Municipal Corporation, Indore vs Rai Bahadur Seth Hiralal

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1967 Supreme(SC) 313

SUPREME COURT OF INDIA
J.C. SHAH, S.M. SIKRI AND J.M. SHELAT, JJ.
Municipal Corporation, Indore, Appellant
Versus
Rai Bahadur Seth Hiralal and others, Respondents.
Civil Appeal No. 141 of 1965,
D/- 3l-10-1967.
Advocates Appeared
M/s. B. P. Jhanjharia and P. C. Bhartari, Advocates, and M/s. J. B. Dadachanji and O. C. Mathur, Advocates of M/s. J. B. Dadachanji and Co., for Appellant; Dr. W. S. Barlingay, Senior Advocate M/s. V. G. Tambvekar and A. G. Ratnaparkhi Advocates with him), (Nos l, 2 and 4 to 7), for Respondents.

Advocates:
A.G.Ratnaparkhi, B.P.JHANJHARIA, J.B.DADACHAN, O.C.MATHUR, P.C.BHARTARI, V.G.TAMASKAR, W.S.Barlingay

Headnote:(1) Municipalities Act, 1954 (M.B.) - S. 2 (c) - tax imposed under repealed Act-cannot be collected after its repeal unless saved-tax imposed not consistent with the 1954 Act-not saved.
       The Indore Municipalities Act being no longer in force as from January 26, 1954, obviously no tax could be levied or imposed thereunder after that date. The Rules made and taxes imposed under the repealed Act are no doubt sarved under the new Act, but Cl. (c) of section 2 lays down an important qualification that they are consistent with the provisions of the new Act.
       Where the repealed Act imposed house-tax at 7 per cent of the gross annual letting value, while the provisions of the new Act (sections 73 and 69) allowed a deduction of 10 per cent from such gross value for assessing the tax of 7 per cent on the net annual letting value, the tax imposed under the repealed Act is not consistent with the new Act and was not saved. [Para 6]
       (2) Municipalities Act, 1954 (M. B.) - Ss. 69 & 73 - house tax-can be imposed on net annual letting value and not on gross letting value-net annual letting value-how calculated.
       Section 73 of the Act read with section 69 provides that a tax on house or building shall. be levied on the annual letting value and that in assessing such tax a sum equal to 10 per cent of such letting value shall be deducted therefrom. After the enforcement of the Act, the Municipal Council can impose and levy tax on the basis of net annual letting value, i.e., the value arrived at after deducting 10 per cent of the gross annual letting value.
       [Para 6]
       (3) Municipalities Act, 1954 (M.B.) - Ss. 79, 75 & 76 - assessment list - to be prepared every fourth year-need not be prepared every year-list of previous year may be adopted but procedure prescribed in sections 75 and 76 has to be followed every year.
       A fresh assessment list has to be prepared every year. The Legislature has empowered by section 79 to adopt the valuation and assessment contained in the assessment list prepared in an earlier year provided, however, that a fresh list is prepared once in every four years. But sub-section (2) of section 79 provides expressly that when such a previous list is adopted for a particular year it can be done subject to the provisions of sections 75 and 76. The list so adopted has to be published, objections have to be invited and the list has to be authenticated in the manner prescribed by section 76 (6) after disposing of objections, if any, and it then becomes conclusive evidence of the valuation and tax assessed thereon for that particular official year. [Para 8]
       (4) Municipalities Act, 1954 (M. B.) - S. 79(2) - mistake in.
       (5) Interpretation of Statutes-mistake apparent-corrected.
       The word 'if' appearing in sub-section (2) of section 79 is obviously a mistake and must be read as 'as if' because the word 'if' standing by itself makes no sense at all. [Para 8]
       (6) Municipalities Act, 1954 (M. B.) - Ss.2 (c) & 73 - resolution under repealed Act - inconsistent with the new Act-may be adjusted according to new Act.
       The resolution of the Municipal Council under the repealed Act, could be saved under the new Act if it was not inconsistent with the new Act. Therefore, to the extent that it is inconsistent with section 73 it is neither saved nor deemed to have been made under the Act and has to be adjusted in the light of the provisions of section 73(2) of the new Act.
       [Para 10]

Judgement

SHELAT, J. : This appeal by special leave is directed against the judgment and order of the High Court of Madhya Pradesh in Second Appeal No. 378 of 196l.

2. The respondents as trustees of, a charitable trust are the owners of certain houses situate in Indore City. Prior to January 26, 1954 the Indore Municipality was governed by the Indore City Municipal Act, 4 of 1909. By virtue of the power conferred on it by that Act the Municipa1ity used to levy and collect house tax at the rate 7 per cent of the gross annual letting value of these houses and the trustees duty paid such tax. After the formation of the State of Madhya Bharat, the legislature of that State passed the Madhya Bharat Municipalities Act, 1954 which came into force on January 26, 1954. The 1954 Act repealed amongst other Acts the Indore City Municipal Act, 1909. The Indore Municipality however purported to levy the house tax on the basis of the gross annual letting value at the rate of 7 per cent of such value for the financial years 1953-54 and 1904-55. This was objected to by the respondents on the ground that under the 1954 Act the tax could be assessed on the basis of gross annual letting value less 10 per cent statutory allowance in lieu of costs of repairs or on any other account whatsoever. The difference came to Rs. 1,461 and of this the trustees claimed refund on the ground that the Municipality had collected the excess from them under pain of distress. The Municipality having refused to refund the excess the respondents filed the suit to recover it on the ground that the excess, amount was illegally recovered. The Trial Court decreed the suit and the appeals filed by the Corporation in the District Court and the High Court were dismissed.

3. To appreciate the stand taken by the appellant Corporation it is necessary to examine some of the provisions of the two Acts. Section 21 of the Indore City Municipal Act authorised the Municipal Council to impose tax on houses, buildings or lands within the municipal limits at a rate not exceeding 121/2 per cent of the gross annual letting value. As aforesaid, this Act amongst other Acts was repealed by the Madhya Bharat Municipalities Act, 1954 Section 2 of the 1954 Act which contains both a repealing and saving provisions repealed the several Acts set out therein Clause (a) however provides that such repeal shall not affect the validity or invalidity of anything already done under any of the said enactments. Clause (c) of Section 2 provides that all rules, orders, bye-laws, notifications and notices, taxes and rates made, passed, framed, issued or imposed or deemed to have been made passed, framed, issued or imposed, shall so far as they are not inconsistent with this Act, be deemed to have been made, passed, framed, issued or imposed, as the case may be under this Act. Section 69 authorises a Municipality to impose the several taxes set out therein including the tax on houses, buildings or lands or both. Section 70 lays down the procedure which the municipality would have to follow before it imposes any one of those taxes. Section 73 provides that when a tax on buildings or lands or both is imposed, the Chief Executive Officer shall cause an assessment list of all buildings or lands in the municipality to be prepared containing the particulars therein set out. Amongst such particulars are the valuation based on capital or annual letting value as the case may be on which the property is assessed. Sub-section (a) provides that in assessing the tax on buildings or lands, where the valuation determined under clause (d) of subsection (1) is the annual letting value, a sum equal to 10 per cent of such valuation shall be deducted therefrom in lieu of allowance for costs of repairs or on any account whatsoever. Section 75 provides for the publication of the assessment list and the right of the owner or occupier of properties included in the list to take inspection thereof and to make extracts therefrom. Section 7

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