Full Judgment Text
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PETITIONER:
THE MUNICIPAL CORPORATION FOR CITY OF PUNE AND ANR.
Vs.
RESPONDENT:
BHARAT FORGE CO. LTD. & ORS.
DATE OF JUDGMENT10/03/1995
BENCH:
HANSARIA B.L. (J)
BENCH:
HANSARIA B.L. (J)
KULDIP SINGH (J)
MAJMUDAR S.B. (J)
CITATION:
1995 SCC (3) 434 JT 1995 (3) 312
1995 SCALE (2)245
ACT:
HEADNOTE:
JUDGMENT:
HANSARIA, J.:
1. The jouney to decide the fate of these appeals has to
start from 1881 as it was on
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12th March of that Notification No. 165 was gazetted
starting inter alia that octroi duties in the
Cantonment of Poona would be, imposed at the rates "for the
time being" leviable and in respect of the several articles
"for time being" dutiable in the Municipality of Poona, when
such articles would enter in to the cantonment from any
place situate without the limits of the said Municipality,
The Poona Cantonment Bowl authorised the Municipality to
collect the octroi which had become so leviable and
thereafter to divide the proceeds as agreed upon. The
Municipality of Poona having become a Corporation under the
Municipal Corporation 1950, it continued to collect octroi
on the strength of the aforesaid Notification and agreement.
The respondents challenged the legality, of the collection
of the octroi made as per 1963 Schedule to the Octroi Rules
framed by the appellant This was done by approaching the
Bombay High Court by filing petitions under Article 226 of
the Constitution which have come to be allowed by the
impugned judgment. Hence these appeals by the Municipal
Corporation for the City of Pune, hereinafter referred as
the Municipal Corporation.
2.The challenge to the collection was broadly on two counts:
(1)The 1881 Notification does not infact permit the
collection; and
(2)even if factually the Notification were to so permit, the
appellant could not have done so in law..
3.The High Court accepted both the contentions, the
correctness of which has been assailed in these appeals.
Factual matrix
4. Poona Cantonment (the Cantonment) came into existence
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in 1817. The Bombay Municipal Act, 1872, provided for levy
of taxes including octroi. Similar was the provision in
Bombay District Municipal Act, 1873. Poona City
Municipality started levy and recovery of octroi from 1875-
76. The Cantonments Act, 1880 was enacted on 5th February,
1980. Section 21 of this Act permitted imposition by the
Local Government, with the previous sanction of the
Governor-General in Council, by notification in the Official
Gazette, any tax which could be imposed in a Municipality.
Section 22 of this Act permitted the Local Government by
notification in Official Gazette to apply and adapt to any
cantonment provisions and rules in force under any enactment
for assessment and recovery, of any tax in Municipality.
5. The Government of Bombay by its Resolution No. 234
adopted on 26.1.1881 approved the levy of octroi in the
Cantonment on the same articles and the same rate as in
Poona City; and it approved the proposal to divide the
proceeds on some terms, the details of which are not
required to be noted. The Government of India conveyed its
sanction to the levy of octroi in the Cantonment by its
telegram dated 4.3.1881. Thereafter came the aforesaid
Notification of 12th March, 1881 and the Municipality
started collection of octroi duties for the Cantonment from
that year itself.
6. The aforesaid arrangement smoothly continued till 1912
by which year the Cantonment Act of 191 0 had come into
force. The Cantonment then wanted a new method of
apportionment as it thought that
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the existing agreement relating to apportionment was unjust
to it, The State Government did not, however, agree and the
disagreement was conveyed to the Cantonment. The
Municipality proposed to revise its Schedule of Octroi Rules
in 1917 by enhancing the same, which was opposed by the
Cantonment Committee. On the matter being examined by the
Government it approved the revised Octroi Schedule as
mentioned in its Order No.6649 dated 25th September, 1918.
This Order required the General Officer Commanding of the
Cantonment to be informed that the Government saw no reason
to modify its earlier decision.
7. In the meantime, the Government had issued four
notifications bearing Nos. 4160 to 4163 dated 17th June,
1918 which were gazetted on June 20, 1918. Notification No-
4160 had been issued in exercise of powers conferred by
section 15(1) of the Cantonments Act, 1910 and it imposed
taxes mentioned in this Notification in the Cantonment of
Poona "in supersession of the notifications of the
Government noted on the margin and all other notifications
on the same subject." Notification No. 4162 had also been
issued in exercise of the same power and it dealt inter alia
with octroi duties. Notification No. 4163 was, however in
exercise of powers conferred by section 15(2) of the
aforesaid Act and applied to the Cantonment of Poona in an
adapted form the rules of the Poona City Municipality
mentioned in Notification relating to assessment collection
and recovery of octroi duties.
8. After the aforesaid Notifications had bean issued
Cantonment Act. 1924 was enacted. Chapter V of this Act is
on the subject of ’Taxation’; and sections 60 to 63 of this
Chapter set out the power and procedure of imposition, of
any tax in any cantonment. (A part of this Act was repealed
in 1927).
9. In 1963 new Octroi Ruts were tamed by the appellant
which enhanced the rates of octroi and included new
articles in the schedule and it started collecting octroi
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accordingly from all concerned.
Submissions
10. In the backdrop of aforesaid broad facts, the
respondents challenged the collection of octroi by the
appellant as per revised Rules of 1963 contending that nei-
ther in fact nor in law the appellant had ’authority of law’
required by Article 265 of the Constitution to carry on the
work of collection of octroi from them as per 1963 schedule
which enhanced the rates of octroi and included new articles
in the schedule.
11. The factual aspects of the submission were:-
(1) The 1881 Notification having stated that octroi duties
at the rates "for the time being" dutiable, are imposed, the
rates which were prevailing on 12th March, 1881 and the
articles on which octroi was leviable on that date alone
could be collected by the appellant; and not at the rates
mentioned in the Schedule of 1963 Octroi Rules, nor on
articles added by those Rules.
(2) The 1881 notification in any Case, stood superseded by
the fasiculus of Notifications dated June 18, 1918 which had
been duly gazetted.
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(3)if the, later Notifications did not supersede the 1881
Notification, the same, in any case, impliedly repealed the
former.
12. The legal affirmity of the collection was assailed
on these counts :-
(1) The appellants not having entered into an agreement
with the Cantonment as required by Section 45(1)(b) of the
Cantonments Act, 1924, so also by section 32(4) of the
Bombay Provincial Municipal Corporations Act, 1949, after
new Octroi Rules were framed in 1963, it had no authority to
collect octroi on behalf of the Cantonment.
(2) If the Notification of 1881 were to be held to permit
levy and collection of octroi not only on the rates and
articles as prevailing on 12th March, 1881 but on articles
other than those and/or at rates higher than those, the
notification is unsustainable being a product of
impermissible delegation.
(3) The procedure contemplated by section 62 of the
Cantonments Act, 1924 having not been followed while
enhancing the rates of octroi duties by 1963 Rules, col-
lection of the same at the enhanced rate would be against
’authority of law.’
13. We propose to deal with the submissions seriatim.
Reach of the 1881 Notification
14. The basic point which would need our consideration to
answer this question is to find out what was meant by the
expression "for die time being" used twice in the aforesaid
Notification. According to S/Shri Shanti Bhusan and Anil
Divan learned Senior Advocates appearing for the
respondents, this expression refers to the rates of octroi
which were prevailing at the time when the notification was
issued; and octroi on the articles or at the rates which
became effective after the Notification saw the light of day
cannot be imposed or collected with the aid of this no-
tification.
15. In support of this submission, reliance has been placed
on a judgment of this Court, to which one of us (Kuldip
Singh, J.) was it pang, in Jivendra Nath Kaul v.
Collector/District Magistrate and another, 1992 (3) SCC 576.
In that case, this Court was concerned to find out the
purport of this expression used in section 28(1) of the
concerned provisions, which dealt with the question as to
when a motion of no confidence can be said to be carried
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out. The section required support of more than half of the
total number of members "for the time being." The contention
advanced was that as the Zila Parishad was constituted of 62
members, but as 31 valid votes had been cast in favour of
the no-confidence motion, which number was not was not more
than half of 62, the motion could not be said to have been
carried out as required by the statutory provision. This
Court stated that die expression "for the time being " meant
"at the moment or existing position"; and as at the time no-
confidence motion was taken up, the total number of members
of the Zila Parishad was 56, it was held that the
requirement of law was satisfied.
16. Learned Advocate General of Maharastra appearing for
the appellant, however, contends that the aforesaid ex-
pression has no fixed connotation and is capable of
different interpretation accord-
317
ing to the context. This is was what been stated at page
257 of Volume 2 of "Words and Phrases" (Second Edition).
According to the statement made there, this expression in
one context may point to "one single period of time"; and in
another context to "succession of periods."
17. That the aforesaid expression means, as is the
contention on behalf of the appellant receives support from
what was pointed out by a Constitution Bench in the case of
Madhav Rao Scindia Bahadur v. Union of India, 1971 (1) SCC
85. In that case, to which our attention has been invited
by the learned Advocate General, while dealing with be
meaning of the word "Ruler" as defined by Article 366 (22)
of the Constitution, which had stated at that time that it
included any person "for the time being" recognized by the
President as the successor of the Ruler with whom any
agreement had been entered into and who had been so
recognized by the President it was observed in paragraph 112
that the expression "for the time being" predicates that
there shall be a Ruler of Indian State and that if the first
recognised Ruler dies, or ceases to be a Ruler, a successor
shall be appointed, and that there shall not be more Ruler
than one at a given time. This observation indicates that
the recognition given by the President is not one time
recognition, but the same could be bout time to time.
18. That die intention of the concerned authorities while
issuing the Notification at hand was not confined to the
rates prevailing or articles subjected to octroi on the date
of Notification is apparent, according to the learned
Advocate-General, from what has been recorded contempora-
neously in the Government file, a zerox copy of relevant
nothings of which has been made available to us by him. At
page 13 of this collection we find mention of the fact that
rates of octroi duties to be imposed and the articles on
which octroi is to be imposed in the Cantonment were to be
so as enforced in the Municipality "from time to time",
There is also enough material on record to show that octroi
at rates prevailing subsequent to the date of aforesaid
notification had come to be collected by the Municipality on
behalf of the Cantonment for a sufficient long period after
the issuance of 1881 Notification. Thus, all concerned
persons had accepted the aforesaid Notification to mean that
the rates (so also the articles) need not be those which
prevailed when the Notification was issued.
19. In view of all the above, we hold that the 1881
Notification was meant to impose octroi duties, not only at
the rates prevailing when the Notification was issued, nor
was confined to the articles on which octroi was lien
leviable, but these could be collected at rates higher than
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those prevailing at the time of issuance of the
Notification, or could be levied on articles then not
subject to octroi.
Supersession of 1881 Notification
20. The submission relating to supersession is advanced on
the strength of what was stated in Notifications Nos. 4160-
4163 dated 17th June, 1918. Shri Divan was very emphatic
that if these four notifications are read as a whole, as
they are required to be, there would be no manner of doubt
that the 1881 Notification relating to octroi stood
superseded. This contention is equally emphatically
challenged by the learned Advocate General.
318
21. We have closely perused the aforesaid Notification and
we do agree with Shri Divan that they form a complete scheme
in themselves relating to tax in the Cantonment of Poona;
and what has been stated in these Notifications would
prevail insofar as taxes to be imposed in the Cantonment is
concerned, in preference of earlier Notifications on the
subject. Question, however, is whether I can be said on the
language of the 1918 Notifications, that the 1881
Notification relating to octroi stood superseded. ’it
deserves mention that Notification No. 4160 alone, of the
four Notifications, expressly stated about supersession of
the-Notifications mentioned in the margin of this
Notification. Shri Divan draws our attention that of the
four Notifications mentioned in the margin, one is
Government Notification No, 481 dated 18th September, 1891,
which had superseded Government Notification No. 574 of 5th
December, 1883, which in its turn had superseded
Notification No. 165 of 2th March, 1881. Relying on this
historical setting, it is urged that Notification No. 4160
must be held to have superseded the Notification of 12th
March, 1881 relating to octroi also.
22. The learned Advocate General joins issue and submits
that Notification No. 4160 having not dealt with the subject
octroi, what can reasonably be said to have been superseded
by this Notification qua the Notification of 12th March,
1881 which had dealt not only with the octroi duties but
Property Rates also, I that die supersession of which
Notification No. 4160 mentioned, is of those taxes which
Were the subject of that Notification. It is contended that
this Notification stated about suppression of notifications
"on the, same subject", which, according to learned
Advocate, General, means the subject dealt with by that
Notification.
23. We do find sufficient force in this submission and,
according to us, it would not be a correct reading of
Notification Nos. 4160 to hold that it superseded Noti-
fication on 12th March, 1881 in its entirety. In our view,
the supersession has to be confined to taxes mentioned in
Notification No.4160. Octroi being not one of these taxes,
we hold that Notification did not supersede 1881
Notification qua octroi. This conclusion of ours receives
support from what has been stated in Notification No.4162
which has specifically dealt with imposition of octroi
duties and trade registration fees.
Implied repeal of 1881 Notification relating to octroi
24. The alternative submission of Shri Divan in this
context is that, in any case, Notification No. 4162 has to
be read to have impliedly repeated 1881 Notification re-
lating to octroi duties. We find no difficulty in accepting
this submission, because Notification 14a 4162 which is on
the subject of imposition of octroi duties has been
supplemented by Notification No. 4163 dealing with
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assessment collection and recovery, of octroi duties. This
aspect has been dealt with by section 15(2) of the
Cantonments Act, 1910; the imposition being covered by sub-
section (1) of this section. As these Notifications were
issued with the previous sanction of the Governor-General in
Council, we have no hesitation in stating that by issuing
Notifications No.4162 and 4163, the issuing authority did
impliedly repeal Notification of 1881 dealing with octroi.
319
25. The learned Advocate General does not really contest
the legal position, What, however, has been urged by him
that the Notification No. of 1918 dealing with the
imposition of octroi and rates thereof had not been acted
upon and a decision had in act been taken to formally cancel
these Notifications, which, however, did not actually
happen. Despite non-cancellation of these Notifications as
required by section 21 of the General Clauses Act, as per
which provision any addition, amendment, variation or
rescission of any notification has to be "in the like
manner" and "subject to the like sanction" as the issuance
of notification, the contention is that if we were to bear
in mind the practical construction given to these
Notifications, it would be apparent that they were not
sought to be acted upon. Another related submission is that
these Notifications should be deemed to have good effaced
because of disuse for almost 50 years by 1963, as permitted
by the legal process known as "desuetude"
26. Shri Divan and Shri Shanti Bhushan would not agree with
the learned Advocate General, because, according to them a
statutory notification could not be set at naught any
executive decision, which is the basis of the first
submission of the learned Advocate General relatable to
practical construction. The learned counsel for respondents
submit that the Local Government knew that even an amendment
of these Notifications could be made only by publication in
official gazette, because of which the little omission which
had occurred in the Notification No.4163 had been supplied
by a corrigendum published in official gazette, Our
attention is invited to what was stated on this subject in
Mahender Lal Jaine v. State of Uttar Pradesh, 1963 (Suppl)
1 SCR 912 at page 951. In the written submissions of the
respondent-:, filed on 31st January, it has been mentioned,
and rightly, that administrative practice (and for that
matter, administrative order) cannot supersede or override
statutory rule or Notification. Some decisions have also
been mentioned in this regard to which we are not adverting,
because this legal proposition is well settled.
27. As we are agreeing with the learned counsel for the
respondents on the legal aspect we do not propose to burden
the judgment with the long factual facts, highlighted by the
learned Advocate General by referring to Government Order
No. 6649 dated 25th September, 1918 (at pages 472 to 482 of
Part-II of the Paper Book) that die Notifications of June
1918 relating to octroi duties were not acted upon. We
would not be justified in allowing the Local Government, or
even the Governor-in Council, to undo a notification issued
with the previous sanction of Governor-General in Council.
According to us, the only legal way in which Notifications
No.4162 and 4163 could have been reminded was by issuance of
another Notification in the like manner and subject to like
sanction prevailing as when those were issued. It would
also be hazardous to allow an executive authority to
obliterate a statutory Notification. We would take this
view, more so, being concerned with a subject which fell,
not within the domain of the Provincial Government, but the
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Central Government, as did the subject of cantonment.
28. What has been stated relating to "executive
construction" or "practical construction" in Crawford’s
’Interpretation of Laws at pages 393 to 401, watch has been
320
relied on by the learned Advocate General, would not
persuade us to agree with him in this submission, though it
may be permissible to take note of post-enactment history to
find out as to how an enactment was understood on the
principle of "contemporanea expositio", of which mention
have been made at pages 551 et. seq. of Francis Bennions’
"Statutory Interpretation" (1984). The learned Advocate
General is not relying on the statements made in the
aforesaid Government Order for the purpose of interpreting
the two Notifications, but for contending that the
Notifications had stood effaced because of what had been
stated therein.
29. On the principle of ’contemporanea expositio’ also,
which is available to find out how a statutory provision has
been understood by those whose duty it is to construe,
execute and apply, as mentioned at pages 659-60 of Polestar
Electronics (P) Ltd. v. Addl. Commissioner, Sales Tax,
1978-1 SCC 636 and at page 383 of Deshbandhu Gupta v. Delhi
Stock Exchange, 1979-3 SCR 373 (to which our attention has
been invited by the Advocate General through his written
Arguments filed on 21 1 A 995), we have two observations to
make. First, this principle is not decisive or controlling
of the question of construction; it has only persuasive
value. If occasion arises, such interpretation may be even
disregarded and in a clear case of error court would without
hesitation refuse to follow such construction. (See obser-
vations of Mukherji J. in Balaeswar v. Bhagirathi, ILR 35
al.701 noted in Deshbandhu’s Case). Secondly, as already
stated, reliance is being placed on the nothings in the file
not to interpret the Notifications in question, but to
declare then as dead. This is not permissible. Not only
this, Shri Divan has objection to the reliance on the
notings made in the file even for the purpose of
interpretation of the Notifications, in support of which
submission he has referred to what was stated in para 39 of
Doypack Construction Pvt. Ltd. v. Union of India, 1988 (2)
SCC 299. As to the reliance on the decision in Polestar
Electronics’ case, it has been mentioned in the written
submissions filed on behalf of the respondents that in that
case itself it was stated at page 660 that the view of the
Department as to the meaning of a statute administered by it
is not admissible as an aid to construction because "wrong
practice does not make the law." It has been further argued
that the present was, in any case, not a case of a statutory
provision being interpreted by, the Department, in which
case it may be that the interpretation put upon it has some
sanction, if there be long acquiescence by the legislature,,
as mentioned in Maxwell’s Interpretation of the Statutes,
noted in the aforesaid decision at page 660.
Quasi-repeal of 1918 Notifications due to desuetude.
30. Learned Advocate-General’s another submission relating
to implied repeal is that the 1918 Notifications having not
been acted upon must be taken to have become a dead letter
because of its long disuse and the same stood repealed
because of the legal process known as desuetude. He draws
our attention to what has been stated in this regard in
Francis Bennion’s ’Statutory Interpretation’ where this
matter has been dealt at pages 441 and 442 of 1984 Edition.
It is stated there that desuetude is a legal process by
which, through disobedience and lack of enforcement over a
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long period, a statute may loose its force with-
321
out express or implied repeal. This doctrine has not
however, been accepted in United Kingdom for the reason that
otherwise an inquiry would be needed before the subject
could know whether or not an enactment would bind him.
Under Scots Law, however, this doctrine has been applied.
As to the English Law the further commentary is that though
this doctrine has no application, an Act may in practice be
’dead letter’, which would be so if the Act falls into
disuse or is not applied as intended. In this connection
Bacon’s dictum: ’ .............let penal laws, if they had
been sleepers for long be confined in the execution’ is
quoted. Reference has also been made to what happened to
the Limitation Act, 1623, apart from mentioning about the
refusal to act according to Sex Disqualification (Removal)
Act, 1919, despite which enactment a peeress was denied the
right to sit in the House of Lords, Vide Committee of
Privileges, Viscountess Rhonddas’ Claim, 1922-2 AC 3 39,
(HL). The judicial emasculation of the first act had caused
Lord Sumner to lament the difficulty of
extracting’...anything that deserves to be called a
principle from the decisions of three centuries, which have
been directed to what is after all the task of decorously
disregarding an Act of Parliament’.
31. In Craies’s ’Statute Law’ (7th Edition) it has been
stated at page 7 that desuetude is a process by which an Act
of Parliament may lose its force without express repeal. It
does not, however, consist merely of obsolescence or disuse:
there must also be a contrary practice, which must be of
some duration and general application. Lord Mackay’s view
in Brown v. Magistrate of Edinburgh, 1931 SLT (Scots Law
Times Reports) 456 (458) has also been noted, which is as
below
"I hold it clear in law that desuetude re-
quires for its operation a very considerable
period, not merely of neglect, but of contrary
usage of such a character as practically to
infer such completely established habit of de
community as to set a counter of law or
establish a quasi-repeal"
A perusal of this judgment shows that Lord Mackay ventured
to prefer the Scottish system to that of England regarding
which Lord Eldon, as a member of House of Lords, had stated
thus in Johnstone v. Scott, (1802) 4 Pat 274 at p. 285: -
"The English lawyer feels himself much at a
loss here; tie cannot conceive at what period
of time a statute can be held as commencing to
grow in desuetude, no when it can be held to
be totally worn out. All he can do is to
submit to what great authorities have declared
the Law of Scotland to be."
Lord Mackay thereafter enunciated the afore-quoted test of
desuetude for it to permit quasi-repeal.
32.It would be useful to note what has been stated in this
regard in the chapter headed ’Repeal and Desuetude of
Statutes’ by Aubrey L. Diamond, printed in Current Legal
Problems (1975), Volume 28 pages 107 to 124. Diamond has
quoted on this subject what Lord Denning M.R. observed in
Buckoke v. Greater London Council, 1971 Ch.655 at page 668,
which reads:-
"It is a fundamental principle of our con-
stitution, enshrined in the Bill of Rights,
that no one, not even the Crown itself, has
’the power of dispensing with laws or the
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execution of laws’. But this is sub-
322
ject to some qualification. When a law has
become a dead letters the police need not
prosecute, nor need the Magistrate punish.
They can give an absolute discharge"
33. Diamond has thereafter referred to the Scottish
approach to desuetude at pages 122 and 123 and has noted
some decisions wherein an Act of Scottish Parliament was not
enforced because of desuetude. It would be of interest to
note that when an argument was advanced that the particular
Act (which was of 1606) had been left unrepealed by the
Statute Law (Repeals) Act, 1906, and must, therefore, be
regarded as still in force, the reply given by one of the
law Lords was that "it was for the Court and not for the
Statute Law Revision (sic Repeal) Act to determine whether
Act of 1606 was or was not in desuetude. "
34. Though in India the doctrine of desuetude does not
appear to have been used so far to hold that any statute has
stood repealed because of this process, we find no objection
in principle to apply this doctrine to our statutes as well.
This is for the reason that a citizen should know whether,
despite a statute having been in disuse for long duration
and instead a contrary practice being in use, he is still
required to act as per the ’dead letter’. We would think it
would advance the cause of justice to accept the application
of doctrine of desuetude in our country also Our soil is
ready to accept this principle: indeed, there is need for
its implantation, because persons residing in free India,
who have assured fundamental rights including what has been
stated in Article 21, must be protected from their being,
say, prosecuted and punished for violation of a law which
has become ’dead letter’. A new path is, therefore,
required to be laid and trodden.
35.In written submissions filed on behalf of respondents, it
has been stated that the theory, of desuetude can have no
application to the facts of the present case, since the
challenge by the respondents is to the levy and calculation
under the 1963 schedule, and not to the rates enforced since
1918. This submission has been characterised as "most
important". As to this -we would observe that if
Notification of 1818 were to prevail despite 1918 No-
tifications, the fact that some changes were made in the
schedule in 1963 has no legal bearing on the question under
examination. The theory or desuetude has been pressed into
service by the appellant only to take can: of relevant 1918
Notifications. If those Notifications can be said to stand
eclipsed, the fact that changes were made in the rates etc.
in 1963 cannot stand in the way of application of the theory
of desuetude.
36. Coming to 1918 Notifications, we find materials on
record to show that it has not been implemented till date;
and in fact what has been done was contrary, and that too
for long period. So, we hold that Notification Nos. 4162
and 4163 dated 17th June 1918 had stood repealed ’quasily’
by the time new Octroi Rules came to be framed in 1963,
which were applied to realise octroi from the respondents.
The Statement made in the written submissions filed on
behalf of the respondents that this cowl had treated
Notification No.416O as operative in the case of western
India Theatres v. Cantonment Board, Pune, 1959 Suppl. (2)
SCR 63, does not affect the view taken by us relating to
quasi-repeal of Notification Nos. 4162 and 4163 inas-
323
much as the field of operation of Notification No.4160 is
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different from that of later Notifications, as already
noted.
Legal objections
37. Being satisfied that 1881 Notifications held the field
even by 1963, the legal objections relating to its
applications may ,now be dealt with. These objections, as
already noted, are (1) lack of agreement as required by law,
(2) impermissible delegation; and (3) non-compliance with
the procedure mentioned in section 62 of the Cantonments
Act, 1924.
38. We shall deal with these objections as well seriatim
Lack of agreement as required by law
39. That such sawn agreement is required is not disputed by
the learned Advocate General. His stand is that such an
agreement had in fact been entered into between the Poona
Cantonment Board and Poona City Municipality in 1881 and the
same was being renewed from time to time, as would appear
from the resolutions of the Cantonment Board, copies of
which have been printed in Appeal Paper Book (ii) at pages
245-428. As we have held that the 1881 Notification held
the field by 1963, the fact that no agreement was entered
into after the Octroi Rules of 1963 were framed by the
appellants as had been done between Poona Municipal
Corporation and Kirkee Cantonment Board, is not relevant We.
therefore, do not find any legal infirmity in enforcement of
1963 Octroi Rules on the ground of lack of agreement with
the Poona Cantonment Board after these ruts came into force.
Impermissible delegation
40. Shri Shanti Bhushan has taken pains to impress upon us
that if we were to read the expression "for the time being,,
finding place in 1881 Notification to mean "from time to
time", that notification has to be struck down because of
the delegation of an essential feature of the statute, which
is not permissible in law.
41. On the question of permissible extent of delegation the
leading judgment is one rendered by a 7-Judge Bench of this
Court in In re Delhi Laws Act, 1951 SCR 747. The ratio of
that decision came to be applied to a taxing statute in
Rajnarain Singh V. Chairman, of Patna Demonstration
Committee, 1955-1 SCR, 290. It was held there by the
majority that a delegatee has no power to change a policy of
the statute; and imposition of tax without observing the
formalities prescribed by the statute was held to be a
change in the legislature policy. The statute which had
came to be examined in that case had required an opportunity
to be given to raise objection; but the notification issued
by the delegate which had the effect of levying tax had been
done without inviting objection. The same was, therefore
struck down as ultra vires.
42. Shri Shanti Bhushan contends that the octroi collected
by the appellant being from persons residing in Poona
Cantonment, opportunity was required to be given to them
to have their say if they have objection to the enhancement
of rate of octroi or for imposition of octroi on new
articles as the 1963 Rules purported to do. It is urged
that because of the special importance of Cantonment the
Central Government has been conferred with the power to
control
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these areas; and it is because of this that the Cantonments
Act of 1924 required by its section 62 to seek objection
before imposing any taxation which had admittedly not been
done in the present case; and so, octroi could not have
collected by the appellant at least after coming into force
of The 1924 Act. (As we would point out later, section 62
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has not application to the facts of the present case. The
non-inviting of objection has therefore introduced no legal
infirmity).
43.In support of his submission, Shri Shanti Bhushan has
further referred to Bagalkot State Municipality v. Bagalkot
Cement Company, (1963 (Supp.) (1) SCR 710 wherein the stand
of the municipality that octroi duty had become
automatically realisable from that area which had come to be
included within the municipal limits following the
enlargement of Be limit, was held to be not sustainable.
What had been stated in that case has no application, be-
cause here the appellant is not trying to realise octroi
from the residents of the Poona Cantonment because of
enlargement of the limit of Poona Municipality.
44.Shri Shanti Bhushan than places reliance on B. Sharma Rao
v. Union Territory of pondicherry, (1967 (2) SCR 650.
There, the particular Act of Pondicherry Legislative
Assembly was held to be an abdication or effacement by the
law making authority inasmuch as it had by the Act in
question allowed the amendments to be made in the parallel
Madras statute to prevail in Pondicherry without knowing
that those amendments would be. Shri Shanti Bhushan
contends that same would be the position here if the 1881
Notification were to permit changes in the rates of octroi,
without knowing what the same would be, to prevail in the
Cantonment area also.
45.Learned Advocate General has contended that the case of
Sharma Rao was distinguished in Gwalior Rayon Silk Mfg.
(Wvg.). Company Ltd. v. The Assistant Commissioner of Sales
Tax, (1974 (2) SCR 879. In this connection what was stated
by Khanna, J. at pages 885-6 and by Mathew J. at pages 908-9
has been brought to our notice. In that case the validity
of section 8(2)(b) of the Central Sales Tax, Act, 1956 was
assailed on the ground that it suffered from the vice of
excessive delegation inasmuch as it stated that the rate of
central sales tax in case of goods other than declared goods
shall be calculated at the raw of 10%, or at the rate
applicable to the sale or purchase of such goods inside the
appropriate State,, whichever is higher. The Constitution
Bench rejected the contention because of clear legislative
policy being discernible in what has been provided in the
impugned section. This shows that merely because the matter
of rate at which tax is required to be imposed is left to be
determined by some authority other than the one which
imposesit, the same would not be impermissible in law.
46. Still another decision pressed into service by Shri
Shanti Bhushan in this context is that of Atlas Cycle
Industries v.State of Haryana, 1971 (2) SCC 564. A perusal
of this decision shows dud A too was on a different point.
There, the effort of the Municipality of Sonipat to realise
octroi on the force of Notification which had been issued
earlier was not upheld, because the relevant section did not
take care, of Notification, but had mentioned about rules,
bye-laws, orders, directions and powers.
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47.To buttress his submission, the learned Advocate General
brings to our notice the decision in MK Papaiah v. Excise
Commissioner, 1975 (1) SCC 492, in which it was held that if
the legislature retained its control over its delegate by
exercising its power of repeal, the same would meet the
objection relating to excessive delegation, for which
purpose the test to be applied is not whether the
legislature has delegated any matter relating to essraial
policy. It is contended what was stated in Papiah’s case by
a three-Judge Bench through Mathew, J. was accepted, as
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correct by a Constitution Bench in A.K. Roy v. Union of
India, 1982 (1) SCC 27 1.
48. What was held in Brij Sunder Kapoor v. First Addl.
District Judge, 1989 (1) SCC 561 is more relevant for our
purpose, because in that case a two-Judge Bench of this
Court had upheld the delegation as contained in section 3 of
Cantonment (Extention of Rent Control Laws) Act, 1957, by
which the Central Government by a notification in official
gazette could extend to any cantonment any enactment
relating to control of rent which was in force in the State
in which the cantonment is situated. The Bench
distinguished Shama Rao’s case and held that the delegation
was valid, including that part of it by which amendments in
the concerned State legislation were allowed to become
effective in the cantonment area as well.
49. What was stated in Brij Sunders’case about the typical
situation of cantonment in para 25 is more important for our
purpose. The same is as below:-
"These cantonments were located in the heart
of various cites ha the different States and
unlike the position that prevailed in early
years, had ceased to be a separate and
exclusive colony for army personnel. It was,
therefore, but natural for Parliament to
decide, as a matter of policy, that there
should be no difference, in the matter of
housing accommodation, between persons
residing in cantonment areas of a State and
those residing in other parts of the State and
it is this policy that was given effect
to..... Having decided upon this policy, it
was open to Parliament to do one of two
things: pass a separate enactment in respect
of the cantonment areas in each State or to
merely extend the statutes prevalent in other
parts of the respective States by a single
enactment. The second course was opted upon
50.What was stated relating to cantonments in the aforesaid
excerpt qua housing accommodation should apply, according to
us, to levy of taxes as well on persons residing in
cantonment areas. It can well be said that as a matter of
policy there should be no difference in taxing the residents
of cantonment areas and those residing in municipal areas,
in view of the fact that the former have ceased to be a
separate and exclusive colony. for armed personnel, as
pointed out in the aforesaid case.
51.This being the legal position, we hold that the 1881
Notification cannot be assailed on the ground of
impermissible delegation. -Me second legal infirmity also,
as canvassed by the learned counsel for the respondents,
therefore, does not exist.
Non-compliance with the procedure mentioned in section 62 of
the Cantonments Act, 1924
52.That the procedure contemplated by section 62 has not
been followed is not in disputes The stand of the appellant
is that
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procedure was not required to be followed. The respondents
have serious objection to this stand of the appellant
53.The objection is founded on the legal proposition that
enhancement of rates by the Octroi Rules of 1963 have to be
taken as imposition of octroi, which would have required
invitation of objections, of which mention has been made in
section 62. The question for determination is whether en-
hancement of rates of octroi can be said to be imposition of
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octroi, in which case alone section 62 would get attracted,
because of what has been stated in sections 60 and 6 1. That
this is so is very strenuously contended by Shri Anil Divan
by placing reliance on two decisions of this Court, one of
which is of Constitution Bench: The Amalgamated Coal Fields
Ltd. v. Janapada Sabha Chhindwara 1963 Sup, (1) SCR 172;
and another by a two-Judge Bench:in Dhrangadhara Chemicals
Works Ltd. v. State of Gujarat, 1973 (2) SCC 345.
54. In Amalgamated Coal Field’s case the legality of levy
of the tax imposed on coal at 9 pies per ton by the Janapada
Sabha of Chhindwara was assailed on the ground that die same
was in violation of section 51(2) of the concerned Act
(noted at page 191 of the Report) which had laid down that
the ’first imposition’ of any tax shall be the subject to
the previous sanction of the Provincial (Government The tax
on coal had not, however, been imposed for the first time on
the residents of the Janapada Sabha. What the Janpadha had
done was that the tax which was earlier being levied by a
Mining Board (whose successor the Sabha was) at the rate of
3 pies per ton had been enhanced to 9 piece.The appellant
took a stand that though the Janpadha Sabha had on, enhanced
be rate of tax, the same could have been done only with the
previous sanction of the Provincial Government, as laid down
in section 5 1(2), despite the section having required this
for ’first imposition’. The Constitution Bench upheld this
contention. Mr. Divan, therefore, contends that enhancement
of rate of octroi duties by 1963 Rules could have been done
only in accordance with the provisions contained in sections
60 to 63 of the Cantonments Act 1924.
55 Learned Advocate General, however, submits that what was
held by the Constitution Bench in the aforesaid case may not
be taken to mean that every case of enhancement of rate
would be first or fresh imposition of tax. According to the
learned counsel, the Constitution Bench had regarded the
imposition of the levy at the altered rates as ’first
imposition’ only in the context (this word has been used at
page 193 of the Report) of what had happened; and it is
because of this that the altered rates were ’deemed’ (page
194) to have been included in the expression ’first
imposition’. The context, as per the learned counsel was
that the Janpada Sabha had levied the tax for the first time
and it is because of this that it was taken to be first
imposition qua the Sabha residents. Learned Advocate
General submits that if what was held by the. Constitution
Bench were to be taken literally, even if the rate of any
tax were to be enhanced, say, even by 1% the same would
require the procedural aspect relating to imposition of tax
to be gone through whole hog, which could not have been the
intention of the constitution Bench.
56. We have duly considered the rival submission. Nothing
really turns on the
327
rate of change, according to us. It cannot be that if the
change be significant (say, 10051) then only the same would
be a case of fresh imposition, but if it be insignificant
(say, 1% as mentioned by the Advocate General), die same
would not be a case of fresh imposition. Even so, what has
been contended by the learned Advocate General seems to have
force, as in Amalgamated Coal Field’s case this Court did
deal with a levy which had been imposed for the first time
by the Janpada Sabha.
57. Shri Divan urges that what was held by the two-Judge
in.Dharangadhra Chemicals’ case (supra) would not leave any-
thing to doubt that increase in rate of tax has to be taken
to be a case of imposition of tax. But in that case also
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the Municipality’s increase of octroi was in first act,
because of which what has been urged by the learned Advocate
General qua Amalgamated Coal Field’s case would apply to
this case also.
58.The case of Visakhapatnam Municipality v. Nukaraju,
1976(1) SCR 544, which was cited by shri Shanti Bhusan in
some other context, is more relevant in the present context.
There, what happened Was that no opportunity to object was
given to the persons of the area, which had come to be
included in the municipality subsequently, before calling
upon the residents to pay tax in question. Though the mu-
nicipality in that case lost on some other ground, what had
been stated about the need to call for objections is
relevant inasmuch as it was stated that even for imposition
of tax at new rate objection is required to be invited.
This stand was taken according to us, because the proviso to
Section 81(2) of the concerned Act (noted at page 548) had
stated that before passing a resolution imposing a tax for
the first time or increasing the rate of an existing tax the
council shall publish a notice in the prescribed manner
declaring the requisite intention. It is because of this
requirement that the need for calling objections for
increased rate as well was held obligatory.
59. This is not all that we propose to say on this
important facet of the appeals. We think that if sections
60 to 63 of the 1924 Act are read closely it would appear
that for change in the rate of tax already in operation,
objections are not required to be invited. To bring home
this, let sections 60 to 63 of the Act, which together form
a chain, be noted:-
"60. General power of taxation-
(1) The Board may, with the previous,
sanction of the Central Government, impose in
any Cantonment any tax which under any
enactment for the time being in force, may be
imposed in any municipality in the State
wherein such cantonment is situated:
(2) Any tax imposed under this section shall
take effect from the date of its notification
in the official Gazette, or where any later
date is specified in this behalf in the
notification from such later, date.
61. Framing of preliminary proposals-
When a resolution has been passed by the Board
proposing to impose a tax under section 60,
the Board shall in the manner prescribed in
section 255 publish a notice specifying -
(a) the tax which it is proposed to impose;
328
(b)the persons or classes of persons to be
made liable and the description of the
property or other taxable thing or circum-
stance in respect of which they are to be mode
liable; and
(c)the rate at which the tax is to be levied.
62. Objections and disposal thereof-
(1) Any inhabitant of the cantonment may,
within thirty days from the publication of the
notice under section 61, submit to the Board
an objection in writing to all or any of the
proposals contained therein and the Board
shall take such objection into consideration
and pass orders thereon by special resolution.
(2) Unless the Board decides to abandon its
proposals contained in the notice published
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under section 61, it shall submit to the
Central Government through the Officer
Commanding in-Chief, the command, all such
proposals alongwith the objections, if any,
received in connection therewith together with
its opinion thereon and any modifications
proposed in accordance with such opinion an
d
the note published under the said section.
63. Imposition of tax -
(1) The Central Government may authorise the
Board to impose the tax either in the original
form or, if any objection has been submitted
in that form or any such modified form as it
thinks fit. "
60. The aforesaid shows that the notice required to be
published by Section 61 specifying, inter alia, "the rate at
which the tax is to be levied", of which mention has been
made in clause (c), refers to the tax to be levied, and not
which has already been levied. Clause (a) makes it clear
that the publication required by Section 61 is about the tax
which is proposed to be imposed. These provisions would
show that the objection which is to be solicited, pursuant
to the mandate of section 62, has to be regarding the tax
proposed to be imposed and the rate at which it is to be
levied. The opening sentence of section 61 mentions about
the proposal of the Board "to impose a tax" ; and so, the
imposition of which section 60 speaks of, is of a tax
proposed to be imposed by the Board, and not a tax which had
already been imposed by the time the Act came to be
enforced.
61. We, therefore, do not find any infirmity in the
collection of octroi by the appellant at the enhanced rates,
mentioned in the schedule of 1963 Rules, without there
having been compliance of what was required by section 62 of
the: aforesaid Act.
Conclusion
62. For the reasons aforesaid, we hold that the 1881
Notification did in fact permit the appellant to collect
octroi duties at the rates specified in 1963 Octroi Rules
framed by the appellant; and there was no obstacle in law in
allowing the appellant to do so.
63. The appeals are allowed accordingly by setting aside
the impugned judgment, with the result that the writ
petitions filed in the High Court by the respondents stand
dismissed. On the facts and circumstances of the case, we
do not make any order as to costs.
330