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PETITIONER: ANANT MILLS CO.  LTD.

       Vs.

RESPONDENT: STATE OF GUJARAT & ORS.

DATE OF JUDGMENT21/01/1975

BENCH:

ACT: Constitution of India, 1950, Art. 14--Treating pending cases as  a class different from decided cases, if  a  permissible classification. Constitution  of India, 1950, .Art. 14--Duty of  the  person challenging     a     provision    of     the     Act     as discriminatory--Constitutional validity, if could be decided on  the  basis  of supposed existence of  certain  facts  by raising a presumption. Bombay Provincial Municipal Corporations Act (Bombay Act  59 of 1949) as amended by Gujarat Acts No. 8 of 1968 and No.  5 of 1970, Sections 129 and 137--Conservancy tax for different categories of properties--Tax, it should be related only  to the  expense  for conservancy service  for  that  particular category. Bombay Provincial Municipal Corporations Act (Bombay Act  59 of 1949) as amended by Gujarat Act Nos. 8 of 1968 and No.  5 of 1970, proviso to section 129(b)--Corporation to determine different     rates     for     different     classes     of properties--Proviso,  if suffers from the vice of  excessive delegation of legislative power. Bombay Provincial Municipal Corporations Act (Bombay Act  59 of 1949) as amended by Gujarat Acts No. 8 of 1968 and No.  5 of  1970,  Section 406(2) (e) rule  42  of  Taxation--Appeal against  a tax or rateable value--Deposit of amount  claimed condition precedent to entertaining appeal--Appellate  judge empowered to remove undue hardship to appellant--Requirement of deposit, if nullifies right of appeal--Provision if makes invidious distinction. Constitution  of  India, 1950, Entry 49, List  II,  Schedule VII-"Land", if includes underground strata.

HEADNOTE: The  assessment of properties to property tax  in  Ahmedabad was made under the Bombay Provincial Municipal  Corporations Act by making entries in the assessment books in  accordance with the procedure prescribed in the Taxation Rules set  out in  Chapter  VIII of Schedule A of the Corporations  Act,  A separate section of the assessment book was prepared by  the Commissioner  of the Corporation for each official  year  in respect  of the assessment of property tax on certain  kinds of properties like textile mills, factories and buildings of University.   These  properties were classified  as  special properties.   There was some increase in the rateable  value fixed by the Commissioner for the year 1964-65 and  1965-66. The  Commissioner  also made initial entries  in  assessment book in respect of those properties for the year 1966-67.  A number  of writ petitions under Art. 32 of the  Constitution were  filed  in this Court challenging the validity  of  the assessments  for  the years 1964-65 and 1965-66 as  well  as

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initial entries for the year 1966-67.  The Supreme Court  in the  judgment New Manek Spinning & Weaving Mills Co. Ltd.  & Ors.  v. Municipal Corporation of City of Ahmedabad  &  Ors. [1967] 2 S.C.R. 69, allowed the writ petitions and held  the relevant  entries  in the assessment books  to  be  invalid. Rules  7(2) and (3) were also held to be invalid on  account of  excessive delegation of powers by the legislature.   The taxation  on  the  basis of floor area  as  adopted  by  the Corporation was held to violate Art. 14 of the Constitution. When   the  Corporation  initiated  steps  to   make   fresh assessment  for the years 1964-65, 1965-66 and  1966-67,  it was  unable  to do so in view of the decision  of  the  High Court  in the case of Ahmedabad Municipality v. Keshavlal  6 G.L.R.  228 wherein it was held that the Corporation had  no power to assess and levy property tax for any official  year after  that  year  had  ended. in order  to  get  over  this difficulty,  the legislature enacted Gujarat Act 8 of  1968. New Sec. 152A 221 and  new rules 7 and 21B were inserted.  When  notices  were served   on  the  petitioners  to  furnish  return  of   the particulars,  the  petitioners filed petitions in  the  High Court  challenging  the validity of  those  notices.   Those petitions  were  allowed by the High Court as  per  judgment dated July 3, 1969 on the ground that the demand for certain particulars contained in the notices was beyond the scope of r. 8(1).  In the appeal filed by the Corporation against the judgment  dated  3rd July, 1969, the Supreme Court,  in  its judgment   in  Municipal  Corpora.  lion  of  the  City   of Ahmedabad,  etc. v. New Sherock Spg. & Wvg.  Co.  Ltd.  etc. [1971] 1 S.C.R. 288, held that, as the assessments were  not in accordance with law, the Corporation was not entitled  to retain  that amount.  The Court also struck down  subsection (3)  of  s.  152-A which gave power to  the  Corporation  to refuse to refund the amount illegally collected de-spite the order of the Court. For the official year 1967-68 the Corporation determined the rate of conservancy tax to be 3 per cent and a special  rate of 9 per cent for the large premises like textile mills  and factories.   The petitioners preferred appeals  against  the order  of the Deputy Commissioner determining the amount  of property  tax  to  the Chief Judge of  the  Court  of  Small Causes, Ahmedabad.  The Chief Judge was, however,  precluded from  hearing those appeals since the amount of tax was  not deposited  by the petitioners as required by s. 406 (2)  (e) of the  Corporations Act.  The petitioners thereafter  filed petitions in the High Court challenging the validity of  the assessments  made by the Deputy Municipal  Commissioner  for the,  official  years 1966-67, 1967-68 and  1968-69.   Those writ petitions were allowed by the Gujarat High Court as per judgment  dated  October  27,  1969.   The  ordinance  dated December 23, 1969. was replaced by Gujarat Act No. 5 of 1970 which  came  into  effect from March  31,  1970.   This  Act brought about material changes in the Corporations Act. The High Court held (i) Section 2(IA) Clause (i) is valid so far as it is applicable to the official year 1969-70 but  it is  null  and void in so far as it applies to  the  official years from the commencement of the Corporations Act uptoand including   the  official  year  1968-69,  on   account   of infraction or Art. 14; (ii)Section 406(2) (e) and s.  411 (b) are null and void as being in contraventionof    Art. 14;  Rule 42 of the Taxation Rules is also ultra  vires  and void in so far as it provides that if an appeal is preferred or entertained against the tax, warrant shall not issue  for the recovery of the amount of tax; and (ii)The Resolutions

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passed  by  the Corporation for the official  year  1967-68, 1968-69, 1969-70 and 1970-71 to the extent to which they fix the  rate  of conservancy tax at 9 per cent  inter  alia  in respect  of  textile mills and factories  belonging  to  the petitioners are ultra vires the proviso to s. 129(b) and the rate  of  conservancy  tax applicable in  respect  of  these textile mills and factories must, therefore, be taken to  be the  general rate of 3 per cent.  The High Court upheld  the constitutional  validity of proviso (e) to s.  2(IA)  clause (ii)  and sections 49, 129(b), 406(2)(e) and 411(bb) of  the Act and s. 13(1) and 13 (2) of the Act 5 of 1970. Civil  Appeals Nos. 489 to 513 and 752 to 755 of  1973  have been filed in this Court by the petitioners before the  High Court  against the Judgment of that Court in so far  as  the Court had upheld the constitutional validity of the impugned provisions.  Civil Appeals Nos. 643 to 684 of 1973 have been filed by the Municipal Corporation of the City of  Ahmedabad and others against the above judgment in so far as the  High Court  has  struck  down the  impugned  provisions  and  the Resolutions.  Civil Appeals No. 389 to 430 of 1974 have been filedby the State of Gujarat against the judgment in so far as the High Court hasstruck   down   the   impugned provisions.  Writ Petitions Nos. 51, 60 to 73, 87 to91. 197,  492  to  503, 533, 534 and 583 of 1972  as  also  writ petitions Nos. 1866 to 1877 and 2046 of 1973 which have been filed by the Aryodaya Sp-. & Wvg.  Mills Co. Ltd. and  other parties involve substantially the same question which arises in  appeals, though some of these writ petitions  relate  to the  subsequent period of 1971-72.  Writ Petition No. 74  of 1972 filed by the Ahmedabad Electricity Co. Ltd. involves an additional point regarding its liability to pay property tax which  ha% been levied on the ground that it  occupies  land below the surface for underground cables. 222 Reversing the decision of the High Court, HELD  :  (i)  As  the  affidavit  filed  on  behalf  of  the respondents  discloses  that  ,the factual  position  as  it existed  before the promulgation of Ordinance 6 of 1969  was that  the provisions of ,he Bombay Rent Act were  not  taken into account in determining the rateable value, there  would be  no  escape  from the  conclusion  that  no  differential treatment has been meted out to pending cases in clause  (i) of  s. 2(IA).  There is a presumption of the  constitutional validity  of  a  statutory provision.   In  case  any  party assails the validity of any provision on the ground that  it is violative of Art. 14 of the Constitution. it is for  that party to make the necessary averments and adduce material to show discrimination violative of Art 14.  No averments  were made  in  the  petitions  before  the  High  Court  by   the petitioners  that  the assessments before  the  coming  into force  of Ordinance. 6 of 1969 had been made by taking  into account  he rent restriction provisions of the  Bombay  Rent Act.   It is extremely hazardous to decide the  question  of constitutional  validity of a provision on the basis of  the supposed   existence,   of  certain  facts  by   raising   a presumption. it is very clear that the High Court has  acted on an incorrect assumption. [236G-237E] Assessment  Committee of the Metropolitan BoRough of  Poplar v.  Roberts  [1922] 2 A.C. 93, Gulam Ahmed Rogey  v.  Bombay Municipality  A.I.R.  1951 Bom. 320 and The  Corporation  of Calcutta  v.  Sn.  Padma Devi and Ors. [1962] 3  S.C.R.  49, referred to (ii)Classification  by treating decided cases as  belonging to  one category and pending cases as belonging  to  another category is reasonable and not per se offensive to Art 14 of

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the Constitution. [238H-239A] Ram Krishna Dalmia v. Shri Justice S. R. Tanadolkar,  [1959] S.C.R.  279, Khandige Shah Bhav v.  Agricultural  Income-tax Officer,  [1963]  3 S.C.R. 809, Rao Shiv  Bahadur  Singh  v. State   of  Vindhya  Pradesh  [1953]  S.C.R.   1188,   1197, Hathisingh Manufacturing Co. Ltd. v. Union of India [1960] 3 S.C.R.  528 and Jain Bros. and Ors. v. The Union of India  & Ors. [1970] 3 S.C.R. 253. referred to. (iii)The  scheme of the Corporation Act appears  to  be that in the case of premises used solely for public purposes and not intended to be used for purposes of profit or in the case  of  premises intended to be used  for  residential  or charitable  or  religious  purposes  in  respect  of   which conservancy  tax is payable ’by the Government, the rate  of conservancy  tax  should be lower compared to  the  rate  of general conservancy tax.  What is required by s. 129 is that before   determining  the  rates  of  conservancy  tax   for different  categories of properties the  Corporation  should find  out the total expense it would have to incur  for  the various  purposes mentioned in clause (b) of  that  section. After  having  ascertained  the total expense  it  would  be permissible  to  the Corporation to fix different  rates  of conservancy tax for various categories of properties.  It is ,not essential except in cases mentioned in sub-sections (2) and  (3)  of s. 137 that the rate of conservancy tax  for  a particular category of properties should be such as would be related only to the expense for conservancy service for that particular  category  of properties.  Clause (b) of  s.  129 also takes into account the expense required for efficiently maintaining  and  repairing  the municipal  drains  and  for finding  out the total expenditure for conservancy  service. The High Court was, therefore, in error in striking down the resolution passed by the Corporation. [242E-F; 244F-H; 245B- C] (iv)The "opinion of Corporation" mentioned in clause (b) of section  129 ,is formed after budget estimates are  prepared in  accordance with Ss. 95. 96 and 100 of  the  Corporations Act.   The entire procedure provides built-insafeguards  and lays down adequate guidelines in the matter of taxation.  It cannot,  therefore,  be said that the  legislature  has  not prescribed  any  guiding principle for the  Corporation  for determining the rates of conservancy tax. [245F-G.  H-246A] (v)The bar created by s. 406(2)(e) to the entertainment of the  appeal by a person who has not deposited the amount  of tax due from him and who is not 223 able to show to the appellate judge that the deposit of  the amount would cause him undue hardship arises out of his  own omission and default.  A disability or disadvantage  arising out of a party’s own default or omission cannot be taken  to be  tantamount to the creation of two classes  offensive  to Art. 14 of the Constitution. especially when that disability or  disadvantage  operates  upon all persons  who  make  the default or omission.  Section 406(2)(e) is  constitutionally valid  and, in as much as ’the validity of s. 41 1 (bb)  and r. 42 hinges on the validity of sec. 406(2)(e) all the three provisions are constitutionally valid, [247D-248C, F-G] Hannah  Cohen,  Ex. of Sol.  Cohen, Deceased, and  David  E. Cohen,  Intervener, Petitioners & .Anr.. v. Beneficial  Loan Corporation & Ors. 37 U.S. 539, referred to. (vi)There can be no doubt that land in entry 49 of List  II would include underground Strata.   The word "land" has also been defined in clause (30) of s. 2 of the Corporations  Act to  include land which is being built upon or is built  upon or covered with water, benefits to arise out of land, things

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attached  to the earth or permanently fastened  to  anything attached  to the earth or permanently fastened  to  anything attached  to  the earth and rights  created  by  legislative enactment over any street.  This definition is of  inclusive nature  and does not exclude from its ambit the  underground strata of the land.  The petitioner-company is in occupation of the land wherein underground supply line is laid.  [249E- F. 25OD-E] Electric  Telegraph Co. v. Salford Overseers, [1855] 11  Ex. 181,  186,  Mysore Aldermen and Councillors of the  City  of Westminster  Ors.  v.  The  Southern  Railway  Company,  The Railway Assessment Authority and W. H.Smith & Son, Limited & Ors.  1936  A.C. 511, The Assessment Committee  of  Holywell Union  & Anr. v. Halkyn District Mines Drainage Col,  [1895] A.C. 117 Rex. v. Chelsea Waterworks Company. 5 B. & Ad.  156 and Reg v. West Miiddlesex Waterworks, 1 E. & E, at p.  720, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeals Nos.  752  to 755, 489 to 513, 643 to 684 of 1973 & 389 to 430 of 1974. From the Judgment and order dated the 4th December, 1972  of the  Gujarat High Court in Spl.  Civil Appeals.   Nos.  233, 239-241, 339, 488, 1634, 1635 and 1636 of 1971, and Writ Petitions Nos. 51, 60 to 74, 87 to 91, 157, 492 to 503, 533534 and 583 of 1972 and 1866 to 1877 & 2040 of 1973. Y.M. Tarkunde (In C. As, Nos. 752, 489, 643, 389 and W.P. Nos.  51 and 74/72), C. T. Daru and Ravinder Narain,  P.  C. Bhartari,  K. M. Desai and K. J. John, for the  petitioners, (In  all the W.Ps.) and Appellants (In C.As.  Nos.  489-513, 752-755/73)  and respondent No. 1 (C.As. Nos.  643-47,  650- 654, 658-664, 667-671, 674, 678, 679 and 681-684/73). F.S.  Nariman, Additional Solicitor General of India,  S. B.  Vakil  and 1. N. Shroff, for appellants (In  C.As.  Nos. 643-684/73) and for respondent No. 3 (In all the W.Ps.)  for respondents Nos. 2-4 (In C.As. Nos. 489-497) respondent Nos. 1-4  (In C.As. Nos. 498-511) respondent Nos. 2-5  (In  C.As. Nos.   512-513)  respondent  No.  2-4  (In  C.A.  No.   752) respondent  Nos. 1-4 (In C.A. Nos. 753-754) respondent  Nos. 2-5 (In C.A. No. 755) and for respondent Nos. 1-3 (In  C.As. Nos. 389-430/74). 224 M.C.  Bhandare and M.  N. Shroff, for the appellants  (In C.As. Nos. 389-430) respondent No. 7. (In C.A. No.  389-497, 512-513) respondent No. 5 (In C.As. Nos. 498-510) respondent No. 2. (In C.A. Nos. 643-678, 681-684) respondent No. 3  (in C.As. Nos. 679680) respondent No. 1 (In C.As. Nos.  752-755) respondent  No. 5 (In C.As. Nos. 753) respondent No.  6  (In C.A. No. 754) and respondent No. 4 (In all the W.Ps.) C.   S. S. Rao, for respondent No. 5 (In C.A. No. 752/73). R.   H.  Dhebar and B. V. Desai, for respondent No.  4.  (In C.As. Nos. 417-418/74) and In C.As. No. 656-657 of 1973). The Judgment of the Court was delivered by KHANNA, J.-Questions relating to the constitutional validity of  the  different  provisions  of  the  Bombay   Provincial Municipal   Corporations  Act  (Bombay  Act  59   of   1949) (hereinafter referred to as the Corporations Act) as amended by  Gujarat Acts No. 8 of 1968 and No. 5 of 1970  arise  for determination  in  these  appeals  and  the  connected  writ petitions.   The Corporations Act was enacted by the  Bombay legislature  in  December  1949  for  the  establishment  of municipal corporations in the cities of Ahmedabad and Poona. It was applied to Ahmedabad on July 1, 1950.

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The  assessment of properties to property tax  in  Ahmedabad was made under the Corporations Act by making entries in the assessment books in accordance with the procedure prescribed in the Taxation Rules set out in Chapter VIII of Schedule  A of  the  Corporations  Act.   A  separate  section  of   the assessment  book was prepared by the Cornmissioner  of.  the Corporation  for  each  official  year  in  respect  of  the assessment  of property tax on certain kinds  of  properties like  textile mills, factories and buildings of  university. These  properties were classified special  properties.   The rateable  value  of  properties  included  in  the   Special Property  Section was previously determined on a  flat  rate for every 100 sq. ft. of the floor area.  In arriving at the figure  of  the  rateable value, the  plants  and  machinery situate  upon  lands  and buildings  were  also  taken  into account as provided in clauses (2) and (3) of rule 7 of  the Taxation  Rules.   There was some increase in  the  rateable value  fixed by the Commissioner for the years  1964-65  and 1965-66.   The  Commissioner also made  initial  entries  in assessment book in respect of those properties for the  year 1966-67.  A number of writ petitions under article 32 of the Constitution  were  filed  in  this  Court  challenging  the validity of the assessments for, the years 1964-65 and 1965- 66  as  well as the initial entries for  the  year  1966-67. Those  writ  petitions were disposed of by this Court  by  a judgment delivered on February 21, 1967 and reported as  New Manek  Chok  Spinning  & Weaving Mills Co. Ltd.  &  Ors.  v. Municipal  Corporation  of the City of Ahmedabad  &  Ors.(1) This Court allowed the writ petitions and held the  relevant entries in the assessment books to be invalid.  It was  held in  that case that the State Legislature had  no  competence under entry 49 of the State List in the Seventh Schedule  to the  Constitution  to  make  a  law  for  taxing  plant  and machinery.  Rule 7 (2) was held to be beyond the legislative competence of the State.  Rules 7 (2) and (1)  [1967]2 S.C.R. 679. 225 (3)  were  also held to- be invalid on account of  excessive delegation  of  powers  by the-  legislature.   Under  those rules.  the specification (A. the classes of  machinery  for the, purpose of taxation was to be made, by the Commissioner with  the  approval of the Corporation irrespective  of  the question  as  to where they were to be  found.   This  Court found  that  it  depended upon the  arbitrary  will  of  the Commissioner as to what machinery he would specify and  what he  would  not  and that he was the only  person  who  could examine  this  question  as there,was no  right  of  appeal. Dealing with the method of levy of tax on the basis of floor area, this Court observed that it was against the provisions of the Act and the rules made thereunder and that it had not been shown that conditions prerequisite for determination of the  annual value on that basis had existed at the  relevant time.   The above method of taxation on the basis  of  floor area,  it  was  held, was violative of  article  14  of  the Constitution as it would in the absence of classification of factories on any rational basis give rise to inequalities. Although  the  Supreme  Court directed  the  Corporation  to prepare fresh assessment lists relating to properties in the Special  Property  Section for the official  years  1964-65, 1965-66 and 1966-67, the Corporation was unable to do so  in view  of  the  decision of the High Court  in  the  ease  of Ahmedabad  Municipality v. Keshavlal(1) wherein it was  held that the Corporation had no power to s and levy property tax for  any  official  year after that  year  had  ended.   The legislature  in  order to get over this  difficulty  enacted

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Gujarat  Act  8 of 1968 and by this  amending  Act  inserted inter  alia new section 152A in the Corporations, Act.   The new section conferred power on the Corporation to assess  or reassess  property  taxes  if the  original  assessment  was affected  by a decree or order of a court on either  of  the grounds  on  which  the  Supreme Court  had  set  aside  the assessment for the official years 1964-65, 1965-66 and 1966- 67  in New Manek Chowk Mills case (supra). The amending  Act also substituted new rule 7 for the old rule which contained the  offending clauses (2) and (3).  Rule 21B was  also  in- serted  by the amending Act and the said rule permitted  the Municipal Commissioner to make fresh valuation of properties after  the  expiry of the official year  if  preparation  or completion  of  the  assessment before  the  expiry  of  the official  year were or would be affected on account  of  any order  of  a court.. After the amending Act  had  come  into force,   the  Corporation  initiated  proceedings  for   re- assessment  of  lands and buildings of  the  petitioners  to property  tax  for the official years 1964-65,  1965-66  and 1966-67.   When  notices were served on the  petitioners  to furnish  return  of the particulars, the  petitioners  filed petitions  in  the High Court challenging  the  validity  of those  notices.   Those petitions were allowed by  the  High Court as per judgment dated July 3, 1969 on the ground  that the demand for certain particulars contained in the  notices was  beyond the scope of rule 8(1).  The contention  of  the petitioners  in those petitions that no assessment could  be made after the expiry of the official year was repelled  and it was held that the Corporation had the power under section 152A  to reassess lands and buildings of the petitioners  to property  tax  for the official years 1964-65.  1965-66  and 1966-67 notwithstanding the expiration of those (1) 6 G.L.R. 228. 16-L379SupCI/75 226 years.   The High Court also held that the new  section  did not  stand in the way of the petitioners getting  refund  of the  property  tax already paid.. Appeal was filed  in  this Court against the above judgment by the Corporation. The Ahmedabad Corporation, it may be stated, used to pass  a resolution   under  section  99  of  the  Corporations   Act determining  the rate at which property tax would be  levied for the particular official year.  So far as conservancy tax was concerned, the rate determined by the Corporation was  3 per  cent.  A special rate of conservancy tax of  7-1/2  per cent was, however, fixed by the Corporation for the official year  up to 1966-67 for hotels, clubs, stables, theaters  or cinemas   or  other  large  premises  including  mills   and factories registered under the Factories Act and where fifty or  more workmen were employed ill manufacture for  all  the shifts.   For  the  official year  1967-68  the  Corporation determined the rate of conservancy tax to be 3 per cent  and a  special  rate  of  9 per  cent  for  the  large  premises mentioned  above  the  rate  of  general  tax  for  ordinary property  was fixed on a graduated scale but  on  properties used  by textile mills the rate was uniform at 30 per  cent. The powers of the Commissioner under the Taxation Rules were entrusted to the Deputy Municipal Commissioner by virtue  of an  office  order issued under section  49(1).   The  Deputy Commissioner thereafter determined the rateable value of the lands  and  buildings of the petitioners.   The  petitioners preferred   appeals   against  the  order  of   the   Deputy Commissioner  determining the amount of property tax to  the Chief  Judge  of the Court of Small Causes  Ahmedabad.   The Chief  Judge,  was, however, precluded  from  hearing  those

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appeals  since  the amount of tax was not deposited  by  the petitioners  as  required  by section 406  (2)  (e)  of  the Corporation Act.  The petitioners thereafter filed petitions in  the High Court challenging the validity of  the  assess- ments  made,  by the Deputy Municipal Commissioner  for  the official  years  1966-67, 1967-68 and 1968-69.   Those  writ petitions  were  allowed by the Gujarat High  Court  as  per judgment dated October 27, 1969. it was held that section 49 of  the  Corporation Act did not contemplate  delegation  of judicial   or   quasi-judicial  powers  by   the   Municipal Commissioner  under  taxation rule 18 and that  disposal  of complaints  by the Deputy Commissioner was not  permissible. The High Court also declared section 406(2) (e) violative of article  14.  Part of rule 42 which related to  distress  or attachment  for  default in payment of tax was  also  struck down on the ground that it could not stand independently  of section 406 (2) (e).  The fixation of special rate of 9  per cent  for  conservancy  tax in  respect  of  large  premises including  mills and factories was also held to  be  illegal and void. The official year 1969-70 having in the meantime  commenced, the  Municipal Commissioner adopted under taxation  rule  21 the entries of the official year 1968-69 as the entries  for the  official year 1969-70.  Complaints were then  filed  by the petitioners against the amount of rateable value entered in  the  assessment  books.  During the  pendency  of  those complaints, the Governor of Gujrat promulgated Ordinance No. 6 of 1969 on December 23, 1969.  The ordinance was  replaced by  Gujarat  Act No. 5 of 1970 which came  into  force  with effect  from  March  31, 1970.  The  ordinance  amended  the definition of rateable 227 value  as well as section 49 with retrospective effect.   It also contained ,tam validating provisions.  Gujarat Act 5 of 1970 was on the line Ordinance No-. 6 of 1969, except in the matter  of  definition  of  rateable  value.   A  number  of petitions  in  the  meantime were  filed  to  challenge  the validity  of the provisions of Ordinance No. 6 of  1969  and :)se of Act 5 of 1970. For  the  official year 1970-71, the valuation was  made  in accordance  with  Gujarat Act 5 of 1970.  A number  of  writ petitions  were A before the Gujarat High Court  challenging the  provisions  of  Gujarat Act 5 of 1970 as  well  as  the valuation for the year 1970-71. In  the  meantime,  on April 17, 1970 appeal  filed  by  the Corporation  against judgment dated July 3, 1969 of  Gujarat High Court was ;missed by this Court.  The decision of  this Court  was  given in Municipal Corporation of  the  City  of Ahmedabad, etc. v. New Shorock vg. & Wvg.  Co. Ltd. etc.(1). It was held by this Court that under conviction 152A  before the Corporation can retain an amount collected property tax, there must be assessment according to law.  As the  impugned assessments were not in accordance with law, the Corporation was  not  entitled to retain that amount.  This  Court  also struck  own  subsection (3) of section 152A which  had  been added  by  ordinance 6 of 1969 and which gave power  to  the Corporation to fuse to refund the amount illegally collected despite the order of the Court. It  may  be  stated  that the  dispute  with  which  we  are concerned  in be present appeals and writ petitions  relates to  assessment to property x of large premises like  textile mills,  and  factories.   One  writ  petition  dates  to  an electricity company. Before  setting  out  the findings of  the  High  Court  and dealing with the questions which arise for determination  in

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the  appeals  and writ petitions before us, we  consider  it appropriate  to  refer to some of the  relevant  provisions. Section   127(1)  of  the  Corporations  Act  requires   the Corporation to impose inter alia property taxes.   "Property taxes"  according to section 129, shall comprise- (a)  water tax, (b) conservancy tax, and (c) a general tax.  Clause (b) and the relevant part if clause (c) of that section read  as under :               For the purpose of sub-section (1) of  section               127   property   taxes  shall   comprise   the               following  taxes which shall, subject  to  the               exceptions, limitations and conditions herein-               after  provided,  be levied on  buildings  and               lands in the City               (a)................               (b)   a conservancy tax at such percentage  of               their rateable value as will in the opinion of               the  Corporation  suffice to provide  for  the               collection, removal and disposal, by municipal               agency,  of all excrementitious  and  polluted               matter  from privies, urinals  and  cess-pools               and for efficiently maintaining and  repairing               the municipal drains- constructed or used  for               the receipition or               (1)   [1971] 1 S.C.R. 288.                228               conveyance of such matter, subject however  to               the  provisos that the minimum amount of  such               tax  to  be  levied  in  respect  of  any  one               separate  holding  of  land  or  of  any   one               building  or of any one portion of a  building               which  is let as a separate holding  shall  be               eight annas per mensem and that the amount  of               such tax to be levied in respect of any hotel,               club or other large premises may be  specially               fixed under section 137;               (c)   a  general tax of not less  than  twelve               per  cent. of their rateable value, which  may               be levied,- if the Corporation so  determines,               on a graduated scale               Provided............. According to section 99 the Corporation shall, on or  before the  twentieth  day  of  February,,  after  considering  the Standing  Committee’s proposals in this  behalf,,  determine inter alia subject to limitations an( conditions  prescribed in  Chapter XI, the rates at which municipal taxes  referred to in sub-section (1) of section 127 shall be levied in  the next  ensuing  official  year.   "Official  year"  has  been defined in section 2(44) to mean the year commencing on  the first day of April.  Section 137 reads as under :               "(1) The Commissioner may, whenever he  thinks               fit,  fix  the conservancy tax to be  paid  in               respect  of any hotel, club, stable  or  other               large  premises at such special rate as  shall               be   generally   approved  by   the   Standing               Committee in this behalf, whether the  service               in  respect of which such tax is  leviable  be               performed  by human labour or  by  substituted               means or appliances.               (2)In the case of premises used solely  for               public purposes and not used or intended to be               used for purposes of profit or for residential               or charitable or religious purposes in respect               of which the conservancy tax is payable by the               Government the Commissioner shall fix the said

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             tax at a special rate approved as aforesaid.               (3)In  any  such  case the  amount  of  the               conservancy tax shall be fixed with  reference               to   the   cost  or  probable  cost   of   the               collection,  removal  and  disposal,  by   the               agency  of  municipal  conservancy  staff,  of               excrementitious  and polluted matter from  the               premises." Section  150 relates to supplementary taxation.  Clause  (1) of  section  49  enables a  Deputy  Municipal  Commissioner, subject to the orders of the Commissioner, to exercise  such of  the  powers  and  perform such  of  the  duties  of  the Commissioner  as  the Commissioner shall from time  to  time depute  to him.  Section 406 deals with appeals.   According to  clause  (1) of section 406, subject  to  the  provisions hereinafter contained, appeals against any rateable value or tax  fixed  or  charged under the Act  shall  be  heard  and determined by the Judge.  "Judge" has been defined in clause (29) (as amended by Act 8 of 229 1968)  of  section 2 to mean in the city  of  Ahmedabad  the Chief Judge of the Court of Small Causes.  Clause (e) of sub section  (2) of section 406 states that no appeal  shall  be heard  against  a  tax, or in the case  of  an  appeal  made against a rateable value after a bill for any property tax a assessed   upon  such  value  has  been  presented  to   the appellant, unless the amount claimed from the appellant  has been  deposited by him with the Commissioner.   Section  411 (as amended by Act 8 of 1968) makes provision for appeal  to the High Court from a decision of the Judge in an appeal  in certain  contingencies.   Clause (54) of section  2  defines "rateable  value" to mean the value of any building or  land fixed  in accordance with the provisions of the Act and  the rules  for  the  purpose of assessment  to  property  taxes. According  to  section  453, the rules in  the  schedule  as amended from time to time shall be deemed to be part of  the Act.   Chapter  VIII of the schedule contains  the  Taxation Rules.   According to clause (1) of rule 7, in order to  fix the  rateable value of any building or land assessable to  a property-tax there shall be deducted from the amount of  the annual rent for which such land or building might reasonably be expected to let from year to year a sum equal to ten  per cent  of the said annual rent, and the said deduction  shall be  in  lieu of all allowance for repairs or  on  any  other account whatever.  Clauses (2) and (3) of that rule need not be  set  out as they were struck down by this Court  in  the case  of New Manak Chowk Mills (supra).  Rule 9  relates  to the keeping of an assessment book in which shall be  entered inter  alia every year the rateable value of  buildings  and lands in the city of Ahmedabad determined in accordance with the provisions of the Act and the rules as also the names of persons primarily liable for the payment of property  taxes, if  any, leviable on each such building or land’ Clause  (i) of rule 42 reads as under               (1)  If the person on whom a notice of  demand               has been served under rule 41 does not  within               fifteen  days  from such service pay  the  sum               demanded  or shows sufficient cause, for  non-               payment of the same to the satisfaction of the               Commissioner  and  if no appeal  is  preferred               against   the   said  tax,   a,,   hereinafter               provided,  such  sum, with all  costs  of  the               recovery,  may  be levied under a  warrant  in               Form H or to the like effect, to be issued  by               the Commissioner, by distress and sale of  the

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             movable  property  of  the  defaulter  or  the               attachment   and   sale  of   the,   immovable               property’   of  the  defaulter-  or,  if   the               defaulter  be the occupier of any premises  in               respect  of  which a property-tax is  due,  by               distress  and  sale of  any  movable  property               found on the said premises or. if the, tax  be               due in respect of any vehicle, boat or  animal               by distress and sale of such vehicle, boat  or               animal in whomsoever’.,, ownership, possession               or control, the same may be.’, We  may now set out the material changes brought out in  the Corporations Act by Gujarat Act No. 5 of 1970.  Sections  2, 4,  6, 7, 10, 11, 12 and 13 of (2) of the amending Act  read as under :                "2.   In  the  Bombay  Provincial   Municipal               Corporations  Act, 1949 (hereinafter  referred               to as ’the principal Act’), in section 2,-                230               (1)before  clause (1) the following  clause               shall  be, and shall be deemed always to  have               been, inserted, namely               (1A) ’annual letting value’ means-               (i)in  relation to any period prior to  1st               April,  1970,  the annual rent for  which  any               building  or  land or premises,  exclusive  of               furniture  or machinery contained  or  situate               therein  or  thereon,  might,  if  the  Bombay               Rents,  Hotel and Lodging House Rates  Control               Act,  1974  were not in force,  reasonably  be               expected to let from year to year with  refer-               ence to its use :               (ii)in  relation  to any other  period,  the               annual rent for which any building or land  or               premises, exclusive of furniture or  machinery               contained  or  situate there  in  or  thereon,               might reasonably be expected to let from  year               to year with reference to its use;               and shall include all payments made or  agreed               to  be  made to the owner by a  person  (other               than the owner) occupying the building or land               or  premises on account of occupation,  taxes,               insurance or other charges incidental thereto               Provided  that, for the purpose of sub  clause               (ii),-               (a)   in  respect of any building or  land  or               premises  the standard rent of which has  been               fixed  under section 11 of the  Bombay  Rents,               Hotel  and  Lodging House Rates  Control  Act,               1.947,  the  annual  rent  thereof  shall  not               exceed the annual amount of the standard  rent               so fixed;               (b)   in  the case of any land of a class  not               ordinarily  let,  the  annual  rent  of  which               cannot  in the opinion of the Commissioner  be               easily  estimated,  the annual rent  shall  be               deemed  to  be six per cent of  the  estimated               market  value  of  the land  at  the  time  of               assessment;               (c)   in  the case of any building of a  class               not  ordinarily  let, or in the  case  of  any               industrial  or other premises of a  class  not               ordinarily  let, or in the case of a class  of               such  premises  the building or  buildings  in               which  are not ordinarily let, if  the  annual

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             rent  thereof  cannot in the  opinion  of  the               Commissioner  be easily estimated, the  annual               rent shall be deemed to be six per cent of the               total  of the estimated market value,  at  the               time  of the assessment, of the land on  which               such  building or buildings stand or,  as  the               case  may be. of the land which is-  comprised               in  such premises, and the estimated cost,  at               the  time of the assessment, of  erecting  the               building, or as the case may be, the  building               or buildings comprised in such premises;’               231               (2)for clause (54), the following shall be,               and  shall  be  deemed  always  to  have  been,               substituted, namely               (54)’rateable value’ means the value of  any               building or land fixed, whether with reference               to   any  given  premises  or  otherwise,   in               accordance with the provisions of Act and  the               rules   for  the  purpose  of  assessment   to               property taxes; 4.   In  section  49  of   the               principal Act, in sub-section (1),-               (1)for the words ’such of the duties of the               Commissioner’ the words ’such of the duties of               the Commissioner, including powers and  duties               of a judicial or quasi-judicial nature,  shall               be,  and shall be deemed always to have  been,               substituted;               (2)after  the first proviso, the  following               further proviso shall be, and shall be  deemed               always to have been, added, namely :-               ’Provided  further that nothing in  this  sub-               section   "   be   deemed   to   empower   the               Commissioner to issue any order regulation the               exercise of powers or performance of duties of               a judicial or quasi-judicial nature deputed by               him., 6.In section 129 of the principal Act, to clause (b), the following  proviso shall be, and shall be deemed  always  to have been, added, namely :-               ’Provided that when determining under  section               99   or   section  150  the  rate   at   which               conservancy  tax  shall  be  levied  for   any               official year or part of an official year, the               Corporation may determine different rates  for               different classes of pro- 7.In section 137 of the principal Act, to subsection (1) the following proviso shall be added, namely .-               "Provided  that if the Corporation shall  have               determined for any official year any different               rate  of  conservancy  tax for  any  class  of               properties  to  which any  of  the  properties               referred  to in this sub-section belongs,  the               Commissioner  shall not, without the  previous               approval  of  the Corporation, fix,  for  such               official year or part thereof, the conservancy               tax  to  be paid in respect  of  any  property               belonging   to  such  class  for  which   such               different rate may have been determined by the               Corporation, at any other different rate under               this subsection.’               10.   In section 406 of the principal Act,  in               sub-section (2),-               (1)for the words ’shall be heard’ the words               ’shall  be entertained’ shall be  substituted;

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             and               (2)the  following  proviso shall  be  added               after clause (e), namely :-               ’Provided  that where in any  particular  case               the  Judge is of opinion that the  deposit  of               the amount by the appellant                232               will  cause undue hardship to him  the,  Judge               may  in  his  discretion  dispense  with  such               deposit   or   part   thereof,   either    un-               conditionally or subject to such conditions as               he may deem fit.’               11.in  section  411 of the  principal  Act,               after  clause (a), the following clause  shall               be inserted, namely :’-               "  (b) from any order of the Judge  under  the               proviso  to  sub-section (2) of  section  406;               and;"               12.   In  Schedule A to the principal Act,  in               Chapter VIII,-               (i)in sub-rule (3) of rule 7, for the words               annual  rent for which such building, land  or               premises  might reasonably be expected to  let               from year to year a sum equal to ten per  cent               of  the  said annual rent’ the  words  ’annual               letting  value  of  such  building,  land   or               premises  a sum equal to ten per cent of  such               annual  letting value’ shall be, and shall  be               deemed always to have been substituted; and               (ii)in  sub  rule (1) of rule  42,  for  the               words is preferred’ the words ’is preferred or               entertained’ shall be substituted.               13.Notwithstanding  anything  contained  in               any judgment, decree or order of any court  or               tribunal or any other authority,-               (1)................               (2)no  determination  of  any  special   or               different  rate,  of  conservancy  tax  by   a               Municipal Corporation constituted by or  under               the  principal  Act in respect of  any  hotel,               club,  stable,  industrial premises  or  other               large   premises  in  exercise  or   purported               exercise of its powers under any of the provi-               sions of the principal Act, at any time before               the commencement of the said Ordinance,  shall               be  deemed  to  have been  invalidly  made  by               reason  of the Corporation having no power  to               determine  such  rate at the  time  when  such               determination   was   made;   and   any   such               determination shall be deemed to be valid  and                             shall  be  deemed always to have  been   validly               made under the provisions of the principal Act               as amended by this Act as if this Act had been               in  force at the time when such  determination               was   made;  and  no  such  determination   of               different or special rate of conservancy  tax,               or  any  entry of tax made in  any  assessment               book pursuant thereto, or any levy of such tax               or  bill  or notice of demand or  distress  or               attachment  issued or executed for  collection               of  such tax, shall be called in  question  in               any court or before any tribunal or  authority               merely on the ground that the Corporation  had               no  power  or  authority  to  determine   such

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             different  or special rate of conservancy  tax               in   respect  of  any  hotel,  club,   stable,               industrial premises or other large premises or               on any ground Consequential hereto."               233 The  High  Court  after  protracted  hearing  we  given   to understand  lasted for 21 days besides 4 days  for  judgment while  partly allowing the petitions filed before  it  under article 226 of constitution made the following declaration :               "(i) Section 2 1A) clause (i) is valid so  far               as it is applicable to the official year 1969-               70  but  it is null and void in so far  as  it               applies  to the official years from  The  com-               mencement  of  the Corporations Act  upto  and               including   the  official  year  1968-69,   on               account of infraction of article 14.               (ii)  Proviso (c) to section 2(1A) clause (ii)               is not               violativeof     article-    14    and     is               constitutionally valid.                (iii)  Section  49 does not suffer  from  the               vice     of    unreasonableness     and     is               constitutionally valid and so_ also is section               13(1) of Gujarat Act 5 of 1970.               (iv)The  proviso  to section 129(b)  is  not               violative  of  article 14 nor does  it  suffer               from  the  vice  of  excessive  delegation  of               legislative power.               (v)Section  13(2) of Gujarat Act 5 of  1970               is  not  violative of article  14  or  article               19(1)(f)   and   cannot   be   challenged   as               constitutionally invalid.                (vi)Section  406(2)(e) and  section  411(bb)               are  null and void as being in.  contravention               of article 14 : Rule 42 of the Taxation  Rules               is  also ultra vires and void in so far as  it               provides  that  if an appeal is  preferred  or               entertained against thetax,  warrant  shall               not  issue for the recovery, of the amount  of               tax.               (viii)     The   Resolutions  passed  by   the               Corporation  for the official  years  1967-68,                             1968-69,  1969-70 and 1970-71 to the e xtent  to               which they fix the rate of conservancy tax  at               9  per cent inter alia in respect of  textile,               mills   and   factories   belonging   to   the               petitioners  are  ultra vires the  proviso  to               section 129(b) and the rate of conservancy tax               applicable  in respect of these textile  mills               and  factories must, therefore be taken to  be               the general rate of 3 per cent." Civil  appeals Nos. 489 to 513 and 752 to 755 of  1973  have been filed in this Court by the petitioners before the  High Court  against the judgment of that court in so far  as  the court has upheld the constitutional validity of the impugned provisions.  Civil appeals Nos. 643 to 684 of 1973 have been filed by the Municipal Corporation of the City of  Ahmedabad and others against the above judgment in so far as the  High Court  has  struck  down the  impugned  provisions  and  the Resolutions.  Civil appeals No. 389 to 430 of 1974 have been filed by the State of Gujarat against the judgment in so far as  the High Court has struck down the impugned  provisions. Writ petitions Nos. 51, 60 to 73, 87 to 91, 157, 492 to 503, 533, 534 and 583 of 1972 as also writ petitions Nos. 1866 to

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1877 and 2046 of 1973 which have been filed by the  Aryodaya Spg.  &  Wvg.   Mills Co. Ltd.  and  other  parties  involve substantially the same question Which arises in 234 appeals,  though some of these writ petitions relate to  the subsequent period-of 1971-72.  Writ petition No. 74 of  1972 filed  by  the Ahmedabad Electricity Co.  Ltd.  involves  an additional point regarding its liability to pay property tax which  has been levied on the ground that it occupier.  land below  the  surface for underground cables.   This  judgment would dispose of all the appeals and writ petitions. The first important_question which arises for  determination is  whether  clause  (i) of section 2(1A)  is  violative  of article  14.   According  to this  clause,  "annual  letting value"  means in relation to any period prior to 1st  April, 1970  the  annual  rent for which any building  or  land  or premises,  exclusive of furniture or machinery contained  or situate  therein  or thereon, might, if  the  Bombay  Rents, Hotel and Lodging House Rates Control Act, 1947 were not  in force, reasonably be expected to let from year to year  with reference  to  its use.  According to the  petitioners,  the operation  of  this  clause  affected  only  the  assessment proceedings pending on December 23, 1969 when Ordinance 6 of 1969 (which was subsequently replaced by Act 5 of 1970) came into  force  and did not affect the assessments  which  were final  and completed before that date.  The  said  provision war,  thus  said  to  create  an  arbitrary  and  irrational classification which had no reasonable nexus with the object of  levying  the tax.  As against the above,  the  following four contentions were advanced on behalf of the  Corporation : -               (1)   There is no discrimination in the matter               of    completed   assessments   and    pending               assessment  because  the  prior  law  did  not               require valuation to be restricted to standard               rent.    The  impugned  provision  is   merely                             declaratory of previous state of law.                (2)  There is no discrimination in the matter               of completed assessment,% pending  assessments               because   as  a  matter  of   fact   valuation               assessments finalised before December 23, 1972               were  in  disregard of the provisions  of  the               Rent Act.               (3)   Pending  cases  constitute  a  class  by               themselves   and   any  law  which   makes   a               distinction between decided cases and  pending               cases  is not violative of article 14  of  the               Constitution as the above distinction is based               upon rational classification.               (4)   In  any case so far as the year  1969-70               is  concerned, there is no  discrimination  or               violation of article 14. The  High Court rejected the first three  contentions  urged can  behalf  of  the  Corporation  but  accepted  the  fourt contention.  Accordingly, it held that clause (i) of section 2(1A)  was  valid in so far a,,, it was  applicable  to  the official year 1969-70, but was null and void in so far as it applied  to the previous years on account of the  infraction of article 14. Regarding  clause  (c) of the proviso to sub-clause  (2)  of clause  (1A)  of section 2 of the Act, the High  Court  held that it is only if 235 the  annual  rent  having regard to the  provisions  of  the Bombay  Rent  Act  cannot  be  easily  estimated  that   the

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Commissioner can adopt the basis of the valuation set out in proviso  to clause (c).  Mr. Tar under learned  counsel  for the   petitioners  has  not  pressed  the  attack   on   the constitutional validity of clause (c) because, according  to him,  it is not known as to which property would be  covered by that clauses as construed by the High Court. Likewise,  so far as the constitutional validity of  section 49 of the Act is concerned, the attack has not been  pressed on  behalf of the petitioner-appellants.  Mr.  Tarkunde  has also pointed out that despite the decision of this Court  in Manek  Chowk  Spg.  & Wvg.  Mills  case  (supra)  in  making assessments  attempts are being made by the  Corporation  to include some structures which constitute plant and machinery as part of building.  The learned counsel, however, concedes that  this  would be question of fact  depending  upon  each case.   He  accordingly  states that his  clients  would  if necessary agitate the matter in appeal. It  has  been argued before us by the  Additional  Solicitor General,  Mr.  Vakil  and  Mr. Bhandare  on  behalf  of  the Corporation  as well as the State Government that  the  High Court  was  in error in holding that clause (i)  of  section 2(1A)  was violative of article 14 in respect  of  the_years prior  to the official year 1969-70.  As against  that,  Mr. Tarkunde   on   behalf   of  the   petitioners   (the   word "petitioners"  would cover not only the petitioners in  this Court  but also those who were the petitioners in  the  High Court) has supported the finding of the High Court in  this. respect.   Mr.  Tarkunde  in his own  turn  has  mailed  the finding  of  the High Court in so far as it  has  held  that clause  (i) of section 2(1A) is not violative of article  14 in  respect of the year 1969-70.  After hearing the  learned counsel  for the parties we find considerable force  in  the submission made on behalf of the Corporation and the State Government. The first questionwhich  arises for consideration  in  the above context is whether thereis any discrimination  in relation to the assessments for the periodprior to  April 1,  1970  between  pending  cases and  the  cases  in  which assessment  had  already  been completed.  So  far  as  this aspect is concerned, we find that in the case of  Assessment Committee   of   the  Metropolitan  Borough   of   Poplar.V. Hobberis(1)  the  House of Lords held by  majority  that  in arriving at the valuation for this purposes of the Valuation (Metropolis)  Act,  1969,  of a hereditament  to  which  the Increase  of  Rent and Mortgage interest  (Restriction)  Act 1920 applies, the maximum gross value to be assigned to that hereditament  is  not limited to the standard  rent  of  the creditament together with the additions thereto permitted by the  latter  Act.   It  was  further  held  that  the  above mentioned  Act  of 1920 is not to be taken into  account  in determining  the  valuation  for  rating  purposes  of   the hereditaments  to  which it applies.   Following  the  above decision  of  the  House of Lords a Division  Bench  of  the Bombay  High Court held in the case of Gulam Ahmed Rogay  v. Bombay Municipality(1), (1)  [1922] 2 A.C. 93. 236 That  in  arriving  at the rateable value  for  purposes  of section 154(1) ,of the City of Bombay ’Municipal Act, 18 8 8 of  property  to which the Bombay Rents, ’Hotel  &  ’Lodging house  Rates Control Act, 1947 applies the maximum value  to be  assigned  to the property is not  to’be  limited,to  the maximum   standard  rent  of  the  property  together   with additions  thereto  permitted by the  latter  Act.   Similar question there-after arose in the case of The Corporation of

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Calcutta  v. Sm.  Padma Debi & ors (2) . This Court in  that case was concerned with the provisions of section 127(a)  of the  Calcutta Municipal Act, according to which  the  annual rental  value of land and the annual value of  any  building erected  for  letting purposes or ordinarily act,  shall  be deemed  to  be the gross annual rent at which  the  land  or building  might  at  the time of  assessment  reasonably  be expected  to let from year to year, less, in the case  of  a building,  an  allowance  of ten per cent for  the  cost  of repairs and for all other expenses necessary to maintain the building in a state to command such gross rent.  I was  held by this Court that on a fair reading of the above  provision the  rental value ,cannot be fixed higher than the  standard rent  under the Rent Control Act.  It was further held  that the words "gross annual rent at which the land. or  building might  at the time of assessment reasonably be  expected  to let  from year to year" imply that the rent which the  land- lord  might  realise if the house was let is the  basis  for fixing  the annual value of the building.  The criterion  is the rent realisable by the landlord and not the value of the holding  in  the  wards of the tenent.   The  value  of  the property  to  the  owner  is  the  stardard  in  making  the assessment.  The Corporation, it was accordingly  concluded, had no power to fix the annual value of the premises  higher than the $tandard rent. It  was argued on behalf of the Corporation before the  High Court  that no averment had been made by the petitioners  in the petitions that the assessments which had been  completed before  the  coming into force of Ordinance 6 of  1969  were made having regard to the provisions of the Bombay Rent  Act and  that  in  the  absence of such  averments  no  case  of discrimination  could  be  said to have  been  made  by  the petitioners.   The  High  Court  rejected  this   contention because  in  its opinion it would be reasonable  to  presume that  the  assessments were made keeping in  view  the  rent restriction  provisions  of  the Bombay Rent  Act.   We  are unable to agree with the above approach of the High Court. There is a presumption of the constituticonal validity of  a statutory  provision.   In  case  any  party  ass-ails   the validity of any provision on the ground that it is violative of  article 14 of the Constitution, it is for that party  to make  the  necessary averments and adduce material  to  show discrimination  violative of article 14.  No averments  were made  in  the  petitions  before  the  High  Court  by   the petitioners  that  the .assessments before the  coming  into force  of Ordinance 6 of 1969 bad been made by  taking  into account  the rent restriction provisions of the Bombay  Rent Act.  Paragraph 2B and some other paragraphs of peti- (1)  AIR 1951 Bombay 320. (2)  [1962] 3 S C R 49. 237 tion  No.  233 of 1970 before the High Court, to  which  our attention  was invited by Mr. Tarkunde, also do not  contain that  averment.  No material on this factual aspect  was  in the   circumstances  produced  either  on  behalf   of   the petitioners or the Corporation.  The High Court, as  already observed,  decided the matter merely on the basis of a  pre- sumption.   It  is, in our opinion, extremely  hazardous  to decide  the  question of the constitutional  validity  of  a provision on the basis of the supposed existence of  certain facts  by  raising  a  presumption.   The  facts  about  the supposed  existence of which presumption was raised  by  the High  Court were of such a nature that a  definite  averment could  have  been  made  in respect  of  them  and  concrete material  could  have  been produced  in  support  of  their

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existence  or non-existence.  Presumptions are  resorted  to when the matter does not admit of direct proof or when there is some practical difficulty to produce evidence to prove  a particular fact.  When, however, the fact to be  established is of such a nature that direct evidence about its existence or nonexistence would be available, the proper course is  to have the direct evidence rather than to decide the matter by resort   to   presumption.   A   pronouncement   about   the constitutional validity of a statutory provision affects not only the parties before the Court, but all other parties who may  be  affected by the impugned provision.   There  would, therefore,  be  inherent risk in striking down  an  impugned provision without having the complete factual data and  full material  before  the  court.   It  was  therefore,  in  our opinion, essential for the High Court to ascertain and field out the correct factual position before recording a  finding that the impugned provision is violative of article 14.  The fact that the High Court acted on an incorrect assumption is also borne out by the material which has been adduced before us  in  the  writ petitions filed under article  32  of  the Constitution. In  the affidavit of Jayantilal Maneklal Shah, Assessor  and Collector  of  the  Corporation, filed  on  behalf  of,  the respondents  in  these petitions, the factual  position  has been  brought  out at length.  According to  the  affidavit, after the Corporation had been constituted with effect  from July  1, 1950 the Commissioner kept for every official  year an assessment book as contemplated by rule 9 of the Taxation Rules.  The rateable value of lands and buildings in Special Property  Section  were first determined  by  the  municipal valuers  on  Contractor’s  Theory  in  accordance  with  the methods  prevailing  under the English law of  rating.   The owners  of lands avoid buildings which were valued on’  Con- tractor’s Theory filed appeals.  During the pendency of  the appeals,.  the  authorities concerned agreed  to  refer  the question  of  determination of the rateable  values  to  the arbitration  of  the  arbitrators,  one  appointed  by   the Corporation  and the other appointed by the  taxpayers.   On disagreement  between  the two arbitrators  the  matter  was referred  in 1953 to Shri H. V. Divetia, a former Judge  of. the  High  Court of Judicature at Bombay  as  umpire.   Shri Divetia  held  that flat rate floor area  method  which  was being  adopted by the Municipal Corporation of the  city  of Bombay  in  similar  cases  was  the  proper  method.    The municipal authorities consequently adopted that method.  The award  of Shri Divetia was effective only till the  official year 1954-55, but its application was extended by  agreement between  the parties up to the year 1958-59.  The  municipal authorities continued to value the lands; 238 and  buildings aforesaid on the flat rate floor area  method for  the  year 1959-60 and  onwards to prevent  any  dispute being   raised.    The   affidavit   further   shows    that notwithstanding  decision in Padma Devi’s case  (supra)  the Corporation  continued  as before to  value  the  properties included  in the Special Property Section on the  flat  rate floor area method.  Both the valuers as well as the  persons liable  to  pay  property taxes were not  conscious  of  any impact  of  rent restriction for the  purposes  of  property taxes.   The  Collector has denied that in  determining  the rateable  value the Municipal Commissioner had  been  taking into  account the standard rent of the building or  land  of was following the principle that the rent restricted by  law was the measure of the true rent of the building. There  is  no material before us to show  that  the  factual

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position  is in any way different from that brought  out  in the   affidavit  of  the  Assessor  and  Collector  of   the Corporation.   Mr.  Tarkunde has referred  to  three  orders dated  March 22, 1969 of the Deputy  Municipal  Commissioner whereby the rateable value as initially fixed was reduced on complaint  filed by the ratepayers It would appear from  the orders  that  in  reducing the  rateable  value  the  Deputy Municipal  Commissioner took into account the rental  value. The above three orders, in our opinion, can hardly be of any help  to  the petitioners because there is nothing  to  show that  the Deputy Municipal Commissioner while  making  those orders   took  into  account  the  standard  rent  and   the restrictions  placed on the increase in rent by  the  Bombay Rent Act. Mr.  Tarkunde  then urges that the material which  has  been placed before this Court regarding the factual position  was not before the High Court and as such this Court should  not disturb the finding of the High Court on the  constitutional validity  of clause (i) of section 2(1A).  We are unable  to accede to this submission.  The validity of the above clause has also been assailed in the writ petitions filed before us and  in deciding those writ petitions, we cannot  refuse  to take into account the material which has been placed  before us.  As that material discloses that the factual position as it  existed before the promulgation of Ordinance 6  of  1969 was  that  the provisions of the Bombay Rent  Act  were  not taken into account in determining the rateable value,  there would be no escape from the conclusion that no  differential treatment  has  been meted, out to pending cases  in  clause (i).  It is plain that the impugned provision cannot be held to  be violative of article 14 in the appeals filed  against the judgment of the High Court and constitutionally valid in the  writ petitions.  As the High Court decided  the  matter without  having the full and complete data before it and  as such data is available to us, the contention that we  should not  take that data into account, in our opinion, is  wholly untenable.   We  would,  therefore hold  that  there  is  no material  on  record as might justify the inference  that  a differential hostile treatment has been meted out in pending cases.   The  very  basis  of  striking  down  the  impugned provisions  on the ground of being violative of  article  14 would thus disappear. Apart   from   the  above.we  are  of   the   opinion   that classification by treating decided cases as belonging to one category and pending cases 239 as  belonging to another category is reasonable and not  per se.offensive to article 14. It  is  well-establioshed  that  article  14  forbids  class legislation but does not forbid classification.  Permissible classification   must   be  founded   on   an   intelligible differentia  which distinguishes persons or things that  are grouped together from others left out of the group, and  the differentia  must  have a rational relation  to  the  object sought  to  be  achieved by the  statute  in  question.   In permissible  classification mathematical nicety and  perfect equality  are  not required.  Similarity,  not  identity  of treatment,  is enough.  If there is equality and  uniformity within  each  group,  the  law  will  not  be  condemned  as discriminative, bought due to some fortuitous  circumstances arising out of a peculiar situation some included in a class get  an  advantage  over others, so long  as  they  are  not singled  out for special treatment.  Taxation law is not  an exception to this doctrine.  But, in the application of  the principle the courts, in view of the inherent complexity  of

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fiscal  adjustment  of  diverse elements,  permit  a  larger discretion   to   the   legislature   in   the   matter   of classification,  so  long as it adheres to  the  fundamental principles  underlying the said doctrine.  The power of  the legislature to classify is of wide range and flexibility  so that it can adjust its system of taxation in all proper  and reason-able ways (see Ram Krishna Dalmia v. Shri Justice  S. R.  Tendolkar(1)  and  Khandige Shah  Bhat  v.  Agricultural Income-tax   Officer,  Kasaragod(2).   Keeping   the   above principles  in view, we find no violation of article  14  in treating  pending cases ;as a class different  from  decided cases.   It  cannot be disputed that so far as  the  pending cases  covered by clause (i) are concerned, they  have  been all treated alike.  In the case of Rao Shiv Bahadur Singh v. State of Madhya Pradesh(") this Court observed :               "But   there   is  no   reason   why   pending               proceedings   cannot   be   treated   by   the               legislature  as a class by  themselves  having               regard  to  the exigencies  of  the  situation               which such pendency itself call,, for.   ’Mere               can  arise  no question as to  such  a  saving               provision infringing article 14 so long as  no               scope  is left for any further  discrimination               inter  se as between persons affected by  such               pending matters." In Hathising Manufacturing Co. Ltd. v. Union of India(4) the constitutional  validity of section 25FFF of the  Industrial Disputes  Act,  1947  was assailed.   That  section  made  a distinction   between   employers  who  had   closed   their undertakings  on or before November 28, 1956 and  those  who closed  their  undertakings after that date.  It  was  urged that the above provision was. violative of article 14 of the Constitution.  The above contention was rejected and it  was observed               "When  Parliament  enacts  a  law  imposing  a               liability as flowing from certain transactions               prospectively,    it   evidently    makes    a               distinction  between those transactions  which               are covered by the Act and those which are not               covered   by  the  Act,  because   they   were               completed before the date on which               (1)   [1959] S.C.R. 279.               (2)   [1963] 3 S.C.R. 809.               (3)   [1953] S.C.R. 1188. 1197.               (4)   [1960] 3 S.C.R. 528.               240               the  Act was enacted.   This  differentiation,               however,  does  not amount  to  discrimination               which  is  liable  to  be  struck  down  under               article  14.  The power of the legislature  to               impose   civil   liability   in   respect   of               transactions completed even before the date on               which.  the Act is enacted does not appear  to               be restricted.  If, as is conceded-and in  our                             judgment  rightly by a statute  imposi ng  civil               liability   in  respect  of   post   enactment               transactions, not discrimination is practiced,               by  a  statute  which  imposes  liability   in               respect of transactions which have taken place               after a date fixed by the statute, but  before               its   enactment,  it  cannot  be   said   that               discrimination is practiced." in  the  case of fain Bros. & Ors. v. The Union of  India  & Ors.  (1)  it  was urged on behalf of  the  appellants  that

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clause (g) of section 297(2) of the Income-tax Act, 1961 was violative  of  article  14  inasmuch as  in  the  matter  of ’imposition of penalty, it discriminated between two sets of assesses with reference to a particular date, namely,  those whose assessment had been completed before 1st day of April, 1962  and others whose assessment was completed on or  after that  date.   While  upholding the  validity  of  the  above provision, this Court observed               "Now the Act of 1961 came into force on  first               April  1962.   It repealed the  prior  Act  of               1922.  Whenever a prior enactment is  repealed               and new provisions are enacted the legislature               invariably  lays  down under  which  enactment               pending  proceedings  shall be  continued  and               concluded.   Section 6 of the General  Clauses               Act 1897 deals with the effect of repeal of an               enactment  and its provisions apply  unless  a               different  intention appears in  the  statute.               It is for the legislature to decide from which               date   a  particular  law  should  come   into               operation.  It is not disputed that no  reason               has  been  suggested why  pending  proceedings               cannot  be  treated by the  legislature  as  a               class  for the purpose of Art. 14.   The  date               first  April 1962 which has been  selected  by               the  legislature for the purpose of  cls.  (f)               and (g) of s. 297 (2) cannot be  characterised               as arbitrary or fanciful." We  would, therefore, hold that clause (i) of section  2(1A) is constitutionally valid and not violative of article 14 in respect  of  all  the  years  to  which  it  has  been  made applicable. , Leamed Additional Solicitor-General and Mr. Vakil on  behalf of  the  Corporation have assailed the finding of  the  High Court in so far as it has held the resolutions passed by the Corporation  for  the, four years from  1967-68  to  1970-71 fixing the rate of conservancy tax at 9 per cent in  respect of textile mills, factories and other large premises instead of  the  general rate of 3 per cent to be  ultra  vires  the proviso  to section 129(b).  We may in this context.set  out the  material  part  of  the  impugned  resolution  for  the assessment  year 1971-72 taking it to been specimen for  the four years in question (1)  [1970] 3 S.C.R. 253. 241               (c)   Conservancy  tax at 3% of  the  rateable               value  of  the premises liable  to  tax  under               provisions of section 131 of the Act, subject,               however, to the proviso that the minimum amount               to such tax to be levied in respect of any one               separate holding of land or of any one portion               of  a  building  which is let  as  a  separate               holding  shall be eight annas per  month,  and               that  the amount of such tax to be  levied  in               respect  of any hotel, club, stable  or  other               large  premises may be specially  fixed  under               section 137.               (d)As  per the provisions of  section  137,               hotel,  club, stables, theatres or cinemas  or               other  large  premises  including  mills   and               factories registered under the Factories  Act,               and  where 50 or more workmen are employed  in               manufacture  in  all  the  shifts,  shall   be               subject  to  a conservancy tax at  9%  of  the               rateable value."

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The  High Court in striking down the four resolutions in  so far  as the rate of conservancy tax in respect of the  large premises had been fixed at 9 per cent instead of 3 per cent, observed   that  the  power  to  fix  different   rates   of conservancy  tax  for  different classes  of  properties  is limited by the actual cost element and the differential rate of   conservancy  tax  fixed  for  a  particular  class   of properties  must be related to the actual cost  involved  in supplying conservancy service to that class.  The High Court agreed  that large premises could be treated as a class  and given  differential treatment in the matter of  fixation  of conservancy tax.  On the question, however, as to what  rate of  conservancy tax should be fixed for large premises,  the High   Court.  observed  that  there  was  nothing  in   the affidavits  filed on behalf of the Corporation  which  might show  that the Corporation was guided by the actual cost  of conservancy service supplied to each class. We may at this stage advert to the scheme of the Corporation Act in the matter of levy of conservancy tax.  Clause (b) of section 129 states that the rate of conservancy tax shall be such percentage of rateable value as will in the opinion  of the  Corporation suffice to provide the collection,  removal and  disposal, by municipal agency, of  all  excrementitious and polluted matter from privies, urinals and cesspools  and for  efficiently  maintaining and  repairing  the  municipal drains  constructed or used for the reception or  conveyance of  such  matter.  It is further provided that  the  minimum amount  of  such  tax to be levied in  respect  of  any  one separate  holding of land or of any one building or  of  any one portion of a building which is let as a separate holding shall be eight annas per mensem and that the amount of  such tax  to  be levied in respect of any hotel,  club  or  other large  premises  may be specially fixed under  section  137. Sub-section   (1)   of  section  137   provides   that   the Commissioner   may,   whenever  he  thinks  fit,   fix   the conservancy  tax to be paid in respect of any  hotel,  club, stable or other large premises at such special rate as shall be  generally  approved by the Standing  Committee  in  this behalf, whether the service in respect of which such tax  is leviable  be  performed by human labour  or  by  substituted means  or appliances Subsection (2) of section  137  directs the Commissioner to fix a special rate of conservancy tax in the case 17-L379Sup CI/75 242 of premises used solely for public purposes and not used  or intended   to  be  used  for  purposes  of  profit  or   for residential  or charitable or religious purposes in  respect of  which the conservancy tax is payable by the  Government. According  to  sub-section (3) of section 137, in  any  such case  the conservancy tax shall be, fixed with reference  to the  cost  or probable cost of the collection,  removal  and disposal,  by the agency of municipal conservancy staff,  of excrementitious and polluted matter from the premises. One of the questions which has been agitated before us is as to  whether sub-section (3) of section 137 deals  only  with cases mentioned in sub-section (2) or whether it applies  to cases covered both by sub-section (1) as well as sub-section (2) of section 137.  Put differently, the question is as  to what  is the significance of the opening words ’In any  such case" in sub-section (3). After  giving  the matter our consideration, we are  of  the view that sub-section (3) deals only with cases mentioned in sub-section (2) of section 137 and is not attracted in cases mentioned in sub-section (1).

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Sub-section   (3)  provides  for  a  concessional  rate   of conservancy  tax because the amount of such conservancy  tax has to be fixed with reference to the cost or probable  cost of  the collection, removal and disposal, by the  agency  of municipal conservancy staff, of excrementitious and polluted matter   from  the  premises.   The  rate   of   conservancy tax  .covered by section 137(3) would be lower  compared  to the  general  rate of conservancy tax under  clause  (b)  of section  129 which would be fixed after taking into  account not  only the cost or probable cost referred to  in  section 137(3) but also the expenses for efficiently maintaining and repairing  the municipal drains constructed or used for  the receiption  or  conveyance of excrementitious  and  polluted matter.   The scheme of the Corporations Act appears  to  be that in the case of premises used solely for public purposes and not intended to be used for purposes of profit or in the case  of  premises intended to be used  for  residential  or charitable  or  religious  purposes  in  respect  of   which conservancy  tax is payable by the Government, the  rate  of conservancy  tax  should be lower compared to  the  rate  of general  conservancy tax.  Sub-section (1) deals with  large premises  like hotels, clubs and stables which in  the  very nature of things require greater conservancy service, and it hardly   stands  to  reason  that  the   Legislature   would contemplate  the  fixing  of  lower  concessional  rate   of conservancy  tax in the case of such premises.  The  opening words of sub-section (3) of section 137, viz.  "In any  such case"  make it clear that its concessional provisions  apply only  to the immediately preceding clause,  namely,  section 137(2). Act 5 of 1970 added a proviso to clause (b) of section  129. According to that proviso, when determining under section 99 or  section 150 the rate at which conservancy tax  shall  be levied  for any official year or part of an  official  year, the Corporation may determine different rates for  different classes of properties.  A proviso was also added to  section 137(1)  by the said Act that if the Corporation  shall  have determined  for  any  official year any  different  rate  of conservancy tax for any class of properties to which any  of the properties referred to in 243 this subsection belongs, the Commissioner shall not, without the  previous  approval of the Corporation,  fix,  for  such official  year  or part thereof, the conservancy tax  to  be paid in respect of any property belonging to such class  for which  such different rate may have been determined  by  the Corporation. Perusal  of the different provisions shows that the rate  of conservancy  tax  can  be fixed under  the  following  three provisions : (1)A  rate  of  conservancy tax (which  for  the  sake  of convenience may be described as general rate of  conservancy tax)  to  be fixed by the Corporation under  clause  (b)  of section 129.  This is, however, subject to the proviso  that it would be open, to the Corporation to determine  different rates for different classes of properties. (2)A  special rate of conservancy tax to be fixed  by  the Commissioner in respect of certain large premises under sub- section (1) of section 137.  Such rate shall not without the previous  approval of the Corporation be different from  the rate of conservancy tax for that class of properties in case the  Corporation has determined the rate of conservancy  tax for that class. (3)A  special  rate  of  conservancy  tax  in  respect  of premises  mentioned  in section 137(2) to be  fixed  by  the

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Commissioner. The   following  affidavit  was  filed  on  behalf  of   the Corporation   in  justification  of  the  higher   rate   of conservancy  tax of 9 per cent for large premises  mentioned in the resolution :               "I  submit that the properties in  respect  of               which the Corporation has determined the  rate               of  conservancy tax at 9 per cent are  proper-               ties  belonging  to a class the cost  of  pro-               viding   conservancy  services  to  which   is               proportionately higher than corresponding cost               in  respect  of other properties.     I  state               that  it is not necessary for the  purpose  of               determining   such   higher  rate   that   the               Corporation   or   the   Commissioner   should               separately  work out the expenditure  involved               in dealing with these properties.  I deny that               there is no valid justification for  providing               a higher rate of conservancy tax in respect of               such   properties.   I  submit  that   it   is               competent to the Corporation to take notice of               the   higher  cost  of  conservancy   services               required  to be incurred in respect  of  these               properties  and to form an opinion on  general               facts-that  the cost of providing  conservancy               services  to these properties would be  higher               and to what extent.  I submit that matters  of               this  type  do  not  demand  an   arithmetical               accuracy  and broad compliance in  matters  of                             this  type  is sufficient for  complia nce  with               law.  I submit that according to the  estimate               of  the  Municipal Corporation,  to  meet  the               total expenditure of conservancy services,  if               a  unit  rate  of conservancy tax  was  to  be               provided,  it was necessary to  determine  the               rate of conservancy tax at 41 per cent of  the               rateable value.  The Corporation has, however,               sought  to  distribute the incidence  of  con-               servancy tax equitably among all the lands and               buildings,  determine  the  general  rate   of               conservancy tax at 3 per cent               L379Sup.CI/75                244               and determine a higher rate of conservancy tax               at  9  per  cent  in  respect  of   industrial               premises  and other properties as provided  in               the said resolution.  I submit that the use of               the  premises has a material relation  to  the               cost of providing conservancy services and  to               the  maintenance and repairs thereof I  submit               that  the hotels, clubs,  industrial  premises               and:  other  large  premises  referred  to  in               section  129(b) as well as in section 137  are               premises which need relatively larger  conser-               vancy services." The  question  with which we are concerned  in  the  present cases  is  whether it is sufficient, as has been  argued  on behalf of the Corporation, to find out the total expense  to be  incurred for conservancy service and thereafter  to  fix different  rates for different categories of  properties  so that the tax raised is sufficient to meet the total expense, or  whether,  as  has  been held  by  the  High  Court,  the different  rate  of conservancy tax fixed for  a  particular class of property under the proviso to clause (b) of section

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129 must be related to the actual cost involved in supplying conservancy  service  to  that class.  In  other  words  the question is whether the Corporation in determining the rates of  conservancy  tax has to find out the  total  expense  it would  have to incur for the various purposes  mentioned  in section  129(b) in connection with the  conservancy  service and  ’thereafter  to raise that amount by  fixing  different rates   of  conservancy  tax  for  various   categories   of properties or whether the Corporation would have to find out separately  the expense required in respect  of  conservancy service for each category of property and thereafter to  fix such  rate of conservancy tax for a category of property  as would  be sufficient to meet the expense on the  conservancy service for that particular category.  To put it differently is the rate of conservancy tax for a class of property to be determined  by taking into account the total  expense  which the  Corporation has to meet for conservancy service in  any official  year  or  is it to be determined  by  taking  into account  the expense which the Corporation has to  meet  for conservancy service for that particular class of property ? After  giving  the matter our consideration, we are  of  the view  that  what is required by section 129 is  that  before determining  the  rates  of conservancy  Tax  for  different categories of properties the Corporation should find out the total  expense  it  would  have to  incur  for  the  various purposes  mentioned  in clause (b) of that  section.   After having ascertained the total expense it would be permissible to the Corporation to fix different rates of conservancy tax for various categories of properties.  It is not  essential, except  in  cases mentioned in sub-sections (2) and  (3)  of section  137  that  the  rate  of  conservancy  tax  for   a particular category of properties should be such as would be related only to the expense for conservancy service for that particular category of properties.  According to the proviso which  has  been added to clause (b) of section 129  of  the Corporations  Act by Act 5 of 1970, when  determining  under section 99 or section 150 the rate at which conservancy  tax shall be levied for any official year or part of an official year,  the  Corporation may determine  different  rates  for different  classes of properties.  There is nothing  in  the above proviso which makes it obligatory 245 for the Corporation to take into account separately the cost of conservancy service for each class of property for  which conservancy tax is fixed.  Apart from the fact that there is no statutory obligation for the Corporation to have separate estimates  of the costs of conservancy service  for  various classes of properties referred to in the above proviso  with a  view  to allocate the cost amongst different  classes  of properties, it would not even be feasible to do so for there would not be separate municipal drains for different classes of properties.  As already mentioned clause (b), of  section 129  also  takes  into  account  the  expense  required  for efficiently  maintaining and repairing the municipal  drains for  finding,  out  the total  expenditure  for  conservancy service.   The High Court, in our-opinion, was in  error  in striking down the resolutions passed by the Corporation  for the official years 1967-68, 1968-69, 1969-70 and 1970-71  to the  extent to which they fixed the rate of conservancy  tax at  9  per cent in respect of textile  mills  and  factories because of the absence of sufficient data to show as to what would be the cost of conservancy service for that particular category  of properties.  The affidavit filed on  behalf  of the  Corporation,  extract from which  has  been  reproduced above,  shows  that  the rates of conservancy  tax  for  the

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different  category  of  properties have  been  fixed  after taking  into account the total expense for  the  conservancy service.   It  is not possible to insist  upon  arithmetical accuracy  in such matters.  A broad and general estimate  of the cost of conservancy service and the tax receipts.  after taking  into account the relevant factors would satisfy  the requirement of law. We  are unable to accede to the submission of  Mr.  Tarkunde that  in view of the construction which we are placing  upon the  proviso  to  section  129(b),  the  proviso  would   be violative  of article 14 of the Constitution on  account  of excessive  delegation  of  legislative  power.   As  already mentioned,  the Corporation must keep in view the total  ex- pense  it  would have to incur for the  conservancy  service before  fixing  the various rates of conservancy  tax.   The different  rates of conservancy tax have thus to be  related to the total cost of conservancy service to be borne by  the Corporation.  The "opinion of the Corporation" mentioned  in clause  (b) of section 129 is formed after budget  estimates are  prepared in accordance with sections 95, 96 and 100  of the Corporations Act.  According to the above provisions the Commissioner  is to make a statement of proposals as to  the taxation  which  would  in  his  opinion  be  necessary   or expedient  to impose under the provisions of the Act in  the Annual  Budget  estimate  of the next  official  year.   The Standing   Committee  then  considers  the   estimates   and proposals  of  the Commissioner, and after  having  obtained from  the  Commissioner further details and  information  as they  think fit, the Committee frames the budget  estimates. The budget estimates contain proposals of rates and  extents of  municipal taxes.  The budget estimates are then  printed and   the  printed  copies  are  sent  to   each   municipal councillor.  The budget estimates are thereafter laid before the   Corporation  which  then  considers  the   same.    In considering the budget estimates the Corporation is entitled to  refer  them back to the Standing Committee  for  further consideration  or to adopt them us they stand or subject  to alterations.    The  entire  procedure   provides   built-in safeguards  and lays down adequate guidelines in the  matter of taxation.  It therefore cannot be said 246 that   the  legislature  has  not  prescribed  any   guiding principle  for the Corporation for determining the rates  of conservancy  tax.   We agree with the High  Court  that  the proviso  to clause (b) of section 129 does not  suffer  from the vice of excessive delegation of legislative power. Mr. Bhandare on behalf of the State of Gujarat has  assailed the  finding of the High Court that section 406 (2) (e)  and section  411 (bb) are violative of article 14 and that  rule 42  of  the  Taxation  Rules is void in so  far  as  it  has provided  that  if  an appeal is  preferred  or  entertained against  the  tax,  warrant  shall not  be  issued  for  the recovery of the     amount  of  tax.   The  High  Court   in striking down section 406(2)(e)    and    section    411(bb) relied upon its earlier judgment dated October    27,   1969 which  had been given before the addition of the proviso  to section  406(2) (e) of by Act 5 of 1970.  According to-  the earlier  judgment, clause (e) of sub-section (2) of  section 406 classified the appellant filing appeals against tax  and rateable  value into two clauses : (1) those  who  deposited the  amount  of tax assessed by the  Commissioner.  and  (2) those   who   did  not.   It  was  held   that   the   above classification had no rational nexus with ’the object of the provision  for  appeal  and that  there  was  no  reasonable justification for giving a right of appeal to one class  and

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denying   it   to  the  other.   After  referring   to   the observations  in  the  earlier  judgment,  the,  High  Court expressed the opinion in the judgment under appeal that  the addition  of the proviso to section 406(2) (e) by Act  5  of 1970  did  not make any material difference as  far  as  the constitutional   validity   of  the  above   provision   was concerned.  According to the High Court, the proviso  merely carves  out an exception from the main provision in  section 406 (2) (e) and limits the applicability of the- main provi- sion to appellants who can deposit the amount of tax without undue  hardship.   The result, in the opinion  of  the  High Court,  was that the discrimination between  the  appellants who  deposited the amount of tax and the appellant  who  did not,  Which  is the necessary consequence of  the  condition requiring  deposit  of the amount of  tax,  still  persists, though it is now limited to the class of appellants who  can deposit the amount of tax without undue hardship. After  bearing the learned counsel for the parties,  we  are unable  to  subscribe to the view taken by the  High  Court. Section 406 (2) (e) as amended states that no appeal against a rateable value or tax fixed or charged under the Act shall be entertained by the Judge in the case of an appeal against a  tax or in the case of an appeal made against  a  rateable value  after a bill for any property tax assessed upon  such value has been presented to the appellant unless the  amount claimed  from the appellant has been deposited by  him  with the  Commissioner.   According to-the proviso to  the  above clause. where in any particular case the Judge is of opinion that  the deposit of the amount by the appellant will  cause undue  hardship  to  him, the Judge may  in  his  discretion dispense   with  such  deposit  or  part   thereof,   either unconditionally or subject to such conditions as he may deem fit.   The  object of the above provision apparently  is  to ensure the 247 deposit of the amount claimed from an appellant in case  he, seeks to file an appeal against a tax or against a  rateable value  after a bill for any property tax assessed upon  such value  has been presented to him. power at the same time  is given  to the appellate judge to relieve the appellant  from the  rigour on the above provision in case the judge  is  of the  opinion  that  it would cause  undue  hardship  to  the appellant.  The requirement about the deposit of the  amount claimed as a condition precedent to the entertainment of  an appeal which. seeks to engage the imposition or the  quantum of  that  tax,  in  our  opinion,  has  not  the  effect  of nullifying  the right of appeal, especially when we keep  in view  the  fact that discretion is vested in  the  appellate judge   to  dispense  with  the  compliance  of  the   above requirement.  All that the, statutory provision seeks to  do is  to regulate the exercise of the, right of  appeal.   The object  of  the above provision is to keep  in  balance  the right  of  appeal, which is conferred upon a person  who  is aggrieved  with  the demand of tax made from  him,  and  the right of the Corporation to speedy recovery of the tax.  The impugned provision accordingly confers a right of appeal and at  the same time prevents the delay in the  payment of  the tax. We find ourselves unable to accede to the argument that the  impugned  provision  has  the  effect  of  creating   a discrimination as is offensive to the principle of  equality enshrined   in  article  14  of  the  Constitution.  it   is significant  that the right of appeal is conferred upon  all persons  who are aggrieved against the determination of  tax or  rateable value. The bar created by section 406(2)(e)  to the  entertainment  of the appeal by a person  who  has  not

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deposited the amount of tax due from him and who is not able to  show  to  the appellate judge that the  deposit  of  the amount would      cause him undue hardship arises out of his own  commission  and default. The above  provision,  in  our opinion, has not the effect of making invidious  distinction or  creating  two  classes with the  object  of  meting  out differential  treatment  to  them; it only  spells  out  the consequences  flowing  from the omission and  default  of  a person  who despite the fact that the deposit of the  amount found due from him-would cause him no hardship, declines  of his own volition to deposit that amount. The right of appeal is the creature of a statute. Without a statutory  provision creating such a right the aggrieved is not entitled to  file an  appeal. We fail to understand as to why the  legislature while granting the right of appeal cannot impose  conditions for  the  exercise  of such right. In  the  absence  of  any special   reasons   there  appears  to  be   no   legal   or constitutional   impediment  to  the  imposition   of   such conditions.  It is permissible, for example. to prescribe  a condition  in criminal cases that unless a convicted  person is released on bail, he must surrender to custody before his appeal  against  the  sentence  of  imprisonment  would   be entertained. Likewise, it is permissible to enact a law that no  appeal  shall  lie  against  an  order  relating  to  an assessment  of  tax  unless the tax had been  paid.  Such  a provision  was  on the statute book- in section  30  of  the Indian  Income-tax  Act, 1922. The proviso to  that  section provided  that  " . . . . . no appeal shall lie  against  an order under sub-section (1) of section 46 unless the tax had been paid". 248 the same is not abused by a recalcitrant party and there  is no  difficulty  in  the enforcement of  the  order  appealed against  in case the appeal is ultimately dismissed.  It  is open to the legislature to impose an accompanying  liability upon  a  party upon whom a legal right is  conferred  or  to prescribe  conditions  for the exercise of the  right.   Any requirement  for  the  discharge of that  liability  or  the fulfillment  of that condition in case the  party  concerned seeks  to  avail  of  the said right is  a  valid  piece  of legislation, and we can discern no contravention of  article 14  in  it.  A disability or disadvantage arising out  of  a party’s  own  default  or omission cannot  be  taken  to  be tantamount  to  the  creation of two  classes  offensive  to article  14  of  the  Constitution,  especially  when   that disability  or  disadvantage operates upon all  persons  who make the default or omission. Observations  in  the case of Hannach Cohen,  Exrx.  of  Sol Cohen, Deceased. and David E. Cohen, Intervener, Petitioners &  Anr. vs.Ben Industrial Loan Corporation & Ors.  (1)  lend some  support to the view we have taken.  Headnote 10  which is  based upon the observations in the body of the  judgment reads as under :-               "10.  A State statute which requires that in a               stockholder’s  derivative action  a  plaintiff               who owns less than 5 per cent of the defendant               corporation’s  outstanding shares,  or  shares               having  marked value not exceeding  $  50,000,               give  security  for the  reasonable  expenses,               including   counsel  fees,  incurred  by   the               corporation  and by other  parties  defendant,               and which makes the plaintiff liable for  such               expenses if he does not make good his  claims,               and   subjects  the  amount  of  security   to               increase  if  the progress of  the  litigation

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             reveals  that it is inadequate or to  decrease               if  it  is proved to be  excessive,  does  not               violate  the  contract  clause,  or  the   due               process clause, or the equal protection clause               of the Federal Constitution." SO far as the constitutional validity of section 411(bb) and rule  42 is concerned, it is the common case of the  parties that  it hinges upon the validity of section 406(2) (e)  and that  in case we uphold the validity of the  last  mentioned provision,  the validity of the other two  provisions  would have to be upheld.  We accordingly uphold the constitutional validity of all the three provisions. The  Ahmedabad  Electricity  Co.  Ltd.  petitioner  in  writ petition  No.  74  of 1972 is a licensee  under  the  Indian Electricity Act, 1910.  It has laid underground supply lines under  most of the roads and public streets in the  city  of Ahmedabad.  The Corporation has in that connection  assessed property  tax and made the petitioner-company liable to  pay that  tax  on the ground that the underground  supply  lines occupy  space  below  the surface and that  the  said  space constitutes ’and.  Section 12 of the Indian Electricity  Act confers  a  right upon a licensee to open and break  up  the soil  and  pavement of any street, railway  or  tramway  for laying down and placing electric supply lines (1)  337 U.S. 539. 249 and  other  works.  Although the roads  and  public  streets under which the petitioner-company has laid down underground supply  lines vest in the, Corporation under section 202  of the  Corporation Act, the liability to pay property  tax  in respect  of  the  space in which supply lines  are  laid  is sought to be fastened upon the petitioner-company in view of the  provisions of section 139(1) of the  Corporations  Act. According  to section 139(1), subject to the  provisions  of sub-section  (2), with which we are not concerned,  property taxes assessed upon any premises shall be primarily leviable if the premises are held immediately from the Government  or from the Corporation, from the actual occupier thereof.  The word  "premises" as defined in section 2(46) includes  land. The  case of the Corporation as set out in the affidavit  of Shri  Narendra  R. Desai, Town Development  Officer  of  the Corporation  is  that  only  such area of  the  land  as  is occupied by the under,ground supply lines that is valued for the purposes of assessing property taxes.  It is stated that for the purpose of laying supply lines, the petitioner  digs trenches  and lays down bricks to serve as bedding  for  the supply’   lines.   The  petitioner-company,  it  is   urged, occupies  by  means of the supply lines that  area  of  land which  is occupied by the bedding prepared for  laying  down the supply lines. Mr.  Tarkunde on behalf of the petitioner-company has  urged that  under  entry  49  of the State  List  in  the  Seventh Schedule  to  the  Constitution, the  State  Legislature  is empowered  to  enact a law relating to taxes  on  lands  and buildings.   It is submitted that the State Legislature  has no competence under the above entry to enact a law for levy- ing  tax in respect of the area occupied by the  underground supply  lines.   The word "land", according to  the  learned counsel,  denotes  the  surface  of the  land  and  not  the underground  strata.  We are unable to accede to  the  above submission.  Entry 49 of List II contemplates a levy of  tax on  lands  and  buildings or both as units.   Such  tax  ’is directly imposed on lands and buildings and bears a definite relation to it.  Section 129 makes provision for the levy of property  tax  on buildings and lands.  Section  139  merely

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specifies the persons who would be primarily responsible for the payment of that tax.  The ’word "land" includes not only the face of the earth, but everything under or over it.  and has  in its legal signification an indefinite extent  upward and downward, giving rise to the maxim, Cujus eat  solumejus est  usque ad coelum (see p. 263 72 Corpus Juris  Secondum). According  to  Broom’s Legal Maxims. 10th ed., P.  259,  not only  has  land  in its legal  signification  an  indefinite extent  upwards,  but in law it extends also  downwards.  so that  whatever is in a direct line between the  surface  and the  centre  of the earth by-the common law belongs  to  the owner  of the surface (not merely the surface, but  all  the land down to the centre of the earth and up to the  heavens) and  hence  the word "land" which is  nomen  generalissimum, includes,  not  only the face of the earth,  but  everything under it or over it. In Rade on Rating, 11th ed.. it is stated on page 14               "By  far the largest number of  persons  rated               are  as  ’occupiers of land or  houses’.   The               word ’land’ as used in the               250               statute,  must  be understood  in  the  widest               possible  sense  it  includes  not  only   the               surface of the earth. but everything under it,               or  over  it.  In Electric  Telegraph  Co.  v.               Salford Overseers(1).  Pollock, C. B. said               ’There is no distinction between the occupying               land,  by  passing through a  fixed  point  of               space in the air to another fixed point, or by               passing  in  the same manner through  land  or               water.   Land  extends  upwards  as  well   as               downward. In  the case of Mayor, Aldermen and Councillors of the  City of  Westminster & Ors. v. The Southern Railway Company,  the Railway Assessment Authority and W. H. Smith & Son,  Limited & Ors.(2) Lord Russel of Killowen observed               "Subject  to  special enactments,  people  are               rated   as  occupiers  of  land,  land   being               understood as including not only the space  of               the earth but all strata above or below." There can, therefore, be no doubt that land in entry 49,  of List It would include the underground strata. It may be stated that the word "land" has also been  defined in  clause  (30)  of section 2 of the  Corporations  Act  to include  land which is being built upon or is built upon  or covered  with water. benefits to arise out of  land.  things attached  to the earth or Dermanently fastened  to  anything attached  to  the earth and rights  created  by  legislative enactment  over the street.  The definition is of  inclusive nature  and does not exclude from its ambit the  underground strata of the land. It  has  been argued by Mr. Tarkunde that the right  to  lay down supply lines under section 12 of the Indian Electricity Act  is  in the nature of a statutory licence and is  not  a right  in  land.  Hence the right does not  constitute  land within   entry   49  and  is  not  taxable  by   the   State legislature.’ This submission is wholly misconceived because what  is taxed under the Corporation Act is  land.   Section 139,  as  already  mentioned  earlier,  merely  fastens  the liability and states that the person primarily liable to pay that  tax would be the actual occupier.  It is not the  case of  the Corporation that the right of the  petitionercompany of laying and placing electric supply lines constitutes land and  as such the petioner-company is liable to pay  property tax.   On  the  contrary,  the liability  is  sought  to  be

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fastened  on  the petitionercompany because of  the  company being  in  occupation of the land  wherein  electric  supply lines  have been laid and placed.  Section 52 of the  Indian Easement  Act,  1882, to which reference ha,; been  made  on behalf  of the petitioner-company. merely defines  "license" and has no     bearing  on  the question with which  we  are concerned. It  cannot, in our opinion, be doubted that the  petitioner- company is     in occupation of the land wherein underground supply line is laid. (1) (1855) 11 Ex. 181, at p. 186, (2) [1936] A.C. 511. 251 In  England also a similar view was taken.  We may refer  in this context to the case of The Assessment Committee of  the Holywell Union & Anr. v. The Halkyn District Mines  Drainage Co.(1)  The Headnote of this case which was decided  by  the House of Lords, reads as under :               "Land  may be occupied for the purpose of  and               in   connection  with  the  enjoyment  of   an               easement  in  such  a manner as  to  make  the               person so occupying rateable to the relief  of               the  poor.  , Such a person may  be  rateable,               though  his occupation is exclusive  only  for               certain purposes, and though the owner of  the               soil   has  reserved  to  himself  rights   of               possession subordinate to the paramount  right               granted to the other.  The test of rateability               is   not  whether  the  rights   granted   are               corporeal or incorporeal, but whether there is               an occupation-which is a question of fact.               Where  in pursuance of a statute the owner  of               land   granted  to  a  drainage  company   the               exclusive  right of drainage through a  tunnel               and  water-course in his land, with the  right               of  placing  works in the  tunnel  and  water-               course,   and  of  making  other  tunnels   in               connection  therewith,  reserving  to  himself               mineral and other rights :-               Held,  reversing the decision of the Court  of               Appeal,  that the statute and grant  gave  the               company not merely an easement but  possession               of  the  tunnels and  water-course,  that  the               right  reserved to the owner were  subordinate               to the rights granted to the company, and that               the company were de facto in occupation of the                             tunnels  and water-course and rateable   to  the               poor in respect thereof."               "Along the tunnel for a considerable  distance               the company have placed iron tubbing; in parts               they have placed brick arches, it seems to  me               that in these parts they occupy land precisely               in  the same sense as a water company does  by               its  pipes or a tramway company by its  rails,               or a telephone company by the supports for its               wires."               It was further observed :               "The question whether a person is an  occupier               or not within the rating law is a question  of               fact,  and does not depend upon  legal  title.               The  person legally possessed may not  occupy.               On  the other hand, a person may  be  occupier               either  with  or without the  consent  of  the               owner."

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Lord  Herschell also relied upon the case of Rex v.  Chelsea Waterworks  romnany (2) wherein a water comnany to whom  the Crown  granted the right to lay down its pipes was  held  by the Court of King’s (1)  [1895] A.C. 117. (2)  5 D. & Ad. 156, 252 Bench  to be occupier of land and liable to be rated.   Lord Macnaghteo in the above case observed               "Now,   putting   aside  for  a   moment   the               reservations  contained in the deed of  grant,               can there be, any doubt as to the position  of               the  company  for rating purposes  as  regards               their  authorized works ?  The numerous  cases               relating  to gas companies,  water  companies,               and   tramways,   place  the   matter   beyond               question."               Lord Davey observed in the above case               "My Lords, I agree with the learned judges  in               the Court of Appeal that the drainage  company               are  not owners of the soil of the tunnels  of               water-course.   But that does not seem  to  me               conclusive   on   the   question   of    their               rateability  in respect of  their  occupation.               The right of the company may be an easement or               incorporeal  right; but the assessment may  be               of such a character as requires the occupation               of land for its exercise, and confers upon the               company  a  right to occupy  land  during  its               continuance.   According to a long  course  of               authority,  the occupation of land under  such               circumstances   is   sufficient   for   rating               purposes, though unaccompanied by ownership of               any  portion  of the soil.  The law  was  thus               stated   by  Wightman  J.  in  Reg.  v.   West               Middlesex Waterworks(1) : In this case’,  says               the  learned  Judge, ’the  first  question  is               whether  the  company are rateable  for  their               mains, which are laid under the surface of the               highway,  without  any freehold  or  leasehold               interest  in the soil thereof being vested  in               the company.  We think they are.  These  mains               are fixed capital vested in land.  The company               is  in possession, of the mains burred in  the               soil, and so is de facto in possession of that               space in the soil which the mains fill, for  a               purpose  beneficial to itself,  The  decisions               are  uniform  in holding gas companies  to  be               rateable  in respect of their mains,  although               the  occupation of such mains may be de  facto               merely,  and  without any legal  or  equitable               estate  in  the land where the mains  lie,  by               force of some statute." Nothing cogent has been argued before us as may induce us to take a view different from that we have arrived at and which is  also in accord with the view of the House of Lords.   We would,  therefore,  hold that the petitioner-company  is  in occupation  of  the underground strata of the  land  through which their electric supply lines had been laid. It  has  been  argued  by Mr.  Tarkunde  that  even  if  the petitioner  electricity  company may be held  to  be  actual occupier  of the underground space on which its supply  line has been laid the petitioner company does not hold the  said space   from  the  Corporation.   It  is  urged   that   the petitioner-company  is in occupation of that space  under  a

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statute and not from the Corporation.  In order to hold that space  from the Corporation, it was essential, according  to the learned counsel. (1)  I F,. & P. at P. 720, 253 that  there  should  have been some  agreement  between  the petitioner   company  and  the  Corporation  or   that   the Corporation should have given its consent for that  purpose. We  are unable to accede to the above submission.Clause  (a) of  section  139(1)  of the  Corporations  Act  fastens  the liability for payment of property tax on the actual occupier of the premises held immediately from the Government or from the  Corporation.  In order to attract the  liability  under the above clause, it is not essential that there should have been  an  agreement  between the  actual  occupier  and  the Government  or  the  Corporation  for  the  holding  of  the premises or that the holding must be with the consent of the Government  or the Corporation.  The liability would  accrue even  if  the  premises vesting in  the  Government  or  the Corporation  are  occupied  in  pursuance  of  a   statutory provision.  The words "held immediately from the  Government or  from the Corporation signify only the party in whom  the premises vest which are held by the actual occupier thereof. Contention has also been advanced by Mr. Tarkunde  regarding the  quantum  of tax levied on and the extent  of  the  land alleged to have been occupied by the petitioner-company  for the  underground  supply  lines.   This  is  essentially   a question  of fact and would have to be agitated  before  the authorities concerned, including the appellate authority. As a result of the above, we dismiss writ petitions Nos. 51, 60 to 74, 87 to 91 157, 492 to 503, 533, 534 and 583 of 1972 as  also writ petitions Nos. 1866 to 1877 and 2046  of  1973 with costs.  One hearing fee.  We also dismiss civil appeals Nos.  489  to 513 and 752 to 755 of 1973.  We  accept  civil appeals  Nos. 643 to 684 of 1973 and civil appeals Nos.  389 to 430 of 1974 and set aside the judgment of the High  Court in  so far as it has struck down section 2(lA) (i),  section 406  (2) (e), section 411 (bb) and rule 42 of  the  Taxation Rules  in Schedule A to the Corporations Act.  We  also  set aside  the judgment of the High Court to the extent  it  has struck  down  resolutions  passed  by  the  Corporation  for official years 1967-68, 1968-69, 1969-70 and 1970-71  fixing the  rate  of conservancy tax at 9 per cent  in  respect  of textile mills and factories.  ’The writ petitions which were filed  in  the High Court by the respondents  concerned  are dismissed.  The appellants shall be entitled to their  costs in these two sets of appeals.  One hearing fee. V. M. K. 2-423SupCI/75 254