JUDGMENT (Per: M.S SONAK, J.):-

1] Rule. With the consent of the learned counsel appearing for the parties, the Rule is made returnable forthwith.

2] The Petitioner challenges constitutional validity of Section 406(2)(e) of the Bombay Provincial Municipal Corporations Act 1949 (now known as “Maharashtra Municipal Corporation Act”), which provides that no appeal against determination of the rateable value or capital value or tax fixed or charged under this Act shall be entertained unless the amount of rateable value or capital value or disputed tax claimed or chargeable upto the date of filing the appeal has been deposited by the Appellant with the Commissioner.

3] Shorn of irrelevancies, the facts and circumstances in which the challenge has been raised are that the Petitioner claims to be owner of the lands bearing Survey Nos. 87A/1A and 87A/3, Aundh, Taluka Haveli, Pune City admeasuring approximately 103 Acres and 21 Gunthas (hereinafter referred to as “the said property”). In respect of the said property, the Petitioner was served with a property tax assessment special notice dated 08.05.2008 by the Deputy Commissioner cum Assessor and Collector of Taxes Municipal Corporation of the City of Pune (Respondent No. 3) informing that annual rateable value in respect of the said property has been proposed at Rs. 1,07,91,850/- with effect from 01.04.2008 The Petitioner filed its objections to the proposed assessment on 12.06.2008 The Commissioner of Respondent No. 1 Corporation inspected the said property, complied with the procedure prescribed under Rules 7 and 8 of the Taxation Rules contained in Chapter VIII of the said Act, including afford of hearing to the Petitioner. However no final order was communicated to the Petitioner. Instead the Petitioner was served with yet another property tax assessment special notice dated 27.09.2011, virtually recommencing the entire process. The Petitioner nevertheless filed objections in pursuance of the notice dated 27.09.2011 The procedure prescribed under the Rules was repeated and the Petitioner was served with a tax bill dated 11.01.2012 in an amount of Rs. 3,25,07,350/- towards tax for the billing period 01.04.2008 to 31.03.2012 in respect of the said property. On 27.01.2012, the Petitioner preferred an Appeal (Municipal Tax Appeal No. 6 of 2012) before the Appellate Authority which is the Small Causes Judge, Pune challenging interalia the annual rateable value of the bill dated 11.01.2012 under section 406 of th said act. The Petitioner also applied for ‘stay’ on the recovery of tax bill amount during the pendency of the Appeal. During the pendency of the Appeal, the Petitioner was served with a computer generated bill/demand in an amount of Rs. 4,18,94,919/- towards taxes. Hence the Petitioner preferred writ petition no. 3791 of 2013 before this Hon'ble Court questioning such levy. By judgment and order dated 17.06.2013 the Division Bench of this Court disposed of the said writ petition on the ground that alternate and efficacious remedy of appeal was available to the Petitioner and that the same be resorted to. On 23.08.2013, the Petitioner received yet another computer generated bill/demand in an amount of Rs. 6,13,58,804/- towards taxes. The Officers of the Respondent Corporation visited the premises of the Petitioner and threatened coercive action of attachment, in case the amounts referred to in the bills/demands were not cleared. Accordingly, the Petitioner filed application for stay dated 27.08.2013, which was rejected by the Small Causes Court by an order dated 19.09.2013 The rejection is interalia on the ground that under Section 406(2)(e) no such appeal can be entertained unless the amount of disputed tax claimed upto the date of filing has been deposited by the Appellant with the Commissioner. Hence the present petition questioning the order dated 19.09.2013 (impugned order) and the constitutional vires of Section 406(2)(e) of the said Act.

4] Mr. S.G Aney, the Senior Advocate appearing for the Petitioner made the following submissions in support of the Petition:

(A) That styling the proceedings under Section 406 of the said Act as an ‘Appeal’ is misnomer, since the said proceedings are in fact ‘original proceedings before a judicial authority’. The imposition of any precondition of deposit of entire disputed tax claimed for entertainment of said proceedings is ex facie arbitrary, unreasonable, unconstitutional, null and void;

(B) The provisions contained in Section 406(2)(e) of the said Act impose an onerous and unreasonable condition of depositing the entire disputed tax claimed as a precondition for entertainment of the appeal. The very imposition of such an onerous and unreasonable condition renders the right of appeal illusory. There is no provision contained in Section 406 empowering the judicial authority to waive this condition in case of genuine and undue hardships. For these reasons, the provisions contained in Section 406(2)(e) are ex facie illegal, arbitrary, unconstitutional, null and void.

5] In support of the aforesaid submissions, Mr. Aney placed reliance upon the decision of the Division Bench of Delhi High Court in case of Gagan Makkar v. Union of India 192 2012 Delhi Law Times 186 DB, which concern challenge to the Proviso to Section 169 of the Delhi Municipal Corporation Act, 1957. The Division Bench, upon reference to various decisions of the Supreme Court ruled that the proviso to section 169(1) of the dmc act imposed an onerous and unreasonable condition of paying the full amount of property tax before filing of an appeal and that such provision renders the right of appeal illusory. The Division Bench went on to observe that it is true that the legislature need not have given a right to appeal at all, but having decided in its wisdom, to give a right of appeal, the same cannot be made illusory by imposing an onerous or unreasonable condition as to amount to a deprivation of that very right which it intended to give. Accordingly the proviso, which made the deposit of entire tax a precondition for entertainment of appeal was struck down as being violative of Article 14 of the Constitution of India.

6] For appreciation of the challenge, reference is required to be made to the provisions contained in sub section (1), (2) and 2A of Section 406 of the Maharashtra Municipal Corporations Act, 1949 (“said Act”) and some Rules contained in Chapter VIII entitled “Taxation Rules” which provide for a detailed procedure to be adopted by the Corporation in the matter of determination of rateable value, capital value or tax in respect of land and property.

7] The provisions contained in sub sections (1), (2) and (2A) of Section 406 of th said Act read as under:

“406. Appeals when and to whom to lie (1) Subject to the, provisions hereinafter contained, appeals against any rateable value (or the capital value, as the case may be) or tax fixed or charged under this Act shall be heard and determined by the Judge.

(2) No such appeal [shall be entertained] unless-

(a) it is brought within fifteen days after the accrual of the cause of complaint;

(b) in the case of an appeal against a rateable value (or a capitable value, as the case may be,) a complaint has previously been made to the Commissioner as provided under this Act and such complaint has been disposed of;

(c) in the case of an appeal against any tax (including interest and penalty imposed) in respect of which provision exists under this Act for a complaint to be made to the Commissioner against the demand, such complaint has previously been made and disposed of;

(d) in the case of an appeal against any amendment made in the assessment book for property taxes during the official year, a complaint has been made by the person aggrieved within twenty one days after he first received notice of such amendment and his complaint has been disposed of;

(e) in the case of an appeal against a tax, or in the case of an appeal made against a rateable value (or the capitable value, as the case may be), (the amount of the disputed tax claimed from the appellant or the amount of the tax chargeable on the basis of the disputed rateable value (or the capitable value, as the case may be), up to the date of filing the appeal, has been deposited by the appellant with the Commissioner]:

(2A) Where the appeal is not filed in accordance with the provisions of clauses (a) to (e) of sub section (2), it shall be liable to be summarily dismissed.

8] The provisions contained in Chapter VIII i.e “Taxation Rules” (Rules 15 to 19) read as under:

15. Time for filing complaints against valuations to be publicly announced

(1) The Commissioner shall, at the time and in the manner prescribed in rule 13, give public notice of a day, not being less than [twenty one days] from the publication of such notice, on or before which complaints against the amount of any rateable value [or the capitable value, as the case may be,] entered in the ward assessment-book will be received in his office.

(2) In every case in which any premises have for the first time been entered in the assessment-book as liable to the payment of property-taxes, or in which the rateable value [or the capital value, as the case may be,] of any premises liable to such payment has been increased, the Commissioner shall, as soon as conveniently may be after the issue of the public notice under sub-rule (1), give a special written notice to the owner or occupier of the said premises specifying the nature of such entry and informing him that any complaint against the same will be received in his office at any time within [twenty one days] from the service of the special notice.

16. Time and manner of filing complaints against valuation.- (1) Every complaint against the amount of any rateable value [or the capital value, as the case may be,] entered in the assessment-book or against the mention of the name of any person as primarily liable for the payment of property taxes or against the treatment of any building or land as liable to be assessed to the general tax must be made by written application to the Commissioner, which shall be left at his office on or before the day or the latest day fixed in this behalf in the public or special notice aforesaid.

(2) Every such application shall set forth briefly but the fully the grounds on which the valuation is complained against.

17. Notice to complainants of day fixed for investigating their complaints.- The Commissioner shall cause all complaints so received to be registered in a book to be kept for this purpose and shall give notice in writing, to which complaint, of the day, time and place when and whereat his complaint will be investigated.

18. Hearing of complaint.- (1) At the time and place so fixed, the Commission or shall investigate and dispose of the complaint in the presence of the complainant, if he shall appear, and, if not, in his absence.

(2) For reasonable cause, the Commissioner may from time to time adjourn the investigation.

(3) When the complaint is disposed of, the result thereof shall be noted in the book of complaints kept under rule 17 and any necessary amendment shall be made in accordance with such result in the assessment-book.

19. Authentication of ward assessment-books when all complaints have been disposed of.- (1) When all such complaints, if any, have been disposed of and the entires required by clause (e) of rule 9 have been completed in the ward assessment book, the said book shall be authenticated by the Commissioner, who shall certify, under his signature, that except in the cases, if any, in which amendments have been made as shown therein, no valid objection has been made to the rateable value (or the capital values, as the case may be) entered in the said book.

(2) Thereupon the said ward assessment-book, subject to such alterations as may thereafter be made therein under the provisions of rule 20 shall be accepted as conclusive evidence of the amount of each property-tax leviable on each building and land in the ward in the official year to which the book relates.

9] In the case of Mardia Chemicals Ltd. v. Union of India 2004 4 SCC 311, the Supreme Court in the context of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 observed that the proceedings thereunder, though styled as ‘appellate proceedings’ were in fact proceedings in the nature of an initial action brought before the forum prescribed under the said Act raising grievance against the action or measures taken by one of the parties to the contract. Therefore, the proceedings were akin to filing of a suit. The Supreme Court after noting the basic distinction between suit and appeal drawn out in its earlier judgment in the case of Ganga Bai v. Vijay Kumar 1974 2 SCC 393, in that there is an inherent right to file a suit of a civil nature but the right of appeal inheres in no one and therefore an appeal for its maintainability must have a clear authority of law, went on to observe that the requirement of pre-deposit of 75% of the demand, at the initial proceedings itself sounds unreasonable and oppressive, more particularly when the secured assets/the management thereof along with the right to transfer such interest has been taken over by the secured creditor or in some cases property is also sold.

10] The first submission of Mr. Aney obviously takes clue from the reasoning of the Supreme Court in the case of Mardia Chemicals (supra). However, in our opinion, there is absolutely no warrant to style proceedings under Section 406 of the said Act as ‘original or initial proceedings’. The Taxation Rules, including in particular rules 15 to 19 referred to above, make it absolutely clear that ‘original or initial proceedings’ arise when an owner or occupier lodges objection/complaint in response to property tax assessment special notice under Rule 15. Rule 16 provides that the complaint shall set forth briefly but fully the grounds on which the valuation is complained against. Rule 17 then provides that the Commissioner shall cause all complaints so received to be registered in a book to be kept for this purpose and shall give notice in writing to the complainant of the day, time and place when and where its complaint will be investigated. Rule 18 provides for afford of hearing to the complainant and investigation and the disposal of the complaint in the presence of the complainant, if he shall appear and, if not, in his absence. Upon disposal of the complaint, the result thereof is to be noted in the book of complaints kept under Rule 17 and any necessary amendment is to be made in accordance with such result in the assessment bill. Rule 19(1) provides for authentication of the assessment bill by the Commissioner and Rule 19(2) provides that the assessment book so authenticated by the Commissioner shall be accepted as conclusive evidence of the amount of property tax leviable on each building and land in the ward in the official order to which the book relates.

11] In the context of Section 406(2)(c) of the said Act, the Supreme Court in the case of Gujarat Agro Industries Co. Ltd. v. Municipal Corporation of the City of Ahmedabad 1999 4 SCC 468 at paragraph 11 observed thus:

“We also note that under clause (c) of sub-section (2) of Section 406, a complaint lies to the Municipal Commissioner against imposition of any property tax and only after that when the complaint is disposed of that appeal can be filed. Appeal to the court as provided in clause (e) may appear to be rather a second appeal.”

12] In the aforesaid circumstances, we are of the opinion that proceedings under Section 406 of the said Act cannot be styled or compared to ‘initial or original proceedings’. The ruling and principle laid down in the case of Mardia Chemicals Ltd. (supra) is neither attracted nor applicable. Accordingly, we are unable to see any merit in the first submission of Mr. Aney and the same is hereby rejected.

13] In so far as the second submission of Mr. Aney is concerned, the position in law is no longer res integra.

14] A Single Judge of this Court in the case of Elora Construction Co. v. Municipal Corporation of Greater Bombay AIR 1980 Bom 162 upheld an almost similar provision contained in Section 217(2)(d) of the Bombay Municipal Corporations Act, 1888. This Section provided that in the case of an appeal against a tax, or in the case of an appeal made against a rateable value the amount of the disputed tax claimed from the appellant, or the amount of the tax chargeable on the basis of the disputed rateable value, up to the date of filing of the appeal, has been deposited by the appellant with the Commissioner.

The aforesaid clause (d) is in similar terms as clause (e) of Section 406(2) of the said Act.

15] The judgment in the case of Elora Construction Co. (supra) was noted with approval by the Supreme Court in the case of Gujarat Agro Industries Co. Ltd. (supra)

16] A Division Bench of this Court in the case of Peninsula Land Ltd. v. Brihan Mumbai Mahanagarpalika 2008 6 ALL. M.R 519 has upheld the constitutional validity of Section 217(5) of the Bombay Municipal Corporation Act, 1888 which provided that in case of any appeal against any rateable value or property tax fixed or charged under the said Act which may have been entertained by a Chief Judge before the commencement of the Act or which may be entertained by him after the said date, the Chief Judge shall not hear and decide such appeal unless the property tax, if any, payable on the basis of the original ratable value plus eighty per centum, of the property tax claimed from the appellant on the increased portion of the rateable value of the property out of the property tax claimed under each of the bills which may have been issued, from time to time, since the filing of appeal, is also deposited with the Commissioner within a period prescribed under the Act. In case of default by the appellant on getting an intimation to that effect from the Commissioner at any time before the appeal is decided, the Chief Judge shall summarily, dismiss the appeal. In this case the Division Bench noted that the decision of the Single Judge in the case of Elora Construction Co. (supra) was approved with specific reference by the Supreme Court in the case of Shyam Kishore v. Municipal Corporation of Delhi 1993 1 SCC 22 and Government of Andhra Pradesh v. P. Laxmi Devi (Smt.) 2008 4 SCC 720

17] Yet another Division Bench of this Court in the case of Ashutosh Metal Industries v. Commissioner Of Central Excise 2008 2 LJSOFT URC 4 repelled the challenge to the constitutional validity of the first proviso to Section 19(1) of Foreign Exchange Management Act, 2000, by observing thus:

“During the course of argument, the issue relating to the constitutional validity of the first proviso to section 19(1) of fema, which requires any person appealing against the order of adjudicating authority to deposit the amount of penalty while filing the appeal was not canvassed. It is only by way of written submission the validity of the first proviso to section 19(1) is challenged. In any event, the said issue is not res integra. The Apex Court in the case of Gujarat Agro Industries Ltd. v. Municipal Corporation reported in (1999) 4 SCC 468 while considering a similar provision contained in Section 406(2)(e) of the Bombay Provincial Municipal Corporation Act, 1949, held that the right to appeal being a statutory right, it is for the legislature to decide whether to make the right subject to any condition or not. The Apex Court further held that any challenge to the constitutional validity of a provision for predeposit before entertaining an appeal on the ground that onerous conditions have been imposed and right to appeal has become illusory must be negatived and such a provision cannot be said to be ultra vires Article 14 of the Constitution. Therefore, the challenge to the validity of the first proviso to section 19(1) of fema and the challenge to Rule 10 of the FEMA Adjudication Proceedings and Appeal Rules, 2000 do not merit any consideration in the present case.”

18] In upholding constitutional validity of clauses which provide for pre-deposit of disputed amount as a pre-condition for entertainment of an appeal, various courts have applied the position established in law, that the right of appeal is a creature of a statute and it is for the legislature to decide whether the right of appeal should be unconditionally given to an aggrieved party or it should be conditionally given. If the statute does not create any right of appeal then no appeal can be filed. The right of appeal is neither an absolute right nor an ingredient of the principles of natural justice. There is a clear distinction between a suit and an appeal. While every person has an inherent right to bring a suit of civil nature unless the suit is barred by statute, in regard to an appeal, the position is opposite. The right to appeal inheres in no one and therefore, for maintainability of an appeal there must be authority of law. When such a law authorises filing of an appeal, it can impose conditions as well. The object of such provisions is to keep in balance the right of appeal conferred upon a person aggrieved with a demand of tax and the right of the Corporation to speedy recovery of the tax. A disability or disadvantage arising out of parties own default or omission cannot be taken to be tantamount to the creation of two classes offensive to Article 14 of the Constitution of India, especially when that disability or disadvantage operates upon all persons who make the default or omission.

19] In this case, we are concerned with a statute which deals with recovery of tax upon lands and buildings in Municipal areas. In this sense, we are concerned with a statute dealing with an economic matter. There is always a presumption in favour of the constitutionality of a statute. Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call-trial and error method. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The courts cannot be converted into tribunals for relief from such crudities and inequities. The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. The Court must defer to legislative judgment in matters relating to social and economic policies and must not interfere, unless the exercise of legislative judgment appears to be palpably arbitrary.10

20] The intent of legislature cannot be defeated merely for the reason that it may operate a bit harshly on a small section of peoples where it may be necessary to make such provisions for achieving the desired objective of providing a right of appeal and at the same time prevent unnecessary delay in recovery of tax. If the very provision for an appeal cannot be regarded as any constitutional mandate or requirement of the principles of natural justice, surely the provision for an appeal, even if hedged with conditions does not fall foul of any constitutional guarantees merely because in a given case some hardship might result. As observed by the Supreme Court in the case of Fatehchand Himmatlal v. State of Maharashtra 1977 2 SCC 670

“Every cause claims its martyr and if the law, necessitated by practical considerations, makes generalizations which hurt a few, it cannot be helped by the Court. Otherwise, the enforcement of the Debt Relief Act will turn into an enquiry into scrupulous and unscrupulous creditors, frustrating through endless litigation, the instant relief to the indebted which is the promise of the legislature.”

21] In the aforesaid circumstances, with great respect, we are unable to subscribe to the view taken by the Division Bench of the Delhi High Court in case of Gagan Makkar v. Union of India (supra)

22] The impugned order rejects ‘stay’ on the recovery of the taxes by the corporation interalia by reliance upon Section 406(2) of the said Act, which bars the very entertainment of appeal unless the disputed tax claimed from the appellant upto the date of filing the appeal has been deposited by the appellant with the Commissioner. The meaning of the word ‘entertained’ has been explained by the Supreme Court in the case of Lakshmiratan Engineering Works Ltd. v. CST (Judicial) AIR 1968 SC 488 in the following manner:

“To begin with it must be noticed that the proviso merely requires that the appeal shall not be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due. A question thus arises what is the meaning of the word ‘entertained’ in this context? Does it mean that no appeal shall be received or filed or does it mean that no appeal shall be admitted or heard and disposed of unless satisfactory proof is available? The dictionary meaning of the word ‘entertain’ was brought to our notice by the parties, and both sides agreed that it means either ‘to deal with or admit to consideration’. We are also of the same opinion.”

23] As we detect no constitutional infirmity in Section 406(2)(e) of the said Act, there is absolutely no warrant to fault the impugned order which is premised upon the provision contained in Section 406(2)(e) of the said Act.

24] In the result, we see no merit in either of the submissions made by Mr. Aney, the learned Senior Advocate appearing for the Petitioner. The Petition, under the circumstances, is liable to be dismissed.

25] The Petition is hereby dismissed. Rule is discharged. There shall however be no order as to costs.