaw applicable to the case. 28. In such circumstances, this Court is of the consideredview that the appellant has not shown sufficient cause or reason tointerfere with the judgment and decree passed by the Courts below.Hence, the second appeal stands dismissed confirming the judgmentand decree passed by the Courts below. No costs. Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.lan https://hcservices.ecourts.gov.in/hcservices/ To:1. The III Additional Judge, City Civil Court, Madras.2. The III Assistant Judge, City Civil Court, Madras3. The Section Officer,VR Section,High Court, Madras.1 cc to Mr.S. Rajendran, Advocate, SR. 41476S.A.No.1311 of 1996AKR (CO)kk 13/11