MP HC Quashes Notice Threatening Attachment Of Tenants’ Shops For Landlord’s ₹3.04-Lakh Property-Tax Dues

In brief

The question

Whether the Municipal Corporation could threaten attachment or auction of the owner’s property, including the rented shops, to recover property tax arrears through the impugned notice.

The court held

The Court held that the impugned notice was unsustainable and that the property could not be auctioned for recovery of the property tax in the manner contemplated.

It also directed

It quashed the notice dated 18 February 2026 and allowed and finally disposed of the petition.

01Facts

The petitioners were tenants of six shops in premises owned by respondent No. 5.

¶ 2–6

The Municipal Corporation issued a demand notice dated 18 February 2026 for property tax arrears of ₹3,04,612, requiring payment within 24 hours and threatening recovery by attachment of movable and immovable property under Sections 175 and 177 of the Madhya Pradesh Municipal Corporation Act, 1956.

¶ 2–6

The petitioners challenged the notice insofar as it threatened action against their shops, relying on the Court’s prior decision concerning recovery of property tax from rented premises.

¶ 2–6

The Corporation stated that it would pursue only recovery methods permitted by the Act.

¶ 2–6

02Issues

i.Whether the Municipal Corporation could threaten attachment or auction of the owner’s property, including the rented shops, to recover property tax arrears through the impugned notice.

¶ 6–8

ii.Whether the impugned notice was sustainable in light of the rule that property tax recoverable from a tenant-occupied premises may be recovered by attaching rent due, rather than by sealing or locking the premises.

¶ 4–6

03Law Applied

Under the Madhya Pradesh Municipal Corporation Act, 1956, the Corporation may recover property tax through statutory procedures, including attachment of rent due in respect of the property.

In Saleem Mansoori v. Municipal Corporation, 2009 (3) MPLJ 519, as quoted in the judgment, Sections 134(6) and 141(2) were read together to permit recovery from an occupying tenant by attachment of rent, while not authorising the Corporation to lock or seal rented premises for that purpose.

¶ 4

The Court also relied on M/s Parkson Decor Galleria Private Limited v. Indore Municipal Corporation, W.P. No. 17290 of 2024 (decided 5 July 2024), which applied that principle and recognised attachment of rent and other statutorily authorised measures as permissible recovery modes.

¶ 4–5

The notice invoked Sections 174, 175 and 177 of the 1956 Act.

¶ 3

Provisions in the judgment · 2

M.P. Municipal Corporation Act, 1956 Section 134Section 141

04Reasoning

The Corporation acknowledged that it was aware of the decision in Parkson Decor Galleria and would act in accordance with the law, but did not explain how the notice’s threatened action against the property was consistent with that decision.

¶ 6–8

The Court treated the notice as contemplating auction of the owner’s property for recovery of the tax and found that such action could not be justified where the recognised method for recovery from tenant-occupied premises was attachment of rent, alongside other measures authorised by the Act.

¶ 6–8

The Corporation’s submission that the notice was merely preliminary did not cure the defect in the recovery action it threatened.

¶ 6–8

05Holding

The Court held that the impugned notice was unsustainable and that the property could not be auctioned for recovery of the property tax in the manner contemplated.

¶ 8–9

It quashed the notice dated 18 February 2026 and allowed and finally disposed of the petition.

¶ 8–9

LawLens.Madhya Pradesh High Court

Original Court PDF