Pralok Agencies Vs Pimpri Chinchwad Municipal Corpn. and Ors.

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 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 CIVIL APPELLATE JURISDICTION

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 Writ Petition No. 4711 of 2004

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 M/s Pralok Agencies ..Petitioner

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vs.

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 1. Pimpri Chinchwad
 Municipal Corporation &
 others ..Respondents

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 Shri Shrihari Aney with Shri Bharat Joshi with Shri
 S.R.Ganbavale for petitioner.
 Shri Jai Chinoy with Shri Deepak More i/b Shri
 A.J.Suryavanshi for respondents.

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CORAM: A.P.SHAH AND
S.C.DHARMADHIKARI JJ
3rd NOVEMBER, 2004

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P.C.

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 1. Heard Advocates.

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 2. By this petition, the petitioners seek to

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 challenge the constitutional validity of clause (e)
 of Sub-section (2) of section 406 of the Bombay
 Provincial Municipal Corporation Acts, 1949 on the
 ground that it is violative of Articles 14 and
 19(1)(g) of the Constitution. The petitioners are
 also seeking to quash the notices of demand of
 octroi dated 7th December, 2003 and 23rd December,
 2003 issued by the Primpri Chinchwad Municipal
 Corporation. Briefly the facts are that the
 petitioners are carrying business of forwarding

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 agent and were holding Bonded Warehousing
 (Transport) Licence No.128 dated 16th January,
 1991. The petitioners as a forwarding agent used
 to bring the goods belonging to their principal
 within the jurisdiction of the Corporation and used
 to store the goods in their warehouses till they
 receive instructions to further forward/despatch
 the goods as per the requirement of the principal.
 The licence issued to the petitioner was governed
 by Pimpri Chinchwad Municipal Corporation (Octroi)
 Rules, 2001, hereinafter for brevity’s sake
 referred to as lthe "Octroi Rules" and Pimpri
 Chinchwad Municipal Corporation Octroi Standing
 Orders. Under the Rules it was obligatory for the
 petitioners to submit monthly statements to the
 Corporation giving factual position of import and
 export of the goods within the jurisdiction of
 respondent no.1. On 5th November, 2003 a raid was
 conducted on the petitioners’ warehouses and it was
 found that there was large scale evasion of octroi
 duty. As a result the licence of the petitioners
 came to be suspended and the petitioners were
 called upon to pay the octroi duty to the extent of
 Rs.5,99,136/- The petitioners have filed a civil
 suit challenging suspension of the licence as well
 as demand notices issued by the Corporation. The
 petitioners, however, failed to get any interim

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 reliefs.

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 3. The petitioners have also preferred an appeal
 against the demand notices under sec.406 of the
 Bombay Provincial Municipal Corporation Act, 1949.
 Section 406(2)(e) provides that no such appeal
 shall be entertained in the case of an appeal
 against a tax or in the case of an appeal made
 against a rateable value the amount of the disputed
 tax claimed from the appellant or the amount of tax
 chargeable on the basis of the disputed rateable
 value, upto the date of filing the appeal has been
 deposited by the appellant with the Commissioner.
 The validity of the said provision is sought to be
 challenged on the ground that the condition imposed
 on the tax payer to deposit the entire amount makes
 the remedy of appeal completely illusory and is
 thus violative of Article 14. A distinction is
 also sought to be made between an appeal against
 the order fixing rateable value and appeal against
 the demand of octroi duty. It is contended that no
 adjudication takes place before the demand of
 octroi is issued. Therefore, so far as appeal
 against octroi duty is concerned, the remedy of an
 appeal is really in the nature of original
 proceedings and, therefore, the provision of

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 predeposit should not be made applicable to an
 appeal against the levy of octroi. In this behalf
 reliance is placed on the decision of the Supreme
 Court in Mardia Chemicals Ltd. Vs. Union of
 India; (2004) 4 SCC 311.

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 4. In our opinion, the petition is devoid of any
 substance. It is now well settled by a series of
 judgments of the Supreme Court that the provision
 of appeal will not be rendered unconstitutional
 merely because it provides for the deposit as a
 condition precedent for entertaining the appeal.
 In Anant Mills Co.Ltd. Vs. State of Gujarat
 (1975) 2 SCC 175, Supreme Court had an occasion to
 consider vires of Section 406(2)(e) of the Bombay
 Provincial Municipal Corporation Act, as amended by
 Gujarat Act 8 of 1968 to the entertainment of the
 appeal by a person who had not deposited the amount
 of tax due from him and who had not been able to
 show to the appellate Judge that the deposit of the
 amount would cause him undue hardship arising out
 of his own omission and default. The High Court
 had taken a view that there was a discrimination
 between an appellant who deposited the tax and an
 appellant who did not, which is the necessary
 consequence of the condition requiring deposit of
 the amount of tax, which was unreasonable and hit

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 by Article 14 of the Constitution. Khanna J.
 speaking for the Court observed as under:

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 "The bar created by Section 406(2)(e) to the
 entertainment of the appeal by a person who
 has not deposited the amount of tax due from
 him and who is not able to show to the
 appellate Judge that the deposit of the
 amount would cause him undue hardship arises
 out of his own omission and default. The
 above provision, in our opinion, has not the
 effect of making invidious distinction or
 creating two classes with the object of
 meting out differential treatment to them it
 only spells out the consequences flowing
 from the omission and default of a person
 who despite the fact that the deposit of the
 amount found due from him would cause him no
 hardship, declines of his own volition to
 deposit that amount. The right of appeal is
 the creature of a statute. Without a
 statutory provision creating such a right
 the person aggrieved is not entitled to file
 an appeal. We fail to understand as to why
 the Legislature while granting the right of
 appeal cannot impose conditions for the
 exercise of such right. In the absence of

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 any special reasons there appears to be no

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 legal or constitutional impediment to the
 imposition of such conditions. It is
 permissible, for example, to prescribe a
 condition in criminal cases that unless a
 convicted person is released on bail, he
 must surrender to custody before his
 a;appeal against the sentence of
 imprisonment would be entertained.
 Likewise, it is permissible ton enact a law
 that no appeal shall lie against an order
 relating to an assessment of tax unless the
 tax had been paid. Such a provision was on
 the statute book in Section 30 of the Indian

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 Income Tax Act, 1922. The proviso to that
 section provided that "....no appeal shall
 lie against an order under sub-section (1)
 of Section 46 unless the tax had been paid."

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 Such conditions merely regulate the exercise
 of the right of appeal so that the same is
 not abused by a recalcitrant party and there
 is no difficulty inn the enforcement of the
 order appealed against in case the appeal is
 ultimately dismissed. It is open to the
 Legislature to impose an accompanying
 liability upon a party upon whom a legal
 right is conferred or to prescribe

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 conditions for the exercise of the right.
 Any requirement for the discharge of that
 liability or the fulfilment of that
 condition in case the party concerned seeks
 to avail of the said right is a valid piece
 of legislation, and we can discern no
contravention of Article 14 in it. A
disability or disadvantage arising out of a
party’s own default or omission cannot be
taken to be tantamount to the creation of
two classes offensive to Article 14 of the
Constitution, especially when that
disability or disadvantage operates upon all
persons who make the default or omission".

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 (Emphasis supplied)

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 5. In Vijay Prakash D.Mehta/Shri Jawahar D.Mehta
 Vs. Collector of Customs (Preventive),
 Bombay,(1988) 4 SCC 402, the Supreme Court rejected
 the plea that the provisions laying down the
 condition of deposit of duty or penalty pending the
 appeal is ultra vires. The Court observed:

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 "Right to appeal is neither an absolute nor

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 an ingredient of natural justice the
 principles of which must be followed in all

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 judicial and quasi judicial adjudications.
 The right to appeal is a statutory right and
 it can be circumscribed by the conditions in
 the grant."

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 6. Similar is the view taken by the Supreme Court
 in Shyam Kishore and others Vs. Municipal
 Corporation of Delhi and another; (1993) 1 SCC 22
 the provisions of sec.170(b) of the Delhi Municipal
 Corporation Act requiring pre deposit of the amount
 of tax was held to be intra vires. In a recent
 decision in Gujarat Agro Industries Co.Ltd. Vs.
 Municipal Corporation of the city of Ahmedabad and
 others; (1999)4 SCC 468, it was held that pre
 condition of section 406(2)(e) (Gujarat Amendment)
 for depositing the amount of disputed tax or tax
 chargeable on the basis of the disputed rateable
 value is not constitutionally invalid. The Court
 observed that right of appeal is the creature of a
 statute and it is for the legislature to decide
 whether the right of appeal should be
 unconditionally given to an aggrieved party or it
 should be conditionally given. Right of appeal
 which is a statutory right can be conditional or
 qualified. It cannot be said that such a law would
 be violative of Article 14 of the Constitution. If
 the statute, does not create any right of appeal,

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 no appeal can be filed. There is a clear
 distinction between a suit and an appeal. While
 every person has an inherent right to bring a suit
 of a civil nature unless the suit is barred by
 statute, however, in regard to an appeal, the
 position is quite opposite. The right to appeal
 inheres in no one and, therefore, for
 maintainability of an appeal there must be
 authority of law. When such a law authorises
 filing of appeal, it can impose conditions as well.

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 7. We may also mention that Bharucha J. (as His
 Lorldship then was) in Elora Construction Company
 Vs. Municipal Corporationof Greater Bombay;
 A.I.R.1980 Bom.162 while dealing with the validity
 of sec.217 which is para materia with the
 provisions of section 406 held the provisions to be
 intra vires. We have, therefore, no hesitation in
 rejeting the challenge to constitutional validity
 of section 406(2)(e).

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 8. We are also not impressed by the submission
 that condition of predeposit cannot apply to
 appeals relating levy of octroi as such appeals
 are in the nature of original procededings. The
 submission is based on the decision in Mardia
 Chemicals Ltd. Vs. Union of India. In that case

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 the Supreme Court was considering the issue as to
 whether the remedy available under sec.17 of
 Securitisation Act is illusory for the reason that
 it is available only after action is taken under
 sec.13(4) and the appeal provided for under sec.17
 is entertainable only on deposit of 75% of the
 amount under the notice of demand. The Court held
 that the provisions of requirement of deposit of
 75% of the amount at the initial proceedings itself
 sounds unreasonable and oppressive, more
 particularly when the secured assets/the management
 thereof along with the right to transfer such
 interest has been taken over by the secured
 creditor or in some cases property is also sold.
 Requirement of deposit of such a heavy amount on
 the basis of a one sided claim alone cannot be said
 to be a reasonable condition at the first instance
 itself before start of adjudication of the dispute.
 Placed in a situation where it may not be possible
 for the borrower to raise any amount to make the
 deposit, his secured assets having already been
 taken possession of or sold, such a rider to
 approach the Tribunal at the first instance of
 proceedings, captioned as appeal, renders the
 remedy illusory and nugatory. The condition of
 predeposit is held to be bad rendering the remedy
 illusory on the grounds that (i) it is imposed

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 while approaching the adjudicating authority of the
 first instance, not in appeal, (ii) there is no
 determination of the amount due as yet, (iii) the
 secured assets or their management with
 transferable interest is already taken over and
 under control of the secured creditor, (iv) no
 special reason for double security in respect of an
 amount yet to be determined and settled, (v) 75% of
 the amount claimed by no means would be a meagre
 amount, and (vi) it will leave the borrower in a
 position where it would not be possible for him to
 raise any funds to make deposit of 75% of the
 undermined demand. Such conditions are not only
 onerous and oppressive but also unreasonable and
 arbitrary.

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 9. We fail to appreciate how the ratio in Mardia’s
 case can be made applicable to the appeal under
 sec.406 of the Bombay Provincial Municipal
 Corporation Act. The provisions of the Act read
 with octroi rules provide a complete scheme for
 levy, assessment and enforcement of Octroi. It,
 therefore, cannot be said that there is no prior
 adjudication and the appeal against levy of octroi
 is in the nature of original proceedings. In the
 aforesaid circumstances, no interference is
 warranted in exercise of jurisdiction under Article

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 226 of the Constitution. Petition is, therefore,

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 dismissed.

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 10. Learned Counsel for the petitioner seeks stay

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 of the recovery. Prayer for stay is rejected.

Pralok Agencies v. Pimpri Chinchwad Municipal Corpn. and Ors.

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Pralok Agencies v. Pimpri Chinchwad Municipal Corpn. and Ors.

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