Thekke Chalu Parambil Bhaskaran v. Meppayyur Grama Panchayat

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.BHAVADASAN THURSDAY, THE 8TH DAY OF MARCH 2012/18TH PHALGUNA 1933 SA.No. 833 of 1998 (G) ---------------------AS.195/1996 of ADDL.DISTRICT COURT, KOZHIKODE OS.92/1995 of SUB COURT, QUILANDY ## APPELLANT/RESPONDENT/PLAINTIFF -----------THEKKE CHALU PARAMBIL BHASKARAN, S/O KUNHIRAMAN, MEPPAYYUR AMSOM, KAYALAD DESOM, KOYILANDY TALUK. BY ADV. B.PARTHASARATHY RESPONDENT/APPELLANT/DEFENDANT -------------- MEPPAYYUR GRAMA PANCHAYAT, REPRESENTED BY SECRETARY, MEPPAYUR, KOYILANDY TALUK BY ADV. SRI.MATHEW KURIAKOSE THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 08-03-2012, ALONG WITH SA. 834/1998, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: kkj ## P.BHAVADASAN, J. - - - - - - - - - - - - - - - - - - - - ## S.A.Nos. 833 & 834 of 1998 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 8[th] day of March, 2012 ## J U D G M E N T These two appeals arise from the O.S.No.92 of 1995 and O.S.No.93 of 1995 before the Sub Court Koyilandy relating to the building tax assessment said to have been made by the Mepayur Grama Panchayat. Since common issues were involved in these two suits, the suits were tried jointly and disposed of by a common judgment. Both the suits were decreed by the trial court. The lower appellate court reversed the judgment and decree of the trial court and dismissed the suit. Then the respective plaintiffs have come up in appeal. S.A.No.833 of 1998 is directed against the judgment and decree in O.S.No. 92 of 1995 and S.A.No.834 of 1998 is against the judgment and decree in O.S.No.93 of 1995. 2. The facts which are absolutely necessary for the disposal of these appeals are as follows:- 3. The plaintiffs in the respective suits are owners of ## -:2:- ## S.A.Nos. 833 & 834 of 1998 the premises which were subjected to the tax assessment by the Mepayyur Grama Panchayat. The complaint of the plaintiff in the respective suit is that after issuing proposal for enhancement of tax evidenced by Ext.A1 notice, though they had filed their objections, without considering the objections revenue recovery proceedings has been issued for recovering the tax. In both the suits, the respective plaintiffs have produced a copy of the objection filed by them against the proposal for enhancement of tax. They also pointed out that the revision proposed is not in accordance with the provisions of the Act and Rules then existing in the Panchayat Act or in accordance with the Panchayat Raj Act. 4. The suits were resisted by the defendant by pointing out that subsequently the defendant has issued fresh notices to the plaintiffs dated 07.07.1995. They were asked to appear before the Secretary on 18.07.1995. According to the defendant, the plaintiffs were given opportunity to file objections of the proposed enhancement. ## -:3:- ## S.A.Nos. 833 & 834 of 1998 They have heard. Fresh orders have been passed re-fixing the tax. In the light of the said fact the suits had become infructuous since the orders under challenge in the respective suits have been superseded by the subsequent orders issued on 26.07.1995. It is also contended that the suits were not maintainable as no notice had been issued under Section 249 of Panchayat Raj Act 1994. 5. On the basis of the above pleadings issues were raised and evidence was adduced. The evidence consist of Exts.A1 to A7 produced by the plaintiff in O.S.No.92 of 1995 and Exts.A1 to A19 produced by the plaintiff in O.S.No.93 of 1995. The trial court after an evaluation of the materials before it came to the conclusion that the plaintiffs are entitled to succeed in the suit and decreed the suit in their favour. The trial court found that, as a matter of fact, the functions vested on statutory authorities under Panchayat Raj Act had not been duly discharged and orders have been issued in violation of the provisions of the Act and Rules even assuming that the said Act applied to the ## -:4:- ## S.A.Nos. 833 & 834 of 1998 cases on hand. The trial court also found that statutory notice of suit as contended by the defendants may not be necessary. 6. The Panchayat took up the matter in appeal as A.S.Nos.195 of 1996 and 196 of 1996 against the respective judgment and decrees. The lower appellate court considered the issue on the basis of the provisions of Panchayat Raj Act of 1994. The lower appellate court was of the opinion that since the 1[st] notice did not survive, the the validity of notice need not be considered and allowed the appeal and dismissed the suit giving right to the plaintiffs to agitate their claims before appropriate forum. 7. Notice is seen issued on the following questions of law in these second appeals. i) Is the lower appellate court correct in law in stating that the appeal filed by the Meppayyur Grama Panchayat is maintainable without the approval of the District Panchayat Officer as provided under Rule 3 of the Kerala Panchayat (Restriction and Litigation) Rules as when a thing is to be done in a particular way under the rules it should be done in that way and no other way of doing it is permissible as hled in Taylor vs. Taylor(1876 1 Ch D 426). ## -:5:- ## S.A.Nos. 833 & 834 of 1998 ii) Is the lower appellate court is correct in law in holding that even in respect of the action taken under the Panchayat Act 1960 and when the suit is for injunction notice before the suit is mandatory inspite of the fact that notice under Section 249 is required only in respect of any thing done in purporting to be done under the new Act. Iii) Has not the lower appellate court gone wrong in thinking that Sec.284(2)(g) of the Panchayat Raj Act 1994 will make notice mandatory even for proceedings taken under the earlier Act. iv) Has not the lower appellate court gone wrong in stating that suit challenging revision of tax by 300% and 500% as against the maximum limit of 25% as directed in the circular issued by the Government (which is upheld by this Hon'ble Court in 1994(2) KLT and 1998(2) KLT 625 is not maintainable by stating that the act done is within the authority of the Executive Officer. v) Has not the lower appellate court gone wrong in holding that merely because the Grama Panchayat passed a subsequent order confirming the earlier order the suit filed against the earlier order has become infructous. v) Has not the lower appellate court gone wrong in not pronouncing upon the validity of the orders passed by the Secretary of the Grama Panchayat after the filing of the suit. 8. The learned counsel appearing for the appellants pointed out that whether under the old Act or new Act, proper procedure had not been followed and it was without hearing the appellants that the orders has been passed. Further it is pointed out that if the proceedings are based -:6:- ## S.A.Nos. 833 & 834 of 1998 on the earlier Act, then going by the decision reported in **Vareed Poulose v. State of Kerala (1994(2) KLT 21)** the enhancement should not exceeded 25% of the existing tax. If the provisions of the new Act are to be applied, the initial proposal of assessment of tax must be made by the Standing Committee and notice has to be published by the Secretary. Objections raised will have to be heard by the Standing Committee. The learned counsel refer to Section 203 of the new Act and also the relevant provisions of Kerala Panchayat Raj (Building Tax and the Surcharge Thereon) Rules, 1996. The learned counsel pointed out that either way whether be the earlier or new Act, the assessment now made is clearly illegal and since it violates the relevant provisions of law it may not be necessary and proper to drive the appellant to take recourse to statutory remedies. The learned counsel also emphasised that the orders of assessment of the tax are illegal and unsustainable in law. 9. The learned counsel appearing for the respondent ## -:7:- ## S.A.Nos. 833 & 834 of 1998 on the other hand pointed out that apart from the fact that the appellants will have to be relegated to the statutory remedies available to them, there were no notice regarding the institution of the suit. 10. Proceedings were initiated against the appellants admittedly on the basis of earlier Act. The said act provided for mode of assessment of tax and issue of notice etc. From the written statement filed by the defendants in the suit what is discernible is that in pursuance to Ext.A1 notice issued, they had filed their objections. The complaint of the plaintiff in the suit was that without considering their objections, the tax was finalised and revenue recovery proceedings had been initiated. During the pendency of the suit, it is seen that fresh notice was issued and fresh assessment was made. It was this fact which had persuaded the lower appellate court to come to the conclusion that the earlier cause of action did not survive and if plaintiffs have any grievance regarding the assessment they will have to resort to statutory remedies. -:8:- ## S.A.Nos. 833 & 834 of 1998 11. The approach of the lower appellate court does not appear to be correct. If the assessment was done under the earlier Act, then as per a government notification issued, enhancement cannot exceed 25% of the existing tax. In fact this issue has been considered in the decision reported in **Vareed Poulose v. State of Kerala [1994(2) KLT 21]** where in it is held as follows:- It is difficult for me to say that the above direction contained in Ext Pl is in any way opposed to the provisions contained in the Act or Rules. The reasons for issuing such directions are also stated in Ext.Pl circular. It is pointed out therein that the Government have received large number of complaints in regard to the revision of building tax in respect of the buildings in the Panchayat area. On examination of such complaints the Government have satisfied that certain Panchayats had fixed the building tax in general revision in an unreasonable manner without any basis. It has also came to light that certain Panchayat has fixed tax adding 100% to 200% to the existing rate. In order to prevent the Executive Authority from exercising the power conferred on it under the Rules in an arbitrary and unreasonable manner, it cannot be said the Government have no power to issue circular directions or guidelines in the matter. This is not a function, acting against the provisions of the Act or Rules but a function facilitating proper and just implementation thereof. The powers are given to executive authorities to exercise them in a reasonable and just manner and not to misuse it in detrimental to the interest ## -:9:- ## S.A.Nos. 833 & 834 of 1998 of the general public. In such situations, the Government can step in as they deem fit in the circumstances of the case without doing violence to the provisions contained in the statute, in order to safeguard the paramount interest of the people at large. There is no provision in the Act or Rules as to how a building used by the owner either for his residence or for carrying on his employment shall be assessed to building tax in general revisions. It is in that background the directions are given as per Ext. P2 circular. This is not a restraint on the power of the Executive Authority as contended by the learned counsel for the Panchayat. Ultimately it is for the State to maintain the welfare of the people or a section thereof. The local authorities like Panchayat cannot be justified in adopting a posture that they are above the State in safeguarding the interest of the people. There may be cogent and adequate materials for the Government to issue circular directions apart from those contained in Ext. Pl and the Government are not bound to disclose them in any manner. Of course this court can examine such materials if such a course of action is absolutely necessary in the interest of general public. 12. In view of the principle laid down in the above decision if the assessment is treated as one under the earlier Act, then obviously it could not have exceeded 25% of the existing rate. It is not disputed by the defendant that the present tax levied far exceeds the said rate. 13. Equally unsustainable is the proceedings, if the ## -:10:- ## S.A.Nos. 833 & 834 of 1998 assessment is treated as one under the new Act. As already noticed, Section 203 deals with the assessment of tax. It provides the mode of assessment. Then there are rules under the Kerala Panchayat Raj(Taxation, Levy and Appeal) Rules, 1996 and so also Kerala Panchayat Raj (Building Tax and the Surcharge Thereon) Rules, 1996. There is nothing to indicate that if as contended by the defendant in the suit that assessment had been made under the current Act, procedures made mention of in the above provision have been followed. Going by the Kerala Panchayat Raj (Building Tax and the Surcharge Thereon) Rules, 1996, first proposal for assessment has to be made by the standing committee (as it then stood) and notice of decision has to be published by the Secretary. Any objection filed will have to be heard by the standing committee. It is not disputed that in the case on hand said procedures have not been followed. One need not consider in this case the provisions of Kerala Panchayat Raj (Taxation, Levy and Appeal) Rules, 1996 which are not very relevant for the present purpose. Even -:11:- ## S.A.Nos. 833 & 834 of 1998 going by the rules under Kerala Panchayat Raj (Building Tax and the Surcharge Thereon) Rules, 1996, Rule 6(3) the assessment now made may not be proper. 14. The learned counsel appearing for the defendant brought notice of this Court Sections 284 (2)(d) and 2(i) of Panchayat Raj Act, which read as follows:- (d) all sums due to an existing panchayat, whether on account of any tax, cess, fee, surcharge or otherwise, shall be recoverable by the successor Panchayat, and for the purpose of such recovery the successor Panchayat shall be competent to take any measure of institute any proceedings which it would ave been open to an existing panchayat, or any authority thereof to take or institute before the appointed day. (i) any appointment notification, notice, tax, fee, order, scheme, license, permission, rule, bye-law, regulation of form made, issued, imposed or granted in respect of the Panchayat area of existing Panchayat under the Panchayat Raj Act,1960 and in force immediately before the appointed day shall, in so far as it is not inconsistent with the provisions of this Act continue to be in force as if made, issued, imposed or granted in respect of the corresponding Panchayat area of a successor panchayat under this Act until superceded or modified by any appointment, notification, notice, tax, fee, order scheme, license permission, rule, bye-law, regulation or form made, issued, imposed or granted under this Act; ## 15. It is not possible to understand how these -:12:- ## S.A.Nos. 833 & 834 of 1998 provisions can be of any help to the respondents in these appeals. As already noticed that if one goes by the principle laid on by this Court and also procedure to be followed in levying the tax, as per the earlier Act, present orders cannot be sustained. In fact the contentions taken by the Panchayat before the lower appellate court was to treat the present proceedings as one under the new Act. In that case also proper procedures have not been followed. Either way, the Panchayat cannot sustain the assessment which has now been made. In the result, these appeals are allowed, the judgment and decree of the lower appellate court are set aside and that of the trial court restored but subject to the liberty of the Panchyat to proceed in accordance with law for the assessment of tax of buildings belonging to the appellants in accordance with the provisions of the relevant Act. P.BHAVADASAN, JUDGE kkj