High Court · 2010

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 20-07-2010CORAMTHE HONOURABLE MR.JUSTICE M.JAICHANDRENS.A.No.908 of 2007 Central Warehousing Corporation,A Government of IndiaUndertaking, Represented By its Regional Manager,No.4, NorthAvenue, Srinagar Colony, Saidapet, Chennai-600 015. .. Appellant/Plaintiff Versus Chitlapakkam Town PanchayatRepresented by itsExecutive OfficerChitlapakkam, Tambaram Taluk,Kancheepuram District. .. Respondent/Defendant PRAYER: Appeal against the judgment and decree, dated 26.10.2004,made in A.S.No.52 of 2003, on the file of the Additional SubordinateJudge, Chengleput, confirming the judgment and decree of the trialCourt, dated 11.3.2003, made in O.S.No.77 of 2000, on the file of theDistrict Munsif Court, Tambaram. For Appellant : Mr.A.J.Abdul Razak For Respondent : Mr.R.Revathi Government Advocate J U D G M E N T This second appeal has been filed against the judgment anddecree, dated 26.10.2004, made in A.S.No.52 of 2003, on the file ofthe Additional Subordinate Court, Chengalpattu, confirming thejudgment and decree, dated 11.3.2003, made in O.S.No.77 of 2000, onthe file of the District Munsif Court, Tambaram.2. The plaintiff in the suit, in O.S.No.77 of 2000, is the appellantin the present second appeal. The defendant in the said suit is therespondent herein. https://hcservices.ecourts.gov.in/hcservices/

3. It has been stated that the plaintiff is a Government ofIndia undertaking, having its building in the schedule mentionedproperties, within the limits of the defendant Town Panchayat. Thedefendant Town Panchayat has been assessing the building for levyingbuilding tax. There are 22 house tax assessments levied by thedefendant Town Panchayat, in respect of the plaintiff Corporationrelating to which the suit had been filed. 4. It has been stated that the plaintiff Corporation has beenexempted, under the Tamil Nadu Buildings (Lease and Rent) ControlAct, 1960. It has also been stated that the plaintiff Corporation hadlet out the buildings to various government departments. It has beenstated that the respondent Town Panchayat had enhanced the tax,substantially, by way of a special notice, dated 31.1.1999, served onthe plaintiff Corporation. It has also been stated that the plaintiffCorporation had been asked to pay the enhanced tax, withretrospective effect, from the month of October, 1998, without givingany reason as to how the tax had been increased by more than 400 %per year. It has also been stated that the plaintiff Corporation hadfiled a revision, dated 14.7.1999, to the Director of MunicipalAdministration, marking a copy of the said revision to the defendantTown Panchayat. However, the defendant Town Panchayat had rejectedthe same, calling upon the plaintiff Corporation to pay the enhancedtax, as fixed by the defendant Town Panchayat, in its special notice. 5. It has also been stated that there cannot be an increase ofmore than 33.33 % of the existing tax, in respect of the buildingsowned by the Government of India undertaking. However, since theTamil Nadu Buildings (Lease and Rent) Control Act, 1960, is notapplicable, the defendant Town Panchayat cannot fix the tax by takinginto consideration the fair rent formula. As the defendant TownPanchayat had initiated distraint proceedings the plaintiffCorporation had paid 50% of the enhanced tax amount payable by theplaintiff Corporation, under protest. In fact the plaintiffCorporation had paid more than the admitted tax liability. In suchcircumstances, the plaintiff Corporation had filed the suit prayingfor a decree against the defendant to declare that the assessmentlevied by the defendant Town Panchayat, in respect of the schedulementioned properties, is illegal, ultravires and void, and for aconsequential interim injunction restraining the defendant and othersfrom, in any way, collecting the enhanced tax from the plaintiffCorporation, and for costs. 6. In the written statement filed on behalf of the defendantTown Panchayat it has been stated that it is true that the plaintiffis a Government of India undertaking and that there are nearly 22 https://hcservices.ecourts.gov.in/hcservices/ buildings belonging to the plaintiff Corporation, which had beensubjected to assessment. Though all the 22 buildings belonging to theplaintiff Corporation were situated at one and the same place, sincethe buildings had emerged separately, at different periods, the taxhad been levied on each one of the buildings separately, underseparate assessment numbers. Even though the buildings belonging tothe plaintiff Corporation will not come under the ambit of theprovisions of the Tamil Nadu Buildings (Lease and Rent) Control Act,1960, it would not have the effect of preventing the defendant TownPanchayat from assessing and levying the property tax, based on theguidelines given under Section 4 of the said Act. The plaintiffCorporation had challenged only the enhancement of the tax assessmentlevied on its buildings and not the mode of tax. 7. It has been further stated that the plaintiff Corporation hadmade payments towards the arrears of the tax for the period coveringthe year 1998-1999 II Half Year, till 1999-2000 II Half Year, at theenhanced rate, without any protest. Further, the claim of theplaintiff Corporation seeking declaration of the assessment made bythe defendant Town Panchayat cannot be maintained, as it is timebarred. Further, the plaintiff Corporation has not been in a positionto show that there are Government orders and guidelines to restrictthe increase of tax only by 33.33% on the existing tax. Further, theplaintiff Corporation had not exhausted the statutory remedy ofappeal and revision, before the appropriate authority, within thetime limit prescribed by the relevant provisions of the Tamil NaduDistrict Municipalities Act, 1920.8. It has also been stated that the revision petition, dated14.7.1997, said to have been sent by the plaintiff Corporation, hadbeen, admittedly, addressed to the Director of MunicipalAdministration, who is not the competent authority to entertain therevision petition. Though a copy of the revision petition had beenmarked to the defendant Town Panchayat, since it had been sentbelatedly, a suitable reply had been made to the plaintiffCorporation confirming the enhancement of the tax, made as per theavailable Government Orders and the guidelines. Since, the suit filedby the plaintiff Corporation is devoid of merits, it is liable to bedismissed. 9. In view of the averments made on behalf of the plaintiff, aswell as the defendant the trial Court had framed the following issuesfor consideration:“1) Whether the assessment of tax in respect of the suit property isillegal, void and ultravires? https://hcservices.ecourts.gov.in/hcservices/ 2) Whether the plaintiff is entitled for an injunction, as prayed forby him?3) Whether the plaintiff is entitled for a declaration, as prayed forby him? 4) To what relief, the plaintiff is entitled?”10. One witness had been examined on the side of the plaintiffand Exhibits A-1 to A-25 had been marked on behalf of the plaintiff.Similarly, one witness was examined on the side of the defendant,Exs.B-1 to B-5 had been marked.11. Analysing the evidence on record the trial Court had foundthat, though the plaintiff Corporation had relied on a GovernmentOrder to show that the defendant Town Panchayat can enhance the taxon buildings belonging to the plaintiff Corporation, which is said tobe a Government of India undertaking, only by 33.33%, the same hadnot been produced before the Court. Further, the trial Court hadrejected the contention of the plaintiff Corporation that theincrease in tax is more than 400%. However, it has been found thatthe comparison had been erroneously made between the total amount ofthe existing tax on 14 buildings on the one hand and the enhanced taxon 14 buildings plus, the new tax on 8 buildings on the other hand,so as to give an erroneous impression that the tax enhanced hadexceeded 400%.12. From the exhibits marked as Ex.B-1, Government Order, dated8.9.1998 and Ex.B-2 Circular, issued from the office of the Directorof Municipalities, dated 1.2.1998, it had been established that therevision of tax was only a general revision made, strictly, as perthe guidelines laid down therein. The trial Court had further foundthat the plaintiff Corporation had preferred an appeal, directly, tothe Director of Municipal Administration, even though it should havebeen sent to the Executive Officer, Chitlapakkam Town Panchayat, incases of any grievance regarding the enhancement of tax. In suchcircumstances, the trial Court had dismissed the suit, with costs,holding that it is devoid of merits. 13. Aggrieved by the judgment and decree of the trial Court,dated 11.3.2003, made in O.S.No.77 of 2000, the plaintiff hadpreferred an appeal before the Additional Subordinate Court,Chengalpattu, in A.S.No.52 of 2003. https://hcservices.ecourts.gov.in/hcservices/

14. On considering the facts and circumstances of the case andin view of the evidence available on record, the First AppellateCourt had confirmed the findings of the trial Court, by its judgmentand decree, dated 26.10.2004. 15. Aggrieved by the judgment and decree of the First AppellateCourt, dated 26.10.2004, the appellant in the first appeal, inA.S.No.52 of 2003, who was the plaintiff in the suit, in O.S.No.77 of2000, had preferred the present second appeal before this Court,raising the following questions, as substantial questions of law. “(i) When the Hon’ble Supreme Court in A.I.R. 1998 Supreme Court atPage 2636 has held that in cases where the buildings are notcontrolled by any Rent Control Legislations, the actual income can betaken as annual value of the property for the assessment of propertytax, the stand of the Courts below that fair rent formula has beenadopted for assessment of property taxes, is correct in law?(ii) Whether the special notices are valid in law when no reasonshave been assigned in the special notices for the proposedenhancement?” 16. The learned counsel appearing on behalf of the appellant hadsubmitted that the Courts below had failed to note that no reason hadbeen given in the special notices issued by the respondent TownPanchayat for enhancing the tax, except using the words “GeneralRevision”. Thus, the appellant Corporation had been prevented frompreferring a revision petition against the special notices. Thus, itis clear that no proper opportunity had been given to the appellantCorporation to agitate the matter further, by raising the necessaryobjections. 17. It had also been stated that the Courts below had failed tonote that the statement of the respondent Town Panchayat that theincrease in tax has been levied, in view of the general revision ofproperty tax, cannot be shown as a reason for the enhancement of theproperty tax. Unless the assessee knows the grounds on which theenhancement had been made it would not be possible for the assesseeto challenge the same, by resorting to the appropriate proceedings,in the manner known to law. He had also submitted that theenhancement of tax, by over 400 %, is arbitrary and illegal, as heldby the various Courts of law. He had also submitted that the Courtsbelow had failed to note that the suit buildings belong to theplaintiff Corporation, which is a Government of India undertaking,and as such, they are exempted from the application of the provisionsof the Tamil Nadu Buildings (Lease and Rent) Control Act, 1960.Further, the Courts below had failed to note that the notices had https://hcservices.ecourts.gov.in/hcservices/ been issued, under the wrong provisions of the Tamil Nadu DistrictMunicipalities Act, 1920, and the rules framed therein. He had alsosubmitted that the Courts below had not taken into consideration theGovernment orders and the guidelines restricting the enhancement ofthe property tax, by more than 33.33%, in respect of the Governmentbuildings belonging to the Central Government and its undertakings. 18. The learned counsel appearing for the appellant had reliedon the following decisions in support of his contentions:18.1. In Dhulabhai V. State of Madhya Pradesh and another (AIR1969 SC 78), it had been held as follows:“(1) Where the statute gives a finality to the orders of the specialtribunals the civil courts’ jurisdiction must be held to be excludedif there is adequate remedy to do what the civil Court would normallydo in a suit. Such provision, however, does not exclude those caseswhere the provisions of the particular Act have not been compliedwith or the statutory tribunal has not acted in conformity with thefundamental principles of judicial procedure.” 18.2. In Chellammal V. Alandur Municipality, represented by itsCommissioner (1992(1) LW 110), it had been held as follows:“It is well settled that when the basis of the levy itself is wrongor that there is no basis at all for the levy and in that sense thereis no substantial compliance with the provisions of theMunicipalities Act, it is open to the Civil Court to declare the levyas illegal and in fact it is its duty to do so.” 18.3. In Government Servant Co-operative Housing BuildingSociety Ltd V. Union of India (AIR 198 SC 2636), it had been held asfollows:“The annual rent actually received by the landlord, in the absence ofany special circumstances, would be a good guide to decide the rentwhich the landlord might reasonably expect to receive from ahypothetical tenant. Since the premises in the present case are notcontrolled by any rent control legislation, the annual rent receivedby landlord is what a willing lessee, uninfluenced by othercircumstances, would pay to a willing lessor. Hence, actual annualrent, in these circumstances, can be taken as the annual rateablevalue of the property for the assessment of property tax.” 18.4. In Rajkot Municipal Corporation and Ors. V. Union of India(Civil Appeal Nos.9458-9463 of 2003), it had been held as follows:“(i) The Union of India and its departments will pay service chargesfor the services provided by the appellant Municipal Corporations. https://hcservices.ecourts.gov.in/hcservices/ They will not pay any property tax. The service charges will be paidat 75%, 50% and 33 1/3% respectively of the property tax levied onprivate owners, depending upon whether Union of India or itsdepartment is utilising the full services, or partial services or nilservices. The Union of India represented by its concerned departmentwill enter into agreements/understandings in regard to servicecharges for each of its properties, with the respective MuncipalCorporation.” 19. Per contra, the learned counsel appearing on behalf of therespondent Town Panchayat had submitted that the assessment ofproperty tax, made in respect of the buildings belonging to theappellant Corporation, is in accordance with the provisions of lawapplicable to the levying of such tax. Further, the appellantCorporation had preferred to challenge the enhancement of propertytax, belatedly, without any basis. It has also been stated that theappellant Corporation had not availed the statutory remedy available,under the provisions of the Tamil Nadu District Municipalities Act,1920. Even though the appellant Corporation had claimed that thereare Government Orders and guidelines to restrain the enhancement ofproperty tax, in respect of buildings belonging to the CentralGovernment and its undertakings to 33.33% on the existing rate oftax, the appellant Corporation had not been in a position to producethe Government Orders and the guidelines before the Courts below.When the appellant Corporation had not challenged the mode of thelevy of property tax, it would not be open to the appellantCorporation to challenge the enhancement of tax stating that it isarbitrary and illegal. Further, the appellant Corporation had alreadypaid the tax to the respondent Town Panchayat, without any protest.In such circumstances, the second appeal preferred by the appellantCorporation is liable to be dismissed. 20. In view of the submissions made by the learned counselsappearing on behalf of the appellant, as well as the respondent, andon a perusal of the records available, this Court is of theconsidered view that the appellant has not shown sufficient cause orreason to interfere with the concurrent findings of the Courts below.There is nothing available on record to show that the enhancement ofproperty tax, in respect of the buildings belonging to the appellantCorporation, should be restricted to 33.33%, as claimed by theappellant Corporation. Further, when there are alternative remediesavailable, under the provisions of the Tamil Nadu DistrictMunicipalities Act, 1920, the appellant Corporation ought to havechallenged the assessment notices by resorting to such remedies.Instead the appellant Corporation had preferred to file a civil suitchallenging the special notices issued by the respondent TownPanchayat stating that they have been issued in an arbitrary mannerand without following the provisions of law. It is clear, from the https://hcservices.ecourts.gov.in/hcservices/ evidence available on record, that the appellant Corporation hadpreferred to challenge the special notices issued by the respondentTown Panchayat, for the assessment of the property tax, in respect ofthe buildings said to be belonging to the appellant Corporation,belatedly. In such circumstances, the contentions raised on behalf ofthe appellant cannot be sustained in the eye of law. Since, thesecond appeal is devoid of merits, it is liable to be dismissed.Hence, it is dismissed. No costs. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarcshTo1) The Additional Subordinate Judge, Chengleput.2) The District Munsif Court, Tambaram.1 cc To The Government Pleader, SR.52341 S.A.No.908 of 2007SV (CO)RH (12.11.10)