M/s.D.C.M.Hundai Limited v. Pollivakkam Panchayat

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED:16.04.2009CORAMTHE HON'BLE Mr. JUSTICE M.SATHYANARAYANANW.P.No.36615 of 2007 andM.P.No.1 of 2007M/s.D.C.M.Hundai Limited,rep. By its Director,Mr.r.Srinivasan,N.104, Pollivakkam Village,Thiruvallur, (Sriperumbudur Road,Thiruvallur-602 002.).. PetitionerVs1.Pollivakkam Panchayat, rep. By its President, Pollivakkam Village, Thiruvallur District.2.The Assistant Director (Panchayat) Office of the Collectorate, Thiruvallur District.3.The Panchayat Assistant Grade-I, Pollivakkam Panchayat, Thiruvallur District... RespondentsPrayer: Writ Petition filed under Article 26 of the Constitution ofIndia praying for an issue of writ of certiorari calling for therecords relating to the impugned notice in Form-I, dated 30.11.2007issued by the first respondent and quash the same.For Petitioner: Mr.Sanjay Mohan for Ramasubramaniam & AssociatesFor RR-1 & 3: Mr.I.paranthamanFor R-2: Mr.R.Neelakandan Govt. AdvocateORDERThe petitioner in the affidavit filed in support of thispetition averred that ever since the inception of the company, thecompany had been incurring losses and thereby becoming a sick https://hcservices.ecourts.gov.in/hcservices/ industry and it was also due to free availability of cheap containersfrom China. Since the petitioner company become sick, proceedingswere initiated under Sick Industrial Companies (Special Provisions)Act, 1985 (in short 'SICA'). The BIFR has passed an order dated28.07.1998 wherein it has been ordered among other things that thefirst respondent-local body was directed to consider levyingreasonable demand of property tax similar to the demands raised bythem in respect of other industrial units in the same area and not totake any coercive action for recovery of their dues pendingcrystallization of the dues as per rehabilitation. The BIFR furtherdirected the first respondent to reconsider their demand in respectof the petitioner company with reference to the demands raised bythem in respect of other industrial units viz., Hindustan Motors etc.in their jurisdiction and take a rational view in respect of thedemand from the company and the first respondent was also directednot to take any coercive action without prior permission of the BIFR.2.The first respondent has initiated coercive action includingby way of attachment for recovery of property tax arrears for theperiod from 1996-1997 to 1999-2000 against the petitioner company.Therefore, the petitioner company filed a writ petition inW.P.No.12648 of 1997 praying for issuance of a writ of mandamusforbearing the respondents1 and 2 herein from taking any coerciveproceedings for recovery of the property tax in respect of thepetitioner's factory for the period from 1996-1997 to 1999-2000 or byway of any attachment etc. Pending disposal of the suit, anapplication for ad-interim injunction restraining the respondentstherein from initiating coercive proceedings was taken up wherein, aconditional order was passed and challenging the vires of the same,the petitioner company preferred W.A.No.2051 of 1999.3.When the writ appeal came up for hearing, a Division Bench ofthis Court has taken up the main writ petition itself for disposalalong with the writ appeal.4.The Division Bench, in the order dated 05.09.2007 made inW.A.No.2051 of 1999 and W.A.M.P.No.167 of 2007, W.P.No.12648 of 1997and W.M.P.No.18123 of 1999, has held that under Section 22 of theSICA, all legal proceedings, contracts, etc. stand suspended if anenquiry under Section 16 is pending or any scheme referred to underSection 17 is under preparation or consideration or a sanctionedscheme is under implementation before the BIFR. The Division Benchalso found that BIFR has already passed an order dated 20.06.2007 andas such no further order is required in the further proceedings. TheDivision Bench ultimately recalled the conditional order dated28.07.1999 passed in W.M.P.No.18123 of 1999 in W.P.No.12648 of 1999and disposed of the writ appeal by quashing the coercive proceedingspertaining to the period from 1996-1997 to 1999-2000 and granted https://hcservices.ecourts.gov.in/hcservices/ liberty to the first respondent-local body to proceed in accordancewith law in respect of demand for the subsequent period.5.The petitioner, thereafter, submitted a representation dated05.10.2007 to the District Collector of Thiruvallur District withcopy marked to respondents 1 and 2 praying for reduction of propertytax in terms of the above said orders passed by this Court and BIFRand further requested them to re-fix the property tax in line withthe property tax being charged from Hindustan Motors or otherindustries in the vicinity of their plant. 6.Thereafter, a meeting was held on 06.11.2007 between theofficials of the petitioner's company and the President of the firstrespondent and the representative of the Government. In the saidmeeting, no decision was reached. Thereafter, the first respondenthas initiated distinct proceedings for issuing demand notice dated30.11.2007 demanding the tax o Rs.69,07,625/-. Challenging the viresof the same, the present petition is filed. 7.Heard the submissions made by Mr.Sanjai Mohan, learned counselfor the petitioner, Mr.I.Paranthaman, learned counsel for therespondents 1 and 3 and Mr.R.Neelakandan, learned Government Advocatefor the second respondent.8.A perusal of the impugned order would reveal that the firstrespondent has failed to properly apply his mind to the proceedingsof the BIFR dated 20.06.2007 and the order dated 05.09.2007 passed bythe Division Bench of this Court in W.A.No.2051 of 1999 andW.P.No.12648 of 1997. The BIFR, in the above said order, hasspecifically directed the first respondent-local body to reconsidertheir demand of property tax in respect of the petitioner companywith reference to the demands raised by them in respect of otherindustrial units viz., Hindustan Motors etc. in their jurisdictionand take a rational view and pending consideration of the same, thelocal body was also directed not to take any coercive action withoutprior permission of the BIFR. The Division Bench of this Court in theabove said orders has also quashed the distraint proceedingspertaining to the demand of property tax for the period from 1996-1997 to 1999-2000. However, the first respondent-local body has notproperly taken into consideration the levy of property tax pertainingto the Hindustan Motors and other industrial units within thejurisdiction of the petitioner's company and raised a demand ofRs.69,07,625/- by way of property tax. A perusal of the impugnedorder also reveals that the first respondent-local body has notfollowed the procedure contemplated under Section 172 of the TamilNadu Panchayats Act, 1994. Since the local body has failed to advertto the directions of the BIFR as well as the direction of this Court,the impugned order suffers non-application of mind on the part of thelocal body and consequently, it is liable to be quashed. https://hcservices.ecourts.gov.in/hcservices/

9.Hence, the writ petition is allowed and the impugned orderpassed by the first respondent is quashed. No costs. Consequently,connected miscellaneous petition is closed.10.It is represented by the learned counsel for the petitionerthat in pursuance to the interim orders passed in the above said writappeal a sum of Rs.15 lakhs was already deposited to the local bodyand also the Bank Guarantee for a sum of Rs.54 lakhs was also given.In view of quashing of the impugned proceedings, Therefore, the BankGuarantee of Rs.54 lakhs is to be released in favour of thepetitioner company. 11.Per contra, the learned counsel appearing for the first andthird respondent as well as the learned Government Advocate appearingfor the second respondent would represent that pending adjudicationof the proceedings for levy of property tax, a sum of Rs.54 lakhsgiven to the local body by way of bank guarantee may be kept alive bythe petitioner company. 12.The Court is taken into consideration the said submissionsand is of the view that the sum of Rs.15 lakhs deposited by thepetitioner company by virtue of the interim orders passed by thisCourt in favour of the first respondent-local body is to be with themand in so far as the Bank Guarantee of Rs.54 lakhs is concerned, asum of Rs.15 lakhs is to be given as a Bank Guarantee in favour ofthe first respondent and the balance amount may be withdrawn by thepetitioner company.13.In view of the quashing of the impugned order, the firstrespondent-local body is to hold enquiry afresh pertaining to thedemand of property tax from the petitioner company from 1996-1997 to2007-2008 in terms of the orders passed by the BIFR on 20.06.2007 andalso in accordance with law, after affording reasonable opportunityto the petitioner.Sd/Asst.Registrar/true copy/Sub Asst.Registrar sgl https://hcservices.ecourts.gov.in/hcservices/ To1. The President,Pollivakkam Panchayat, Pollivakkam Village, Thiruvallur District.2.The Assistant Director (Panchayat) Office of the Collectorate, Thiruvallur District.3.The Panchayat Assistant Grade-I, Pollivakkam Panchayat, Thiruvallur District.+1cc to Mr.I.Paranthaman, Advocate Sr 15077BV(CO)km/24.4.W.P.No.36615 of 2007