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Case Number

C.R No. 433 of 1971

Attorney(S)

Sudhir Chandra Ghose
Krishna Mohan
Bishvanatha Agarwal

Judges

S.N.P Singh
S.K Jha, JJ.

Acts

provisions of Section 108 of the Bihar and Orissa Municipal Act, 1922 (hereinafter referred to as the Act)
Section 100(1), read with Section 82 of the Bihar and Orissa Municipal Act.
Section 25 of the Small Cause Courts Act
Sub-sections (2), (3) and (4) of Section 107.
Section 100(1) read with Section 3(18),
Sub-section (3) of Section 108,
provisions of Sub-section (1)
Orissa Municipal Act

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Smart Summary

Structured Summary of the Opinion (Chakradharpur Municipality v. Defendant) — Division Bench

Factual and Procedural Background

This is an application in revision under Section 25 of the Small Cause Courts Act by the Chairman and the Municipal Commissioners of the Chakradharpur Municipality challenging the judgment and decree of the Munsif of Chaibassa (Small Cause Court suit no. 1 of 1969).

The Municipality had sued for recovery of Rs. 285.80 p. as holding tax (including Education Cess) in respect of holding no. 2, Ward no. 1, for several quarters between 1965 and 1969. The defendant denied liability on the ground that, by a registered deed of gift dated 8 June 1957, the holding had been transferred by his father to Mewawati Devi (the defendant's wife). The defendant asserted that applications for mutation (to record the transfer) had been filed but were not acted upon by the Municipality, and that the assessment proceedings were therefore defective; he and his wife also alleged they were not heard on their applications against the assessment.

The learned Munsif found that the defendant had proved that Mewawati Devi was the owner and that municipal holding tax and Education Cess were payable by the owner; accordingly, the Munsif dismissed the suit with costs.

The petitioners (Municipality) sought revision in this Court. Before a Single Judge the petitioners contended that because the defendant's name stood in the municipal register as owner the trial court erred; reliance was placed on Patna Municipal Corporation v. Ladley Saran (1963 BLJR 214). The Single Judge referred the matter to a Division Bench because of an apparent conflict with Abrar Ali Khan v. Patna City Municipality (ILR 41 Patna 338).

Legal Issues Presented

Whether the trial court was correct in holding that the defendant was not liable for the municipal holding tax because his wife, Mewawati Devi, was the owner of the holding under the deed of gift, despite the defendant's name remaining in municipal records.
Whether non-compliance (if any) with Section 108 of the Bihar and Orissa Municipal Act, 1922 (relating to mutation procedure and fee) by the transferee or transferor absolved the Municipality from the duty to record the true owner and to amend the assessment list under Section 107(1)(b).
Whether there is any conflict between Patna Municipal Corporation v. Ladley Saran and Abrar Ali Khan v. Patna City Municipality on the question of how ownership for tax liability is to be determined (municipal record entry versus substantive taxing sections).

Arguments of the Parties

Petitioners' (Municipality) Arguments

Since the defendant's name continued to stand in the municipal register as the owner, the trial court erred in dismissing the suit; the municipal record should determine liability (relying on Patna Municipal Corporation v. Ladley Saran).
Mr. Sudhir Chandra Ghose argued that the application for mutation filed by Mewawati Devi was not in accordance with Section 108 of the Bihar and Orissa Municipal Act because (a) the application was not filed both by transferor and transferee, and (b) the requisite fee under Section 108(3) (one per cent of the annual value, subject to a maximum) had not been deposited along with the application — rendering the application non-entertainable.

Defendant's Arguments

The defendant denied liability on the sole ground that the holding had been transferred by his father to his wife Mewawati Devi by a registered deed of gift dated 8 June 1957 and the Municipality had failed to record the mutation despite applications having been filed.
It was alleged that an application for mutation (by the transferee) and a further notice by registered post through a lawyer were not acted upon; the defendant and his wife had also filed applications against the assessment but were neither heard nor were the applications disposed of, rendering the assessment proceedings defective as regards liability for the claimed period.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Patna Municipal Corporation v. Ladley Saran (1963 BLJR 214)	Held that the word "owner" in Section 109 of the Act meant the person recorded as such by the Municipality; municipal records are the primary materials available to authorities at the time of assessment, unless law requires further inquiry.	The Court distinguished this case from the present facts, observing that Ladley Saran dealt with the scope of Section 109 and municipal valuation/assessment procedure; it did not conflict with the principle applied from Abrar Ali Khan and therefore did not justify overturning the trial court's factual finding that the real owner was the transferee.
Abrar Ali Khan v. Patna City Municipality (ILR 41 Patna 338)	Established that liability to pay municipal taxes is determined by the taxing provisions (Section 100(1) read with Section 82 and Section 3(18)) and not merely by entries in the assessment list (Sections 105–107); municipality has a duty to alter/amend assessment list under Section 107(1)(b) after following prescribed procedure and cannot take advantage of its own laches.	The Court relied on this decision as authority for the proposition that even if a mutation application were imperfect procedurally, the Municipality had the duty to mutate/record the real owner and amend the assessment list; Abrar Ali Khan supported the Munsif's view on owner-based liability and municipal duty to act.
Sarat Kumar Acharya v. Mahesh Prasad Sahu (AIR 1972 Patna 377)	Referenced in the opinion as a subsequent case in which an observation from Abrar Ali Khan was treated as a point decided (supporting the contention that the observation was not mere obiter).	The Division Bench noted that Untwalia, J. (member of the Abrar Ali Khan Bench) referred to the Abrar Ali Khan observation in Sarat Kumar Acharya as a point decided, and therefore the Court treated the Abrar Ali Khan observation as having binding character for the relevant proposition.
Chairman, Municipality, Arrah v. Ram Kumar Choudhury (AIR 1933 Patna 177)	The opinion cites the case but does not specify a particular rule from it in the text of the opinion.	The Court observed that this decision did not support the petitioners' contention and therefore did not assist the Municipality's argument in this matter.
Satyadeo Narain Lal v. Municipal Commissioners, Bhagalpur Municipality (AIR 1960 Patna 84)	The opinion cites the case but does not specify a particular rule from it in the text of the opinion.	The Court observed that this decision likewise did not support the petitioners' contention and therefore was not relied upon to disturb the trial court's decision.

Court's Reasoning and Analysis

The Division Bench proceeded through a focused, text-based analysis of procedure and precedent:

Examination of the mutation application (exhibit E). The Court noted that exhibit E was signed by Mewawati Devi, that the defendant endorsed the correctness of the statement in the application, and that the registered deed of gift was annexed. On the specific procedural objections under Section 108 (that both transferor and transferee must file notice and that a fee under Sub-section (3) must accompany the notice), the Court observed there was no material on the record to show the fee had not been paid or whether the transferor (the defendant's father) was alive when the application dated 16 October 1958 was filed.
Even assuming the application was not strictly in compliance with Section 108 (for example, if the transferor had not filed the notice), the Court held that the Municipality had a duty to mutate the name of the real owner when the matter was brought to its notice. This duty was anchored on the reasoning in Abrar Ali Khan: liability for municipal taxes is governed by the taxing provisions (Section 100(1) read with Section 82 and Section 3(18)) rather than by procedural entries in the assessment list, and the Municipality must correct its assessment list under Section 107(1)(b) after following the prescribed procedure.
On the apparent conflict between Patna Municipal Corporation v. Ladley Saran and Abrar Ali Khan, the Court analyzed the scope of each decision. It concluded there was no true conflict because Ladley Saran concerned the meaning and application of Section 109 (the municipal authority's valuation/assessment and reliance on municipal records at the time of assessment), whereas Abrar Ali Khan turned on whether tax liability is determined by the taxing sections (Section 100(1) read with Section 82 and Section 3(18)) irrespective of entries in assessment lists. Abrar Ali Khan did not decide the scope of Section 109, so the decisions addressed different legal questions.
The Court rejected the petitioners' attempt to characterize the pivotal observations in Abrar Ali Khan as mere obiter dictum. It relied on a subsequent reference (Sarat Kumar Acharya) where one of the Abrar Ali Khan Bench judges (Untwalia, J.) was taken to treat that observation as a point decided, supporting its authoritative character.
The Court considered, but found unhelpful to the petitioners, the other authorities cited (Arrah v. Ram Kumar Choudhury and Satyadeo Narain Lal), stating that neither decision supported the petitioners' position.
On the record and applying the above principles, the Court found no basis to interfere with the Munsif's concurrent finding that Mewawati Devi was the owner and that the defendant was not liable for the tax claimed for the relevant period. Accordingly, the revision was dismissed.

Holding and Implications

Core Ruling: The application in revision is DISMISSED WITH COSTS, thereby upholding the judgment and decree of the Munsif of Chaibassa which had dismissed the Municipality's suit.

Direct consequences for the parties (as stated in the opinion):

The Munsif's factual finding that Mewawati Devi was the owner of the holding was left undisturbed.
The defendant was not held liable for the municipal holding tax for the periods claimed in the suit, as decided by the court below; the Municipality's revision application failed and costs were awarded against the Municipality.

Broader legal implication noted by the Division Bench: the Court treated Abrar Ali Khan as authoritatively establishing that municipal tax liability is determined by substantive taxing provisions (Section 100(1) read with Section 82 and related definitions) and that the Municipality has a duty to mutate and amend its assessment list where ownership is brought to its notice. The Bench further clarified there was no inconsistency between that principle and the decision in Ladley Saran because they address different statutory provisions and questions. The opinion did not purport to lay down a new principle of law beyond applying and reconciling existing authorities.

End of summary — derived exclusively from the provided opinion text.

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Chairman And The Municipal Commissioners Of The Chakradharpur Municipality v. Bishwanath Jagatramka Opp. Party.

S.N.P Singh, C.J:— This application in revision under Section 25 of the Small Cause Courts Act has been filed by the Chairman and the Municipal Commissioners of the Chakradharpur Municipality and it is directed against the judgment and decree passed by the Munsif of Chaibassa exercising Small Cause Court power in Small Cause Court suit no. 1 of 1969. The Chakradharpur Municipality brought the small cause court suit for recovery of Rs. 285.80 p. from the defendant on account of holding tax in respect of holding no. 2 in Ward no. 1 of the Chakradharpur Municipality for the fourth quarter of 1965-1966, first and fourth quarters of 1966-1967, first to four quarters of 1967-1968 and first to third quarters of 1968-1969. The defendant denied his liability on the sole ground that he was not the owner of the holding in question in as much as that holding had been transferred to Mewawati Devi by a registered deed of gift dated the 8th of June 1957 by his father. It was alleged by the defendant that after the execution of the deed of gift an application for mutation was duly made, but the same was not acted upon. It was further alleged that Mewawati Devi, the wife of defendant, had served a notice on the plaintiffs by registered post through her lawyer for mutation of her name, but that application was also not acted upon. According to the defendant he and his wife had both filed applications against the assessment, but they were neither heard nor were the applications disposed of and so the entire assessment proceeding was not void ab intio, and, therefore, the defendant was not liable to pay the tax claimed against him. The learned Munsif upon consideration of the evidence came to the finding that the defendant had proved that his wife Mewawati Devi was the owner of the holding in question and not the defendant. The learned Munsif further held that the holding tax and the Education Cess were assessments on the annual value of the holding and were payable by the owner of holding and, as such, the defendant was not liable to pay the taxes for the period claimed in the suit. Accordingly, he dismissed the suit with costs.

2. When this case was placed before a learned Single Judge of this Court it was contended on behalf of the petitioners that since the defendant's name stood in the Municipal register as the owner, the trial court erred in dismissing the suit. Reliance was placed on a Bench decision of this Court in (1) Patna Municipal Corporation v. Ladley Saran (1963 BLJR 214). The learned Single Judge referred the case to a Division Bench as it appeared to him that there was some conflict between the decision in the case referred to above and in (2) Abrar Ali Khan v. Patna City Municipality (I.L.R 41 Patna 338).

3. Mr. Sudhir Chandra Ghose, learned counsel appearing for the petitioners, contended before us that the application filed by Mewawati Devi for mutation of her name was not in accordance with the provisions of Section 108 of the Bihar and Orissa Municipal Act, 1922 (hereinafter referred to as the Act) and as such it was not entertainable. Section 108 reads as under:

“108(1) Whenever the title to any holding is transferred both the transferor and the transferee shall within three months after the execution of the instrument of transfer, or, if no such instrument is executed, within three months after the transfer is effected, give notice in writing of such transfer to the Chairman.

(2) In the event of the death of the person in whom such title vests, the person to whom, as heir or otherwise, the title of the deceased is transferred, by descent or devise, shall, within one year from the death of the deceased, give notice in writing of such transfer to the Chairman.

(3) Every notice under Sub-section (1) or (2) shall be accompanied by a fee calculated at the rate of one percentum on the annual value of the holding subject to the maximum of five rupees in any one case.

(4) Whenever contrevenes the provisions of Sub-section (1) or (2) shall be liable to a fine not exceeding ten rupees.”

4. The application filed by Mewawati Devi has been marked as exhibit E. It appears from exhibit E that it was signed by Mewawati Devi. In that application the defendant has made an endorsement to the effect that the statement contained in the application is correct, and he also made a prayer that the mutation be made in the name of his wife Mewawati Devi after removing his name. The registered deed of gift had been annexed with the application for mutation. According to learned counsel, there was non-compliance with the provision of Section 108 because the application for mutation was not filed both by the transferor and the transferee. It was further submitted that the requisite fee calculated at the rate of one percent on the annual value of the holding had not been deposited along with the applications, No doubt, the application for mutation was not filed by the transferor, but there is no material on the record to show that the requisite fee, as required under Sub-section (3) of Section 108, was not paid along with the application. There is also no material to show whether the father of the defendant was alive or dead when the application for mutation dated the 16th of October 1958 was filed. Even if it be assumed that he was alive and as such the application was not strictly in accordance with the provision of Section 108 of the Act, in my opinion, it was the duty of the municipality to mutate the name of the real owner of the holding when the matter was brought to their notice. I am fortified in the above view by the Bench decision of this Court in the case of (2) Abrar Ali Khan (ILR 41 Patna 338) referred to above. In that case it was held:

“The liability of the defendants to pay the taxes is determined not by the entry of their names in the assessment list but by virtue of Section 100(1), read with Section 82 of the Bihar and Orissa Municipal Act. The liability of the defendants to pay the taxes is dependent upon the provisions of these taxing Sections and not upon the provisions of Sections 105, 106 and 107, which deal with the preparation of assessment list and the quantification of the tax liability.”.

5. In that case the defendants had transferred the holdings in question to their wives in lieu of dower debt by a registered bat-mokssa deed, dated the 16th of November 1939. The transferees had made an application for mutation of their names to the Chairman of the Patna City Municipality and for entering their names in the assessment list under Section 108 of the Act. The Municipality, however, refused to mutate the names of the transferees on the sole ground that neither the transferee nor the defendants had paid the arrears of municipal taxes. It was held in that case that there was no legal ground on which the plaintiff respondent could, have rejected the application for mutation because the payment of arrears of taxes was not made a condition precedent by Section 108 of the Act for mutation of the holding in the names of the transferees. Therefore, the action of the plaintiff respondent in keeping the application for mutation pending and in demanding the payment of arrears of taxes from the transferees was illegal. It was further held in that case as follows:—

“Even in the absence of an application for mutation under Section 108 of the Biher and Orissa Municipal Act it was a duty imposed upon the plaintiff-respondent to alter or amend the assessment list under Section 107(1)(b) of the Act after following the procedure mentioned in Sub-sections (2), (3) and (4) of Section 107. It is, therefore, not open to the plaintiff-respondent in the present case to take advantage of its own laches or negligence in not entering the mutation of title in its assessment list. As we have already pointed out, the defendants are not liable to pay Municipal taxes for the period in question because they are not ‘owners’ within the meaning of Section 3(18) of the Act, read with Section 100(1) of the Act”.

6. The above observation fully lends support to the view which I have taken that it was the duty of the municipality to mutate the name of Mewawati Devi in place of the defendant and to alter or amend the assesment list under Section 107(1)(b) of the Act after following the prescribed procedure when it was brought to their notice that she was the real owner. Mr. Ghose submitted that the above observation made by the Division Bench is obiter dictum, inasmuch as the Bench had held that the application for mutation was rejected not on a legal ground, because payment of arrears of tax was not made a Condition precedent by Section 108 of the Act. In my opinion, the observation made by the Bench cannot be held to be mere obiter dictum. I may point out that Untwalia, J. (as he then was), who was one of the members of the Division Bench, while considering the question whether there was any conflict between the decisions in the cases of (1) Patna Municipal Corporation v. Ladley Saran (1963 BLJR 214) and (2) Abrar Ali Khan v. Patna City Municipality (ILR 41 Patna 338), referred to the above observation made in that case in (3) Sarat Kumar Acharya… v. Mahesh Prasad Sahu…Opposite Party. (AIR 1972 Patna 377) as a point decided in the latter case. It cannot, therefore, be said that the observation quoted above was a mere obiter dictum.

7. In my opinion, there is no conflict in the aforesaid two Bench decisions. In the case of (1) Patna Municipal Corporation v. Ladley Saran (1963 BLJR 214) it was held that the word ‘owner’ in Section 109 meant only the person who was recorded as such by the Municipality, and it was observed as follows;

“It will be noticed that under Sub-sec. (1) of that section it is in the discretion of the municipal authorities to value the house and land together and to impose a consolidated tax; but they are not bound to do so. If, however, a consolidated tax is imposed, Sub-sec. (2) comes into play; and the tax is to be realised from the owner of the house. It is obvious that before imposing the consolidated tax, the authorities must know who is the owner; and the municipal records are the only materials in their possession for the purpose at the time of assessing the tax, unless the law requires the authorities to make further inquiry, of their own motion, about the actual ownership of the house or the land at the time of the assessment. No such law has been brought to our notice.”

8. In the case of (2) Abrar Ali Khan (ILR 41 Patna 338) the point which fell for consideration before the Bench was whether the liability to pay the taxes is to be determined by the entry of the names in the assessment list or it is dependent upon the taxing sections, namely, Section 100(1) read with Section 82 of the Act or upon the provisions of Sections 105, 106 and 107, which deal with the preparation of assessment list and the quantification of the assessment list. It was held that since the defendants were not the owners of the holding in question within the meaning of Section 100(1) read with Section 3(18), they were not liable to pay the municipal taxes, but the liability to pay the taxes was upon the wives of the defendants to whom the holding was transferred. In that case the Bench had not to consider the scope of Section 109 of the Act.

9. In course of argument, learned counsel referred to the decisions in the cases of (3) Chairman, Municipality, Arrah v. Ram Kumar Choudhury (AIR 1933 Patna 177) and (4) Satyadeo Narain Lal v. Municipal Commissioners, Bhagalpur Municipality (AIR 1960 Patna 84). In my opinion, the decision in neither of the cases supports the contention which has been raised on behalf of the petitioners.

10. For the reasons stated above, I find it difficult to interfere with the judgment and decree passed by the court below. In the result, this application is dismissed with costs.

11. S.K Jha, J. I agree.

Application dismissed.

Chairman And The Mun... v. Bishwanath Jagatramk...