In The Gateway Hotels v. Kochi Municipal Corporation [2025: KER:31602] and the connected cases, the High Court of Kerala has ruled that the three-year period of limitation prescribed in the Kerala Municipality Act, 1994, will prevail over the general 12-year period of limitation provided under the Limitation Act, 1908.
The Special Law on Limitation Prevails
The High Court held that even though property tax is a “charge on the property,” for which the Limitation Act provides a 12-year recovery period, the specific three-year limit under Section 539 of the Kerala Municipality Act must prevail over the other.
The judgment clarified that other provisions, such as those creating a charge on the property (Section 237) or allowing recovery as arrears of public revenue (Section 538B), would not extend this three-year limitation period prescribed under section 539 of the Act.
Consequently, a municipality’s power to recover property tax is strictly limited to arrears for the three years immediately preceding the demand.
Time Barred Debt Cannot be Recovered by Recovery Act
In State Of Kerala & Ors vs V.R.Kalliyanikutty & Anr [AIR 1999 SC 1305], the Supreme Court held that a debt which is barred by the law of limitation cannot be recovered by recovery proceedings under the Kerala Revenue Recovery Act of 1968.
The Court’s Analysis and Relief
The case was brought in by the hotel and building owners within the Kochi Corporation and was for challenging the demand notices for arrears of property tax dating back to the 2016-17 financial year.
In its ruling, the High Court held that the petitioners were only liable to pay the property tax at the revised rates for the three-year period immediately prior to the date of the demand notice.
Significance of the Judgement
The Corporation cannot recover any tax arrears for the period before this three-year window and the property owners cannot be considered defaulters or subjected to any prejudice for the non-payment of tax for those earlier, time-barred periods.
