M.S. Liberhan, J.
1. This Reference to Division Bench has posed a legal issue of considerable importance. The legal issue raised was whether the Municipal Committee has a right to recover the house tax under Section 81 of the Punjab Municipal Act, 1911, after a lapse of a period of three years from the date it fell due.
2. The factual basic terrafirma with brevity is that the Special Executive Magistrate issued a notice, dated January 8, 1986, under Section 81 of the Punjab Municipal Act. 1911, to the effect that the amount of Rs. 14 580/- was due on account of house tax for the years 1979 to 1985 The plaintiff-respondents were directed to deposit the amount in the Court failing which recover' was to be effected by sale of the immovable property of the plaintiffs The plaintiffs deposited the house tax for the preceding three years and challenged the recovery prior to that, inter alia, on the ground that since the Municipal Committee was not entitled to recover the amount beyond three years being barred by time, it could have been recovered within three years from the date it fell due The limitation for recovery is governed by Article 113 of the Indian Limitation Act, 1963. Thus, no recovery can be made and issuance of notice is illegal.
3. The trial Court found that the house tax prior to the period of three years could not be recovered under Section 81 of the Punjab Municipal Act. Thus, the notice to the extent of recovery of the house tax for a period from April l, 1979 to March 31, 1982 was found to be illegal and without jurisdiction. To this extent it was quashed. However, the recovery for the remaining period was found to be within limitation and notice was found to be valid. Resultantly, the Municipal Committee was restrained from recovering the amount of the house tax from April I, 1979 to March 31, 1982, under Section 81 of the Punjab Municipal Act, 1911.
4. The Additional District Judge, keeping in view the observations made in Faqir Chand and Ors. v. Municipal Committee, Sultanpur, Lodhi and Ors., 1984 (1) L. L. R. 443 affirmed the finding of the trial Court. Nothing beyond this was urged before the learned Additional District Judge.
5. The Municipal Committee challenged the finding of the Courts below and urged that in view of Section 80 of the Punjab Municipal Act, 1911, the house tax payable being a first charge on the property with respect to which it was payable, the recovery would be governed by Article 62 of the Indian Limitation Act (hereinafter referred to as the Limitation Act) and not by Article 113. Article 62 provides a limitation of 12 years for recovery. Consequently, the recovery being within limitation, the entire amount was payable and is due; the Municipal Committee is at liberty to recover the same under Section 81 of the Punjab Municipal Act, 1911 (hereinafter referred to as the Municipal Act).
6. The learned counsel for the appellant relied on Mt. Badrunnissa and Ors. v. Municipal Board, Agra, A. I. R. 1989 All. 510. Shidrao Narayanrao Gumaste Patil v. Municipality of Athni, A. I. R. 1943 Bom. 21, Nripendra Nath Roy Choudhary v. Commissioner of Chaibasa Municipality and Ors.,4 Faqir Chand and Ors. v. Municipal Committee, Sultanpur lodhi and Ors., 1984 (1) L. L. R. 443 and Lakhmi Chand v. Municipal Corporation of Delhi, A. I. R. 1981 Pat. 47, (1984) 4 L. R. S. Pb. 6.
7. In order to answer the question posed, it would be expedient to reproduce the statutory provisions of the Municipal Act as well as the Limitation Act, for reference.
8. Sections 80 and 81 of the Municipal Act run as under :--
'80. Recovery of taxes payable by owner.--(1) When any sum is due on account of a tax payable under this Act in respect of any property by the owner thereof the committee shall cause a bill for the amount, stating the property and the period for which the charge is made to be delivered to the person liable to pay the same.
(2) If the bills be not paid within ten days from the delivery thereof the committee may cause a notice of demand to be served on the person liable to pay the same, and if he does within seven days from the service of the notice, pay the sum due, with any fee leviable for the notice, or show sufficient cause for nonpayment of the sum due with the fee shall be deemed to be an arrear of tax.
(3) The amount of every such arrear, besides being recoverable, in any other manner provided on this Act; shall, subject to any claim on behalf of Government be a first charge on the property in respect of which it is payable, and shall be recoverable; on application made in this behalf by the Committee to the Collector, as if the property were an estate assessed to land revenue and the arrear were an arrear of such revenue due thereon:
Provided that nothing in this Sub--hall authorise the arrest of a defaulter. (4) If any tax or sum leviable under this Act from the owner is recovered from the occupier, such occupier shall, in the absence of any contract to the contrary, be entitled to recover the same from the owner and may deduct the same from the rent then or thereafter due by him to the owner.
81. Recovery af taxes etc --(1) Any arrears of any tax, water-rate, rent, fee or any other money claimable by a committee under this Act may be recovered on application to a Magistrate having jurisdiction within the limits of the municipality, or in any other place where the person from whom the money is claimable may for the time being be resident, by the distress and sale of any moveable property within the limits of his jurisdiction belonging to such person. The cost of such proceedings shall be recoverable from the defaulter in the same manner as the said arrears.
(2) An application made under Sub-section (1) shall be in writing and shall be signed by the president, a vice president or the secretary to the Committee, but it shall not be necessary to present it in person.'
9. Articles 62 and 113 of the Limitation Act run as under :--
------------------------------------------------------------------'PART V--SUITS RELATING TO IMMOVABLE PROPERTY------------------------------------------------------------------Description Period of Time from whichof suit limitation period begins to run------------------------------------------------------------------(1) (2) (3)62. To enforce payment of Twelve years When the moneymoney secured by a sued for becomesmortgage or otherwise due.charge dupon immovableproperty.'PART X--SUITS FOR WHICH THERE IS NO PRESCRIBEDPERIOD113. Any Suit for which Three years When the right to no period of limitation is provided sue accrues.'elsewhere in thisschedule.------------------------------------------------------------------
10. The Allahabad High Court in Mt. Badrunnissa and Ors. case (supra), while considering the provisions of Section 177 of the U. P. Municipal Act which provides that any sum due on account of tax. imposed on the annual value of building or road or both shall, subject to any claim on behalf of Government be a first charge upon such demised premises, held that neither Section 177 nor any other Section of U. P. Municipal Act prior to the institution of the suit under Section 177 to enforce the charge on the demised premises with respect to the house tat was required to submit or demand made from the persons who are liable to pay the tax and further held that the suit would be governed by Article 32 and not by Article 120 of the Limitation Act, 1908. Article 120 of the Limitation Act, 1908 corresponds to Article 113 of the Limitation Act, 1963, i. e., the residuary Article and Article 132 is equivalent to Article 62. It was found that since the house tax was a first charge on the property in dispute, the governing Article would be Article 132 of the Limitation Act, 1908 which is equivalent to Article 62 of the Limitation Act, 1963.
11. Similarly, in Shidrao Narayanrao Gumasta Patil's case (supra) the Court was of the view that since Section 87 of the Bombay District Municipal Act (Act No. 3 of 1901) relates to a sum of money due on account of house-tax and shall be a fir3t charge on the building or land in respect of which tax is leviable, the governing limitation for its recovery would be Article 132 of the Limitation Act, 1908 which is equivalent to Article 62 of the Limitation Act, 1963. It was further observed that it was immaterial whether the charge was created on the building or land by operation of law or agreement of parties. It was in those peculiar circumstances that it was held that the claim to enforce the payment of money due on account of house tax in the form of rate on the building or land would be governed by Article 132,
12. This Court in Faqir Chand and Ors. case (supra), observed that the Municipal Committee could not be permitted to resort to procedure prescribed under Section 81 for recovery of its time haired dues. Section 81 only provides a procedural methodology for recoverable dues. Section 81 is not a foundation of a light. It only provides a summary remedy for its recovery It was further observed that though the Municipal Committee lost a remedy to recover its amount in a Court of aw, it still retained right to recover it by invoking coercive machinery. The observations of the learned Judge run as under :
'............As would appear from the terms of Section 81 of the Act, it provides a summary procedure for the recovery of any arrears of any tax, water rate (rent) fee or any other money claim-able by a committee under the Act, On an application made by the committee, a Magistrate having jurisdiction may recover the arrears claimable by a committee by the distress and sale of any moveable property belonging to the defaulter Under this section a summary Procedure is provided for the recovery of certain categories of dues with the object of avoiding all complications involved in litigation. The provisions of this Section cannot be construed to mean that even though the Municipal Committee had lost the remedy to recover the amount in a Court of law, it still retained the right to recover it by invoking the coercive machinery. Section 81 of the Act only provides a special procedure for the recovery of the claimable money and does not constitute a source of foundation of a right to claim the money otherwise time barred Consequently, I hold that the procedure prescribed under Section 81 of the Act cannot be resorted to by a Municipal Committee for the recovery of the time barred dues.'
13. In Nripendra Nath Roy Choudhary's case (supra), a Full Bench of Patna High Court observed that rights and liabilities are created in the manner commanded by statutory fiction. It was further observed that one should not allow one's imagination to boggle when working out the consequence of such statutory fiction. The suit having been filed beyond tares years from the date from which the liability is deemed to have been created would be barred by time, it was so held in the peculiar facts and circumstances of that case.
14. In Ganesh Commercial Corporation, through Managing Partner, Bhawanilal v. State of Andhra Pradesh (Municipal Administration by its Secretary, Government of A. P., Hyderabad) and two Ors., (1969) II An. W. R. 467, Additional Commissioner of Hyderabad Municipal Corporation issued a warrant of distress sale under Section 269 of the Hyderabad Corporation Act for sale of the movable property. The objection to sale of movable property was raised to the effect that since the taxes due to the Corporation related to the period beyond three years, the claim of the Corporation being time barred, the taxes could not be recovered by adopting a coercive process of the Corporation. Section 269 provides the law pari materia with Sections 80 and 81 of the Municipal Act to the effect that if a person liable for the payment of tax does not pay within fifteen days from the service of the notice of demand to pay the sum due or shows sufficient cause for its non-payment to the satisfaction of the authority, the authority could effect the recovery by distress sale of the movable property of the defaulter. The provisions are in sum and substance pan materia to the provisions of Section 81 of the Municipal Act. In the precedent cited, the question posed was whether the distress warrants under Section 269 can be issued for arrears of taxes without any restriction as regards limitation. Under the provisions of the said statute, the authorities had a right to proceed against the assessee for the recovery of the amount due by civil suit or by other mode provided by the Act. Similarly, Section 238 provides that liability of the tax would be a charge on the immovable property as well as movable. After discussing the law, it was observed that since Section 238 creates a first charge on the property, the Municipal Corporation was well within i(s rights to institute a suit within twelve years, as Article 132 of the Limitation Act equivalent to Article 62, shall govern the limitation. It was observed that a suit to enforce their payment of money charged on movable property and their being no specific Article providing for limitation for such a suit, it would be governed by residuary Article 120 equivalent to Article 113. This plea was rejected. After noticing numerous precedents, it was observed that limitation would begin to run from the time when demand for money was made, by a person who could give the receipt. There being no specific Article applicable for recovery of taxes or cess, it would be governed by Article 113 now and Article 120 earlier. The relevant provisions for the case in hand in the said judgment run as under :--
'........When once it is realised that the suit for the recovery of money pertaining to the property tax charged upon immovable or movable property have to be instituted within the specific time under the Indian Limitation Act, what must, in my opinion, necessarily follow is that the Commissioner would not be competent to issue distress warrant for arrears of property tax due without having any regard to the question of limitation. I am clear in my opinion that the same period of limitation shall govern the issue of distress warrant under Section 269 If the Commissioner wants to recover the amount of the property tax due from the immovable property for which Section 238 creates a charge, he can employ the coercive process within 12 years from the day when the tax falls due. Similarly, it he wants to issue distress warrant for the recovery of property tax due from the moveable property on which Section 238 creates a charge, he can employ the coercive machinery within six years from the date when the property tax becomes due. If the suit itself for the recovery of property tax is time barred, either as against the immovable property or against the moveable property on which charge is created, then it is obvious that the Commissioner will not be competent to issue any distress warrant for a sum which has become time barred. Any other view would make the coercive process issued without any regard to the question of limitation inconsistent with the basic principles of the Limitation Act.'
15. It was further observed as under :--
'.....When the suits, which it is empowered to institute, have to be instituted within a prescribed limitation, on the same analogy, the distress warrant cannot be issued beyond the period prescribed by the said limitation Otherwise, while the Corporation will have no manner of right to institute a suit for recovey of the amount even from the property on which statutory charge is created, there will be no limitation at all for the recovery of tax due by way of coercive process. I do not think the Legislature would have intended to give such a wide power to the Commissioner. The reasonable view therefore is to confine the power for the recovery of money by distress warrant to the sums which are within the limitation '
16. It has been categorically observed in the said judgment in so far as the immovable property is concerned that since the suit had become time barred for the arrears of tax due, no distress warrant could be issued for the recovery of the amount as right to institute a suit had itself become time-barred, though the Corporation left the course open to recover the amount of tax from the immovable property on which a charge is created within twelve years as provided by Article 132. Thus, no distress warrant can be sustained relating to the time-barred claim.
17. In Lakhmi Chand's case (supra), while dealing with a perpetual injunction suit challenging the demand made by the Corporation for payment of house tax it was observed that Section 123 of the Delhi Municipal Corporation Act made it clear that the property taxes were the first charge on the premises on which they were levied and the period of limitation would be twelve years to enforce the payment of money secured by way of being a charge on the immovable property. The plea of the applicability of residuary Article 113 was rejected.
18. The undisputed facts which emerged from the lis are that the Municipal Committee imposed a house tax. The legality and validity of the same, though disputed but not under consideration, no finding need be given on it, inasmuch as the only contention raised before the Courts below as well as before us was with respect to the limitation for the recovery of the taxes As reproduced above, Sections 80 and 81 fall in the Chapter of taxation under the scheme of Punjab Municipal Act, 1911. Section 80 provides for recovery of taxes payable by the owner. The procedural methodology for the recovery of taxes payable by the owner by Section 80 provides that when any sum is due on account of tax payable under the Punjab Municipal Act, 1911 in respect of any property by the owner, it was made incumbent on the Municipal Committee to issue show cause notice with respect to bill for the amount The bill was to carry the particulars like the property with respect to the amount due, period for which the charge is being claimed It further enjoins on the Municipal Committee to deliver the bill of charge to the persons liable to pay the sum. The said procedure is envisaged by Section 80.
19. Section 80(2) further provides that if the bill issued in terms of Section 80(1) is not met within ten days i.e., by either showing cause with respect to the demand or making the payment, the Committee was to serve a notice of demand on the person liable to pay It is only after the expiry of the period of notice of demand i. e., seven days from the dale of service of notice of demand for payment of the sum due or to show sufficient case for its non payment, it is only then that the sum due with respect to which demand notice has been issued and served, would be taken to be an arrear of tax. It is on account of these deeming provisions that non-payment of the sum due towards arrears of property tax shall become the arrears of tax. Further it is such an arrear which would be a charge on the immovable property as envisaged by Section 80(3). Before a property can be charged with respect to a sum payable, it is mandatory that the Commute was required to issue or cause a bill for the amount due to the owner. If the bill was not paid within ten days from its delivery, the Municipal Committee was required to issue or serve a notice of demand on the person liable to pay the tame, The payee had to satisfy within seven days from the receipt of the demand notice that either the tax is not payable or may show sufficient cause for its non-payment, it is only on the finding that tax is payable or there is no sufficient cause for its nonpayment, it becomes an arrear of tax and creates a charge on the property for an amount represented in the demand notice subject to the dues of the Government The Municipal Committee would be at liberty to recover the amount due from the property charged. Its recovery can be made only with respect to the specified taxes, i.e., if the tax is in respect of the property charged. These provisions are specific provisions for recovery of a house tax or other taxes imposed on the property.
20. The statute provides a machinery for recovery of other taxes by enacting Section 81 of the Punjab Municipal Act, 1911. The Municipal Committee has been authorised by Section 81 that any arrears of any tax, water-rate fee (rent) or any other money claimable by the Committee under the Municipal Act may recover through the agencies of the Magistrates having the jurisdiction within the limits of Municipal Committee or through the Magistrate within whose jurisdiction a parson lives from whom the money is due and recoverable. The Magistrate can recover the amount under distress sale of any immovable property belonging to the person within his jurisdiction. The Legislature in its wisdom did not think it advisable to create a charge over the assets or the properties, movable or immovable, of the delinquent for the recovery of taxes otherwise than the specific tax in respect of the property, it is undisputed that in case there is no charge on the property, the recovery would be governed by Article 113 which provides a limitation of three years for the recovery of the amount due from the date the right to sue accrues.
21. In our considered view as well as from the law laid down in the precedents cited above, with which we fully agree that limitation in case of recovery of a tax other than the tax in respect of any property of the owners, will be three years as provided by Article 113 of the Limitation Act. It was not refuted that there is no specific provision under the Limitation Act providing a limitation for recovery of the taxes. It was not disputed in the course of arguments and otherwise also as it cannon be disputed that in the absence of any specific provision under the Limitation Act or the statute, it would be Part X of the Schedule to the Limitation Act which provides limitation for the suits for which there is no prescribed period to govern the limitation. Undisputably, the limitation governing the arrears of tax other than the tax in the property would be governed by Article 113 of the Limitation Act, 1963, wherein a limitation of three years is provided for a suit to recover the amount of tax from the date the right to sue accrues. There is no gainsaying that right to sue with respect to tax accrued on the date the tax was imposed in terms of Sections 80 and 81 of the Municipal Act. It is undisputed that in case the Municipal Committee decides to make the recovery under Sections 80 and 81, the period of limitation would be three years. The period of limitation only gets enlarged when the arrears of tax with respect to the property on account of their non-payment become a charge on the property. It is in the latter case only that it would be governed by Article 62 of the Limitation Act which provides limitation of twelve years for the recovery of the amount due which is a charge on the property. Our view finds support from a Full Bench decision of the Delhi High Court reported in Municipal Corporation of Delhi v M/s Palace Cinema, I. L. R. (1972) 1 Delhi 163. We fully agree with the reasoning adopted therein and nothing more can be added.
22. There is no controversy that the appellant issued a notice under Sections 80 and 81 of the Punjab Municipal Act, 1911, with respect to the tax due for a period beyond three years. The recovery notice of arrears beyond three years without any charge having been created in accordance with methodology provided by Municipal Act would be barred by time.
23. Thus, in our considered view the answer to the question is that the period of limitation for issuance of bill for the amount as well as the demand notice would be three years and it is only after the respondents have failed to meet the demand that the arrears would become the arrears of tax on the property and would be a charge on the property. When the arrears become a charge on the property, the limitation gets enlarged and the recovery could be made within twelve years. Similarly for recovering any taxes which may include even the house tax from movable property would be three years from the time it fell due as the limitation would be governed by Article 113 of the Limitation Act.
24. For the reasons recorded above and the answer to the question given, we find no force in the appeal. The same is dismissed, with no order as to costs.