M/S Niagara Hotels & Builders (P) Ltdpetitioner v. Union Of India.S

Lokeshwar Prasad, J.— The plaintiff has filed the present suit for the recovery of Rs. 1,61,098/- against the defendants averring that the plaintiff is a Company, duly incorporated under the provisions of the Companies Act, 1956 and Shri Baldev Kishan, a Director of the plaintiff Company is competent to sign and verify the pleadings and to institute the present suit on behalf of the plaintiff Company. It is alleged that the plaintiff Company purchased a commercial plot No. 4, at the District Centre, Janak Puri, New Delhi in an open auction from the Delhi Development Authority (hereinafter referred to as ‘the DDA) for a consideration of Rs. 1,22,30,512/- and the defendant DDA executed a perpetual lease deed dated the 10th August, 1984 in favour of the plaintiff Company by virtue of which the lease hold rights in respect of the above said plot were transferred in favour of the plaintiff Company.

1.2 It is further alleged that the following amount has been collected and charged from the plaintiff towards Stamp Duty under the Indian Stamp Act, 1899 and towards duty on the transfer of property under the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as ‘the Act’) for the execution and registration of the Lease Deed of the above said plot in favour of the plaintiff.

(a) Stamp Duty: 4,35,735.00 (b) Duty on transfer of property (under the provisions of Section 147 of the DMC Act): 2,16,582.25 Total (Rs) 6,52,317.25

1.3 The above said amount, amounting to Rs. 6,52,317.25 was deposited by the plaintiff Company on 9.7.84 As per the averments made in the plaint, the amount of Stamp Duty, payable under the Indian Stamp Act, 1899 is collected by Delhi Administration (defendant No.2) and the amount of duty on transfer of property is collected by the Municipal Corporation of Delhi (defendant No.3). It is further alleged that the above said transfer of lease hold rights in perpetuity by virtue of the Perpetual Lease Deed dated the 10th August, 1984 in respect of the plot in question, in favour of the plaintiff, for the purpose of duty on transfer of property is covered under Section 147 (2) (b)(v) of the Act, which reads as under:—

“147. (2) The said duty shall be levied -

(a)..........

(b) at such rate as may be determined by the Corporation not exceeding 5 per cent on the amount specified below against such instruments:

(i)..........

(ii)..........

(iii).........

(iv).........

(v) Lease in perpetuity | the amount equal of immovable to one-sixth of property. the whole amount or value of the rent which would be paid or delivered in respect of the first fifty years of the Lease as set forth in the instrument.”

1.4 It is averred that in terms of the above said pa provisions of the Act, the amount payable was Rs. 1,01,920.93 and as against the above said amount, the defendants have collected a sum of Rs. 2,16,582.25 towards the duty on transfer of property under the above said provisions of the Act which is illegal, without jurisdiction and against the provisions of the Act. It is alleged that the plaintiff Company, therefore, has a right to claim the refund of Rs. 1,14,661.32, charged in excess by the defendants. It is further alleged that in-spite of the service of legal notice dated the 8th July, 1986 the defendants have not refunded the above excess amount to the plaintiff Company and as such are jointly and severely liable to pay interest @ 18% per annum according to the bank rate which in turn had to be paid by the plaintiff while taking loans from the Bank.

1.5 It is also stated that statutory notices under Section 80 CPC, read with Section 478 of the Act and Section 53(b) of the Delhi Development Act, 1957 were duly served upon the defendants per registered post and as no reply has been received and no relief has been granted to the plaintiff, the plaintiff Company has filed the present suit. It has been prayed by the plaintiff that a decree for Rs. 1,61,098/- be passed in favour of the plaintiff and against the defendants jointly and severally with costs and future interest @ 18% per annum from the date of the filing of the suit till realisation.

2. The claim of the plaintiff has been resisted by the Municipal Corporation of Delhi (defendant No.3). Defendant No.3 in the written statement has taken preliminary objection to the effect that the suit filed by the plaintiff Company is barred by time; that the same is not maintainable against the defendant DMC in view of the provisions of Section 477 and 478 of the Act and non compliance of Section 478 of the Act and also on account of the fact that an equally efficacious remedy is available which ought to have been exhausted by the plaintiff. On merits it is contended that the suit is mis-conceived and is based on wrong interpretation of the provisions of section 147 of the Act and that the impugned levy of duty on transfer of property under section 147 of the Act in respect of the suit property has been correctly levied and there is no question of any excess levy and that the present suit for the recovery of the alleged excess amount of transfer duty is liable to be dismissed with costs.

3. The defendant Delhi Development Authority (defendant No.4) in its written statement has admitted the fact regarding the purchase of the plot in question for a sum of Rs. 1,22,30,512.10 by the plaintiff from the defendant DDA in auction and the execution of a perpetual lease deed dated 10.08.84 in favour of the plaintiff.

4. The plaintiff has filed replication to the written statements filed on behalf of defendant No.3 (MCD) and defendant No.4 (DDA). In the replication filed to the written statement filed on behalf of MCD (defendant No.3) the plaintiff has controverted the pleas of MCD and has reaffirmed the contents of the plaint.

5. The learned predecessor of this Court, on the pleadings of the parties, vide order dated 17.5.90, framed the following issues:—

1. Whether the suit has been filed by a duly authorised and competent person on behalf of the plaintiff? OPP

2. Whether the suit is barred in view of the provisions of Section 478(2) of the DMC Act? OPD

3. Whether the suit is not maintainable in view of the provisions of Sections 477 and 478 of DMC Act? OPD

4. Whether the suit is not maintainable in view of the provisions of Sections 169 & 170 of the DMC Act?OPD

5. Whether the amount charged by the MCD on account of duty on transfer of property is not in accordance with provisions of Section 147 of the DMC Act? If so, its effect. OPP

6. If issue No.5 is decided against the defendant, to what amount is the plaintiff entitled from defendant? OPP

7. Whether the suit has not been properly valued for the purposes of court fee? OPD

8. Relief.

6. The learned predecessor of this Court vide order dated 3.2.95 directed that the defendants be proceeded ex-parte in the present proceedings as none appeared on behalf of the defendants on that date.

7. The plaintiff, with the leave of the Court, has adduced evidence in support of its case by means of affidavit and has filed an affidavit of Shri Baldev Kishan, one of the Directors of the plaintiff Company. Said Shri Baldev Kishan, in his affidavit dated the 6th November, 1995, filed by way of evidence has fully supported the case of the plaintiff Company and has also proved and exhibited all the material/relevant documents. The evidence of said Shri Baldev Kishan, adduced by means of affidavit, has gone on record unrebutted and unchallenged.

8. I have heard the learned counsel for the plaintiff at length and have also carefully gone through the documents/material on record including the contents of the affidavit of said Shri Baldev Kishan, filed by way of evidence in support of the case of the plaintiff Company and my findings on the issues are as under:—

ISSUE NO.1

9. Shri Baldev Kishan, a Director of the plaintiff Company, in his affidavit dated the 6th November, 1995, filed by way of evidence, has stated on oath that he is duly authorised to sign and verify the pleadings and to institute the present suit on behalf of the plaintiff Company by virtue of a resolution (Exhibit P-1) passed in the meeting of the Board of Directors of the plaintiff Company held on 22.9.1986 This witness, besides proving and exhibiting a copy of resolution (Exhibit P-1) has also proved and exhibited the copy of the Certificate of incorporation of the plaintiff Company (Exhibit P-2). In my opinion, in the presence of the above facts which have gone on record unrebutted and unchallenged, the burden of proving the above issue stands duly discharged by the plaintiff. The issue is, therefore, decided in favour of the plaintiff and against the defendants.

ISSUE No.2

10.1 The defendant MCD, as already stated, in its written statement, has taken one of the preliminary objections to the effect that under Section 478(2) of the Act, the period of limitation for filing the present suit was six months from the date on which the cause of action alleged to have arisen. It is contended that the cause of action in the present case is alleged to have arisen on 9.7.84 whereas the present suit was filed on or after 21.10.86 and, therefore, the same is not maintainable, being barred by time.

10.2 The above contention of the defendant MCD, in my opinion, is not tenable on the short ground that the limitation of six months, prescribed in Section 478(2) of the Act, is applicable only in respect of those suits which fall within the ambit and scope of Section 478(1) of the Act, namely, filed in respect of any act done, or purported to have been done in pursuance of the Act or any rule, regulation or bye-law made thereunder. The nature of the present suit, filed by the plaintiff, is decidedly not such so as to fall within the ambit and scope of Section 478(1) of the Act because the present suit filed by the plaintiff is for the recovery of the amount which has been charged as duty on transfer of property in excess of the amount payable under the provisions of Section 147(2)(b)(v) of the Act.

10.3 The question as to what would be the period of limitation for the recovery of excess amount of tax, illegally recovered, came up for consideration before the Supreme Court in case A. Venkata Subba Rao v. The State of-Andhra Pradesh reported as (1965) 2 SCR 577 wherein their lordships of the Supreme Court have held:—

“So far as the present claim for recovery of a tax illegally collected is concerned the authorities are fairly uniform that the period of limitation for a suit making such a claim is governed by Article 62. Rajputana Malwa Railway Co-operative Stores Ltd., v. The Ajmer Municipal Board arose out of a suit against a Municipal Board for refund of certain octroi duty which they were not legally entitled to levy. The suit for that claim was held to be governed by Article 62, the learned Judges stating:

“The language of Article 62 is borrowed from the form of count in vogue in England under the Common Law Procedure Act of 1852. Prior to the passing of the Supreme Court of Judicature Acts of 1873 and 1875, there was a number of forms of pleading known as the common indebitatus counts, such as counts for money lent, money paid by the plaintiff for the use of the defendant at his request, money received by the defendant for the use of the plaintiff, & co........... The most comprehensive of the old common law counts was that for money received by the defendant for the use of the plaintiff. This count was applicable where a defendant received money which in justice and equity belonged to the plaintiff under circumstances which rendered the receipt by the defendant to the use of the plaintiff.... It was a form of claim which was applicable when the plaintiff's money had been wrongfully obtained by the defendant.” A similar view was taken of claims of a like nature in Municipal Council Dindigul v. The Bombay Co. Ltd., Madras, India Sugar and Refinery Ltd. v. The Municipal Council Hospet, State of Madras v. A.M.N.A Abdul Kader, and The Municipal Committee, Amritsar v. Amar Dass. Learned counsel submitted that these cases proceeded, in great part, on the inapplicability of the shorter periods of limitation provided in the particular statutes for amounts improperly collected thereunder. We do not, however, consider that this militates, in any manner, from the reasoning upon which the decisions are based, for they all refer to the terms of Article 62, to its scope and their applicability in terms to cases of suit for refund of tax illegally collected. In addition, we might point out that in India Sugar and Refinery Ltd. v. The Municipal Council, Hospet the claim for some of the years for which the suit was filed was dismissed as barred by limitation by applying the three year rule. In fact, learned counsel conceded that save a solitary decision in Govind Singh v. The State of Madhya Pradesh to which we shall presently refer, the decisions were uniform in applying Article 62 to cases of suits for refund of taxes illegally collected. We consider that these decisions are correct and they have applied the proper article of limitation.

Before referring to Govind Singh's case it would be convenient to clarify the position as regards certain circumstances in which the Article would be applicable without making any exhaustive list. Where the defendant occupies a fiduciary relationship towards the plaintiff it is clear that Article 62 is inapplicable. Next even if the claim could have been comprehended under the omnibus caption of the English “action for money had and received”, still if there are other more specific articles in the Limitation Act - vide e.g Article 96 (mistake), Article 97 (consideration which fails) Article 62 would be inapplicable. Lastly, if the right to refund does not arise immediately on receipt by the defendant but arises by reason of facts transpiring subsequently, Article 62 cannot apply, for it proceeds on the basis that the plaintiff has a cause of action for instituting the suit at the very moment of the receipt.

It is this last point that was involved in Govind Singh v. The State of Madhya Pradesh on which learned counsel relied as a decision which had refused to apply Article 62 and applied Art. 120 to a claim for refund of tax overpaid. There the assessee deposited along with his return certain sums. He had overpaid and so was entitled to obtain a refund when the assessment was completed. A suit for the amount of that excess was held to be governed by Article 120. It is clear that at the time when the assessee made the deposit of the tax he was not entitled to the refund. That right accrued to him only after the completion of the assessment. We consider, therefore, that this decision does not assist the appellant in the construction which he seeks to persuade us to adopt of Article 62.”

10.4 A similar question with regard to the scope of Section 478(2) of the Act also came up for consideration of this Court in case The Municipal Corporation of Delhi v. The Delhi Stock Holders(I & S) Association Limited (RSA No. 327D/1962 decided on 25.1.1972). In the above said case, this Court, relying on the above said decision of the Supreme Court and also on an another decision of the Supreme Court in case Tilok Chand Moti Chand v. H.B Munshi [(1969) 2 SCR 824] has held that in such like cases, not covered within the ambit and scope of Section 478(1) of the Act, the period of limitation for filing the suit would not be governed by the provisions of Section 478(2) of the Act and the period of limitation in. such like cases, would be three years as provided under the normal law of limitation governed by the Limitation Act, 1963.

10.5 As already stated, the present suit filed by the plaintiff Company is not in respect of any act done or purported to have been done in pursuance of the provisions of the Act or any rule regulation or bye-law made thereunder, but the same is for the recovery of the excess amount of duty on transfer of property, collected by the defendant MCD and thus, in my opinion, the period of limitation for filing the present suit, in the facts and circumstances of the present case, would not be governed by sub-Section (2) of Section 478 of the Act and the same would governed by the normal law of limitation, applicable to the filing of such like suits, which is three years. In the present case, the amount in question was deposited by the plaintiff on 9.7.84, (as stated in para 4 of the plaint and not denied/controverted in the written statement filed on behalf of the defendant MCD) and thus the present suit, filed on 22.10.86, is well within the prescribed period of limitation.

10.6 In view of the above discussion, the above issue is decided against the defendants and in favour of the plaintiff Company.

ISSUES NOS.3 & 4

11.1 The above issues are taken up together as the same are interconnected and interlinked with each other. The onus, in so far as the above issues are concerned, was on the defendants. As already stated, the defendants have been proceeded ex parte and thus they have not discharged the onus which was on them. The objection taken by the defendant MCD in its written statement with regard to the maintainability of the present suit in view of the provisions of Section 169, 170, 477 & 478 of the Act is also not tenable because of the fact that as already stated the present suit filed by the plaintiff is decidedly not in respect of any act done or purporting to have been done in pursuance of the provisions of the Act. or any rule regulation or bye-law made thereunder by any Municipal Officer or Authority. Above all, from the contents of the affidavit said Shri Baldev Kishan it is apparent that the notice as contemplated under Section 478(1) of the DMC Act, 1957, claiming the refund of the amount in question has been served upon the defendant MCD, carbon copy of which is Exhibit P-4, postal receipts are Exhibit P-5 and Exhibit P-8 and A.D cards in token of the service of the said notice having been effected upon the defendant MCD are Exhibit P-9 and Exhibit P-10.

11.2 In view of the above discussion the above issues are also decided in favour of the plaintiff and against the defendants.

ISSUE NO.5

12.1 As already stated, the present suit has been filed by the plaintiff for the recovery of the amount which has been charged as duty on transfer of property in excess of the amount, payable under the provisions of Section 147(2)(b)(v) of the Act. The Perpetual lease Deed (Exhibit P-3) dated the 10th August, 1984, executed between the parties inter alia provides:—

“Now this indenture witnesseth that in consideration of the amount of Rs. 1,22,30,512.10 (Rupees one crore twenty two lakh thirty thousand five hundred twelve and paise ten only) paid towards premium before the execution of these presents (the receipt whereof the lessor hereby acknowledges) and of the rent hereinafter reserved............” (Emphasis supplied)

“TO HOLD the premises unto the lessee in perpetuity from 25th day of February one thousand nine hundred and eight two yeilding and paying therefor yearly rent payable in advance of Rs. 5/- (Rupees five only) upto 24th day of February one thousand nine hundred and eighty seven and thereafter at the rate of two and a half percent of the premium (the sum already paid..................” (Emphasis supplied)

12.2 As per the provisions of Section 147(2)(b)(v) of the Act, the duty on transfer of property in the case of lease in perpetuity (as in the present case) is payable on the amount equal to one-sixth of the whole amount or value of the rent which would be paid or delivered in respect of the first fifty years of the lease as setforth in the instrument.

12.3 The amount on account of duty on transfer of property collected by the defendants is stated in para 4(b) of the plaint, which fact has not been denied in para 4 of the written statement. From the contents of the written statement, filed on behalf of the defendant MCD, it is apparent that the defendant MCD has taken into consideration the premium paid as well as 50 years rent and after adding both the above mentioned components i.e premium & rent the defendant MCD has calculated 1/6th of the same and men applied the rate of 5% to calculate the duty on transfer of property which is not permissible in accordance with the provisions of section 147(2)(b)(v) of the Act. The word ‘OR’ occurring in sub-clause(v) of clause(b) sub-section (2) of Section 147 of the Act cannot be read or so interpreted as contended by the defendant MCD. The defendant MCD in the preliminary objections has contended that the initial amount paid to DDA for the purchase of plot in question is not ‘premium’ but is a ‘rent’. Similar contention has been stated in para 2 of the written statement on merits. As per the case of the defendant, as putforth in the written statement, the word ‘premium’ is to be treated as ‘rent’ for the purpose of calculation of the amount of duty on transfer of property. In my opinion, the above interpretation is also not tenable in the eyes of law being contrary to the definition of the term ‘rent’ as well as ‘premium’ as defined in Section 105 of the Transfer of Property Act, 1882. Section 105 of the Transfer of Property Act, 1882 provides the definition of the word ‘premium’ as well as ‘rent’ separately as under:—

“Lessor, lessee, premium and rent defined - The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.”

12.4 The same is also against the contents of the Perpetual Lease Deed (Exhibit P-3), executed by the DDA on behalf of UOI in favour of the plaintiff. In the lease deed (Exhibit P-3) itself the word ‘premium’ has been specifically used with regard to the amount of ‘auction price’ paid by the plaintiff as ‘premium’ and the same has not been termed as ‘rent’. Further in the above said document (Exhibit P-3) a separate provision has been made to charge two and a half percent of the ‘premium’ as ‘rent’ after the expiry of the first five years as per clause of the document (Exhibit P-3) reproduced above.

12.5 Thus the term ‘premium’ and ‘rent’ are two different terms and by no stretch can be so read as to have tne same meaning either in terms of the provisions of Section 105 of the Transfer of Property Act, 1882 or in terms of the Perpetual Lease Deed (Exhibit P-3).

12.6 In view of the above discussion the defendant MCD has decidedly charged duty on transfer of property in excess of the amount payable under the provisions of section 147(2)(b)(v) of the Act and the plaintiff is, therefore, entitled to the refund of the amount recovered in contravention of the above said provisions of the Act. The issue is, therefore, decided in favour of the plaintiff and against the defendants.

ISSUE No. 6

13. In view of the finding in respect of issue No.5, the plaintiff is entitled to the refund of the amount charged unauthorisedly and in excess which comes to Rs. 1,14,661.32 as stated in paras 8,9 & 10 of the plaint.

ISSUE No.7

14.1 As already stated, the plaintiff has filed the present suit for the recovery of Rs. 1,61,098/- and has paid advolrm court fees of Rs. 3954.40 which is on record. In the presence of the above facts, the objection taken by the defendant MCD that the suit has not been correctly valued and correct court fees has not been paid is without any substance. This issue is, therefore, also decided in favour of the plaintiff and against the defendants. .pa

14.2 The plaintiff has also claimed interest @ 18% per annum for the period (i) prior to the institution of the suit; (ii) during the pendency of the suit and (iii) from the date of the decree to the date of the payment. As per settled law the position is that the interest cannot be claimed as a matter of course and the same is recoverable provided there is an express or implied agreement to pay interest or interest can be recovered under any statutory provision. In the present case, there is neither an express nor an implied agreement to pay interest. The transaction in question is decidedly not a ‘commercial transaction’ and, therefore, in terms of the provisions contained in Section 34 of the Code of Civil Procedure, 1908 the maximum interest from the date of the filing of the suit till realisation which can be awarded, can be @ 6% per annum.

15. In view of the above discussion, the suit of the plaintiff is decreed for Rs. 1,14,661.32 (Rs one lac fourteen thousand six hundred sixty one and paise thirty two only) in favour of the plaintiff and against the defendants jointly and severally with costs and interest @ 6% per annum from the date of the filing of the suit till realisation. Decree sheet be drawn up accordingly and thereafter the file be consigned to Record Room.