Chapter VII RECOVERY OF MUNICIPAL CLAIMS

(1) When any amount,— (a) which, by or under any provisions of this Act, is declared to be recoverable in the manner provided by this Chapter, or (b) which, is claimable as an amount or instalment on account of any tax which is now imposed or hereafter may be imposed in any municipal area, shall have become due, the municipal council shall, with the least practicable delay, cause to be presented to the person liable for the payment thereof, a bill for the sum claimed as due: Provided that no such bill shall be necessary in the case of,— (i) a tax on vehicles; (ii) a tax on dogs; (iii) toll payable on demand; (iv) a tax on advertisements; (v) property tax including penalty leviable under sub-section (5) of section 105: Provided further that no such bill shall be presented to any person for payment of profession tax to the extent to which tax has been deducted from his salary, wages or remuneration by his employer. (2) Every such bill shall specify,- (a) the period for which, and (b) the property, occupation or thing in respect of which, the sum is claimed, and shall also give notice of,— (i) the liability incurred in default of payment, and of (ii) the time within which an appeal may be preferred as hereinafter provided against such claim. (3) If the sum for which any bill has been presented as aforesaid is not paid into the municipal office, or to a person authorised by any rule in that behalf to receive such payments, within fifteen days from the presentation thereof, or if the tax on vehicles or the tax on dogs or the property tax including the penalty leviable under sub-section (5) of section 105 is not paid after it has become due, the municipal council may cause to be served upon the person liable for the payment of the same a notice of demand in the form set forth in Schedule X or to the like effect.

Distress. (1) If the person on whom a notice of demand has been served under sub-section (3) of section 142, does not within thirty days from the service of such notice of demand, either,— (a) pay the sum demanded in the notice, or (b) show cause to the satisfaction of the municipal council, or of such officer as the municipal council by rule may appoint in this behalf, or of the Municipal Commissioner or Chief Officer, if any, why he should not pay the same, or (c) prefer an appeal in accordance with the provisions of section 150 against the demand, he shall be deemed to be in default, and thereupon such sum not exceeding twenty per cent of the amount of the tax as may be determined by the Municipal Commissioner or the Chief Officer, may be recovered from him by way of penalty, in addition to the amount of tax as an arrear of tax; and the tax and penalty with all costs of the recovery may be levied under a warrant caused to be issued by the municipal council in the form set forth in Schedule XI or to the like effect, by distress and sale of the movable property or attachment and sale of the immovable property of the defaulter within two months from the date of issuance of warrant: Provided that where any measures precautionary or otherwise have been taken in respect of any such property for the recovery of any sum claimed by the Government, any proceedings under this Chapter in respect of such property shall abate. (2) Every warrant issued under this section shall be signed by the Municipal Commissioner or Chief Officer, of the municipal council causing the same to be issued. (3) Where the property is in the area under the control of the municipal council, the warrant shall be addressed to an officer of the municipal council. Where the property is in another municipal area constituted under this Act or the Karnataka Municipal Corporations Act, 1976, or in a cantonment or in a place which is not a municipal area constituted under this Act, the warrant shall be addressed to the Municipal Commissioner or Chief Officer of the Corporation or of the municipal council concerned or the Executive Officer of the cantonment or to the Tahsildar of the taluk, as the case may be: provided that such Municipal Commissioner, Chief Officer, Executive Officer or Tahsildar may endorse such warrant to a subordinate officer. (4) It shall be lawful, for any officer to whom a warrant issued under sub-section (2) is addressed or endorsed, if the warrant contains a special order authorising him in this behalf, but not otherwise, to break open, at any time between sunrise an sunset, any outer or inner door or window of a building, in order to make the distress directed in the warrant, if he has reasonable grounds for believing that such building contains property which is liable to seizure under the warrant, and if after notifying his authority and purpose and duly demanding admittance, he cannot otherwise obtain admittance: Provided that such officer shall not enter or break open the door of any apartment occupied by women, until he has given three hours’ notice of his intention, and has given such women an opportunity to withdraw. (5) It shall also be lawful for any such officer, authorised by the warrant, to distrain, wherever it may be found, any movable property or attach any immovable property of the person named in the warrant issued under sub-section (1), as defaulter, subject to the following conditions, exceptions and exemptions, namely:— (a) the following property shall not be distrained:— (i) necessary wearing apparel and bedding of the defaulter, his wife and children, and their cooking and eating utensils, (ii) tools of artizans; (iii) books of account; or (iv) when the defaulter is an agriculturist, his implements of husbandry, seed, grain, and such cattle as may be necessary to enable the defaulter to earn his livelihood; (b) the distress shall not be excessive, that is to say, the property distrained shall be as nearly as possible equal in value to the amount recoverable under the warrant, and if any articles have been distrained which, in the opinion of a person authorised by or under sub-section (2) to sign a warrant or of the person to whom the warrant was addressed, should not have been so distrained, they shall forthwith be released; (c) the officer shall, on distraining the property forthwith make an inventory thereof and shall before removing the same give to the person in possession thereof at the time of distraint a written notice in the form set forth in Schedule XII; (d) (i) when the property is immovable, the attachment shall be made by an order prohibiting the defaulter from transferring or charging the property in any way and all persons from taking any benefit from such transfer or charge; (ii) the order shall be proclaimed at some place on or adjacent to the property by beat of drum or other customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and upon the notice board of the municipal office, and also, when the property is land paying revenue to the Government in the office of the Tahsildar of the Taluk in which the land is situate; (e) any transfer of or charge on the property attached or of any interest therein made without the written permission of the Municipal Commissioner or Chief Officer shall be void as against all claims of the municipal council enforceable under the attachment.

(1) When the property seized is subject to speedy and natural decay, or when the expense of keeping it in custody together with the amount to be levied is likely to exceed its value, the officer by whom the warrant was signed, shall at once give notice to the person in whose possession the property was when distrained, to the effect that it will be sold at once, and shall sell it accordingly by public auction unless the amount mentioned in the warrant is forthwith paid. (2) If not sold at once under sub-section (1), the property distrained or a sufficient portion thereof or if the property attached is immovable property, a sufficient portion thereof may, unless the warrant is suspended by the person who signed it, or the sum due by the defaulter together with all costs incidental to the notice, warrant and distress or attachment and detention of property, is paid, be, or the expiry of the time specified in the notice served by the officer executing the warrant, sold by public auction under the orders of the Municipal Commissioner or Chief Officer, and the proceeds, or such part thereof as shall be requisite, shall be applied firstly in discharge of any sum due to the Government in respect of such property and secondly in discharge of the sum due and of all such incidental costs as aforesaid. (3) Where the sum due together with costs is paid by the defaulter as aforesaid, the attachment of any immovable property shall be deemed to have been removed. Sale of movable or immovable property under sub-section (2) shall be held in the manner laid down in section 145 and the rules framed in that behalf.

Procedure in respect of sales, etc. (1) When any sale of either movable or immovable property is ordered under the provisions of this Chapter, the officer concerned shall issue a proclamation of the intended sale, specifying the time and place of sale, together with any other particulars as he may think necessary. Such proclamation shall be made by beat of drum at such places and in such other manner as the Municipal Commissioner or Chief Officer may direct. (2) A notice of the intended sale of immovable property and of the time and place thereof shall be affixed on the notice board of the municipal office, the office of the Tahsildar of the taluk in which the immovable property is situated and at such other places as may be prescribed. In the case of movable property, a notice of the intended sale shall be affixed on the notice board of the municipal office and at such other places as may be prescribed. The notice shall also be published in such other manner as may be prescribed. (3) No sale shall be held on a public holiday nor until the expiration of at least thirty days in the case of immovable property or seven days in the case of movable property, from the latest date on which any of the notices referred to in sub-section (2) have been published. (4) If the defaulter or any person on his behalf pays the sum due and all other charges, at any time before the property is knocked down, to the officer conducting the sale, the sale shall be stayed. (5) In respect of sale of movable property (other than property sold under sub-section (1) of section 144), the person who is declared to be the purchaser shall deposit immediately twenty-five per cent of the amount of his bid, and in default of such deposit, the property shall forthwith be again put up for auction and sold. The full amount of purchase money shall be paid by the purchaser on the next working day after the day on which he is informed of the sale having been confirmed by the Municipal Commissioner or Chief Officer. On payment of such full amount of the purchase money, the purchaser shall be granted a receipt for the same and the sale shall become absolute as against all persons whatsoever. (6) In respect of sale of immovable property, the person who is declared to be the purchaser shall deposit twenty-five per cent of the amount of his bid, and, in default of such deposit, the property shall forthwith be again put up for auction and sold. The full amount of purchase money shall be paid by the purchaser before the sixteenth day from that on which the sale of the property took place. (7) In default of payment of the full amount of purchase money within the period specified under sub-section (5) or sub-section (6), the Municipal Commissioner or the Chief Officer may in his discretion direct that the deposit, after deducting therefrom the expenses of the sale, in whole or in part, shall be forfeited to the municipal council, and that the property shall be resold, and thereupon the deposit shall stand forfeited as directed and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold. If the proceeds of the resale which is held by reason of the default of the purchaser is less than the price bid by such defaulting purchaser, the difference shall be recoverable in the manner provided in this Chapter from him by the municipal council as an amount due from him to the municipal council. (8) Every resale of property in default of payment of the purchase money, or after the postponement of the first sale, shall, except when such resale takes place forthwith, be made after the issue of a fresh notice in the manner specified in this section for original sales. (9) Any person owning or claiming any interest in immovable property sold under this section may at any time within thirty days from the date of the sale deposit in the municipal office,- (i) a sum equal to ten per cent of the purchase money; and (ii) a sum equal to the sum due for which the immovable property was sold together with interest at nine per cent per annum thereon and the expenses of attachment, management, and sale and other costs due in respect of the sum due; and may apply to the Municipal Commissioner or Chief Officer to set aside the sale. On such deposit and application being made, the Municipal Commissioner or the Chief Officer shall by order set aside the sale and shall repay to the purchaser the purchase money deposited by him together with the ten per centum deposited by the applicant: Provided that if two or more persons make such deposit and application, the application of the first depositor shall be accepted: Provided further that if the applicant is also an applicant under sub-section (10), his application under this sub-section shall not be considered unless he withdraws his application under sub-section (10). (10) At any time within thirty days from the date of sale of immovable property, an application may be made to the Municipal Commissioner or Chief Officer to set aside the sale on the ground of some material irregularity, or mistake or fraud, in publishing or conducting it; but save as otherwise provided in sub-section (11), no sale shall be set aside on the ground of any such irregularity or mistake, unless the applicant proves to the satisfaction of the Municipal Commissioner or Chief Officer that he has sustained substantial injury by reason thereof. If the application is allowed, the Municipal Commissioner or Chief Officer shall set aside the sale and direct a fresh sale. (11) On the expiration of thirty days from the date of sale, if no application is made under sub-section (9) or sub-section (10), or if an application made under sub-section (10) is rejected, the Municipal Commissioner or Chief Officer shall make an order confirming the sale: Provided that if the Municipal Commissioner or Chief Officer considers that in the interest of justice the sale should be set aside for any reason, he may, for reasons to be recorded in writing and on such conditions as he may deem proper set aside the sale. (12) Whenever the sale of any property is not confirmed or is set aside, the purchaser shall be entitled to refund of his deposit or purchase money, as the case may be. (13) If any claim to any movable property distrained under this Chapter is made by any person, the Municipal Commissioner or Chief Officer shall after a summary enquiry, admit or reject the claim. If the claim is admitted wholly or partly, the property shall be dealt with accordingly. Except in so far as the claim is admitted, the property shall be sold and the title of the purchaser shall be good for all purposes, and the proceeds shall be disposable as provided in section 144. (14) Where the municipal council itself purchases any immovable property under sub-section (16) it shall on payment by the defaulter within one year from the date of sale of the amount of bid offered by municipal council and the expenses of attachment, management, sale and other costs together with interest at nine per cent per annum thereon, reconvey the property to the defaulter. (8) Every resale of property in default of payment of the purchase money, or after the postponement of the first sale, shall, except when such resale takes place forthwith, be made after the issue of a fresh notice in the manner specified in this section for original sales. (9) Any person owning or claiming any interest in immovable property sold under this section may at any time within thirty days from the date of the sale deposit in the municipal office,- (i) a sum equal to ten per cent of the purchase money; and (ii) a sum equal to the sum due for which the immovable property was sold together with interest at nine per cent per annum thereon and the expenses of attachment, management, and sale and other costs due in respect of the sum due; and may apply to the Municipal Commissioner or Chief Officer to set aside the sale. On such deposit and application being made, the Municipal Commissioner or the Chief Officer shall by order set aside the sale and shall repay to the purchaser the purchase money deposited by him together with the ten per centum deposited by the applicant: Provided that if two or more persons make such deposit and application, the application of the first depositor shall be accepted: Provided further that if the applicant is also an applicant under sub-section (10), his application under this sub-section shall not be considered unless he withdraws his application under sub-section (10). (10) At any time within thirty days from the date of sale of immovable property, an application may be made to the Municipal Commissioner or Chief Officer to set aside the sale on the ground of some material irregularity, or mistake or fraud, in publishing or conducting it; but save as otherwise provided in sub-section (11), no sale shall be set aside on the ground of any such irregularity or mistake, unless the applicant proves to the satisfaction of the Municipal Commissioner or Chief Officer that he has sustained substantial injury by reason thereof. If the application is allowed, the Municipal Commissioner or Chief Officer shall set aside the sale and direct a fresh sale. (11) On the expiration of thirty days from the date of sale, if no application is made under sub-section (9) or sub-section (10), or if an application made under sub-section (10) is rejected, the Municipal Commissioner or Chief Officer shall make an order confirming the sale: Provided that if the Municipal Commissioner or Chief Officer considers that in the interest of justice the sale should be set aside for any reason, he may, for reasons to be recorded in writing and on such conditions as he may deem proper set aside the sale. (12) Whenever the sale of any property is not confirmed or is set aside, the purchaser shall be entitled to refund of his deposit or purchase money, as the case may be. (13) If any claim to any movable property distrained under this Chapter is made by any person, the Municipal Commissioner or Chief Officer shall after a summary enquiry, admit or reject the claim. If the claim is admitted wholly or partly, the property shall be dealt with accordingly. Except in so far as the claim is admitted, the property shall be sold and the title of the purchaser shall be good for all purposes, and the proceeds shall be disposable as provided in section 144. (14) Where the municipal council itself purchases any immovable property under sub-section (16) it shall on payment by the defaulter within one year from the date of sale of the amount of bid offered by municipal council and the expenses of attachment, management, sale and other costs together with interest at nine per cent per annum thereon, reconvey the property to the defaulter. (15) After sale of the immovable property by auction as aforesaid, the Municipal Commissioner or Chief Officer shall put the person declared to be the purchaser in possession of the same and shall grant him a certificate to the effect that he has purchased the property to which the certificate refers. (16) It shall be lawful for the municipal council to offer a bid in the case of any immovable property put up for auction, provided the previous approval of the Deputy Commissioner is obtained to such bidding. (17) The surplus of the sale proceeds, if any, shall immediately after the sale of the property be credited to the municipal fund, and notice of such credit shall be given at the same time to the owner or person in whose possession the property was at the time of distraint or attachment, and the same shall be refunded to such person on a written application if made within three years from the date of the notice. Any sum not claimed within three years from the date of such notice shall be the property of the municipal council.

Where the warrant is addressed outside the municipal area, the Municipal Commissioner or Chief Officer may, by endorsement direct the officer to whom the warrant is addressed, to sell the property distrained or attached; in such case it shall be lawful for such officer to sell the property and to do all things incidental to the sale in accordance with the provisions of sections 144 and 145 and to exercise the powers and perform the duties of the Municipal Commissioner or Chief Officer under sub-sections (1) and (2) of section 144 in respect of such sale except the power of suspending the warrant. Such officer shall, after deducting all costs of recovery incurred by him, remit the amount recovered under the warrant to the Municipal Commissioner or Chief Officer by whom it was issued who shall dispose of the same in accordance with the provisions of section 144.

Procedure when distraint is impracticable. (1) If, for any reason, the distraint or a sufficient distraint of the defaulter’s property under the foregoing provisions of this Chapter is impracticable, the municipal council may prosecute the defaulter before a magistrate of the first class: Provided that an occupier of a building or vacant land, in respect of which any tax remains unpaid in whole or in part, shall not be liable to prosecution in respect of any sum recoverable from him unless he has wilfully prevented distraint or a sufficient distraint of movable property found on the building or vacant land. (2) Every person who is prosecuted under sub-section (1), shall be liable on proof, to the satisfaction of the magistrate, that he wilfully omitted to pay the amount due by him, to pay a fine not exceeding twice the amount which may be due by him on account of,— (a) the tax and warrant fee, if any, and (b) if the distraint has taken place, the distraint fee and the expenses incidental to the detention and sale, if any, of the property distrained. (3) Whenever any person is convicted of an offence under sub-section (2), the magistrate shall, in addition to any fine which may be imposed, recover summarily and pay over to the municipal council the sum, if any, due under the heads specified in clauses (a) and (b) of sub-section (2), and may in his discretion also recover summarily and pay to the municipal council such amount, if any, as he may fix as the cost of the prosecution.

Summary proceeding may be taken against persons about to leave the municipal area. (1) If the municipal council has reason to believe that any person from whom any sum recoverable under the provisions of this chapter is due or is about to become due, is about to leave the municipal area, the municipal council may cause a bill for the sum due or about to become due to be presented to such person and demand immediate payment thereof. (2) If, on presentation of such bill, the said person does not forthwith pay the sum due or about to become due by him, the amount shall be leviable by distress and sale of the movable property or attachment and sale of immovable property of the defaulter in the manner hereinbefore prescribed, except that it shall not be necessary to serve upon the defaulter any notice of demand and the municipal council’s warrant for distress or attachment and sale may be issued and executed without any delay.

Fees for,— (a) every notice issued under sub-section (3) of section 142; (b) every warrant issued under sub-section (1) of section 143; (c) every distress or attachment made under sub-section (5) of section 143; and the cost of maintaining any live-stock seized under sub-section (5) of section 143; shall be chargeable at the rates, respectively, specified in that behalf in the rules and shall be included in the costs of recovery to be levied under section 144.

(1) Appeals against any claim included in a notice of demand served under sub-section (3) of section 142 or under sub-section (1) of section 148 may be made to the judicial magistrate having jurisdiction over the area concerned. But no such appeal shall be heard and determined unless,— (a) the appeal is brought within one month next after service of the notice complained of; and (b) an application in writing, stating the grounds on which the claim is disputed, has been made as follows, that is to say:- (i) in the case of property tax, to the Chief Officer or the Municipal Commissioner, as the case may be, or the authorised officer within fifteen days next after the service of notice under sub-section (3) of section 142. (ii) in the case of any other claim for which a notice of demand served has been presented under sub-section (3) of section 142, to the municipal council within fifteen days next after the service of such notice; and (c) the amount admitted by the appellant has been deposited by him in the municipal office. (2) The decision of the magistrate upon any appeal, shall at the instance of either party, be subject to revision by the court to which appeals from his decisions ordinarily lie. (3) Subject to the provisions of sub-section (2) the decision of a Magistrate on any appeal or revision under this section shall be final and shall be implemented by the municipal council. (4) Save as provided in this Act, no entry in the property tax register made under the provisions of this Act and no sum claimed by any person under this Chapter shall be called in question before any court or other authority.

All sums due on account of any tax imposed in the form of property tax mentioned in section 110 shall subject to prior payment of land revenue, if any, due to the Government thereupon, be a first charge upon the building or vacant land, in respect of which such tax is leviable, and upon the movable property, if any, found within or upon such building or vacant land, and belonging to the person liable for such tax or taxes and shall be recoverable as arrears of land revenue: Provided that no arrear of any such tax shall be recovered from any occupier who is not the owner if it has been due for more than three years or for a period during which such occupier was not in occupation.

Suspension of power to recover by distress and sale. The Government may, at any time by notification, suspend the operation of sections 143 and 144 in any municipal area, and from such date as shall be fixed in this behalf in the notification, every amount due on account of any tax theretofore recoverable under the said sections, shall be recoverable on application to a magistrate of the first class, in the manner provided in sub-section (2) of section 276 for the recovery of such fines as are therein referred to, and not otherwise.

Receipt to be given for all payments. For all sums paid on account of any tax under this Act, a receipt stating the amount, and the tax on account of which it has been paid shall be tendered by the person receiving the same. (4) The municipal council may, in its discretion give compensation to any person who sustains substantial loss by the destruction of any property under this section: but except as allowed by the municipal council no claim for compensation shall lie for any loss or damage caused by any exercise of the powers specified therein. (5) If in any municipal area in which such declaration under sub-section (2), as aforesaid is for the time being in force, any person,— (a) knowingly disobeys any order which for the time being is in force in such municipal area and which has been passed by the municipal council in exercise of any power conferred on it by section 248 or under this section, or (b) obstructs any officer of the municipal council or other person acting under the authority of the municipal council in carrying out or executing any such order, such person shall be punishable with fine which may extend to one thousand rupees.

(1) Where any sum is due on account of rent or property tax from a person to the municipal council in respect of land vested in, or entrusted to the management of, the municipal council, the municipal council may apply to the Deputy Commissioner to recover any arrear of such rent or property tax as if it were an arrear of land revenue. (2) The Deputy Commissioner on being satisfied that the sum is due shall proceed to recover it as an arrear of land revenue. (3) Any officer or employee of the municipality who fails to collect property tax dues under assessment of property tax or any financial causes to the municipality, shall be fined upto Rs. 50,000 in each case and may also be punished with simple imprisonment for fifteen days.