Bombay High Court: Gram Panchayat Cannot Backtrack From Tax Settlement Based on Sarpanch’s Changing Stand

The Bombay High Court has held that a Gram Panchayat cannot arbitrarily withdraw from a settlement agreement merely because elected representatives later change their position. The Court observed that public interest and village welfare cannot be left to the whims and fancies of a Sarpanch or other elected officials.

A Division Bench of Justice G.S. Kulkarni and Justice Aarti Sathe was hearing a petition filed by Weikfield Agro Products Ltd., which challenged property tax demands imposed by the Bakori Gram Panchayat on structures located on agricultural land used for mushroom cultivation.

During the pendency of the case, the parties entered into settlement discussions. The company agreed to clear property tax dues for the period between 1997-98 and 2024-25 at mutually agreed rates and also undertook to construct a school for local children. The Gram Panchayat accepted the proposal and the company subsequently accepted the modified terms suggested by the Panchayat.

However, when the matter came up for final hearing, the Panchayat attempted to introduce a fresh stand. Rejecting this approach, the High Court noted that the settlement had remained unrevoked and operational for nearly a year. It held that allowing the Panchayat to resile from the agreement at a later stage would amount to arbitrariness and abuse of authority.

The Court directed the Gram Panchayat to honour the settlement and recover the agreed tax dues, while clarifying that future tax assessments may be carried out in accordance with law.