MUNICIPAL COUNCIL AHMEDNAGAR Vs. BHASKAR PANDURANG HIVALE

JUDGEMENT

(1.) AN interesting question of law that arises for consideration in this appeal is whether an `educational institution registered under the Bombay Public Trusts Act, 1950, can claim exemption from payment of `education cess by virtue of the provisions contained in Clause (e) of sub-section (1) of section 7 of the Maharashtra Education and Employment Guarantee (Cess) Act, 1962.

(2.) THE respondent plaintiff is an educational institution and through its Secretary cum Treasurer filed the suit for a declaration that the properties mentioned in the Schedule attached to the plaint are not liable to pay the education cess, as same are exempted under the Maharashtra Education and Employment Guarantee (Cess), Act, 1962 (for short, the Act) with the consequential relief that the Appellant-defendant Municipal Council be restrained by permanent injunction not to levy the education cess with the further prayer for refund of Rs. 27,737/- which were recovered illegally and wrongfully by the Municipal Council with interest at the rate of 12% per annum from the date of the suit till realisation. The plaint averments are mainly these : the plaintiff society is registered as a public trust under the Bombay Public Trusts Act, 1950. The buildings and the properties described in detail in Schedule I annexed to the plaint are owned by the society. The society conducts "ahmednagar College" at Ahmednagar. The suit properties are used by the College for its educational activities. The plaintiff stated that the properties are used purely for educational purpose which is the charitable purpose and in none of the properties any trade or business is carried out. No rent is charged to the student or occupiers who use some of the buildings of the society. In case of the hostels for boys and girl students, the hostel fees are charged and no rent of any kind is being recovered from them. The plaintiff further stated that the levy and demand of the education cess by the Municipal Council was illegal and ultra vires. The Defendant Municipal Council had demanded the education cess for the suit properties for the year 1976-77 illegally.

(3.) THE claim of the plaintiff society was resisted by the defendant Municipal Council by raising technical objections. In the first place it has been stated that the suit as framed was not proper in law and same is not tenable. It is bad as it was not filed within limitation as provided in section 304 of the Maharashtra Municipalities Act, 1965. The Municipal Council denied that the buildings were constructed for educational purposes or activities or that only fees are recovered from the students. It is stated that the society runs a canteen. It gives all for business on rent. Moreover, some of the portion of the buildings are given on rent or licence fees and the society derives income. It was, therefore, denied that the plaintiff society is a charitable institution. According to the defendant Municipal Council the plaintiff society carries the business and derives rent or licence fees in some portion of the buildings and hence, the plaintiff society was not exempted from payment of the education cess. The Municipal Council was only recovering the cess for the State Government and the suit was bad for non-joinder of the parties. Moreover, it has also been stated that the plaintiff society gets grant in full from the Government including the rent of the buildings and therefore, the plaintiff society was not entitled for exemption. Lastly the defendant Municipal Council has also challenged the jurisdiction of the Civil Court to entertain the suit.