HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA-3343-1999 (O&M) Harbans Singh & Anr. v. Municipal Corpora(cid:13)on, Ludhiana & Anr.

Argued by:- Mr. Sunil Chadha, Senior Advocate with Mr. Raghav Chadha, Advocate for the appellants. Mr. Parambir Singh, Advocate and Ms. Prabhpreet Kaur, Advocate for the respondents. DEEPAK GUPTA, J. **** The present Regular Second Appeal has been preferred by the plain(cid:13)ff against the judgment & decree dated 28.04.1999 passed by the learned first Appellate Court, whereby, while accep(cid:13)ng the appeal filed by the defen- dants–Municipal authori(cid:13)es, the judgment & decree dated 01.02.1996 passed by the trial Court decreeing the suit for permanent injunc(cid:13)on was set aside and the suit was dismissed.

2. The factual matrix, as borne out from the record, reveals that on

16.10.1990, plain(cid:13)ff No.1, while driving a truck loaded with synthe(cid:13)c yarn and Nirma washing powder packs, entered the municipal limits of Ludhiana and had crossed approximately 50 yards beyond the Octroi barrier, when he was stopped by the Municipal staff. The plain(cid:13)ff expressed willingness to pay the Octroi duty for the goods brought within municipal limits; however, the truck along with the NEETIKA TUTEJA 2026.03.05 13:17 I attest to the accuracy and integrity of this document RSA-3343-1999 (O&M) goods was seized and the plain(cid:13)ff was directed to pay Octroi along with a penalty quan(cid:13)fied at twenty (cid:13)mes, as the alleged evaded duty. The plain(cid:13)ffs approached the concerned authori(cid:13)es for withdrawal of the demand and release of the vehicle and goods, but the demand of ₹15,000/- towards penalty persisted, compelling them to ins(cid:13)tute the civil suit seeking protec(cid:13)on against the said demand and consequen(cid:13)al relief.

3. The defendants contested the suit primarily on the ground of lack of jurisdic(cid:13)on of the Civil Court and asserted that the plain(cid:13)ff had a=empted to evade Octroi duty and was rightly penalized under the provisions of the Punjab Municipal Corpora(cid:13)on Act, 1976.

4. Upon apprecia(cid:13)on of evidence, the learned trial Court recorded a categorical finding that although Octroi duty could be assessed and recovered by the Municipal authori(cid:13)es, the power to impose penalty under Sec(cid:13)on 116 of the Act did not vest with the Commissioner or officers of the Corpora(cid:13)on and could be exercised only by a competent Criminal Court. On that basis, the demand was held to be illegal and the suit was decreed.

5. The first Appellate Court, while concurring with the finding that the Municipal authori(cid:13)es lacked competence to impose the penalty, nonetheless allowed the appeal and dismissed the suit on the premise that the plain(cid:13)ffs had an efficacious statutory remedy of appeal under the Act.

6. Assailing the reversal, learned senior counsel for the appellants contends that once the ac(cid:13)on of the Municipal authori(cid:13)es was found to be without jurisdic(cid:13)on, the availability of an alterna(cid:13)ve remedy could not operate as a bar to the maintainability of the civil suit.

7. Conversely, learned counsel for the respondents supports the judgment of the first Appellate Court.

8. Having heard the par(cid:13)es and examined the record, this Court finds that the substan(cid:13)al ques(cid:13)on arising for considera(cid:13)on is whether officers of the Municipal Corpora(cid:13)on possess the authority to impose penalty under Sec(cid:13)on NEETIKA TUTEJA 2026.03.05 13:17 I attest to the accuracy and integrity of this document RSA-3343-1999 (O&M) 116 of the Punjab Municipal Corpora(cid:13)on Act, 1976 for alleged evasion of Octroi and, if not, whether the civil suit could be dismissed solely on the ground of availability of an alterna(cid:13)ve statutory remedy.

9. The issue is no longer res integra. The Hon’ble Supreme Court in Municipal Corpora(cid:13)on, Ludhiana v. Commissioner of Pa(cid:13)ala Division Pa(cid:13)ala, 1995 (1) SCC 304 authorita(cid:13)vely held that while assessment and recovery of Octroi fall within the domain of municipal authori(cid:13)es, imposi(cid:13)on of penalty contemplated under Sec(cid:13)on 116, being penal in nature and capable of extending to mul(cid:13)ple (cid:13)mes the duty allegedly evaded, can be ordered only by a Criminal Court in accordance with law. The statutory scheme, par(cid:13)cularly when Sec(cid:13)ons 388 and 394-A of the Act are read conjointly, reinforces the dis(cid:13)nc(cid:13)on between administra(cid:13)ve recovery of duty and penal consequences for evasion.

10. The same principle has been reiterated by this Court in M/s Gestetner (India) Ltd. v. The Municipal Corpora(cid:13)on, Ludhiana and Others 1996(3) P.L.R. 259; and later in Indian Tankers (P) Ltd. v. Municipal Corpora(cid:13)on, Jalandhar, 2016 (2) PLR 841, wherein it was consistently held that municipal authori(cid:13)es are not vested with the power to impose such penalty.

11. In the present case, both Courts below have concurrently held that the Commissioner or officers of the Municipal Corpora(cid:13)on lacked competence to impose the penalty in ques(cid:13)on. Once such a finding regarding inherent lack of jurisdic(cid:13)on stands recorded, the demand raised becomes void and unenforceable in the eyes of law.

12. It is a se=led principle that the rule of alterna(cid:13)ve remedy is a rule of prudence and not a bar where the impugned ac(cid:13)on is wholly without jurisdic(cid:13)on. A party cannot be compelled to pursue a statutory remedy against an order, which is a nullity. The first Appellate Court, therefore, fell into error in dismissing the suit merely on the ground that an appellate remedy was available, despite upholding the finding that the impugned demand was issued by an authority lacking statutory competence. NEETIKA TUTEJA 2026.03.05 13:17 I attest to the accuracy and integrity of this document RSA-3343-1999 (O&M)

13. The trial Court had correctly appreciated the legal posi(cid:13)on and rightly decreed the suit by holding the impugned demand to be illegal. The reversal by the first Appellate Court thus suffers from a misapplica(cid:13)on of law and warrants interference in second appellate jurisdic(cid:13)on.

14. Consequently, the present appeal is allowed. The judgment and decree dated 28.04.1999 passed by the learned first Appellate Court are set aside; and those dated 01.02.1996 passed by the learned trial Court are restored.

15. All pending applica(cid:13)on(s), if any, shall stand disposed of. (DEEPAK GUPTA) JUDGE

05.03.2026 Nee(cid:3)ka Tuteja Whether speaking/reasoned? Whether reportable? Yes/No Yes/No Uploaded on.: 05.03.2026 NEETIKA TUTEJA 2026.03.05 13:17 I attest to the accuracy and integrity of this document