Corporation of Madras vs T. Balakrishna Mehta

Satyanarayana Rao, J.—These two appeals were heard together as a common question of law arises in both the appeals. C.C. C. A. No. 66 of 1950 is against the decision of the City Civil Court in O. S. No. 239 of 1949 and the plaintiff who is the City Motor Service Ltd., is the appellant. C. C. C. A. No. 50 of 1951 is against the decision in O. S. No. 232 of 1949 of the City Civil Court, Madras, and the appellant is the Corporation of Madras. The two suits were heard by different Judges and they held opposite views on the common Question of law, which arises for consideration. The suit O. S. No. 239 of 1949 was dismissed, but O. S. No. 232 of 1949 was decreed.

It will be convenient to refer to the facts in C. C. C. A. No. 66 of 1950. The facts in the connected C. C. C. A. No. 50 of 1951 are similar though there is a slight difference in the material dates. In C.C.C.A. No. 66 of 1950, the defendant is the Corporation of Madras & the relief claimed was a declaration that the Corporation has no right to resort to distress proceedings for enforcing the collection of betterment contribution payable, if any, in respect of the bungalow and ground bearing R. S. No. 329/2 Thousand Lights Town Planning area and door No. 36 Whites Road, Mount Road, Madras, for the various financial years commencing from the date the scheme took effect and also for a permanent injunction restraining the defendant Corporation and its agents and servants from resorting to distress proceedings in any manner for enforcing the collection of betterment contribution or any portion thereof.

The plaintiff is the owner of the bungalow and ground bearing R. S. No. 329/2 Thousand Lights Town Planning area and bearing door No. 36 Whites Road, Mount Road, Madras. A notification u/s 12 of the Madras Town Planning Act (Act 7 of 1920), hereinafter called the "Act", was issued by the Government in 1934 requiring the Corporation to prepare, publish and submit for their sanction a draft scheme in respect of lands in the Thousand Lights area for applying the Town Planning Scheme. The scheme was finally sanctioned by the Government of Madras and published in the Fort St. George Gazette on 7-7-1941. u/s 14, Sub-clause (6) of the Act, the scheme, therefore) took effect from that date and the execution of the scheme commenced from that date. The Government appointed an arbitrator u/s 27 of the Act and before the arbitrator the defendant Corporation filed a claim against the plaintiff company for betterment contribution in respect of the aforesaid property. The arbitrator had to decide, among others, two important questions, (i) whether the properly was liable to betterment contribution u/s 23 of the Act and (ii) the market value of the property on the date of the notification u/s 12 in accordance with the provisions of Section 24 (a) of the Act. On 26-3-1945, the arbitrator gave an award holding that the property of the plaintiff was liable for betterment contribution and he also fixed the market value of the property u/s 24(a) of the Act Thereupon an appeal was preferred by the plaintiff u/s 29 of the Act to the Chief Judge of the Court of Small Causes against the award of the Arbitrator. The appeal was dismissed by the Chief Judge, Small Cause Court on 2-12-1947.

The next stage in the proceedings under the Act to determine the betterment contribution is to fix the market value of the property in each financial year commencing from the date when the scheme took effect u/s 14, in this case, 7-7-1941. u/s 24 of the Act, the Commissioner fixed the market value for each of the financial years commencing from 1941-42 and ending with the financial year 1948-49 and served on the plaintiff in June 1948 sixteen notices for the 16 half years in respect of the 8 financial years beginning from 1941-42 as required by Rule 59 of the rules framed by the Madras Government u/s 44, Sub-sections (1) and (2) of the Act. The plaintiff preferred revision petitions Exs. A. 2 series on 8-7-1949 to the Commissioner of the Corporation of Madras objecting to the estimate of the market value made by the Commissioner during the financial years. These were finally disposed of by the Commissioner on 29-11-1943 confirming the estimate already made of the market value by him (vide Ex. A. 3) and after the disposal of the revision petitions, the plaintiff was called upon to pay the amount within the period fixed in accordance with Rule 62 but the plaintiff preferred an appeal under Rule 63 to the Council against the order of the Commissioner. While these appeals were pending, the Commissioner of the Corporation threatened distress proceedings to collect the betterment contribution from the plaintiff for the 8 financial years and he, therefore, filed the present suit on 8-3-1949 for the reliefs already mentioned. The appeals were subsequently dismissed on 9-8-1949.

Though in the pleadings and in the issues framed in the lower Court, various other contentions were raised, the only substantial and outstanding question now debated in these appeals is whether the defendant-Corporation is entitled to enforce by distress proceedings the collection of the betterment contribution for all the eight years and the decision of the question lies in a narrow compass though the arguments before us covered a wider ground.

It will be convenient at this stage to refer briefly to the relevant provisions of the Act and the rules framed thereunder for a better understanding of the respective contentions of the parties. The Town Planning Act applies to the City of Madras governed by the City Municipal Act and also to the Municipalities governed by the District Municipalities Act as is evident from the definition of "chairman" in Section 2(1) of the Act Section 4 of the Act contains the provisions that may be made in the Town Planning Scheme. A proceeding for applying the Town Planning Scheme may be initiated by a resolution u/s 9 of the Act by the Municipalities or the Corporation as provided by Section 10 or may be initiated at the instance of the Provincial Government, which may require the Municipality to prepare and publish for the sanction of the Government a Town Planning Scheme u/s 12 of the Act. When all the preliminary steps are gone through, the scheme is published in the Official Gazette under Sub-clause (5) of Section 14 and a notification so published is conclusive evidence that a scheme has been duly made and sanctioned and the scheme takes effect from the date of the publication of such notification. Thereafter, the execution of the scheme should be commenced (vide Section 14(6)). The next stage for the determination of the betterment contribution, which the Municipalities are empowered to levy u/s 23 of the Act, is to make a claim for that purpose within the time prescribed before the Arbitrator, who is appointed u/s 27 of the Act. The functions of the Arbitrator in respect of the claim made by the Corporation or the Municipalities are enumerated in Section 27, the chief of which are to determine in the first instance whether the property is liable for betterment contribution u/s 23 and, if so, to record the market value on the date of the notification u/s 10 or Section 12 as the case may be. This power to determine the market value is contained in Section 24(a) and the market value of the property on the date of the publication of the notification u/s 10 or Section 12 is treated as the basic value as they call it, which is the standard for comparison for arriving at the betterment contribution in each financial year.

The betterment contribution, which the Corporation or Municipality is entitled to levy is the annual betterment contribution and the term of years and the percentage of the increase in value not exceeding 10 per cent, are fixed by the scheme. There is however an upper limit fixed by the proviso to Section 23 for the betterment contribution as it states that the aggregate amount of the contributions so recovered shall not exceed one half of the maximum increase in value during the term of years fixed under the scheme. The mode of ascertaining and the time during which the ascertainment should be made are laid down in Clauses (b) to (d) of Section 24. The Chairman, that is, in the case of the Corporation the Commissioner has to fix in each of the financial years following the date on which the scheme takes effect u/s 14 the market value of the property on the first day of April of that year. In other words, even in the beginning of the financial year, he must proceed to estimate the market value of the property for the purpose of that financial year. If the market value so estimated by the Commissioner does not exceed the basic value, that is, the value fixed by the Arbitrator under Clause (a) of Section 24, no betterment contribution shall be leviable in that year. If, on the other hand, the market value fixed by the Commissioner under Clause (b) exceeds the basic value, the Municipality is entitled to levy on the difference a betterment contribution according to the percentage fixed under the scheme. This annual betterment contribution is a first charge on the property (vide Section 25) but is subject to the prior payment of land revenue, if any, due to the Government and it shall be paid in half yearly instalments of one half of the amount fixed for the year; that means, that if the contribution is fixed for the financial year 1941-42, it must be paid in two half yearly instalments in that year and that amount to be paid is one half of the amount fixed for the whole year. Against the decision of the Arbitrator, an appeal is provided by Section 24 to the authority provided therein and the amount of contribution fixed by the Commissioner under Clause (d) is also subject to revision by him under the rules and against his decision there is a further appeal to the Council. The mode of collecting the betterment contribution in respect of each financial year is provided by Sub-section (2) of Section 25 of the Act. The Provincial Government is authorised to make rules for the assessment and collection of betterment contribution by that sub-section, but subject to such rules however it is provided that the Chairman shall have the same powers and shall adept the same procedure for the assessment and collection of betterment contribution as he has for the assessment and collection of property tax. Further, the persons affected shall have the same right to receive notice of assessment and to object to the assessment and to appeal in respect thereof as they have in respect of the property tax and the decision shall to the same extent be final and conclusive. If under the City Municipal Act or the District Municipalities Act, lands and buildings are exempt from property tax, they shall also be exempt from betterment contribution. The rules framed by the Government under the Act do not provide for the collection of betterment contribution.

The language of Section 25(2) that "The Chairman shall have the same powers and shall adopt the same procedure for the assessment and collection of the betterment contribution as he has for the assessment and collection of the property tax" naturally, therefore, refers to and attracts the provisions of the City Municipal Act in this case and of the District Municipalities Act in the case of Municipalities. The provisions relating to property tax are contained in Sections 98 to 109 of the City Municipal Act and Section 138 enacts that the rules and tables embodied in Schedule IV shall be read as part of the chapter. Schedule IV contains taxation rules and Part I deals with the assessment of property tax and Part VI provides for the collection of taxes. Rules 20 and 21 are the relevant rules so far as collection by distress is concerned. Under Rule 20 Sub-clause (1) it is provided that, where any tax, not being a tax in respect of which a notice has to be served u/s 113 or Section 120-A or a direction has been given under Rule 6, is due from any person, the Commissioner shall cause to be served upon or sent to such person a bill for the sum due before proceeding to enforce the provisions of Rule 21. Sub-clause (3) of that rule states that where a notice, bill or direction referred to in Sub-rule (1) has not been served or given either in the half year in which tax became due or in the succeeding half year, the tax for the half year first mentioned in this sub-rule shall not be demanded. Under Rule 21,

"If the amount due on account of any tax is not paid within 15 days from the service of the notice or bill or the giving of the direction referred to in Section 113 or Section 120-A or Rule 6 or Rule 20 and if the person from whom the tax is due has not shown cause to the satisfaction of the Commissioner why it should not be paid, the Commissioner may recover by distraint under his warrant and sale of the moveable property of the defaulter or if the defaulter is the occupier of any building or land in respect of which a tax is due, by distress and sale of any moveable property which may be found in or on such building or land the amount due on account of the tax together with the warrant fee and distraint foe and with such further sums as will satisfy the probable charges that will be incurred in connection with the detention and sale of the property so distrained,"

so that if within 15 days from the date of the service of the bill under Rule 20 -- we are not concerned in this case with Section 113 or Section 120-A or Rule 6 -- the tax is not paid, the Commissioner is entitled to recover by distraint under a warrant for sale of the property of the defaulter the arrears due. The requirement of Rule 20 (3) is that the bill referred to in Sub-rule (1) of Rule 20 has to be served or given either in the half year in which the tax became due or in the succeeding half year. If it is not so served, the tax for the half year first mentioned in the sub-rule cannot be demanded. On the interpretation of this clause, in our opinion, the decision of the question whether the distraint in this case for the sixteen half years is valid has to be determined. To illustrate the meaning of this clause, we may take a concrete example. Taking the last of the financial years in the present case 1948-49, the financial year commenced on the 1st of April 1948 and ended with the 31st of March 1949. The first half year ended with September 1943 and the second half year with March 1949. If the tax became due in the first half year ending with September 1948, a demand notice under Sub-rule (1) may be issued for the amount due in respect of that half year or in the succeeding half year. If such a notice is given in either of the two half years then the distraint would be valid for the amount, which became due in the first half year. Otherwise, he cannot make a demand and distrain the property under Rule 21. So far the meaning of the sub-clause seems to be unambiguous and does not admit of any serious doubt.

It must be mentioned that the appellant does not dispute his liability to pay betterment contribution fixed for the 8 financial years and it is also clear from Section 25 that that amount is a first charge on the property, subject however to the revenue payable to Government. What is disputed is that the mode of enforcing that liability is not by distraint for all the half years by a demand made in the second half year of 1948-49 i.e., after November 1948. By the demand, the Corporation can recover only the betterment contribution payable in respect of the financial year 1948-49 and no more. On a plain reading of the provisions of the Town Planning Act and the rules framed thereunder and the rules jn Part VI of Schedule IV to the City Municipal Act, it is clear that in each financial year, at its commencement, the Commissioner has to determine the betterment contribution payable for that financial year and that that amount should be paid in two half yearly instalments during that year. If no payment is made and if a demand is made in accordance with Rule 20 of Part VI of Schedule IV to the City Municipal Act, he can distrain moveables for the recovery of the betterment contribution payable in respect of that financial year. But unfortunately for the Corporation, in the present case, the determination of the betterment contribution for the 8 financial years took a long time as the various stages for its fixation had to be gone through and no doubt those steps proceeded in a very leisurely manner. It took nearly seven years to determine the betterment contribution for the 8 financial years after the scheme took effect u/s 14. It is, therefore, contended on behalf of the Corporation by Dr. John, the learned Counsel, that it is unthinkable that the Legislature could have intended to make distraint available even long before the betterment contribution was ascertained and that before it was ascertained, it could not have become due. If the contribution was determined within the periods contemplated by Section 24 of the Act, the Commissioner could exercise the right of distraint by complying with the provisions of Rule 20. But it was impossible for him to have complied with those provisions because the amount was not ascertained finally.

It is no doubt true that an amount, which was not ascertained, cannot become payable before it is ascertained. Take for example the case of arrears of rent. If the rent had to be ascertained, it cannot be said that before ascertainment the rent became due and the period of limitation to recover rent under Article 110 of the Limitation Act commences to run even before such ascertainment as held by the Privy Council in--''Rangayya Apparao v. Bobba Sriramulu'', 27 Mad 143. (A). The provisions in such a case for recovery of rent would apply only to rent, which is ascertained and not to rent, which is in the process of ascertainment. Dr. John was, therefore, right in his contention that the betterment contribution did not become due until it was ascertained by the Commissioner on 29-11-1948. But that would only help him to contend that the cause of action for enforcing the charge u/s 25 of the Act accrued and arose only on that date even in respect of the contribution for the years commencing from 1941-42. When once it is ascertained, it became due and became payable. But that docs not help him in invoking the provisions for distraint under Rules 20 and 21. The language of Sub-clause 3 of Rule 20 clearly refers to the tax, which not only became due in that half year but also which became due in respect of that half year. Therefore, a demand could be made either in the half year in which it became due or in the succeeding half year only for the amount due in respect of the first half year. It is no doubt true that the betterment contribution for all the half years became due in 1948-49 but the Commissioner has no right to demand under Rule 20 betterment contribution due in respect of any other half year or half years other than one half year in respect of which it became due in that half year. He may make, however the demand either in that half year or the succeeding half year. The language of the rule excludes the possibility of any such construction, which has been urged on behalf of the Corporation by Dr. John the learned counsel.

Dr. John then referred to the inconvenience in realising the betterment contribution that may be caused by driving the Corporation to file a suit as the proceedings may take a very long time. That may be so, but we cannot get over the clear language of the rule as our function is only to interpret the rule as it stands and not to legislate. Further, he, also contended that the demand referred to in Rule 62 after the disposal of the revision petition by the Commissioner complies with the demand contemplated by Rule 20. Rule 21 clearly contemplates a demand under Rule 20 and not any other demand outside it. Even if it be assumed that a demand under Rule 62 tantamounts to a demand under Rule 20, even then it would not help the Corporation as distress cannot be made for more than one half year in which the betterment contribution became due under Sub-rule 3 of Rule 20.

Reference was made in the course of the arguments to Section 387 of the City Municipal Act and it was contended that without complying with the provisions of Rule 20, a demand could be made for betterment contribution as a contribution payable under any other law, i.e., the Town Planning Act in this case. The language of Section 25 (2) excludes the applicability of Section 387 as the procedure to be applied under the former section is the procedure for the assessment and collection of the property tax and not the procedure prescribed under the City Municipal Act for the recovery of any other amount as compensation or contribution. Section 387 does not therefore help the respondent. For these reasons we think that the respondent is not entitled to recover by distraint proceedings any amount in respect of the financial years beginning from 1941-42 except the betterment contribution due in respect of the financial year 1948-43. This the appellant is willing to pay and in fact in the connected appeal it is represented that the amount has been already paid, though in C. C. C. A. No. 66 of 1950 it was not paid in full. For these reasons we think that the decision of the learned City Civil Judge in O. S. No. 239 of 1949 is erroneous and must be reversed. C C. C. A. No. 66 of 1950 is, therefore, allowed and the suit is decreed except in respect of the financial year 1948-49 with costs here and in the court below.

C. C. C. A. No. 50 of 1951: The facts are similar though the dates are somewhat different and it is unnecessary to burden this judgment with details of those dates. The question raised is the same and for the reasons given in the connected appeal, the decision of the lower court in this case is correct and the decree must be confirmed. The amount due in respect of the financial year 1948-49 was already paid by the plaintiff. The appeal is dismissed with costs.