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2012 DIGILAW 385 (CAL)

RASHMAY DAS v. KOLKATA MUNICIPAL CORPORATION

2012-04-30

GIRISH CHANDRA GUPTA

body2012
JUDGMENT The Court : The prayers pressed by Mr. Talukdar, learned senior Advocate appearing for the writ petitioner read as follows:- "a) A writ or writs in the nature of mandamus do issue commanding the respondents No.1 to 5 and/or each of them, their servants and agents- [i] to mutate the name of your petitioner in the municipal assessment books and records as owner of the said property, more fully described in Schedule being Annexure "P-1" hereof without demanding any property tax dues for any period prior to 22nd March, 2006; [ii] not to take any step and/or any further step and/or initiate any action and/or any further action on the basis of or pursuant to the letter dated 8th July, 2010 and/or the letter of intimation being Annexure "P-9" hereof;" 2. The letter dated 8th July 2010 referred to in clause (ii) of prayer (a) quoted above is annexure P-9 to the writ petition by which the writ petitioner was informed that he has to clear the outstanding dues and to submit 'No Objection Certificate' for the purpose of mutation. He was also requested to submit the 'No Objection Certificate' at an early date otherwise the mutation case was likely to be cancelled. From an enclosure to that letter it appears that a sum of Rs. 2525283/- was due and payable inclusive of penalty and it also appears that a sum of Rs. 8213/- was lying all a deposit under suspension. 3. The case of the writ petitioner briefly stated is as follows: The property sought to be mutated was purchased in an auction pursuant to a notice of sale, a copy whereof is annexure P2 to the writ petition. The sale notice provides that the terms and conditions of the sale are the same as stipulated in the proclamation of sale issued by the Recovery Officer on 2nd December, 2005 and 22nd December, 2005. The terms and conditions of sale, according to Mr. Talukdar, did not contain any stipulation that the arrear dues of the Kolkata Municipal Corporation are payable by the purchaser. The purchaser, according to him, is in any event not liable to pay the alleged dues of the Kolkata Municipal Corporation because he is a bonafide purchaser for value without notice of any such claim of the Municipal Corporation. Mr. . The purchaser, according to him, is in any event not liable to pay the alleged dues of the Kolkata Municipal Corporation because he is a bonafide purchaser for value without notice of any such claim of the Municipal Corporation. Mr. . Talukdar in support of his submissions relied upon a judgment in the case of The Ahmedabad Municipal Corporation vs. HajiAbdul Gafur Haji Hussenbhai reported in AIR 1971 SC 1201 wherein the Apex Court held as follows construing section 141 of the Bombay Provincial Municipal Corporation Act, 1949 : "Sub-section (1), as is obvious, merely creates a charge in express language. This charge is subject to prior payment of land revenue due to the State Government on such building or land. The section, apart from creating a statutory charge, does not further provide that this charge is enforceable against the property charged in the hands of a transferee for consideration without notice of the charge. It was contended that the saving provision, as contemplated by section 100 of the Transfer of Property Act, may, without using express words, in effect provide that the property is liable to sale in enforcement of the charge and that if this liability is fixed by a provision expressly dealing with the subject, then the charge would be enforceable against the property even in the hands of a transferee for consideration without notice of the charge. According to the submission it is not necessary for the saving provision to expressly provide for the enforceability of the charge against the property in the hands of a transferee for consideration without notice of the charge. This submission is unacceptable because, as already observed, what is enacted in the second half of section 100 of Transfer of Property Act is the general prohibition that no charge shall be enforced against any property in the hands of a transferee for consideration without notice of the charge and the exception to this general rule must be expressly provided by law. The real core of the saving provision of law must be not mere enforceability of the charge against the property charged but enforceability of the charge against the said property in the hands of a transferee for consideration without notice of the charge. Section 141 of the Bombay Municipal Act is clearly not such a provision. The second contention accordingly fails and is repelled." 4. Mr. Section 141 of the Bombay Municipal Act is clearly not such a provision. The second contention accordingly fails and is repelled." 4. Mr. Talukdar also relied on the judgment in the case of AI Champdany Industries Limited vs. Official Liquidator and another reported in (2009) 4 SCC 486 wherein an identical claim of the Bhatpara Municipality was turned down by the Supreme Court. 5. Mr. De, learned Advocate appearing for the Kolkata Municipal Corporation submitted that neither of the judgments cited by Mr. Talukdar does have any application to the facts of this case. He contended that even assuming that section 141 of the Bombay Provincial Municipal Corporation Act, 1949 construed by the Apex Court, in the case of the Ahmedabad Municipal Corporation vs. Hazi Abdul Gafur (supra.), is in pari materia of Section 232 of the KMC Act the fact remains that in the case before Their Lordships there was no provision enabling the Municipal Corporation to refuse to mutate the property in favour of the transferee except upon payment of the dues as is the case herein. He submitted that besides section 232 of the Kolkata Municipal Corporation Act, there is another provision holding the field which is section 183(5) of the KMC Act which provides as follows: "(5) The Municipal Commissioner shall, on receipt of a notice of transfer or devolution of title under this section [and upon payment of such fee as may be determined by regulations], record such transfer or devolution in a book [***] and also in the Municipal Assessment Book: [Provided that nothing in this sub-section shall derogate from the power of the Corporation to refuse mutation in a case where there is arrear of any dues to the Corporation on account of the transfer or the predecessor-in-interest of the applicant.]" 6. He contended that the petitioner cannot be heard to say that he was not aware of the law which requires him to pay the municipal dues before he can have the transfer mutated in his favour. Therefore, the writ petitioner cannot claim to be a transferee without notice and that is the reason why the judgment in the case of the Ahmedabad Municipal Corporation vs. Haji Abdul Gafur (supra.) shall not apply to the facts of this case. Therefore, the writ petitioner cannot claim to be a transferee without notice and that is the reason why the judgment in the case of the Ahmedabad Municipal Corporation vs. Haji Abdul Gafur (supra.) shall not apply to the facts of this case. Another reason why the said judgment shall not apply to the facts of this case, according to him, is that in the case before the Apex Court there was nothing to show that the plaintiff could even be said to have constructive notice of the arrear property taxes. He in particular drew my attention to the following portion of paragraph 8 of the said judgment: "The question of constructive knowledge or notice has to be determined on the facts and circumstances of each case. According to the Full Bench decision in Nawal Kishore's case, ILR (1943) All 453 = (AIR 1943 All 115) (FB) (supra) also the question of constructive notice is a question of fact and we do not find that the material on the present record justifies that the plaintiff should be fixed with any constructive notice of the arrears of Municipal taxes." 7. He contended that in the present case the documents disclosed by the writ petitioner go to show that he could not have proceeded on the basis that there was no arrear dues of the corporation. He drew my attention to the following stipulation appearing in the Proclamation of Sale, a copy whereof is annexure-P3 to the writ petition : "The sale will be of the property of the Certificate Debtor(s) above named as mentioned in the Schedule below and the liabilities and claims attaching to the said property, so far as they have been ascertained, are those specified in the schedule against each lot." 8. He also drew my attention to the notice for settling the Sale Proclamation, a copy whereof is annexure-P4 to the writ petition by which the certificated debtors were requested to disclose the particulars of the charges and encumbrances, the relevant portion whereof reads as follows : "You are hereby informed that the 22nd day of December, 2005 at 10.30 A.M. has been fixed for drawing up the proclamation of sale and settling the terms thereof. You are requested to bring to the notice of the undersigned any encumbrances, charges, claims or liabilities attaching to the said properties or any portion thereof." 9. Mr. You are requested to bring to the notice of the undersigned any encumbrances, charges, claims or liabilities attaching to the said properties or any portion thereof." 9. Mr. De contended that any prudent businessman could not have proceeded on the basis that there were no charges or encumbrances or dues on account of the property when the aforesaid indications were made in the proclamation of sale (annexure-P4). The certificated debtors were requested to appear and inform the Recovery Officer as regards the particulars of charges and encumbrances but presumably they did not turn up as a result whereof the particulars of charges of encumbrances were not furnished. That by no means, he contended, is reason enough to proceed on the basis that there were no encumbrances. He contended that the purchaser, on the contrary, should have enquired as regards the dues which constitute a statutory charge on the property. If the petitioner failed to do so, he has to thank himself alone. The Municipal Corporation cannot be directed to mutate the property except upon payment of the dues which the Municipal Corporation is entitled to insist upon on the basis of the statutory right engrafted in section 183(5) of the KMC Act. 10. Mr. De submitted that in the case of AI Champdany Industries Ltd. (supra) there was no statutory charge in favour of the Municipal Corporation as would appear from paragraph 10 of the judgment. The provision was that the dues of the Municipal Corporation could be recovered as a statutory dues. He submitted that the judgment, in the case of AI Champdany Industries Ltd. far from assisting the writ petitioner, goes against his submission. In support of his contention he drew my attention to paragraph 14 of the said judgment which is as follows: "If the property tax was merely a statutory dues without creating any encumbrance on the property which had cast a duty upon all the auction purchasers to make an investigation, it would mean that they must try to find out all the liabilities of the company in liquidation in their entirety". 11. He contended that Their Lordships proceeded on the basis and impliedly also held that in a case where the dues of the statutory corporation constitute a charge upon the property, the auction purchaser has to make investigation and find out the liabilities. 11. He contended that Their Lordships proceeded on the basis and impliedly also held that in a case where the dues of the statutory corporation constitute a charge upon the property, the auction purchaser has to make investigation and find out the liabilities. Therefore, he contended that the judgment is of no assistance to the writ petitioner. He drew my attention to a judgment in the case of Municipal Corporation of Delhi vs. Trigon Investment and Trading Pvt. Ltd. and Another reported in (1996) 3 SCC 630 wherein the following view was adopted. "Since the property tax constitutes first charge upon the land/building and because the land/building is fastened with this liability, the liability travels with the land/building. The transferee is liable to pay the property taxes due thereon not only for the period subsequent to transfer in his favour but even for the period anterior to the transfer." 12. He also drew my attention to a division Bench judgment of this Court in the case of KMC & Ors. vs. Joyee Laheri & Ors. reported in 2009 (1) CHN 829 wherein the following view was taken: "Having regard to the clear statutory provision, accordingly we hold that Corporation has power to refuse mutation in a case where there is arrear of any dues to the Corporation on account of the transfer or the predecessor-in-interest of the applicant. In view of such finding the impugned judgment under appeal accordingly is not sustainable in law and it is set aside and quashed." 13. He, therefore, contended that the writ petition should be dismissed with costs. 14. I have considered the rival submissions advanced by the learned Advocates appearing for the parties. The sum and substance of the contention put forward by the learned Counsel is that the charge under section 232 of the KMC Act is not enforceable against the transferee for value without notice. Therefore the transferee has no liability to pay. In the absence of any liability to pay the provision of section 183(5) of KMC Act enabling the respondent Municipality to refuse to mutate the property in favour of the petitioner except upon payment is bad in law. The submission of the petitioner cannot be accepted. The KMC Act provides for two separate procedures for the purpose of recovery of its dues. The submission of the petitioner cannot be accepted. The KMC Act provides for two separate procedures for the purpose of recovery of its dues. section 232 of the Act creates a charge and/or encumbrances upon the property which runs with the property. In exercise of the right under section 232 the KMC can proceed to sell the property for the purpose of recovery of its dues. The second right reserved to the KM C is under section 183(5) of the Act by which the Municipal Corporation can refuse to register the transfer except upon payment of its outstanding dues. In the case of Ahemadabad Municipal Corporation (supra) there was no provision in para materia with that in section 183(5) of the KMC Act. The charge, it was held by the Apex Court, would not apply to a transferee for value without notice. The Apex Court examined the matter in great detail and opined that the transferee in that case did not even have a constructive notice of the charge. In the case before me it cannot be said that the transferee did not have any constructive notice of the charge. The terms and conditions of the sale, discussed above, would go to show that the recovery officer, who sold the property, was in doubt with regard to the same which he also had indicated. Therefore the purchaser was put upon notice with regard to liability arising out of any charge or encumbrances. On the top of that the petitioner should have known that under section 183(5) of the KMC Act the municipal corporation is entitled to refuse to register the transfer except upon payment of its dues. Therefore they should have ascertained the dues payable by them. They did not ascertain the liability is a latches on their part. They cannot be heard to say that due to ignorance of law they proceeded on the basis that no such money was payable to the KMC. Therefore they should have ascertained the dues payable by them. They did not ascertain the liability is a latches on their part. They cannot be heard to say that due to ignorance of law they proceeded on the basis that no such money was payable to the KMC. Reference in this regard may be made to the judgment in the case of Bharat Electronics Limited vs. Deputy Commissioner of Commercial Taxes reported in 2005(4) SCC 295 wherein the following views were taken:- "Reliance has been placed upon the authorities of this Court in the cases of British Physical Lab India Ltd. vs. State of Karnataka, Texmaco Ltd. vs. State of A.P. and Shree Cement Ltd. vs. State of Rajasthan and it was submitted that this Court has, in similar circumstances, directed the respective Governments not to collect tax for the relevant period. It was submitted that as the State had filed an appeal and that appeal was pending, the appellant could not have collected tax @ 6%, as if the appeals were allowed, they would have become liable to penalty under Section 18A for having collected tax contrary to the provisions of section 18 of the Karnataka Sales Tax Act, 1957. It was also submitted that the appellant did not know about the judgment of the High Court dated 8-10-1990 as that judgment was reported only in 1994. We see no substance in these submissions. Ignorance of law is no excuse. Once the notifications stood quashed, the dealers were bound to collect tax @ 6%. Even otherwise, it is difficult to believe that parties in the trade do not know the prevailing rate of tax. The three authorities relied upon are of also no assistance. Those are cases where during the pendency of the relevant notifications, the parties were prevented, by law, from collecting tax at a different rate. Subsequently those notifications were struck down. The question was whether the parties were liable to pay differential tax during the period when the notifications were in force. It was under those circumstances that this Court held that during the period of notifications were in force, the parties could not have collected at a rate different from that specified in the notifications. As the parties were prevented by law from so collecting, this Court held that the authorities cannot claim the differential tax. It was under those circumstances that this Court held that during the period of notifications were in force, the parties could not have collected at a rate different from that specified in the notifications. As the parties were prevented by law from so collecting, this Court held that the authorities cannot claim the differential tax. In the present case, as per the law in force, the appellants were bound to collect tax @ 6%. If the appellants chose not to collect tax @ 6% from their customers, the appellants did so at their own peril. They cannot refuse to pay the respondents tax at the rate in force at the relevant time." 15. Even if it is assumed for the sake of argument that the charge created by Section 232 of the KMC Act is inoperative because the transferee/petitioner did not have notice of the dues of the Calcutta Municipal Corporation, the position does not materially change. In that case, all that can be said is that the charge stood extinguished. But the extinction of the charge is not the extinction of the liability. Extinction of the charge would reduce the KMC to the position of an unsecured creditor. As an unsecured creditor, the KMC can insist upon payment of its dues as a precondition to record the transfer under Section 183(5) of the KMC Act. Therefore the contention of the writ petitioner is altogether bad in law. 16. So long as section 183(5) of the KMC Act is on the statute Book, it is not possible for any Court to direct the Municipal Corporation to mutate the property without payment of its dues because that would amount to issuing a Writ of Mandamus to act illegally which no Court can do. 17. For the aforesaid reasons, this writ petition fails and is dismissed. Parties will bear their own costs. 18. Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.