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PETITIONER: MUNICIPAL BOARD, SITAPUR

       Vs.

RESPONDENT: PRAYAG NARAIN SAIGAL & FIRM MOOSARAMBHAGWANDAS

DATE OF JUDGMENT: 16/01/1969

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SIKRI, S.M. HEGDE, K.S.

CITATION:  1970 AIR   58            1969 SCR  (3) 387  1969 SCC  (1) 399  CITATOR INFO :  RF         1987 SC1059  (17)

ACT: U.P.  Municipalities Act, 1916 (U.P. Act 2 of 1916)-Levy  of water  tax-Non-compliance  with provisions  of  ss.  131(3), 132(2)  and  94-  Whether makes levy  invalid-Effect  of  Y. 135(3).

HEADNOTE: The Municipal Board Sitapur took various steps to levy water tax as authorised by s. 126(1)(x) of the U.P. Municipalities Act, 1916, and the special resolution imposing the tax  with effect  from October 1, 1957 was passed on April  23,  1957. The  High  Court held the levy to be,  invalid.   In  appeal filed by the Municipal Board this Court had to consider  the effect  of  (i)  the omission  to  publish  the  preliminary proposal  separately in the manner prescribed by  s.  131(3) read  with s. 94, (ii) the nonpublication  of  the  modified proposal  in  accordance with s. 132(2) and (iii)  the  non- publication   of  the  special  resolution   directing   the imposition of the tax in accordance with s. 94. HELD:     The  High  Court  was in  error  in  quashing  the imposition of the water-tax. (i)  Procedural  defects  in the imposition of the  tax  are cured  by  s.. 135(3).  Such defects cannot be  regarded  as fundamental  or  as  invalidating  the  imposition,  if   no substantial  prejudice is caused thereby to the  inhabitants of the municipality.  The issue of the notification under s. 135(2) is conclusive proof that all necessary steps for  the imposition  of  the tax have been taken in  accordance  with the. provisions of the Act. [389E-F] Municipal Board v. Raghuvendra, [1966] 1 S.C.R. 950,  Buland Sugar V.  Municipal  Board,  [1965] 1 S.C.R. 970  and  Berar Swadeshi Vanaspathi v.   Municipal    Committee,    Shegaon, [1962] 1 S.C.R. 596, applied. (ii) In  the present case there was  substantial  compliance with  S. 131(3).  The proposal was not separately  published in the prescribed form but the omission to do so was a  mere irregularity.  The object of the publication under s. 131(3) is  to inform the inhabitants of the proposal so  that  they

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can  file  their objections to it.  That  object  was  fully achieved by the publication in the local newspaper. [390  B- D] (iii)     The  inhabitants  submitted all  objections  which they  could possibly raise both with regard to the  rate  of tax and the exemption limit.  Noprejudice was caused by  not inviting fresh objections to reduction of the rate of tax or the  exemption limit.  The non-publication of  the  modified proposal was a mere irregularity and the defect was cured by s. 135(3). [390 E] (iv) Section 134(2) does not provide for the publication  of the  special resolution passed under it.  Assuming  that  it had  to be published under the general provisions of s.  94, the  non-publication  was a mere irregularity  cured  by  s. 135(3). [391 C]

JUDGMENT: CIIVL APPELLATE JURISDICTION: Civil Appeals Nos. 847 and 848 of 1966. 388 Appeals by special leave, from the judgment and order  dated January 20, 1965 of the Allahabad High Court, Lucknow  Bench in Writ Petitions Nos. 108 and 109 of 1962. S.   C.  Manchanda and S. S. Shukla, for the  appellant  (in both ’the appeals). C.   B.  Agarwala and K. P. Gupta, for the  respondents  (in both the appeals). The Judgment of the Court was delivered by Bachawat,  J. These appeals are directed against  orders  of the Allahabad  High Court (Lucknow  Bench),  quashing  the im.Position  of a water rate imposed by the Municipal  Board Sitapur.  Section 126(1)(x) of the U.P. Municipalities  Act, 1916 (U.P Act No. 2 of 1916) empowers the Board to impose  a water  tax on the annual Value of buildings or lands  or  of both.   Sections  131  to 135 lay  down  the  procedure  for imposing  the  tax.  The High Court held that the  levy  was invalid as the Board did not comply with this procedure. A municipal board desiring to impose the tax is required  by S.  131 sub-s. (1) to pass a special resolution framing  the preliminary  proposal  for the tax.   The  Municipal  Board, Sitapur,  passed  a special resolution on January  24,  1956 framing  the proposal for the levy of water tax at the  rate of 12% per annum on the annual value of buildings and  lands and exempting buildings and lands whose annual value was Rs. 24 or below. Section 131 sub-s. (2) requires the Board to prepare a draft of  t he  rules in respect of the proposed tax.   The  Board duly prepared the necessary draft rules.  Section 131 sub-&. (3)  requires the Board to publish in the manner  prescribed in  S.  94  the proposal and the draft rules  along  with  a notice  in  the form set-forth in Schedule III.   The  draft rules  along  with the notice was published in  the  Rashtra Sandesh, a local paper published in Hindi.  The proposal was not separately published.  But the proposal was to be  found in the draft rules published in the local paper.  Objections against the proposal were filed by the inhabi- tants of  the municipality.  The Board duly considered the objections  and passed  orders  thereon  under S.  132  sub-s.  (1).   After considering  the objections and the recommendations  of  the prescribed  authority  under  S. 133 sub-s.  (1)  the  Board decided to modify the original proposal by reducing the  tax to  10% on the annual value and by exempting all  lands  and buildings  whose annual value was Rs. 36 or below.   Section

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132  sub-S. (2) requires the Board to publish  the  modified proposal  along  with  a, notice indicating that  it  is  in modification of the original proposal, and S. 132 sub-s. (3) provides that the objec-                             389 tions  to the modified proposal shall be dealt with  in  the manner prescribed by sub-s. (1).  The modified proposal  was not  published  as  required  by  S.  132  subs.  (2).   The prescribed  authority acting under S.’ 132 sub-s.  (2)  duly sanctioned  the final proposal and made the necessary  rules in   respect  of  the  tax.   It  may  be  noted  that   the Commissioner,   Lucknow   Division,   was   the   prescribed authority.  On receipt of the order of sanction and the copy of the rules, the Board acting under S. 134 sub-s. (2)  pas- sed a special resolution on April 23, 1957 directing the im- position of the tax with effect from October 1, 1957.   This special   resolution  was  not  published  in   the   manner prescribed  by S. 94. On receipt of the  special  resolution the  prescribed  authority acting under S.  135  sub-s.  (2) notified  in the official gazette dated August 3,  1957  the imposition of the tax from the appointed date.  Section  135 sub-s. (3) provides that, "a notification of the  imposition of  a  tax under sub-section (2) shall be  conclusive  proof that  the  tax  has  been imposed  in  accordance  with  the provisions of this Act." The respondents raised three objections against the validity of  the  imposition  of the water tax : ( 1  )  omission  to publish  the preliminary proposal separately in  the  manner prescribed  by S. 131 sub-s. (3) read with S. 94;  (2)  non- publication  of the modified proposal in accordance with  S. 132  sub-s.  (2);  and (3) non-publication  of  the  special resolution directing the imposition of the tax in accordance with  S.  94.  The procedure laid down by the Act  was,  not strictly complied with before imposing the tax’ But all  the procedural defects in the imposition of the tax are cured by S.  135  sub-s. (3), where, as in this case,  the  Municipal Board  has  the power to levy the tax and has  passed  the special ’resolution necessary for the imposition of the  tax and  the  defects are not of a fundamental  character.   The procedural  defects cannot be regarded as fundamental or  as invalidating the imposition, if no substantial prejudice  is caused thereby to the, inhabitants of the municipality.  The issue  of  the  notification  under S.  135  sub-s.  (2)  is conclusive proof that all necessary steps for the imposition of the tax have been taken in accordance with the provisions of the Act. In Municipal Board v. Raghuvendra(1) the Court held that the defect   of  non-publication  of  the   special   resolution proposing  the  tax in a local Hindi paper and  omission  to publish  the  draft rules as required by S. 131  sub-s.  (3) read  with S. 94 sub-s. (3) was cured by s. 135  sub-S.  (3) and  that  the  publication of  the  special  resolution  by affixing  a  copy of it on the notice board and by  beat  of drum  was sufficient.  In Bland Sugar v. Municipal  Board(2) the Court held that the publication of the pro- (1) [1966] 1 S.C.R. 950. (2) [1965] 1 S.C.R. 970. 390 posals  and ;the draft rules in Hindi in a local Urdu  paper was sufficient compliance with S. 131 sub-s. (3).  In  Berar Swadeshi Vanaspathi v. Municipal Committee, Shegaon,(1)  the Court  held that in view of the similar provisions of S.  67 sub-s.  (7) of the C.-P. and Berar Municipal Act, 1922,  the validity  of  imposition  of the octroi  tax  could  not  be challenged  on  the  ground that  the  objections  were  not

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considered on the merits. As  to  the-  first  objection  we  find  that  there,   was substantial  compliance with S. 131 sub-s. (3).   The  draft rules   were  published  in  the  Rashtra   Sandesh.    They incorporated  the  preliminary proposal  and  mentioned  the special  resolution  dated  January 24, 1956  by  which  the proposal was framed.  There was thus sufficient  publication of the proposal.  The proposal was not separately  published in the prescribed form, but the omission to do so was a mere irregularity.   The inhabitants of the municipality had  due notice of the proposal.  The object of the publication under S.  131  sub-s.  (3) is to inform  the  inhabitants  of  the proposal  so  that, they can file their  objections  to  it. That  object  was fully achieved by the publication  in  the Rashtra Sandesh. As to     the  second objection, we, find that the  original proposal was   to  levy  water tax at the rate  of  12%  per annum on the annual value.   The   inhabitants   had    full opportunity to raise objections    to  the rate of  the  tax and to submit whether the rate should be     12%  or 10%  or less. After considering their objections, the Board proposed to levy the tax at the reduced rate of 10% per annum on  the annual value.  No prejudice was caused by not inviting fresh objections  to the modified proposal of levying the  tax  at the reduced rate.  It is interesting to notice that the U.P. Municipalities (Amendment) Act, 1964 (U.P. Act No. XXVII  of 1964) inserted in S. 132 sub-s. (2) the following proviso  : "Provided that no such publication shall be necessary  where the  modification is confined to reduction in the amount  or rate  of the tax originally proposed." This proviso was  not in force. on January 24, 1956.  But it does indicate that it is  unnecessary to publish a modified proposal reducing  the rate  of  tax originally proposed.   The  original  proposal exempted all buildings and lands whose annual value was  Rs. 24  or  below.  The modified proposal raised  the  exemption limit and provided that all buildings and lands whose annual value   was  Rs.  36  or  below  would  be  exempted.    The inhabitants  of  the municipality had  full  opportunity  to raise  objections as to the exemption limits  as  originally proposed  and to submit whether buildings and lands  of  the value  of  Rs. 24 or Rs. 36 or more should be  exempted.  No prejudice was caused by not inviting fresh objections to the (1)  [1962] 1 S.C.R. 596. 391 modified   proposal  raising  the  exemption   limit.    The inhabitants  submitted  all  objections  which  they   could possibly I raise both with regard to the rate of tax and the exemption limit.  In our opinion, the non-publication of the modified  proposal was a mere irregularity, and  the  defect was cured by s. 135 sub-s. (3). As to the third objection it is to be observed that s.  134. sub.  s.  (2) does not provide for the  publication  of  the special  resolution  passed under it.   Assuming  that  this special  resolution  had to be published under  the  general provisions of s. 94, we think that the non-publication was a mere irregularity.  The inhabitants had no right to file any objections against the   special resolution.  They had clear notice of the imposition of   the tax from the  notification published in the official gazette on    August 3, 1957.  The defect  of the non-publication of the special resolution  in the  manner prescribed by s. 94 was cured by s.  135  sub-s. (3).  The High Court was in error in quashing the imposition of the water tax. In  the result, the appeals are allowed with costs  in  this Court and in the High Court, the order of the High Court  is

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set aside and the writ petitions are dismissed.  There  will be one hearing fee. G . C.                                   Appeals allowed 3 9 2