{"id":236762,"date":"1996-01-16T00:00:00","date_gmt":"1996-01-15T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/delhi-cloth-general-mills-co-vs-state-of-rajasthan-ors-on-16-january-1996"},"modified":"2019-02-05T23:42:05","modified_gmt":"2019-02-05T18:12:05","slug":"delhi-cloth-general-mills-co-vs-state-of-rajasthan-ors-on-16-january-1996","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/delhi-cloth-general-mills-co-vs-state-of-rajasthan-ors-on-16-january-1996","title":{"rendered":"Delhi Cloth &amp; General Mills Co. &#8230; vs State Of Rajasthan &amp; Ors on 16 January, 1996"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Delhi Cloth &amp; General Mills Co. &#8230; vs State Of Rajasthan &amp; Ors on 16 January, 1996<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1996 SCC  (2) 449, \t  JT 1996 (1)\t390<\/div>\n<div class=\"doc_author\">Author: B S.P.<\/div>\n<div class=\"doc_bench\">Bench: Bharucha S.P. (J)<\/div>\n<pre>           PETITIONER:\nDELHI CLOTH &amp; GENERAL MILLS CO. LTD. &amp; ANR.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF RAJASTHAN &amp; ORS.\n\nDATE OF JUDGMENT:\t16\/01\/1996\n\nBENCH:\nBHARUCHA S.P. (J)\nBENCH:\nBHARUCHA S.P. (J)\nVERMA, JAGDISH SARAN (J)\nVENKATASWAMI K. (J)\n\nCITATION:\n 1996 SCC  (2) 449\t  JT 1996 (1)\t390\n 1996 SCALE  (1)332\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n<p>\t\t      J U D G M E N T<br \/>\nBHARUCHA, J.\n<\/p>\n<p>     These are appeals by special leave against the judgment<br \/>\nand  order  of\ta  Division  Bench  of\tthe  High  Court  of<br \/>\nRajasthan. The\tDivision Bench\treversed  the  judgment\t and<br \/>\norder of a learned single Judge, which, upon a writ petition<br \/>\nfiled by  the present  appellants, had\tstruck down the Kota<br \/>\nMunicipal Limits (Continued Existence) Validating Act, 1975.\n<\/p>\n<p>     The  appellants   established  a\tfertilizer  unit  in<br \/>\nvillages called\t Raipura and  Ummedganj of  District Kota in<br \/>\nthe State of Rajasthan in 1969.\n<\/p>\n<p>     On 1st  March, 1958,  the State  of Rajasthan  (the 1st<br \/>\nrespondent) issued  a notification under Section 7(1) of the<br \/>\nRajasthan  Town\t Municipalities\t Act,  1951,  informing\t the<br \/>\npublic that,  in exercise  of powers  under Section  5(1) of<br \/>\nthat Act,  it proposed\tto extend  the limits  of  the\tKota<br \/>\nmunicipality so as to include therein the village of Raipura<br \/>\nand it invited objections thereto. On 16th October, 1958, in<br \/>\nexercise of  powers conferred  by Section  5(1) of  the 1951<br \/>\nAct, the  State Government  extended the  limits of the Kota<br \/>\nmunicipality to\t include therein  the village  of Ummedganj.<br \/>\nThis inclusion\twas challenged\tin  a  writ  petition  filed<br \/>\nbefore\tthe  Rajasthan\tHigh  Court.  Pending  the  decision<br \/>\nthereof, on 2nd May, 1960, the State Government excluded the<br \/>\nvillage of Ummedganj from the said municipal limits. On 17th<br \/>\nAugust, 1960,  a Full Bench of the Rajasthan High Court held<br \/>\nthat Ummedganj was not validly included within the limits of<br \/>\nthe  Kota   town  municipality\tinasmuch  as  the  mandatory<br \/>\nprovisions in that behalf had not been followed.\n<\/p>\n<p>     It appears\t that the  villages of Raipura and Ummedganj<br \/>\nwere treated  as falling within the municipal limits of Kota<br \/>\nand octroi  was collected from the appellants. Realizing, in<br \/>\nApril 1974,  that the  levy and realization of octroi by the<br \/>\nKota Municipality  (the 2nd  respondent)  was  illegal,\t the<br \/>\nappellants filed  a suit  in the court of the Munsiff, Kota,<br \/>\nseeking\t a   permanent\tinjunction   restraining  the\tKota<br \/>\nMunicipality from  levying or  collecting octroi from it. An<br \/>\ninjunction  was\t granted  and  was  upheld  in\tappeal.\t The<br \/>\nappellants also\t filed a  suit in  the court of the District<br \/>\nJudge, Kota,  for refund  of the  amount of Rs.10,85,365.32,<br \/>\nbeing  the   amount  of\t  octroi  erroneously  paid  by\t the<br \/>\nappellants to  the Kota\t Municipality during  the period  of<br \/>\nthree years prior to the filing of the suit.\n<\/p>\n<p>     On 7th  January, 1975,  the State Government issued the<br \/>\nKota  Municipal\t  Limits  (Continued  Existence)  Validating<br \/>\nOrdinance, 1975.  It was  replaced  by\tthe  Kota  Municipal<br \/>\nLimits (Continued  Existence)  Validating  Act,\t 1975)\t(now<br \/>\ncalled the  &#8220;Validating Act&#8221;).\tUpon the promulgation of the<br \/>\nOrdinance, the\tappellants filed a writ petition challenging<br \/>\nits validity.  When the\t Validating Act was passed, the writ<br \/>\npetition  was  amended\tto  challenge  the  same.  The\twrit<br \/>\npetition was  allowed by  a learned  single Judge.  Both the<br \/>\nState Government and the Kota Municipality filed appeals. By<br \/>\nthe judgment  and order\t under appeal,\tthe  Division  Bench<br \/>\nallowed the  appeals and  set  aside  the  judgment  of\t the<br \/>\nlearned single Judge.\n<\/p>\n<p>     The  1951\t Act   was   replaced\tby   the   Rajasthan<br \/>\nMunicipalities Act,  1959. The\tprovisions in  regard to the<br \/>\nde-limitation of  municipalities and  the procedure  in that<br \/>\nbehalf was  substantially similar  to that  contained in the<br \/>\n1951  Act.   It\t is  convenient\t to  set  out  the  relevant<br \/>\nprovisions, which are contained in Section 4 and 6.\n<\/p>\n<blockquote><p>     &#8220;4. Delimitation of Municipalities &#8211; (1)<br \/>\n     Subject to\t the provisions of sections 5<br \/>\n     and 6,  the State\tGovernment may,\t from<br \/>\n     time to  time, by\tnotification  in  the<br \/>\n     official Gazette &#8211;\n<\/p><\/blockquote>\n<blockquote><p>     (c)  include or  exclude any  area in or<br \/>\n     from any municipality;\n<\/p><\/blockquote>\n<blockquote><p>     6.\t  Procedure\t preliminary\t   to<br \/>\n     notification under\t section 4  &#8211; (1) Not<br \/>\n     less than two months before the issue of<br \/>\n     any notification  under  section  4  the<br \/>\n     State  Government\t shall\tcause  to  be<br \/>\n     published in  the Official\t Gazette, and<br \/>\n     to be  posted in  conspicuous  spots  or<br \/>\n     proclaimed by  beat of  drum in the area<br \/>\n     concerned,\t a   proclamation  announcing<br \/>\n     that it  is proposed  to constitute such<br \/>\n     local area\t to be\ta municipality, or to<br \/>\n     include or\t exclude it  in or  from  any<br \/>\n     municipality, or  to alter the limits of<br \/>\n     any municipality  in a  specified manner<br \/>\n     or to declare that such local area shall<br \/>\n     cease to  be a municipality, as the case<br \/>\n     may be,  and requiring  all persons  who<br \/>\n     entertain\tany  objection\tto  the\t said<br \/>\n     proposal  to   submit  the\t  same,\t with<br \/>\n     reasons therefore\tin  writing,  to  the<br \/>\n     State Government  within two months from<br \/>\n     the date of the said proclamation.<br \/>\n     (2)  No  notification  under  section  4<br \/>\n     shall be issued by the State Government,<br \/>\n     unless  the   objections,\tif   any,  so<br \/>\n     submitted are, in its opinion sufficient<br \/>\n     or invalid.&#8221;\n<\/p><\/blockquote>\n<p>The relevant portion of the Statement of Objects and Reasons<br \/>\nof the Validating Act reads thus :\n<\/p>\n<blockquote><p>     &#8220;1. According  to the  provisions of the<br \/>\n     Rajasthan Municipalities  Act, 1959, the<br \/>\n     village of Raipura was never included in<br \/>\n     the limits\t of the Kota Municipality and<br \/>\n     though  the  village  of  Ummedganj  was<br \/>\n     included therein  but it  was thereafter<br \/>\n     excluded from these limits. However, the<br \/>\n     Kota Municipality to all intents and for<br \/>\n     all purposes  treated them\t as  existing<br \/>\n     within its\t limits.  During  the  period<br \/>\n     from 1958\tto 1974\t elections were\t held<br \/>\n     and taxes\twere levied  in\t relation  to<br \/>\n     these villages  as existing  within  the<br \/>\n     limits of\tthe Kota  Municipality. These<br \/>\n     actions were  challenged in  law courts.<br \/>\n     Doubts have, therefore, arisen as to the<br \/>\n     validity of  the continued\t existence of<br \/>\n     these villages  within these  limits and<br \/>\n     as to  the legality  of the action taken<br \/>\n     or things\tdone, including\t the levy and<br \/>\n     collection of taxes within these limits.\n<\/p><\/blockquote>\n<blockquote><p>     2.\t  It  was,  therefore,\texpedient  to<br \/>\n     remove these  doubts and to validate the<br \/>\n     continued existence  of  these  villages<br \/>\n     within   the    limits   of   the\t Kota<br \/>\n     Municipality and the things done, action<br \/>\n     taken, taxes  levied and  collected  and<br \/>\n     other matters connected therewith.&#8221;<\/p><\/blockquote>\n<p>\t\t\t (Emphasis supplied.)<br \/>\nSection 3  of  the  Validating\tAct  is\t its  most  relevant<br \/>\nprovision and it reads thus :\n<\/p>\n<blockquote><p>     &#8220;3.   Validation\t of   the   continued<br \/>\n     existence of  certain limits of the Kota<br \/>\n     Municipality  and\t of   other   matters<br \/>\n     connected\ttherewith  &#8211;  Notwithstanding<br \/>\n     anything contained\t in sections  4 to  7<br \/>\n     both inclusive,  or any other section of<br \/>\n     the Municipal  Act or  in any provisions<br \/>\n     of the Panchayat Act or in any judgment,<br \/>\n     decree, order  or direction of any court\n<\/p><\/blockquote>\n<blockquote><p>     &#8211;\n<\/p><\/blockquote>\n<blockquote><p>     (a)  the\tvillages    of\t Raipur\t  and<br \/>\n     Ummedganj in  Kota tehsil\tin  the\t Kota<br \/>\n     district shall  be deemed always to have<br \/>\n     continued to  exist and  shall hereafter<br \/>\n     continue to  exist within\tthe limits of<br \/>\n     the Municipality  at Kota to all intents<br \/>\n     and for all purposes; and\n<\/p><\/blockquote>\n<blockquote><p>     (b)  all  persons\t who  but   for\t  the<br \/>\n     inclusion of the villages of Raipura and<br \/>\n     Ummedganj\twithin\t the  limits  of  the<br \/>\n     municipality at  Kota were not liable to<br \/>\n     pay any  tax due under the Municipal Act<br \/>\n     shall,  upon   the\t inclusion  of\tthese<br \/>\n     villages within  the said limits or upon<br \/>\n     the   validation\t of   the   continued<br \/>\n     existence of  these villages  within the<br \/>\n     said limits, according to the provisions<br \/>\n     of this  Act, be  liable  and  shall  be<br \/>\n     deemed always to have been liable to pay<br \/>\n     the taxes\tdue under  the Municipal  Act<br \/>\n     and such  taxes shall  be levied  on and<br \/>\n     collected from  them  according  to  the<br \/>\n     provisions of the Municipal Act;\n<\/p><\/blockquote>\n<blockquote><p>     (c)  the\t areas\t  constituting\t  the<br \/>\n     aforesaid villages shall be deemed never<br \/>\n     to have  been included  in any Panchayat<br \/>\n     Circle  under  the\t Panchayat  Act,  and<br \/>\n     accordingly &#8211;\n<\/p><\/blockquote>\n<blockquote><p>     (i)  all  actions\ttaken,\tthings\tdone,<br \/>\n     appointments  and\t transfers  made  and<br \/>\n     powers exercised by the State Government<br \/>\n     or\t by   any  officers   or  authorities<br \/>\n     subordinate to  it or by or on behalf of<br \/>\n     the Municipality at Kota, in relation to<br \/>\n     the aforesaid  villages  of  Raipur  and<br \/>\n     Ummedganj\ttreating   them\t as  existing<br \/>\n     within the limits of the Municipality at<br \/>\n     Kota  shall   be  deemed  to  have\t been<br \/>\n     lawfully taken, done, made or exercised;\n<\/p><\/blockquote>\n<blockquote><p>     (ii) all taxes  levied and\t collected in<br \/>\n     exercise  of  the\tstatutory  powers  or<br \/>\n     purported exercise\t of such powers under<br \/>\n     the Municipal  Act or  under any law for<br \/>\n     the time  being in\t force,\t by  treating<br \/>\n     these villages  as existing  within  the<br \/>\n     limits  of\t the  Municipality  at\tKota,<br \/>\n     shall be  deemed  always  to  have\t been<br \/>\n     lawfully levied  and  collected  and  no<br \/>\n     claim for\ttheir refund  shall arise  or<br \/>\n     shall be deemed ever to have arisen;<br \/>\n     as if  the\t said  villages\t had  legally<br \/>\n     existed  within   the  limits   of\t  the<br \/>\n     Municipality at Kota.\n<\/p><\/blockquote>\n<p>By reason  of Section  4, no  court is permitted to question<br \/>\nthe validity  of anything  done or  power exercised  on\t the<br \/>\nground that  the villages  of Raipura and Ummedganj were not<br \/>\nwithin the  municipal limits  of Kota. Sections 6 and 7 read<br \/>\nthus :\n<\/p>\n<blockquote><p>     &#8220;6. Cancellation  of notifications\t with<br \/>\n     retrospective  effect.  &#8211;\tAs  from  the<br \/>\n     commencement   of\t  this\t  Act,\t  all<br \/>\n     notifications from\t time to  time issued<br \/>\n     under the Municipal Act or the Panchayat<br \/>\n     Act, providing  for the exclusion of the<br \/>\n     villages of  Raipura and  Ummedganj from<br \/>\n     the limits\t of the\t Municipality at Kota<br \/>\n     or for  their inclusion in any Panchayat<br \/>\n     Circle, shall  be deemed  to have ceased<br \/>\n     to have  effect and  be cancelled\tas if<br \/>\n     they never came into force.\n<\/p><\/blockquote>\n<blockquote><p>     7.\t  Act to  have over-riding  effect. &#8211;<br \/>\n     The provisions  of this  Act shall\t have<br \/>\n     effect\tnotwithstanding\t     anything<br \/>\n     contained in  any law for the time being<br \/>\n     in force.&#8221;\n<\/p><\/blockquote>\n<p>Mr. Shanti  Bhushan, learned  counsel  for  the\t appellants,<br \/>\nsubmitted that the Validating Act was bad in law inasmuch as<br \/>\nthe defects  which had\tbeen pointed  out in the judgment of<br \/>\nthe Full  Bench of  the Rajasthan  High Court  had not\tbeen<br \/>\nremoved by it. Reliance was placed upon the judgment of this<br \/>\nCourt in  Shri Prithvi Cotton Mills Ltd. and anr. vs. Broach<br \/>\nBorough Municipality  and ors.,\t 1970-1 S.C.R. 388. The case<br \/>\nof Prithvi Cotton Mills Ltd. is undoubtedly the leading case<br \/>\non the\tsubject of  validating statutes. Hidayatullah, C.J.,<br \/>\nspeaking for a Constitution Bench, said :\n<\/p>\n<blockquote><p>     &#8220;Before we\t examine s.  3\tto  find  out<br \/>\n     whether it\t is effective  in its purpose<br \/>\n     or not  we may  say a  few\t words\tabout<br \/>\n     validating statutes  in general.  When a<br \/>\n     legislature sets  out to  validate a tax<br \/>\n     declared by  a  court  to\tbe  illegally<br \/>\n     collected under  an  ineffective  or  an<br \/>\n     invalid\tlaw,\t the\tcause\t  for<br \/>\n     ineffectiveness or\t invalidity  must  be<br \/>\n     removed before validation can be said to<br \/>\n     take   place   effectively.   The\t most<br \/>\n     important condition,  of course, is that<br \/>\n     the legislature  must possess  the power<br \/>\n     to impose\tthe tax, for, if it does not,<br \/>\n     the action\t must ever remain ineffective<br \/>\n     and   illegal.    Granted\t  legislative<br \/>\n     competence,  it  is  not  sufficient  to<br \/>\n     declare merely  that the decision of the<br \/>\n     Court  shall   not\t bind\tfor  that  is<br \/>\n     tantamount to  reversing the decision in<br \/>\n     exercise of  judicial  power  which  the<br \/>\n     legislature   does\t   not\t possess   or<br \/>\n     exercise. A court&#8217;s decision must always<br \/>\n     bind unless  the conditions  on which it<br \/>\n     is based  are so  fundamentally  altered<br \/>\n     that the  decision could  not have\t been<br \/>\n     given  in\t the  altered  circumstances.<br \/>\n     Ordinarily, a  court holds\t a tax\tto be<br \/>\n     invalidly imposed\tbecause the  power to<br \/>\n     tax is  wanting or\t the statute  or  the<br \/>\n     rules or  both are\t invalid  or  do  not<br \/>\n     sufficiently  create  the\tjurisdiction.<br \/>\n     Validation of  a tax so declared illegal<br \/>\n     may be  done  only\t if  the  grounds  of<br \/>\n     illegality or  invalidity are capable of<br \/>\n     being removed  and are  in fact  removed<br \/>\n     and the  tax thus\tmade legal. Sometimes<br \/>\n     this   is\t  done\t by   providing\t  for<br \/>\n     jurisdiction where\t jurisdiction had not<br \/>\n     been properly invested before. Sometimes<br \/>\n     this    is\t    done    by\t  re-enacting<br \/>\n     retrospectively a valid and legal taxing<br \/>\n     provision and then by fiction making the<br \/>\n     tax already collected to stand under the<br \/>\n     re-enacted\t   law.\t    Sometimes\t  the<br \/>\n     legislature gives\tits own\t meaning  and<br \/>\n     interpretation of\tthe law\t under\twhich<br \/>\n     the tax was collected and by legislative<br \/>\n     fiat makes\t the new meaning binding upon<br \/>\n     courts. The  legislature may  follow any<br \/>\n     one method\t or all\t of them and while it<br \/>\n     does so  it may neutralize the effect of<br \/>\n     the earlier  decision of the court which<br \/>\n     becomes ineffective  after the change of<br \/>\n     the law.  Whichever method is adopted it<br \/>\n     must be  within the  competence  of  the<br \/>\n     legislature and  legal and\t adequate  to<br \/>\n     attain the\t object of validation. If the<br \/>\n     legislature  has\tthe  power  over  the<br \/>\n     subject-matter and\t competence to make a<br \/>\n     valid law,\t it can at any time make such<br \/>\n     a valid  law and make it retrospectively<br \/>\n     so as  to bind  even past\ttransactions.<br \/>\n     The  validity   of\t a   Validating\t law,<br \/>\n     therefore,\t depends   upon\t whether  the<br \/>\n     legislature  possesses   the  competence<br \/>\n     which it  claims over the subject-matter<br \/>\n     and whether  in making the validation it<br \/>\n     removes the  defect which the courts had<br \/>\n     found in  the  existing  law  and\tmakes<br \/>\n     adequate provisions  in  the  Validating<br \/>\n     law for a valid imposition of the tax.&#8221;<\/p><\/blockquote>\n<p>\t\t\t (Emphasis supplied.)<br \/>\nMr.  S.J.   Sorabjee,\tlearned\t  counsel   for\t  the\tKota<br \/>\nMunicipality, submitted that Section 3 of the Validating Act<br \/>\nrequired the  court to\tdeem the  villages  of\tRaipura\t and<br \/>\nUmmedganj always  to have  been within\tthe  Kota  municipal<br \/>\nlimits to  all intents and for all purposes. All corollaries<br \/>\nfor such  assumption had,  therefore, necessarily to follow.<br \/>\nAccordingly, the  court had  to assume\tthat the  procedural<br \/>\nrequirements of\t Sections 4  to 7  of the  1959 Act had been<br \/>\nsatisfied. The\tuse of\tthe non-obstante clause in Section 3<br \/>\nof the Validating Act fortified the submission.\n<\/p>\n<p>     Mr.  Sorabjee   cited  the\t following  passage  in\t the<br \/>\njudgment in  <a href=\"\/doc\/379047\/\">The  State\t of  Bombay  vs.  Pandurang  Vinayak<br \/>\nChaphalkar &amp; Ors.,<\/a> 1953 S.C.R. 773 :\n<\/p>\n<blockquote><p>     &#8220;When a  statute enacts  that  something<br \/>\n     shall be deemed to have been done, which<br \/>\n     in fact  and truth\t was  not  done,  the<br \/>\n     court is entitled and bound to ascertain<br \/>\n     for  what\t purposes  and\tbetween\t what<br \/>\n     persons the  statutory fiction  is to be<br \/>\n     resorted to  and  full  effect  must  be<br \/>\n     given to  the statutory  fiction and  it<br \/>\n     should  be\t  carried  to\tits   logical<br \/>\n     conclusion. (Vide\tLord Justice James in<br \/>\n     Ex\t parte\t Walton\t :  In\tre  Levy  [17<br \/>\n     Ch.D.746 at p. 756].&#8221;\n<\/p><\/blockquote>\n<p>He brought  to our  attention the oft-quoted observations of<br \/>\nLord Asquith  in East  End Dwellings  Co. Ltd.\tvs. Finsbury<br \/>\nBorough Council, 1952 A.C. 109, cited therein :\n<\/p>\n<blockquote><p>     &#8220;If you are bidden to treat an imaginary<br \/>\n     state  of\taffairs\t as  real,  you\t must<br \/>\n     surely, unless prohibited from doing so,<br \/>\n     also imagine  as real  the\t consequences<br \/>\n     and incidents  which,  if\tthe  putative<br \/>\n     state of  affairs had  in fact  existed,<br \/>\n     must  inevitably  have  flowed  from  or<br \/>\n     accompanied it&#8230;&#8230;&#8230; The statute says<br \/>\n     that you must imagine a certain state of<br \/>\n     affairs; it  does not  say\t that  having<br \/>\n     done so,  you must\t cause or permit your<br \/>\n     imagination to  boggle when  it comes to<br \/>\n     the inevitable corollaries of that state<br \/>\n     of affairs.&#8221;\n<\/p><\/blockquote>\n<p>The judgment  in <a href=\"\/doc\/1717149\/\">M.  Venugopal vs.  Divisional Manager, Life<br \/>\nInsurance Corporation  of India, Machilipatnam, A.P. &amp; Anr.,<\/a><br \/>\n(1994) 2  S.C.C. 323,  also cites Lord Asquith and says that<br \/>\nthe legislature\t can introduce\ta statutory  fiction and the<br \/>\ncourts have  to proceed\t upon the assumption that that state<br \/>\nof affairs existed on the relevant date. Reliance was placed<br \/>\nby Mr.\tSorabjee upon J.K. Cotton Spinning and Weaving Mills<br \/>\nLtd &amp;  anr. vs.\t Union of India &amp; ors., (1988) 1 S.C.R. 700.<br \/>\nThe Explanations  to Rules  9 and  49 of  the Central Excise<br \/>\nRules, 1944,  had provided  that excisable goods produced or<br \/>\nmanufactured in\t any place  or premises\t at an\tintermediate<br \/>\nstage and  consumed  or\t utilised  for\tthe  manufacture  of<br \/>\nanother commodity in a continuous process would be deemed to<br \/>\nhave been  removed from\t such place  or premises immediately<br \/>\nbefore such consumption or utilisation. This court said that<br \/>\nit  was\t well  settled\tthat  a\t deeming  provision  was  an<br \/>\nadmission  of\tthe  non-existence   of\t the   fact  deemed.<br \/>\nTherefore, in  view  of\t the  deeming  provision  under\t the<br \/>\nExplanations, although\tthe goods  which  were\tproduced  or<br \/>\nmanufactured  at  an  intermediate  stage  and,\t thereafter,<br \/>\nconsumed or  utilised in  the  integrated  process  for\t the<br \/>\nmanufacture of\tanother commodity were not actually removed,<br \/>\nthey had to be regarded as having been removed.\n<\/p>\n<p>     It is to be noted that what is to be deemed is a matter<br \/>\nof fact;  there is  a &#8220;deeming\tfiction&#8221;. It  is also  to be<br \/>\nnoted that when a fact is to be deemed, its consequences and<br \/>\nincidents are  also to\tbe deemed;  that  is  to  say,\twhat<br \/>\nfollows from the deemed fact is also to be deemed.\n<\/p>\n<p>     Mr. Sorabjee relied upon the judgment in <a href=\"\/doc\/1521043\/\">R.L. Arora vs.<br \/>\nState of  Uttar Pradesh\t and Ors.,<\/a> (1964) 6 S.C.R. 784. This<br \/>\nCourt in <a href=\"\/doc\/1144327\/\">R.L. Arora vs. State of U.P.,<\/a> (1962) Supp. 2 S.C.R.<br \/>\n149, had  considered the  provisions of\t Section 40(1)(b) of<br \/>\nthe Land  Acquisition Act,  1894, read\twith clause  (5)  of<br \/>\nSection 41  thereof and\t had held  that\t valid\tacquisitions<br \/>\nthereunder could  only be  for work  that would\t be directly<br \/>\nuseful to  the public  and  the\t relevant  agreement  should<br \/>\ncontain a  term setting\t out that  the public  would have  a<br \/>\nright to  use the work directly. Acquisitions that failed to<br \/>\ncomply\twith   this  requirement  fell\tthrough.  Parliament<br \/>\nthereupon   enacted   the   Land   Acquisition\t (Amendment)<br \/>\nOrdinance, 1962,  which was replaced by the Land Acquisition<br \/>\n(Amendment) Act,  1962. Thereby,  amendments to\t Sections 40<br \/>\nand 41\tof the\tprincipal Act  were  made  and\tacquisitions<br \/>\ninvalidated  by\t  reason  of   the  earlier   judgment\twere<br \/>\nvalidated. Section 40 was amended to include the acquisition<br \/>\nfor a  company which  was engaged  or was  taking steps\t for<br \/>\nengaging in  any industry  or work  which was  for a  public<br \/>\npurpose. Section  41 was  amended to  include clause 4(A) to<br \/>\ncover  agreements  which  provided  for\t such  acquisitions.<br \/>\nSection\t 7   of\t the  Amendment\t Act,  1962,  validated\t the<br \/>\nacquisitions invalidated  by reason  of the earlier judgment<br \/>\nby stating  that such  acquisitions should be deemed to have<br \/>\nbeen made for the purpose and in accordance with Sections 40<br \/>\nand 41 of the principal Act, as amended, as if these amended<br \/>\nprovisions were\t in force  at all material times. This Court<br \/>\nheld that  the deeming provision in Section 7 laid down that<br \/>\nwhere the  acquisition did not fall within the provisions as<br \/>\nthey existed  before the  Amendment  Act,  1962,  came\tinto<br \/>\nforce, it should be deemed to come within the amendment made<br \/>\nthereby, provided,  of course,\tthat it\t was of\t a kind that<br \/>\ncould so come. Reliance was placed by Mr. Sorabjee also upon<br \/>\nUdai Ram  Sharma &amp;  Ors. etc.  vs. Union  of India  &amp;  ors.,<br \/>\n(1968) 3  S.C.R. In  the case of <a href=\"\/doc\/1434322\/\">State of Madhya Pradesh vs.<br \/>\nV.P. Sharma,<\/a>  (1966) 3\tS.C.R. 557, this Court had held that<br \/>\nonce a\tdeclaration under  Section 6 of the Land Acquisition<br \/>\nAct, 1894,  had been  made, the\t notification under  Section<br \/>\n4(1) of\t the  Act  was\texhausted  and\tthere  could  be  no<br \/>\nsuccessive notifications  under Section\t 6 with\t respect  to<br \/>\nland specified\tin one\tnotification under  Section 4(1).  A<br \/>\nvalidating ordinance was promulgated, to be succeeded by the<br \/>\nLand Acquisition  (Amendment and  Validation) Act, 1967. The<br \/>\nAmendment and  Validation Act,\t1967, amended Section 5-A of<br \/>\nthe principal  Act to  allow for the making of more than one<br \/>\nreport in  respect of  land which  had been  notified  under<br \/>\nSection 4(1).  It also\tamended Section\t 6 so that different<br \/>\ndeclarations made  from time to time in respect of different<br \/>\nparcels of  land covered  by  the  same\t notification  under<br \/>\nSection 4(1)  were permissible. The Amendment and Validation<br \/>\nAct, 1967,  also validated  all acquisitions  which had been<br \/>\nrendered invalid  by reason of the judgment in V.P. Sharma&#8217;s<br \/>\ncase.  The   Amendment\tand   Validation  Act,\t 1967,\t was<br \/>\nchallenged. This Court rejected the challenge. It observed :\n<\/p>\n<blockquote><p>     &#8220;All these\t decisions lay\tdown that the<br \/>\n     power  to\t legislate   for   validating<br \/>\n     actions taken  under statute  which were<br \/>\n     not sufficiently  comprehensive for  the<br \/>\n     purpose is\t only ancillary or subsidiary<br \/>\n     to legislate  on any  subject within the<br \/>\n     competence of  the legislature  and such<br \/>\n     Validating Acts  cannot be\t struck\t down<br \/>\n     merely  because   courts  of   law\t have<br \/>\n     declared actions  taken  earlier  to  be<br \/>\n     invalid for want of jurisdiction. Nor is<br \/>\n     there any\treason to  hold that in order<br \/>\n     to validate  action without  legislative<br \/>\n     support the  Validating Act  must\tenact<br \/>\n     provisions to  cure the  defect for  the<br \/>\n     future and also provide that all actions<br \/>\n     taken or  notifications issued  must  be<br \/>\n     deemed to\thave  been  taken  or  issued<br \/>\n     under the\tnew provisions so as to given<br \/>\n     them full retrospective effect.\n<\/p><\/blockquote>\n<p>It is  to be noted that in each of these two cases under the<br \/>\nLand  Acquisition   Act,   that\t  Act\twas   amended\twith<br \/>\nretrospective\teffect.\t  Under\t  the\tamended\t  Act,\t the<br \/>\nacquisitions that  had\tbeen  rendered\tinvalid\t by  earlier<br \/>\njudgments became  valid and  the validation  was effected on<br \/>\nthe strength of such amendment.\n<\/p>\n<p>     In the  case of  the village  of Raipura  there  was  a<br \/>\npreliminary  notification  calling  for\t objections  to\t the<br \/>\nextension of  the limits of the Kota municipality to include<br \/>\nit, but\t it was not followed by a final notification. In the<br \/>\ncase of\t the village  of Ummedganj  there was a notification<br \/>\nextending the limits of the Kota municipality to include it,<br \/>\nbut it\thad not been preceded by a notification inviting the<br \/>\nobjections   of\t  the\tpublic\t thereto.   Later,   another<br \/>\nnotification was  published whereby the village of Ummedganj<br \/>\nwas excluded  from the\tlimits of the Kota municipality. The<br \/>\nprovisions of  Sections 4  to 7\t of the\t 1959  Act  and\t the<br \/>\nearlier provisions  of the 1951 Act in the same behalf were,<br \/>\ntherefore, not\tmet in\tthe case  of either  the village  of<br \/>\nRaipura or  the village\t of Ummedganj. The Full Bench of the<br \/>\nRajasthan High\tCourt has  held that  these provisions\twere<br \/>\nmandatory and that judgment has become final.\n<\/p>\n<p>     The  Validating   Act  provides  that,  notwithstanding<br \/>\nanything contained  in Sections 4 to 7 of the 1959 Act or in<br \/>\nany judgment,  decree, order  or direction of any court, the<br \/>\nvillages of Raipura and Ummedganj should be deemed always to<br \/>\nhave continued\tto exist  and they  continue to exist within<br \/>\nthe limits  of the Kota municipality, to all intents and for<br \/>\nall purposes.  This provision  requires the  deeming of\t the<br \/>\nlegal position\tthat the  villages of  Raipura and Ummedganj<br \/>\nfall within  the limits\t of the\t Kota municipality,  not the<br \/>\ndeeming of  facts from\twhich this  legal consequence  would<br \/>\nflow. A\t legal consequence  cannot be deemed nor, therefrom,<br \/>\ncan the\t events that  should have  preceded it. Facts may be<br \/>\ndeemed and, therefrom, the legal consequences that follow.\n<\/p>\n<p>     Sections 4\t to 7 remained on the statute book unamended<br \/>\nwhen the  Validating Act  was passed.  Their provisions were<br \/>\nmandatory. They had admittedly not been followed. The defect<br \/>\nof not\tfollowing these\t mandatory provisions in the case of<br \/>\nthe villages  of Raipur\t and Ummedganj\twas not cured by the<br \/>\nValidating Act.\t The curing  of the  defect was an essential<br \/>\nrequirement for\t the passing  of a valid validating statute,<br \/>\nas held\t by the\t Constitution Bench  in the  case of Prithvi<br \/>\nCotton Mills  Ltd.. It\tmust, therefore,  be held  that\t the<br \/>\nValidating Act is bad in law and it must be struck down.\n<\/p>\n<p>     It must  be made  clear  that  in\tthe  suit  that\t the<br \/>\nappellants have\t filed in  the court  of the District Judge,<br \/>\nKota, for refund of the amount of octroi paid by them to the<br \/>\nKota municipality,  which is  stated to be pending, it shall<br \/>\nbe open to the defendants to take every defence available to<br \/>\nthem other than that concluded by this judgment.\n<\/p>\n<p>     At the  stage when special leave to appeal was granted,<br \/>\nno stay\t was ordered except for the year 1974-75. Counsel on<br \/>\nbehalf of  the Kota  municipality agreed that if the appeals<br \/>\nwere allowed  and the  Kota  municipality  was\trequired  to<br \/>\nrefund the  amount paid\t by the\t appellants by way of octroi<br \/>\nduty, it  would refund the same with interest at the rate of<br \/>\n8 per cent per annum. The time within which the refund would<br \/>\nhave to\t be made  was left  to be  determined when the court<br \/>\nheard and  disposed of the appeals. The Kota municipality is<br \/>\nnow directed  to refund\t to the\t appellants the\t amounts  of<br \/>\noctroi duty  paid by  the appellants to it subsequent to the<br \/>\nyear 1974-75  with interest  at the  rate of  8 per cent per<br \/>\nannum from  the dates of payment till refund or realisation.<br \/>\nSuch refund shall be made on or before 15th July, 1996.\n<\/p>\n<p>     The appeals  are allowed.\tThe judgment and order under<br \/>\nappeal is  set aside.  The Kota\t Municipal Limits (Continued<br \/>\nExistence) Validating  Act, 1975, is declared to be invalid.<br \/>\nRefund of  octroi duty\tby  the\t Kota  municipality  to\t the<br \/>\nappellants shall be made as aforestated.\n<\/p>\n<p>     The Kota  Municipality shall  pay to the appellants the<br \/>\ncosts of its appeal, quantified in the sum of Rs.15,000\/-.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Delhi Cloth &amp; General Mills Co. &#8230; vs State Of Rajasthan &amp; Ors on 16 January, 1996 Equivalent citations: 1996 SCC (2) 449, JT 1996 (1) 390 Author: B S.P. Bench: Bharucha S.P. (J) PETITIONER: DELHI CLOTH &amp; GENERAL MILLS CO. LTD. &amp; ANR. Vs. RESPONDENT: STATE OF RAJASTHAN &amp; ORS. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-236762","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Delhi Cloth &amp; General Mills Co. ... vs State Of Rajasthan &amp; Ors on 16 January, 1996 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/delhi-cloth-general-mills-co-vs-state-of-rajasthan-ors-on-16-january-1996\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Delhi Cloth &amp; 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