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2019 Supreme(SC) 1182
SUPREME COURT OF INDIA
A.M. KHANWILKAR, AJAY RASTOGI, JJ.
Municipal Corpn. of Greater Mumbai - Appellant
Versus
Harish Lamba of Bombay, Indian Inhabitant & Ors. - Respondents
Civil Appeal No.142 of 2009
Decided on : 22-10-2019
For the Appellant(s) :Atul Yeshwant Chitale, Suchitra Atul Chitale, Tanvi Kakar, Advocates
For the Respondent(s):Hardeep Singh Anand, Praveen Kumar Rai, Hemal Kirit Kumar Sheth, M/S. Lawyer S Knit & Co, Ashiss Wad, Sidharth Mahajan, Sukriti Jaggi, Ajeo Sharma, M/S. J S Wad And Co, Advocates
IMPORTANT POINTS
Water tax/ water benefit tax is in the nature of property tax which is compulsorily payable.
Limitation will start from the date of issue of demand notice.
Litigant pursuing the case in wrong forum bona fide is entitled to differential treatment.
Headnote:
(a) Mumbai Municipal Corporation Act, 1888 - Sections 140, 141, 142, 160 and 169 - Concept of water tax and water benefit tax is qualitatively distinct from that of water charges - Water benefit tax u/s 140, 141 is determined on prescribed per centum of rateable value of specified premises or its capital value - Water tax/water benefit tax being a property tax its levy has been made subject to Section 169 - Section 169 envisages levy of charges in lieu of a tax (water tax/water benefit tax) u/s 140 if water supply materializes - Water tax/water benefit tax becomes payable as soon as the owner/occupant of the premises is in a position to avail of water connection to his premises in the prescribed manner even if the water supply/water meter is later on disconnected - Water tax/Water benefit tax, being property tax, is compulsory imposition - Instant demand notices, held, were for recovery of property tax in the form of water benefit tax u/s 139 read with Sections 140 and 141 - High Court erroneously considering it as water charge u/s 169. (Para 18, 19, 20, 22, 24)
(b) Limitation Act, 1963 - Article 137 - Demand for period 1st October, 1993 to 9th January, 1994 - falling in official year 1993-94 becoming payable on 31st March, 1994 - Limitation of 3 years would expire on 30th March, 1997 - Demand notices issued on 10th January, 1997 - Held, not barred by limitation. (Para 26)
(c) Administration of justice - Statutory interest - Respondent bona fide pursuing the matter in the High court and Supreme Court - Also interim orders of the High Court operating in favour of the respondent and finally the demand notices were quashed - Held, respondent entitled to differential treatment for the period spent in High Court and Supreme Court as regards payment of statutory interest - Directions given. (Para 27, 28)
Facts of the case:
The respondent No.2 is the landlord of respondent No.1. The respondent No.3 is the tenant of respondent No.2 in respect of the remainder area of the same building other than the area in possession of respondent No.1. The respondent No.1’s firm required 10 lakh gallons of water for its frozen food and ice cream business, which was being supplied by the appellant (under the fixed quota of 10 lakh gallons of water) till October, 1983. On 29th October, 1983, an illegal strike call was given by the workmen in the factory of respondent No.1, due to which the production work in the factory was suspended by the management. Therefore, the respondent No.1 wrote to the appellant on 2nd February, 1987 and 15th October, 1987, requesting to discontinue the water quota allotted and then charge them on actual consumption basis, as they did not require the large quantity of water any more due to shut down of the production. Besides, a new water meter came to be installed on 15th October, 1987. Later on, the appellant informed respondent No.1 that his water connection will be cut off as requested by the company. That was finally done on 25th October, 1993. Since then, respondent No.1 is dependent on water supply by private water tankers.
Accordingly, respondent No.1 wrote to the appellant dated 10th December, 1993 that since the water connection to the premises has been disrupted/cut off by the Water Department and he having paid all the dues until then amounting to Rs.46,794/(Rupees Forty Six Thousand Seven Hundred Ninety Four Only), the appellant ought to install a new water meter. Upon receipt of this communication, the appellant demanded a deposit of Rs.72,000/(Rupees Seventy Two Thousand Only) for processing the request for a new water meter. However, respondent No.1 did not pay the said amount on the ground of financial crisis because of closure of the factory. The respondent No.1 in turn requested the appellant to accept the deposit amount in installments of Rs.5,000/(Rupees Five Thousand Only), which request was declined by the appellant. Therefore, there was no water connection/meter in the premises of respondent No.1 since 25th October, 1993.
The appellant thereafter in 1997 started raising bills for the period from 1st October, 1993 including towards water benefit tax in respect of the subject premises. In January, 1997, seven bills of water tax and water benefit tax were raised in respect of the said building (for the period from 1st October, 1993 to 30th September, 1998) aggregating to Rs.10,60,312/(Rupees Ten Lakh Sixty Thousand Three Hundred Twelve Only). The respondent No.3 paid his share of the bill in protest but respondent No.1, on advice, refused to pay his prorata share of the bill.
Resultantly, on 5th August, 1998, the appellant issued Warrant of Attachment and levied an attachment upon the said premises and building for the arrears of stated tax being property tax amounting to Rs.9,11,708/(Rupees Nine Lakh Eleven Thousand Seven Hundred Eight Only) and further penalty of Rs.1,48,503/(Rupees One Lakh Forty Eight Thousand Five Hundred Three Only). Thus, the aggregate demand was for Rs.10,60,312/(Rupees Ten Lakh Sixty Thousand Three Hundred Twelve Only), against respondent No.1. Further respondents were informed that if the arrears of taxes were not paid, the appellant would proceed to advertise the public auction relating to premises occupied by respondent No.1.
Being aggrieved, respondent No.1 filed Writ Petition No.1206 of 1999 before the High Court of Judicature at Bombay to quash/set aside the bills and demand raised by the appellant and the Warrant of Attachment dated 5th August, 1998 for recovery of the amount. The High Court was pleased to quash and set aside the bills/demands along with the Warrant of Attachment.
Finding of the Court:
Water tax/ water benefit tax is in the nature of property tax which is compulsorily payable.
Result: Appeal allowed.
JUDGMENT :
A.M. Khanwilkar, J.
1. This appeal takes exception to the judgment and order dated 21st November, 2006 of the High Court of Judicature at Bombay in Writ Petition No.1206 of 1999, whereby the bills/demand raised by appellant including towards water benefit tax and the Warrant of Attachment in respect of the stated premises belonging to the respondents came to be quashed and set aside being illegal.
2. The appellant is a corporate body constituted under the provisions of the Mumbai Municipal Corporation Act, 1888 (for short, “1888 Act” or “the Act”) and respondent No.1 is a sole proprietor in the business, which was carried on by him in the name and style of Volga Frozen Foods and Ice Cream Company, hereinafter referred to as the “said firm”. The stated business was located at Volga House, 1C, K.K. Marg, Mahalaxmi, Bombay-400034, hereinafter referred to as the “said premises”. The respondent No.2 is the landlord of respondent No.1 in respect of the said premises. The respondent No.3 is the tenant of respondent No.2 in respect of the remainder area of the said building other than the area in possession of respondent No.1. The respondent No.1’s firm required 10 lakh gallons of water for its frozen food and ice cream business, which was being supplied by the appellant (under the fixed quota of 10 lakh gallons of water) till October, 1983. On 29th October, 1983, an illegal strike call was given by the workmen in the factory of respondent No.1, due to which the production work in the factory was suspended by the management. Therefore, the respondent No.1 wrote to the appellant on 2nd February, 1987 and 15th October, 1987, requesting to discontinue the water quota allotted and then charge them on actual consumption basis, as they did not require the large quantity of water any more due to shut down of the production. Besides, a new water meter came to be installed on 15th October, 1987. Later on, the appellant informed respondent No.1 vide letter dated 27th January, 1992, that his water connection will be cut off as requested by the company. That was finally done on 25th October, 1993. Since then, respondent No.1 is dependent on water supply by private water tankers.
3. Accordingly, respondent No.1 wrote to the appellant vide letter dated 10th December, 1993 that since the water connection to the premises has been disrupted/cut off by the Water Department and he having paid all the dues until then amounting to Rs.46,794/(Rupees Forty Six Thousand Seven Hundred Ninety Four Only), the appellant ought to install a new water meter. Upon receipt of this communication, the appellant demanded a deposit of Rs.72,000/(Rupees Seventy Two Thousand Only) for processing the request for a new water meter. However, respondent No.1 did not pay the said amount on the ground of financial crisis because of closure of the factory. The respondent No.1 in turn requested the appellant to accept the deposit amount in installments of Rs.5,000/(Rupees Five Thousand Only), which request was declined by the appellant. Therefore, there was no water connection/meter in the premises of respondent No.1 since 25th October, 1993.
4. The appellant thereafter in 1997 started raising bills for the period from 1st October, 1993 including towards water benefit tax in respect of the subject premises. In January, 1997, seven bills of water tax and water benefit tax were raised in respect of the said building (for the period from 1st October, 1993 to 30th September, 1998) aggregating to Rs.10,60,312/(Rupees Ten Lakh Sixty Thousand Three Hundred Twelve Only). The respondent No.3 paid his share of the bill in protest but respondent No.1, on advice, refused to pay his prorata share of the bill.
5. Resultantly, on 5th August, 1998, the appellant issued Warrant of Attachment and levied an attachment upon the said premises and building for the arrears of stated tax being p
