Thirurangadi Muslim Orphanage Committee vs The Government of Kerala and The Tahsildar

H.L. Dattu, C.J.—In this appeal, the appellant calls in question the correctness or otherwise of the orders passed by the learned single Judge

in O.P. No. 24824 of 1999 dated 6th June, 2006. The learned Judge, relying on the decision of this Court in Medical Trust Hospital v. State of

Kerala 2004 (2) KLT 139, has rejected the writ petition. While doing so, this Court has observed as under: Admittedly petitioner is not rendering

medical service free of cost in the hospital even though petitioner has a case that in some cases free services were rendered.

The facts in brief are:

The appellant before us is a registered charitable society. The aims and objects of the society include establishment and running of orphanages,

educational institutions, vocational training centres, hospitals and other charitable institutions. It is in pursuance of its main aims and objects the

society is running an orphanage, various educational institutions and a hospital known as `M.K.Haji Orphanage Hospital'' at Thirurangadi.

The appellant had approached the State Government claiming exemption from payment of tax under the provisions of the Kerala Building Tax

Act, 1975 (hereinafter, for the sake of brevity and convenience, referred to as Act 1975). The State Government after taking into consideration

the statement of accounts produced by the appellant has observed in its order dated 7.9.1999 that the appellant is spending a very meager amount

for the treatment of poor patients and, therefore, they are not entitled for exemption u/s 3(1)(b) of the Kerala Building Tax Act. The order passed

by the State Government is as under:

GOVERNMENT OF KERALA

Taxes (H) Department, Thiruvananthapuram,

No. 18592/H3/98/TD Dated: 7.9.1999.

From

The Principal Secretary to Government.

To

The Secretary,

Tirurangadi Muslim Orphanage Committee,

Saudabad, Tirurangadi - 676306.

Sir,

Sub: Kerala Building Tax Act - Request for exemption from payment of building tax - Regarding.

Ref: Your representation dated 24.8.1998.

I am to invite your attention to the reference cited and to inform you that Government have examined your request for exemption from payment of

building tax to the building in Rs. No. 113/4 of Tirurangadi Village of Malappuram District in which M.K.Haji Orphanage Hospital owned and

managed by Tirurangadi Muslim Orphanage Committee is functioning. The statement of your Counsel at the time of hearing on 24.2.1999 were

also considered. On verification of the available records it is found that the hospital functioning in the building in question is charging fees and other

charges from the patients. The Income & Expenditure statement for the year ended 31.3.1998 shows that the hospital is generating income heavily

from treatment of patients and it is spending a very small amount towards treatment of Orphans. It cannot be considered as a building principally

used for charitable purpose. The building is not eligible for exemption u/s 3(1)(b) of the Kerala Building Tax Act. Your request for exemption is

hereby declined.

Yours faithfully,

K.N.Vilasini, Addl.Secretary,

For Prl.Secretary to Govt.

Aggrieved by the said order passed by the State Government, the appellant was before this Court in O.P. No. 24824 of 1999. The learned

Judge has rejected the original petition following the judgment of this Court in Medical Trust Hospital''s case. Therefore, the appellant is before us

in this appeal.

The learned Counsel appearing for the appellant would submit that the hospital run by the appellant society is for a charitable purpose and the

hospital is rendering services to the poor and also giving free medical relief and, therefore, the State Government was not justified in rejecting the

claim of the appellant for exemption from payment of the building tax under Act 1975. In support of his contention the learned Counsel takes us

through the observations made by this Court in Medical Trust Hospital Vs. State of Kerala, and also the decision of this Court in State of Kerala v.

St.Gregorious Medical Mission 1992(1) KLT 230.

In order to appreciate the contentions canvassed by the learned Counsel for the appellant, the provisions of Section 3 of the Act is to be noticed

and, therefore, we extract the same. It reads as under:

Exemptions:- (1) Nothing in this Act shall apply to--

(a) buildings owned by the Government of Kerala or the Government of India or any local authority; and

(b) buildings used principally for religious, charitable or educational purposes or as factories or workshops. Explanation:-- For the purposes of this

sub-section, ""charitable purpose"" includes relief of the poor and free medical relief.

(2) If any question arises as to whether a building falls under Sub-section (1) or u/s 3A, it shall be referred to the Government and the Government

shall decide the question after giving the interested parties an opportunity to present their case.

(3) A decision of the Government under Sub-section (2) shall be final and shall not be called in question in any court of law.

Section 3 of the Act states that the provisions of the Kerala Building Tax Act will not apply to the buildings owned by the State Government or

the Central Government or any local authority. Section 3 (1)(b) envisages that the Act will not apply in the case of buildings used principally for

religious, charitable or educational purposes or as factories or workshops.

The explanation appended to Sub-section 3(1)(b) of the Act defines `charitable purpose'' for the purpose of Section 3 (1)(b) of the Act. It is an

inclusive definition. It says: charitable purpose should include relief of the poor and free medical relief.

Assuming that the appellant society is a charitable institution it has to satisfy two more conditions. That is, it should cater to the needs of the poor

people and also provide a free medical relief.

Judicial review of an administrative action cannot be expanded to find fault with every order passed by an Executive. This can be done only as

observed by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service (1985) AC 374, ""one can conveniently classify

under three heads the grounds upon which administrative action is subject to control by judicial review. The first ground I would call ''Illegality'', the

second ''irrationality'' and the third ''procedural impropriety''. That is not to say that further development on a case by case basis may not in course

of time add further grounds.

In the instant case, admittedly, the appellant had approached the State Government claiming exemption from payment of tax under Act 1975.

At the time of hearing of the application, the appellant society had produced the statement of accounts maintained by them for the purpose of

Income Tax Act. After going through the statement of accounts so produced, the State Government has come to the conclusion that the appellant

has spent a very meager amount towards free medical relief to the poor patients. This is a finding of fact and this finding of fact cannot be disturbed

by us unless we have sufficient and cogent material before us.

In the decisions on which reliance is placed by the learned Counsel for the appellant it is made very clear that if major portion of the amount is

spent by the hospital for catering to the needs of poor people and providing free medical relief, then such an institution is completely exempted u/s

3(1)(b) of the Act. In the instant case, as we have already noticed that though the appellant society is a charitable institution it has not fulfilled the

other two conditions, namely, it does not cater to the needs of poor and does not provide free medical relief. In that view of the matter, we are of

the opinion that the learned Judge was justified in holding that the appellant is not rendering medical services free of cost in the hospital. Therefore,

they are not eligible for exemption u/s 3(1) (b) of the Act. We concur with the reasonings and conclusions rendered by the learned single Judge.

Therefore, interference of the said order is not called for. Therefore, the appeal requires to be rejected and it is rejected.

Ordered accordingly.