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PETITIONER: THE WESTERN INDIA THEATRES LTD.

       Vs.

RESPONDENT: MUNICIPAL CORPORATION OF THE CITY OFPOONA

DATE OF JUDGMENT: 16/01/1958

BENCH:

ACT:        Municipality,  Power of--Imposition of tax on  cinema  show-        Constitutional validity of enactment-Enhancement of such tax        Validity-Bombay  District  Municipal Act, 1901  (Bom.of  111        1901),  s. 59(1) (XI)--Bombay Municipal Boroughs  Act,  1925        (Bom.  XVIII of 1925), s. 60.

HEADNOTE: The  appellant,  a public limited company, was a  lessee  of four  cinema houses situated within the municipal limits  of Poona  City  where it used to exhibit  cinematograph  films. The  respondent,  the  Municipal Corporation  of  Poona,  in exercise  of  its power under s. 59(1) (XI)  of  the  Bombay District  Municipal  Act,  1901,  levied  with  effect  from October 1, 1920 a tax of Rs. 2 per day as license fee on the owners and lessees of cinema houses.  That Act governed  the Municipality till 1926 and thereafter it was governed by the Bombay  Municipal Boroughs Act, 1925.  The tax was  enhanced to Re. 1 per show on June 3, 1941, and to Rs. 5 per show  on June 9, 1948.  By the suit, out of which the present  appeal arose, the appellant sought for a declaration that the  levy of  the said tax, the rules framed in  connection  therewith and the enhancement of the tax as aforesaid were illegal and ultra  vires.  The trial court decreed the suit in part  but the High Court in appeal reversed the decision of the  trial court 72 and  dismissed the suit.  It was contended on behalf of  the appellant  that (1) the tax was not one covered by Entry  50 in  List 11 of Seventh Schedule to the Government  of  India Act, 1935, but was one on trade or calling covered by  Entry 46 thereof, and, was as such governed by S. 142A of the said Act  and  that  (2)  s. 59(1)(XI)  Of  the  Bombay  District Municipal  Act,  1901,  was  unconstitutional  in  that  the legislature  had  thereby  delegated  essential  legislative power to the Municipality to determine the nature of the tax to  be imposed on the rate-payers and  completely  abdicated its function, leaving such power wholly unguided. Held, that both the contentions must fail. The  first  point was covered by the decision given  in  the appellant’s other appeal, Civil Appeal No. 145 Of 1955 which must also govern this case. It  was not correct to contend that the power  delegated  to the  Municipality under S. 59(1)(XI) Of the Bombay  District Municipal Act, 1901, was unguided.  That section  authorised the imposition of such taxes alone as were necessary for the purposes  of  the Act.  The obligations and  functions  cast upon  the Municipalities by ch.  VII of the Act showed  that taxes could be -levied only for implementing those  purposes

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and none others. Nor  could  it be said that the Provincial  Legislature  had abdicated  its function in favour of the Municipality.   The taxing  power  of the Municipality was made subject  to  the approval of the Governor-in-Council by the section itself. The  marginal  note  to  a  section  could  not  affect  the construction  of the section if its language  was  otherwise clear  and  unambiguous and the word ’modify’  connoted  not merely   reduction  but  also  other  kinds  of   alteration including  enlargement.   The  substitution of  the  word  I reduce’  by the word I modify’ in the body of s. 6o  of  the Bombay  Municipal  Boroughs Act, 1925,  notwithstanding  the omission  to do so in the marginal note, therefore,  clearly indicated  the  intention of the Legislature  to  widen  the scope  of  that section and, consequently, it could  not  be said  that  the enhancement of the tax was  not  sustainable thereunder. Commissioner  of Income Tax, Bombay v. Ahmedbhai Umarbhai  & Co.,  Bombay, [1950] S.C.R. 335 and Stevens v.  The  General Steam  Navigation  Company, Ltd., L.R. (1903)  1  K.B.  890, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 146 of 1955. Appeal from the judgment and decree dated February 10, 1953, of the Bombay High Court in Appeal No. 953 of 1951,  arising out  of the judgment and decree dated November  36,1951,  of the Court of 73 Joint  Civil Judge, Senior Division, Poona, in Special  Suit No. 76 of 1950. H.   D. Banaji, R. A. Gagrat and G. Gopalakrishnan, for  the appellant. M.   C.  Setalvad, Attorney-General for India, S. N.  Andley and J. B. Dadachanji, for the respondent. 1959.  January 16.  The Judgment of the Court was  delivered by DAS,  C.  J.-The  appellant  is  a  public  limited  company registered  under the Indian Companies Act, 1913.  It  is  a lessee  of four cinema houses situate within  the  municipal limits  of Poona City known respectively as " Minerva  ",  " The Globe ", " Sri Krishna " and " The Nishat ". It exhibits cinematograph  films, both foreign and Indian, in  the  said four houses.  The respondent, a body corporate, was governed by  the  Bombay District Municipal Act, 1901 (Bom.   III  of 1901)  up  to  June 8, 1926, and from  then  by  the  Bombay Municipal  Boroughs  Act, 1925 (Bom.  XVIII of 1925)  up  to December 29, 1949, and, thereafter, by the Bombay Provincial Municipal  Corporation Act, 1949 (Bom.  LIX of 1949).   With effect  from  October  1, 1920,  the  respondent,  with  the sanction  of the Government of Bombay levied on  the  owners and  lessees  of  cinema houses within  the  limits  of  the erstwhile  province  of  Bombay a tax of Rs. 2  per  day  as license fee.  Rules for the levy and collection of the  said tax were framed by the respondent.  Those rules were amended on or about June 3,      1941, enhancing the tax from Rs.  2 per day to Re.  I per show.  The rules were again revised on or about June 9,1948, under which the tax was enhanced  from Re.   I per show to Rs. 5 per show.  At all  material  times the tax was being collected at the last mentioned rate. Section  59  of  the  Bombay  District  Municipal  Act  1901 provided that subject to any general or special orders which the   State  Government  might  make  in  that  behalf   any

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municipality  (a) after observing the preliminary  procedure required  by  s.  60,  and (b)  with  the  sanction  of  the authority therein mentioned, might 10 74 impose  for  the  purposes  of that Act  any  of  the  taxes mentioned  in that section.  After enumerating ten  specific heads of taxes, which a municipality could levy a  residuary category was set forth in cl. (xi) in the words following:- "Any other tax to the nature and object of which he approval of  the Governor in, Council shall have been obtained  prior to  the selection contemplated in sub-clause (1)  of  clause (a)  of  section  60 ". Ever since the appellant became a  lessee of the said cinema houses,  the appellant has been making payments of the  said tax under protest. After   giving  the  necessary  statutory  notice   to   the respondent, the appellant, on or about March 31,1950,  filed a  suit  in the Court of the Civil Judge,  Senior  Division, Poona, being Suit No. 76 of 1950, against the respondent for a  declaration that the levy and imposition of the said  tax with effect from October 1, 1920, were invalid and  illegal; that  the  enhancement in the rates of the tax  with  effect first from June 3, 1941, and then June 9, 1948, was  invalid and illegal and that the resolutions passed and rules framed in  connection  with the levy, imposition,  enhancement  and collection  of the said impugned tax were  invalid,  illegal and ultra vires, for a permanent injunction restraining  the defendants from levying or recovering and or increasing  and enhancing  the said tax and for refund to the  appellant  of the  amounts of the tax collected from it and for  costs  of the  suit and interest.  By its judgment dated November  30, 1951,  the  trial court held that the said tax  was  validly levied  and imposed, but that the increase  and  enhancement thereof  in 1941 and 1948 were illegal and ultra vires.  and that  the suit was not barred under the Acts  governing  the respondent.   The  trial court decreed the suit in  part  by issuing  an  injunction  restraining  the  respondent   from levying,  recovering or collecting the tax at  the  enhanced rate and passing a decree against the respondent for  refund of  a  sum  of  Rs. 27,072 with  interest  and  costs.   The respondent preferred an appeal and the appellant filed cross objections.   But the High Court by its judgment and  decree dated February 10, 1953, 75 reversed  the judgment of the trial court and dismissed  the suit   of   the  appellant  with  costs   throughout.    The appellant’s  cross  objections  were  also  dismissed.    On December  10,  1953,  the High Court granted  leave  to  the appellant  to appeal to this Court from the  said  judgment. Hence  this  final appeal questioning the  validity  of  the impugned tax. The  first  point  urged  in this appeal  is  that  the  law imposing  this tax is not covered by entry 50 in List II  of the  Seventh Schedule to the Government of India Act,  1935, but  is  really a tax on the appellant’s  trade  or  calling referred  to in entry 46 and that, therefore, the amount  of tax  cannot under s. 142-A of the Government of  India  Act, 1935  exceed Rs. 100 per annum.  This point need not  detain us  long, for it is covered by us in the  appellant’s  other appeal No. 145 of 1955. The  second point urged before us in support of this  appeal is  that  s.  59(1) (xi) is  unconstitutional  in  that  the legislature  had completely abdicated its functions and  had delegated essential legislative power to the Municipality to

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determine  the nature of the tax to be imposed on  the  rate payers.   Learned counsel for the appellant urges  that  the power  thus  delegated  to  the  municipality  is  unguided, uncanalised and vagrant, for there is nothing in the Act  to prevent  the  municipality from imposing any tax  it  likes, even,   say,  income  tax.   Such  omnibus  delegation,   he contends,   cannot  on  the  authorities  be  supported   as constitutional.   We  find ourselves in agreement  with  the High Court in rejecting this contention. In  the first place, the power of the  municipality  -cannot exceed  the power of the provincial legislature  itself  and the  municipality  cannot impose any tax, e.g.,  income  tax which  the provincial legislature could not  itself  impose. In  the  next place, s. 59 authorises  the  municipality  to impose  the  taxes therein mentioned " for the  purposes  of this  Act  ". The obligations and functions  cast  upon  the municipalities are set forth in ch.  VII of the Act.  Taxes, therefore,  can  be  levied by  the  municipality  only  for implementing  those purposes and for no other  purpose.   In other  words it will be open to the municipality to  levy  a tax for giving any of the amenities therein mentioned. 76 The  matter may be illustrated by reference to s.  54  which enumerates  the  duties of municipalities.  The  first  duty mentioned  in that section is that the  Municipality  should make  provision for lighting public streets and  nobody  can object  if it imposes alighting tax, which, indeed, is  item (ix)  in s. 59(1).  Take another example: It is the duty  of the Municipality to arrange for supply of drinking water and it  may  legitimately charge a water rate which,  again,  is item  (viii)  in s. 59(1).  We do not for a  moment  suggest that  the municipalities may only impose a tax  directly  in connection  with the heads of duties cast upon it.  What  we say is that the tax to be imposed must have some  reasonable relation to the duties cast on it by the Act.  In the  third place,  although  the  rule of  construction  based  on  the principle of ejusdem generis cannot be invoked in this case, for  items (i) to (x) do not, strictly speaking,  belong  to the  same genus, but they do indicate, to our mind the  kind and nature of tax which the municipalities are authorised to impose.   Finally, the provincial legislature had  certainly not abdicated in favour of the municipality, for the  taxing power of the municipality was quite definitely made  subject to  the  approval  of the  Governor-in-Council.   Under  the Indian Council Act, 1861 (24 & 25 Vic. c. 67) the  Governor- in-Council  might mean the Governor in Executive Council  or the Governor in Legislative Council.  If the reference in s. 59(1)(xi)  is  to the Governor’s Legislative  Council,  then there was no improper delegation at all, for it was  subject to  the legislative control of the Governor  in  Legislative Council.  The Governor’s Legislative Council was composed of all the members of the Governor’s Executive Council  besides a few other persons.  Therefore if the reference was to  the Governor  in  his  Executive  Council  even  then,  from   a practical point of view, the ultimate control was left  with the Governor’s Legislative Council.  We need not labour this point  any  further,  for on the  first  three  grounds  the delegation   of  legislative  authority,  if  any,  is   not excessive so as to make the exercise of it unconstitutional. In our opinion the impugned section did lay down a principle and fix a standard 77 which the municipalities had to follow in imposing a tax and the  legislature  cannot, in the circumstances, be  said  to have had abdicated itself and, therefore, the delegation  of

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power to impose any other tax cannot be struck down as being in  excess  of  the  permissible  limits  of  delegation  of legislative functions. The last point urged by learned counsel for the appellant is that,  under el. (xi) of s. 59(1), the enhancements  of  the rates  of the tax in 1941 and again in 1948 were illegal  in that the municipality had no power to do so under the Bombay Municipal Boroughs Act, 1925.  According to learned  counsel for  the appellant the judgment under appeal  upholding  the validity of such enhancements cannot be supported under s.60 of that Act.  That section runs as follows:- " Power to suspend 60(1)Subject to the requirements of cl- reduce or abolish          ause (a)of the proviso to section any existing tax           58  municipality                            may except as otherwise                            provide  in  clause  provided  in clause  (b) of the  proviso to section 103 at any  time  for any  sufficient  reason,  suspend,  modify  or  abolish  any existing tax by suspending, altering or rescinding any  rule prescribing such tax." (2)  The   provisions  of  Chapter  VII  relating  to,   the imposition of taxes shall apply so far as may be to the suspension, modification or abolition of any tax and  to the  suspension,  alteration  or  rescission  of  any   rule prescribing a tax." Reference is made to the marginal note where the words  used are  " power to suspend, reduce or abolish any existing  tax ". It is suggested that the word it modify " in the body  of the section in between the words " suspend " and " abolish " should be construed in the sense of reduction.  The marginal note,  according to him, shows that the several  words  were used in the section to indicate a progressive diminution  in the quantum of tax until it was completely gone.   Reference is made to the root meaning of the word " modify " which  is to  reduce  or  make less but does not  cover  the  idea  of enhancement.   In the first place, the marginal note  cannot affect the construction of the language used in the body  of the  section if it is otherwise clear and  unambiguous  (see Commissioner of 78 Income Tax, Bombay v. Ahmedbhai Umarbhai & Co., Bombay) (1). In the next place, it should be borne in mind that s. 67  of the Bombay District Municipal Act (Bom.  III of 1901)  which was  formerly applicable to municipalities used the  word  " reduce  " in between the words " suspend " and "  abolish  " and  that that section had been reproduced is s. 60  of  the Bombay Municipal Boroughs Act, 1925, but that in the process of such reproduction the word "reduce" was dropped ,and  the word  "modify"  was  introduced.   In  the  marginal   note, however, the word " reduce " was not substituted by the word " modify ", apparently through inadvertence.  If the word  " modify  " is to be read as "reduce", then there could be  no point in the provincial legislature substituting the word  " reduce  " by the word "modify".  This change must have  been made with some purpose and the purpose could only have  been to  use an expression of wider connotation so as to  include not  only  reduction  but also other  kinds  of  alteration. Section  76 of this very Act also refers to  "  modification not involving an increase in, the amount to be imposed which makes the sense in which the word " modify has been used  in this  Act  perfectly  clear, namely, that  there  may  be  a modification  involving an increase.  Reference may also  be made  to the decision of the Court of Appeal in  England  in the case of Stevens v. The General Steam Navigation Company, Ltd.  (2). " Modification ", according to Collins M.  R.  in

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his  judgment at p. 893, implied an alteration and the  word was equally applicable whether the effect of the  alteration was to narrow or to enlarge the provisions.  In our  opinion the dropping of the word " reduce " and the introduction  of the  word  ’modify" in the body of s. 60, of the  Act  under consideration  clearly indicate an intention on the part  of legislature to widen the scope of this section and the  High Court was right in so construing the same. No  other  point was urged in this appeal  and  for  reasons stated above this appeal must be dismissed with costs.                                Appeal dismissed. (1)  [1950]  S.C.R. 335 at P. 353.  (2) L.R. (1903)  1  K.B. 890. 79