MANU/UP/1343/2020

Equivalent Citation: 2020(12)ADJ333, 2020 3 AWC 3050All

IN THE HIGH COURT OF ALLAHABAD (LUCKNOW BENCH)

Misc. Bench No. 9822 of 2020
Decided On: 19.06.2020
Appellants: Sardar Patel Shikshan Samiti and Ors.
Vs.
Respondent: State of Uttar Pradesh and Ors.
Hon'ble Judges/Coram:
P.K. Jaiswal and Dinesh Kumar Singh, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Jageswari Prasad Mathur
For Respondents/Defendant: Shailendra Singh Chauhan
Case Note:
U.P. Municipal Corporation Act, 1959 - Sections 506, 507 and 177--General
Clauses Act, 1897--Section 3(26) and 3(36)--Quashing of order issued by
Commissioner of Lucknow Municipal Corporation directing to seize bank
account of petitioner--Petitioner in arrears of municipal tax in respect of a
medical college and hospital and a Research Centre run by it--Did not pay
municipal taxes claiming the same to be exempt from such taxes--Every
building and land within the limits of the Corporation liable to tax except that
specifically exempted under Section 177 of the Act--Section 177 does not
provide for exemption from tax generally--It only provides for exemption from
tax to educational institutions and professional education institutions except
those imparting education upto intermediate standard--Municipal Corporation
authorised to recover its taxes from defaulters by attachment and sale of the
property--Liability to pay property tax and other taxes of petitioner already
settled by the court--Movable property includes all property of every
description except immovable property--A bank account is not an immovable
property--Contention that a bank account is not a movable property and not
liable to be attached towards recovery of tax dues from petitioner in exercise
of power under Sections 506 to 509 of the Act rejected--Writ petition
dismissed with costs of ' one lac. [12], [17], [20] and [21]
ORDER
1. The present Writ Petition under Article 226 of the Constitution of India has been filed
by the petitioners for quashing the Order dated 13.03.2020 (Annexure-6) by the
Commissioner of Lucknow Municipal Corporation issued in exercise of powers under
Sections 509-516 of the Uttar Pradesh Municipal Corporations Act, 1959 (hereinafter
referred to as the Municipal Corporations Act) whereby the Municipal Corporation
directed to seize the bank account of the petitioners in ICICI Bank, Teli Bagh, Lucknow.
It has been further directed that no money should be allowed to be withdrawn from the
said account till 'No Dues Certificate' is issued by the Municipal Corporation, Lucknow in
favor of the petitioners. The petitioners are in arrears of the municipal tax

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(general/house tax) amounting to Rs. 4,39,31,776 (Four Crores Thirty Nine Lakh Thirty
One Thousand and Seven Hundred and Seventy Six Rupees) till 31.03.2020 and, despite
demand notice, the payment has not been made by the petitioners.
2 . Petitioner Number 1 runs and operates Sardar Patel Institute of Dental and Medical
Science (Medical College) as well as OP Chaudhary Hospital and Research Centre within
the municipal limits of the Lucknow Municipal Corporation.
3. The petitioners had earlier filed a Writ Petition No. 1048 (M/B of 2006) challenging
the assessment and demand of tax on the petitioners on the ground that the petitioners
were also entitled for exemption from property tax as was given to the educational
institutions imparting education up to Class XIIth standard. Initially, this Court granted
interim order in favor of the petitioner on the condition of deposit of Rs. 16 Lakhs.
4. The Division Bench of this Court vide its final judgment and order dated 04.06.2010
(Annexure-2) did not find any substance in the Writ petition and challenge to the
constitutional validity of section 177(c) of the Municipal Corporations Act and held that
the institutions imparting education up to intermediate standard and the professional
institutions were two different classes. These were not equals and therefore, they could
not be treated equally. It was further held that the differentiation was based on
intelligible criteria and State was well within its power to exempt the educational
institutes imparting education up to Class 12th standard and, there was no
discrimination as alleged or otherwise. It was also held that the petitioners had
statutory remedy of appeal under section 472 of the Municipal Corporations Act if they
had any grievance against the tax imposed. The petitioners were given opportunity to
file appeal within a period of one month and, it was directed that the appellate authority
should entertain and decide the appeal on merit preferably within a period of four
months without entering into the question of limitation. Thus, the issue of payment of
property tax by the petitioners got finally settled by this Court vide Judgment and Order
dated 03.05.2010 referred to above.
5. It appears that the petitioners had filed Appeal No. 11 of 2010 before the designated
Court, Lucknow and the appeal is still pending. Strangely enough the petitioners
approached this Court again second time by filing Writ Petition No. 5320 (M/B) of 2011
on the same ground that the petitioners were not liable for assessment and demand of
property tax under the provisions of Municipal Corporations Act, the issue which had
attained finality. This Court on the very first day disposed of the said Writ Petition with
the following peculiar order:
"Heard counsel for the petitioners Sri J.P. Mathur and Sri Shashi Prakash Singh
for the respondents.
Petitioners grievance is that though petitioners are charitable institutes and are
entitled for exemption from house tax, yet assessment has been made against
them and though appeal has been filed against the assessment which is
pending before the Judge, Small Cause Court, the Nagar Nigam is proceeding to
make recovery by adopting coercive methods. He further says that there is no
provision under the Act to grant any stay order in the appeal.
Under the circumstances we dispose of the petition finally with the direction
that till the decision of the pending appeal of the petitioners, recovery of the
house tax shall not be made and the appeal be decided expeditiously, say,
within a maximum period of three months from the date of receipt of a certified
copy of this order.

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 Order Date:- 31.5.2011"
6. Since then the petitioners have not paid any property tax and they are in arrears of
tax amounting to Rs. 4,39,31,776 (Four Crores Thirty Nine Lakh Thirty One Thousand
and Seven Hundred and Seventy Six Rupees).
7 . In 2012 the Municipal Corporation started proceedings to recover the property tax
from and for which there was not stay operating against the Municipal Corporations
inasmuch as the stay was granted by this Court only in respect of demand for which the
petitioners had filed the statutory appeal. However, the petitioners filed Contempt No.
381 of 2012 on the ground that in view of the stay order passed by this Court on
31.05.2011 in Writ Petition No. (M/B) 5320 the respondents could not have assessed
and recovered the property tax from the petitioners.
This Court issued notice on the contempt petition to the officer concerned and under the
pain of contempt, it appears that the proceedings were dropped by the Municipal
Corporation. This Court vide Order dated 15.03.2012 disposed of the aforesaid
contempt petition by the following order:
"Hon'ble Dr. Satish Chandra J.
In pursuance to the earlier order dated 13.02.2012, Sri Atul Kumar Singh, Tax
Superintendent, Zone-V, Nagar Nigam, Alambagh, Lucknow is present in
person. He is represented by Sri. S.S. Chauhan, Advocate.
Sri J.P. Mathur, learned counsel for the petitioners submits that the order dated
31.05.2011, passed by this Court in Writ Petition No. 5320 (M/B) of 2011 has
been compiled with by the opposite parties. Hence. Contempt petition has
become infructuous.
Accordingly, the contempt petition is dismissed being infructuous.
Order Date:- 15.3.2012"
8. Now, the notice for payment of House Tax had been issued to the petitioners by the
Lucknow municipal corporation on 26.02.2019. The petitioners had replied to said
notice and said that in view of the Order dated 31.05.2011 (supra) they were not liable
to pay any property tax. When the petitioners have failed to make payment of the
property tax as demanded vide notice dated 26.02.2019, the Municipal Commissioner
has issued the impugned order dated 13.03.2020.
9. In the present petition, it has been again averred that the petitioners are exempted
from levy and payment of property and other taxes by the Municipal Corporation under
the provisions of Section 177(b) of the Municipal Corporations Act. Para 8 of the Writ
Petition is reproduced below:
"That in view of the above status and facts, the institution is exempted from
imposition and demand of property and other taxes under the provision of
177(b) of the U.P. Municipal Corporation Act 1959 and is not subject to
assessment by the Municipal Corporation in any manner whatsoever."
10. It has been further submitted that there is no power to seize the bank account of
the petitioners towards the recovery of house tax and Section 507 of the Act only
provides to attach the movable property of the defaulter which does not include the
bank account. It is also contended that the bank maintains the bank account as

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custodian/garnishee and the attachment can be done by the Court of law on the request
made by the person having money decree from the Court and in execution thereof.
1 1 . Chapter IX of the Municipal Corporations Act provides for taxes which can be
imposed by the Municipal Corporations section 173 of the Act. The taxes so collected
become the income of the Corporation and, it is provided under Section 176 of the Act,
the proceeds of the water, drainage and conservancy taxes and all other income derived
from water works, drainage works, drains etc. is to be used for the purposes connected
with construction, maintenance, extension and improvement of such water works and
drainage works etc.
12. Section 177 provides the nature of buildings and lands which are exempted from
general tax to be levied by the Municipal Corporations. Clause (c) of Section 177
provides for exemption from levying general tax on buildings solely used as schools and
intermediate colleges.
Section 177 (c) reads as:
"The general tax shall be levied in respect of all buildings and lands in the City
except --
[(c) building solely used as schools and intermediate colleges whether
aided by the State Government or not, fields, farms and gardens of
Government aided institutes of research and development, playgrounds
of Government aided or unaided recognised educational institutions
and sports stadium;]"
Thus, except for buildings and lands which are specifically exempted from payment of
taxes under Section 177 of the Act, every other building and land is liable to be levied
with taxes from the Municipal Corporation. Section 177 does not provide any exemption
from levying taxes by the Municipal Corporation in respect of the educational
institutions except the education institutions which are imparting education up to
intermediate standard. The higher education institutions and professional education
institutions are not exempted from levy and payment of taxes by the Municipal
Corporation.
13. Section 179 of the Act provides for the primary responsibility of the person for the
payment of tax. Section 181 of the Act provides that property taxes to be a first charge
on premises on which they are assessed.
14. Chapter XXI of the Municipal Corporations Act provides for recovery of taxes and
other corporation dues. Section 506 and Section 507 of the Act provide for notice of
demand and warrant if the person liable for payment of the sum of tax fails to make
payment within 15 days from the service of notice. Section 506 and Section 507 are
extracted hereunder:
"506. Notice of demand. - If the sum for which a bill has been presented as
aforesaid is not paid into the office of the Corporation, or to a person
empowered by a regulation to receive such payments, within fifteen days from
the presentation thereof, the Municipal Commissioner may cause to be served
upon the person liable for the payment of the said sum a notice of demand in
the form prescribed by rule.
507. Issue of warrant. - (1) If the person liable for the payment of the said

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 sum does not, within fifteen days from the service of such notice of demand
either - (a) pay the sum demanded in the notice, or (b) show cause to the
satisfaction of the Municipal Commissioner or of such officer as the Corporation
by regulation may appoint in this behalf, why he should not pay the same, such
sum with all costs of the recovery may be recovered under a warrant caused to
be issued by the Corporation in the form prescribed by rule, or to like effect, by
distress and sale of the movable property of the defaulter. (2) Every warrant
issued under this section shall be signed by the Municipal Commissioner, or by
the officer referred to in clause (b) of sub-section (1)."
15. Section 509 provides the manner if executing warrant which reads as:
"509. Manner of executing warrant - (1) It shall also be lawful for such officer
to distrain, wherever it may be found, any movable property of the person
therein named as defaulter, subject to the provisions-of sub-sections (2) and
(3), (2) The following property shall not be distrained:
(a) the necessary wearing apparel and bedding of the defaulter, his
wife and children;
(b) the tools of artisans;
(c) books of account;
(d) when the defaulter is an agriculturist, his implements of husbandry,
seed grain and such cattle as may be necessary to enable him to earn
his livelihood.
(3) The distress shall not be excessive, that is to say, the property distrained
shall be as nearly as possible equal in value to the amount recoverable under
the warrant, and if any articles have been distrained which in the opinion of the
person authorized under sub-section (2) of Section 507 to sign a warrant,
should not have been so distrained they shall forthwith be returned.
(4) The officer shall on seizing the property, forthwith make an inventory
thereof, and shall before removing the same give to the person in possession
thereof at the time of seizure a written notice in the form prescribed by rule
that the said property will be sold as shall be specified in such notice."
The Municipal Corporation is also authorized to recover the tax due from the defaulter
by attachment and sale of immovable property as is provided under Sections 512 to 514
of the Act."
16. Heard Shri J.P. Mathur, learned Counsel for the petitioners and Shri S.S. Chauhan,
learned Counsel for the respondents. The question regarding the petitioners' liability to
pay the property tax and other taxes has already been finally settled by this Court vide
judgment and order dated 04.06.2010 passed in Writ Petition 1048(M/B) of 2006 and,
therefore, no further discussion is required by us on the aforesaid issue.
17. Under Section 3(26) of the General Clauses Act 'immovable property' shall include
land, benefits to arise out of land, and things attached to the earth, or permanently
fastened to anything attached to the earth. On the other hand, under Section 3(36)
'movable property' shall mean property of every description, except immovable
property. Upon juxtaposing the definitions of 'immovable property' vis-Ã -vis 'movable

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property' under the General Clauses Act, it becomes amply evident that a bank account,
as such, is not an immovable property. Thus, it has to be treated as movable property.
1 8 . The Supreme Court, while interpreting the term 'property' under Section 102 of
Code of Criminal Procedure, 1973, in the case of State of Maharashtra v. Tapas D Neogy
MANU/SC/0582/1999 : 1999 (7) SCC 685, has categorically held that money lying in
bank accounts amounts to 'property' for exercise of power to seize 'property' of the
accused under Section 102 of the Code of Criminal Procedure.
1 9 . The Hon'ble Supreme Court in the case of Standard Chartered v. Andhra Bank
Financial Services MANU/SC/0935/2015 : 2016 (1) SCC 207 while interpreting Section
3(26) of the General Clauses Act in context of Section 17 of the Displaced Persons
(Debts Adjustment) Act, 1951, has held that the money lying in the bank account falls
within the definition of 'movable property'.
20. Similarly, the Hon'ble Delhi High Court while dealing with almost identical facts and
legal provisions under the Delhi Municipal Corporation Act with respect to recovery of
property tax, had repelled the submission that the bank account is not a movable
property in the case of State Bank of India vs. M.C.D. MANU/DE/0293/2003 : 104
(2003) DLT 363 and held that:
"7. Learned Counsel contends that the expression used is "distress and sale of
the movable property", which did not imply that the bank accounts can be
attached. Learned Counsel in this behalf has referred to the expression
"distress" under Section 157 of the said Act. The said provision is as tinder:
"157. Distress--
(1) It shall be lawful for any officer or other employees of the
Corporation to whom a warrant issued under Section 156 is
addressed to distrain, wherever it may be found in any place in
Delhi, any movable property or any standing timber, growing
crops or grass belonging to the person therein named as
defaulter, subject to the following conditions, exceptions and
exemptions, namely:
(a) the following property shall not be distrained:
(i) the necessary wearing apparel and bedding of the defaulter,
his wife and children and their cooking and eating utensils;
(ii) tools of artisans;
(iii) books of account; or
(iv) when the defaulter is an agriculturist his implements of
husbandry, seed, grain and such cattle as may be necessary to
enable the defaulter to earn his livelihood;
(b) the distress shall not be excessive, that is to say, the
property distrained shall be as nearly as possible equal in value
to the amount recoverable under the warrant, and if any
property has been distrained which, in the opinion of the
Commissioner, should not have been distrained, it shall
forthwith be released.

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 (2) The person charged with the execution of a warrant of
distress shall forthwith make an inventory of the property
which he seizes under such warrant, at the same time, give a
written notice in the form set forth in the Ninth Schedule, to
the person in possession thereof at the time of seizure that the
said property will be sold as therein mentioned."
"8. Ld. Counsel contends that the said provision of distress cannot apply to the
money lying in the account. This is further supported by the contention that the
money of assessee lying in the account merges with the money of bank and
does not remain the money of the assessee.
9 . I am unable to accept the contention of the learned Counsel for the
petitioner. The money when deposited with the bank remains the money of the
depositor, but in custody of the bank. The expression used in Section 156(1)
refers to "movable property" and the money would certainly fall within the said
category. A reading of Section 156 and 157 of the said Act together, in my
considered view, imply that it is open to the respondent Corporation to attach
money of the assessee lying with the bank in case the property tax is unpaid."
In view of the aforesaid discussion and considering the legal position with regards to
the General Clauses Act, particularly Section 3(26) and 3(36) as well as the law laid
down in the aforesaid judgments, we find no substance in the submission of the learned
counsel for the petitioners that bank accounts is not a movable property and not liable
to be attached towards the recovery of tax due from the Petitioners pursuant to exercise
of power by the Municipal Corporation under Sections 506 to 509 of the Municipal
Corporations Act.
21. It is evident from the aforesaid narration of the facts that the petitioners had not
paid any tax and arrears have mounted to Rs. 4,39,31,776 (Four Crores Thirty Nine
Lakh Thirty One Thousand and Seven Hundred and Seventy Six Rupees). They have
repeated their submissions which have been rejected by this Court earlier and therefore,
we dismiss this petition with costs of Rs. 1,00,000/- (Rupees One Lacs only) to be
deposited in the Chief Minister Distress Relief Fund, Covid Care Fund, U.P.
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