w w w . L a w y e r S e r v i c e s . i n



Vimalchandra Manikchand Gandhi v/s Jawahar Shivlal Shah and others


Company & Directors' Information:- MANIKCHAND CORPORATION INDIA PRIVATE LIMITED [Strike Off] CIN = U15400TG2013PTC090150

Company & Directors' Information:- SHAH GANDHI AND CO PVT LTD [Active] CIN = U99999MH1948PTC006750

Company & Directors' Information:- GANDHI SHAH LTD. [Strike Off] CIN = U99999MH1949PLC007053

    SECOND APPEAL NO.149 OF 1984

    Decided On, 22 June 1995

    At, High Court of Judicature at Bombay

    By, THE HON'BLE MR. JUSTICE M.L. DUDHAT

    A.A. Bhubhakoni, for the appellant. A.V. Valsangkar with K.Y. Mandlik, for respondents Nos. 1, 2 and 3. Nitin Jamdar, for respondent No. 4.



Judgment Text

M.L. DUDHAT, J.


This second appeal is preferred against the judgment and decree dated 28-10-1988 passed by the Third Extra Assistant Judge, Solapur, in Civil Appeal No. 515 of 1981 preferred against the judgment and decree dated 29-11-1980 passed by the Third Joint Civil Judge, Junior Division, Solapur, in Regular Civil Suit No. 1054 of 1976 whereby the Lower Appellate Court partly allowed the appeal and set aside the judgment and decree passed by the trial Court.


2.Few facts which are material for the purpose of disposing of this second appeal are as under :


Original plaintiff (appellant herein) filed the aforesaid suit against respondents Nos. 1, 2 and 3, who were the vendors, from whom he purchased the property and also against respondent No. 4 Municipal Corporation of Solapur. It is the case of the plaintiff that he purchased the suit property consisting of buildings and open land situated at Solapur Nararji Peth, Solapur from respondents Nos. 1, 2 and 3 (original defendants Nos. 1, 2 and 3) by a sale deed dated 13-4-1966. It is also an admitted position that after the purchase of the suit property, plaintiff paid all the Municipal taxes due towards the property from the date of its purchase. It is the case of the plaintiff that in the year 1943 he was in possession of the suit property, of which one Chandulal Gandhi was the owner. The suit property had been mortgaged by the owner Chandulal Gandhi with the Bank of Maharashtra in the year 1952. Bank of Maharashtra filed Civil Suit No. 39 of 1952 for recovery of arrears due from the mortgagee Chandulal Gandhi under the mortgage. The said suit was decreed in the Darkhast No. 31 of 1963 taken out by Bank of Maharashtra for executing the said decree. The suit property was sold in auction. In the execution of the said decree, one Wadilal deposited the purchase price in the Court. When the aforesaid amount deposited by Wadilal was lying in the Court, it appears that Municipal Corporation (defendant No. 4) filed an application in the Executing Court for recovering the property tax due from Chandulal Gandhi from the year 1953-54 to 1956-57 amounting to Rs. 9533.70P. from the amount deposited by the said Wadilal in the Executing Court. The aforesaid application dated 20-10-1956 filed by defendant No. 4 is at Exhibit 51. The Executing Court by its order dated 20-4-1957 rejected the said application filed by defendant No. 4 Corporation. It is further stated by the plaintiff that subsequently on 29-3-1957, the suit property was purchased by Bank of Maharashtra in an auction held in execution proceedings. Thereafter on 23-3-1964, defendant Nos. 1, 2 and 3 purchased the suit property from Bank of Maharashtra. It appears that on 18-11-1965, defendant No. 4-Corporation issued notice of demand to Bank of Maharashtra in respect of arrears of taxes due. To the aforesaid notice vide Exhibit 64 dated 20-12-1965, Bank of Maharashtra gave reply. It is pertinent to note that in the aforesaid reply, Bank of Maharashtra pointed out to the defendant No. 4-Corporation that earlier they had filed an application dated 20-10-1956 in the Executing Court and the Executing Court had rejected the said application. Further, the Bank of Maharashtra also replied to the effect that since the taxes due from Chandulal Gandhi were for the period 1953-54 to 1956-57 i.e. much prior to their purchase of the suit property on 29-3-1957, defendant No. 4-Corporation is not entitled to recover the Municipal Taxes from the Bank. It appears that to the aforesaid reply of the Bank of Maharashtra, defendant No. 4 Corporation has not given any reply. Thereafter, on 13-4-1966, present plaintiff purchased the suit property from defendant Nos. 1 to 3. After the said purchase when the plaintiff was in possession of the property, defendant No. 4-Corporation on 20-3-1975 gave notice in a local newspaper to the effect that the defendant No. 4-Corporation was going to put the suit property on auction for recovery of their arrears of Municipal taxes. On 12-3-1976, plaintiff issued notice to defendant Nos. 1, 2 and 3 calling upon them to pay the taxes on the basis of certain averments made in the sale deed dated 13-4-1986. On 18-3-1976, defendant No. 4-Corporation put the suit property on action and in order to save the property, plaintiff was constrained to pay the arrears of taxes of Rs. 9433.30P. on 30-3-1976. Thereafter plaintiff gave statutory notice dated 30-3-1976 to defendant No. 4-Corporation and then on 28-2-1976 filed Regular Civil Suit No. 1054 of 1976 against his vendors-defendant Nos. 1 to 3, and defendant No. 4-Municipal Corporation of Solapur. It was contended on behalf of defendant Nos. 1 to 3 that on the date when they had purchased she suit property from Bank of Maharashtra on 23-3-1964 till they had sold the property to the present plaintiff on 13-4-1966 they had paid all the Municipal taxes in respect of the suit property and, therefore, plaintiff was not entitled to recover the taxes for the years 1953-54 to 1956-57 which he paid to the defendant No. 4 Corporation. Defendant Nos. 1, 2 and 3 also took the stand that alternatively Bank of Maharashtra was liable to pay the said taxes, which was not made a party to the suit.


3.Defendant No. 4 contended that as per the provisions of the Bombay Provincial Municipal Corporation Act, 1949, the Corporation was entitled to recover the property taxes due from the property and even though the plaintiff was not the owner of the property in the years 1953-54 to 1956-57, still, under the law, defendant No. 4 was entitled to recover the property tax from the property and, therefore, their action to recover was legal and according to defendant No. 4 the suit filed by plaintiff against the Corporation is liable to be dismissed.


4.After going through the aforesaid pleadings and after scanning the evidence, the trial Court dismissed the suit against defendant No. 4 but decreed the suit against defendant Nos. 1 to 3 on the ground that there were certain averments in the sale deed dated 13-4-1966. Against the said judgments and decree passed by the trial Court, defendants Nos. 1 to 3 preferred an appeal being civil Appeal No. 515 of 1981 before the Third Extra Assistant Judge, Solapur, and the lower appellate Court by his judgment and decree was pleased to allow the appeal of defendant Nos. 1 to 3 and set aside the judgment and decree passed against defendant Nos. 1 to 3. It is against this judgment and decree of the lower appellate Court, the present second appeal is preferred by the original plaintiff.


5.The only question of law to be decided by me in this second appeal is as to whether the defendant No. 4-Corporation was entitled under the law to recover the property due from Chandulal Gandhi, who was the owner of the property during the period 1953-54 to 1956-57 from the present plaintiff, who purchased the said property much subsequently on 13-4-1966, more particularly keeping in mind that the property belonging to Chandulal Gandhi was purchased on 29-3-1957 by Bank of Maharashtra, who sold the same to defendant Nos. 1 to 3 on 28-2-1964 and which was ultimately purchased by present plaintiff from defendant Nos. 1 to 3 on 13-4-1966.


6.According to me, both the Lower Courts unfortunately did not apply their minds to the provisions of the Bombay Provincial Municipal Corporation Act, 1949. Though the Lower Appellate Court raised an issue as to whether plaintiff was liable to pay arrears of tax but in the discussion at page 12-para 20 of the judgment merely rejected the contention of the plaintiff on a flimsy ground that the plaintiff had not denied the right and legality is respect of recovery of arrears of tax on the property by defendant No. 4-Corporation. According to me, whether the taxes are legal or not is not to be decided on the basis of any of ordinary citizens but it must be decided by interpreting law and statutory provisions. Apart from that, according to me, even factually the aforesaid observation made by the Lower Appellate Court is incorrect. In this particular case, in para 6 of the plaint filed by the present plaintiff, present plaintiff has taken a specific stand that the said amount was paid by the plaintiff under protest. The plaintiff maintained that he was not liable to pay the arrears of tax so recovered from him as the same were of the period prior to his purchasing the suit property. That means, in the pleadings specific stand is taken by the plaintiff challenging the authority of defendant No. 4-Corporation to recover the aforesaid amount. Further, in the cross-examination, he was asked a question as to whether the said taxes are legal ? It appears that to that question he has replied in his cross-examination as under : "It is not my say that the taxes are illegal. It is correct that I have not contended in my plaint that the taxes are illegal". Relying on this, unfortunately, the Lower Appellate Court observed that the plaintiff had given an admission about the legality of the tax. The Lower Appellate Court completely lost sight of the fact that it is nobody's case that the taxes on the property were illegal. The case of the plaintiff was specific that though the said taxes are legal, the same cannot be recovered from the plaintiff, because he was not the owner of the suit property in the years 1953-54 to 1956-57.


7.As I have already pointed out above, Issue No. 4 was a very important issue before the Lower Appellate Court and as the Lower Appellate Court cursorily disposed of the said issue in few lines in paragraphs 20 and 21 of his judgment by giving some flimsy reasoning, this Court is constrained to decide this issue afresh with reference to the sections under the Bombay Provincial Municipal Corporation Act, 1949.


8.Under the Bombay Provincial Municipal Corporation Act, 1949, the primary responsibility for the property tax is referred to in section 139. Section 139 of the said Act is as under:


"139. Primary responsibility for property taxes on whom to rest.-(1) Subject to the provisions of sub-section (2) property taxes assessed upon any premises shall be primarily leviable as follows, namely :-

(a) If the premises are held immediately from the Government or from the Corporation, from the actual occupier thereof :

Provided that property taxes due in respect of buildings vesting in the Government and occupied by servants of the Government or other persons on payment of rent shall be leviable primarily from the Government ;

(b) If the premises are not so held,-

(i) from the lessor if the premises are let ;

(ii) from the superior lessor if the premises are subject ;

(iii) from the person in whom the right to let the premises vests if they are unlet.

(2) If any land has been let for any term according one year to a tenant, and such tenant has built upon the land, the property taxes assessed upon the said land and upon the building erected thereon shall be primarily leviable from the said tenants or any person deriving title from the said tenant by the operation of law or by assignment or transfer but not sub-lease or the legal representative of the said tenant or person whether the premises be in the occupation of the said tenant or person or legal representative or a sub-tenant."


Now, in the present case, admittedly defendant No. 4-Corporation recovered the tax due upon the suit property for the period concerning from the year 1952-53 to 1956-57. It is also an admitted position that during the period when plaintiff was the owner of the property, no tax was due. Similarly, it is also an admitted position that when Bank of Maharashtra purchased the suit property on 29-3-1957, Bank of Maharashtra paid all the Municipal taxes till the Bank sold the suit property to defendant Nos. 1 to 3 and defendant Nos. 1 to 3, after the purchase, paid all the taxes from the date of purchase till the suit property was sold to the present plaintiff on 13-4-1966. It is also an admitted position that during the said period of 1952-53 and 1956-57, the said Chandulal Gandhi was the owner of the suit property and the property was mortgaged with Bank of Maharashtra.


9.If one goes through the aforesaid section 139 of the Bombay Provincial Municipal Corporation Act, 1949, it would appear that section 139, sub-section (2) of the said Act is not applicable to the facts of the present case. The liability to pay the property tax, an per section 139(1)(b) is (i) from the lesser if the premises are let ; (ii) from the superior lessor if the premises are sublet, and (iii) from a person in whom the right to let the premises if they are unlet. The present plaintiff does not come under any of the categories mentioned in the aforesaid section. This being the clear position, it is very difficult to understand as to how defendant No. 4-Corporation can recover the property tax from the years 1952-53 to 1956-57 from the present plaintiff. For that matter, on the same principle, according to opinion of this Court, defendant No. 4-Corporation is not entitled to recover the said taxes even from defendant Nos. 1 to 3 and even from Bank of Maharashtra.


10.Mr. Nitin Jamdar, learned Counsel appearing on behalf of defendant No. 4-Corporation strenuously contended that liability for payment of tax is always annexed to the premises in respect of which the tax is due. Learned Counsel Mr. Nitin Jamdar argued the aforesaid proposition with reference to section 141 of the Bombay Provincial Municipal Corporations Act, 1949. Section 141 of the said Act is as under :


"141. Property taxes to be a first charge on premises on which they are assess-

(1) Property-taxes due under this Act in respect of any building or land shall, subject to the prior payment of the land revenue, due to the provincial Government thereupon, be a first charge, in the case of any building or land held immediately from the Government, upon the interest in such building or land of the person liable for such taxes and upon the moveable property, if any, found within or upon such building or land, upon the said building or land and upon the moveable property, if any, found within or upon such building or land and belonging to the person liable for such taxes.

Explanation.-The term "property tax" in this section shall be deemed to include charges payable under section 134 for water supplied to any premises and the costs of recovery of property-taxes as specified in the rules.

(2) In any decree passed in a suit for the enforcements of the charge created by sub-section (1), the Court may order the corporation of interest on the sum found to be due at such rate as the Court deems reasonable from the date of the instruction of the suit until realisation, and such interest and the cost of enforcing the said charge, including the costs of the suit and the cost of bringing the premises of movable property in question to sale under the decree, shall, subject as aforesaid, be a fresh charge on such premises and movable property along with the amount found to be due, and the Court may direct payment thereof to be made to the Corporation and of the sale proceeds."


On a fair reading of the aforesaid section 141, more particularly, sub-section (1) thereof, it will be clear that whenever there are arrears of tax, the same form a charge on the premises on which they are assessed subject to the prior payment of the land revenue upon the interest in such building or land of the person liable for such taxes. Pausing here for a moment, it is clear that the charge is upon the interest of such building or land is of a person liable for such taxes. As already discussed above, person liable for such taxes in the present case, with reference to section 139(1)(b) of the said Act was Chandulal Gandhi, who was the lessor and owner of the property. However, admittedly, when defendant No. 4-Corporation declared its intention vide notice dated 20-3-1975 (Exhibit 81) in the local newspaper that defendant No. 4-Corporation is going to put the suit property on auction for recovery of the taxes due, present plaintiff who had purchased the said property on 13-4-1966 was in occupation of the property as the owner. The present plaintiff not being a person falling in any of the categories under section 139(1)(b), charge as envisaged under section 141 of the Bombay Provincial Municipal Corporations Act, 1949 is not applicable in the facts and circumstances of the case and, therefore, according to my opinion, the argument as advanced by the learned Counsel Mr. Nitin Jamdar is not sustainable. Apart from that as per the ratio of the judgment of the Supreme Court in the case of Ahmedabad Municipality v. Haji Abdul, reported in A.I.R. 1971 S.C. 1201, Municipality cannot by virtue of section 141 of the Bombay Provincial Municipal Corporations Act, 1949 enforce its charge against the property in the hands of transferee for consideration without notice. The Supreme Court interpreted the aforesaid section 141 of the said Act in conjunction with the second half of section 100 of the Transfer of Property Act, which enacts a general prohibition that no charge shall be enforced against any property in the hands of transferee for consideration without notice of charge and that exception to this rule can be made only if it is expressly provided so by law. In the present case, from the record it is clear that when Bank of Maharashtra purchased the suit property in auction on 29-3-1957, they had no notice about the said charge. Apart from that, on 29-3-1964, when defendant Nos. 1, 2 and 3 purchased the suit property from Bank of Maharashtra, they had no notice of the said charge for the arrears of tax for the period 1953-54 to 1956-57 and same is the case when the property was purchased by the present plaintiff. In view of this, according to me, defendant No. 4-Corporation was not entitled to recover the said arrears from the plaintiff or from defendant Nos. 1 to 3.


11.Mr. Nitin Jamdar, learned Counsel appearing on behalf of defendant No. 4-Corporation contended that in view of Taxation Rules framed by the Municipal Corporation under chapter VIII to the Bombay Provincial Municipal Corporations Act, 1949, since Bank of Maharashtra when they purchased the suit property on 29-3-1957 ; defendant Nos. 1 to 3 when they purchased the suit property on 29-3-1964 and the present plaintiff, who thereafter purchased the suit property on 13-4-1966 from defendant Nos. 1 to 3 failed to give notice under Rule 1 of the Taxation Rules, defendant No. 4-Corporation. was entitled to recover the said taxes due on the property for the period 1953-54 to 1956-57. It is very difficult to accept the aforesaid contention raised on behalf of defendant No. 4-Corporation. Firstly, tax can be collected on the basis of the Act and if there is no provision to collect tax from a particular person under the Act, by framing the rules, the tax cannot be collected from the person who is not liable under the Act to pay the tax. Apart from that, according to me, the said rules do not support the aforesaid contention as advanced by Mr. Nitin Jamdar. On the contrary, reading of the said rules defeats the contention as advanced by Mr. Nitin Jamdar. Rule 1 of the Taxation Rules is as under :


"1. Notice to be given to Commissioner of all transfers of title of persons primarily liable to payment to property tax.-(1) Whenever the title of any person primarily liable for the payment of property-taxes on any premises to or over such premises is transferred, the person whose title is so transferred and the person to whom the same shall be transferred shall, within three months after execution of the instrument of transfer, or after its registration, if it be registered, or after the transfer is effected, if no instrument be executed, give notice of such transfer, in writing to the Commissioner.

(2) In the event of the death of any person primarily liable as aforesaid, the person to whom the title of the deceased shall be transferred, as heir or otherwise, shall give notice of such transfer to the Commissioner within one year from the death of the deceased."


If one carefully reads the aforesaid rule, the aforesaid rule is really meant for the benefit of the owner of the property who sells his property. In order to see that he should not be liable after the sale of the property to some other person and that some other person should be made liable under section 139(1)(b) of the Act, Rule 1 envisages notice to that effect by parties to the said transfer. The same intention is clear if one reads Rule 3 which is as under :


"3. Liability for payment of property taxes to continue in the absence of any notice or transfer.-(1) If any person primarily liable for the payment of a property tax whose title to or over such premises is transferred fails to give notice of such transfer to the Commissioner, he shall, in addition to any other liability which he incurs through such neglect, continue liable for the payment of all property-taxes from time to time payable in respect of the said premises until he gives such notice, or until the transfer shall have been recorded in the Commissioner's books.

(2) Nothing in this rule shall be held to diminish the liability of the transferee for the said property-taxes, or to effect the prior claim of the Commissioner on the premises conferred by section 141 for the recovery of the property-taxes due thereupon."


The aforesaid rule clearly reiterates the position as laid down in the Act that even after the sale of the property if there is failure on the part of the owner to inform the Corporation about the transfer, then inspite of the sale under this rule apart from other penalties he is made liable to pay the taxes for the period after the sale is effected. In view of this, according to me, there is no substance in the aforesaid argument as advanced on behalf of defendant No. 4-Corporation.


12.There is one more dimension of this matter, which will come to the help of the present plaintiff. Admittedly, the tax due to defendant No. 4-Corporation is for the period 1953-54 to 1956-57 and in view of section 139, it was the liability of Chandulal Gandhi to pay the said tax. It appears that the suit property was also mortgaged with Bank of Maharashtra and, therefore, in the year 1952-53, Bank of Maharashtra filed a suit being Suit No. 39 of 1952 for recovery of the amount due under the mortgage and the same suit was decreed. After the said decree, in the year 1953, Bank of Maharashtra filed Special Darkhas No. 31 of 1953 for execution of the said decree. On 9-10-1956, the said property was put on auction and one Wadilal deposited amount towards the purchase of plot No. 7. When the said amount deposited by Wadilal was lying in the Court, defendant No. 4-Corporation filed an application dated 20-10-1956 (Exhibit 51). In the said application, it was contended on behalf of defendant No. 4-Corporation that against the suit property, arrears from 1953-54 to 1956-57 were due and, therefore, Court may pass an order to release the aforesaid amount towards the appropriation of the taxes due from the property. The aforesaid application filed by defendant No. 4-Corporation. was rejected on the ground that in the execution decree of the decree-holder such an order cannot be passed. Surprisingly, defendant No. 4-Corporation has not taken any action thereafter. According to my opinion, the defendant No. 4-Corporation ought to have filed a suit for recovery and get a direction from the Court for attachment of the said amount and thereafter for recovery of the said amount. Defendant No. 4-Corporation even could have taken distress auction for distress sale as the sale under the auction was not complete. Unfortunately, defendant No. 4-Corporation failed to take any of these steps, which the Corporation ought to have taken to recover the arrears. From the date of dismissal of the said application on 30-4-1957 till 20-3-1975 there was total inaction on the part of defendant No. 4-Corporation and it was only after a lapse of about 18 years that the Corporation decided to recover the tax when the property was purchased in the meantime by bona fide purchasers without notice. Further, on 20-3-1975, the Corporation (defendant No. 4) published a notice in the local newspaper for putting the property to auction for recovery of Municipal taxes in the year 1954 when the said property belonged to the present plaintiff and not to Chandulal Gandhi. Surprisingly, the warrant issued by the Corporation was against the Bank of Maharashtra. In the declaration (Exhibit 81), Bank of Maharashtra, Solapur was shown in

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arrears of the taxes in respect of suit property for the period 1953-54 to 1956-57. Admittedly, at the relevant time even the Bank of Maharashtra was not the owner of the property and the said property passed on to the present plaintiff through one more intermediate sale from Bank of Maharashtra to defendant Nos. 1, 2 and 3. It is true that on 30-3-1976 plaintiff deposited the amount due towards the arrears of Rs. 9433.00P. under protest. According to my opinion, the plaintiff had no alternative at that time and, therefore, out of coercion in order to avoid the sale of his property by auction for payments of taxes, though due from Chandulal Gandhi, the plaintiff paid the aforesaid amount under protest. It is pertinent to note that plaintiff has no relation whatsoever with Bank of Maharashtra and I do not understood as to how defendant No. 4-Corporation could have put the property belonging to plaintiff on distress sale and recover from him the amount of the aforesaid taxes. The Lower Appellate Court surprisingly observed that plaintiff is not entitled to recover the said amount paid by him under protest because he has not made Bank of Maharashtra a party to the suit. According to me, if it is the contention of the plaintiff that defendant No. 4-Corporation is not entitled to recover the tax for the period 1953-54 to 1956-57 since he had became owner of the property on 13-4-1966, there was no need to make the Bank of Maharashtra as party to the suit as Bank of Maharashtra was not a necessary party. According to me, taking any view of the matter, defendant No. 4-Corporation was not legally entitled to recover the tax leviable on the suit property for the years 1953-54 to 1956-57 amounting to Rs. 9533.70 from the present plaintiff and who purchased the said property subsequently after ten years on 13-4-1966. In view of this, the judgment and decree dated 28th October, 1983 passed by the Third Extra Assistant Judge, Solapur, in Civil Appeal No. 515 of 1981 is liable to be set aside. 13.Hence this Second Appeal No. 149 of 1964 is allowed. The judgment and decree dated 28th October, 1983 passed by the Third Extra Assistant Judge, Solapur, in Civil Appeal No. 515 of 1981 and the judgment and decree dated 29-11-1980 passed by the Third Joint Civil Judge, Junior Division, Solapur, in Regular Civil Suit No. 1054 of 1976 are set aside, and the respondent No. 4-The Municipal Corporation of Solapur, Chief Municipal Office, Solapur, is directed to return the amount of Rs. 9933.80P. to the plaintiff with interest at the rate of 12 per cent per annum calculated from 20-3-1976 (when the plaintiff deposited the entire amount towards the arrears) till the actual recovery. This appeal is allowed with costs. Certified copy be issued expeditiously.
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