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CASE NO.: Appeal (civil)  5670-5671 of 2000

PETITIONER: Lagan Jute Machineries Co. Ltd

RESPONDENT: Candlewood Holdings Ltd. & Ors

DATE OF JUDGMENT: 28/09/2007

BENCH: Dr. ARIJIT PASAYAT & LOKEHWAR SINGH PANTA

JUDGMENT: J U D G M E N T

CIVIL APPEAL NOS.5670-5671OF 2000

Dr. ARIJIT PASAYAT, J.

        1.      Challenge in these appeals is to the order passed by a  Division Bench of the Calcutta High Court in an appeal which  was directed against the order of the learned Single Judge  dated 23.3.2000.  By the said order, the learned Single Judge  in that application for execution appointed Receiver for  realization of commercial charges and consolidated rates and  taxes in terms of prayer (e) of column 10 of the tabular  statement.  The order was passed on 9.2.2000 wherein it was  recorded in terms of earlier order dated 18.5.1999 that the  judgment debtor did not pay any instalment and in that view  the decree dated 13.10.1982 had become executable. The  second order dated 9.2.2000 was not challenged in any  proceedings. The application was made by the tabular  statement before the learned Single Judge for execution of the  decree dated 13.10.1982. The said decree was passed by  consent of the parties and parties filed their terms of  settlement in the Court on the basis of which the said consent  decree was made. The decree was subsequently modified by  consent of parties by order dated 26.4.1990 and subsequently  the decree was transferred by the then decree-holder in favour  of the applicant-respondent for execution proceedings. The  execution proceedings were related to recovery of the  immovable property and money on account of rates, taxes and  commercial surcharge levied by the Municipal Corporation of  Calcutta (in short ’Corporation’) under the Municipal  Corporation Act, 1980 (in short the ’Corporation Act’) which  operated prospectively from 4.1.1984. An order was made in  terms of prayer (b) of the tabular statement on the earlier  occasion and also in terms of prayer (f) as recorded in the  order dated 2.9.2000. By another order dated 30.3.2000  application was rejected.   

2.      Stand of the appellant was that the learned Single Judge  was incorrect in passing the order directing execution by way  of appointment of Receiver since the commercial surcharge is  not payable according to Corporation Act and the consolidated  rates and taxes are determined by the Corporation. Stand  before the High Court was that since no rate had been  produced and it was not so as determined by the Corporation,  there is no question of paying any amount by way of  surcharge.  It was urged that the Corporation Act envisages  one consolidated rate bill payable by the owner which is

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recoverable by the owner from the occupier. It was urged that  the earlier order dated 10.3.1999 as well as the order of the  Division Bench did not consider this aspect.  Therefore, it was  submitted that the application should not have been disposed  of under Section 47 of Code of Civil Procedure, 1908 (in short  ’CPC’).   3.      Stand of the respondents, on the other hand, was that  there was no dispute with regard to amount payable and the  appellant had in fact paid the amount. The question was  considered by the earlier Division Bench by an order dated  18.5.1999.  The order was challenged before this Court by SLP  which was not accepted. Reference was also made to a letter  dated 10.12.1999, which clearly indicated the liability for  commercial surcharge. The Division Bench considered the  respective stand. It was noted that the claim can be divided  into two parts. One part of the claim is from 1976 upto  4.1.1984, when the Corporation Act came into force and the  second portion of the claim is subsequent to coming into  operation of the said Act.  

4.      So far as the first portion is concerned, there was no  argument on behalf of the appellant.  It was not explained as  to what would be its stand for non-payment of the dues prior  to the operation of the Act. It was, however, submitted by the  appellant that under law prevalent at the relevant time, the  rate bill should have been presented to the occupier for  payment and since there was no such presentation, the  question of non-payment does not arise.  The High Court did  not accept this stand with reference to the consent decree. The  High Court also did not accept this stand that after the  Corporation Act came into operation, there was one  consolidated rate bill and amount was not determined and the  primary obligation "Owner to pay and thereafter recover from  appellant", and as such the appellant is not liable. It was  noted that it all along made payment in terms of clause 7 of  the terms of the settlement before the High Court on the basis  of which the consent decree was passed. There was no dispute  with regard to the amount raised at any point of time.                 5.      The Division Bench also did not find any relevance of the  fact that letter dated 10.12.1999 was issued under the  heading "without prejudice".  The High Court was of the view  that it is clear from the letter that there was no dispute with  regard to the amount and the expression "without prejudice"  referred to any other contention that could have been raised  by the appellant. Since the appellant was paying the amount  without any dispute, the stands raised were not acceptable. In  the earlier round also, the Division Bench noted this stand  which was indicated in the memorandum of appeal and SLP  before this Court was withdrawn.  The appeal was accordingly  dismissed.

6.      In support of the appeals,  it has been contended as  follows:

(1)     Commercial surcharge only becomes payable after the  same is determined by the Corporation.  Since that has not  been done and there is no assessment and no demand by the  Corporation, the question of any liability does not arise. (2)     Commercial surcharge payable under the Act since  4.1.1984 and the same is not payable.  

7.      In the consent decree, clause (vii) is of considerable  relevance in the present dispute.  The same reads as follows:

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"The defendant further undertakes and agrees  to punctually and regularly pay commercial  surcharge on consolidated rates @ 50% of the  amount of corporation tax or at such rate as  Municipal Corporation of Calcutta may  determine as and when the same is  determined and becomes payable and the  defendant shall keep the plaintiff or person  claiming through the plaintiff fully discharged  and indemnified."        

8.      Reference also needs to be made to letter dated  10.12.1999.  The said reads as follows:     

"M/s Candlewood Holdings Limited, 24, Park Street, CALCUTTA 700 016.

Dear Sir,

Sub:    Payment of Rent for the month of October, 1999  without prejudice.

Enclosed please find the four Manager’s Cheque No. 056083,  056084, 056085, 056086 dated 09.12.99 payable at UCO  Bank, Free School Street Branch for Rs.1,53,182/- on  account of Rent Payable for October, 1999. The amount in  the Cheque is arrived as below.

Rent Rs.1,26,943.00 Corporation Tax Rs.   46,270.84 Commercial Surcharge @ 50% of  Corpn. Tax. Rs.   23,135.44

Rs.1,96,349.00 Less: 1. Tax 20% on Rs.1,26,943.50                               =Rs.   25,389.00          2. Surcharge 10% on I.Tax.                               =Rs.     2,539.00                                =============

Rs.   27,928.00 Rs.1,68,421.78 Less: Arrear I.Tax and surcharge:          Actual I.Tax and surcharge          since April, 1999 to Sept. 99                              =Rs.1,67,568.00

Less: Deducted during earlier          Said months =Rs.1,52,328.00                             ----------------------                                                Net amount:

Rs.   15,240.00

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--------------------- Rs.1,53,181.78 ---------------------

With best regards,

                                                       Yours faithfully,

                       For THE LAGAN JUTE MACHINERY CO. LTD.                                 Sd/- B.B. CHAKRABORTY                                 SUPERVISOR (Cashier)

Encl: As above."

9.      At this juncture, it would be appropriate to take note of  what was stated in Kamlabai and Ors. v. Mangilal Dulichand  Mantri (1987 (4) SCC 585), it was noted as follows:

28. The next question which is of some  importance is about raising of the objections at  the earlier stage. Admittedly when the award  was filed in the court, notice was served and  no objection was raised. If the tenant intended  to raise the objection that this decree on the  basis of the award could not be passed as it  was in contravention of Clause 13 of the Rent  Act and therefore was absolutely without  jurisdiction, such an objection could have been  raised there and then. The tenant admittedly  did not raise this objection which was open to  him. In this view of the matter, the contention  on behalf of the appellant about the  constructive res judicata also is of some  significance. This question of constructive res  judicata in execution proceedings came before  this Court in Mohanlal Goenka v. Benoy  Krishna Mukherjee. In this decision following  the earlier decision of the Privy Council, this  Court ruled that the principles of constructive  res judicata will be applicable even in  execution proceedings.

29. It is also clear that when the decree was  passed on the basis of award and notice was  issued to the judgment-debtor respondent no  such objection was raised. It is also clear that  the decree was put in execution on more than  one occasions and this objection was for the  first time raised only in 1983. In this view of  the matter also the contention of the learned  counsel for the appellant that by not raising  this objection earlier the judgment-debtor has  lost his right to raise this objection and he is  estopped, deserves to be accepted, although in  the light of what we have discussed earlier, it  is not necessary to go into this question,  having come to the conclusion on the first  question against the respondent."    

10.     It is to be noted that in the earlier SLP the stand was that  there was no liability prior to 1984. In other words the dispute  related to post-1984 and also there is no dispute after 1997.   It is also to be noted that there was no point raised relating to  interest before the High Court.  

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11.     Admittedly, Municipal Corporation was not a party before  the High Court and was subsequently impleaded. It is stated  before this Court that so far as the appellant is concerned, the  Corporation has completed the assessment proceedings and  bills amounting to Rs.1,02,23,706.88, have been raised.

12.     It is pointed out that in terms of the order dated  24.7.2000 of the Deputy Municipal Commissioner (Revenue  HQ) the said premises were surveyed and assessed.  The  assessment was made from April 1974 to March 2001, when it  was found that a total amount of tax payable, in respect of the  said premises, as assessed is Rs.26,47,07,167/- out of which  approximately Rs.7.70 crores, which includes  Rs.1,10,50,624.51 p. in Suspense A/c., have been realized.   However, more than Rs.18.7 Crores of tax is due from the  premises.  The details of year wise valuation and tax liability   contained in a Summary Report on Annual Valuation with Tax  Liabilities of premises No.24, Park Street, Kolkata.  A copy of  the report has been filed.

13.     The High Court has referred to all the relevant factors  and has kept in view the correct position in law.  That being  so, there is no merit in these appeals which are accordingly  dismissed.