Full Judgment Text
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PETITIONER:
FIRM SETH RADHA KISHAN (DECEASED)REPRESENTED BY HARI KISHAN
Vs.
RESPONDENT:
THE ADMINISTRATOR, MUNICIPALCOMMITTEE, LUDHIANA
DATE OF JUDGMENT:
07/03/1963
BENCH:
SUBBARAO, K.
BENCH:
SUBBARAO, K.
DAYAL, RAGHUBAR
MUDHOLKAR, J.R.
CITATION:
1963 AIR 1547 1964 SCR (2) 273
CITATOR INFO :
RF 1966 SC1089 (8)
E 1968 SC 271 (12)
R 1970 SC1002 (5)
RF 1975 SC2238 (2)
E&D 1977 SC 955 (23)
R 1979 SC1250 (11,24A)
ACT:
Terminal Tax-Municipality-Collection of--Remedies by way of
appeal provided in the Act-Express or implied exclusion of
Civil courts-Punjab Municipal Act, 1911 (Punj. III of
1911), ss. 61, 78, 84, 86-Punjab Government Notification No.
26443 dated July, 21, 1932-Items 68 69 of the Schedule-Code
of Civil Procedure, 1908 (Act 5 of 1908), s. 90.
HEADNOTE:
The appellant is a firm carrying on business within the
octroi limits of Ludhiana Municipality. On the Sambhar salt
imported by it into the limits of the Municipality terminal
tax was imposed and the appellant made payment of the said
tax. Under item 68 of the Schedule to the relevant
Government Notification the Municipality is entitled to
impose a certain rate of tax on common salt and under item
69 it is entitled to impose a higher rate of tax in respect
of salt of all kinds other than common salt. In the present
case the higher rate was imposed. The appellant filed a
suit against the respondent in the civil court, Ludhina, for
the refund of the amount paid by him.
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The Civil Court held that Sambhar salt was common salt
within the meaning of item 68, that the imposition of tax on
it by the respondent under item 69 was illegal and that
there fore the court had jurisdiction to entertain the suit.
On appeal the High Court proceeded on the assumption that
Sambhar salt was common salt but held that, even so, the
Civil Court had no jurisdiction to entertain the suit as the
Act provided a remedy by way of appeal against the wrong
orders of the authorities thereunder. The present appeal is
by way of certificate granted by the High Court.
On behalf of the appellant it was contended that the
respondent had no power to impose terminal tax on common
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salt under item 69 of the Schedule and therefore the tax
having been imposed contrary to the provisions of the Act,
the Civil Court has jurisdiction to entertain the suit. The
contention on behalf of the respondent was that the
respondent has power to impose terminal tax on common salt
under the provisions of the Act, that the imposition of tax
under a wrong entry could be rectified only in the manner
prescribed by the Act and that the Civil Court has no
jurisdiction to entertain the suit for the refund of the tax
collected when a specific remedy is available under the Act.
Held, that a statute can expressly or by necessary implica-
tion bar the jurisdiction of Civil Courts in respect of a
particular matter. The mere confirment of special
jurisdiction on a tribunal in respect of the said matter
does not in itself exclude the jurisdiction of civil Courts.
The statute may specifically provide for vesting the
jurisdiction of civil Courts, even if there was no such
specific exclusion, if it creates a liability not existing
before and gives a special and particular remedy for the
aggrieved party, the remedy provided by it must be followed.
The same principle would apply if the statute had provided
for the particular forum in which the same remedy could be
had. Even in such cases the civil Court’s jurisdiction is
not completely ousted. A suit in a civil Court will always
lie to question the order of a tribunal created by a
statute, even if its order is, expressly or by necessary
implication, made final, if the said tribunal abuses its
power or does no act under the Act but in violation of its
provision.
Wolverhamton New Watterworks Co. v. Hawkesford, (1859) 6 C.
B. (N. S.) 336, Secretary of State v. Mast & Co., (1940) L.
R. 67 1. A. 222, Bhaishankar Nanabhai v. Municipal
Corporation of Bombay. (1907) 1. L. R. 31 Bom. 604, Zamindar
of Ettayapuram v. Sankarappa, 1904) 1. L. R. 27 Mad. 483
East Fremantle Corporation V., Annois, [1902] A. C. "21
275
Gaekwar Sarkar of Baroda v. Gandhi Kachrabhai, (1903) I.L.R.
27 Bom. 344, Municipal Board, Banares v. Krishna & Co.,
(1935) I. L. R. 57 All. 916, Municipal Committee, Montgomery
v. Sant Singh, A. I. R. 1940 Lah. (F. B.) 377 and Ad-
ministrator, Lahore v. Abdul Majid, A. I. R. 1945 Lah. 81.
In the present case the liability to pay terminal tax is
created by the Act and a remedy is given to a party
aggrieved in the enforcement of the liability. The party
aggrieved can only pursue the remedy provided by the Act and
he cannot file a suit in a civil court in that regard.
Provisions of ss. 84 and 86 of the Act exclude the
jurisdiction of the Civil Court in respect of the tax levied
or the assessment under the Act. In a case where the
Municipal Committee has undoubted power to levy tax under a
particular entry in respect of an article but it levies tax
under a wrong entry not applicable to that article the said
committee only commits a mistake or an error in fixing the
rate (of tax payable) in respect of the said article and no
question ’of jurisdiction but only a question of detail is
involved. Such a mistake can be corrected only in the
manner prescribed by the Act.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 45 of 1961.
Appeal from the judgment and decree dated April 16, 1959, of
the Punjab High Court at Chandigarh in Regular First Appeal
No. 30 of 1952.
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S. P. Verma, for the appellants.
B. P. Maheshwari, for respondent.
1963. March 7. The Judgment of the Court was delivered by
SUBBA RAO J. -This appeal raises the question whether a suit
would lie in a civil Court claiming refund of the terminal
tax collected by a municipality under the provisions of the
Punjab Municipal Act, 1911 (Punjab Act III of 1911),
hereinafter called the Act.
The appellant is alleged to be a firm registered under the
Indian Partnership Act. It carries on
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business within the limits of the Ludhiana Municipality. It
imported Sambhar salt into the octroi limits of the Ludhiana
Municipality. The Municipal Committee, Ludhiana, imposed
terminal tax on the said salt and the appellant paid a sum
of Rs. 5,893/7/0 towards the said tax between October 24,
1947 and December 8, 1947. Under the Punjab Government
Notification No. 26463, dated July 21, 1932, terminal tax
was payable under item 68 of the Schedule attached to the
said Notification at the rate of 3 pies per maund in respect
of salt common, and under item 69 at the rate of As./10/-per
maund in respect of salt of all kinds other than common
salt. The Municipal Committee, Ludhiana, collected terminal
tax on the Sambhar salt at the higher rate under item 69 of
the Schedule on the ground that it did not fall under item
68 of the Schedule. The appellant filed a suit against the
respondent in the Civil Court, Ludhiana, claiming refund of
the said amount with interest. The respondent, inter alia,
contended that Sambhar salt was not common salt and the
Civil Court had no jurisdiction to entertain the suit. The
Senior Subordinate judge, Ludhiana, held that Sambhar salt
was common salt within the meaning of item 68 of the
Schedule, that the imposition of tax on it by the respondent
under item 69 of the Schedule was illegal and that,
therefore, the Court had jurisdiction to entertain the suit.
On appeal, the High Court of Punjab proceeded on the
assumption that Sambhar salt was salt common, but held that,
even so, the Civil Court had no jurisdiction to entertain
the suit as the Act provided for a remedy by way of appeal
against the wrong orders of the authorities thereunder. It
further held that, in any view, the suit was premature as
the appellant should have pursued his remedies under the Act
before coming to the Civil Court. In the result, the decree
of the Subordinate judge was set aside and the suit was
dismissed. The
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present appeal has been preferred by the appellant by way of
certificate issued by the High Court.
Mr. Varma, learned counsel for the appellant, contends that
the respondent has no power to impose terminal tax on salt
common under item 69 of the Schedule to the said
Notification and therefore the tax having been imposed
contrary to the provisions of the Act, the Civil Court has
jurisdiction to entertain the suit.
On the other hand, Mr. Maheshwari, learned counsel for the
respondent, argues that the respondent has power to impose
terminal tax on common salt under the provisions of the Act,
that the imposition of tax under a wrong entry could be
rectified only in the manner prescribed by the Act and that
the Civil Court has no jurisdiction to entertain a suit for
the refund of tax collected when a specific remedy is
available under the Act.
It would be convenient at the outset to notice the relevant
provisions of the Act. Under s. 61 (2) the Municipal
Committee has power to impose, with the previous sanction of
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the State Government, any tax which the State Legislature
has power to impose in the State, subject to any general or
special orders which the State Government may make in that
behalf. The State Government issued the Notification No.
26463 dated July 24, 1932 to come into force from November
1, 1932 empowering the Municipal Committee to impose
terminal tax at the rates shown in Col. 3 of the Schedule
attached thereto upon the articles mentioned in Col. 2
thereof which are imported into or exported out of the
municipal limits by rail or by road. The relevant items are
items 68 and 69. Item 63 is "salt common" and the rate
prescribed is 3 pies per maund; and item 69 is "salt of all
kinds other than common salt" and the rate fixed is As.
/10/- per maund. Section 78 provides for a penalty if any
person brings any article liable to the
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payment of terminal tax into the prescribed limits without
paying the said tax. Section 84 gives a right of appeal.
against any levy or refusal to refund any tax collected
under the Act to the Deputy Com missioner or such other
officer as may be empowered by the State Government in that
behalf ; under sub-s. (2) thereof, if on hearing of an
appeal under the section., any question as to the liability
to, or the principle of assessment of a tax arises, on which
the officer hearing the appeal entertains reasonable doubt,
he may,. either of his own motion or on the application of
any person interested, state the case and refer the same for
the opinion of the High Court; and after the High Court
gives its opinion on the question referred to it, the
appellate authority shall proceed to dispose of the appeal
in conformity with the decisions of the High Court. Under
s. 86, the liability of any person to be taxed cannot be
questioned in any manner or by any authority other than that
provided in the Act; under sub-s. (2) thereof, no refund of
any tax shall be claimed by any person otherwise than in
accordance with the provisions of the Act and rules
thereunder. It will be seen from the aforesaid provisions
that the power to impose a terminal tax and the liability to
pay the same is conferred or imposed on the municipal com-
mittee and the assessee respectively by the provisions of
the Act. The Act also gives a remedy to an aggrieved party
to challenge the correctness of the leavy or to seek refund
of the same. Not only an appeal has been provided for
against the order of municipal committee levying the tax or
refusing to refund the same, but the appellate authority is
empowered to get an authoritative opinion of the High Court
on any question as to the liability or on the principle of
assessment; and on receiving such opinion, the said
authority is bound to dispose of the appeal in the light of
the said opinion. It is said that the reference provided to
the High Court is in the discretion of the appellate
authority and he can
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with impunity refuse to do so, even if any difficult
question is involved in the appeal. The question is not
whether a particular officer abuses his power but whether a
remedy is available under the Act or not. It cannot be
assumed that an officer, though he entertains reasonable
doubt on the question as to liability or on the principle of
assessment, he will deliberately and maliciously refuse to
do his duty : if he does, other remedies may be available.
The Act also in specific terms debars any authority other
than that prescribed under the Act from deciding the
question of liability of any person to tax or his right to
get refund of a tax paid. In short, the Act contains a
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self-contained code conferring a right, impossing a ability
and prescribing a remedy for an aggrieved party. In such a
situation, the question arised whether a Civil Court
can entertain a suit for a refund of the tax wrongfully
collected from an assessee; and if so, what are the limits
of its jurisdiction ?
We shall now proceed to consider the relevant principles
governing the said question. Willes, J., in Wolverhamton
New Waterworks Co. v. Hawkesford (1), describes as follows
the three classes of cases in which a liability may be
established founded upon a statute :
"One is, where there was a liability existing
at common law, and that liability is affirmed
by a statute which gives a special and
peculiar form of remedy different from the
remedy which existed at common law : there,
unless the statute contains words which
expressly or by necessary implication exclude
the common law remedy the party suing has his
election to pursue either that or the
statutory remedy. The second class of case
is, where the statute gives the right to sue
merely, but provides no particular from of
remedy : there, the party
(1) (1859) 6. C.B. (N.S.) 336, 356.
280
can only proceed by action at common law. But
there is a third class, viz., where a
liability not. existing at common law is
created by a statute which at the same time
gives a special and particular remedy for
enforcing it.......... The remedy provided by
the statute must be followed, and it is not
competent to the party to pursue the course
applicable to cases of the second class."
It is clear from the said passage that in a case where the
liability is created by a statute, a party aggrieved must
pursue the special remedy provided by it and he cannot
pursue his remedy in a Civil Court. This principle was
approved by the Judical Committee in Secretary of State v.
Mask and Co. (1). The High Courts in India also accepted
the principle and applied it to different situations : see
Bhaishankar Nanabhai v. The Municipal Corporation of Bombay
(2); Zamindar of Ettayapuram v. Sankarappa (3). But there
is also an equally well settled principle governing the
scope of the Civil Court’s jurisdiction in a case where a
statute created a liability and provided a remedy. Lord
Macnaghten in East Fremantle Corporation v. Annois (4),
states the principles thus :
"The law has been settled for last hundred
years. If persons in the position of the
appellants, acting in the execution of a
public trust and for the public benefit, do an
act which they are authorised by law to do,
and do it in a proper manner, though the act
so done works a special injury to a particular
individual, the individual injured cannot
maintain an action...... In a word, the only
question is, ’Has the power been exceeded?’
Abuse is only one form of excess."
In Gaekwar Sarkar of Baroda v. Gandhi Kachrabhai(5) the
defendants by the negligent construction of railway made in
exercise of their powers under the
(1) (1940) L.R. 67 I.A 222.
(3) (1904) I.L.R. 27 Mad. 483. (5) (1903) I.L.R, 27
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Bom. 344.
(2) (1907) I.L.R. 31 Bom. 604.
(4) (1902) A.C. 213.
281
Railways Act had caused the plaintiff’s land to be flooded
in the rainy season and consequently damaged. The Railways
Act provided that a suit shall not lie to recover
Compensation for damage caused by the exercise of the powers
thereby conferred, but that the amount of such compensation
shall be determined in accordance with the Land Acquisition
Act, 1870. In spite of this bar the plaintiff brought a
suit for damages for injury alleged to have been caused to
his field. It was argued that though the statutory
authority of the Act, of 1890 might have been abused or
exceeded, the of the aggrieved party was only to proceed
under the Land Acquisition Act and not by a civil suit.
Rejecting that plea the judicial Committee observed:
"It would be simply a waste of time to deal
seriously with such contentions as these. It
has been determined over and over again that
if a person or a body of persons having
statutory authority for the construction of
works...... exceeds or abuses the powers
conferred by the Legislature, the remedy of a
person injured in consequence is by action or
suit, and not by a proceedings for
compensation under the statute
which has been so transgressed."
Indian Courts, in the context of Municipal Acts had occasion
to apply both the principles. In Municipal Board, Benaras
v. Krishna & Co. (1), it was held that no suit for a refund
of an octroi charge, which has been assessed and levied by a
municipality, lies in a Civil Court on the ground that the
goods were not in fact assessable to octroi duty or that the
amount of assessment was excessive. There, the assessment
was made in accordance with the provisions laid down in the
Municipalities Act and the rules made thereunder. In
Municipal Committee, Montgomery v. Sant Singh (2), a Full
Bench of the Lahore High Court had to consider the question
(1) (1935) I.L.R. 57 All. 916
(2) A.1.R. 1940 Lah. (F.B.)377, 380,
282
whether a suit would lie in a Civil Court for an injunction
restraining a Municipal Committe from realizing the tax
demanded from a person on the ground that he was not the
owner of the lorries the subject matter of tax, and
consequently the demand made on him was illegal and ultra
vires of the Municipal Committee. Din Mohammad J., speaking
for the Court, elaborately considered the case law on the
subject and expressed his conclusion in the following words
:
"Any special piece of legislation may provide
special remedies arising therefrom and may
debar a subject from having recourse to any
other remedies, but that bar will be confined
to matters covered by the legislation and not
to any extraneous matter. A corporation is
the creature of a statute and is as much bound
to act according to law as the constituents
thereof, namely, the individuals ruled by the
corporation and if the corporation does an act
in disregard of its charter and intends to
burden any individual with the consequences of
its illegal act, an appeal by that individual
to the general law of the land can in no cir-
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cumstances be denied."
This is a case where it may be said that the Municipal
Committee acted not under the Act but outside the Act in as
much as the tax on vehicles was payable by the owners only
but not by those who did not own them. Another Full Bench
of the Lahore High Court, in Administrator, Lahore v. Abdul
Majid (1), had to deal with the jurisdiction of a Civil
Court to entertain a suit for an injunction restraining a
municipal committee from interfering with the construction
of the plaintiff’s proposed building on the ground that its
order refusing sanction under s. 193 (2) of the Punjab
Municipal Act was an abuse of its power. Mahajan J.,
delivering
(1) A. 1. R. 1945 Lah. 81.
283
the judgment on behalf of the Full Bench observed at p. 84 :
"The provisions of s. 225 which make the
decision of the Commissioner final can only
mean this that that decision is final only so
far as the proceedings under the Act are
concerned. But when an order is made which is
outside that Act, then the provisions of S.
225 can have no application to such an order
which itself is outside the
Act........................................
In short the Bench laid down that in two kinds
of cases s. 225 was no bar to the jurisdiction
of a civil court in examining the order of the
municipal committee passed under s. 193 (2),
Punjab Municipal Act. The first case is where
a committee acts ultra vires and the second
case is where it acts arbitrarily or
capriciously. In other words, where it abuses
its statutory powers."
The learned judge concluded thus, at p. 85
"The remedies given to the subject by a
statute are for relief against the exercise of
power conferred by a statute but those
remedies are not contemplated for usurpation
of power under cover of the provisions of the
statute. The civil Courts are the proper
tribunals in those kinds of cases and their
jurisdiction cannot be held barred by reason
of statutory remedies provided for grievances
arising in exercise of statutory powers. To
cases of this kind the rule that where a
statute creates a right and provides at the
same time a remedy, that remedy and no other
is available, has no application.
Further citation is unnecessary. The law on the subject may
be briefly stated thus :
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Under s. 9 of the Code of Civil Procedure the Court shall
have jurisdiction to try all suits of civil nature excepting
suits of which cognizance is either expressly or impliedly
barred. A statute, therefore, expressly or by necessary
implication, can bar the jurisdiction of civil Courts in
respect of a particular matter. The mere conferment of
special jurisdiction on a tribunal in respect of the said
matter does not in itself exclude the jurisdiction of civil
courts. The statute may specifically provide for ousting
the jurisdiction of civil Courts ; even if there was no such
specific exclusion, if it creates a liability not existing
before and gives a special and Particular remedy for the
aggrieved party, the remedy provided by it must be followed.
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The same principle would apply if the statute had provided
for the particular forum in which the said remedy could be
had. Even in such cases, the Civil Court’s jurisdiction is
not completely ousted. A suit in a civil Court will always
lie to question the order of a tribunal created by a
statute, even if its order is, expressly or by necessary
implication, made final, if the said tribunal abuses its
power or does not act under the Act but in violation of its
provisions.
Let us now apply the said principles to the facts of the
present case. The liability to pay terminal tax is created
by the Act and remedy is given to a party aggrieved in the
enforcement of that liability. As has been already
indicated, against the order of the municipal committee
levying terminal tax an appeal lies to the Deputy Commis-
sioner and a reference to the High Court. Applying one of
the principles stated supra, the party aggrieved can only
pursue the remedy provided by the Act and he cannnot file a
suit in a civil Court in that regard. Provisions of ss. 84
and 86 of the Act exclude the jurisdiction of the civil
Court in respect of the tax levied or the assessment made
under the Act.
285
But the learned counsel for the Appellants contends that the
impugned levy was not made under the Act but in derogation
of the provisions thereof. There is no force in this
contention. Section 61 (2) of the Act specifically empowers
the Municipal Committee to levy any tax other than those
specified therein with the previous sanction of the State
Government. The levy of terminal tax was sanctioned by the
Punjab Government by Notification No. 26463 dated July 21,
1932, at the rates shown in column 3 of the Schedule to the
said Notification. Under the said Notification, read with
s. 61 of the Act, the Municipal Committee is empowered to
levy terminal tax on salt whether it is common salt or not.
The Committee has, therefore, ample power under the Act and
the Notification issued by the State Government to impose
the said tax. The only dispute was as regards the rate of
tax payable in respect of the salt brought by the appellant
into the limits of the Municipal Committee. The rate
depended upon the character of the salt. The ascertainment
of the said fact is a necessary step for fixing the rate and
it is not possible to say that in ascertaining the said fact
the authorities concerned travelled outside the provisions
of the Act. The learned counsel contends that if a
municipal committee levies terminal tax on an article not
liable to tax under the Act, a suit would lie and,
therefore, the same legal position should apply even to a
case where the municipal committee levies the tax in respect
of an article under an entry not applicable to if. We do
not see any analogy between these two illustrations : in the
former, the municipal committee does not act under the Act,
but in the latter it only commits a mistake or an error in
fixing the rate of tax payable in respect of a particular
commodity ; one is outside the Act and the other is under
the Act ; one raises the question of jurisdiction and the
other raises an objection to a Matter of detail. We,
therefore, hold that in the
286
present case the mistake, if any, committed in imposing the
terminal tax can only be corrected in the manner prescribed
by the Act. The appellants have misconceived their remedy
in filing the suit in the civil Court. The conclusion
arrived at by the High Court is correct.
In the result, the appeal fails and is dismissed with costs.
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Appeal dismissed.
286