Holding

The provision allowing the judge to dispense with up to 25% of the tax deposit is constitutionally valid and does not violate Article 14.

Summary

The Gujarat Agro Industries Co. Ltd. owned properties in Ahmedabad and were served with property tax demand notices. It appealed the assessments under Section 406(1) of the Bombay Provincial Municipal Corporations Act, 1949, which requires the appellant to deposit the disputed tax before the appeal is heard. Section 406(2)(e) permits the judge, at his discretion, to waive up to 25% of the required deposit if it would cause undue hardship. The company challenged this proviso as violative of Article 14 of the Constitution. The Gujarat High Court upheld the provision, and the Supreme Court affirmed that the right to appeal is a statutory creation that may be conditioned, and that the 25% limit does not constitute an unreasonable classification. Consequently, the Supreme Court dismissed the appeal with costs.

Issues considered

The constitutionality of the proviso to Section 406(2)(e) of the Bombay Provincial Municipal Corporations Act, 1949 limiting exemption to 25% of the tax deposit, in view of Article 14.
Whether a statutory right of appeal can be made conditional upon the deposit of disputed tax.
Whether the condition imposed on the right of appeal violates the principle of equality.

Legislation cited

Bombay Provincial Municipal Corporations Act, 1949s. 406, s. 408
Income Tax Act, 1922s. 30

Subjects

property taxright of appealstatutory conditionArticle 14deposit requirementmunicipal corporationconstitutional validityexemption limitarbitration

Judgment

- THE GUJARAT AGRO INDUSTRIES CO. LTD.
v.
A
THE MUNICIPAL CORPORATION OF
THE CITY OF AJ-IMEDABAD AND ORS. ETC. ETC.

APRIL 26, 1999
B
[D.P. WADHWA AND N. SANTOSH HEGDE, JJ.]

Bombay ProvinCial Municipal Corporation Act, 1949-Section 406
(J!J, 2(c), (e) (Proviso), 408 (1) as applicable to Ahmedabad-Appeal against
demand of property tax-Pre-condition to deposit amount of disputed tax or C
chargeable tax on the basis of disputed rateable value-Exemption could be
granted up to 25% of the amount required to be deposited at the discretion
of the Judge-Constitutional validity challenged-Upheld by High Court-
on appeal Held, right to appeal being statutory right, it is for the legislature
to decide whether to make it subjecf to any condition or not-Provision for D
appeal under clause (e) is a kind of second appeal apart from other effective
remedie$ available-Pre-condition for making deposit and provision for
exemption not beyond25% are constitutionally valid-Constitution of Jndia-
Artic/e 14.

The appellants own certain properties regarding which demand notices E
for payment of property tax were issued. They challenged the assessments
in appeals under. Section 406 (1) of the Bombay Provincial Municipal
Corporations Act, 1949 as applicable to Ahmedabad. The Act provides that
the amount of disputed tax or chargeable tax on the basis of the disputed
rateable value shall have to be d~posited before hearing of an appeal. In view
of Section 406(2) (e) (Proviso) of the Act, a Judge cannot grant exemption F
from payment of property tax .for more than 25% of the amount demanded
during pendency ofan appeal. The constitutional validity of this clause was
cha.llenged before the High Court as being violative of Article· 14 of the
Constitution. The High Court held the clause to be constitutionally valid.
Hence these appeals. G
Dismissing the appeal, this Court

HELD : 1. Right to appeal is a 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 give11. It cannot be H
895
896 SUPREME COURT REPORTS [1999] '2 S.C.R.

A said that such a law would be violative of Article 14 of the Constitution. If~
--
the statute does not create any right of appeal, no appeal can be filed. There
is a clear distinction between a suit and an appeal. 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. Tht~
B right to appeal inheres in no one and, therefore, for maiutainability of an
appeal there must be authority of law. When such a law authorises filing of
appeal, it can impose conditions as well. (902-B-C)

Anant Mills Co. Ltd. v. State of Gujarat and Others, (1975) 2 SCC 1'46;
Smt. Ganga Bai v. Vijay Kumar & Ors., [1974) 4 SCC 393; Shyam Kishore
C & Ors, v. Municipql Corporation of Delhi & Anr., [1993) 1 SCC 22 and Vijay
Prakash D. Mehta/Shri Jawahar D. Mehta v. Collector of Customs
(Preventive) Bombay, [19S8) 4 SCC 402, relied on.

Mis Elora Construction Company v. Municipal Corporation of Greater
Bombay & Ors., AIR (1980) Born. 162 and Chhatter Singh Baid & Ors. v.
D Corporation of Calcutta & Ors., AIR (1984) Cal. 283, referred to.

2. Under Section 406 (2) (c) a complaint lies to the Municipal
Commissioner against imposition· of any property tax and only after that
when the complaint is disposed of that appeal can be filed. Appeal to the Court
E as provided in clause (e) appears to be rather a second appeal. Then under
Section 408 of the Act provisions exist for referring the matter to arbitration.
Under Section 408(1) where any person aggrieved by any order fixing or
charging any rateable value or tax under the Act desires that any matter in
difference between him and the other parties interested in such order should
be referred to arbitration, then, if all such parties agree to do so, they may
F apply to the Court for an order of reference on such matter and when such
an order is made provisions relating to arbitration in suits shall apply. That
apart, if a person cannot avail of the right of appeal under Section 406 of
the Act, other remedies are available to him under the law. (904-D-FJ

3. There is no difficulty in upholding the vires of Section 406 (2) (e)
G
(proviso) and any challenge to its constitutional validity on the ground that
onerous conditions have been imposed and right to appeal has become illusory
must be negatived. (904-C)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3012 of
H 1980 Etc.
GUJ AGRO IND. CO. LTD. v. M.C. CITY OF AHMEDABAD [D.P. WADHWA, J.] 897
. From the Judgment and Order dated 17 .9 .80 of the Gujarat High Court A
in S.C.A. No. 794 of 1980.

Anoop Chowdhary, Ms. Indoo P. Verma and Ms. Beena Madhavan and
P.H. Parekh for the Appellants.

- Mahendrea Anand, Kuldeep Parihar and H.S. Parihar for the Respondent
Nos. 1-3.
B

Adhyaru Yashank P. and Ms. Hemantika Wahi for the Respondent No.

- 4.

The Judgment of the Court was delivered by c
D.P. WADHWA, J. This batch of appeals arises out of judgment dated
October 9, 1980 passed by the Division Bench of the Gujarat High Court
holding that Section 406(2)(c) of the Bombay Provincial Municipal Corporations
Act, 1949 in its application to Ahmedabad in the State of Gujarat was a valid D
piece of legislation. Section 406 of the Act we may set out here and now :

"406.(l) Subject to the provisions hereinafter contained, appeals against
any rateable value or tax fixed or charged under this Act shall be
heard and determined by the Judge.
E
- (2) No such appeal shall be entertained unless-

(a) it is brought within fifteen days after the accrual of the cause
of complaint;
(b) in the case of an appeal against a rateable value a complaint has
previously been made to the Commissioner as provided under F
this Act and such complaint has been disposed of;
(c) in the case of an appeal against any tax in respect of which
provision exists under this Act for a complaint to be made to the
Commissioner against the demand, such complaint has previously
been made and disposed off; G
(d) in the case of an appeal against any amendment made in the
assessment book for property taxes during the official year, a
complaint has been made by the person aggrieved within fifteen
days after he first received notice of such amendment and his
complaint has been disposed .of; H
898 SUPREME COURT REPORTS [1999] 2 S.C.R.

A ( e) 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 the tax chargeable
on the basis of the disputed rateable value, up to the date of ••
filing the appeal, has been deposited by the appellant with the

B
Commissioner :

Provid~d that where in any particular case the judge is of the opinion
that the deposit of the amount by the appellant will cause undue
hardship to him, the judge may in his discretion, either unconditionally
-
or subject to such conditions as he may think fit to impose, dispense
with a part of the amount deposited so however that the part of the
c amount so dispensed with shall not exceed twenty five per cent of the
amount deposited or required to be deposited."

'Judge' is defined in Section 2(29) of the Act to mean in the City of
Ahmedabad the Chief Judge of the Court of Small Causes or such other Judge
D of the Court as the Chief Judge may appoint in his behalf and in any other
City the Civil Judge (Senior Division) having jurisdiction in the City. Section
406 suffered some amendments. In sub-section (2) for .the words 'shall be r
r
heard' were substituted by 'shall be entertained'. Proviso to clause (e) of sub-
section (2) was first added by Gujarat amendment 5 of 1970. This proviso (as

E
it now exists) was then substituted by Gujarat Amendment l of 1979. r
Appellants in all these appeals own properties in the City of Ahmedabad.
They are liable to pay property tax which is a tax on buildings and lands in
the City. Property tax is revisable every four years. When last revision took
-
place, appellants challenged those assessments in appeals which they filed
before the Judge under Section 406(1) of the Act after bills were presented
F by the Municipal Corporation to them. During the pendency of appeals before
the Judge, appellants prayed for stay of recovery of the property tax. In view
of proviso to clause (e) of Section 406(2) of the Act, the Judge could not give
effective interim relief to the appellants as exemption from payment of property
tax could not be more than 25% of the amount of the property tax demanded
G from the appellants. The appellants, therefore, challenged the constitutional
validity of clause (e) of sub-section (2) of Section 406 contending that it was
violative of Article 14 of the Constitution.

The Division Bench who heard the writ petitions considered the earlier
history of amendments to clause (e) of Section 406(2) of the· Act. Clause (e ),
H as it originally stood at the time when the Act was made applicable to the
GUJ AGROll\jD.CO.LTD.,v M.C.CITYOFAHMEDABAD(D.P. WADHWA,J.J 899

- City of Ahmedabad,. read as under : A
"No such appeal shall be heard unless-

in the case of an appeal against a tax or in the case of an appeal made
against a rateable value after a bill for any property tax assessed upon B
such value has been presented to the appellant, the claim from the
appellant has been deposited by him with the Commissioner."

,,___ A Division bench of the Gujarat High Court in SCA No. 662 of 1968
decided on October 27, 1969 held that clause (e) violated Article 14 of the
Constitution. It is not necessary for us to go into the reasons which weighed
c
with the Court in reaching such a conclusion. By Gujarat Act 5 of 1970
following proviso' was added to clause (e):

"Provided that where in any particular case the Judge is of opinion
that the deposit of the amount by the appellant will cause undue D
hardship to him, the Judge may in his discretion dispense with such
deposit or part thereof either unconditionally or subject to such
conditions as he may deem fit."

This proviso also came to be challenged before the Gujarat High Court
on the same very plea that it violated the provisicns of Article 14 of the E
-- Constitution. This time also a Division Bench of the High Court held that
clause (e) violated Article 14 of the Constitution. This decision of the High
Court was challenged in this Court in The Anant Mills Co. Ltd. v. State of
Gujarat and Others, [1975] 2 SCC 175. This Court reversed the decision of
the High Court and held that clause (e) with the added proviso did not violate
article 14 of the Consti~tion.
F

Now it is this amended clause (e) and the proviso which were subject
matter of the constitutional challenge in the High Court and by the impugned
judgment, High Court held the same'to be constitutionally valid and dismissed
all the petitions filed before it. G
- We may refer to the reasons which led this Court to uphold the
constitutional validity of clause (e) read with proviso which was added by
Gujarat Act 5 of 1970. This Court said:

"After hearing the learned Counsel for the parties, we are unable to H
900 SUPREME COURT REPORTS (1999] 2 S.C.R. '

A subscribe to the view taken by the High Court. Section 406(2)(e) as
amended states that no appeal against a rateable value or tax fixed or
charged under the Act shall be entertained by the Judge in the case
of an appeal against a tax or in the case of an appeal made against
a rateable value after a bill for any property tax assessed upon such
value has been presented to the appellant, unless the amount claimed -c,--
B from the appellant has been deposited by him with the Commissioner.
According to the proviso to the above clause, where in any particular
case the Judge is of opinion that the deposit of the amount by the
appellant will cause undue hardship to him, the Judge may in his
discretion dispense with such deposit or part thereof, either
c unconditionally or subject to such conditions as he may deem fit. The
object of the above provision apparently is to ensure the deposit of
the amount claimed from an appellant in case he seeks to file an
appeal against a tax or against a rateable value after a bill for any
property tax assessed upon such value has been presented to him.
Power at the same time is given to the appellate Judge to relieve the
D appellant from the rigour of the above provision in case the Judge is
1
of the opinion that it would cause undue hardship to the appellant.
The requirement about the deposit of the amount claimed as a condition
- precedent to the entertainment of an appeal which seeks to-challenge
the imposition or the quantum of that tax, in our opinion, has not the
E effect of nullifying the right of appeal, especially when we keep in
view the fact that discretion is vested in the appellate Judge to
dispense with the compliance of the above requirement. All that the
statutory provision seeks to do is to regulate the exercise of the right
-
of appeal. The object of the above provision is to keep in balance the
right of appeal, which is conferred upon a person who is aggrieved
F with the demand of tax made from him, and the right of the Corporation
to speedy recovery of the tax. The impugned provision accordingly
confers a right of appeal and at the same time prevents the delay in
the payment of the tax. We find ourselves unable to accede to the
argument that the impugned provision has the effect of creating a
discrimination as is offensive to the principle of equality enshrined in
G .,_
Article 14 of the Constitution. It is significant that the right of appeal
is conferr~d upon all persons who are aggrieved against the
~

determination of tax or rateable value. 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
H to the appellate Judge that the deposit of the amount would cause him
OUJ. AOROIND. CO. LTD. v. M.C.CITYOF AHMEDABAD [D.P. WADHWA, J.] 901
undue hardship arises out of his own omission and default. The A
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. B
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 rigpt of appeal cannot impose conditions for the exercise
of such right. I'n the absence of any special reasons there appears to C
be no 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 surrende~ to custody before his appeal against the sentence of
imprisonment would be entertained. Likewise, it is permissible to enact
a law that no appeal shall lie against an order relating to an assessment D
of tax unless the tax had been paid. Such a provision was on the
statute book in Section 30 of the Indian 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 has been
paid". Such conditions merely regulate the exercise of the right of E
appeal so that the same is not abused by a recalcitrant party and there
is no difficulty in 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 legal
right is conferred or to prescribe conditions for the exercise of the
right. Any requirement for the discharge of that liability or the fulfilment F
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, G
especially when that disability or disadvantage operates upon all
persons who make the default or omission."

By the Amending Act l of 1979 discretion of the Court in granting
interim relief has now been limited to the extent of 25% of-the tax required
to be deposited. It is, therefore, contended that earlier decision of this Court H
902 SUPREME COURT REPORTS [1999] 2 S.C.R.

A in Anant Mills case may not have full application. We, however, do not think
that such a contention can be raised in view of the law laid by this Court in
A;ant Mills case. This Court said 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 statutory right can be conditional
B or ,qualified. It cannot be said that such a law would be violative of Article
1.4 of the Constitution. If the statute does not create any right of appeal, 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 barr~d by statute. However, in regard to an appeal, position
C 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, see Smt. Ganga
Bai v. Vijay Kumar & Ors., (1974] 2 SCC 393.
In Mis. Elora Construction Company v. Municipal Corporation of
D Greater Bombay & Ors., AIR ( 1980) Bom.162, the question before the Bombay
High Court was as to the validity of Section 217 of the Bombay Municipal
Corporations Act. This Section provided for filing of appeal against any
rateable value or tax fixed or charged under that Act but no such appeal could
be entertained unless:

E "(d) in the case of an a(>peal against a tax, or in the case of an appeal
made against a ratable value the amount of the disputed tax cla~med
from the appellant, or the amount of the tax chargeable on the basis
of the disputed ratable value, up to the date of filing of the appeal,
has been deposited by the appellant with the Commissioner."

F It will be seen that clause (d) aforesaid was in similar terms as clause (e) of
Section 406(2) as it originally existed. Bombay High Court upheld the
constitutional validity of Section 217 of the Bombay Municipal Corporation
Act. Calcutta High Court in Chhatter Singh Baid & Ors. v. Corporation of
Calcutta & Ors., AIR (1984) Cal. 283 also took the same view. There it was
sub-section (3A) of Section 183 of the Calcutta Municipal Act, 1951 which
·G provided
"No appeal under this section shall be entertained unless the
consolidated rate payable up to the date of presentation of the appeal
on the valuation determined-

H (a) by an order under Section 182, in the case of an appeal to the
GUJ. AGRO IND. CO.LTD. v. M.C. CITY OF AHMEDABAD [D.P. WAD HWA, J.] 903
Court of Small Causes, A
(b) by the decision of the Court of Small Causes, in the case of an
appeal to the High Court,

has been deposited in the municipal office and such consolidated
rate is continued to be deposited until the appeal is finally decided." B
Similar provisions existed in the Delhi Municipal Corporation Act, 1957.
There it is Section 170 which is as under : -

"170. Conditions of right to appeal-No appeal shall be heard or
determined under Section 169 unless-
c
(a) the appeal is, in the case of a property tax, brought within
thirty days next after the date of authentication of the assessment list
under Section 124 (exclusive of the time requisite for obtaining a copy
of the relevant entries therein) or, as the case may be, within thirty
days of the date on which an amendment is finally made under Section D
126, and, in the case of any other tax, within thirty days next after the
date of the receipt of the notice of assessment or of alteration of
assessment or, if no notice has been given, within thirty days after the
date of the presentation of the first bill or, as the case may be, the first
notice of demand in respect thereof :
E
Provided that an appeal may be admitted after the expiration of the
period prescribed therefor by this section if the appellant satisfies the
court that he had sufficient cause for not preferring the appeal within
that period;

(b) the amount, if any, in dispute in the appeal has been deposited F
by the appellant in the office of the Corporation."

A Full Bench of the Delhi High Court, by majority, upheld the
constitutional validity of the aforesaid provision though there was also
challenge to the same based on Article 14 of the Constitution. Appeal against
~ the judgment of the Delhi High Court was taken to this Court which upheld G
-,___ the view of the Delhi High Court. The decision of this Court is reported as
Shyam Kishore and Ors., v. Municipal Corporation of Delhi & Anr., [1993]
1 SCC 22. This Court relied on its earlier decisions in Ganga Bai case and
Anant Mills case. Reference was also made to another decision of this Court
in Vijay Prakash D. Mehta/Shri Jawahar D. Mehta v. Collector of Customs H
904 SUPREME COURT REPORTS [1999] 2 S.C.R.

A (Preventive), Bombay, (1988] 4 sec 402 where'Justice Sabyasachi Mukharji,
J., speaking for the Court, said :-
"Right, to appeal is neither an absolute right nor an ingredient .of
natural justice the principles of which must be followed in all judicial

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

It is not necessary for us to refer to other decisions asserting the same
--
principle time and again. When the statement of law is so clear, we find no
difficulty in upholding the vires of clause (e) of sub-section (2) of Section 406
C read with proviso thereto. Any challenge to its constitutional validity on the
ground that onerous conditions have been imposed and right to appeal has
become illusory must be negatived.
f

We also note that under clause (e) of sub-section (2) of Section 406, a
complaint lies to the Municipal Commissioner against imposition of any
D property tax and only after that when the complaint is disposed of that appeal
can be filed. Appeal to the Court as provided in clause (e) may appear to be
rather a second appeal. Then under Section 408 of the Act provisions exist
for referring the matter to arbitration. Under sub-section (1) of Section 408
where any person aggrieved by any order fixing or charging any rateable
E value or tax under the Act desires that any matter in difference between him
' and the other pa11ies interested in such order should be referred to arbitration,
then, if all such parties agree to do so, they may apply to the Court for an
order of reference on such matter and when such an order is made provisions
relating to arbitration in suits shall apply. That apart, if a person cannot avail
of the right of appeal under Section 406 of the Act, other remedies are
F avai.iable to him under the law. In that case, it may not be possible for the
Municipal Corporation to contend that an alternative remedy of appeal exist
under Section 406 of the Act.

When leave was granted in these 'appeals by order dated December 12,
G 1980 this Court granted stay on the condition that seventy-five per cent of
the tax is deposited with the Municipal Commissioner within two months from
that date and on such deposit being made, the appeals be heard and disposed
of (by the Judge) and we believe by this time the appeals filed before the
Judge under Section 406 must have been disposed of.

H When the arguments started in these matters, on the statement of
OUJ. AORO IND. CO. LTD. v. M.C. CITY OF AHMEDABAD [0.P. WADHWA, J.) 905
learned counsel for the appellant two appeals bearing Nos.3018-19/80 were A
dismissed as withdrawn.

We do not find any merit in these appeals. These are accordingly
dismissed with costs.

A.Q. Appeals dismissed. B

----
T