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Judgment
Sabyasachi Bhattacharyya, J
On December 24, 2002, by a registered deed, the Union of India, through the State Bank of India (SBI) (respondent no.1) as its custodian, sold a property to the petitioner no.1-Company.
The current dispute arises on the basis of a clause in the sale deed to the effect that the vendor shall bear all municipal taxes for consolidated taxes, supplementary municipal tax bills and commercial surcharges relating to the entire period prior to the date of the sale deed.
The State Bank of India communicated to the petitioner vide letter dated September 11, 2002 that the Bank shall be liable to pay municipal tax and/or other statutory dues in respect of the property till the date on which the petitioner purchased the property and that it would undertake all tax liability, etc., before such transfer by execution and registration of the conveyance deed, in which regard the Bank gave its “assurances and unfettered promise”.
Such stand was reiterated by the Bank subsequently, however, with the rider that it would retain Rs.54,00,000/-, upon receipt of Rs.8,00,00,000/- towards final payment of the property, exclusively for payment of municipal tax and/or other statutory dues in respect of the property, if any, imposed by the Kolkata Municipal Corporation (KMC) and payable after contest. The respondent no.1 further stipulated that it would hold the fund for the said purpose till March 15, 2003 and any demand must be made within the said date, whereafter the Bank or Government of India would have no liability in any manner.
The petitioners gave a reply on December 20, 2002, that is, the very next date, expressing their disagreement to the Bank’s proposal that the Bank or Government of India would have no liability beyond March 15, 2003. Subsequently, a writ petition bearing WP No.825 of 2003 was preferred by the petitioners. At the same time, WP No.587 of 2003 was also filed by the petitioners with regard to the liability of the respondent no.1-Bank to retain Rs. 54,00,000/- after March 15, 2003.
Vide order dated December 18, 2003, a co-ordinate Bench of this Court decided the writ petition, bearing WP No.587 of 2003, thereby directing the State Bank of India to deposit the sum of Rs.54,00,000/-with the Corporation on account of the Corporation dues, due and payable on account of the said property up to December 23, 2002 (the date prior to the purchase by the petitioners). A challenge was preferred by the Bank against the said order, which was decided by the concerned Division Bench on August 4, 2004, thereby affirming the order of the learned Single Judge.
The Union of India preferred an appeal bearing Civil Suit No.5640 of 2006 against the order of the Division Bench before the Supreme Court, which was decided on April 27, 2011 by dismissing the said appeal of the Union of India, however, making it clear that the deposit with the Corporation on account of the Corporation dues in respect of the subject-property “is subject to final assessment and the decision of the Calcutta High Court in Writ Petition No.825/2003”.
Subsequently, however WP No.825 of 2003, filed by the present petitioner against the Corporation, was dismissed on November 15, 2014 for non-prosecution.
The petitioners plead that in view of such non-prosecution, the sum calculated to be due as municipal taxes up to December 23, 2002 was about Rs.70,00,000/- and have filed certain documents in that regard.
Since Rs. 54,00,000/- had already been deposited with the Corporation, the present writ petition has been filed by the petitioner seeking a direction on the respondents, being the Bank and the Union of India, to pay the additional amount of Rs.16,14,048.74p as balance quantum of the demand on account of the municipal rates and taxes for the period of occupation of Union of India, out of the total aggregate of Rs.70,14,048.74p as determined by the KMC.
Such arguments are controverted by the SBI, which argues that the liability of the Bank was limited to the extent that the Bank was a custodian on behalf of the Union for a limited period, which expired long back.
It is further argued that, at the worst, it was the vendor/Union which was to pay the municipal taxes for the property till it was purchased by the petitioner. The Bank’s liability, as repeatedly reiterated in communication, was up to the limit of Rs. Rs.54,00,000/-, as also admitted by the Union.
Moreover, it is contended that the petitioner deliberately permitted WP No.825 of 2003 to be dismissed for non-prosecution, without pursuing the challenge against the final assessment of municipal taxes for the relevant period by the Corporation, thereby compromising the interest of the respondents. Since the Supreme Court had observed that the payment of Rs. 54,00,000/- would be subject to the final assessment made and the result of the said writ petition, such process was frustrated by the petitioners themselves, for which they cannot claim a premium.
At the stage of final hearing, although the matter was taken up on repeated dates, the Union of India was last represented on April 5, 2023. Thereafter the matter was called on for hearing on April 10, 2023 and on April 11, 2023, but the Union remained unrepresented on both of such dates. Hence, the matter is taken up for decision ex parte against the Union of India.
A perusal of the deed of sale executed by the Union of India as vendor in favour of the petitioner no.1 clearly shows that Clause (f) thereof mandates that the vendor shall bear and pay all municipal bills for consolidated taxes, supplementary municipal tax bills and commercial surcharges relating to the entire period prior to the date of the deed (that is, up to December 23, 2002), even if such supplementary bills and other bills shall be issued by the Calcutta Municipal Corporation and if the bills/payment/claim/supplementary bills be for either consolidated rates and taxes for the separate portions and/or for commercial surcharges and any other kind of charges under the municipal laws or any other statutes and relating to the period post or prior to the conveyance dated March 29, 2001 till the execution of the deed, after which the same was to be borne by the purchaser.
Hence, the vendor, that is the Union of India, could not at any point of time avoid such liability.
It is evident from the affidavit-in-opposition filed by the Bank that the Government of India, Ministry of Finance, Department of Financial Services, vide communication dated March 28, 2014, had intimated the Bank, in reply to the State Bank of India’s letter dated January 31,2014 to convey the approval of the competent authority for making payment of Rs. Rs. 54,00,000/- to the KMC in compliance with the directions of the Hon’ble Courts and remitting the balance amount, if any, to the Government of India so as to close the SDFC portfolio assigned to SBI pertaining to the property-in-dispute and exonerate SBI from its role as a custodian.
Hence, as per the Union of India, even on March 28, 2014, the SBI was playing the role of custodian with regard to the sale on behalf of the vendor.
A perusal of the Bank’s communications at various stages clearly indicates the unambiguous admission of the Bank that it was liable to pay at least to the tune of Rs. 54,00,000/- as custodian on behalf of the vendor, in lieu of municipal taxes and other statutory dues in respect of the property up to the date of purchase by the petitioner no.1. Even after giving its assurance and “unfettered promise” vide communication dated September 11, 2022, the Bank attempted to resile from the same by the subsequent communication dated December 19, 2002.
However, such attempt by the petitioner was set aside by the order dated December 8, 2003 passed by the learned Single Judge directing the SBI to deposit Rs.54,00,000/- with the Corporation, which was affirmed by the Division Bench on August 4, 2004.
Interestingly, the Supreme Court, while disposing of the appeal preferred by the Union of India against the order of the Division Bench affirming the deposit of Rs. 54,00,000/- by the SBI with the Corporation, was pleased to make the same subject to “final assessment” and the “decision of the Calcutta High Court in WP 825/2003”.
Hence, the legal position after the order of the Supreme Court was that the deposit of Rs. 54,00,000/- was given a stamp of approval by the Court, however, keeping the same subjected to the final assessment and the decision of this Court in WP No.825 of 2003.
At that juncture, neither the Union of India nor the State Bank of India expressed their desire to challenge the quantum assessed by the Corporation.
Subsequently, upon the Corporation having finally assessed the payable tax up to December 23, 2002 to be Rs.70,14,048.74p, there was also no challenge to the same on the part of either the Bank or the Union. Hence, the post facto argument of the Bank that it could have challenged the quantum if the petitioner did not compromise the challenge by not proceeding with WP No.825 of 2003, does not lie in the mouth of the Bank or the Union.
The assessment of the Corporation having reached finality and being prima facie established by the annexures to the pleadings in the writ petition, there cannot be any further scope of the respondents denying such liability. However, it is between the Union of India and the SBI to ascertain as to whether liabilities above Rs. 54,00,000/- were to be met by the Bank or the Union.
Vis-à-vis the petitioner no.1, however, in view of Clause (f) of the Deed, there could not be any doubt that it was the exclusive liability of the vendor, as principal, to meet such claim of the petitioner. In view of the unequivocal assurance given in the Deed that the vendor would meet all municipal taxes up to the date of purchase that is up to December 23, 2002, the Union of India cannot shirk such liability now. Hence, it is for the Union of India to pay the balance amount over Rs. 54,00,000/- to the Kolkata Municipal Corporation in lieu of taxes up to December 23, 2002.
Accordingly, WPA No.4153 of 2015 is allowed, thereby directing the Union of India, being the respondent no.4 herein, to deposit the amount of Rs.16,14,948.74p, being the balance of the demand on account of the municipal taxes during the period of occupation of the vendor through its custodian, the SBI, with the Kolkata Municipal Corporation, within May 31, 2023. Upon such deposit being made, credit for the same would be given to the petitioners in respect of the future taxes payable in respect of the disputed property.
It will, however, be open to the Union of India to claim such amount against the State Bank of India (respondent no.1), if the Union of India has a legitimate claim against the latter.
There will be no order as to costs.
Urgent certified server copies, if applied for, be issued to the parties upon compliance of due formalities.