M/s. Natvar Properties Pvt. Ltd. v. Municipal Corporation of Greater Bombay

1 This Petition challenges the warrant of attachment dated 14th March 2011 and notice of auction dated 5th May 2011, both issued by the Respondent–Municipal Corporation. Respondent No.3 has been arrayed as party Respondent being licensee at the relevant time of the suit property. Petitioner was the licensor of the suit property.

2 It is the case of the Petitioner’s that the property tax during the leave and licence period was to be paid by the licensee Respondent No.3 and the Petitioner was licensor of the suit premises. The counsel for Corporation opposes this position in law. The Applicant claim’s to have purchased all right, title and interest in the suit property from the Petitioner by way of conveyance. So also, as per the consent terms dated 14th October 2021 filed in Commercial Suit No. 415 of 2019 entered into between the Petitioner (Plaintiff therein) and Applicant (Defendant therein), in clause No.16, it had been recorded that: “16) The Plaintiff has informed the Defendants that a Writ Petition No.2182 of 2012 has been filed by the Plaintiff in this Hon’ble Court, challenging the levy of the Municipal Tax in respect of the suit property. Defendant No.2 undertakes to this Hon’ble Court to settle and pay all the outstanding amounts due to the MCGM till date in respect of the Suit property, for and on behalf of Defendant No.1 as well as the expenses borne/to be borne by the Plaintiff/Defendant No.1.” (Emphasis supplied)

3 The advocate for the Applicant states that by communication dated 31st March 2022, addressed to Respondent No.2/Corporation they had “Under Protest” paid a sum of Rs.52,08,636/-. However, the cheque bounced due to technical flaw. The Applicant further by its letter dated 13th April 2022, addressed to Respondent No.2/Corporation forwarded a Demand Draft for Rs.52,08,636/- dated 12th April 2022. The advocate for the Applicant states that the said Demand Draft has been honoured. The Applicant’s Counsel further argued that after the year 2008, they have been regularly paying the property tax of the Corporation.

4 Respondent No.3/licensee had in fact challenged the impugned demand made by the Corporation by filing an Appeal under Section 217 of Mumbai Municipal Corporation Act, 1988 (“the MMC Act”, for short) before the Small Causes Court Mumbai. However, they had failed to pay the mandatory amount, which is required to be deposited at the time of filing the Appeal under Section 217 of the MMC Act. Hence, the Appeal of Respondent No.3 was dismissed. The Petitioner also could have challenged the impugned demand made by the Corporation by filing an appeal under Section 217 of MMC Act, but it didn’t, instead the Petitioner preferred the present Writ Petition under Article 226 of the Constitution of India.

5 The advocate for the Applicant states that he wants to pursue this Writ Petition by stepping into the shoes of the Petitioner, pursuant to conveyance and consent terms entered into by the parties.

6 It is important to consider Section 217 of the MMC Act, which is reproduced hereinbelow:

217. Appeals when and to whom to lie (1) Subject to the provisions hereinafter contained, appeals against any rateable value [or the capital value, as the case may be,] or tax fixed or charged under this Act shall be heard and determined; by the Chief Judge of the Small Cause Court. (2) But no such appeal [shall be entertained] by the said Chief Judge, unless— (a) it is brought within [twenty-one days] after the accrual of the cause of complaint; …….. [(5) In the case of any appeal against any rateable value or property tax fixed or charged under this Act, which may have been entertained by Chief Judge before the commencement of the Act aforesaid, or which may be entertained by him after the said date, the Chief Judge shall not hear and decide such appeal unless the property tax, if any payable, on the basis of the original rateable value plus eighty per centum of the property tax claimed from the appellant on the increased portion of the rateable value of the property out of the property tax claimed under each of the bill, which may have been issued, from time to time, since the filling of appeal, is also deposited with the Commissioner within the period prescribed under the Act. In case of default by the appellant, on getting an intimation to that effect from the Commissioner, at any time before the appeal is decided, the Chief Judge shall summarily dismiss the appeal: Provided that, in case the appeal is decided in favour of the Corporation, interest at 6.25 per centum per annum shall be payable by the applicant on the balance amount of the property tax from the date on which the amount of property tax was payable: Provided further that, in case the appeal is decided in favour of the appellant and the amount of property tax deposited with the Corporation is more than the property tax payable by him, the Commissioner shall adjust the excess amount of the property tax with interest at 6.25 per centum per annum for the date on which the amount is deposited with the Corporation towards the property taxes payable thereafter.] Therefore, it is mandatory for a party challenging the rateable value of property tax, to deposit the entire amount as per Section 217 (5) of the MMC Act, for the Small Causes Court to hear the Appeal.

7 In the case of Naman Developers Private Limited and Ors. Vs. Municipal Corporation of Greater Mumbai and Ors.1, the Division Bench of Bombay High Court in Paragraph Nos.[8] and 10 recorded that: “8. …….. Legality, correctness or otherwise justification of the high rateable value fixed for land under construction as vacant land than the remaining land simpliciter has to be questioned by the aggrieved party in a statutory appeal provided under Section 217 of MMC Act, 1888 which is in the nature of original proceedings. Since, according to us, the petitioners have adequate and efficient statutory remedy in challenging the fixation of rateable value of land under construction, we need not go into the matter further and the petitioners, if so advised, may challenge fixation of rateable value in the statutory appeal. 9.……..

10. We may observe that in Writ Petition no.1634/2001 Nagari Nivara Parishad & Ors. v/s. Brihan Mumbai Mahanagar Palika & ors. and 2758/2001 - M/s. Lokhandwala Builders vs. Brihan Mumbai 1 2002(6) BCR Page No.561 Mahanagar Palika & ors., the petitioners have already preferred the statutory appeals under Section 217 of MMC Act, 1888 and the said appeals are pending. In other writ petitions also if the petitioners are so advised may prefer appeals. We observe that should the petitioners prefer appeals under section 217 challenging the rateable value within six weeks from today and deposit the requisite amount of due taxes as per statutory provision, the Appellate Authority shall decide the said appeals on merits. In that event we also record the statement of Mr. K. K. Singhvi, learned senior counsel for the respondents that objection regarding limitation shall not be raised and delay in filing the statutory appeal shall be deemed to have been condoned.” (Emphasis supplied)

8 Taking into consideration the findings recorded in the judgment of Naman Developers, and the facts that Respondent No.3 had filed an Appeal under Section 217 of the MMC Act, and the same was dismissed. So also the fact that Applicant had already without prejudice deposited the entire amount, as mentioned in the impugned notices of the Corporation, and also that the Applicant had agreed in Consent Terms, dated 14th October 2021, Clause No.16, that they will pay all the outstanding amounts due to the Corporation. Writ Petition doesn’t aver that there is no other efficacious remedy available to the Petitioner.

9 I therefore conclude that when efficacious remedy in the form of filing Appeal U/s. 217 of MMC Act, to challenge the fixing of rateable value is available, the Petitioners / Applicants have not made out a case where powers under Article 226 of the Constitution of India, should be entertained. The Applicant therefore is granted a period of four weeks to file an Appeal under Section 217 of the MMC Act for challenging the fixation of rateable value before the Small Causes Court, Mumbai if so advised. The Applicant should comply with all the directions, as mentioned in Section 217 (5) of the MMC Act. The amount already deposited by the Applicant should be taken into consideration by the Judge of the Small Causes Court, who takes up the Appeal for hearing.

11 Learned counsel for the Applicant prays that they be protected for a further period of four weeks. As the Applicants are granted time of 4 weeks to file an Appeal under Section 217 of the MMC Act. Corporation is precluded from taking any coercive steps for a period of four weeks from today. (RAJESH S. PATIL, J.)