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2021 (5) TMI 768 - HC - Indian LawsRecovery of outstanding dues of Municipal dues - who is liable to pay - Exemption from the liability to pay tax arises for consideration - whether the defendants can be called upon to discharge the liability? - HELD THAT:- The submission on behalf of the defendants that the plaintiff cannot insist upon the payment of taxes and charges by the defendants unless the plaintiff unequivocally acknowledges the defendants as the lessee of the suit premises, does not merit acceptance. The basic premise of the plaintiff’s case is that the term of lease, as modified by the indenture of modification, has expired. In the plaint, the plaintiff has made categorical assertion that the defendant No.2, the appropriate authority, is an illegal occupant and in unauthorised possession of the suit premises. It is not the requirement of law that unless the plaintiff acknowledges the continuation of status of lessee, the later cannot be called upon to discharge the liability under the instruments/contract, in terms of which it has entered into the demised premises. The question of bar under Order II Rule 2 to the tenability of the instant suit would warrant adjudication after providing an opportunity of hearing to the parties. Undoubtedly, the expiry of term of lease, as alleged by the plaintiff, constitutes the substratum of the plaintiff’s case. The question as to whether the claim for damages, as prayed for in the instant suit, is based on cause of action distinct from the cause of action on the basis of which the suit for recovery of possession of the suit premises has been instituted would, thus, arise for consideration. However, for the purpose of determination of the prayer in the instant Notice of motion, especially, the prayer for direction to pay accumulated Municipal dues and the Municipal Taxes and charges, as they fall due, the challenge on the count of the bar under Order II Rule 2, may not apply with equal force. The basis of the alleged liability is the instruments under which the predecessor-in-interest of the defendants had entered upon the suit premises The term of ‘property’ has wide amplitude. It is not restricted to lands and buildings but may subsume within its fold all forms of property. There is no warrant for restricting it to the property in which the Union of India has absolute ownership right and to assume that it does not cover the interest short of absolute ownership. The plaintiff being the owner of the suit premises is served with the notices under the Mumbai Municipal Corporation Act to pay the outstanding municipal dues, at the pain of coercive action. The defendants, who are indisputably in possession of the suit premises, contest the liability to pay the municipal dues. In terms of the instruments under which the predecessor-in-interest of the defendants entered upon the suit premises, the lessee is bound to pay the municipal taxes, cess and charges. Alternatively, the defendants claim immunity from payment of municipal taxes. It is necessary to modulate the relief in such a way that the defendants get an opportunity to pursue its stand that the suit premises is exempt from payment of taxes, with the Municipal Authorities and in the event of failure to obtain a favourble order of exemption, direct the defendants to pay the Municipal taxes and charges, as have accumulated up to date, and continue to pay the same as they fall due till the disposal of the suit. The Court is confronted with the issue of Municipal Corporation proceeding with coercive action to recover its dues. As observed above, in the absence of Municipal Corporation as a party to the instant proceeding, no restraint can be ordered against the Municipal Corporation. Even otherwise, it is well recognized that a Municipal Corporation cannot be restrained from levying and collecting taxes by lightly passing interim orders. O R D E R I) Defendants No.1 to 3 may pursue the claim with the Mumbai Municipal Corporation that the suit premises is exempt from payment of taxes, cess and charges, within a period of two months. II) If the defendants do not get a declaration/order/ clarification that the suit premises is exempt from the payment of taxes, cess and charges from the Municipal Corporation, within the said period of two months, the defendants shall pay the Municipal dues accumulated till 31st March 2021 and continue to pay the Municipal taxes and charges, as they fall due henceforth. III) In the event, any coercive action is taken by the Municipal Corporation, in the intervening period of two months, costs and consequences thereof shall also be borne by the defendants No.1 to 3.
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