Calcutta High Court: On a writ petition revolving around the legality of the charges imposed by Kolkata Municipal Corporation (KMC) under the authority conferred upon them by the Kolkata Municipal Corporation Act, 1980 (the Act), a single-judge bench comprising of Saugata Bhattacharyya,* J., upheld the validity of the demand notice, stating that KMC has the authority to levy stallage and related charges. The Court opined that the penalty for transfer of interest without prior approval was waived due to post facto approval. The Court directed the petitioners to pay the outstanding dues, with the interim deposit adjusted.
Brief Facts
In the instant matter, the present writ petition challenges two demand notices issued by the Superintendent, S.S. Hogg Market, Kolkata, dated 14-01-2011 and 21-11-2011, demanding payments of Rs.2,79,02,453 and Rs.2,10,56,342, respectively, from the petitioner. he notices demanded varying amounts, ultimately settled at Rs.2,05,81,725/-. The Municipal Commissioner’s decision, following a co-ordinate Bench’s order, is also contested. The primary contention is that the charges imposed, including stallage and amalgamation fees, are without legal authority.
Writ Petitioners’ Contentions
The petitioner contended that the stall operators are licensees, not tenants, and the charges imposed by KMC are without authority. It w3as contended that the demand is arbitrary and inadmissible under the Kolkata Municipal Corporation Act, 1980 and Article 265 of the Constitution of India. It was contended that the transfer of stalls from Sk. Nizam to Irshad Alam and then to the petitioner cannot be charged, and stallage charges with multipliers are impermissible under relevant provisions. It was contended that the authority of KMC to impose charges is limited by Section 430 of the Act and any new head must be introduced in the budget under Section 131. It was further contended that the demand for utilization of sub-floor area is unreasonable and lacks statutory backing.
Respondents’ (KMC) Contentions
The respondent contended that the excess area was utilized without formal permission, and charges are legitimate for amalgamation and mutation. It was contended that the license granted to Sk. Nizam is not transferable, and the formation of M/s. Nizam’s Restaurant Private Limited is unauthorized. It was contended that the demand notices are valid, and the charges are license fees, not taxes or rent. It was further contended that Section 573 has no application to stallage, and specific provisions in the Act empower KMC to realize stallage without time limitations.
Legal Provisions Invoked:
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Section 430 of the Kolkata Municipal Corporation Act, 1980, empowers the Municipal Commissioner to charge stallage, rent, or fee for the occupation or use of any stall, shop, stand, shed, or pen in a municipal market.
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Section 131 deals with the adoption of a budget estimate, stating the rates at which various taxes, surcharges, cesses, and fees shall be levied by the corporation in the following year.
Court’s Assessment
The Court observed that KMC has the authority to levy stallage, rents, or any other dues upon the licensee based on Section 430 read with Section 131. The Court distinguished the present case from the (Asian Leather Ltd. v. Calcutta Municipal Corpn., 2007 SCC OnLine Cal 268, stating that the demand is made under authorized provisions.
The Court dismissed the argument that the Municipal Commissioner’s order did not consider all points, as both parties extensively argued their positions. The Court rejected the application of the proviso to Section 573, stating that it is not applicable in the case of arrear stallage. The Court found that the demand notice is justified, and calculations are made based on the methodology provided in the Schedule of rates, taxes, fees, and charges.
The Court, however, restrained the KMC from recovering the penalty/fine for transfer of interest without prior approval, as approval was subsequently granted. The Court held that the interim order directing the petitioners to deposit Rs. 35,00,000 stands vacated, and the amount will be adjusted to recover the dues.
Court’s Decision
The writ petition is disposed of. The KMC is authorized to recover dues as per the demand notice approved by the Municipal Commissioner, with adjustments for the deposited amount and exclusion of the set-aside penalty. The Court directed the petitioners to pay the remaining dues to KMC. No costs are awarded.
[Nizam’s Restaurant (P) Ltd. v. Kolkata Municipal Corpn., 2023 SCC OnLine Cal 5723, order dated 21-12-2023]
*Judgment by Justice Saugata Bhattacharyya
Advocates who appeared in this case :
Mr. Sakti Nath Mukherjee, Senior Advocate, Mr. Achintya Banerjee, Mr. R.N. Chakraborty, Ms. Tanusree Das, Counsel for the Petitioners
Mr. Ashoke Kumar Banerjee, Senior Advocate, Mr. Biswajit Mukherjee, Mr. Swapan Kumar Debnath, Mr. Sourav Chaudhuri, Counsel for the KMC
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