KRISHNA DAS v. PATHANAMTHITTA MUNICIPALITY — 1983 DIGILAW 99 (KER)

Judgment :- 1. The proprietor of Radha Talkies, Pathanamthitta, the petitioner herein, prays for the issue of a writ of certiorari or other appropriate writ and quash Exts. P1 to P1 (c) notices served on him by the respondent calling upon him to pay the various amounts mentioned in the notices and threatening him with action under the Revenue Recovery Act. The petitioner was assessed to additional Entertainment Tax for the year 1975-76 by the Pathanamthitta Panchayat. Licence fee has been levied from him under the Places of Public Resort Act for the same year. According to the petitioner, he has paid the entire tax and fee levied on him. Thereafter a Special Officer was appointed in October 1978 who was in charge of the Municipal Administration. While so, the respondent issued Exts. P1 to P1 (c), as stated earlier to the petitioner. 2. Exts. P) to P2 (c) are dated 25-2-1981. As per Ext. P1 an amount of Rs. 126.20 being the balance licence fee recoverable from the petitioner under the Places of Public Resort Act for the year 1975-76 and as per Ext. P1 (a) an amount of Rs. 368.37 being the balance amount due from the petitioner towards Entertainment Tax for the year 1975-76 are sought to be realised. Under Ext. PI(b) an amount of Rs. 20,330.76 being loss sustained by the erstwhile Panchayat during the year 1975-76 towards Entertainment Tax and Addl. Entertainment Tax has been demanded from the petitioner and as per Ext. PI(c) an amount of Rs. 257.99 being the value of sealed tickets issued for the year 1975-76 has been demanded. In all these notices it has been stated by the Special Officer that the various amounts mentioned therein were found due to the Panchayat as per the Audit Report for the year 1975-76. 3. The counsel for the petitioner strongly attacked Exts. P1 to PI(c) mainly on the ground that the amounts claimed to be due under these notices are barred by limitation by virtue of the provisions in S.117 of the Kerala Panchayats Act, hereinafter referred to as the Panchayat Act, and the corresponding provisions in S.387 of the Kerala Municipalities Act, for short the Municipal Act. S.117 of the Act reads: "117. Limitation for recovery of dues. S.117 of the Act reads: "117. Limitation for recovery of dues. No distraint shall be made, no suit shall be instituted, and so prosecution shall be commenced in respect of any tax or other sum due to a Panchayat under this Act or any rule, bye-law, regulation or order made under it after the expiration of a period of three years from the date on which distraint might first have been made, a suit might first have been instituted, or prosecution might first have been commenced, as the case may be, in respect of such tax or sum: Provided that, for the purposes of the recovery of the land cess levied under S.66A for the period before the date of commencement of S.66B, such distraint, suit or prosecution may be made, instituted or commenced at any time before the expiration of a period of three years from that date." The provisions in S.387 of the Municipal Act are identical and that section reads: "387. Limitation for recovery of dues. No distraint shall be made, no suit shall be instituted and no prosecution shall be commenced in respect of any sum due to the municipal council under this Act after the expiration of a period of three years from the date on which distraint might first have been made, a suit might first have been instituted, or prosecution might first have been commenced as the case may be, in respect of such sum. xx xx" The counsel for the petitioner also submitted that no opportunity has been given to the petitioner to represent his case and submit his explanation by the Special Officer before these notices were issued to him and he also could not file an appeal because the Special Officer himself is the appellate authority. 4. xx xx" The counsel for the petitioner also submitted that no opportunity has been given to the petitioner to represent his case and submit his explanation by the Special Officer before these notices were issued to him and he also could not file an appeal because the Special Officer himself is the appellate authority. 4. The learned advocate appearing for the respondent very vehemently contended that S.117 of the Act and S.387 of the Municipal Act have no application to the facts of the case; that the demand notices were issued by the Special Officer in pursuance of a report made under the statute by the auditor; that there is no question of limitation applying to such a case; that such cases are governed by R.10 of the Kerala Panchayats (Audit) Rules, 1963, for short the Audit Rules, and that by virtue of the provisions in R.10 of the Rules notwithstanding anything contained in S.117 of the Act and S.387 of the Municipal Act referred to above, the Executive Authority is entitled to recover amounts reported to be due from any person by the auditors under the respective Acts. It is also argued by the counsel that the petitioner could have filed an appeal under R.9 of the Audit Rules, if he was aggrieved by the issue of Exts. P1 to P.1 (c) notices. 5. Pathanamthitta town was within the limits of Pathanamthitta Panchayat till October, 1978. When Pathanamthitta Municipality was formed in October, 1978 the limits of Pathanamthitta Panchayat were brought within the limits of the Municipality. Admittedly no election to the Municipal council has so far been conducted and the Special Officer is in charge of the Municipal administration. The petitioner was running a theatre within the limits of the Panchayat for the last so many years. The balance amounts claimed under Exts. P1 to PI(c) are amounts said to be due from the petitioner to the Panchayat for the year 1975-76. The audit report relied on by the respondent was received by the Panchayat on 26-4-78 as admitted in para 2 of the counter affidavit filed by the respondent. Exts. P1 to PI(c) issued are seen dated 25-2-1981. There is no material to show when exactly these notices were served on the petitioner. The demand notices now under challenge were issued only after the expiry of more than 3 years. Exts. P1 to PI(c) issued are seen dated 25-2-1981. There is no material to show when exactly these notices were served on the petitioner. The demand notices now under challenge were issued only after the expiry of more than 3 years. The amounts now claimed were admittedly amounts due to the erstwhile Panchayat. The provisions in S.117 of the Act and S.387 of the Municipal Act clearly prescribe a period of limitation for recovery of amounts due to the Panchayat or the Municipality, as the case may be. Any rule made under the above mentioned Acts cannot override or nullify the provisions in the Acts and the period of limitation prescribed under the above sections cannot be extended by the negligence or carelessness or by the deliberate act of the concerned officer in not taking appropriate steps by way of issuing notice demanding the amounts due soon after the amount has become due or within a reasonable time. A reading of the provisions in the sections mentioned above clearly shows that there is a limitation prescribed for recovery of the amounts by way of tax or other sums due to a Panchayat or a Municipality under the Panchayat and Municipal Acts or any rule, bye-law, regulation or order made under the above said Acts. No tax or other sum due to a Panchayat or a Municipality can be recovered after the expiry of a period of three years from the date on which a distraint might first have been made, a suit might first have been instituted or prosecution might have been commenced, as the case may be in respect of such tax or sum. A distraint might first have been made or a suit might first have been instituted or prosecution might have been commenced, when the amounts fell due to the Panchayat or the Municipality, as the case may be. As stated earlier, the amounts claimed under Exts. P1 to P1 (c) are admittedly amounts due to the Panchayat for the financial year 1975-76. Therefore the period ending the financial year 1975-76 would be the point at which limitation would commence. 6. Similar questions arose for consideration before a Division Bench of the Madras High Court in In re Corporation of Madras (AIR. 1954 Mad. P1 to P1 (c) are admittedly amounts due to the Panchayat for the financial year 1975-76. Therefore the period ending the financial year 1975-76 would be the point at which limitation would commence. 6. Similar questions arose for consideration before a Division Bench of the Madras High Court in In re Corporation of Madras (AIR. 1954 Mad. 944), where the sections which came up for consideration were S.218 (2) and 390(a) of the Madras City Municipal Act (Act IV of 1919). The provisions in S.117 of the Panchayats Act and S.387 of the Municipal Act are almost the verbatim reproduction of S.390(a) of the Madras City Municipal Act. S.390(a) stipulates that no suits shall be instituted in respect of any sum due to the Corporation after the expiration of a period of three years from the date on which a suit might first have been instituted in respect of such sum. Under S.218(2) of the Madras City Municipal Act each of the several owners is not -liable to pay the entire amount of the expenses incurred in respect of the street or part thereof in respect of which the work was carried out by the Corporation. Therefore the Corporation contended that till the proportion was settled by the Commissioner as between the several owners a suit could not have been instituted. Rejecting this contention the Division Bench observed: "If we accept the contention of the Corporation the logical result would be that it would rest entirely with the Commissioner to fix an arbitrary date for the starting of limitation, that is, it would lie within his power by setting the proportions on any day he pleases to postpone the commencement of limitation. We cannot contemplate with equanimity such a result." 7. This decision has been followed in the decision reported in AIR. 1961 Mad. 390, wherein it was observed that S.390(a) of the Madras City Municipal Act provides that no suits shall be instituted in respect of any sum due to the Corporation under the Act, after the expiration of a period of three years from the date on which a suit might first have been instituted. 8. 1961 Mad. 390, wherein it was observed that S.390(a) of the Madras City Municipal Act provides that no suits shall be instituted in respect of any sum due to the Corporation under the Act, after the expiration of a period of three years from the date on which a suit might first have been instituted. 8. In the case before us also, the Special Officer of the Municipality does not and cannot have any right to fix an arbitrary date for the starting or commencement of the limitation by issuing notices or distraint under the Act or the Rules on any day he pleases thereby postponing the commencement of limitation. 9. The principles stated in these decisions squarely apply to the facts of the instant case. There is no dispute that as per Exts. P1 to P1 (c), it is only the amounts due from the petitioner for the year 1975-76 that is sought to be recovered. These amounts claimed under the said notices have become due from the petitioner in the year 1976. It was only on 25-2-81 that the demand notices in respect of these amounts were issued to the petitioner, that is after the expiry of 4 years from the date on which the amount became due from the petitioner. The petitioner has been threatened under Exts. P1 to P1 (c) that action under the Revenue Recovery Act and other legal action will be taken, in case he fails to pay the amounts demanded thereunder within the time prescribed. These are amounts due to the erstwhile Panchayat and therefore, under S.117 of the Act these amounts have become barred for recovery from the petitioner. 10. The contention of the counsel for the respondent is that R.8, 9 & 10 of the Audit Rules applied to the facts of the case and that by virtue of these rules irrespective of the restrictions in S.117 and 387, the Special Officer is entitled to recover the amounts demanded as per the notices. The counsel also submitted that it is open to the petitioner to file appeals under R.9 of the Rules if he is really aggrieved by the notices sought to be quashed. It is doubtful whether the Audit Rules apply to the facts of the case. The counsel also submitted that it is open to the petitioner to file appeals under R.9 of the Rules if he is really aggrieved by the notices sought to be quashed. It is doubtful whether the Audit Rules apply to the facts of the case. Even if it is assumed for the sake of argument that the said rules apply to the case, these rules cannot override the salutary provisions in S.117 of the Act which clearly imposes a limitation for recovery of the amounts due to a Panchayat under the Act or any Rule, bye-law, regulation or order made under it. It was in exercise of the powers conferred by S.129 of the Kerala Panchayats Act, 1960 (Act 32 of 1960) that the Audit Rules were made. R.8 and 9 have to be read together. The counsel for the petitioner submitted alternatively that if R.8 to 10 applied to the facts of the case, Exts. P1 to P1 (c) have to be quashed on the ground that no opportunity was given to the petitioner of being heard before these notices were issued. Under the proviso to sub-rule (1) of R.8 of the Audit Rules, no surcharge or charge shall be made without giving the person affected a reasonable opportunity of being heard. The respondent has no case that any opportunity has been given to the petitioner as contemplated under the proviso to sub-rule (1) of R.B. Under sub-rule (2) of R.8, the auditor shall state in writing the reason for surcharge and furnish by registered post a copy thereof against the person against whom it is made. No such decision of the auditor has been sent or furnished to the petitioner. R.9 provides for an appeal only against the surcharge or charge made under the rules and under this rule a person aggrieved by surcharge or charge can approach civil court of original jurisdiction after he has received or been served with the decision of the auditor to set aside such surcharge or charge and under clause (b) in lieu of that application he can apply to the Government who shall pass order as it may deem fit. No decision of the auditor as contemplated under the rules has been served on the petitioner. No decision of the auditor as contemplated under the rules has been served on the petitioner. A reading of the relevant rules, particularly R.8, 9 and 10, will show that these rules do not apply to the petitioner; and that apart as stated earlier, these rules cannot override the salutary provisions in S.117 of the Panchayat Act. In the result this Original Petition has to be allowed and Exts. P1 to P1(c) are hereby quashed. No costs.