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PETITIONER: SONIK INDUSTRIES, RAJKOT

       Vs.

RESPONDENT: MUNICIPAL CORPORATION OF THE CITY OF RAJKOT

DATE OF JUDGMENT02/04/1986

BENCH: PATHAK, R.S. BENCH: PATHAK, R.S. REDDY, O. CHINNAPPA (J) MISRA, R.B. (J)

CITATION:  1986 AIR 1518            1986 SCR  (2)  59  1986 SCC  (2) 608        1986 SCALE  (1)500

ACT:      Bombay Municipal  Boroughs Act, 1925, section 77, scope of -  Whether the  rules for the levy of a rate on buildings and lands  can be  said to  be published under section 77 of the Act, if the notice published in a newspaper reciting the sanction of  the State Government to the rules mentions that the rules themselves are open to inspection in the Municipal office and  that copies  of the  rules can also be purchased there.

HEADNOTE:      The Rajkot municipality framed Draft rules for the levy of rates  on buildings  and lands in Rajkot. The Draft Rules were published  and objections  were invited and, thereafter the State Government accorded its sanction to the rules. The issue dated  November 28,  1964 of  "Jai Hind",  a  Gujarati newspaper published  from Rajkot carried a Notice purportlng to be under section 77 of the Bombay Municipal Boroughs Act, 1925 as  adopted and  applied for the information of persons holding  buildings   and  immovable   property  within   the Municipal  limits   of  Rajkot  that  the  Municipality  had resolved  to  enforce  the  "Rules  to  the  Rajkot  Borough Municipality for  the levy  of Rate  (Tax) on  buildings and lands" sanctioned  by the  State Government of Gujarat, with effect from  January 1,  1965. Thereafter an assessment list was prepared and steps were taken to demand the tax. F      The   appellants,   a   registered   partnership   firm instituted a  suit in  the Court  of the Civil Judge, Senior Division Rajkot  for a  declaration that the aforesaid Rules were invalid.  The Trial  Court decreed  the suit. An Appeal against the  decree of  the Trial Court was dismissed by the Extra Assistant  Judge, Rajkot. A Second Appeal preferred by the Municipality  was referred to a larger Bench of the High Court  consisting  of  learned  Judges  who  held  that  the conditions  of   section  77  had  been  complied  with.  In accordance with  the said  opinion, the learned Single Judge allowed the  Second Appeal.  Hence  the  appeal  by  Special Leave. 60 Dismissing the appeal, the Court, ^

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    HELD : 1.1 The general principle is that if the mode of publication adopted  is sufficient  for persons  affected by the rules  with reasonable  diligence to  be acquainted with them,  publication   of  the   Rules  has   taken  place  in contemplation of the law. [65 D-E]      1.2 In the case of Municipal taxation, the conventional procedure enacted  in most  statutes requires publication of the proposed  rules providing  for  the  levy  and  inviting objections thereto from the inhabitants of the Municipality. Thereafter when  the rules  are finalised  and sanctioned by the State Government, it is mandatory that they be published so that  the inhabitants of the Municipality should know how the levy  affects them  in its  final form.  The rules,  and consequently the  levy, take effect only upon publication in accordance with  the statute.  The object of the requirement is that  a person  affected by  the levy must know precisely the provisions of the levy and its consequences for him. [64 D-F]      1.3 The  requirement of  section 77  was complied  with inasmuch as  information was  thereby given  to all  persons holding  buildings   and  immovable   property  within   the Municipal limits  of Rajkot that the rules mentioned therein had been  sanctioned by  the State  Government and  that the rules could  be  inspected  in  the  Municipal  office.  The mandatory requirement  of section  77  was  that  the  rules should be published, which requirement the notice satisfies. The mode  of publishing  the rules is a matter for directory or  substantial  compliance.  It  is  sufficient  if  it  is reasonably possible  for persons  affected by  the rules  to obtain,  with  fair  diligence,  knowledge  of  those  rules through the mode specified in the notice. Had the Act itself specified the  mode in which the rules were to be published, that mode would have to be adopted for publishing the rules. In the  opinion of the Legislature, that would have been the mode through which the inhabitants of the Municipality could best be informed of the rules. [64 H; 65 A-D]      1.4  Section   77  provides  the  final  stage  of  the procedure enacted  in sections 75 to 77 for imposing a levy. The period  referred to in section 77, after which alone the tax can be 3 imposed, is intended to enable persons affected by the  levy to acquaint themselves with the contents of the rules, and to 61 take preparatory measures for compliance with the rules. The period has  not been  particularly prescribed  in  order  to enable a  person to take advantage of the benefit of section 102 before the tax is imposed. [66 B-D]      Chunni Lal  v.  The  Municipal  Board,  Shri  Madhopur, [1956] I.L.R.  Rajasthan 568;  Gokaldas Amarshi v. Porbandar City Municipality,  [1971] 12  G.L.R. 603;  Commissioner  of Sales-tax, Uttar  Pradesh v.  The  Modi  Sugar  Mills  Ltd., [1961] 2  S.C.R. 189; The Municipal Corporation Bhopal, M.P. v. Misbahul  Hasan and  Ors., [1972] 1 S.C.C. 696; Govindlal Chhaggan  Lal  Patel  v.  The  Agricultural  Produce  Market Committee, Godhra  and Others,  [1976]  1  S.C.R.  451;  and Municipal  Council,   Rajahmundry  v.   Nidamarti  Jaladurga Prasadarayudu and Anr., 1926 A.I.R. Madras 800 referred to.      OBSERVATION      (It would have been more desirable for the Municipality to have  published the rules in the Newspaper along with the notice reciting  the sanction,  though the omission to do so and notifying  instead that  inspection  of  the  rules  was available  in   the  Municipal   office   still   constitute sufficient compliance with the law.)

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JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1242 of 1980.      From the  Judgment and Order dated 2nd May, 1980 of the Gujarat High Court in Second Appeal No. 110 of 1978.      T.U. Mehta, D.H. Kothari, S.K. Dholakia and R.C. Bhatia for the Appellant.      Dr. Y.S.  Chitale, Vimal  Dave and  H.  Mehta  for  the Respondent.      The Judgment of the Court was delivered by      PATHAK, J.  This appeal  by special  leave  raises  the question whether  the rules  for  the  levy  of  a  rate  on buildings and  lands can  be said to be published under s.77 of the  Bombay Municipal  Boroughs Act,  1925 if  the notice published in a 62 newspaper reciting  the sanction  of the State Government to the rules  mentions that  the rules  themselves are  open to inspection in  the Municipal  office and  that copies of the rules can also be purchased there.      The Rajkot  Borough Municipality framed Draft rules for the levy  of rates  on buildings  and lands  in Rajkot.  The Draft rules  were published and objections were invited, and there after  the State  Government accorded  its sanction to the rules.  In the  issue dated  November 28,  1964 of  "Jai Hind", a  Gujarati newspaper published from Rajkot, a notice was published  purporting to  be under  s.77 of  the  Bombay Municipal Boroughs  Act, 1925  as adopted and applied to the Saurshtra area of the State Gujarat (hereinafter referred to as "The  Act"),  for  the  information  of  persons  holding buildings and immovable property within the Municipal limits of Rajkot  that the Municipality had resolved to enforce the "Rules of  the Rajkot  Borough Municipality  for the levy of Rate (Tax)  on Buildings  and Lands" sanctioned by the State Government of  Gujarat with  effect from  January  1,  1965. Notice recited  the date  and serial number of the sanction. It also stated :           "These rules can be inspected at the office of the           Municipality  on  all  days  other  than  Holidays           during office  hours; moreover copies of the rules           can be purchased at the Municipal Office". It appears  that thereafter  an assessment list was prepared and steps were taken to demand the tax.      The   appellant,   a   registered   partnership   firm, instituted a  suit in  the Court of the learned Civil Judge, Senior Division,  Rajkot, praying for a declaration that the aforesaid  rules  were  invalid,  and  that  the  consequent assessment list  and the  related  notices  of  demand  were without authority  of law.  A permanent  injunction was also sought to  restrain the  Municipality from  giving effect to the rules.  The trial court decreed the suit and granted the declaration and injunction prayed for. An appeal against the decree of the trial court was dismissed by the learned Extra Assistant Judge,  Rajkot. A  second appeal  was filed by the Municipal Corporation  of Rajkot  (the Municipal  Borough of Rajkot having been so renamed) in the High Court, and at the time of admission a learned Single 63 Judge of  the High  Court formulated  three questions of law arising in  the appeal. The appeal was referred subsequently to a  larger Bench.  A Bench  of three learned Judges of the High Court  took up the case and observed at the outset that the only question which required consideration at that stage

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was whether  the courts below had erred in striking down the rules on  the ground  that they  had not  been published  as required by  s.77 of  the Act.  The learned Judges held that the courts  below had taken an erroneous view of the statute and that,  in their  opinion, the  conditions of s.77 of the Act had  been satisfied  in the case. The case was sent back to the  learned Single  Judge with that opinion for disposal in accordance with law.      Chapter VII of the Act provides for Municipal taxation. While  the   different  taxes  which  can  be  levied  by  a Municipality are  enumerated in  s.73,  sections  75  to  77 detail the  procedure to  be observed  when the Municipality proposes  to   levy  a   tax.  Before  imposing  a  tax  the Municipality is  required  by  s.75  to  pass  a  resolution deciding which  one or  other of the taxes specified in s.73 would be imposed and to approve rules specifying the classes of persons or property or both which are proposed to be made liable, the  amount or  rate proposed  for  assessment,  the basis of valuation on which such rate on buildings and lands is to  be imposed  and other  related matters.  The rules so approved by  the Municipality  are required  to be published with a  notice in  a prescribed form. Objections are invited from the  inhabitants of  the  Municipal  borough,  and  the Municipality  is   required  to  take  the  objections  into consideration, and  if it  decides to  pursue  the  levy  it submits the  objections with  its opinion  thereon  and  any modifications proposed  by it,  together with the notice and rules to the State Government. Section 76 empowers the State Government  to   sanction  the   rules   with   or   without modification, or  to return  them to  the  Municipality  for further consideration. Section 77 provides :           "77. Rules  sanctioned under  section 76  with the           modifications and  conditions, if  any, subject to           which the  sanction is given shall be published by           the  Municipality   in  the   Municipal   borough,           together with  a notice  reciting the sanction and           the date and serial number thereof; and the tax as           prescribed by the rules so published shall, from a 64           date which  shall be  specified in such notice and           which shall  not be  less than  one month from the           date of  publication on  such notice,  be  imposed           accordingly, ............"      It is  contended by  learned counsel  for the appellant that the  rules sanctioned  by the  State Government  should have been  published along  with  the  notice  reciting  the sanction in  the same newspaper and there was no publication for the  purposes of s.77 if the notice merely mentions that the rules  can be inspected in the Municipal Office and that copies of  the rules  can be  purchased.  Our  attention  is invited to  s.192 which  provides for the mode of service of notice under  the Act,  and it is urged that the publication of the  rules in  this case is not in conformity with any of the modes  prescribed therein.  It  is  contended  that  the provisions of  s.77 call for strict construction inasmuch as the rules  are intended  to levy a tax on the inhabitants of the Municipality.      In the  case of  Municipal taxation,  the  conventional procedure enacted  in most  statutes requires publication of the proposed  rules providing  for  the  levy  and  inviting objections thereto from the inhabitants of the Municipality. Thereafter when  the rules  are finalised  and sanctioned by the State Government, it is mandatory that they be published so that  the inhabitants of the Municipality should know how the levy  effects them  in its  final form.  The rules,  and

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consequently the  levy, take effect only upon publication in accordance with  the statute.  The object of the requirement is that  a person  affected by  the levy must know precisely the provisions  of the  levy and  its consequences  for him. Section 77  requires that  the sanctioned  rules  should  be published by  the  Municipality  in  the  Municipal  borough together with  the notice  reciting the sanction. The notice published in  the newspaper  mentioned that  the  "Rules  of Rajkot Borough  Municipality for  the  levy  of  Rate  (Tax) levied on  Buildings and  Lands" had  been sanctioned by the State Government  and the  notice recited  also the date and serial  number   of  the   sanction.  It  was  open  to  the Municipality to  publish the  sanctioned rules  also in  the newspaper, but  what it  did was to state in the notice that the rules  could be  inspected in  the Municipal office, and also that  copies of  the rules  could be  purchased at  the Municipal Office.  In our  opinion, the  requirement of s.77 was complied with inasmuch as 65 information  was   thereby  given  to  all  persons  holding buildings and immovable property within the Municipal limits of  Rajkot   that  the  rules  mentioned  therein  had  been sanctioned by  the State Government and that the rules could be  inspected   in  the   Municipal  Office.  The  mandatory requirement of  s.77 was  that the rules should be published and  it   seems  to   us  that  the  notice  satisfies  that requirement. The  mode of  publishing the  rules is a matter for directory or substantial compliance. It is sufficient if it is  reasonably possible for persons affected by the rules to obtain,  with fair  diligence, knowledge  of those  rules through the mode specified in the notice. Had the Act itself specified the  mode in which the rules were to be published, that mode would have to be adopted for publishing the rules. In the opinion of the Legislature, that was the mode through which the  inhabitants of  the Municipality  could  best  be informed of  the rules.  But the  Act is  silent as to this. Section 102 specifies the modes in which service of a notice contemplated by  the Act  should be served. There is nothing in the section prescribing the mode for publishing the rules in question  here. Nor  does  s.24  of  the  Bombay  General Clauses Act  help us. We must, therefore, fall back upon the general principle that if the mode of publication adopted is sufficient  for   persons,  affected   by  the  rules,  with reasonable diligence to be acquainted with them, publication of the  rules has taken place in contemplation of law. It is necessary to  emphasise that  we are  dealing with  a  stage defining the  final shape  of the rules, after objections to the  draft   rules  have   been  considered  and  the  State Government has accorded its sanction.      Learned counsel  for the  appellant and learned counsel for the  Interveners have  referred us to s. 102 of the Act, which empowers  the State  Government on  complaint made  or otherwise that  any tax  leviable  by  the  Municipality  is unfair in  its incidence,  or that  the levy thereof, of any part thereof,  is obnoxious  to the  interest of the general public, to  require the  Municipality to  take measures  for removing any  objection which  appears to it to exist to the said tax.  If, within  the period so fixed, such requirement is not  carried into effect to the satisfaction of the State Government, it may, by notification in the Official Gazette, suspend the  levy of the tax, or of such part thereof, until such time  as the  objection thereto is removed. It is urged that the rules published under 66 s.77 of  the Act  are still open to challenge under s.102 of

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the Act  and it  is for  that reason that s.77 provides that the notice published thereunder should prescribe a date, not less than  one month  from the  date of such publication, as the date  on which  the tax as prescribed by the rules shall be imposed.  It is  said that  this period  is  intended  to enable persons  affected by  the levy  to object again under s.102 of  the Act, and therefore the rules must be set forth in the  newspaper itself.  We are  unable to  agree. To  our mind, s.77 provides the final stage of the procedure enacted in sections  75 to  77  for  imposing  a  levy.  The  period referred to  in s.77,  after which  alone  the  tax  can  be imposed, is  intended to enable persons affected by the levy to acquaint  themselves with  the contents of the rules, and to take  preparatory measures for compliance with the rules. The period  has not been particularly prescribed in order to enable a  person to  take advantage  of the benefit of s.102 before the  tax is  imposed. We are of opinion that it would have been  more  desirable  for  the  Municipality  to  have published the  rules in  the newspaper along with the notice reciting the  sanction, but while saying so we are unable to hold that  its omission  to do so and notifying instead that inspection of  the rules  was  available  in  the  Municipal Office does not constitute sufficient compliance with law.      Reliance was  placed by  the appellant on Chunni Lal v. The Municipal  Board, Shri Madhopur, [1956] I.L.R. Rajasthan 568 before  us. In  that case,  on a  difference of  opinion between two  learned Judges  of the  Rajasthan High Court, a third  learned  Judge  of  the  High  Court  held  that  the provision for  inspection of  the  rules  in  the  Municipal Office did  not constitute publication within the meaning of s.62 of  the Rajasthan  Town Municipalities  Act, 1951.  The High Court  in that  case was  influenced by  the particular evidentiary material  before it,  on the  basis of  which it reached the  conclusion that  it was not reasonably possible for a  member of  the public  to acquaint  himself with  the contents of  the rules.  No such  difficulty has been placed before us.  Out  attention  was  also  invited  to  Gokaldas Amarshi v. Porbandar City Municipality, [1971] 12 G.L.R. 603 but in that case the High Court was concerned with the stage of publication  of the  draft rules,  that  is  to  say  the preliminary procedure  enacted under the Act before imposing a tax. Learned counsel for the 67 appellant has  referred to  Commissioner of Sales-tax, Uttar Pradesh v.  Modi Sugar  Mills Ltd., [1961] 2 S.C.R. 189, The Municipal Corporation  Bhopal, M.P.  v. Misbahul  Hasan  and Ors., [1972]  1 S.C.C.  696, Govindlal Chhaggan Lal Patel v. The Agricultural  Produce Market Committee, Godhra and Ors., [1976] 1  S.C.R. 451  and Municipal  Council, Rajahmundry v. Nidamarti Jaladurga  Prasadarayudu and  Anr., [1926]  A.I.R. Madras 800,  but nothing said therein appears to us to be of any assistance to the appellant in this case.      There is  no force in this appeal and it is accordingly dismissed with costs. S.R.                                       Appeal dismissed. 68