JUDGMENT
Bhaskar Bhattacharya, J.
1. By this writ application, the petitioners owners of a building have prayed for direction upon the Kolkata Municipal Corporation (“Corporation”) to pay the excess amount deposited by them in compliance with the provisions contained in Section 189(6) of the Kolkata Municipal Corporation Act (“Act”) with interest at the rate of 12% per annum consequent to the decision of the Appellate Tribunal reducing the valuation assessed by the Hearing Officer.
2. Being dissatisfied with the decision of the Hearing Officer fixing annual valuation of the premises at Rs. 18,580/- the petitioners preferred an appeal being M.A. No. 1990 of 1998 before the Municipal Assessment Tribunal and deposited a sum of Rs. 53,186/- in terms of Section 189(6) of the Act. Ultimately, the Tribunal allowed the appeal in part and after setting aside the order of Hearing Officer fixed the annual valuation at Rs. 11,000/- with effect from 3rd quarter, 1994-95. The petitioners wrote letter to the Corporation demanding refund of the excess amount with interest at the rate of 12% per annum after adjusting the tax payable by them in accordance with the appellate order but the Corporation having paid no heed to such demand, the petitioners have come up with the present application.
3. Mr. Das, the learned counsel appearing on behalf of the petitioners has placed strong reliance upon the decision of D.P. Kundu, J in the case of Larsen and Toubro Limited and Ors. v. Calcutta Municipal Corporation and Others reported in 1999 WBLR (Cal) 527 and has contended that under similar circumstances His Lordship directed the Corporation to pay interest at the rate of 12% per annum upon the excess amount although in the said case Corporation refunded the excess amount. Mr. Das further submits that the said decision of Kundu, J has been affirmed by a Division Bench of this Court in APOT No. 276 of 2000 in an appeal preferred by Corporation against the said decision.
4. Mr. Mukherjee, the learned counsel appearing on behalf of the Corporation has resisted this application by contending that a writ application is not maintainable for realization of interest on the excess amount lying with the Corporation. Mr. Mukherjee further submits that the Act does not authorize the Corporation to pay any interest on the excess amount kept with the Corporation following the decision of the Tribunal reducing the valuation. Mr. Mukerjee further points out that Section 197 of the Act enables the Corporation either to refund the excess amount or to adjust the said amount towards present or even future demand of Corporation. Thus, Mr. Mukherjee continues, the petitioner having no right to even claim refund, no question of payment of interest arises. Mr. Mukherjee in this connection relies upon the following decisions of the Apex Court in support of his above contentions :-
a) Union of India v. Kirloskar Pnehatic Company 1996(84) ELT 401 (SC)
b) Kirloskar Brothers Ltd. v. Union of India 2001(132) ELT 14 (SC)
c) Indian Carbon Ltd. v. State of Assam 106 Sales Tax Cases 460(SC)
d) Union of India and Anr. v. Orient Enterprises and Others
e) Ferro Alloy Corporation Ltd. v. A.P. State Electricity Board
f) Chingleput Bottlers v. Majestic Bottling Company .
5. As regards the decision of Kundu, J in the ease of Larsen and Toubro (supra) and the decision of the Division Bench in appeal against such decision, Mr. Mukherjee submits that in those two decisions, this Court failed to take note of the aforesaid Supreme Court decisions and as such the decisions in the case of Larsen and Toubro cannot be cited as a precedent.
6. Before entering into the questions involved herein, it will be appreciated to refer to the scope of an application under Article 226 of the Constitution of India as laid down in various decisions by the Supreme Court. The power conferred by Article 226 of the Constitution of India is designed to effectuate the law, to enforce the Rule of law and to ensure that the various authorities and organs of State act in accordance with law. The applicant in order to maintain a writ application must satisfy the Court that there has been infringement of his fundamental or existing legal right by the act or omission on the part of State. Such legal right may be a statutory one or other right or interest recognized by law.
7. Therefore, in the case before us, in order to get the reliefs claimed, the petitioners must establish that law casts a duty upon the Corporation to refund the excess amount with interest, the moment their appeal before Tribunal has succeeded resulting in reduction of annual valuation.
8. Section 197(2)(a) of the Act deals with such a situation and the same is quoted below :-
“197(2)–if, after the objection has been determined under Section 188, the previous valuation is altered, or after the appeal has been disposed of under Section 189, the valuation decided under Section 188 is altered, then –
a) any sum paid or deposited under Section 189 in excess shall be refunded or allowed to be set-off against any present or future demand of the Corporation under this Act and
b) any deficiency shall be deemed to be an arrears of the property tax and shall be payable and recoverable as such.”
9. Thus, the aforesaid provisions of the Act direct the Corporation either to refund the excess amount or to allow the same to be set-off against any present or future demand of the Corporation under this Act. It is therefore for the Corporation to decide whether it will refund the excess amount or will claim set-off against any future or present demand. The Act has not conferred any right upon the person liable to pay tax to insist on refund and not to allow the excess to be set-off against present or future demand. The Act has not even restricted any time limit within which the right of set-off against the future demand must be exercised. Therefore, only right, a tax payer is bestowed under the said section is that, he has the right to refuse any demand towards tax present or future so long the excess amount is not adjusted and the Corporation has no right to realize further tax if the excess is not refunded and/or adjusted.
10. Even if the Corporation decides to refund the excess amount, the Act has not authorized it to pay any interest. The Corporation being a creature of statute has no right to pay any interest unless the Act permits and the rate of interest is specified. Therefore, a tax payer has no existing legal right to refund of excess with interest. However, if the Corporation does not pay back the excess and at the same time demands the current or future tax, the assessee has the right to claim set-off as the Act has recognized such right of the tax payer.
11. In this connection Mr. Mukherjee rightly relied upon the decision of the Supreme Court in the case of Union of India and Ors. v. Orient Enterprises and Ors. . In the said case a writ petitioner claimed interest on delayed refund of custom duty for a period prior to introduction of Section 27A of the Customs Act, 1962. In such a fact, the Apex Court pointed out that till the insertion of Section 27A in the said Act by Act 22 of 1995 there was no right entitling payment of interest on delayed refund under the Customs Act and such right was conferred for the first time by the said provision. Thus, the Supreme Court proceeded, at the relevant time there was no statutory right enabling the writ petitioner to get interest on delayed refund and therefore the writ application was filed not for enforcement of a legal right available to them under any statute. The Supreme Court further held that claim for interest was in the nature of compensation for wrongful retention by the Government of money collected from the writ petitioner and in view of the decision of the Five Judges Bench of Supreme Court in case of Suganmall , a writ petition seeking the relief of payment of interest on delayed refund of amount so collected was not maintainable. The Supreme Court in the said case however made it clear that if imposition of tax itself is illegal, in such a case, the writ Court while setting aside such illegal order can direct refund of tax illegally collected and at the same time can also direct payment of interest as a consequential measures. In the case before us. I have already held that the petitioners have no legal right to compel refund of excess and thus the petitioners are not entitled to get the relief of refund of excess or payment of interest.
12. Mr. Das however tried to impress upon this Court that although the Act does not recognize the right to get interest on excess amount but Interest Act, 1978 upholds such right and for that purpose relied upon the decision of Kundu, J in the case of Larsen and Toubro Limited (supra) and of the Division Bench, approving the said decision.
13. Before I proceed to consider those decisions, I propose to narrate the facts of the case of Larsen and Toubro (supra) leading to the filing of the writ application before Kundu, J.
14. Being successful in an appeal preferred under Section 189
of the Act, the company/writ petitioner demanded refund of excess amount of Rs. 47,31,735.75 paise paid in terms of Section 189(6) of the Act during the pendency of the appeal. The Corporation having failed to return any amount, the Company preferred a writ application before Chatterjee, J which was
disposed of by His Lordship by directing the Assessor-Collector of the Corporation to consider the prayer for refund as made by the writ petitioner within two months from the date of communication of that order by a reasoned order after giving an opportunity of hearing to the company. His Lordship further ordered that in the event the Assessor-Collector of Corporation found that the company was entitled to refund of any amount, such amount should be refunded to the company within a month of passing of such order by the Assessor-Collector.
15. Alleging non-compliance of the said order, the company filed a contempt application when His Lordship gave a further opportunity to the Assessor-Collector to comply with the previous order within three weeks. The Corporation ultimately refunded a sum of Rs. 47,14,776 by a cheque dated January 15, 1998. On March 27, 1998 Chatterjee, J. recorded the payment of principal amount and inter alia passed the following order :-
“Having heard Mr. Gooptoo appearing of Larsen and Toubro Limited and another and Mr. Vihani appearing for Calcutta Municipal Corporation and after going through the materials on record I dispose of this application for contempt by directing the Assessor-Collector of Calcutta Municipal Corporation to consider the prayer of Larsen and Toubro Limited and another for payment of interest as prayed for in the application for refund being annexure “F” to the writ application after giving hearing to the Larsen and Toubro Limited and another and after giving hearing to other interested parties, if there be any, and after passing a reasoned order in accordance with law within four weeks from the date of this order positively. In the event the direction made in this order is not carried out by the Assessor-Collector of Calcutta Municipal Corporation, it will be open to Larsen and Toubro Limited and another to mention the matter for further order.”
16. The Assessor-Collector however by a letter dated June 15, 1998 intimated the reasoned order as per aforesaid order passed by Chatterjee, J. pronouncing that as the law does not sanction payment of interest on refundable sum, Calcutta Municipal Corporation cannot pay any interest on such amount.
17. The said decision of the Assessor-Collector was challenged before Kundu, J. by filing a fresh writ application.
18. Therefore, His Lordship was considering a writ application filed by the company, who after obtaining the principal excess amount from Corporation as per order of Chatterjee. J. was dissatisfied with the decision of the Corporation as regards payment of interest. Kundu, J. allowed such writ application on the ground that although Section 197 of the Act is silent about payment of interest, Section 599 of the Act imposes a duty upon the Corporation not to disregard any law for the time being in force and that Section 4(2)(a) of the Interest Act, 1978 was applicable to the facts of the said case. Kundu, J further held that no special provision is required to be made in the Act for payment of interest on refundable excess amount because of the Interest Act, 1978.
19. On appeal by Corporation, the Division Bench approved the order of Kundu, J. Before appellate Court although it was argued on behalf of Corporation that it had a discretion either to refund the amount or to claim set-off against present or future demand, the Division Bench did not enter into that question on the ground that the Corporation in that case did not exercise the right to claim set-off but refunded the excess amount.
20. With great respect to Kundu, J. and the Division Bench [S.B. Sinha, (as His Lordship then was) and M.H.S. Ansari. JJ.] I am unable to accept the decisions in the case of Larsen and Toubro Limited (supra) as a precedent in this case for the following reasons :-
a) In the said case, writ application having been filed claiming interest only after the Corporation refunded the excess money, the Court had no occasion to consider the defense of the Corporation in this case that in a given case, the Corporation can refuse to refund excess money and claim set-off; whereas in the present case, the petitioners have prayed for refund of excess money after adjustment and interest thereon. Therefore, if the Corporation succeeds in establishing that it is within its competence not to refund, no question of payment of interest arises.
b) In the said case, although the writ application was filed claiming only interest after the principal excess amount was paid pursuant to direction of Chatterjee, J. in an earlier writ application, attention of the Courts was not drawn to the decisions of the Supreme Court in the cases of Union of India and Ors. v. Orient Enterprises and Anr. and Suganmall v. State of M.P. holding that a writ application seeking relief of interest on delayed refund was not maintainable and as such the said writ application was not maintainable. Even in a subsequent decision in the case of Kirloskar Brothers Limited v. Union of India (2001 (132) ELT 14 (SC) the Supreme Court has followed the same principle by passing the following order :-
“We agree with the High Court that the filing of a writ petition seeking relief of payment of interest on delayed refund of the amount paid by the petitioner (assessee) towards custom duty is not an appropriate remedy.”
Therefore any law laid down in a writ application which is not even maintainable cannot be cited as a precedent.
c) The Interest Act, 1978 merely enables a Court to allow interest under certain circumstances provided in the said Act in any proceedings for recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made. But if a writ application itself is not maintainable for recovery of interest in respect of a debt or damages already paid as held by Supreme Court, a writ Court cannot exercise such discretion by taking aid of the power conferred by the Interest Act.
d) In the case of Larsen and Toubro Limited the proceedings were for recovery of interest in respect of a debt already paid pursuant to the order passed by Chatterjee, J in an earlier writ application. Therefore, the proceeding before Kundu, J was one for recovery of interest on a ‘judgment-debt’ already paid. The word ‘debt’ defined in Section 2C of the Interest Act means “liability for an ascertained sum of money and includes a debt payable in kind but does not include a Judgment-debt.”
(Emphasis given)
21. Thus, the Interest Act was not applicable to a proceeding for recovery of interest on an amount already paid if such amount is not a ‘debt’ within the meaning of the said Act. Suffice it to say, the amount already paid was not ‘damages’.
22. In view of the aforesaid reasons I am of the view that the Corporation not having infringed any of the existing legal rights of the petitioners, they are not entitled to maintain this application for recovery of excess amount and as such no question of payment of interest arises. However, the petitioners by supplementary affidavit have drawn attention of this Court to the fact that Corporation has not only refused to refund the excess amount but also demanded tax for future period at the enhanced rate even after the appeal before Tribunal has been allowed. Mr. Mukherjee appearing for Corporation conceded that through mistake such demand has been made.
23. I therefore dispose of this writ application by restraining the Corporation from demanding any present or future tax from the petitioner before adjusting those dues from the excess amount paid by petitioners. The Corporation is however free to refund the excess amount after adjusting the upto date dues. If any demand is already made by Corporation before adjusting the dues from excess, those demands should be ignored.
No costs.