JUDGMENT

Satish Chandra, J. - Between August, 1947, and February, 1955, the Railway Administration at Allahabad imported large quantities of foodgrains and cereals which were liable to octroi duty payable to the Municipal Board of Allahabad. The Railway Administration imported these goods through contractors as well as itself directly. It also purchased these commodities from the Town Rationing Officer, Allahabad. The Municipality claimed that a sum of Rs. 62,944.81 was payable by the Railway Administration as octroi on goods imported through the contractors. Out of this Rs. 30,048.87 has been realised leaving a balance of Rs. 32,895.94. The Municipality claimed that a sum of Rs. 19,737/3/- was due from the Railway Administration on account of goods imported by it directly. The Railway Administration had paid a sum of Rs. 494/5/- leaving a balance of Rs. 19,242/14/-. The Municipality claimed that a sum of Rs. 51,728.65 was payable by the Railway Administration on account of goods purchased from the Town Rationing Officer.

2. The Railway Administration denied its liability to pay octroi for goods purchased from the Town Rationing Officer on the ground that the Town Rationing Officer had himself paid octroi when he imported the goods. It also denied liability to pay octroi for goods imported through contractors on the plea that the contractors alone were liable to pay it and they must have paid it. The Railway Administration however, admitted its liability to pay Rs. 19, 737/3/- on goods directly imported by it and also admitted that only a sum of Rs. 494/5/-had been paid on this account, leaving a balance of Rs. 19,242/14/-. The Railway Administration claimed that it had exported a large quantity of these goods for which it was entitled to a refund of Rs. 37, 140/3/- from the Municipal Board. The Municipality denied any liability to the amount claimed as refund on the ground that the Railway Administration had not complied with the requisite rules meant for claiming refund.

3. At first the Railway Administration and the Nagar Mahapalika entered into negotiations to settle these demands. Subsequently the State Government referred the matter to the Additional District Magistrate for settlement. While the matter was being heard by the Additional District Magistrate the parties on 24th January, 1963, executed an agreement whereunder these claims and counter claims were referred to the arbitration of the judicial Secretary to the Government of U.P. The arbitrator after hearing the parties pronounced his award on 30th July, 1964. He held that the claim of the Nagar Mahapalika on account of octroi duty due on goods imported through contractors has been paid and nothing is due now. The claim of the Railway Administration for refund was held barred by limitation as well by Section 326, U.P. Municipalities Act. The arbitrator found that the Railway Administration had admitted its liability to pay a sum of Rs. 19,242/14/- as octroi due on goods directly imported by it. He awarded this sum in favour, of the Nagar Mahapalika, Allahabad, with proportionate costs against the Railway Administration.

4. On the award being filed in the Court of the Additional Civil Judge, Allahabad, both parties instituted objections. The objection of the Nagar Mahapalika in relation to the specification of the actual amount of costs awarded was upheld. The rest of the objections were rejected. The Court also dismissed the objections filed by the Union of India. Aggrieved, the Union of India came to this Court in appeal.

5. One of the points urged by the learned counsel appearing for the Union of India (appellant) was that the arbitrator had no jurisdiction to entertain the dispute with regard to the recovery of octroi dues. Learned counsel urged that a Municipality's claim for recovery of octroi dues was not justiciable by the Civil Courts. Consequently, it could not be entertained or adjudicated upon by an arbitrator. In support of the first limb of the submiss