LALADHAR PRAGJI Vs. STATE OF GUJARAT

JUDGEMENT

(1.) The petitioners who were the members of Malia Gram Panchayat from 1968-73 have challenged the order of the learned District Judge, Junagadh dated 17-2-1984 passed in Civil Miscellaneous Application No. 11 of 1983 and the order of the Mamlatdar, Malia-Hatina dated 11-1-1983 holding the petitioners liable for loss of tax on buildings and lands for the period from 1- 4-1971 upto 30/04/1973 under Sec. 317 of the Gujarat Panchayats Act, 1961.

(2.) The petitioners were elected as members of the said Panchayat in 1968, the term of which came to an end on 31/04/1973. The petitioner No. 2 was elected as Sarpanch and the petitioner No. 1 as Upa-Sarpanch. A Gram Panchayat is empowered to levy the taxes and fees at such rates as may be decided by it and in such manner and subject to exemptions as may be prescribed, under Sec. 178(1) of the said Act, subject to any general or special order of the State Government. Under clause (i) of Sec. 178(1), a Gram Panchayat can levy a tax on buildings and lands. By Amendment Act 1 of 1968, sub-sec. (1A) was added to Sec. 178 whereunder it was provided that it shall be compulsory for a Gram Panchayat to levy a tax on buildings and lands referred to in clause (ii) of sub-sec. (1) and at least any two of the other taxes or fees referred to in that sub-section after the expiry of a period of two years from 1/04/1968. Accordingly, from 1/04/1970 it became compulsory for a Gram Panchayat to levy a tax on buildings and lands besides any other two items from Sec. 178(1). However, it was only on 3/07/1973 that resolution No. 28 was passed by the said Panchayat deciding to impose such tax from 1/01/1974. Before the formalities could be completed and the tax finally imposed, the term of the Panchayat came to an end on 31/12/1973 when the petitioners ceased to be the members of the Panchayat. The newly elected Body of the said Panchayat, to which none of the petitioners were members, continued the work of assessment. In the meantime, the District Development Officer, Junagadh by his order dated 14-1-1975 directed the Gram Panchayat to impose and collect tax from 1/04/1970 and in default of such levy, he recommended to supersede the Gram Panchayat under Sec. 297 of the Act. Therefore, the new elected Body of the Panchayat imposed the tax retrospectively from 1/04/1970 on lands and buildings. The inhabitants of the Gram Panchayat feeling aggrieved by the levy with retrospective effect, filed Civil Suit No. 231 of 1975 in the Court of Civil Judge (J.D.). In the said suit, the petitioners were co-plaintiff. The suit was decreed on 20/10/1976 and the house tax as imposed by the Panchayat retrospectively was held to be illegal and without jurisdiction. The trial Court found that it was decided on 5/02/1975 to levy the said tax from 1/04/1970 instead of 1/04/1974 but there was nothing to show that objections were invited before deciding to levy taxed from 1/04/1970. This was considered to be a material defect. The Court held that the Panchayat had failed to observe the procedure prescribed under Rules 3 and 4 of the Gujarat Gram and Nagar Panchayats Taxes and Fees Rules, 1964. As provided by Rule 4, the tax or fee could be levied from the date specified in the notice which shall not be earlier than one month after the date of the publication of the notice. Accordingly, the house tax imposed by the Panchayat was declared as null and void. In the process of that decision, the learned Civil Judge (J.D.) made certain observations against some of the plaintiffs, i.e., the petitioners herein, who were former members of the Panchayat. The trial Judge had observed that in his opinion there was gross misconduct on the part of the Sarpanch and the members of the Panchayat to perform the duties of the Panchayat and that the mandatory requirement of Sec. 178(1A) of the said Act was violated by not imposing the house tax from 1-4-1970. The learned trial Judge lamented "reasons are best known to them and to God". He observed that in this case the former Sarpanch and member had come to the Court to get benefit of their own wrong and that they were the real wrong-doers. He then though it proper to send copy of the judgment to the competent authority to take necessary action against the petitioners who were co-plaintiffs in the suit. The District Development Officer was asked to take necessary action against them if he can. The seed of the said direction given on 20/10/1976 sprouted into proceedings against the petitioners by notice dated 14-9-1982 issued under Sec. 317(1) of the said Act by the Mamlatdar and the said case No. 1 of 1982 culminated in order dated 11-1- 1983 directing recoveries to be made from the petitioners of the estimated loss of tax for the period from 1970-71 to 1976-77 and the recovery was directed to be effected under Secs. 149 and 150 of the said Act. Accordingly, each of the petitioners were required to pay Rs. 18,395.65. It was held that the Panchayat of which the petitioners were members at the relevant time failed in its duty by not imposing the prescribed tax from 1-4-1970 as required by Sec. 178(1A) of the said Act. The petitioners aggrieved by the said decision applied to the District Court to set aside the order of the Mamlatdar. The learned District Judge referred to the provisions of sub-sec. (1) of Sec. 317 and observed that the other sub-sections of Sec. 317 were not relevant. The learned District Judge found that the misconduct or gross neglect of duty attributed to the petitioners related to non-imposition of taxes which were required to be imposed under Sec. 178(1A). The learned District Judge construing the provisions of Sec. 317(1), more particularly the expression "loss....... of any money or other property of Panchayat......" and referring to the dictionary meaning of "of" and "to" negatived the contentions of the petitioners that so long as the tax had not accrued there could be no loss of money or property of the Panchayat. It was held that if something which under the statute the members of the Panchayat were required to bring to the coffers of the Panchayat and if in that regard they did not fulfil their obligation or discharge their duty prescribed under the statute, there would be loss caused to the Panchayat of its property. Accordingly, the petitioners were held liable to pay only for the period till the Panchayat in which they were the members had initiated the process on 1-5-1973. It was held that the loss occasioned to the Panchayat related to its prospective income and the petitioners were, therefore, liable for the period from 1-4-1971 upto 30/04/1973. The individual liability of the petitioners was, therefore, scaled down from Rs. 18,395.16 to Rs. 5,495.75 by order dated 17-2-1984 passed under Sec. 317(4) of the said Act.

(3.) It was contended on behalf of the petitioners that on a proper reading of Sec. 317, the enquiry initiated against the petitioners was unwarranted. It was argued that the inaction of the petitioners did not result in any loss of property to the Panchayat since no money or property of the Panchayat had come into existence which could be the subject-matter of loss. It was also argued that there were 15 members in the Panchayat and the petitioners alone could not be held responsible for the inaction of the Panchayat. It was on the other hand contended by the learned Assistant Government Pleader appearing for the authorities that the petitioners who were members of the Panchayat at the relevant time were guilty of inaction and violations of the statutory duty cast under Sec. 178(1A) of the said Act on the Panchayat requiring it to impose tax on lands and buildings. It was also argued that these petitioners had challenged the action of the subsequent Panchayat which had resolved to impose tax with effect from 1-4-1970 and such action betrayed their intention not to impose taxes when they were members and therefore, they became individually liable under the provisions of Sec. 317(1) of the said Act.