Vehicular Toll is a Tax and not merely a contractual obligation : Bombay High Court.

The Mumbai-based MEP Infrastructure Developers Ltd.’s (MEPIDL) request to have recovery actions for its failure to pay toll collected by it to the civic body was dismissed by the Bombay High Court because it was noted that vehicular toll is a tax and not just a contractual debt between the collection company and the civic body. The case was decided by the division bench of Justices GS Patel and SG Dige


MEPIDL was given the job of collecting toll taxes by MCD. The contract was terminated by MCD on the grounds that MEPIDL failed to make the required reimbursements and that a sizable sum was owed. MEPIDL’s appeal of the dismissal was denied by the Delhi High Court. According to the MCD, MEPIDL owes approximately 4000 crores as of April 10, 2021, and that amount has subsequently escalated. In order to get the money back, it filed distress warrants.

In Delhi, MEPIDL owns no property. As a result, MCD asked the local government to send notices of attachment to MEPIDL’s movable and immovable property that is under the control of the Bombay High Court. Instead of enforcing the Tehsildar’s order to freeze MEPIDL’s account, the Kalyan Janata Sahakari Bank Ltd. sent it a show-cause letter. MEPIDL and MCD filed competing writ petitions in which they contested the distress warrants and attachment notices and the Bank’s action. The court answered MCD’s requests.

The bank was ordered to recall the show-cause notice by the court after determining that the bank’s actions were “indefensible.” The bank was prohibited by the court from communicating with MEPIDL in any way that would prompt it to withdraw funds from the account.


According to the Delhi Municipal Corporation Act, 1957 (DMC Act) and the Toll Tax Bye-Laws, a toll is a tax. Therefore, the court determined that it is not possible to limit the recovery to a contractual debt. According to Section 156(1) of the DMC Act, the defaulter’s mobile property may be attached and sold, its immovable property may be attached and sold, or it may be distressed and sold to recoup tax.

Subject to certain conditions, Section 157(1) states that MCD may seize any property belonging to the defaulter stated in this section from any location inside Delhi. According to the court, section 157 is an enabling clause. It has no restrictions on section 156, which is unrestricted geographically. The court ruled that if MEPIDL’s argument is accepted, MCD will never be able to hire a contractor who doesn’t own property in Delhi, and if it does, the contractor won’t be subject to recovery. This interpretation of Section 156 was labelled “absurd and untenable” by the court.

The Tehsildar must take action after receiving the Revenue Recovery Certificate, the court ruled, and there is no need for him to check his own satisfaction. The court ruled that the Tehsildar does not have any discretion under Section 3(3) of the Revenue Recovery Act. As a result, the court decided that Tehsildar had not committed a crime. It is not justifiable to meddle because MEPIDL finds it uncomfortable. Furthermore, the court ruled that the remedy does not reside in writ court if the dispute is solely contractual, as MEPIDL contended.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal falls into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”


Click here to view the full pdf.

Leave a Reply

Your email address will not be published. Required fields are marked *