The petitioner in the affidavit filed in support of this petition averred that ever since the inception of the company, the company had been incurring losses and thereby becoming a sick industry and it was also due to free availability of cheap containers from China. Since the petitioner company become sick, proceedings were initiated under Sick Industrial Companies (Special Provisions) Act, 1985 (in short 'SICA'). The BIFR has passed an order dated 28.07.1998 wherein it has been ordered among other things that the first respondent-local body was directed to consider levying reasonable demand of property tax similar to the demands raised by them in respect of other industrial units in the same area and not to take any coercive action for recovery of their dues pending crystallization of the dues as per rehabilitation. The BIFR further directed the first respondent to reconsider their demand in respect of the petitioner company with reference to the demands raised by them in respect of other industrial units viz., Hindustan Motors etc. in their jurisdiction and take a rational view in respect of the demand from the company and the first respondent was also directed not to take any coercive action without prior permission of the BIFR.
2.The first respondent has initiated coercive action including by way of attachment for recovery of property tax arrears for the period from 1996-1997 to 1999-2000 against the petitioner company. Therefore, the petitioner company filed a writ petition in W.P.No.12648 of 1997 praying for issuance of a writ of mandamus forbearing the respondents1 and 2 herein from taking any coercive proceedings for recovery of the property tax in respect of the petitioner's factory for the period from 1996-1997 to 1999-2000 or by way of any attachment etc. Pending disposal of the suit, an application for ad-interim injunction restraining the respondents therein from initiating coercive proceedings was taken up wherein, a conditional order was passed and challenging the vires of the same, the petitioner company preferred W.A.No.2051 of 1999.
3.When the writ appeal came up for hearing, a Division Bench of this Court has taken up the main writ petition itself for disposal along with the writ appeal.
4.The Division Bench, in the order dated 05.09.2007 made in W.A.No.2051 of 1999 and W.A.M.P.No.167 of 2007, W.P.No.12648 of 1997 and W.M.P.No.18123 of 1999, has held that under
Section 22 of the SICA, all legal proceedings, contracts, etc. stand suspended if an enquiry under
Section 16 is pending or any scheme referred to under
Section 17 is under preparation or consideration or a sanctioned scheme is under implementation before the BIFR. The Division Bench also found that BIFR has already passed an order dated 20.06.2007 and as such no further order is required in the further proceedings. The Division Bench ultimately recalled the conditional order dated 28.07.1999 passed in W.M.P.No.18123 of 1999 in W.P.No.12648 of 1999 and disposed of the writ appeal by quashing the coercive proceedings pertaining to the period from 1996-1997 to 1999-2000 and granted liberty to the first respondent-local body to proceed in accordance with law in respect of demand for the subsequent period.
5.The petitioner, thereafter, submitted a representation dated 05.10.2007 to the District Collector of Thiruvallur District with copy marked to respondents 1 and 2 praying for reduction of property tax in terms of the above said orders passed by this Court and BIFR and further requested them to re-fix the property tax in line with the property tax being charged from Hindustan Motors or other industries in the vicinity of their plant.
6.Thereafter, a meeting was held on 06.11.2007 between the officials of the petitioner's company and the President of the first respondent and the representative of the Government. In the said meeting, no decision was reached. Thereafter, the first respondent has initiated distinct proceedings for issuing demand notice dated 30.11.2007 demanding the tax o Rs.69,07,625/-. Challenging the vires of the same, the present petition is filed.
7.Heard the submissions made by Mr.Sanjai Mohan, learned counsel for the petitioner, Mr.I.Paranthaman, learned counsel for the respondents 1 and 3 and Mr.R.Neelakandan, learned Government Advocate for the second respondent.
8.A perusal of the impugned order would reveal that the first respondent has failed to properly apply his mind to the proceedings of the BIFR dated 20.06.2007 and the order dated 05.09.2007 passed by the Division Bench of this Court in W.A.No.2051 of 1999 and W.P.No.12648 of 1997. The BIFR, in the above said order, has specifically directed the first respondent-local body to reconsider their demand of property tax in respect of the petitioner company with reference to the demands raised by them in respect of other industrial units viz., Hindustan Motors etc. in their jurisdiction and take a rational view and pending consideration of the same, the local body was also directed not to take any coercive action without prior permission of the BIFR. The Division Bench of this Court in the above said orders has also quashed the distraint proceedings pertaining to the demand of property tax for the period from 1996-1997 to 1999-2000. However, the first respondent-local body has not properly taken into consideration the levy of property tax pertaining to the Hindustan Motors and other industrial units within the jurisdiction of the petitioner's company and raised a demand of Rs.69,07,625/- by way of property tax. A perusal of the impugned order also reveals that the first respondent-local body has not followed the procedure contemplated under Section 172 of the Tamil Nadu Panchayats Act, 1994. Since the local body has failed to advert to the directions of the BIFR as well as the direction of this Court, the impugned order suffers non-application of mind on the part of the local body and consequently, it is liable to be quashed.
9.Hence, the writ petition is allowed and the impugned order passed by the first respondent is quashed. No costs. Consequently, connected miscellaneous petition is closed.
10.It is represented by the learned counsel for the petitioner that in pursuance to the interim orders passed in the above said writ appeal a sum of Rs.15 lakhs was already deposited to the local body and also the Bank Guarantee for a sum of Rs.54 lakhs was also given. In view of quashing of the impugned proceedings, Therefore, the Bank Guarantee of Rs.54 lakhs is to be released in favour of the petitioner company.
11.Per contra, the learned counsel appearing for the first and third respondent as well as the learned Government Advocate appearing for the second respondent would represent that pending adjudication of the proceedings for levy of property tax, a sum of Rs.54 lakhs given to the local body by way of bank guarantee may be kept alive by the petitioner company.
12.The Court is taken into consideration the said submissions and is of the view that the sum of Rs.15 lakhs deposited by the petitioner company by virtue of the interim orders passed by this Court in favour of the first respondent-local body is to be with them and in so far as the Bank Guarantee of Rs.54 lakhs is concerned, a sum of Rs.15 lakhs is to be given as a Bank Guarantee in favour of the first respondent and the balance amount may be withdrawn by the petitioner company.
13.In view of the quashing of the impugned order, the first respondent-local body is to hold enquiry afresh pertaining to the demand of property tax from the petitioner company from 1996-1997 to 2007-2008 in terms of the orders passed by the BIFR on 20.06.2007 and also in accordance with law, after affording reasonable opportunity to the petitioner.
sgl To
1.Pollivakkam Panchayat, rep. By its President, Pollivakkam Village, Thiruvallur District.
2.The Assistant Director (Panchayat) Office of the Collectorate, Thiruvallur District.
3.The Panchayat Assistant Grade-I, Pollivakkam Panchayat, Thiruvallur District