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PETITIONER: FIRM SURAJMAL BANSHIDHAR, ETC.

       Vs.

RESPONDENT: THE MUNICIPAL BOARD, GANGANAGAR

DATE OF JUDGMENT25/10/1978

BENCH: SHINGAL, P.N. BENCH: SHINGAL, P.N. CHANDRACHUD, Y.V. ((CJ) UNTWALIA, N.L.

CITATION:  1979 AIR  246            1979 SCR  (2) 169  1979 SCC  (1) 303

ACT:      Rajasthan Town  Municipalities Act 1951-Section 179(2)- Scope of Section if authorises levy of terminal tax.      Words and  Phrases "for  anything done or purporting to be done" meaning of .      Section 179(1)  of the  Rajasthan  Town  Municipalities Act, 1951  provides that no suit shall be instituted against any municipal  board "for anything done or. purporting to be done" under  the Act except in accordance with the procedure laid down  therein. The period of limitation for institution of a  suit against  the municipality was six months from the accrual of cause of action under. sub-s. (2).

HEADNOTE:      The respondent  Board realised  terminal tax  on  goods experted by the appellants. In suits filed by the appellants for refund  of the amounts which they claimed were collected without authority  of law, the respondent Board pleaded that the levy was in accordance with law and that the suits where barred by  limitation. The trial court decreed the suits and on appeal  the District  Judge affirmed  the  trial  Court’s decrees. In  second appeal the High Court held that the levy was illegal. The High Court, however, allowed the appeals in respect of  those amounts  which were  found  to  be  within limitation under  s. 179(2)  of the  Act and  dismissed  the others.      On the  question whether the levy could be said to be a thing done or purported to be done under the Act.      Allowing the appeal, ^      HELD: The  suits did  not fall within the purview of s. 179 of the Act and were not barred by limitation. [172 D]      1. (a)  It is well established that if levy of a tax is prohibited by an Act and is not in pursuance of it, it could not be  said to  be purported to be done in pursuance of the execution or intended execution of the Act. [172 B]      Poona City  Municipal Corporation  v. Dattatraya Nagesh Deodhar, [1964] 8 S.C.R. 178 followed.      (b) The  terminal tax could not be imposed under any of The provisions  of the  Act. The  High Court  was  right  in holding that  the amounts ‘ paid by the appellants by way of

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terminal tax were recoverable by the suits. [173 F-G 174 Al      2. The Bikaner State Municipal Act, 1923 (which was the predecessor of  the present  Act)  authorised  the  levy  of terminal tax  and the Board accordingly levied the tax until January 26, 1950. With the coming into force 12-SCI/78 170 of  the   Constitution,  by   virtue  of  art.  277  it  was permissible for  the Board  to continue to levy the terminal tax until  provision to  the contrary was made by Parliament by law.  But with  effect from December 22, 1951 the Bikaner Act was repealed and the present Act was brought into force. the repeal,  however, did  not affect  the validity of those taxes which  had already  been imposed  and which  could  be "deemed‘’ to  have been  imposed  under  the  Act.  But  the provisions of  the Act  the clear  that the  terminal tax in question could  not be  imposed thereunder.  The levy  could not, therefore,  be saved by cl. (b) of the proviso to s. 2. on the other hand it is clear that the State Legislature had decided to  discontinue the  levy by  excluding it  from the purview of  the saving clauses. The further levy of the tax, therefore, became  illegal and  it was  not  permissible  to continue it  any longer under Art. 277 which merely gave the authority concerned  the option to continue to levy if it so desired. [173A, F-G]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 372-382 of 1969.      Appeals by  Special Leave  from the  Judgment and order dated 10-10-1968  of the Rajasthan High Court in C.S.A. Nos. 18 and 29, 27, 28. 30-35 of 1960 and 54 and 58 of 1961.      S. N. Jain and S. K. Jain for the Appellants.      B. P. Maheshwari and Suresh Sethi for the Respondent.      The Judgment af the Court was delivered by      SHINGHAL, J.,-These  appeals by special leave arise out of a  common judgment  of the  Rajasthan  High  Court  dated October 10, 1968, by which the suits which were filed by the present  appellants  were  dismissed  in  pursuance  of  the earlier judgment  of the  same court dated November 9, 1964, on the  ground that  they were governed by section 179(2) of the Rajasthan  Town Municipalities  Act,  1951,  hereinafter referred to as the Act, and were barred by limitation.      The facts  giving rise to the appeals were different in details, but  they were  examined in  the  High  Court  with reference to  the common questions of law which arose in all of them  and formed  the basis  of  that  Court’s,  decision against the  plaintiffs. We  have heard  these as  companion appeals, and will decide them by a common judgment.      It is  not necessary  to give the detailed facts of all the cases  as it  will be  enough to refer to the suit which was filed  by M/s  Surajmal Banshidhar  and the developments connected with it, in order to appreciate the controversy.      The  plaintiff   firm  referred  to  above  carried  on business in "pakka arat" and exported goods of various kinds from Ganganagar.  The Municipal  Board of Ganganagar realist "export duty", by way of ter- 171 minal tax,  on the  exported goods.  The plaintiff therefore raised a  suit on  October 19, 1957, challenging the Board’s right to  "impose or  to reales"  any export duty during the period June  5, 1954  to March  10 1957,  amounting  to  Rs. 10,729/-. It  however confined  the suit  to the recovery of

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Rs. 10,000/- alongwith interest and gave up the balance. The Board denied  the claim in the suit and pleaded, inter alia, that the levy of the terminal tax was in accordance with the law and  the suit  was barred by limitation. The trial court rejected the  defence and  decreed the  suit, and its decree was upheld  by the District Judge on appeal. Similar decrees were passed  in the  other suits, for various sums of money. The Board  took the  matter to  the  High  Court  in  second appeals. The appeals were heard by a Single Judge who, while deciding that  the suits  were governed by section 179(2) of the Act,  referred the  question on the legality of the levy to a  larger Bench. A Full Bench of the High Court held that the levy of the terminal tax was illegal, and sent the cases back to  the Single  Judge who  allowed the appeals only for those amounts which were found to be within limitation under section 179(2) of the Act and dismissed the other suits. The plaintiffs obtained  special leave  and have come up to this Court in these circumstances.      The question  which arises for consideration is whether the suits  fall within  the purview of section 179(2) of the Act. The  first two  subsection of section 179 which bear on the controversy read as follows,-           "179. Limitation of suits, etc. -(1) No suit shall      be instituted  against any  municipal board, president,      member, officer, servant or any person acting under the      direction of  such municipal  board, chairman,  member,      officer or  servant for  anything done or purporting to      be done  under this  Act, until  the expiration  of two      months next  after notice in writing, stating the cause      of action, the name and place of abode of the intending      plaintiff and  the relief which he claims, has been, in      the case of a municipal board, delivered or left at its      office, and, in case of a chairman, member, officer, or      servant, or  person as  aforesaid, delivered  to him or      left at  his office  or usual  place of  abode; and the      plaint shall  contain a  statement that such notice has      been so delivered or left.           (2) Every such suit shall, unless it is a suit for      the recovery of immovable property or for a declaration      of title  thereto, be dismissed if it is not instituted      within six  months after  the accrual  of  the  alleged      cause of action."      The question  therefore is  whether the illegal levy of terminal tax  (assuming that  it was  illegal as held by the High Court) could be said to 172 be a  thing "done or purporting to be done" under the Act. A similar question  arose for  the consideration of this Court ill Poona  City Municipal  Corporation v.  Dattatraya Nagesh Deodhar(l) with  reference to  the provision  in section 127 (4) of  the Bombay  Provincial  Municipal  Corporation  Act, 1949, and  it was  held that  if  the  levy  of  a  tax  was prohibited by  the Act concerned and was not in pursuance of it, it  ’could not  be said  to be  ’purported to be done in pursuance of  execution or in tended execution of the Act’." It was  observed that what was plainly prohibited by the Act could not  be  "claimed  to  be  purported  to  be  done  in pursuance  or   intended  execution  of  the  Act."  It  was therefore held  that the suit was outside the purview of the section 127(4)  and was  not barred by limitation. We are in respectful  agreement   with  that  view,  and  we  have  no hesitation in  holding, in the circumstances of the pre sent cases, which  are governed by a provision similar to section 127(4) or the Poona City Municipal Corporation Act, that the suits did  not fall within the purview of section 179 of the

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Act and  were not  barred by limitation. It may be mentioned that it has not been argued before us, and is nobody’s case, that the  suits would  be barred  by limitation even if they did not  fall within  the purview  of section  179(2) of the Act. The  decision of  the High Court to the contrary is not correct and will have to be set aside.      It has however been argued on behalf of the respondents that the  High Court  erred in taking the view that the levy of the  terminal tax was illegal, and our attention has been invited to  the relevant provisions of the law including the Bikaner State  Municipal  Act,  1923,  article  277  of  the Constitution and section 2 of the Act.      It is  not in  controversy before  us that  the Bikaner State Municipal  Act, 1923,  authorised the levy of terminal tax and  such a  tax was  levied by the Ganganagar Municipal Board under the authority of that law upto January 26, 1950, when the  Constitution came  into force.  On and  from  that date, the power to levy export duty vested in the Parliament but article 277 saved that and some other taxes as follows,-           "277. Any  taxes, duties,  cesses or  fees  which,      immediately   before    the   commencement    of   this      Constitution,  were  being  law  fully  levied  by  the      Government of any State or by any municipality or other      local authority  or body for the purposes of the State,      municipality, district  or other  local area  may,  not      withstanding that  those taxes,  duties, cesses or fees      are mentioned  in the Union list, continue to be levied      and to  be applied to the same purposes until provision      to the contrary is made by Parliament by law.’      (1) [1964] 8 S.C.R. 178. 173 it was  therefore permissible  for the  Municipal  Board  to continue to  levy A  the terminal tax until provision to the contrary was  made by  Parliament by law. But it so happened that the  Bikaner Municipal  Act, 1923  was repealed and the Act was  brought into  force with  effect from  December 22, 1951. Section  2(b) of  the Act, which dealt with the repeal of the Bikaner Act and the saving of some of its provisions, expressly provided that on the coming into force of the Act, the laws  and enactments  specified in the First Schedule of the Act  shall be  repealed in  so far as they relate to the Town Municipalities  covered by  the Act.  So as the Bikaner State  Municipal  Act,  1923,  was  included  in  the  first Schedule, it  was repealed  by the aforesaid section 2. That section however  contained a proviso, clause (b) whereof was to the following effect,-      "(b) all town municipalities constituted under the said      laws or  enactments, and  members appointed or elected,      committees established,  limits defined,  appointments,      rules, orders  and  bye-laws  made,  notifications  and      notices issued,  taxes imposed, contracts entered into,      and suits  and other  proceedings instituted, under the      said laws or enactments or under and laws or enactments      thereby repealed  shall, so far as may be and so far as      they relate  to town  municipalities be  deemed, unless      the  Government   directs  otherwise,   to  have   been      respectively constituted, appointed, elected, establish      ed" defined,  made, issued,  imposed, entered  into and      instituted under this Act."      The repeal  did not  therefore affect  the validity  of those taxes  which had  already been imposed and which could be "deemed" to have been imposed under the Act, unless there was a  direction to the contrary by the State Government. It is quite  clear from  the provisions  af the  Act, and is in fact not  disputed before  us,  that  the  terminal  tax  in

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question could not be imposed under any of the provisions of the Act.  Its, levy  could not  therefore be saved by clause (b) of  the proviso  to section (2) of the Act. On the other hand, it  could be  said with  justification that  the State Legislature had decided to discontinue the levy by excluding it from  the purview  of the saving clause. The further levy of  the   tax  therefore  became  illegal  and  it  was  not permissible to  continue it  any longer  under  article  277 which merely  gave the  authority concerned  the  option  to continue the levy if it so desired.      So as  the levy of the tax after December 22, 1951, was illegal, there  is nothing  wrong with the view taken by the High Court that the amounts 174 paid  by   the  plaintiffs  by  way  of  terminal  tax  were recoverable by  the suits  which have  given rise  to  these appeals, and  there is  no force  in  the  argument  to  the contrary.      The appeals  are allowed with costs, the decrees of the High Court  are set  aside and  those of the lower appellate court restored. P.B.R.                                      Appeals allowed. 175