The Municipal Committee vs M/s. Jawahar Lal and Corporation

R.S. Thakur, J.—This revision petition is directed against the order of the learned Sub-Judge, 1st Class, Nalagarh, dated June 30,1979.

The facts and circumstances giving rise to this revision petition are that the Respondent Jawahar Lal ran a country liquor vend (L-14) in the name and style of M/s Jawahar Lal and Co. within the municipal area of Nalagarh in the year 1974-75. The Petitioner Municipal Committee, Nala-garh then issued a bill to him to the tune of Rs. 494.10 paise on account of arrears of octroi levy for the period from 1-4-1974 to 31-3-1975 and when he failed to pay the amount the Petitioner initiated proceedings against him for realisation of this amount in the Court of Judicial Magistrate Nalagarh and the learned Judicial Magistrate vide his order dated 2nd November, 1976 ordered the attachment of property of the Respondent for recovery of this amount after affording him an opportunity of being heard and after holding that these proceedings against him u/s 83 of the Himachal Pradesh Municipal Act, 1968 (hereinafter called as ''the Act'') were competent.

The Respondent then filed a suit in the Court of the Sub-Judge, 1st Class, Nalagarh on 25th November, 1976 against the Petitioner wherein he averred that during the period he was dealing in country liquor at Nalagarh (1-4-1974 to 31-3-1975) he had paid the entire octroi due on the liquor imported into the Municipal Area of Nalagarh and the Petitioner had wrongly and arbitrarily assessed the aforesaid amount as arrears of octroi and the proceedings initiated for realisation of the said amount by the Petitioner before the Judicial Magistrate u/s 83 of the Act were also illegal and void. He sought declaration from the Court to that effect and also an injunction order restraining the Petitioner from realising the aforesaid amount from him.

The Petitioner resisted the suit before the learned Sub-Judge and in its written statement took up the preliminary objection that the Court had no jurisdiction to entertain the suit as the same was specifically barred by the provisions of the Act.

The learned Sub-Judge then framed the following preliminary issue:

Whether this Court has no jurisdiction to try this suit ? OPD.

Relief.

The learned Sub-Judge disposed of this issue vide impugned order holding that the Court had jurisdiction to try the suit and this order has now been challenged in this revision petition by the Petitioner Municipal Committee, Nalagarh.

I have heard the learned Counsel for the Petitioner. This Court could not have the advantage of hearing the respond ent as he absented himself.

The only question that arises in this revision petition is whether the impugned order of the learned Sub-Judge assuming jurisdiction to try a suit of this nature is sustainable? I have carefully considered this question and my reply to this poser is in the negative.

The sum and substance of the finding of the lower Court was that admittedly the Respondent had paid the octroi tax at the Toll Tax Barrier while importing liquor within the municipal limits of Nalagarh and, therefore, subsequently it was not open to the Petitioner to claim that the Respondent was in arrears of octroi tax on the ground that the octroi tax was not fully paid by the Respondent.

There is a document on the file of the lower Court purporting to be a recovery notice by the Secretary of the Petitioner committee dated 22-9-1975 wherein it has been stated that a demand notice dated 14-8-1975 was served upon him whereby he was required to deposit an amount of Rs. 494.10 on account of octroi dues within a period of ten days but he failed to do so and that he should now deposit the sum within a period of seven days failing which recovery proceedings in respect of this amount would be initiated against him. The demand notice dated 14-8-1975 is also on record which showed that the octroi record of the Petitioner showed that during the month of February and March, 1975 the Respondent imported country liquor worth Rs. 21,779.50 P. whereas he had paid octroi for Rs. 11,897.50 only and he had thus paid no octroi on liquor worth Rs. 9882/- which amount came to Rs. 494.10 and he was called upon to make this payment to the Petitioner within ten days from the receipt of this demand notice.

Thus it is clear that the Petitioner was demanding this amount of Rs. 494,10 on account of arrears of octror tax which according to their record the Respondent had failed to pay. I have no doubt in my mind that the learned lower Court has erred in holding that the octroi tax was claimable only at Toll Tax Barrier and at no subsequent time. No doubt the Act makes provisions that this octroi tax would be chargeable at the Toll Tax Barrier by the official of the Municipality concerned and in case any party resists the levying of this tax on his goods, the official concerned has been given powers to seize those goods and realise the amount due on account of octroi even by sale of those goods. It is, however, wrong to presume that the Petitioner had no power to charge this tax at all subsequently after the Respondent had crossed the barrier and imported the goods inside the muni-pal limits. If this legal position is accepted it may lead to disastrous results as any party in collusion with the official incharge of the Toll Tax Barrier can go scot-free by taking the articles inside the municipal area which were liable for octroi duty and starting dealing with them with impunity since the municipality concerned would have no powers to charge octroi on those goods after they have crossed the barrier.

Now once this position is accepted that the Petitioner had power to levy this tax on account of octroi even subsequently when it was found that the Respondent had paid less than the actual octroi duty on the liquor he had imported within the ! municipal limits, it logically follows that the Petitioner had full competence to resort to the provisions of Section 83 of the Act and the lower Court was in error in holding that this type of tax could be recovered only by having resort to the provision of Section 85 of the Act. The provisions of these two Sections are pari-materia with the provisions of Sections 81 and 82 of the Punjab Municipalities Act, 1911 (hereinafter called as ''the Punjab Act''), respectively.

A similar question had arisen in a case under the Punjab Act in AIR 1939 Lahore 163, (Firm Sheikh Mian Mohd. Allah Bux versus Municipal Committee, Lyallpur). In that case, the Appellant firm was having a flour mill and used to export wheat flour, rawa and suji. etc. through the goods train out of the limits of Lyallpur Municipal Commit tee in the year 1934-35. The goods used to be taken for des patch by their servant Munwar Hussain and at the barrier he used to understate the weight of the goods and paid the duty on such weight. Later on, it was found that the mill-owner had paid less terminal tax than was due through the fraud of their servant and the balance amount due on account of ter minal tax was sought to be realised by the municipal commit tee from the mill-owner to the tune of Rs. 825-8-6. On a challenge being thrown to the powers of the municipality concerned, the then High Court of Lahore held that Section 82 of the Punjab Act (equivalent to Section 85 of the Act) does not take away the remedies which are available to the Municipal Committee for the collection of arrears of tax u/s 81 of the Punjab Act (corresponding to Section 83 of the Act). The learned Judge held :

The words ''arrears of any tax'' must be given their ordinary meaning and if octroi or terminal tax has not been paid when it is due, the recovery of such a tax is the recovery of arrears of any tax. Octroi or terminal tax is levied by virtue of the provisions of the Punjab Municipal Act. Arrears of octroi or terminal tax are therefore claimable by a committee under the provisions of the Punjab Municipal Act.

This case cited supra had arisen out of a civil suit which the owners of the mill had filed challenging the action on the part of the Municipal Committee levying the amount of terminal tax as arrears of tax.

Now the question is whether such action on the part of the Petitioner was challengeable in Civil Court as has been held by the lower Court ? As-I have already observed, the answer is obviously in the negative. A Full Bench of Punjab High Court in the 1962 2 CLJ 212, (Kalesh Nath v. Municipal Committee, Batala), is a complete answer to this. In that case there was a dispute between the municipal committee Batala and a private firm which dealt in sports. According to the firm the octroi duty leviable on their good s was either under item No. 105 or 110 of the Octroi Schedule whereas according to the municipal committee it was leviable under the residuary item No. 122. The firm challenged this finding of the municipal committee by a civil suit and the Civil Court upheld the contention of the firm and decreed the suit. The first appellate Court then held that the Civil Court had no juris-diction to try the suit and dismissed, the suit of the firm. The matter came up before Punjab High Court when it was referred to a Full Bench. The learned Judges of the Full Bench then in the course of the judgment took note of various judgments having bearing upon the point in issue and concurred with the finding of the Full Bench decision of the Lahore High Court in AIR 1940 Lah 377, Municipal Committee Montgomery v. Master Sant Singh, and found that the Civil Court would have jurisdiction to entertain a suit only in case where the municipal committee has exercised powers which are not conferred upon it by the Municipalities Act or those powers are in excess of its jurisdiction as allowed by the Act. If the Municipality has acted within the frame work of the Municipality Act then even if this jurisdiction has been wrongly exercised, the Civil Court has no jurisdiction to entertain a suit. In that case, it was held that whether the octroi tax was leviable under one rem or the other, was within the ambit of the Punjab Act and even if the municipality had wrongly held that the octroi duty was leviable under a particular item, the Court had no power to entertain the suit to see whether municipal committee had rightly or wrongly decided that way and the only recourse to the party is to go in appeal u/s 84 of the Punjab Act and in such a case the jurisdiction of a Civil Court was expressty barred by the provision of Section 86 of the Punjab Act. The provisions of Section 87 of the Act pari-materia with Section 84 of the Punjab Act and the provisions of Section 86 of the Punjab Act are corresponding to Section 89 of the Act.

The Hon''ble Supreme Court in Dhulabhai and Others Vs. The State of Madhya Pradesh and Another, , has thoroughly gone into the question as to under what circums ances the jurisdiction of Civil Court is ousted and in what cases it is not and has laid down the following principles in that behalf :

(1) Where the statute gives a finality to the orders of the special tribunals the civil Courts jurisdiction must be held to be excluded if there is adequate remedy to do what the civil Court would normally do in a suit. Such provisions, however, does not exclude those cases where the provistions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamenta1 principles of judicial procedure.

(2) Where there is an express bar of the jurisdiction of the Court an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil Court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or liability and provides for the determination of the right or liability and further lays down that all question about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil Court are prescribed by the said statute or not.

(3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even the High Curt cannot go into that question on a revision or reference from the decision of the Tribunals.

(4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if tha claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit.

(5) Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected, a suit lies.

(6) Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry.

(7) An exclusion of jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set down apply.

Now, in the instant case, it is apparent from the scheme of the Act especially by virtue of the provision of Section 87 of the Act that any pany aggrieved by the assessment or levy of any tax or against the refusal to refund any t?x under this Act, can file an appeal before the Deputy Commissioner or such other officer as may be empowered by the State Government in this behalf and on hearing of the appeal if the appellate authority entertains any reasonable doubt on any question as to the liability to or the principle of assessment of a tax, it, either of its own motion 01 on an application being made by any interested person has to draw a statement of the facts of the case and the point on which the doubt is entertained and make a reference in this behalf to the High Court. Section 89(1) of the Act lays down that no objection shall be taken to any valuation or assessment, nor shall the liability of any person to be assessed or taxed, be questioned, in any other manner or by any other authority than as provided in the Act.

Thus the provisions of the Act not only expressly bar any other authority to entertain objections with regard to valuation or assessment made under this Act or regarding liability of any person to be assessed or taxed but also provide that only appeal is competent against any such assessment thereunder and the appellate Court has also been vested with powers to make reference to the High Court in case of doubt as regards the assessment or the liability. In these circumstances, the conditions, in my opinion, set out in the Supreme Court judgment (supra) are satisfied for exclusion of the jurisdiction of the Civil Court.

In view of the above discussion, I allow the revision petition, set aside the order of the Sub-Judge, Nalagarh, dated June 30, 1979, and hold that in this case the learned Sub-Judge had no jurisdiction to entertain the suit of the Respondent and dismiss the suit. The parties are, however, left to bear their own costs.