Rs 4,000-cr toll tax default: Assist Delhi civic body in attaching MEP Infra properties, says Bombay HC to collectors

The Delhi civic body claimed that MEP Infra started delaying remittances to South Delhi Municipal Corporation (SDMC) for which penalties were imposed from time to time. When huge defaults accumulated over a period of time, the civic body was compelled to issue warrants to attach the company’s properties and recover dues. The plea was filed as district collectors in Maharashtra failed to execute them.

A division bench of Justice Atul S Chandurkar and Justice Firdosh P Pooniwalla on January 12 passed a judgement in MCD’s plea seeking execution of recovery certificates issued by it in 2021 and 2023.

Senior advocate Gaurav Joshi for the petitioner stated that MCD was entrusted with toll tax collection from commercial vehicles entering Delhi from 124 toll points which was also its main source of revenue. MEP infra, one party to which MCD gave a toll collection contract, had dues amounting to Rs 3927.06 crore, which have now become Rs 4970.81 crore, including interest and penalty under contract terms. As the firm defaulted in payments, the petitioner issued warrants of distress for attachment and sale of the company’s movable and immovable properties to recover dues as arrears of tax. However, when district authorities in Maharashtra failed to help it in attaching properties, MCD had to approach the HC.

MEP Infra had challenged the warrants of distress issued by the petitioner before Bombay and Delhi High Courts. The Bombay HC on February 1, 2023 dismissed the plea.

Advocate General Birendra Saraf for Maharashtra government argued that notices by which the enforcement is sought have not been issued by the designated authority of Collector under the ‘Revenue Recovery Act, therefore the state’s district authorities were not required to take cognisance and steps in that regard.

However, Joshi argued that the MCD Commissioner was vested with powers to levy taxes to generate revenues, including tax on land and buildings and a toll tax and to issue such warrants under the law.

HC accepted Joshi’s submissions and noted that as per Revenue Recovery Act, ‘the MCD Commissioner is the Collector and was empowered to delegate his powers to issue certificates to the Deputy Additional Commissioner. It held that ‘the sum sought to be recovered by the MCD is recoverable as arrears of land revenue’ as it was a ‘legal authority’ for the same under the law and said respondents’ submission against it “led to absurdity” and “cannot be accepted”.

After senior advocate Pradeep Sancheti for the firm requested a stay on the operation of the judgement to file an appeal before the SC, the bench allowed the same and stated that it will operate after four weeks.

The Bombay High Court recently allowed plea by Municipal Corporation of Delhi (MCD) seeking directions to district collectors of Mumbai city, suburb, Thane, Pune and Chhatrapati Sambhajinagar to execute warrants of distress or recovery certificates against MEP Infrastructure Developers, which defaulted on payments of about Rs 4,000 crore towards dues related to toll-collection contracts for nearly 124 toll points.