Safiya Malik

A recent judicial order from the Calcutta High Court has upheld the obligation of property owners to comply with tax recovery directives issued by municipal authorities. The court dismissed a review application challenging an earlier directive requiring the deposit of a specified sum towards outstanding property tax dues. The judicial bench found that the petitioners had not fulfilled their commitments made before the court and had excessively delayed seeking a review of the order.

The dispute arose concerning unpaid property tax dues owed to the Kolkata Municipal Corporation (KMC) in connection with a property situated at 46/31/1, Lila Roy Sarani (formerly Gariahat Road), Kolkata. The municipal authorities had issued a demand for approximately Rs. 1.22 crore, consisting of Rs. 69.20 lakh as the principal tax amount, with the remaining balance comprising interest and penalties accrued over time due to non-payment.

Upon the petitioners’ failure to clear the outstanding dues, KMC invoked its authority under Section 219 of the Kolkata Municipal Corporation Act, 1980, which empowers it to recover unpaid property tax by way of a distress warrant. When KMC officials arrived at the premises to execute the warrant, they found the entry door secured with a padlock, restricting their access to the property’s movable assets. Since KMC is authorized to attach, remove, and auction movables to recover property tax dues, it responded by placing its official seal over the existing padlock, thereby preventing any unauthorized tampering or removal of property inside.

Challenging this measure, the petitioners filed a writ petition before a single-judge bench, arguing that the sealing of their property was illegal and disproportionate. In response, the court issued an order on June 28, 2023, granting partial relief, provided the petitioners deposited a sum of Rs. 35 lakhs with KMC within a stipulated timeframe. The order also directed that, once the payment was made, KMC officials would unseal the premises and conduct an inventory of movable goods in the presence of the petitioners, KMC representatives, and local police.

Subsequently, the petitioners appealed against this decision, seeking further relaxation. Their primary contention was that the amount imposed was excessive and financially burdensome. The division bench, in its judgment dated August 9, 2023, modified the single-judge’s order by reducing the immediate deposit requirement to Rs. 15 lakhs. The court ruled that while some payment was necessary, the reduced sum would serve as an interim measure, pending further proceedings. The bench noted that this modification did not prejudice the legal rights of either party.

In the current review application, the petitioners sought additional relief, asserting that Rs. 10 lakh had already been deposited with KMC and remained in its suspense account. They argued that this amount should be adjusted against the Rs. 15 lakhs mandated by the appellate court, thereby reducing their liability to only Rs. 5 lakhs.

The court rejected this argument, noting that the petitioners had failed to comply with the original directive within the stipulated time and had filed their review application more than five months after the August 9, 2023, order was passed. The court stated, "The judgment and order in question was passed on August 9, 2023. The review applicants were offered to deposit Rs. 15 lakhs with the municipal corporation within seven working days from the date of the order. On the basis of such offer, we had passed the order in question directing them to deposit such amount within seven working days. They did not do so."

The bench further observed that the petitioners were fully aware of the Rs. 10 lakh deposit at the time they made their commitment to deposit Rs. 15 lakhs. Their subsequent attempt to alter the agreed-upon amount was perceived as a lack of good faith. The court recorded, "Lack of bona fides on their part would also be evident from the fact that the review application was filed more than five months after the order in question was passed."

Additionally, the court took note of the fact that the petitioners waited over a year and three months before filing an application to stay the operation of the August 9, 2023, order. The court found this delay unreasonable and stated that it cast doubt on the petitioners' credibility. The judgment characterized their conduct as "sharp practice, verging on dishonesty."

The court also examined the broader context of the case, stating that a substantial sum remained outstanding as property tax dues. It found no merit in the petitioners’ plea for an adjustment of the Rs. 10 lakh deposit against the Rs. 15 lakhs required under the previous order. The court asserted that the municipal corporation retained the right to collect all outstanding dues in accordance with applicable laws and that partial payments did not absolve the petitioners of their obligations.

Based on its findings, the court dismissed the review application along with the associated stay petition. The court held that the petitioners had failed to provide any justification for their prolonged inaction and had not demonstrated any legal basis for modifying the prior order. The judgment stated, "In all fairness to learned counsel for the review applicants, he candidly submitted that he was not pressing for review of the judgment and order in question. We also do not find any reason for modifying the order in question."

The court upheld its previous directive, requiring the petitioners to deposit Rs. 15 lakh with KMC within seven working days, without any adjustment from the Rs. 10 lakh previously deposited in the suspense account.

Case Title: Singha Singh Roy & Associates Private Limited & Anr. Vs. The Kolkata Municipal Corporation & Ors.
Case Number: RVW 8 of 2024, IA No: CAN/1/2024, MAT 1315 of 2023
Bench: Justice Arijit Banerjee, Justice Apurba Sinha Ray

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