TaxTMI 
TaxTMI 
2021 (5) TMI 768
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....and directed to pay to the Municipal Corporation an amount of Rs. 5,68,798/- (Rupees five lakhs sixty eight thousand seven hundred ninety eight only) every six months towards the Municipal taxes subject to any change in amount. (c) That pending the hearing and final disposal of the suit the Defendants be ordered and directed to deposit in this court an amount of Rs. 148.63 crores towards compensation/ damages and interest on unpaid amount upto 30/11/2011. (d) That pending the hearing and final disposal of the suit the Defendants be ordered and directed to hand over the vacant and peaceful possession of the suit property to the Plaintiff immediately." 2. The notice of motion arises in the backdrop of the following facts: The plaintiff has acquired ownership over the premises admeasuring 821.74 square meters bearing C.S. No. 1266 (part) comprising a cinema hall, situated at 391 Dr. Dadasaheb Bhadkamkar Road, Girgaon (hereinafter referred to as "the suit premises") in terms of the consent decree passed by this Court in Suit No. 810 of 1983 dated 3rd of August 1983. Under the said consent decree, all rights, title and interest of the reversioner, the third defen....
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.... UD(1) of the Income Tax Act, 1961. A series of proceedings followed. Mr. Atmaram Alwani and others instituted a writ petition, being Writ Petition No. 1887 of 1997, against the respondents seeking mandamus to forthwith pay the amount of Rs. four crores. Initially, by an order dated 12th December 1997 a Division Bench of this Court directed the Appropriate Authority to deposit Rs. four crores. The respondents were also restrained from taking steps in the matter. Nonetheless on 24th December 1997 the appropriate authority passed an order under Section 269-UJ withdrawing from acquisition on the premise that the lease was not renewed beyond 30th April 1992 and, thus, there was suppression of facts. 7. As the said order was passed while the stay was in operation, the appropriate authority subsequently vacated the said order of withdrawal from acquisition. Eventually, by order dated 30th of October 2002, the petition came to be allowed and the amount deposited by the Appropriate Authority was directed to be released in favour of the petitioners therein. 8. The plaintiff filed petition, being Writ Petition No. 3154 of 2005, seeking a direction to the defendants herein to vacate the....
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....td., were modified by the indenture of modification dated 19.2.1986. The order under Section 269 UD related to the acquisition of the shareholding of Swastik India (P) Ltd. and thus the Union of India stands in the shoes of "Swastik India (P) Ltd. i.e. respondent no. 4. The impugned notice however, seeks to sell the suit premises which are of the ownership of the petitioners. In our view, this cannot be permitted as respondent nos. 1, 2, & 3 were never the owners of the suit premises." 12. The plaintiff thereafter instituted the suit in the Court of Small Causes at Bombay for recovery of possession of the suit premises alongwith compensation for unlawful occupation and mesne profits. The defendants resisted the suit on the count that the Court of Small Causes had no jurisdiction to try and decide the said suit. A preliminary issue was, thus, framed by the said Court. By order dated 15th of November 2011, the learned Judge of the Court of Small Causes answered the said issue in the affirmative holding that there was no direct relationship of landlord and tenant between plaintiff and defendants No.1 to 3 as envisaged under Section 33 of the Maharashtra Rent Control Act, 1999 and, ....
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....tion were contested. The substance of the resistance put-forth by the defendants/respondents was that the reliefs sought in the Notice of Motion were unworthy of being entertained as the reliefs sought were covered in the suit instituted by the plaintiff being Suit No. 486 of 2014. The principal question that arose for consideration was, whether the defendants were trespassers, as alleged, on the suit premises, and the reliefs of compensation and mesne profits were consequential reliefs. Since the suit instituted by the plaintiff before the Court of Small Causes was then sub-judice, it was necessary to stay the proceedings in the instant suit. The defendants/respondents also contended that the defendants were exempt from payment of Municipal taxes and cess under the provisions of Article 285 of the Constitution of India. 17. In the wake of these pleadings, when the Notice of Motion was listed before the Court on 6th of February 2019, this Court called upon the defendants to make their stand clear by filing affidavit on the issues formulated by the Court. It was directed, inter-alia, as under: "2. ..............................................................................
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....19. The aforesaid background facts and history of the litigation have been noted elaborately, on purpose. The question as to whether the plaintiff is entitled to the reliefs in the Notice of Motion, especially as regards a direction to the defendants to pay the Municipal taxes and charges, for which a demand notice has been served on the plaintiff on 6th of January 2021 computing the due amount at Rs. 2,22,43,863/- up to 31st March 2020, hinges upon the jural relationship between the parties. 20. In the light of aforesaid question, I have heard Mr. Balsara, the learned Counsel for the plaintiff-applicant and Mr. Anil Singh, the learned Additional Solicitor General for the defendants/respondents. Taking the Court through the various orders passed by the Courts, referred to above, Mr. Balsara strenuously urged that the approach of the defendants is simply inexplicable. The defendants are holding on to the property despite being fully aware that the lease term has expired. From the material on record, especially the assertions in the affidavit of Mr. Awadesh Kumar in Writ Petition No. 1887 of 1997, it becomes evident that the defendants had committed a blunder in acquiring the leas....
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....t, insists upon payment of municipal taxes and cess by the defendants. In view of the contradictory stands as regards status of the defendants, the plaintiff is not entitled to any of the reliefs, urged Mr. Singh. Lastly, it was submitted that in any event, the defendants cannot be saddled with the liability to pay Municipal taxes and cess in view of the provisions contained in Article 285 of the Constitution of India. 22. At the outset, it is imperative to note the nature of interest which the defendants have acquired U/S. 269-UD(1) of the Act, 1961. Though an endeavor was initially made by the defendants to claim proprietary title over the suit premises yet, in view of the orders passed by this Court especially, the order passed in Writ Petition No. 2324 of 2007 dated 6^th February 2008, it becomes abundantly clear that the claim of absolute ownership over the suit premises cannot be sustained. If the orders passed by this Court in Writ Petition No. 3154 of 2005 and Writ Petition No. 2324 of 2007, extracted above, are considered in conjunction, an inference becomes inescapable that the defendants had acquired the leasehold rights of the original sublessee, Swastik India Pvt. L....
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.... lease for a period of ten years with only one option of renewal for a further period of ten years. Clause 2(c) of the sub-lease, extracted above, came to be substituted by the following: "To pay all expenses and future rates, cess assessments, dues, duties, charges and outgoings whatsoever imposed by public authority whether Government or Municipal Corporation of Greater Bombay allocable and payable in respect of the demised premises including water charges, allocable in respect of the demised premises." 25. From the aforesaid covenants in the indenture of sublease and indenture of modification, it becomes evident that the lessee had undertaken to pay the municipal taxes and cess under the sub-lease as well as the modified lease deed. The indenture of sub-lease and indenture of modification cast the liability on the lessee-defendants to pay the municipal charges, taxes, cess in clear and explicit terms. The question which thus crops up for consideration is, whether the defendants can be called upon to discharge the liability, as covenanted under the aforesaid instruments ? 26. The submission on behalf of the defendants that the plaintiff cannot insist upon the payme....
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.... The object of Order 2 Rule 2 of the Code is twofold. First is to ensure that no defendant is sued and vexed twice in regard to the same cause of action. Second is to prevent a plaintiff from splitting of claims and remedies based on the same cause of action. The effect of Order 2 Rule 2 of the Code is to bar a plaintiff who had earlier claimed certain remedies in regard to a cause of action, from filing a second suit in regard to other reliefs based on the same cause of action. It does not however bar a second suit based on a different and distinct cause of action. 13. This Court in Gurbux Singh v. Bhoora Lal held : (AIR P. 1812, para 6) "6. In order that a plea of a bar under O. 2, R. 2(3) of the Civil Procedure Code should succeed the defendant who raises the plea must make out ; (1) that the second suit was in respect of the same cause of action as that on which the previous suit was based; (2) that in respect of that cause of action the plaintiff was entitled to more than one relief; (3) that being thus entitled to more than one relief the plaintiff, without leave obtained from the Court omitted to sue for the relief for which the s....
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....on for payment of the arrears of Municipal dues and the Municipal taxes and cess, as they fall due, there does not seem to be any impediment. As indicated above, the liability of the defendants to clear the municipal taxes and other Government charges emanates from the indenture of sub-lease and indenture of modification. Indisputably, the suit premises is in the possession of the defendants. In the context of contractual liability, there is no circumstance which would absolve the defendants from the liability to pay the taxes and charges. 33. At this juncture, the issue of the suit premises being exempt from the liability to pay tax arises for consideration. An endeavor was made on behalf of the defendants to draw home the point that the suit premises, being in the occupation of the Union of India, post acquisition thereunder U/S. 269 UD(1) of the Income Tax Act, 1961, is exempt from all taxes imposed by State or by any authority within a State, under Article 285 of the Constitution. 34. Article 285 of the Constitution of India reads as under: "285. Exemption of property of the Union from State taxation.- (1) The property of the Union shall, save in so far as Parlia....
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....rty" is used in the context without any limitation and therefore should bear its normal meaning. Interpreted in that way it will embrace every kind of property. As observed by Langdale, M.R. in Jones V. Skinner, (1835) 5 L.J. Ch. 87 at page 90: (42 R.R.274): " 'Property' is the generic term for all that a person has dominion over. It is the most comprehensive of all terms which could be used, inasmuch as it is indicative and descriptive of every possible interest which the property can have." Without attempting to define affirmatively what the generic term will cover, it is sufficient for us to hold that the buildings in question are property and as in India the ownership of a building is not necessarily related to the ownership of the land on which the building stands, the buildings in the present case were vested in the Government. ......" 40. Indubitably, the question as to whether the leasehold interest which the Union of India has acquired in the suit premises, by virtue of the provisions contained in Section 269-UD(1) of the Income Tax Act, 1961, qualifies for exemption under Article 285(1) of the Constitution of India, cannot be examined in this proceedi....
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....petition is instituted in order to assail the validity of the levy. So also there is no warrant for presuming the levy to be bad at the very threshold of the proceedings. The only consideration at that juncture is to ensure that no prejudice is occasioned to the rate payers in case they ultimately succeed at the conclusion of the proceedings. This object can be attained by requiring the body or authority levying the impost to give an undertaking to refund or adjust against future dues, the levy of tax or rate or a part thereof, as the case may be, in the event of the entire levy or a part thereof being ultimately held to be invalid by the Court without obliging the tax-payers to institute a civil suit in order to claim the amount already recovered from them. On the other hand, the Court cannot be unmindful of the need to protect the authority levying the tax, for, at that stage the Court has to proceed on the hypothesis that the challenge may or may not succeed. The Court has to show awareness of the fact that in a case like the present a municipality cannot function or meet its financial obligations if its source of revenue is blocked by an interim order restraining the municipali....