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HIGH COURT OF ALLAHABAD
M. Katju and R.S. Tripathi, JJ.
Modi Industries Ltd.
Versus
State of U.P.
Civil Misc. Writ Petition 531 of 2004
Decided On : 24 May 2004
Civil Misc. Writ Petition 531 Of 2004
ultra vires - U. P. Municipalities Act - 161(b) - SICA, Section 20(1), Section 22 - The court declared Section 161(b) of the U. P. Municipalities Act, 1916, as ultra vires the Constitution and held that no recovery can take place against the petitioner-Company in view of the bar of Section 22 of the SICA. The court avoided going into the constitutional question regarding the validity of Section 161(b) and allowed the petition, keeping the impugned recoveries under the U. P. Municipalities Act under abeyance until the proceedings under the SICA are finalized.
Fact of the Case:
The petitioner, a Company registered under the Indian Companies Act, filed a writ petition challenging the demand notices for enhanced house tax and alleging that recovery proceedings were barred by Section 22 of the SICA. The petitioner had also filed a Civil Suit which was withdrawn and alleged that the suit was barred by Section 164 of the Municipalities Act.
Finding of the Court:
The court found that the proceedings before the BIFR were still pending in respect of the petitioner-Company and held that no recovery can take place against the petitioner-Company in view of the bar of Section 22. The court also avoided going into the constitutional question regarding the validity of Section 161(b) of the U. P. Municipalities Act.
Issues: The issues involved the constitutional validity of Section 161(b) of the U. P. Municipalities Act, the bar of Section 22 of the SICA on recovery proceedings, and the pending proceedings before the BIFR.
Ratio Decidendi: The court's decision was influenced by the interpretation of Section 22 of the SICA, which barred the recovery proceedings against the petitioner-Company. The court also followed the legal principle of avoiding the constitutional question if a case can be decided without it.
Final Decision: The petition was allowed, and the impugned recoveries under the U. P. Municipalities Act were ordered to remain under abeyance until the proceedings under the SICA are finalized.
( 1 ) THIS writ petition has been filed with a prayer for declaring Section 161 (b) of the U. P. Municipalities Act, 1916, as ultra vires the Constitution. The petitioner has also prayed for a writ of certiorari to quash the impugned provisional assessment orders of house tax dated 23. 11. 2001 (vide Annexure-III to the petition) and for quashing the demand notices dated 6. 12. 2003, for assessment years 2000-01 to 2002-03 form the petitioner (vide Annexure-II to the petition ). The petitioner has also prayed for quashing of the citations in pursuance of the impugned demand notices (vide Annexure-IV to the petition ).
( 2 ) HEARD learned Counsel for the parties.
( 3 ) THE petitioner is a Company registered under the Indian Companies Act. It is alleged in Para 7 of the petition that the petitioner is a sick unit and proceedings under the Sick Industrial companies (Special Provisions) Act, 1985 (hereinafter referred to as SICA) are pending before the Board of Industrial and Financial Reconstruction (hereinafter referred to as BIFR ). The petitioner is aggrieved by the demand notices dated 6. 12. 2003, demanding enhanced house tax from the petitioner for various units for the years 2000-01 to 2002-03 and has alleged that recovery proceedings are barred by Section 22 of the SICA.
( 4 ) AGGRIEVED against the demand notices dated 6. 12. 2003, the petitioner filed a Civil Suit No. 1452 of 2003 before the Civil Judge, Senior Division, Ghaziabad and applied for an injunction against the demand. It is alleged in Para 18 of the writ petition that it was in the said suit that the respondents for the first time disclosed the impugned provisional assessment orders, copy of which is Annexure-III to the petition. In Para 3 of the supplementary-affidavit it is stated that subsequently the suit has been withdrawn vide order of the ACJ (S. D.), Ghaziabad dated 16. 4. 2004, Annexure SA-I. In fact the suit is barred by Section 164 of the Municipalities Act.
( 5 ) IN Para 22 of the petition it is alleged that in respect of a previous demand relating to previous years the petitioner had challenged the same before this Court but the petition was dismissed on 16. 4. 1999 (vide Annexure-VIII to the writ petition ).
( 6 ) LEARNED Counsel for the petitioner, has submitted that the petitioner cannot file appeals against the provisional assessment orders in view of Section 161 (b) of the U. P. Municipalities Act which states that the appeal shall not be heard unless the amount claimed from the appellant has been deposited by him in the Municipal Office. Learned Counsel has challenged the constitutional validity of Section 161 (b ).
( 7 ) A counter-affidavit has been filed by the Nagar Palika Parishad, Modinagar and we have perused the same.
( 8 ) IN Para 17 of the counter-affidavit it is stated that the scheme of rehabilitation of the Company has been failed before the BIFR who have recommended for the winding up of the Company under Section 20 (2) of the SICA. Hence, it is alleged that no proceedings can be said to be pending before the BIFR, particularly in view of the judgment of this Court in Writ Petition Nos. 99 to 103 of 1999, Modi Industries Ltd. v. State of U. P. and Ors. , decided on 22. 2. 1999, vide annexure-CA-1.
( 9 ) WE have carefully perused the judgment of this Court in Writ Petition Nos. 99 to 103, decided on 22. 2. 1999. That decision has referred to the order of the BIFR dated 8. 10. 1993, copy of which is Annexure-RA-1 to the rejoinder-affidavit.
( 10 ) WE have carefully perused the order of the BIFR dated 8. 10. 1993. In Para 4 of the said order it is mentioned that the BIFR has only formed a prima facie opinion that Modi Industrial Ltd. has to be wound up as no measures under the Act, are feasible for its revival. However, having said that, the BIFR directed in Para 5 of its order for issuing of a public show cause notice under section 20 fixing 14. 12. 1993, for considering of objections/suggestions or alternative propo
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