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DEEPAK GUPTA, J. –

The present Regular Second Appeal has been preferred by the plaintiff  against the judgment & decree dated 28.04.1999 passed by the learned first Appellate Court, whereby, while accepting the appeal filed by the defendants–Municipal authorities, the judgment & decree dated 01.02.1996 passed by the trial Court decreeing the suit for permanent injunction was set aside and the suit was dismissed.

2. The factual matrix, as borne out from the record, reveals that on 16.10.1990, plaintiff No.1, while driving a truck loaded with synthetic yarn and Nirma washing powder packs, entered the municipal limits of Ludhiana and had crossed approximately 50 yards beyond the Octroi barrier, when he was stopped by the Municipal staff. The plaintiff expressed willingness to pay the Octroi duty for the goods brought within municipal limits; however, the truck along with the goods was seized and the plaintiff was directed to pay Octroi along with a penalty quantified at twenty times, as the alleged evaded duty. The plaintiffs approached the concerned authorities for withdrawal of the demand and release of the vehicle and goods, but the demand of Rs.15,000/- towards penalty persisted, compelling them to institute the civil suit seeking protection against the said demand and consequential relief.

3. The defendants contested the suit primarily on the ground of lack of jurisdiction of the Civil Court and asserted that the plaintiff had attempted to evade Octroi duty and was rightly penalized under the provisions of the Punjab Municipal Corporation Act, 1976.

4. Upon appreciation of evidence, the learned trial Court recorded a categorical finding that although Octroi duty could be assessed and recovered by the Municipal authorities, the power to impose penalty under Secon 116 of the Act did not vest with the Commissioner or officers of the Corporation and could be exercised only by a competent Criminal Court. On that basis, the demand was held to be illegal and the suit was decreed.

5. The first Appellate Court, while concurring with the finding that the Municipal authorities lacked competence to impose the penalty, nonetheless allowed the appeal and dismissed the suit on the premise that the plaintiffs had an efficacious statutory remedy of appeal under the Act.

6. Assailing the reversal, learned senior counsel for the appellants contends that once the action of the Municipal authorities was found to be without jurisdiction, the availability of an alternative remedy could not operate as a bar to the maintainability of the civil suit.

7. Conversely, learned counsel for the respondents supports the judgment of the first Appellate Court.

8. Having heard the pares and examined the record, this Court finds that the substantial question arising for consideration is whether officers of the Municipal Corporation possess the authority to impose penalty under Secon 116 of the Punjab Municipal Corporation Act, 1976 for alleged evasion of Octroi and, if not, whether the civil suit could be dismissed solely on the ground of availability of an alternative  statutory remedy.

9. The issue is no longer res integra. The Hon’ble Supreme Court in Municipal Corporation, Ludhiana v. Commissioner of Paala Division Paala, 1995 (1) SCC 304 authoritatively held that while assessment and recovery of Octroi fall within the domain of municipal authorities, imposition of penalty contemplated under Secon 116, being penal in nature and capable of extending to multiple times the duty allegedly evaded, can be ordered only by a Criminal Court in accordance with law. The statutory scheme, particularly when Sections  388 and 394-A of the Act are read conjointly, reinforces the distinction between administrative recovery of duty and penal consequences for evasion.

10. The same principle has been reiterated by this Court in M/s Gestetner (India) Ltd. v. The Municipal Corporation, Ludhiana and Others 1996(3) P.L.R. 259; and later in Indian Tankers (P) Ltd. v. Municipal Corporation, Jalandhar, 2016 (2) PLR 841, wherein it was consistently held that municipal authorities are not vested with the power to impose such penalty.

11. In the present case, both Courts below have concurrently held that the Commissioner or officers of the Municipal Corporation lacked competence to impose the penalty in question. Once such a finding regarding inherent lack of jurisdiction stands recorded, the demand raised becomes void and unenforceable in the eyes of law.

12. It is a settled principle that the rule of alternative  remedy is a rule of prudence and not a bar where the impugned action is wholly without jurisdiction. A party cannot be compelled to pursue a statutory remedy against an order, which is a nullity. The first Appellate Court, therefore, fell into error in dismissing the suit merely on the ground that an appellate remedy was available, despite upholding the finding that the impugned demand was issued by an authority lacking statutory competence.

13. The trial Court had correctly appreciated the legal position and rightly decreed the suit by holding the impugned demand to be illegal. The reversal by the first Appellate Court thus suffers from a misapplication of law and warrants interference in second appellate jurisdiction.

14. Consequently, the present appeal is allowed. The judgment and decree dated 28.04.1999 passed by the learned first Appellate Court are set aside; and those dated 01.02.1996 passed by the learned trial Court are restored.

15. All pending application(s), if any, shall stand disposed of.

Appeal allowed.

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