Municipal Corporation vs Nuchem Limited

L.N. Mittal, J.—This is second appeal by Defendant Municipal Corporation, Faridabad, after it was successful in the trial court, but remained unsuccessful in the lower appellate court.

Suit was filed by Respondent-Plaintiff M/s Nuchem Limited against the Defendant-Appellant, challenging show cause notice dated 29.10.1998 and the assessment order of house tax and the demand of ?1,04,051/-made by the Defendant from the Plaintiff as house tax for the property of the Plaintiff. The Plaintiff also sought consequential relief of R. S. A. No. 3989 of 2009 permanent and mandatory injunction. The Plaintiff alleged that pursuant to show cause notice dated 29.10.1998, the Plaintiff filed objections on 02.12.1998, but no opportunity of hearing was provided to the Plaintiff. Consequently, assessment order of house tax and the demand of house tax are illegal.

The Defendant controverted the plaint allegations and inter alia pleaded that house tax has been properly assessed as per calculation made in accordance with relevant provisions of the Haryana Municipal Corporation Act, 1994 (in short - the Act). Prevailing market rent was also taken into consideration. Issuance of show cause notice dated 29.10.1998 was admitted. Proposed assessment of ratable value of the property being ?26,47,250/-mentioned in the show cause notice was finally reduced to ?10,40,510/-. It was thus contended that the demand made by the Defendant is legal and valid. Various other pleas were also raised.

Learned Additional Civil Judge (Senior Division), Faridabad, vide judgment and decree dated 19.01.2008, dismissed the Plaintiff''s suit. However, first appeal preferred by the Plaintiff has been allowed by learned Additional District Judge, Faridabad, vide judgment and decree dated 18.02.2009 and thereby, suit filed by the Plaintiff-Respondent has been decreed declaring the impugned assessment of house tax as illegal, null and void. Feeling aggrieved, the Defendant has preferred the instant second appeal.

I have heard learned Counsel for the parties and perused the case file.

It is undisputed as also borne out from the record that pursuant to show cause notice issued by the Defendant, the Plaintiff had filed objections against the proposed assessment of house tax. It is also undisputed that the Defendant finalized the assessment of house tax without affording opportunity of hearing to the Plaintiff-Respondent in support of his objections. Section 97(5) of the Act provides that objections shall be inquired into and investigated and the persons making the objections shall be allowed an opportunity of being heard either in person or by authorized agent. In the instant case, however, the objections were disposed of without granting opportunity of hearing to the Plaintiff. Consequently, there has been violation of not only the principles of natural justice, but also of the express statutory provision contained in Section 97(5) of the Act. The impugned assessment order has, therefore, been rightly held to be illegal and null and void by the lower appellate court. Even learned Counsel for the Appellant could not advance any meaningful argument to the contrary.

Learned Counsel for the Appellant, however, contended that liberty should have been granted to the Appellant for proceeding with the assessment afresh in accordance with law. Notice of motion was also issued in the case limited to this extent. Learned Counsel for the Respondent-Plaintiff, however, contended that this offer of granting opportunity of R. S. A. No. 3989 of 2009 hearing should have come either in the trial court or in the lower appellate court and the said offer cannot be accepted in the instant second appeal. I have carefully considered the rival contentions. Impugned assessment of house tax has been set aside only on the ground that the objections preferred by the Plaintiff were disposed of without granting opportunity of hearing to the Plaintiff-Respondent. In this view of the matter, the Defendant-Appellant is entitled to proceed afresh with the assessment of house tax in accordance with law i.e. after granting opportunity of hearing to the Respondent-Plaintiff, as required by Section 97(5) of the Act. This liberty should have been granted to the Defendant-Appellant by the lower appellate court, while setting aside the impugned order of house tax. Lower appellate court has committed grave illegality by not granting the said liberty to the Defendant-Appellant.

For the reasons aforesaid, I find that following substantial question of law arises for determination in the instant second appeal:

"Whether in the facts and circumstances of the instant case, the Defendant-Appellant is entitled to liberty to proceed afresh with the house tax assessment in accordance with law ?"

For the reasons already recorded, this substantial question of law is answered in favour of the Defendant-Appellant holding that Defendant R. S. A. No. 3989 of 2009 Appellant is entitled to liberty to proceed afresh with the impugned house tax assessment in accordance with law.

As a necessary consequence of the aforesaid discussion, the instant second appeal is allowed partly and impugned judgment and decree of the lower appellate court are modified to the extent that the Defendant-Appellant shall be entitled to proceed afresh in accordance with law for assessment of house tax against the Plaintiff-Respondent.