FIRM SURAJMAL BANSHIDHAR, ETC v. THE MUNICIPAL BOARD, GANGANAGAR

appellants.. Jn suits filed by the appellants for refund of the amounts which they claimed were collected without authority of law, the respondent Board pleaded that the levy was in accordance with law and that the· suits were barred by liinitation. The trial court decreed the suits and on appeal In second appeal the Hig1. District Judge affirmed the trial Court's decrees. Court held that the levy was illegal. The High Court, however, allowed t.he appeals in respect of those amounts which were found to be within limitation E under s. 179(2) of the Act and dismissed the others. I> On the question whether the levy could be said to be a thing done 0r purported to be done under the Act, Allo\ving the appeal, --~" HELD : The suits did not fall within the purvievv of s. 179 of the Act F. and were not barred by limitation. [172 D]

#1. (a) It is well established that if levy of a tax is prohibited by an Act and is not in pursuance of it, it could not be said to be purported 'to be done in pursue.nee of the execution or intended execution of the Act. [172 BJ Poona_ City Municipal Corporation v. Dattatra-ya Nagesll Deodlwr, [196-tj G '\ 8 S.C.R. 178 followed. (b) The terminal tax could not be imposed under any of the provisions of the Act. The High Court was right in holding that the antoun.ts paid by the appellants by way of terminal tax were recoverable by the suits. [173 F-G 174 Al

#2. The Bikaner State Municipal Act, 1923 (which was the predecessor of the present Act) authorised the levy of terminal tax and the Board accord ingly levied the tax until January 26, 1950. With the coming into force 12-SCil78 H • t 170 SUPREME COURT REPORTS [1979] 2 S.C.R. A B c D E F' of the Constitution, by virtue of art 277 it was permissible for the Board to continue to levy the terminal tax until provision to the contrary was made by Parliament by law. But with effect from December 22, 1951 the Bikaner Act was repealed and the present Act was brought into force. The repeal, however, did not affect the validity of those ltaxes which had already been imposed and which could be "deemed" t~ have been imposed under the Act. But the provisions of the Act hre clear that the terminal tax in question could not be imposed thereunder. The levy could not, therefore, be saved 'On the other han<l it is clear that the by cl. (b) of the proviso to s. 2. State Legislature had decided to discontinue the levy by excluding it from the purview of the saving clauses. ·rhe further levy of the tax, therefore, becalne illegal and it ¥las not permissible to continue it any longer under art. 277 which merely gave the authority concerned the option to continue to levy if it so desired. [l 73A, F-G] CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 372-382 of

#1969. Appeals by Special Leave from the Judgment and Order dated 10-10-1968 of the Rajasthan High Court in C.S.A. Nos. 18 and 29, 27, 28. 30-35 of 1960 and 54 and 58 of 1961. S. N. lain and S. K. Jain for the Appellants. B. P. Maheshwari and Suresh Sethi for the Respondent. The Judgment of the Court was delivered by SHINGHAL, J .,-These appeals by special leave arise out of a com- mon judgment of the Rajasthan High Court dated October 10, 1968, by which the suits which were filed by tlie preserit appellants were dis missed in pursuance of the earlier judgment of the same court dated November 9, 1964, on the ground that they were governed by section 179(2) of the Rajasthan Town Municipalities Act, 1951, hereinafter referred to as the Act, and were barred by limitation. The facts giving rise to the appeals were different in details, but reference to the common the basis of these as they were examined in the High Court with questions of law which arose in a:n of them and formed that Court's decision against the plaintiffs. We have heard G companion appeals, and will decide them by a common judgment. It is not necessary to give the detailed facts of all the c~es as it filed by M/s Surajmal will be enough to refer to the suit which was Banshldhar and the developments connected with it, in order to appre- ciate the controversy. ! / H The plaintiff firm referred to above carried on business in "pakka arat" and exported goods of various lcinds from Ganganagar. The Municipal Board of Ganganagar reallied "export duty", by way of ter- • • FlRM SURAJMAL v. MUNICIPAL BOARD (Shinghal, J.) 171 aninal tax, on the exported goods. The plaintiff therefore raised a suit •on October 19, 1957, challenging the Board's right to "im]l<lse or to ·realise" any exp<lrt duty during the period June 5, 1954 to March 10, 1957, amounting to Rs. 10,729/-. It however confine.cl the suit to the recovery of Rs. 10,0001- alongwith interest and gave up the balance. The Board denied the claim in the suit and pleaded, inter alia, that the levy of the terminal tax was in accordance with the Jaw and the suit was barred by limitation. The trial court rejected the defence and decreed •the suit, and its decree was upheld by the District Judge on appeal. Simi lar decrees were passed in the other suits, for various sums of money. The Board took the matter to the High Court in second appeals. The appeals were heard by a Single Judge who, while deciding that the suits 'Were governed by section 179(2) of the Act, referred the question of the legality of the levy to a larger Bench. A Full Bench of the High Court held that the levy of the terminal tax was illegal, and sent the ·cases back to the Single Judge who allowed the appeals only for those -amounts which were found to be within limitation under section 179(2) of the Act and dismissed the other suits. The plaintiffs obtained special leave and have come up to this Court in these circumstances. The question which arises for consideration is whether the suits fall within the purview of section 179(2) of the Act. The first two sub :section of se<:tion 179 which bear on the controversy read as follows,- "179. Limitation of suits, etc.-(1) No suit shall be in stituted against any municipal board, president, member, officer, servant or any person acting under the direction of such municipal board, chairman, member, officer or servant for anything done or purp<lrting to be clone under this Act, un til the expiration of two months next after notice in writing, stating the cause of action, the name and place of abode of the intending plaintiff and the relief which he claims, has been, in the case of a mnnicipal board, delivered or left at its office, and, in case of a chairman, member, officer, or servant, or person as aforesaid, delivered to him or left at his office or usual place of abode; and the plaint shall contain a statement that such notice has been ·so delivered or left. (2) Every such suit shall, unless it is a snit for the re r,overy of immovable property or for a declaration of thereto, be diSmissed if it is not instituted within six months after the accrual of the alleged cause of action." The question therefore is whether the illegal levy of terminal tax (as suming that it was illegal a·s held by the Hi!lh Court) could be said to A T B c D E F G H A B c D E F G H 17 2 SUPREME COURT REPORTS [1979] 2 s.c.R. be a thing "done or purporting to be done" under the Act. A similar question arose for the consideration of this Court in Poona City Munici pal Corporation v. Dattatraya Nagesh Deodhar(') with reference to the provision in section 127 ( 4) of the Bombay Provincial Municipal Cor poration Act, 1949, and it was held that if the levy of a tax was prohi bited by the Act concerned and was not in pursuance of it, it "could not be said to be 'purported to be done· in pursuance of execution or in tended execution of the Act'." It was observed that what waS plainly prohibited by the Act could not be "claimed to be purported to be done It was therefore held in pursuance or intended execution of the Act." that the suit was outside, the purview of the section 127(4) and was not barred by limitation. We are in respectful agreement with that view, :md we have no hesitation in holding, in the circumstances of the pre sent cases, which are governed by a provision similar to section 127 ( 4) of the Poona City Municipal Corporation Act, that the suits did not fall within the purview of section 179 of the Act and were not barred by It may be mentioned that it has not been argued before limitation. us, and is nobody's case, that the suits would be barred by limitation even if they did not fall within the purview of section 179(2) of the Act. The decision of the High Court to the contrary is not correct and will have to be set aside. It has however been argued on behalf of the respondents that the High Court erred in taking the view that the levy of the terminal tax was illegal, and our attention has been invited to the relevant provisions. of the law including the Bikaner State Municipal Act, 1923, article 277 of the Constitution and section 2 of the Act. It is not in controversy before us that the Bikaner State Municipal Act, 1923, authorised the levy of terminal tax and such a tax was levied by the Ganganagar Municipal Board under the authority of that law upto January 26, 1950, when the Constitution came into force. On and from that date, the power to levy export duty vested in the Parliament but article 277 saved that and some other taxes as follows,- "277. Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being law fully levied by the Government of any State or by any muni cipality or other local authority or body for the purposes of the ;>tate, municipality, district or other Jorn! area may, not "'ithstanding that those taxes, duties, eesses or fees are men tioned in the Union list, continue to be levied and to be applied to the same purposes until provision to the cnntrary is made by Parliament by Jaw." (I) [196418 S.C.R. 178. • + -r l FIRM SURAJMAL v. MUNICIPAL BOARD (Shinghal, J.) 17 3 A It was therefore permissible for the Municipal Board to continue to levy the terminal tax until provision to the contrary was made by Parliament by law. But it so happened that the Bikaner Municipal Act, 1923 was repealed and the Act was brought into force with effect from December 22, 1951. Section 2(b) of the Act, which dealt with the repeal of the Bikaner Act and the saving of some of its provisions, expressly provided B that on the coming into force of the Act, the laws and enactments speci- fied in the First Schedule of the Act shall be' repealed in so far as they relate to the Town Municipalities covered by the Act. So as the Bikaner State Municipal Act, 1923, was included in the First Schedule, it was repealed by the aforesaid section 2. That section however contained a provi'so, clause (b) whereof was to the following effect,- c • "(b) all town municipalities constituted under the said laws or enactments, and members appointed or elected, committees established, limits defined, appointments, rules, order's and bye-laws made, notifications and notices issued, taxes im posed, contracts entered into, and suits and other proceed ings instituted, under the said laws or enactments or under and laws or enactments thereby repealed shall, so far as may be' and so far as they relate to town municipalities be deemed, nnless the Government directs otherwise, to have been respectively constituted, appointed, elected, e'stablish ed,, defined, made, issued, imposed, entered into and insti tuted under this Act." D E The repeal did not therefore affect the validity of those taxes which had already been imposed and which could be "deemed" to have been imposed under the Act, unless there was a direction to the contrary by F It is quite clear from the provisions of the Act, the, State Government. and is in fact not disputed before us, that the terminal tax in question could not be imposed under any of the provisions of the Act. Its, levy could not therefore be saved by clause (b) of the proviso to section (2) of the Act. On the other hand, it could be said with justification that fbe State Legislature had decided to discontinue the levy by excluding it G from the purview of the saving clause. The further levy of the tax therefore became illegal and it was not permissible to continue it any longer under article 277 which merely gave the authority concerned the option to continue the levy if it so desired. So as the levy of the tax after December 22, 1951, was illegal, there is nothing wrong with the view taken by the High Court that the amounts Il 17 4 SUPREME COURT REPORTS [1'>79] 2 s.c.R .. paid by the plaintiffs by way of tenninal tax were recoverable by the snits which have given rise to these appeals, and there is no force in the argument to the contrary. The appeals are allowed with costs, the decrees of the High Court are set aside and those of the lower appellate court restored. A B P.B.R. Appeals allowed. .. .._>-.. I • >