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PETITIONER: SWASTIK RUBBER PRODUCTS LTD. ETC. ETC.

       Vs.

RESPONDENT: MUNICIPAL CORPORATION OF THE CITY OF POONA & ANR.

DATE OF JUDGMENT16/09/1981

BENCH: DESAI, D.A. BENCH: DESAI, D.A. KOSHAL, A.D. MISRA, R.B. (J)

CITATION:  1981 AIR 2022            1982 SCR  (1) 729  1981 SCC  (4) 219        1981 SCALE  (3)1477  CITATOR INFO :  RF         1992 SC1277  (34)

ACT:      Bombay Provincial  Municipal Corporation  Act 1949, Ss. 127 (2),  149 and Rule 62B and octroi Rules 1962, Rule 5(8)- Scope and effect of.

HEADNOTE:      The Bombay  Provincial Municipal Corporations Act, 1949 came into  operation  in  the  city  of  Poona  on  15th  of February,  1950.   Section  127(2)  thereof  authorised  the Corporation to  impose octroi and other taxes, while section 149 prescribed the procedure to be allowed in levying taxes.      In the  year 1957,  the Corporation  in order  to boost industrial development  and to  encourage the industrialists to establish industries in the city, decided to give certain concession in  the nature  of exemption  from  octroi  duty. Pursuant to this objective the Corporation made rule 62-B in Chapter VIII  to the Schedule of the said Act in 1957, which envisaged the creation of an "Industrial Estate or Area", by which was meant the area which the Corporation may from time to demarcate as the area in which industries can be suitably located in  the interest  of industrialisation  of the city. Under this  rule no  levy of  octroi was  to be  made for  a period of  twelve years.  Later on,  the Corporation  framed extensive new  octroi Rules under their resolution dated 7th of August,  1962. Rule  5(8) of  the new  Rules provided for exemption in respect of levy of octroi.      The  Corporation   had  been   levying  octroi  on  the materials received  by the appellants. The appellants sought exemption under  rule S(8).  The Corporation  rejected their claim for  exemption of  octroi on the ground that exemption can only be granted if the area within which the concern was situated was  declared as industrial area and demarcated for the purpose.      Being aggrieved,  the appellants  filed petitions under Article 226  of tho  Constitution in  the High Court for the issue  of  a  writ  of  Mandamus  requiring  the  respondent Corporation to  define and  demarcate the  area where  their factories were  situated  as  industrial  area,  within  the meaning of  rule 5(8),  and to  exempt them  from payment of

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octroi. During the pendency of these petitions rule 5(8) was repealed. The  appellants amended  the  writ  petitions  and further contended  that (1) that the repeal of rule 5(8) was illegal and/or  ultra vires  and, therefore, rule S(8) still continues to  be effective  and (2)  that in  any event they were entitled  to get the benefit of rule 62-B which had not been repealed.  The High Court repelled both the contentions and held that old rule 62B and the new rule 730 5(8) were  repealed and  that there  was no  legal flaw.  It however took  the view  that despite the repeal of Rule S(8) the appellant  could still  get the  relief under  rule 5(8) because if  the proviso  attached to  the repealing rule the area in  question was not demarcated as industrial estate or area for  the purpose of rule S(8) and that it was solely in the discretion  of the  Corporation to  demarcate an area as industrial  estate.   It  consequently  dismissed  the  writ petitions.      In the appeals to this Court it was contended on behalf of the  appellants (I)  that  the  disputed  area  had  been included in  the development  plan  under  the  Bombay  Town Planning Act,  1954 before the promulgation of rule S(8) and had thus  automatically become  an industrial estate or area for the  purposes of  that rule.  (2)  The  Corporation  had refused  to   grant  exemption  to  the  appellants  on  the arbitrary ground  that the concern of the appellants was not a new one. (3) There had been violation of Article 14 of the Constitution in  as  much  as  some  industries  in  similar situations have  been granted exemption while the appellants have been deprived of the benefit of rule S(8) and (4) While denying the  benefit of  rule S(8) the Corporation had taken into consideration extraneous or irrelevant considerations.      Dismissing the appeals ^      HELD: 1  (i) No  area had  been declared  as industrial area under  the Development  plan before 1957 and in fact it was only  after the  enforcement of  the development plan on 15th of  August, 1966  that  the  disputed  area  became  an industrial area  under the Bombay Town Planning Act. [735 C- D]      (ii) A bare perusal of rule 5(8) makes it apparent that for the  purpose of the exemption from octroi, an industrial estate or area means the area which the Corporation may from time to  time demarcate  for the  purpose of the rule as the area in  which industries  can be  suitably located  for the interest of  industrialisation of  the City.  Therefore, the demarcation made  under the  Town Planning Act will not be a demarcation for the purpose of rule S(8) and unless there is a demarcation  as contemplated  by rule  S(8) the appellants cannot claim  exemption from  octroi. The  view taken by the High Court  is fully  warranted by  rule S(8)  of the octroi Rules. [735 E-G]      2. The  purpose of the Town Planning Act is to plan the town and  to keep industrial areas away from the residential or commercial  areas and  that no industries could be set up in an  area other  than  the  industrial  area  declared  in pursuance  of   the  Act.  The  purpose  of  demarcation  as industrial estate  or area under rule S(8) is for the giving of incentive and impetus to industries in a particular area. [736 B-C]      3. An  analysis of the preamble to the new octroi Rules makes it  clear  that  rule  62-B  relating  to  octroi  was repealed by  implication. It is noteworthy that chapter VIII does not  contain any  rule relating  to octroi, except rule 62-B which  did not  find a place in the preamble. All rules

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relating to  octroi and  enacted under the 1901 and the 1925 Acts were  also repealed  without exemption. Another pointer is available  in the  fact that octroi was made the subject- matter of  a new  and comprehensive  set of  rules which not only dealt with the matters 731 covered  by   the  rules   contained  in  chapter  VIII  and specifically mentioned  in the  A preamble  but also the one covered by  rule 62-B,  namely the  matter of  exemption  of goods  from   octroi  in   areas  considered   suitable  for industrialisation. The  promulgation of  rule 5(8) as a part of an  exhaustive set  of new  rules, has  the effect  of  a repeal of  rule 62-B  by necessary implication, although not in express terms. [737 D-G]      4. The  considerations  which  have  weighed  with  the Corporation for denying the benefit of exemption from octroi to the  appellants cannot be said to be either irrelevant or extraneous. These  are within  the ambit of rule S(8) of the octroi Rules. [739 B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos. 1600, 1568 and 1416 of 1970.      From  the   judgment  and  order  dated  the  13th/14th February, 1969  of the  Bombay High  Court in  Special Civil Application Nos.  295 of  1962, 1397166  and  1086  of  1966 respectively.      R.B. Datar,  Lalit Bhardwaj and Miss Madhu Moolchandani for the appellant in C.A. No. 1600/70.      Dr. L.M.  Singhvi,  R.H.  Dhebar,  S.K  Dholakia,  R.C. Bhatia, Mrs. Ranjana Anand and L.K Pandey for the appellants in C.A. No. 1568/70.      V.S. Desai  and Dr.  Y.S. Chitaley  Mrs. J. Wad for the respondent in C.A. No. 1600 and 1568.      Mrs. J. Wad for respondent in C.A. No. 1416 of 1970.      The Judgment of the Court was delivered by      MISRA,  J.  The  present  appeals  by  certificate  are directed against  a common judgment of the Bombay High Court dated 13th of February, 1969. By the impugned order the High Court dismissed  the petitions filed by the appellants under Article 226  of the  Constitution challenging  the demand of octroi duty by the Municipal Corporation of Poona.      The Bombay  Provincial Municipal  Corporation Act, 1949 (for short  ’the Act’)  came into  operation in  the City of Poona on  15th of  February, 1950.  Section 127  (2) thereof authorises the Corporation to impose octroi and other taxes. Section 149  prescribes the  procedure  to  be  followed  in levying taxes. Insofar as it is material, it reads: 732           "149 (1)  In event  of the Corporation deciding to      levy any  of the  taxes specified in sub-section (2) of      section 127,  it shall  make detailed  provision, in so      far as  such provision  is not made by this Act, in the      from of rules, amplifying or adding to the rules at the      time in force           (2)  The   rules  shall   be  submitted   by   the      Corporation Government  and the  provincial  Government      may either  refuse to  sanction them or refer them back      to  the   Corporation  for   further  consideration  or      sanction  them  either  as  they  stand  or  with  such      modification as  it thinks fit, not, however, involving      an increase  in the  rate or  rates of  the levy or the      extent thereof."

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    It  appears   that  sometime   in  the  year  1957  the Corporation in  order to boost industrial development and to encourage the  industrialists to establish industries in the city, had  decided to  give certain concession in the nature of exemption  from octroi  duty on  certain  products  under certain  conditions.   Pursuant  to   this   objective   the Corporation made  rule 62-B  in Chapter VIII to the Schedule of the Raid Act in 1957. It reads:           "62-B. Industrial  Estate or  Area" means the area      which Corporation  may from  time to time demarcate for      the  purposes   of  the  rule  as  the  area  in  which      industries can - be suitably located in the interest of      industrialisation of the city of Poona.           In respect  of  any  raw  materials  or  machinery      imported  by   any  industrial   manufacturing  concern      established or  to be  established  in  the  industrial      estate solely for the purpose of manufacturing finished      articles   in   the   said   industrial   estate,   the      Commissioner shall  not, for  a period  of twelve years      only, from  the date  on which  this  rule  comes  into      force, levy octroi..."      Under this  rule no levy of octroi was to be made for a period of  twelve years from the date on which the rule came into force.      Later on  the Corporation  framed extensive  new octroi Rules under  their resolution  dated 7th  of  August,  1962, which received the sanction of the Government of Maharashtra on 28th of January, 733 1963. As  the entire argument on behalf of the appellants is based  on  rule  5  (8)  of  the  said  rules,  it  will  be appropriate to quote the rule:           "5(8).  In   respect  of   any  raw  materials  or      machinery belonging  to and imported by the industrial,      manufacturing,   processing   or   assembling   concern      established or  to be  established  in  the  industrial      estate  or  area  for  the  purpose  of  manufacturing,      processing, or assembling finished articles in the said      industrial estate  or area,  the Commissioner shall not      levy octroi  for a  period of 10 years from the date of      demarcation of  such areas  as an  industrial estate or      area. Provided  that this  exemption not  be  given  in      respect of  any raw  materials imported for the purpose      of refilling, packing or repacking only.           Provided that  no exemption  from octroi  shall be      given or  claimable unless the importer produces at the      time of  1) import  but not afterwards a certificate in      the  form  prescribed  in  Schedule  P  signed  by  the      proprietor  or  the  manager  of  the  said  industrial      concern certifying  that the raw materials or machinery      that  are  being  imported  are  the  property  of  the      ownership of  the said  industrial concern and that the      said materials  or machinery  are to  be  used  or  are      intended to  be used by the said industrial concern for      the purpose  of manufacturing, processing or assembling      finished articles  in the  said  industrial  estate  or      area.           For the  purpose  of  this  exemption  ’Industrial      Estate’  or   Area  shall   mean  the  area  which  the      Corporation may  from time  to time  demarcate for  the      purposes of  this rule  as the area in which industries      can  be   suitably   located   in   the   interest   of      industrialisation of the City of Poona."      The  Corporation   had  been   levying  octroi  on  the materials received  by the appellants. They, however, sought

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to get  exemption under  rule 5  (8)  from  octroi.  As  the pattern of facts in each of the appeals is similar, we shall deal with  the application  made by  the appellant in appeal No. 1568 of 1970. The appellant in this case applied on 17th of November,  1964 for exemption from payment of octroi duty under rule 5 (8) of the octroi Rules. The 734 Superintendent of  octroi, Poona Municipal Corporation wrote back on 5th of December, 1964 as follows:           "...exemption from payment of octroi duty can only      be granted  if the  area within  which the  concern  is      situated  is   declared  as   industrial  area  and  is      demarcated for  the purpose under the Resolution of the      Corporation. As  the area  in  question  has  not  been      demarcated as  an industrial area, under the resolution      of the  Municipal Corporation, the question of granting      exemption from  the payment  of octroi  duty  does  not      arise. It  is, therefore,  regretted that the exemption      asked for cannot be granted."      Similar was the position of the appellants in the other two appeals.      In the  circumstances the  appellants  filed  petitions under  Article  226  of  the  Constitution  for  a  mandamus requiring the  Municipal Corporation to define and demarcate the area  where their  factories were  situate as industrial area within  the meaning  of sub-rule  (8) of  rule S and to exempt them from payment of octroi.      It  appears  that  during  the  pendency  of  the  writ petitions rule  5 (8)  of the octroi Rules was repealed by a notification with  effect from  1st of  September, 1968. The appellants,  therefore,   applied  for   amendment  of   the petitions. By  these amendments,  the appellants  sought  to take up  two more pleas: (I) that the repeal of sub-rule (8) of rule  5 was  illegal and/or  ultra vires  and, therefore, rule 5  (8) still continues to be effective, and (2) that in any event  the appellants  can get  the benefit of rule 62-B which has not been repealed.      The High  Court repelled  both the contentions and held that old  rule 62-B and the new rule 5 (8) were repealed and there was  no legal  flaw. It,  however. took  the view that despite the  repeal of rule S (8) the appellants could still get the  relief under  rule S  (8) if  other conditions were satisfied, because  of the proviso attached to the repealing rule. On  merits, however, the High Court did not accept the case of  the appellants. In its opinion the area in ques was not demarcated  as industrial estate or area for the purpose of rule  5 (8).  The High Court further held that in view of rule 5  (8) of  the  octroi  Rules  it  was  solely  in  the discretion of  the  Corporation  to  demarcate  an  area  as industrial estate. The appellants have 735 now come to challenge the order of the High Court by these A appeals.      Dr. Singhvi  appearing for  the appellant in one of the appeals, Civil  Appeal No.  1568 of 1970, has contended that if certain  area has  been demarcated  as an industrial area under the  Bombay Town  Planning Act, 1954 the same shall be taken to  be an industrial area within the meaning of rule S (8) of the octroi Rules. The argument proceeded in the first instance on  the  assumption  that  the  disputed  area  had already been  included in  the development plan under Bombay Town Planning  Act, 1954  before the  promulgation of rule S (8) and  had thus  automatically become an industrial estate or area  for the  purposes of that rule. But the development plan was  prepared by  the Corporation  on 20th of November,

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1958 which  was sanctioned by the Government on 7th of July, 1966 and  it  came  into  fore  on  15th  of  August,  1966. Therefore, no  area had  been declared  as  industrial  area under the  development plan  before 1957  and in fact it was only after  the enforcement  of the development plan on 15th of August,  1967 that the disputed area became an industrial area under  the Bombay  Town  Planning  Act.  Dr.  Singhvi’s assumption clearly lacks any factual basis.      Now the question is whether demarcation of a particular area as  an industrial  estate or  area in  pursuance of the Bombay Town  Planning Act could be taken to be a demarcation within the  meaning of rule 5 (8). On a bare perusal of rule 5 (8)  it will  be apparent  that for  the  purpose  of  the exemption from octroi an industrial estate or area means the area which  the Corporation  may from time to time demarcate for the purpose of this rule as the area in which industries can   be    suitably   located    for   the    interest   of industrialisation  of   the  City   of   Poona.   Obviously, therefore, the  demarcation made under the Town Planning Act will not  be a demarcation for the purpose of rule S (8) and unless there  is a demarcation as contemplated by rule S (8) the appellants  cannot claim exemption from octroi. The view taken by  the High Court is fully warranted by rule S (8) of the octroi Rules.      It  is  next  contended  for  the  appellant  that  the Corporation has  refused to grant exemption to the appellant on the  arbitrary ground  that the  concern of the appellant was not  a new one. The learned counsel seeks to support his argument by the following expression used in sub-rule (8) of rule 5: 736           "...concern established  or to  be established  in      the industrial estate or area." The expression  obviously includes  not only a concern to be established but  also one already established. But even then the appellant  cannot get  exemption unless  he proves  that there has  been demarcation  within the  meaning of sub-rule (8) of rule 5 of the octroi Rules. While demarcating an area for the  purpose of  rule 5(8)  the Corporation  may have to take into  consideration various  factors and  circumstances different from  those which  might weigh  with it for making out an  area as  industrial under the Town Planning Act. The purpose of  that Act  is to  plan the  town and thus to keep industrial areas  away from  the residential  or  commercial areas and  no industries  could be  set up  in an area other than the  industrial area declared in pursuance of that Act, while the  purpose of  demarcation as  industrial estate  or area under  rule 5(8) is the giving of incentive and impetus to  industries   in  a  particular  area  In  so  doing  the Corporation has  got to  see whether a particular area is or is not suitably located in the interest of industrialisation irrespective of  any consideration  as to how the town is to be planned.      It was  next contended that there has been violation of Article 14 of the Constitution in as much as some industries in similar  situation have  been granted exemption while the appellants have  been deprived  of the benefit of rule 5(8). There is  no foundation  for this  ground. It  has not  been alleged, much  less proved,  that any  other unit  has  been granted  exemption   even  without   a  demarcation  by  the Corporation under rule 5(8). There is absolutely no force in this contention.      For the  respondent it  was contended that rule 5(8) of the octroi  Rules having  been deleted  the appellant cannot seek  exemption   under  rule  S(8).  Dr.  Singhvi  for  the

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appellant in  reply has  contended that,  for one thing, the appellant can fall back on the old rule 62-B as the same has not been  repealed. The  preamble to  the new  octroi  Rules reads:           "Whereas it  is found  necessary to  rescind Rules      26, 28  29, 33,  62 and  Rules 35  and 49 (in so far as      they relate to octroi) contained in Chapter VIII of the      Schedule   of    the   Bombay    Provincial   Municipal      Corporations Act,  1949, and  all other  existing rules      and bye-laws  relating  to  octroi  enacted  under  the      Bombay District Municipal Act, 1901, 737      and the  Bombay Municipal  Boroughs Act,  1925,  and  A      whereas  it  is  found  necessary  to  make  new  rules      relating to octroi under sub-section (I) of section 149      of the  Bombay Provincial  Municipal Corporations  Act,      1949, the  Municipal Corporation  of the  City of Poona      under  its   Resolution  No.   78,  dated  7.8-1962  in      pursuance of  the power  vesting in it under clause (7)      and clause (17) of section 457 read with section 454 of      the said  Act is  pleased to rescind the rules and bye-      laws aforementioned  and  to  make  the  new  rules  as      follows."      It is  true that  seven rules  covering the  subject of octroi and  contained in chapter VIII of the Schedule to the Bombay Provincial  Municipal Corporation  Act 1949 have been specifically mentioned  in the  preamble as  being rescinded and rule  62B is conspicuous by its absence therefrom, which fact apparently  supports Dr. Singhvi’s contention. A closer analysis of  the preamble under which new rules were framed, however, makes it clear that rule 62B relating to octroi was repealed by  implication. It is noteworthy that chapter VIII above mentioned  does  not  contain  any  rule  relating  to octroi, except  rule 62B,  which did not find a place in the preamble. All rules relating to octroi and enacted under the 1901 and the 1925 Acts were also repealed without exception. Another pointer (which is perhaps the most important in this connection) is  available in  the fact  that octroi was made the subject-matter  of a  new and comprehensive set of rules which not  only deal  with the  matters covered by the rules contained in  chapter VIII and specifically mentioned in the preamble but  also the  one covered by rule 62B, namely, the matter of exemption of goods from octroi in areas considered suitable for  industralisation. It  does not stand to reason that the  rule-making authority  framed new  rules, of which rule 5(8)  covers the  entire field of the earlier rule 62B, and yet  left the  latter intact. It could possibly not have been the  intention of  that authority  to have two rules on the same subject and thus create confusion. The promulgation of rule 5(8) as a part of an exhaustive set of new rules, in our opinion,  has the  effect of  a repeal  of rule  62B  by necessary implication, although not in express terms.      Dr. Singhvi,  however, as  a second  string to  the bow banks upon  the proviso to the resolution of the Corporation seeking to repeal rule 5(8) which is in these words: 738           "Octroi Rule  5(8) is  hereby  repealed.  Provided      that notwithstanding  such repeal the exemption already      granted  shall   continue  until   the  expiry  of  the      respective periods of their grants." The resolution  so passed was sent to the Government and, as held in  Municipal Corporation for the City of Poona etc. v. Bijlee Product (India) Ltd. etc.,(1) the Government accepted it in  full and  sanctioned the repeal of rule S(8), as also the proposed  proviso. But  then the appellants would not be

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entitled to  any benefit  by reason  of the  proviso because they were never granted any exemption under rule 5(8).      The other  contention raised by Dr. Singhvi is that the Corporation while  denying the  benefit  of  exemption  from octroi has taken into consideration extraneous or irrelevant considerations. In  support of his contention he referred to paragraph  7   of  the   counter  affidavit   filed  by  the Corporation in the writ petition, which is as follows:           "7. The  respondents grant  exemptions to concerns      on certain policies. The purpose of extending exemption      from octroi  duty is  to attract  new industries in the      Corporation limits.  This policy  is also  carried  out      with a  view to  develop the  city and  also to  secure      employment to citizens and thus to have progress in the      economic conditions, commerce and trade for the welfare      of the  people in  general. Moreover  the aim of giving      exemptions to  new industries  is to  secure  permanent      sources of  income for  the respondents after a certain      period, i.e,  ten years.  This is  the main  object  in      granting exemption in the cases of new industries to be      started that  help the  development  of  the  City  and      secure permanent  sources of income for the respondents      after a  definite  period.  Side  by  side,  there  are      certain other objects also which are kept in view while      determining the  question of granting exemptions. These      are whether Defence needs are satisfied, whether in the      interest of  public health  and sanitation the grant of      exemptions is  beneficial, whether  foreign exchange is      saved, whether  the problem of housing accommodation is      solved, to  some extent  and the  like. The respondents      will suffer 739      huge loss  in revenue if exemptions are granted to each      and every  industry falling within the industrial areas      under   the    Town   Planning    Scheme.   All   these      considerations are  within the  full discretion  of the      respondents while  determining the question of grant of      exemptions .... ’ In our  opinion the  considerations which  have weighed with the Corporation  cannot be  said to  be either irrelevant or extraneous. These  considerations are  within the  ambit  of rule 5(8) of the octroi Rules.      A lot  of  argument  was  advanced  on  behalf  of  the appellant by  Dr. Singhvi  on the  nature of  relief  to  be granted to  the appellant. His contention was that a writ of certiorari may  not be of much avail unless the Court grants a writ  of mandamus  directing the  Corporation to demarcate the area in question under rule S(8) of the octroi Rules and grant him  the exemption  from  octroi  duty.  A  number  of authorities were  cited that  the Court  can issue a writ of mandamus in suitable cases even in respect of administrative orders. We do not think it is necessary to decide this point as in  our opinion the appellants have not been able to make out a case for any relief.      In Civil  Appeal No.  1600  of  1970  Shri  R.B.  Datar adopted the  arguments advanced by Dr. Singhvi. In the third appeal, No. 1416 of 1970 also the same questions of fact and law are h involved and, therefore, this judgment will govern the other two appeals.      For the  reasons given  above these  appeals must fail. They are  accordingly dismissed. The parties, however, shall bear their own costs. N.K.A.                                    Appeals dismissed. 740

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