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PETITIONER: WESTERN COALFIELDS LTD.

       Vs.

RESPONDENT: SPECIAL AREA DEVELOPMENT AUTHORITY, KORBA AND ANR.

DATE OF JUDGMENT26/11/1981

BENCH: CHANDRACHUD, Y.V. ((CJ) BENCH: CHANDRACHUD, Y.V. ((CJ) DESAI, D.A.

CITATION:  1982 AIR  697            1982 SCR  (2)   1  1982 SCC  (1) 125        1981 SCALE  (3)1775  CITATOR INFO :  D          1983 SC 937  (12)  D          1988 SC1369  (14)  F          1988 SC1708  (13)  D          1988 SC1737  (53)  RF         1989 SC 222  (3)  RF         1991 SC1676  (47,48,49,53)

ACT:      Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam (23 of 1973), S  69(d), Madhya  Pradesh Municipalities Act 1961, S. 127A and  Madhya Pradesh Municipal Corporation Act 1956, Ss. 135, 136.      Property Tax-Levy  of-Whether special  Area Development Authority has  all the  powers of taxation which a Municipal Corporation or  Municipal Council  has-Whether incorporation of earlier  Act in  a later  Act or  reference to the powers conferred by earlier Acts.      Constitution  of   India   1950,   Act   285(1),   M.P. Municipalities Act  1961, s.  147 Expln.  and M.P. Municipal Corporation Act  1956, s.  141-Property tax on leased lands- Land owned  by State  Government-Taken on  lease by Company- Entire  share  capital  of  company  subscribed  by  Central Government-Liability  to  payment  of  property  tax-Whether arises.      Coal Mines  Nationalisation Act  1973, s.  5,  Mines  & Mineral (Regulation  and Development) Act 1957 s. 2 and M.P. Nagar Tatha  Gram  Nivesh  Adhiniyam  1973,  s.  69(d)-Power conferred  on  State  Legislature  to  impose  property  tax whether in  conflict with  the power to regulate and develop coal mine conferred by Nationalisation Act.

HEADNOTE:      The Madhya  Pradesh Municipalities  Act, 1961 by S. 127 (1) (i)  empowered a  municipal council  to impose,  in  the whole or any part of the municipality, "a tax payable by the owners of  houses, buildings  or lands  situated within  the limits of  Municipality with  reference  to  annual  letting value of  the house,  building or land called property tax". The corresponding  provision in the Madhya Pradesh Municipal Corporation Act, 1956 was section 132(1)(a), and it provided that "the  Corporation shall  impose a  tax payable  by  the owners of  buildings or  lands situated within the city with

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reference to  the gross annual letting value of the building or  land   called  the  property  tax".  The  procedure  for imposition of  taxes was  spelt out  in section  129 of  the Municipalities  Act   and  section   133  of  the  Municipal Corporation  Act.   Section  127A   was  inserted   in   the Municipalities  Act  for  imposition  of  property  tax  and provided by  sub-clause (1)  that as  and from the financial year 1976-77  there shall  be charged,  levied and  paid for each financial  year a tax on the lands or buildings or both situated in  a municipality  at specified  rates. Sub-clause (2) exempted  properties owned  by or  vesting in  the Union Government, State  Government or  the Council from the levy. Similar 2 provisions were  inserted in  sections 135  and 136  of  the Municipal Corporation Act.      Respondent No.  1  was  constituted  the  Special  Area Development Authority under section 65 of the Madhya Pradesh Nagar Tatha  Gram Nivesh Adhiniyam (23 of 1973). Clauses (c) and (d)  of  section  69  of  the  Act  conferred  upon  the Development Authority  powers for  the purpose  of municipal administration  and  for  the  purpose  of  taxation.  These clauses were  inserted by  Ordinance 26  of 1975  which came into force  on February 27, 1976. The Ordinance was replaced by the  Madhya Pradesh  Nagar Tatha Gram Nivesh (Sanshodhan) Adhiniyam 1976 (6 of 1976).      On June 24, 1976 respondent 1 entered into an agreement with the appellant company under which the company agreed to contribute a  sum of  rupees 3  lakhs annually  to the "seed capital" of  the Authority in consideration of the Authority agreeing not to exercise its power of taxation or of levying any other  charges on  the  assets  and  activities  of  the company. The  agreement was  to remain in force for a period of ten  years beginning  from the calendar year 1976 and the annual payments  due from  1977 were  to be  made in January every year.  The appellant company paid the contribution for the year  1976. In the same year the company was called upon by the Sales Tax authorities to pay "the tax on the entry of goods" which  was introduced  by the Madhya Pradesh Sthaniya Kshetra  Me  Mal  Ke  Pravesh  Par  Kar  Adhyadesh  1976  in substitution of  octroi tax.  While the company was pursuing that matter  with the  State Government,  contending that it was not  liable to  pay the  entry  tax  by  reason  of  the agreement, on  January 4,  1977 respondent  1 made a further demand of  Rs. 3  lakhs on  the company for contribution for the year  1977. That amount not having been paid as provided in the  agreement, respondent  1 terminated the agreement by its letter dated February 4, 1977.      By a  notice issued  under section  65  of  the  Madhya Pradesh Nagar  Tatha Gram  Nivesh Adhiniyam ’Act of 1973’ on February 21, 1977 and by another notice issued under section 164(3) of  the Madhya  Pradesh Municipalities  Act  1961  on April 15,  1977, the Chief Executive Officer of respondent 1 called upon  the company  to pay a sum of about Rs. 13 lakhs by way  of property  tax for  the year  1976-77. On July 16, 1977 the  company was  called upon  to pay  a further sum of about Rs. 13 lakhs as property tax for the year 1977-78.      The company disputed its liability to pay on the ground that no  tax was  leviable on its property since the company was owned  wholly  by  the  Government  of  India  and  that respondent 1  was estopped  from levying the property tax by reason of  the agreement  of 1976. Having failed to pursuade respondent 1  to accept  its point  of view, and also having failed in  the High Court the appellant company came to this Court in appeal.

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    In the appeals to this Court it was contended: (1) that respondent 1  can exercise only such powers to levy property tax as  the Municipal  Corporation or  the Municipal Council had under the Madhya Pradesh Municipal Corporation Act, 1956 or the Madhya Pradesh Municipalities Act, 1961 as these Acts stood on  February 27, 1976, when clause (d) was inserted in section 69  of the Act of 1973. Section 127A and section 135 which create and levy the charge of property 3 tax having  been inserted  in the Municipalities Act and the Municipal Corporation  Act  respectively  with  effect  from April 1, 1976 i.e. subsequent to the insertion of clause (d) in  section  69  of  the  Act  of  1973,  Respondent  1  was incompetent to  exercise the  powers of  the Municipality or the  Municipal   Corporation  under   section  127A  of  the Municipal Corporation  Act or  section 136  of the Municipal Corporation Act;  (2) that  respondent 1  cannot impose  the property tax  without following  the procedure prescribed by section 129 of the Municipalities Act and section 133 of the Municipal Corporation  Act; (3)  that Article  285(1) of the Constitution envisages  that the property of the Union shall save in so far as Parliament may by law otherwise provide be exempt from all taxes imposed by a State or by any authority within a  State.  Section  127A(2)  of  the  Madhya  Pradesh Municipalities Act  and section  136 of  the Madhya  Pradesh Municipal Corporation Act also provide that the property tax shall not  be leviable,  on "buildings and lands owned by or vesting in  the Union  Government". The  appellant companies being wholly owned by the Government of India, the lands and buildings owned  by the  companies cannot  be  subjected  to property tax;  (4) that the lands having been taken on lease for a  period of  30 years by the appellant companies, it is the State Government and not the appellant companies who can be called  upon to  pay the  tax; and  (5)  that  Parliament enacted  the   Coal  Mines  Nationalisation  Act,  1973  for acquisition of  coal mines and utilisation of coal resources to subserve  the common  good. The  lands and  buildings  on which respondent 1 had imposed the property tax are used for the purposes  of and  are covered  by coal mines. The taxing power of  the State  legislature comes  in conflict with the power and  function of the Union to regulate and develop the mines as  envisaged by  the Nationalisation  Act, and  is an impediment since  it substantially increased the cost of the developmental activities.      Dismissing the appeals, ^      HELD: (i) Section 69(d) of the Act of 1973 must be read to mean  that respondent  1 shall  have all  the  powers  of taxation  which  a  Municipal  Corporation  or  a  Municipal Council has  at the time when respondent 1 seeks to exercise those powers. [14 A]      (ii)  The   Act  of  1973  does  not  provide  for  any independent power  of taxation  or any  machinery of its own for exercising  the power  of taxation.  It rests content by referring to  the provisions  contained in the two Municipal Acts. The  three Acts  are supplemental,  from which it must follow that  amendments made  to the  earlier Acts after the enactment of  section 69(d)  shall have to be read into that section. Without  recourse to  such a construction the power of  taxation   conferred  by   that  section   will   become ineffectual. [14 B-C]      (iii) A  reading of  the reference  to the  two earlier Municipal Acts as a reference to those Acts as they stand at the time  when  the  power  of  taxation  is  sought  to  be exercised by  respondent 1 will not cause repugnancy between

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the two  earlier Acts on one hand and the Act of 1973 on the other, nor  will it  cause any  confusion in  the  practical application of  the earlier  Acts, because  the Act  of 1973 does not  contain any independent provision or machinery for exercising the power of taxation. [14 D] 4      (iv) If  an earlier  legislation is incorporated into a later legislation,  the provisions  of earlier law which are incorporated into  the later law become a part and parcel of the later law. Therefore, amendments made in the earlier law after the  date of  incorporation cannot by their own force, be read into the later law. That is because the legislature, cannot be  assumed to  intend to  bind itself  to all future amendments or modifications which may be made in the earlier law. [12 D-E]      (v) Where a statute is incorporated by reference into a second statute,  the repeal  of the first statute by a third does  not   affect  the   second.  Likewise,  where  certain provisions from  an existing Act have been incorporated into a subsequent  Act, no  addition to  the former Act, which is not expressly  made applicable to the subsequent Act, can be deemed to be incorporated in it. [12G-13A]      (vi) The  broad principle  that where  a subsequent Act incorporates provisions  of a previous Act then the borrowed provisions become  an integral  and independent  part of the subsequent Act  and are  totally unaffected by any repeal or amendment  in   the  previous   Act,  is   subject  to  four exceptions, one  of which  is that  the principle  will  not apply to  cases "where  the subsequent  Act and the previous Act are supplemental to each other". [13 D]      Secretary of  State for  India in  Council v. Hindustan Co-operative Insurance  Society, Limited, 58 Indian Appeals, 259, Clarke  v. Bradlaugh,  [1881] 8 Q.B.D. 63 69; Collector of Customs, Madras v. Nathella Samathu Chetty & Anr., [1962] 3 S.C.R. 786 and State of Madhya Pradesh v. M.V. Narasimhan, [1976] 1 SCR 6, referred to.      In the  instant case, subsequent amendments made to the Municipal Corporation  Act and  the Municipalities  Act will also apply  to the power of taxation provided for in section 69(d) of the Act of 1973. The Act of 1973 did not by section 69(d), incorporate  in its true signification any particular provision of the two earlier Acts. It provided that, for the purpose of  taxation, the Special Area Development Authority shall have  the powers  which a  Municipal Corporation  or a Municipal Council  has under  the Madhya  Pradesh  Municipal Corporation Act,  1956 or  the Madhya Pradesh Municipalities Act, 1961.  The case, therefore, is not one of incorporation but of mere reference to the powers conferred by the earlier Acts. [13 E-F]      2(i) Section 127A of the Municipalities Act and section 135 of  the Municipal  Corporation Act  create by  their own force, the  liability to  be brought to property tax and the right to  levy that  tax. Nothing  further is required to be done by  the Municipality  or the  Municipal Corporation  in order to  impose the property tax. The procedure preliminary to the  imposition of  other taxes  which is  prescribed  by sections  129   and  133  of  the  two  Acts,  can  have  no application to  the imposition of the property tax. [14 F-15 A]      (ii) The  property tax is imposed by respondent 1 under section 127A  of the  Municipalities Act  and section 135 of the Municipal  Corporation Act.  It  is  not  imposed  under section 127  of the  former Act or section 132 of the latter Act. It is, therefore, not necessary to follow the procedure prescribed by  sections 129  and 133 of the respective Acts.

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[15 B-C] 5      3.  Even   though  the  entire  share  capital  of  the appellant companies has been subscribed by the Government of India, it cannot be predicated that the companies themselves are owned  by the  Government of India. The companies, which are incorporated  under the  Companies Act, have a corporate personality  of   their  own,  distinct  from  that  of  the Government of  India. The lands and buildings, are vested in and owned  by the  companies; the  Government of  India only owns the share capital. [16 A-B]      Rustom Cavasjee  Cooper v.  Union of  India,  [1970]  3 S.C.R. 530,  555, Heavy  Engineering Mazdoor  Union  v.  The State of  Bihar, [1969]  3 S.C.R.  995, Andhra Pradesh State Road Transport  Corporation v. The Income-tax Officer & Anr. [1964] 7  S.C.R. 17  & Tamlin  v. Hansaford  [1950] K.B.  18 referred to.      4. The Explanation to section 147 of the Municipalities Act says  that the  property tax has to be paid by the owner of the  land or  building and  that  a  tenant  of  land  or building or  both, who  holds the  same under a lease for an agreed period,  shall be  deemed to  be the  owner  thereof. Section 141(1)  of the  Municipal Corporation  Act  provides that the  property tax shall be paid primarily by the owner. By sub-section  (2) of  section 141, the property tax levied on the  owner can also be recovered from the occupier of the land or the building.[18D-E]      5(i) The  power conferred  by the  State Legislature on Special Area  Development Authorities to impose the property tax on lands and buildings is not in conflict with the power conferred by the Coal Mines Nationalisation Act on the Union Government to  regulate and  develop coal  mines  so  as  to ensure  rational   and  scientific   utilisation   of   coal resources. [21 G]      (ii)  The  paramount  purpose  behind  the  declaration contained in section 2 of the Mines and Minerals (Regulation and Development)  Act, 1957 is not in any manner defeated by the legitimate  exercise of taxing power under section 69(d) of the Act of 1973. [21 H-22A]      H.R.S. Murthy  v. Collector  of  Chitoor  and  Another, [1964] 6  S.C.R. 666,  State of Haryana & Anr. v. Chanan Mal [1976] 3 SCR 688 and The Ishwari Khetan Sugar Mills (P) Ltd. v. The  State of  Uttar Pradesh  & Ors.  [1980]  3  SCR  331 referred to.      Baijnath Kedia v. State of Bihar & Ors. [1970] 2 S.C.R. 100, distinguished.

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1025-26 of 1978.      Appeals by  special leave from the judgment order dated the 15th  April, 1978  of the  Madhya Pradesh  High Court in Misc. Petition Nos. 61 and 62/78 respectively.                             With                 Civil Appeal No. 213 of 1979 6      Appeal by  special leave  from the  judgment and  order dated the  15th April, 1978 of the Madhya Pradesh High Court in Misc. Petition o.555 of 1977.      L.N. Sinha,  Attorney General,  R. B. Datar and Miss A. Subhashini for the Appellants.      Y.S. Dharamadhikari,  N. M. Ghatate and S. V. Deshpande for the Respondent.

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    Y.S. Chitale,  Suresh Sethi  and S. K. Bhattacharya for the applicant intervener Municipal Corpn. of Delhi.      Altaf Ahmed  for the  applicant intervener  J & K State Agro. Industrial Corpn. Ltd.      S. K.  Gambhir for  the applicant  intervener State  of M.P.      The Judgment of the Court was delivered by      CHANDRACHUD,  C.J.   These  appeals  by  special  leave involve the  question of  the legality  of  the  demand  for Property-tax  made   by  respondent   1  on   the  appellant Companies. Civil  Appeal No. 213 of 1979 filed by the Bharat Aluminium Company  Ltd. arises out of Misc. Petition No. 555 of 1977  filed by  it in  the High  Court of  Madhya Pradesh under Article  226 of  the Constitution. Respondent 1 is the Special  Area   Development   Authority,   Korba,   District Bilaspur, M.P.,  respondent 2 is its Chairman and respondent 3 is  the State  of Madhya  Pradesh. Since the three appeals raise similar questions, we will refer to the facts of Civil Appeal No.  213 of  1979 only.  Civil Appeals  Nos. 1025 and 1026 of 1978 are by Western Coalfields Ltd.      The appellant,  Bharat Aluminium  Company  Ltd.,  is  a Government Company  incorporated under  the  Companies  Act, 1956, the entire share capital being owned by the Government of  India.   Respondent  1,  the  Special  Area  Development Authority for  the Korba  Special Area, is constituted under section 65  of the  Madhya Pradesh  Nagar Tatha  Gram Nivesh Adhiniyam (23  of 1973), referred to hereinafter as ’the Act of  1973’.  That  Act  was  passed  by  the  Madhya  Pradesh Legislature in  order "to  make provision  for planning  and development and  use of  land; to  make better provision for the preparation of development plans and zoning plans with a view to  ensuring that  town planning  schemes are made in a proper manner  and their  execution is  made  effective;  to constitute Town 7 and Country  Planning Authority for proper implementation of town and  country  development  plan;  to  provide  for  the development and  administration  of  special  areas  through Special Area  Development Authority;  to make  provision for the compulsory  acquisition of land required for the purpose of the development plans and for purposes connected with the matters aforesaid".  Chapter VIII  of the Act, consisting of sections 64  to 71,  is entitled "Special Areas". Section 64 empowers the  State Government  to declare  any  area  as  a special area  by issuing a notification. Section 55 provides that for  every Special  Area there  shall be a Special Area Development Authority  consisting of  a  Chairman  and  such other members  as the  Government may determine from time to time. The  Chairman  and  the  members  of  the  Development Authority are appointed by the Government. Section 68, which prescribes the  functions of the Development Authority, lays down by  clauses (v) and (vi) that the Development Authority shall  make   provision  for   the  municipal  services  and municipal management  of the  Special Area.  Section 69,  by clauses (c)  and (d), confers upon the Development Authority powers for  the purpose  of municipal administration and for the purpose of taxation. These two clauses of section 69 and clauses (v)  and (vi)  of section  68 were inserted in their present shape  by Ordinance 26 of 1975 which came into force on February  27, 1976.  The Ordinance  was replaced  by  the Madhya  Pradesh   Nagar  Tatha   Gram  Nivesh   (Sanshodhan) Adhiniyam, 1976 (6 of 1976).      Section 69(d) of the Act of 1973 reads thus:           "69.  Powers:   The   Special   Area   Development      Authority shall

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         (d) for  the purpose  of taxation  have the powers      which is  municipal corporation  or a municipal council      has, as  the case  may be,  under  the  Madhya  Pradesh      Municipal Corporation Act, 1956 (No. 23 of 1956) or the      Madhya Pradesh  Municipalities Act,  1961  (No.  37  of      1961),                (a)  where   the  municipal   corporation  of           municipal council  existed in  such area  prior to           its designation  as special area under section 64,           according to  the  municipal  law  by  which  such           special area was governed, and                (b)  where   no  municipal   corporation   or           municipal council  existed in  such area  prior to           its designation  as special area under section 64,           according to  such of  the aforesaid  Acts as  the           State Government may direct." 8 Clauses (a)  and (b)  above are  sub-clauses of  clause (d). (They should better have not been so numbered alphabetically since the main clauses themselves are similarly numbered).      Since there  was no  Municipal Corporation or Municipal Council in  the Korba Special Area prior to the constitution of the  Development Authority,  the Government  was required under sub-clause  (b) above  to direct  whether  the  Madhya Pradesh Municipal  Corporation  Act,  1956,  or  the  Madhya Pradesh Municipalities  Act, 1961,  shall apply to the Korba Special Area  for the  purposes of  clauses (v)  and (vi) of section 68  and clauses  (c) and  (d) of  section 69. Such a direction was first issued by Notification dated January 28, 1976 published in the Government Gazette, dated February 27, 1976 by which the Development Authority, Korba, was directed to exercise  the powers and perform the functions of a Class I  Municipality   constituted  under   the  Madhya   Pradesh Municipality Act,  1961. This  Notification became effective from February  27,1976 from  which date  Ordinance No. 26 of 1975 was  made effective.  By  another  Notification,  dated March 15,  1977, published in Government Gazette, dated July 15, 1977,  the Development  Authority, Korba,  was  directed under the  aforesaid  clauses  of  sections  68  and  69  to exercise the  powers and  perform the  functions  under  the Madhya Pradesh Municipal Corporation Act, 1956.      Section 127(1)(i)  of the Madhya Pradesh Municipalities Act, 1961  empowers a  municipal council  to impose,  in the whole or any part of the municipality, "a tax payable by the owners of  houses, buildings  or lands  situated within  the limits of  Municipality with  reference  to  annual  letting value of  the house,  building or land called property tax". The corresponding  provision in the Madhya Pradesh Municipal Corporation Act,  1956 is  section 132  (1)(a). It says that "the Corporation shall impose a tax payable by the owners of buildings or  lands situated  within the city with reference to the  gross annual  letting value  of the building or land called the  property tax".  The procedure  for imposition of taxes is  contained in section 129 of the Municipalities Act and section 133 of the Municipal Corporation Act.      In 1964,  the  Madhya  Pradesh  State  Legislature  had enacted the  Madhya Pradesh  Nagariya Sthawar  Sampatti  Kar Adhiniyam, which  was made  applicable to  the whole  State, including the  urban areas.  By section  36 of the aforesaid Adhiniyam, local authorities were prohibited from recovering the property tax from November 24, 1970. 9      Towards the  beginning of  1976, the Government decided to abolish  octroi tax  and to impose in its place a ’tax on the entry  of goods’.  To compensate  the municipal councils

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and the municipal corporations for the loss arising from the abolition of  the octroi  tax,  the  Government  decided  to confer powers  on these bodies for levying property tax. For conferring powers to levy tax on the entry of goods in place of octroi tax, the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhyadesh, 1976 (6 of 1976) was promulgated. For conferring  powers to levy property tax, Ordinance No. 4 of 1976  was promulgated.  Both  of  these  Ordinances  were published in  the Madhya  Pradesh Gazette,  dated April  30, 1976 from  which date  they came into force. Ordinance No. 4 of 1976  inserted certain  provisions in  the Municipalities Act and  the Municipal  Corporation Act.  This ordinance was replaced by Act No. 50 of 1976. By section 1(2) of that Act, the provisions  inserted in  the Municipalities  Act and the Municipal Corporation Act, with which we are concerned, were deemed to  have come  into force  with effect  from April 1, 1976. Section  127A which was inserted in the Municipalities Act for  imposition of  property tax reads as follows, in so far as relevant:           "127A. (1)  Notwithstanding anything  contained in      this chapter,  as and  from the financial year 1976-77,      there shall  be  charged,  levied  and  paid  for  each      financial year  a tax on the lands or buildings or both      situate  in   a  municipality   other  than   class  IV      municipality at the rate specified in the table below:           (i) where the annual letting        6 per centum               value exceeds Rs. 1,800         of the annual               but does not exceed             letting value.               Rs. 6,000.           (ii) X          X         X       X      X       X           (iii)X          X         X       X      X       X           (iv) X          X         X       X      X       X           (v) where the annual letting        20 per centum               value exceeds                   of the annual               Rs. 24,000                      letting value           (2) The  property tax levied under sub-section (1)      shall not  be leviable  in  respect  of  the  following      properties, namely: 10           (a)  building and lands owned by or vesting in                (i)  the Union Government;                (ii) the State Government;                (iii)the Council." Similar provisions  were inserted in sections 135 and 136 of the Municipal Corporation Act.      On June  24,  1976,  respondent  1  (the  Special  Area Development Authority, Korba) entered into an agreement with the appellant  Company under  which the  Company  agreed  to contribute a sum of Rupees three lakhs annually to the "seed capital" of  the Authority in consideration of the Authority agreeing not to exercise its power of taxation or of levying any other  charges on  the  assets  and  activities  of  the Company under  the Act  of 1973 as amended from time to time or under any other Act or notification. The agreement was to remain in force for a period of ten years beginning from the calendar year  1976 and  the annual  payments due  from 1977 were to be made in January every year. The appellant Company paid the  contribution for  the year  1976 as agreed. In the same year,  the Company  was called  upon by  the Sales  Tax authorities to  pay the  tax on  entry of  goods  which  was introduced in  substitution of  the octroi  tax.  While  the Company was  pursuing that matter with the State Government, contending that  it was  not liable  to pay the entry tax by reason of  the  aforesaid  agreement,  on  January  4,  1977 respondent 1  made a  further demand  of Rs.  3 lakhs on the

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Company for  contribution for the year 1977. That amount not having been  paid as provided in the agreement, respondent 1 terminated the  agreement by  its letter  dated February  4, 1977.  The  Company  sent  a  cheque  for  Rs.  3  lakhs  to respondent 1 on April, 28, 1977.      By a  notice issued under section 65 of the Act of 1973 on February  21,1977 and  by  another  notice  issued  under section 164(3) of the Madhya Pradesh Municipalities Act 1961 on April 15, 1977, the Chief Executive Officer of respondent 1 called  upon the  Company to pay a sum of Rs. 13,22,160 by way of  property tax for the year 1976-77. By a letter dated May 21,  1977 respondent 1 reduced the demand by Rs. 3 lakhs being the  amount paid by the Company by way of contribution for the  year 1977, under the agreement of 1976. On July 16, 1977 the Company was called upon to pay a further sum of Rs. 13,65,673.50 as property tax for the year 1977-78. 11      The appellant Company disputed its liability to pay the aforesaid amounts  on the  grounds, principally, that no tax was leviable  on its  property since  the Company  was owned wholly by  the Government of India and that respondent 1 was estopped from  levying the  property tax  by reason  of  the agreement of 1976. Having failed to persuade respondent 1 to accept its  point of view, the Company filed o Writ Petition in the  Madhya Pradesh High Court asking that the demands be quashed. Civil  Appeal No.  213 of  1979 by special leave is directed against the dismissal of the Writ Petition.      In the  other two appeals (Nos. 1025 and 1026 of 1978), the appellant,  Western Coalfields  Ltd., is  also a hundred per cent  undertaking  of  the  Government  of  India.  That Company has been called upon by respondent 1 to pay property tax for  the years  1976-77 and  1977-78 in  the sum  of Rs. 3,71,461 for  each year.  The Writ  Petitions (61  and 62 of 1978)  filed  by  it  were  dismissed  by  the  High  Court, following the  judgment delivered in the Writ Petition filed by the Bharat Aluminium Company Ltd.      Civil Misc.  Petitions Nos.  13211 of  1979 and 3767 of 1980 are  for intervention  by the  Jammu and  Kashmir State Agro Industries  Corporation Ltd.  and the  Delhi  Municipal Corporation respectively.  The Delhi  High Court has held in L.P.A. 105  of 1979 that the Delhi Municipal Corporation has the power  to levy property-tax on the property of the Jammu and Kashmir  State Agro  Industries Corporation  Ltd., whose share capital is owned by the State of Jammu and Kashmir and the Union  of  India  in  the  proportion  of  51%  and  49% respectively. In  Special Leave  Petition No.  10688 of 1979 filed against  the judgment,  the question raised is whether the property  of a  public corporation  owned wholly  by the State Government  and the  Union Government  is exempt  from taxes by reason of articles 285 and 289 of the Constitution. We have  allowed both  the parties  to  intervene  in  these appeals.      The learned  Attorney General, who appears on behalf of the appellants,  has raised  four or  five principal points, any one of which, if accepted, will result in the success of these appeals.  However, we  are unable  to  accept  any  of these.      The first contention of the learned Attorney General is that respondent  I can  exercise only  such powers  to  levy property tax  as the  Municipal Corporation or the Municipal Council  had   under  the   Madhya  Pradesh   Municipalities Corporation Act,  1956, or the Madhya Pradesh Municipalities Act, 1961, as these Acts stood on 12 February 27,  1976, when  clause (d)  was  inserted  in  its

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present form  in section  69 of the Act of 1973. It is urged that the  provisions conferring powers of taxation under the aforesaid two  Acts must  be taken to have been incorporated in section  69(d) of  the Act  of 1973  and  any  subsequent change in  those provisions  by amendment  of the  two  Acts cannot be  availed of  by respondent  1.  Section  127A  and section 135  which, by  their own force, create and levy the charge of  property tax  were inserted in the Municipalities Act and  the Municipal  Corporation  Act  respectively  with effect from  April 1,  1976,  that  is,  subsequent  to  the insertion of  clause (d)  in section  69 of the Act of 1973. Relying  on  this,  it  is  argued  that  respondent  1  was incompetent to  exercise the  powers of  the Municipality or the  Municipal   Corporation  under   section  127A  of  the Municipalities  Act   or  section   135  of   the  Municipal Corporation Act.      The answer  to this  contention will depend mainly upon whether the  provisions of  the Municipalities  Act and  the Municipal Corporation  Act were incorporated into the Act of 1973 by  its section  69(d). It  is well-settled  that if an earlier   legislation   is   incorporated   into   a   later legislation,  the   provisions  of  earlier  law  which  are incorporated into  the later law become a part and parcel of the later law. Therefore, amendments made in the earlier law after the  date of incorporation cannot, by their own force, be read into the later law. That is because the legislature, which adopts  by incorporation  the existing  provisions  of another law,  cannot be  assumed to intend to bind itself to all future  amendments or modifications which may be made in the earlier  law. In other words, the incorporating Act does nothing more  than borrow  certain provisions of an existing Act and  instead of  setting out, verbatim, those provisions in  its  own  creation,  refers  to  them  as  a  matter  of convenience in the mode of drafting. (See Secretary of State for India  in Council  v. Hindustan  Co-operative  Insurance Society Limited;  Craies on  Statute Law, 7th Edition, pages 360-361.)      The principle,  broadly, is  that where  a  statute  is incorporated by  reference into a second statute, the repeal of the  first statute  by a third does not affect the second (see  Clarke   v.  Bradlaugh).  Likewise,  logically,  where certain  provisions   from  an   existing  Act   have   been incorporated into  a subsequent  Act,  no  addition  to  the former Act,  which is  not expressly  made applicable to the subsequent Act, 13 can be  deemed to  be incorporated  in it. (see Secretary of State  for   India  in  Council  v.  Hindusthan  Cooperative Insurance Society  Ltd). (supra)  But these  rules  are  not absolute and  inflexible. In  the case last cited, the Privy Council qualified  its statement  of the  law by saying that the principle,  that an  amendment of the first law which is not   expressly    made   applicable   to   the   subsequent incorporating Act  cannot be  deemed to be incorporated into the  second   Act,  applies  "if  it  is  possible  for  the subsequent Act to function effectually without the addition" (page 267). Besides, as held by a Constitution Bench of this Court in  the  Collector  of  Customs,  Madras  v.  Nathella Samathu Chetty  & Anr.  the decision  of the  Privy  Council could not  be extended  too far so as to cover every case in which the  provisions of  another  statute  are  adopted  by absorption (see  page 837).  Finally,  in  State  of  Madhya Pradesh v.  M. V.  Narasimhan  this  Court  held,  after  an examination  of  the  relevant  decisions,  that  the  broad principle  that   where  a   subsequent   Act   incorporates

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provisions of  a previous  Act then  the borrowed provisions become an  integral and  independent part  of the subsequent Act and are totally unaffected by any repeal or amendment in the previous  Act, is  subject to  four exceptions,  one  of which is  that the  principle will not apply to cases "where the subsequent  Act and the previous Act are supplemental to each other".      Applying these  principles, we  are of the opinion that in the  instant case,  subsequent  amendments  made  to  the Municipal Corporation  Act and  the Municipalities  Act will also apply  to the power of taxation provided for in section 69(d) of  the Act  of 1973.  The Act  of 1973  did  not,  by section 69(d),  incorporate in  its true  signification  any particular provision  of the  two earlier  Acts. It provides that,  for   the  purpose  of  taxation,  the  Special  Area Development  Authority   shall  have   the  powers  which  a Municipal Corporation  or a  Municipal Council has under the Madhya Pradesh Municipal Corporation Act, 1956 or the Madhya Pradesh Municipalities  Act, 1961. The case therefore is not one of  incorporation but  of mere  reference to  the powers conferred by  the earlier  Acts.  As  observed  in  Nathella Sampathu Chetty,  there is  a  distinction  between  a  mere reference to  or a citation of one statute in another and an incorporation which  in effect  means the  bodily lifting of the provisions  of one  enactment and  making them  part  of another, so much so that the repeal of the former leaves the latter wholly untouched. 14 Section 69(d) of the Act of 1973 must accordingly be read to mean that respondent 1 shall have all the powers of taxation which a Municipal Corporation or a Municipal Council has for the time  being, that is to say, at the time when respondent 1 seeks to exercise those powers.      The Act  of 1973  does not  provide for any independent power of taxation or any machinery of its own for exercising the power  of taxation.  It rests  content by  pointing  its finger to  the provisions  contained in  the  two  Municipal Acts. The  three Acts are therefore supplemental, from which it must  follow that  amendments made  to the  earlier  Acts after the  enactment of  section 69(d) shall have to be read into that  section. Without recourse to such a construction, the power  of taxation conferred by that section will become ineffectual. A  reading of  the reference to the two earlier Municipal Acts as a reference to those Acts as they stand at the time  when  the  power  of  taxation  is  sought  to  be exercised  by   respondent  1,  will  not,  possibly,  cause repugnancy between  the two earlier Acts on one hand and the Act of  1973 on  the other,  nor indeed  will it  cause  any confusion in  the practical application of the earlier Acts, because the  Act of  1973 does  not contain  any independent provision or machinery for exercising the power of taxation. The first  contention of the Attorney General must therefore fail.      The second  contention is  that assuming  that  section 127A of  the  Municipalities  Act  or  section  135  of  the Municipal Corporation  Act,  which  were  introduced  by  an amendment made  after the enactment of section 69(d), can be invoked for  levying the  property tax,  respondent 1 cannot impose that  tax without  following the procedure prescribed by sections 129 and 133 of the aforesaid Acts, respectively. This contention  is devoid  of substance.  Sections 127A and 135 create,  by their own force, the liability to be brought to property  tax and  the  right  to  levy  that  tax.  They provide:           Notwithstanding   anything   contained   in   this

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    chapter, as  and from the financial year 1976-77, there      shall be  charged, levied  and paid  for each financial      year a  tax on  the lands or buildings or both.......at      the rate specified in the table below:" Nothing further  is required  to be done by the Municipality or the Municipal Corporation in order to impose the property tax  and   therefore  the   procedure  preliminary   to  the imposition of  other taxes  which is  prescribed by sections 129 and 133 of the two Acts, can 15 have no  application to  the imposition of the property tax. Apart from  this the  position is  put beyond  doubt by  the language of sections 129 and 133 of two Acts. Section 129 of the  Madhya   Pradesh  Municipalities   Act  prescribes  the procedure for "the imposition of any tax under section 127". Similarly  section  133  of  the  Madhya  Pradesh  Municipal Corporation Act prescribes the procedure for "the imposition of any  tax under  section 132". The property tax is imposed by respondent 1 under section 127A of the Municipalities Act and section  135 of the Municipal Corporation Act. It is not imposed under  section 127  of the former Act or section 132 of the  latter Act.  It is therefore not necessary to follow the procedure  prescribed by  sections 129  and 133  of  the respective  Acts.  This  position  is  made  clear,  out  of abundant caution,  by clause  (4)  of  section  133  of  the Municipal  Corporation  Act,  which  provides  that  nothing contained in section 133 shall apply to the tax mentioned in clause (a) of sub-section (1) of section 132, which shall be charged and  levied in  accordance with section 135. Section 132(1)(a) refers to property tax.      The learned  Attorney General  contends that the taxing authority must  all the  same apply its mind to the question whether it wants to bring to tax the land or the building or both. It  is not  possible to accept this submission because sections 127A  and 135  of the two Acts in question leave no such choice  open to  the taxing  authority. The  obligation which the  statute places  upon it is to impose tax on lands where there  are lands  only  and  they  can  be  taxed,  on buildings where buildings alone can be brought to tax and on both lands and buildings where lands are built upon and both can be  brought to tax. This is not, as said by the Attorney General rationalising the taxing power. What we have said is the plain meaning of the taxing provision.      The third contention of the Attorney General flows from the provisions  of article  285(1) of the Constitution which says that the property of the Union shall, save in so far as Parliament may  by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State. Section 127A(2) of the Madhya Pradesh Municipalities Act and section 136  of the Madhya Pradesh Municipal Corporation Act also provide  that the  property tax  shall not be leviable, inter alia,  on "buildings  and lands owned by or vesting in the Union  Government". Relying  on these  provisions, it is contended by  the Attorney  General that since the appellant companies are  wholly owned  by the Government of India, the lands 16 and buildings  owned by the companies cannot be subjected to property tax.  The short  answer to  this contention is that even though  the  entire  share  capital  of  the  appellant companies has been subscribed by the Government of India, it cannot be predicated that the companies themselves are owned by  the  Government  of  India.  The  companies,  which  are incorporated under  the  Companies  Act,  have  a  corporate personality  of   their  own,  distinct  from  that  of  the

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Government of  India. The  lands and buildings are vested in and owned  by the  companies: the  Government of  India only owns the  share capital.  In Rustom Cavasjee Cooper v. Union of India (The Banks Nationalisation case) it was held:           "A company registered under the Companies Act is a      legal person, separate and distinct from its individual      members. Property of the Company is not the property of      the shareholders.  A shareholder has merely an interest      in  the   Company  arising   under  its   Articles   of      Association, measured by a sum of money for the purpose      of liability, and by a share in the profit."      In Heavy  Engineering Mazdoor  Union v.  The  State  of Bihar &  Ors., the Heavy Engineering Corporation Limited was incorporated under  the Companies  Act and  its entire share capital was  contributed by  the Central  Government. It was therefore a  Government Company  under section  617  of  the Companies Act. On the question as to whether the Corporation carried on  an industry  under the  authority of the Central Government  within  the  meaning  of  section  2(a)  of  the Industrial Disputes  Act, 1947,  it was  held by  this Court that an  incorporated company  has a  separate existence and the law  recognises it  as a  juristic person,  separate and distinct from  its members.  The mere  fact that  the entire share capital  of the  respondent company was contributed by the Central Government and the fact that all its shares were held by  the President  and certain  officers of the Central Government did not make any difference to that position.      The decision  of this Court in the Andhra Pradesh State Road Transport  Corporation v. The Income-tax Officer & Anr. puts the  matter beyond  all doubt. In that case, the Andhra Pradesh Road 17 Transport Corporation  claimed exemption from taxation under article 289  of the  Constitution by which, the property and income of a State is exempt from union taxation. This Court, while rejecting the Corporation’s claim, held that though it was wholly  controlled by  the State  Government  it  had  a separate entity  and its  income was  not the  income of the State Government.  Gajendragadkar, C. J., while speaking for the Court,  referred to  the judgment  of  Lord  Denning  in Tamlin v. Hansaford in which the learned Judge observed:           "In the eye of the law, the corporation is its own      master and  is answerable  as fully as any other person      or corporation. It is not the Crown and has none of the      immunities or privileges of the Crown. Its servants are      not civil  servants, and  its  property  is  not  Crown      property. It  is as much bound by Acts of Parliament as      any other  subject of  the King.  It is,  of course,  a      public authority and its purposes, no doubt, are public      purposes, but  it is not a government department nor do      its powers fall within the province of government". In Pennington’s Company Law, 4th Edition, pages 50-51, it is stated that there are only two decided cases where the court has disregarded  the separate  legal entity of a company and that was  done because  the company  was formed  or used  to facilitate the  evasion of  legal obligations.  The  learned author, after  referring to  English and American decisions, has summed  up the  position in  the words  of  an  American Judge, Sanborn,  J. to  the effect that as a general rule, a corporation will  be looked  upon as  a legal  entity and an exception can  be made  "when the  notion of legal entity is used to  defeat public  convenience, justify  wrong, protect fraud, or defend crime", in which case, "the law will regard the corporation as an association of persons". In cases such as those  before us,  there is  no scope  for  applying  the

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doctrine of  lifting the veil in order to have regard to the realities of  the situation.  The appellant  companies  were incorporated under  the Companies  Act for a lawful purpose. Their property  is their  own and  it vests  in them.  Under section 5(1)  of the Coal Mines (Nationalisation) Act, 26 of 1973, which applies in the instant case, the right title and interest of  a nationalised  coal mine vest, by direction of the Central  Government, in  the Government  company. If the lands and building on which respondent 1 has imposed the 18 property tax  cannot be  regarded as  the  property  of  the Central  Government   for  several   other   purposes   like attachment and  sale, there  is no  reason why,  for  taxing purposes, the  property can  be treated as belonging to that Government as distinct from the company which has a juristic personality.      The learned  Attorney General  resisted the taxation on the lands  by contending  that they  belong  to  the  Madhya Pradesh State  Government and  were taken  on  lease  for  a period of  30 years  by the appellant companies. It is urged that if  at all  the lands can be subjected to property tax, it is  the State  Government and not the appellant companies who can be called upon to pay that tax. This contention does not  appear   to  have   been  taken  before  the  assessing authority. No documents seem to have been filed before it to bear out  facts which  are sought to be placed before us nor indeed have  we evidence  before us  to show  that the lands belong to  the State  Government. The  appellants may, if so advised, raise  this particular point in future assessments. We would, however, like to draw attention to the Explanation to section  147 of  the Madhya  Pradesh  Municipalities  Act which says  that though  the property  tax has to be paid by the owner  of the  land or building, as the case may be, for the purposes of that section a tenant of land or building or both, who  holds the same under a lease for an agreed period with a convenant for its renewal thereafter, shall be deemed to be  the owner  thereof.  Section  141(1)  of  the  Madhya Pradesh Municipal Corporation Act provides that the property tax shall be paid primarily by the owner. By sub-section (2) of section  141, the  property tax  levied on  the owner can also be  recovered from  the occupier  of the  land  or  the building. These provisions shall have to be borne in mind by the  appellants  before  any  attempt  is  made  before  the assessing authority  to transfer  or avoid the impost of the property tax.      Finally,  the   learned  Attorney   General  raised   a contention of fundamental importance which was not raised in the High  Court. The lands and buildings on which respondent 1 has  imposed the property tax are used for the purposes of and are  covered by  coal  mines.  Basing  himself  on  that consideration the Attorney General argues:      (1)  By virtue  of the declaration contained in section           2  of   Mines  and   Minerals   (Development   and           Regulation)  Act,   1957,  the  legislative  field           covered by Entry 23, 19           List II  passed on  the Parliament  by  virtue  of           Entry 54, List I.      (2)  The   Parliament    enacted   the    Coal    Mines           Nationalisation Act,  1973 for acquisition of coal           mines   with    a   view   to   reorganising   and           reconstructing such coal mines so as to ensure the           rational, coordinated  and scientific  development           and utilisation  of  coal  resources  as  best  to           subserve the common good.

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    (3)  Under section  5 of  the Nationalisation  Act, the           acquired properties  were vested  in a  Government           Company in  order to  carry out  more conveniently           the object  of that Act, and for that purpose, the           properties were  freed from  all  encumbrances  by           section 6 of the Act.      (4)  The taxing  power of the State legislature must be           construed as  limited in  its scope  so as  not to           come in  conflict with  the power  and function of           the Union  to regulate  and develop  the mines  as           envisaged by the Nationalisation Act.      (5)  The impugned  tax is  manifestly an  impediment in           the discharge  of the  aforesaid function since it           substantially   increases    the   cost   of   the           developmental activities.  The tax  is not  in the           nature of a fee.      Apart from  the fact  that there  is no  data before us showing that  the property  tax constitutes an impediment in the  achievement   of  the   goals   of   the   Coal   Mines Nationalisation Act, the provisions of the M.P. Act of 1973, under which  Special  Areas  and  Special  Area  Development Authorities are  constituted afford  an effective  answer to the Attorney  General’s contention.  Entry  23  of  List  II relates to  "Regulation of  mines  and  mineral  development subject  to  the  provisions  of  List  I  with  respect  to regulation and  development under the control of the Union". Entry 54  of List  I relates  to "Regulation  of  mines  and mineral development  to the  extent to which such regulation and development  under the  control of the Union is declared by  Parliament   by  law  to  be  expedient  in  the  public interest". It  is true  that on  account of  the declaration contained  in   section  2   of  the   Mines  and   Minerals (Development and  Regulation)  Act,  1957,  the  legislative field covered  by Entry  23 of  List  II  will  pass  on  to Parliament by virtue of Entry 54, List I. But in order to 20 judge whether,  on that account, the State legislature loses its competence  to pass  the Act of 1973, it is necessary to have regard to the object and purpose of that Act and to the relevant  provisions   thereof,  under  which  Special  Area Development Authorities are given the power to tax lands and buildings within  their jurisdiction.  We have  set out  the objects of the Act at the commencement of this judgment. one of  which   is  to   provide   for   the   development   and administration  of   Special  Areas   through  Special  Area Development Authorities,  Section 64  of the  Act  of  1973, which provides  for the  constitution of  the special areas, lays down  by sub-section (4) that: Notwithstanding anything contained in  the Madhya  Pradesh Municipal Corporation Act, 1956, the  Madhya Pradesh  Municipalities Act,  1961, or the Madhya  Pradesh   Panchayats  Act,   1962,   the   Municipal Corporation, Municipal Council, Notified Area Committee or a Panchayat, as  the case  may be,  shall, in  relation to the special  area   and  as  from  the  date  the  Special  Area Development Authority  undertakes the functions under clause (v) or  clause (vi)  of section  68 cease  to  exercise  the powers and perform the function and duties which the Special Area Development  Authority is  competent  to  exercise  and perform under  the Act  of  1973.  Section  68  defines  the functions of  the Special Area Development Authority, one of which, as  prescribed by  clause  (v),  is  to  provide  the municipal services  as specified  in sections 123 and 124 of the Madhya  Pradesh Municipalities  Act, 1961.  Section  69, which defines  the powers of the Authority, shows that those powers  are  conferred,  inter  alia,  for  the  purpose  of

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municipal administration.  Surely, the functions, powers and duties of  Municipalities do not become an occupied field by reason of  the declaration  contained in  section 2  of  the Mines and  Minerals (Development  and Regulation) Act, 1957. Though, therefore,  on  account  of  that  declaration,  the legislative field  covered by  Entry 23, List II may pass on to the  Parliament by  virtue  of  Entry  54,  List  I,  the competence  of  the  State  Government  to  enact  laws  for municipal administration  will  remain  unaffected  by  that declaration.      Entry 5  of List  II relates to "Local Government, that is  to   say,  the  constitution  and  powers  of  municipal corporations and  other local authorities for the purpose of local self-Government".  It is  in pursuance  of this  power that the  State Legislature  enacted the  Act of  1973.  The power to impose tax on lands and buildings is derived by the State Legislature  from Entry 49 of List II: "Taxes on lands and buildings".  The power of the municipalities to levy tax on lands  and buildings  has been  conferred  by  the  State Legis- 21 lature on  the Special  Area Development  Authorities. Those authorities have  the  power  to  levy  that  tax  in  order effectively to  discharge the  municipal functions which are passed on  to them.  Entry 54 of List I does not contemplate the taking over of municipal functions.      Shri  Dharmadhikari,  who  appears  on  behalf  of  the respondents, has  drawn our  attention to  the judgment of a Constitution  Bench  of  this  Court  in  H.R.S.  Murthy  v. Collector of Chittoor and Another, which provides a complete answer to  the Attorney  General’s contention. In that case, under the  terms of  a mining  lease, the  lessee worked the mines and  bound himself  to pay  a dead rent if he used the leased land  for the  extraction of  iron  ore  and  to  pay surface rent in respect of the surface area occupied or used by him.  Demands were  made upon  the lessee  for successive years for  the payment of land cess under sections 78 and 79 of the  Madras District Boards Act, 1920. Those demands were challenged by the lessee on the ground, inter alia, that the provision imposing  the land  cess quoad  royalty under  the mining leases  must be  held to  have been  repealed by  the Central Act  viz. the  Mines and  Minerals  (Regulation  and Development)  Act,   1958,  and   the  Mines   and  Minerals (Regulation and  Development) Act, 1957. This contention was repelled by this Court by holding that sections 78 and 79 of the Madras  District Boards  Act had  nothing to do with the development of  mines and  minerals or their regulation. The proceeds of  the land  cess were  required to be credited to the District  fund which  had  to  be  used  for  everything necessary  for   or  conducive   to  the   safety,   health, convenience or education of the inhabitants or the amenities of local  area concerned.  It was  further held by the Court that the  land cess  was not a tax on mineral rights but was in truth  and substance  a "tax on lands" within the meaning of Entry 49 of the State List. The reasoning adopted in this decision shows  that it  is not  correct  to  say  that  the property tax  provided for  in the Act of 1973 is beyond the legislative competence  of the  State Legislature;  that tax has nothing  to do  with the development of mines. The power conferred  by   the  State   Legislature  on   Special  Area Development Authorities  to impose the property tax on lands and buildings  is therefore  not in  conflict with the power conferred by the Coal Mines Nationalisation Act on the Union Government to  regulate and  develop the Coal mines so as to ensure  rational   and  scientific   utilisation   of   coal

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resources. The  paramount  purpose  behind  the  declaration contained in section 2 of the Mines and Minerals (Regulation and Develop- 22 ment) Act,  1957 is  not  in  any  manner  defeated  by  the legitimate exercise  of taxing  power under section 69(d) of the Act of 1973.      The decision  of this  Court in Baijnath Kedia v. State of Bihar  & Ors.,  on which  the  learned  Attorney  General relies,  is   distinguishable.  In   that  case,  the  Bihar Government demanded dead rent, royalty and surface rent from the appellant  contrary to  the terms  of his  lease on  the strength of  the amended  section 10(2)  of the  Bihar  Land Reforms Act,  1950, and  the amended  Rule 20  of the  Bihar Rules. This  Court held  that the  pith and substance of the amended section  10(2) fell  within  Entry  23  although  it incidentally touched land and that, therefore, the amendment was  subject  to  the  overriding  power  of  Parliament  as declared in section 15 of the Mines and Minerals (Regulation and Development) Act, 1957. By the aforesaid declaration and the enactment of section 15, the whole of the field relating to minor  minerals  had  come  within  the  jurisdiction  of Parliament and  no scope  was left  for the enactment of the second proviso  to section 10 of the Bihar Land Reforms Act. The second  sub-rule added to Rule 20 was held to be without jurisdiction for the same reason.      That the  declaration in  section 2  of the  Mines  and Minerals (Regulation  and Development)  Act, 1957  does  not result in  invalidation of  every State legislation relating to mines  and minerals  is demonstrated  effectively by  the decision in  State of  Haryana &  Anr. v.  Chanan  Mal.  The Haryana  State   Legislature  passed  the  Haryana  Minerals (Vesting of Rights) Act, 1973, under which two notifications were issued  for acquisition  of right to saltpeter, a minor mineral, and for auctioning certain saltpeter bearing areas. It was  held by  this Court  that the Haryana Act was not in any way  repugnant to the provisions of the Act of 1957 made by Parliament and that the ownership rights could be validly acquired by the State Government under the State Act.      The decision  of a  Constitution Bench of this Court in The Ishwari  Khetan Sugar  Mills (P)  Ltd. v.  The State  of Uttar Pradesh  & Ors.,  is even  more to  the point. In that case, 12  sugar undertakings  stood transferred  to and were vested in  a Government  undertaking under  the  U.P.  Sugar Undertakings  (Acquisition)  Ordinance,  1971,  which  later became an Act. It was contended on behalf of 23 the sugar  undertakings  that  since  sugar  is  a  declared industry under  the Industries  (Development and Regulation) Act, 1951,  Parliament alone  was competent to pass a law on the subject  and the  State Legislature had no competence to pass the  impugned Act  by reason  of Entry  52, List I read with Entry  24, List  II. The majority, speaking through one of us,  Desai J.,  held that  the legislative  power of  the State under Entry 24, List II, was eroded only to the extent to  which  control  was  assumed  by  the  Union  Government pursuant to  the  declaration  made  by  the  Parliament  in respect of  a declared  industry and that the field occupied by such  enactment was  the measure  of the  erosion of  the legislative competence  of the  State legislature. Since the Central Act was primarily concerned with the development and regulation of declared industries and not with the ownership of industrial  undertakings, it  was  held  that  the  State legislature had  the competence  to enact  the impugned law. Justice Pathak  and Justice  Koshal,  who  gave  a  separate

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judgment concurring  with the  conclusion of  the  majority, preferred to  rest their  decision on  the circumstance that the impugned  legislation fell  within Entry  42, List  III- ’Acquisition and requisition of property’- and was therefore within the competence of the State Legislature.      These  are  the  main  points  argued  by  the  learned Attorney General  on behalf  of the  appellant Companies. In the High  Court, an  additional point  was taken, based upon the agreement  dated June  24, 1976,  which was entered into between the  appellant Companies  and respondent  1. It  was contended in the High Court that respondent 1 had waived its power of  taxation by  that agreement  and,  therefore,  the imposition of  property tax  was invalid. The High Court has given weighty  reasons for  rejecting that  argument and  we endorse those reasons. We adopt, particularly, the reasoning of the  High Court  that in the meeting of January 29, 1976, respondent 1  had decided to give up its right to impose the Octroi tax  only. The  Chairman of  respondent 1, therefore, acted beyond the scope of his authority in entering into the agreement  with   the  appellant   Companies,  under   which respondent 1 bound itself not to impose any tax whatsoever.      For these  reasons the  appeals fail  and are dismissed with costs. N.V.K.                                    Appeals dismissed. 24