Thakkar, J. - (1.) Is the Municipal Corporation of Hyderabad prohibited from levying Municipal taxes from persons inducted by it in the property of its own ownership under the hire purchase agreement The validity of levy of Municipal taxes by the Municipal Corporation of Hyderabad from, allottees to whom the Municipal Corporation had allotted buildings constructed under "Low Income Housing Scheme" launched by it was questioned by the allottees. The learned single Judge upheld the validity but the Division Bench in appeal1 took a contrary view. The Municipal Corporation has preferred the present appeal2 and has contended that the learned single Judge was right in upholding the levy and the Division Bench was wrong in holding it invalid.1 Under Clause 15 of the Letters Patent. 2 Appeal by Special Leave.
(2.) The facts giving rise to the writ petition instituted by the 72 allottees to whom the houses were allotted need to be stated briefly:- The Hyderabad Municipal Corporation started a scheme called Low Income Housing Scheme in 1957. In pursuance of that scheme, the Corporation constructed several houses in various parts of the Hyderabad City including the locality of Malakpet. After the houses at Malakpet were completed, applications were invited from persons belonging to that group for the purpose of allotting these houses. The writ petitioners applied and the Corporation allotted the houses to them. They are occupying the houses since 1959. The writ petitioners executed agreements in favour of the Corporation. According to the terms of the agreement, the allottees were put in possession of the houses allotted to them. The allottees were to pay 20% of the sale price as the first instalment and they were required to pay the balance in monthly instalments. The agreement specifically provides that the houses would remain, till the payment of the last instalment and execution of a conveyance in favour of the writ petitioners, as the property of the Corporation. The allottee has been strictly prohibited from selling or mortgaging or otherwise disposing of the house or even to sublet or part with possession of the same. Even after the writ petitioners become owners of the houses, they are precluded from selling the same within five years of such date. The agreement further provides that all municipal taxes and water takes and electricity charges would be borne by the allottees. The writ petitioners were served with a demand notice on 31-12-1964 asking them to pay house taxes from 1-4-1961 onwards. The demand notice, which the writ petitioners received on 16-4-1965, required the writ petitioners to file objections, if any within 15 days of the receipt of the notice. The writ petitioners accordingly filed their objections on 29-4-1965. The principal contention of the petitioners was that the houses are not liable to be taxed as they vest in the Municipal Corporation, and as the writ petitioners are not the owners of the houses. Negativing this contention, the Municipal Corporation served a notice dated 19-6-1966 demanding from the petitioners taxes for the period commencing from 1st April, 1961 to 31st March, 1965. It is this demand notice which has given rise to the writ petition, giving rise to the present appeal.
(3.) The challenge to the levy of taxes is built on the argument that inasmuch as the houses under the hire purchase agreement have not yet vested unto the allottees, the property vests unto the Municipal Corporation and under the circumstances S. 202(l) of the Hyderabad Municipal Corporation Act (Act) prohibits the levy of the general tax in respect of these houses.;