IMPORTANT POINT
The Kota Municipal Limits (Continued Existence) Validating Act, 1975 is bad in law and is liable to be struck down. Refund of octroi duty by the Kota Municipality to the appellants shall be made accordingly.

JUDGMENT

Bharucha, J.-These are appeals by special leave against the judgment and order of a Division Bench of the High Court of Rajasthan. The Division Bench reversed the judgment and order of a learned single Judge, which, upon a writ petition filed by the present appellants, had struck down the Kota Municipal Limits (Continued Existence) Validating Act, 1975.

2. The appellants established a fertilizer unit in villages called Raipura and Ummedganj of District Kota in the State of Rajasthan in 1969.

3. On 1st March, 1958, the State of Rajasthan (the 1st respondent) issued a notification under Section 7(1) of the Rajasthan Town Municipalities Act, 1951, informing the public that, in exercise of powers under Section 5(1) of that Act, it proposed to extend the limits of the Kota Municipality so as to include therein the village of Raipura and it invited objections thereto. On 16th October, 1958, in exercise of powers conferred by Section 5(1) of the 1951 Act, the State Government extended the limits of the Kota municipality to include therein the village of Ummedganj. This inclusion was challenged in a writ petition filed before the Rajasthan High Court. Pending the decision thereof, on 2nd May, 1960, the State Government excluded the village of Ummedganj from the said municipal limits. On 17th August, 1960, a Full Bench of the Rajasthan High Court held that Ummedganj was not validly included within the limits of the Kota town municipality inasmuch as the mandatory provisions in that behalf had not been followed.

4. It appears that the villages of Raipura and Ummedganj were treated as falling within the municipal limits of Kota and octroi was collected from the appellants. Realising, in April 1974, that the levy and realisation of octroi by the Kota Municipality (the 2nd respondent) was illegal, the appellants filed a suit in the court of the Munsiff, Kota, seeking a permanent injunction restraining the Kota Municipality from levying or collecting octroi from it. An injunction was granted and was upheld in appeal. The appellants also filed a suit in the court of the District Judge, Kota, for refund of the amount of Rs. 10,85,365.38, being the amount of octroi erroneously paid by the appellants to the Kota Municipality during the period of three years prior to the filing of the suit.

5. On 7th January, 1975, the State Government issued the Kota Municipal Limits (Continued Existence) Validating Ordinance, 1975. It was replaced by the Kota Municipal Limits (Continued Existence) Validating Act, 1975 (now called the "Validating Act"). Upon the promulgation of the Ordinance, the appellants filed a writ petition challenging its validity. When the Validating Act was passed, the writ petition was amended to challenge the same. The writ petition was allowed by a learned single Judge. Both the State Government and the Kota Municipality filed appeals. By the judgment and order under appeal, the Division Bench allowed the appeals and set aside the judgment of the learned single Judge.

5. The 1951 Act was replaced by the Rajasthan Municipalities Act, 1959. The provisions in regard to the de-limitation of municipalities and the procedure in that behalf was substantially similar to that contained in the 1951 Act. It is convenient to set out the relevant provisions, which are contained in Sections 4 and 6.

"4. Delimitation of Municipalities-(1) Subject to the provisions of Sections 5 and 6, the State Government may, from time to time, by notification in the official Gazette-

(c) include or exclude any area in or from any municipality ;

6. Procedure preliminary to notification under Section 4-(1) Not less than two months before the issue of any notification under Section 4 the State Government shall cause to be published in the Official Gazette, and to be posted in conspicuous spots or proclaimed by beat of drum in the area concerned, a proclamation announcing that it is proposed to constitute such local area to be a municipality, or to include o