PETITIONER:
FIRM SURAJMAL BANSHIDHAR, ETC.
Vs.
RESPONDENT:
THE MUNICIPAL BOARD, GANGANAGAR
DATE OF JUDGMENT25/10/1978
BENCH:
SHINGAL, P.N.
BENCH:
SHINGAL, P.N.
CHANDRACHUD, Y.V. ((CJ)
UNTWALIA, N.L.
CITATION:
1979 AIR 246 1979 SCR (2) 169
1979 SCC (1) 303
ACT:
Rajasthan Town Municipalities Act 1951-Section 179(2)-
Scope of Section if authorises levy of terminal tax.
Words and Phrases "for anything done or purporting to
be done" meaning of .
Section 179(1) of the Rajasthan Town Municipalities
Act, 1951 provides that no suit shall be instituted against
any municipal board "for anything done or. purporting to be
done" under the Act except in accordance with the procedure
laid down therein. The period of limitation for institution
of a suit against the municipality was six months from the
accrual of cause of action under. sub-s. (2).
HEADNOTE:
The respondent Board realised terminal tax on goods
experted by the appellants. In suits filed by the appellants
for refund of the amounts which they claimed were collected
without authority of law, the respondent Board pleaded that
the levy was in accordance with law and that the suits where
barred by limitation. The trial court decreed the suits and
on appeal the District Judge affirmed the trial Court's
decrees. In second appeal the High Court held that the levy
was illegal. The High Court, however, allowed the appeals in
respect of those amounts which were found to be within
limitation under s. 179(2) of the Act and dismissed the
others.
On the question whether the levy could be said to be a
thing done or purported to be done under the Act.
Allowing the appeal,
^
HELD: The suits did not fall within the purview of s.
179 of the Act and were not barred by limitation. [172 D]
1. (a) It is well established that if levy of a tax is
prohibited by an Act and is not in pursuance of it, it could
not be said to be purported to be done in pursuance of the
execution or intended execution of the Act. [172 B]
Poona City Municipal Corporation v. Dattatraya Nagesh
Deodhar, [1964] 8 S.C.R. 178 followed.
(b) The terminal tax could not be imposed under any of
The provisions of the Act. The High Court was right in
holding that the amounts ` paid by the appellants by way of
terminal tax were recoverable by the suits. [173 F-G 174 Al
2. The Bikaner State Municipal Act, 1923 (which was the
predecessor of the present Act) authorised the levy of
terminal tax and the Board accordingly levied the tax until
January 26, 1950. With the coming into force
12-SCI/78
170
of the Constitution, by virtue of art. 277 it was
permissible for the Board to continue to levy the terminal
tax until provision to the contrary was made by Parliament
by law. But with effect from December 22, 1951 the Bikaner
Act was repealed and the present Act was brought into force.
the repeal, however, did not affect the validity of those
taxes which had already been imposed and which could be
"deemed`' to have been imposed under the Act. But the
provisions of the Act the clear that the terminal tax in
question could not be imposed thereunder. The levy could
not, therefore, be saved by cl. (b) of the proviso to s. 2.
on the other hand it is clear that the State Legislature had
decided to discontinue the levy by excluding it from the
purview of the saving clauses. The further levy of the tax,
therefore, became illegal and it was not permissible to
continue it any longer under Art. 277 which merely gave the
authority concerned the option to continue to levy if it so
desired. [173A, F-G]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 372-382
of 1969.
Appeals by Special Leave from the Judgment and order
dated 10-10-1968 of the Rajasthan High Court in C.S.A. Nos.
18 and 29, 27, 28. 30-35 of 1960 and 54 and 58 of 1961.
S. N. Jain and S. K. Jain for the Appellants.
B. P. Maheshwari and Suresh Sethi for the Respondent.
The Judgment af the Court was delivered by
SHINGHAL, J.,-These appeals by special leave arise out
of a common judgment of the Rajasthan High Court dated
October 10, 1968, by which the suits which were filed by the
present appellants were dismissed in pursuance of the
earlier judgment of the same court dated November 9, 1964,
on the ground that they were governed by section 179(2) of
the Rajasthan Town Municipalities Act, 1951, hereinafter
referred to as the Act, and were barred by limitation.
The facts giving rise to the appeals were different in
details, but they were examined in the High Court with
reference to the common questions of law which arose in all
of them and formed the basis of that Court’s, decision
against the plaintiffs. We have heard these as companion
appeals, and will decide them by a common judgment.
It is not necessary to give the detailed facts of all
the cases as it will be enough to refer to the suit which
was filed by M/s Surajmal Banshidhar and the developments
connected with it, in order to appreciate the controversy.
The plaintiff firm referred to above carried on
business in “pakka arat” and exported goods of various kinds
from Ganganagar. The Municipal Board of Ganganagar realist
“export duty”, by way of ter-
171
minal tax, on the exported goods. The plaintiff therefore
raised a suit on October 19, 1957, challenging the Board’s
right to “impose or to reales” any export duty during the
period June 5, 1954 to March 10 1957, amounting to Rs.
10,729/-. It however confined the suit to the recovery of
Rs. 10,000/- alongwith interest and gave up the balance. The
Board denied the claim in the suit and pleaded, inter alia,
that the levy of the terminal tax was in accordance with the
law and the suit was barred by limitation. The trial court
rejected the defence and decreed the suit, and its decree
was upheld by the District Judge on appeal. Similar decrees
were passed in the other suits, for various sums of money.
The Board took the matter to the High Court in second
appeals. The appeals were heard by a Single Judge who, while
deciding that the suits were governed by section 179(2) of
the Act, referred the question on the legality of the levy
to a larger Bench. A Full Bench of the High Court held that
the levy of the terminal tax was illegal, and sent the cases
back to the Single Judge who allowed the appeals only for
those amounts which were found to be within limitation under
section 179(2) of the Act and dismissed the other suits. The
plaintiffs obtained special leave and have come up to this
Court in these circumstances.
The question which arises for consideration is whether
the suits fall within the purview of section 179(2) of the
Act. The first two subsection of section 179 which bear on
the controversy read as follows,-
“179. Limitation of suits, etc. -(1) No suit shall
be instituted against any municipal board, president,
member, officer, servant or any person acting under the
direction of such municipal board, chairman, member,
officer or servant for anything done or purporting to
be done under this Act, until the expiration of two
months next after notice in writing, stating the cause
of action, the name and place of abode of the intending
plaintiff and the relief which he claims, has been, in
the case of a municipal board, delivered or left at its
office, and, in case of a chairman, member, officer, or
servant, or person as aforesaid, delivered to him or
left at his office or usual place of abode; and the
plaint shall contain a statement that such notice has
been so delivered or left.
(2) Every such suit shall, unless it is a suit for
the recovery of immovable property or for a declaration
of title thereto, be dismissed if it is not instituted
within six months after the accrual of the alleged
cause of action.”
The question therefore is whether the illegal levy of
terminal tax (assuming that it was illegal as held by the
High Court) could be said to
172
be a thing “done or purporting to be done” under the Act. A
similar question arose for the consideration of this Court
ill Poona City Municipal Corporation v. Dattatraya Nagesh
Deodhar(l) with reference to the provision in section 127
(4) of the Bombay Provincial Municipal Corporation Act,
1949, and it was held that if the levy of a tax was
prohibited by the Act concerned and was not in pursuance of
it, it ‘could not be said to be ‘purported to be done in
pursuance of execution or in tended execution of the Act’.”
It was observed that what was plainly prohibited by the Act
could not be “claimed to be purported to be done in
pursuance or intended execution of the Act.” It was
therefore held that the suit was outside the purview of the
section 127(4) and was not barred by limitation. We are in
respectful agreement with that view, and we have no
hesitation in holding, in the circumstances of the pre sent
cases, which are governed by a provision similar to section
127(4) or the Poona City Municipal Corporation Act, that the
suits did not fall within the purview of section 179 of the
Act and were not barred by limitation. It may be mentioned
that it has not been argued before us, and is nobody’s case,
that the suits would be barred by limitation even if they
did not fall within the purview of section 179(2) of the
Act. The decision of the High Court to the contrary is not
correct and will have to be set aside.
It has however been argued on behalf of the respondents
that the High Court erred in taking the view that the levy
of the terminal tax was illegal, and our attention has been
invited to the relevant provisions of the law including the
Bikaner State Municipal Act, 1923, article 277 of the
Constitution and section 2 of the Act.
It is not in controversy before us that the Bikaner
State Municipal Act, 1923, authorised the levy of terminal
tax and such a tax was levied by the Ganganagar Municipal
Board under the authority of that law upto January 26, 1950,
when the Constitution came into force. On and from that
date, the power to levy export duty vested in the Parliament
but article 277 saved that and some other taxes as follows,-
“277. Any taxes, duties, cesses or fees which,
immediately before the commencement of this
Constitution, were being law fully levied by the
Government of any State or by any municipality or other
local authority or body for the purposes of the State,
municipality, district or other local area may, not
withstanding that those taxes, duties, cesses or fees
are mentioned in the Union list, continue to be levied
and to be applied to the same purposes until provision
to the contrary is made by Parliament by law.’
(1) [1964] 8 S.C.R. 178.
173
it was therefore permissible for the Municipal Board to
continue to levy A the terminal tax until provision to the
contrary was made by Parliament by law. But it so happened
that the Bikaner Municipal Act, 1923 was repealed and the
Act was brought into force with effect from December 22,
1951. Section 2(b) of the Act, which dealt with the repeal
of the Bikaner Act and the saving of some of its provisions,
expressly provided that on the coming into force of the Act,
the laws and enactments specified in the First Schedule of
the Act shall be repealed in so far as they relate to the
Town Municipalities covered by the Act. So as the Bikaner
State Municipal Act, 1923, was included in the first
Schedule, it was repealed by the aforesaid section 2. That
section however contained a proviso, clause (b) whereof was
to the following effect,-
“(b) all town municipalities constituted under the said
laws or enactments, and members appointed or elected,
committees established, limits defined, appointments,
rules, orders and bye-laws made, notifications and
notices issued, taxes imposed, contracts entered into,
and suits and other proceedings instituted, under the
said laws or enactments or under and laws or enactments
thereby repealed shall, so far as may be and so far as
they relate to town municipalities be deemed, unless
the Government directs otherwise, to have been
respectively constituted, appointed, elected, establish
ed” defined, made, issued, imposed, entered into and
instituted under this Act.”
The repeal did not therefore affect the validity of
those taxes which had already been imposed and which could
be “deemed” to have been imposed under the Act, unless there
was a direction to the contrary by the State Government. It
is quite clear from the provisions af the Act, and is in
fact not disputed before us, that the terminal tax in
question could not be imposed under any of the provisions of
the Act. Its, levy could not therefore be saved by clause
(b) of the proviso to section (2) of the Act. On the other
hand, it could be said with justification that the State
Legislature had decided to discontinue the levy by excluding
it from the purview of the saving clause. The further levy
of the tax therefore became illegal and it was not
permissible to continue it any longer under article 277
which merely gave the authority concerned the option to
continue the levy if it so desired.
So as the levy of the tax after December 22, 1951, was
illegal, there is nothing wrong with the view taken by the
High Court that the amounts
174
paid by the plaintiffs by way of terminal tax were
recoverable by the suits which have given rise to these
appeals, and there is no force in the argument to the
contrary.
The appeals are allowed with costs, the decrees of the
High Court are set aside and those of the lower appellate
court restored.
P.B.R. Appeals allowed.
175