Court Rules Overdrafts Can't Be Attached; Petitioners to Appeal Goods Attachment Under Bombay Act.

The court quashed the order dated 29th November 2007, which attached the petitioners' cash credit account, ruling that NMMC cannot attach an overdraft facility. However, NMMC is permitted to recover the cess liability through other legal avenues. Regarding the prohibitory order attaching goods, the court directed the petitioners to file an appeal under Section 406 of the Bombay Provincial Municipal Corporations Act, 1949, within eight weeks. The rule was made partly absolute, with no order as to costs.

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Issues Involved:
1. Competence of NMMC to levy and collect cess and property taxes.
2. Legitimacy of the order attaching the cash credit account.
3. Authority to issue the prohibitory order attaching goods.

Summary:

1. Competence of NMMC to levy and collect cess and property taxes:
The petitioners, a company engaged in manufacturing compounded asafoetida, challenged the competence of the Navi Mumbai Municipal Corporation (NMMC) to levy and collect cess from industries in the Maharashtra Industrial Development Corporation (MIDC) area. The court held that the MIDC area is within the municipal limits of NMMC, and thus, NMMC has the power and competence to levy and recover taxes, including cess.

2. Legitimacy of the order attaching the cash credit account:
The petitioners contested the order dated 29th November 2007, passed by the 3rd Respondent, attaching their cash credit account. The court referred to the judgments of the Madras High Court and Karnataka High Court, which held that an un-utilized overdraft account does not render the banker a debtor to the customer. Consequently, the court set aside the order under Rule 35 of the Bombay Provincial Municipal Corporation (Cess on entry of goods) Rules 1996, stating that the NMMC cannot attach an overdraft facility. However, the court allowed NMMC to recover the cess liability through other lawful means.

3. Authority to issue the prohibitory order attaching goods:
The petitioners argued that the prohibitory order dated 5th November 2007, attaching their goods, was without jurisdiction as only the Commissioner of NMMC could pass such an order. The court noted that the petitioners have an equally efficacious alternate remedy by filing an appeal u/s.406 of the Bombay Provincial Municipal Corporations Act, 1949. The court did not express any opinion on the jurisdictional contention and directed that if the petitioners file an appeal within eight weeks, it should be decided in accordance with the law.

Conclusion:
The court quashed the order dated 29th November 2007, attaching the cash credit account, but allowed NMMC to recover the cess liability through other legal means. The court also directed the petitioners to pursue their remedy by filing an appeal regarding the prohibitory order attaching their goods. Rule was made partly absolute with no order as to costs.

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