# lK. BHARAT KALA BHANDAR LTD v. MUNICIPAL COMMITTEE, DHAMANGAON

- **Citation:** [1965] 3 S.C.R. 499
- **Court:** Supreme Court of India
- **Decided:** 1965-03-26
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/lk-bharat-kala-bhandar-ltd-v-municipal-committee-dhamangaon-3511
- **Pages:** 37

## Headnote

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lK.
BHARAT KALA BHANDAR LTD.
V.
MUNICIPAL COMMITTEE, DHAMANGAON
March 26, 1965
SlJBBA RAO
RAGHUBAR DAYAL, J. R. MuoHOLKAR,
BACHAWAT AND V. RAMASWAMI. JJ.]
R. S.
Central Provinces and Berar Mi;nicipa!ities Act (2 of 1922), ss. 48
and 84(3)-Scope of-Suit for refund of excess tax prd-If barred.
The appellant was paying a tax at the rate of one anna per
weight of cotton, under s. 66(l)(b) of the Central Prcvmces Mumc1palities Act, 1922, from 1936. In 1941 the rate of tax was ;ncreased te:
4 as. In 1952, the appellant filed a suit for recovery of the excess tax
paid within 3 years cf the date of suit. It was contended that after the
coming into force of s. 142A of the Governme.nt of India Act, 1935, on
1st April 1939, till 25th January 1950, a tax m excess of Rs. 50 per
annum could not be ·imposed by the respondent, and, after the commg
into force of the Constitution the upper limit of the tax was raised to
Rs. 250 per annum under Art. 276 of the Constitution; and that as the
appellant was already paying more than this amount per year even
at the rate of one anna, the enhanced rate of 4 annas was illegal. The
trial court decreed the suit for recovery from the Municipal Committee of excess tax paid by the appellant within 3 years of the date of
suit but on appeal, the High Court held that the suit was bad for noncorrn::liance with the requirements of s. 48 of the Act. according
to which, a suit for anything done or purported to be done under
the Act shall b2 instituted only after the exp'.rat:cn of 2 months
aft0r serving a written notice 2nd \vithin
months from the date
of the accrual of the alleged cause of action.
In its appeal to th's Court, the appellant contended that it was
a case of recovery of e.n illegal tax and therefore, a· clalm for its
refund fell outside the provisions of s. 48. The respondent contended
that (i) since the ban was not upon the rale of tax but upon the
excess collection thereof, the collection of a tax above the constitutional limit was not without jurisdiction but only illegal or irregular
and therefore, the suit would be in respect of a matter "purported to
be done under the Act" and the provision of s. 48 would apply, and
(ii) on the basis of Raleigh Investment Company Ltd. v. GovernorGeneral in Council, (74 I.A. 50) the suit was barred by s. 84(3) of the
Act, which enacts that no objection shall be taken to any assessment
l!i any other manner than is provided in the Act.
HELD. (Per K. Subba Rao, J. R. Mudholkar and V. Ramaswami
JJ.): (i) Smee the respondent had no authority to levy a tax beyond
what .s. 142A of the Government of India Act, 1935, or what Art. 276
permitted, the assessment proceedings were void in so far as they purported to levy a tax m excess of the permissible limit and authorise
its. collection, and the assessment order would be no answer- to
Sult for the
of the excess amount, and therefore. the suit was
maintainable. t522-G-HJ
The Constitution is the fundamental law of the land and it is unnecessary. to pro':'ide in. a:iy law that anything done in disregard of
the Constitut10n 1s prohibited. Such a prohibition has to be read into
499
SUPREME COURT REPORTS
(1965] 3 s.o.a.
every enactment, and where such prohibition exists or can. be implied,
anything done or purported. t? be .done by. an auth_ority must be
regarded as wholly without iunsdiction, and is not entitled to a
tection of the law under colour of which that act was done. r512A-B,
516B-C]
Poona City Municipal Corporation v. Dabtatraya Nagesh Deodhar,
[1964] 8 S.C.R. 178, followed.
(ii) A tax .can be recovered only. if it is
and it would be
payable only after it is assessed. It is therefore futile to contend that
the ban placed bys. 142A of the Government .of India Act and Art. 276
of the Constitution, extends only to recoveries and not to an earlier
stag.e. [513G]
It is true that the respondent had jurisdiction to recover an
amount up to the constitutional limit, But it cannot be contended that
merely because

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BHARAT KALA BHANDAR LTD.
V.
MUNICIPAL COMMITTEE, DHAMANGAON
March 26, 1965
SlJBBA RAO
RAGHUBAR DAYAL, J. R. MuoHOLKAR,
BACHAWAT AND V. RAMASWAMI. JJ.]
R. S.
Central Provinces and Berar Mi;nicipa!ities Act (2 of 1922), ss. 48
and 84(3)-Scope of-Suit for refund of excess tax prd-If barred.
The appellant was paying a tax at the rate of one anna per
weight of cotton, under s. 66(l)(b) of the Central Prcvmces Mumc1palities Act, 1922, from 1936. In 1941 the rate of tax was ;ncreased te:
4 as. In 1952, the appellant filed a suit for recovery of the excess tax
paid within 3 years cf the date of suit. It was contended that after the
coming into force of s. 142A of the Governme.nt of India Act, 1935, on
1st April 1939, till 25th January 1950, a tax m excess of Rs. 50 per
annum could not be ·imposed by the respondent, and, after the commg
into force of the Constitution the upper limit of the tax was raised to
Rs. 250 per annum under Art. 276 of the Constitution; and that as the
appellant was already paying more than this amount per year even
at the rate of one anna, the enhanced rate of 4 annas was illegal. The
trial court decreed the suit for recovery from the Municipal Committee of excess tax paid by the appellant within 3 years of the date of
suit but on appeal, the High Court held that the suit was bad for noncorrn::liance with the requirements of s. 48 of the Act. according
to which, a suit for anything done or purported to be done under
the Act shall b2 instituted only after the exp'.rat:cn of 2 months
aft0r serving a written notice 2nd \vithin
months from the date
of the accrual of the alleged cause of action.
In its appeal to th's Court, the appellant contended that it was
a case of recovery of e.n illegal tax and therefore, a· clalm for its
refund fell outside the provisions of s. 48. The respondent contended
that (i) since the ban was not upon the rale of tax but upon the
excess collection thereof, the collection of a tax above the constitutional limit was not without jurisdiction but only illegal or irregular
and therefore, the suit would be in respect of a matter "purported to
be done under the Act" and the provision of s. 48 would apply, and
(ii) on the basis of Raleigh Investment Company Ltd. v. GovernorGeneral in Council, (74 I.A. 50) the suit was barred by s. 84(3) of the
Act, which enacts that no objection shall be taken to any assessment
l!i any other manner than is provided in the Act.
HELD. (Per K. Subba Rao, J. R. Mudholkar and V. Ramaswami
JJ.): (i) Smee the respondent had no authority to levy a tax beyond
what .s. 142A of the Government of India Act, 1935, or what Art. 276
permitted, the assessment proceedings were void in so far as they purported to levy a tax m excess of the permissible limit and authorise
its. collection, and the assessment order would be no answer- to
Sult for the
of the excess amount, and therefore. the suit was
maintainable. t522-G-HJ
The Constitution is the fundamental law of the land and it is unnecessary. to pro':'ide in. a:iy law that anything done in disregard of
the Constitut10n 1s prohibited. Such a prohibition has to be read into
499
SUPREME COURT REPORTS
(1965] 3 s.o.a.
every enactment, and where such prohibition exists or can. be implied,
anything done or purported. t? be .done by. an auth_ority must be
regarded as wholly without iunsdiction, and is not entitled to a
tection of the law under colour of which that act was done. r512A-B,
516B-C]
Poona City Municipal Corporation v. Dabtatraya Nagesh Deodhar,
[1964] 8 S.C.R. 178, followed.
(ii) A tax .can be recovered only. if it is
and it would be
payable only after it is assessed. It is therefore futile to contend that
the ban placed bys. 142A of the Government .of India Act and Art. 276
of the Constitution, extends only to recoveries and not to an earlier
stag.e. [513G]
It is true that the respondent had jurisdiction to recover an
amount up to the constitutional limit, But it cannot be contended that
merely because of this, the recovery by the respondent of an amount
in excess of the constitutional limit was only irregular or at the worst
illegal. Where power evists to assess and recover a ta><: up to a particular limit and
assessment or recovery of anythmg above that
amount is prohibited, the assessment or recovery of an amount in
excess is wholly without jurisdiction. To sach a case, the statute
under wh;ch action was purported to be taken can afford no, protection. Indeed, to the extent that it affords protection it would be bad.
But it is the duty of the court to so construe it as to avoid rendering
the provision
that is, to construe s. 48 as affording
protection only if what was done was something which could legally
have been done by the respondent but was wrongly done by it, and
reject <. construction which will invalidate the provision. [515B;
516B-H]
(iii) The appellant's suit could not be ·barred even if s. 84(3) of
the Act is interpreted in the same way as the Privy Council interpreted s. 67 of the Income-tax Act, in the Raleigh Investment Co.'s case.
Unlike the Income-tax Act the Act does not provide a machinery for
making a claim for refund or repayment on the ground of the unconstitutionality of the levy, and the jurisdiction of the civil court .in
cases of refund is not taken away. Even in the class of cases to which
the provisions of ss. 83 and 85 of the Act, which are the only pro•
visions providing a machinery under the Act for challenging an
assessment, apply, they cannot be said to provide a sufficiently
effective remedy to an assessee. A reference to the High Court is
only at the discretion of the appellate or revisional authority and
the person aggrieved has no right to move the High Court. Besides, in
the Raleigh Investment Co.'s case, the expression "assessment made
under this Act vvas given too wide a construction. because, it is
difficq.lt to appreciate how taking into account an ultra vires provision. vvhich in law must be regarded as not being a part of the Act
at all, will make the assessment as one under the Ac'.. [517G; 518B,
F, H; 519A-B; 520D-F; 521H]
The exclUBion of the jurisdiction of the civil court is not to be
readily inferred but such exclusion must either be explicitly expressed
or clearly implied. One of the corollaries flowing from the principle
that the Constitution is the fundamental law is that the normal
remedy of a suit will be available for obtaining redress against the
violation of a constitutional provision. Moreover the provisions of Art.
265 of the Constitution preclude the levy or collection of a tax except
by authority of law, which means only a valid law. There was no
provision in the. va!ious Acts for the governance of
India which preceded the Constitution and the decision in the Raleigh
Investment Co.'s case was given in that context. Further under Art.
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BHANDAR v. MUNC. COMMl'l'TE>: (Mwllwlk11r, .I.)
iiO I
the Constitution has provided a remedy to a citizen to obtain
redress in respect of a tax levied or collected under an invalid law.
and this remedy will not be affected by any provis'on like <. 67 of the
Income-tax Act, or s. 84(3) of the Act. [520G-H; 521C-E]
Thus, when the question merely is whether' the assessment had
been made according to la\v, the respondent having jurisdiction over
the subject matter and the assessee, the provisions of s. 84(3) may be
a bar to a suit. But, where the question raised is as to the jurisdiction
of the respondent to procei;d against the assessee, and levy on or
collect from him an amount in excess of that permitted by the Constitution, the n1atter \\·ould be entirely out of the b:ir of that provision.
Per Raghubar Dayal and Bachawat, JJ. (dissenting): The appellant's suit for the recovery of the tax r&alized in excess of Rs. 250 a
year was rightly dismissed, as the correctness of the assessment of
the tax could not be challenged by a suit in a civil court in view of
s. 84(3) and as the provisions of s. 48, requiring the giving of notice
to the respondent and the institution of the suit within a certain
per'od, had not been complied w:th. [534H: 535A-B]
The suit was in essence a suit for, first, modifying the amount
assessed and then to decree the payment of the amount held to have
been paid in excess of the tax as modified by the court. But the act of
aSiessing the tax or the consequential act of collecting the amount
cannot be broken up into two acts, one, upto the legal limit and the
other in excess of it. The act of assessment or of collection therefore
was an act done by the respondent under the provisions of the Act,
though it acted \\'rongly in assessing the tax at an excessive figure,
and consequently in collecting an amount in e:Xcess of that whicl:i
could have been legally collected. The suit was therefore fully covered by s. 48 and had to be dismissed. [526E-HJ
In vie\v of s. 84(3), exclusive jurisdiction 1.o determine the correctness of the amount assessed is g'.ven to the authorities mentioned in
s. 83. The result is that no other authority can enter into the question
of the correctness of the assess?nent on grounds of law or fact, and
therefore the appellant's suit v.1as barred from the
of the
civil court. [527GJ
Raleigh Investment Co. Ltd. v. Governor-General in Council,
L.R. 74 I A. 50 and Firm of Illuri Subbayya Chetty & Sons v. State of
A ndhra Pradesh. [1964] 1 S.C.R. 752, followed.
Pdo,ia City lvlunicipal Corporation v. Dattatraya Nagesh Deodhar,
(1964] 8 S.C.R. 178. dist'nguished.
Ci1'iL APPELLATL .lURISD!CTION: Civil Appeals Nos. 600 and
679 of 1964.
Appeals from the judgment and decree dated February :o,
1962 of'thc Bombay High Court (Nagpur Bench) at Nagpur in
Appeals Nos. 196 and 195 cf 1956 from original decree.
S. G. PatwardJzan, S. Murthv an-J B. P. Maheshwari, for ihe·
appellant (in CA. No. 600/64). ·
S. N. Kherdekar and A.G. R.atnaparkhi, for the appellant (in
CA. No. 679/64i.
A. V. Viswanat/ia Sastri and M. S. Gupta, for the respondent
<in CA. No. 600 / 64).
A. fl. Viswanatha Sastri and M. S. Gupta for U. P. Singh, for
the respondent (in C.A. No. 679 I 641.
502
SUPREME COURT REPORTS
(1965} 3 S.C.R.
The Judgment of Subba Rao, Mudholkar and Ramaswami, JJ.
w:!s delivered by Mudholkar J. The dissenting Opinion of Raghubar Dayal and Bachawat, JJ. was delivered by Dayal, J.
Mudholkar, J.
This judgment will also govern Civ;I Appeal
N,1. 679 of 1964 since common questions of law arise in both the
appeals. For illustrating the points which arise for consideration in
these appeals we will set out briefly the facts pertaining to C.A. 600
of 1964.
The appellant (hereinafter referred to as the Company) is a
private limited comp2ny having its registered office at Calcutta and
a branch office at Dhamangaon which was formerly in the Province
of Central Provinces & Berar but is now in the State of Maharashtra. The company owns a ginning factory at Dhamangaon. The
Notified Area Committee of that place imposed, under s. 66(1)(b) of
the Central Provinces Municipalities Act, 1922 (hereinafter referred
to as the Act) as applied to Berar, a tax at the rate of one anna
per bajha of ginned cotton and one anna per bale of pressed cotton
as from Dec. 22, 1936 en which date a notification sanctioning the
Imposition under s. 241 (!) of the Act was published in the official
Gazette by order of the Government of the Province. The Notifi-
.cation in question runs as follows: -
"No. 7911-3242-M-VIII :-In exercise of the powers conferred by clause (a) of sub-sec. (!) of sec. 241 of the Central
Provinces Municipalities Act. 1922 (C.P. Act II of 1922) asapplied to Berar, the Local Government is pleased to confirm
the following rule made by the Notified Area Committee,
Dhamangaon, in the Amravati district, under clause (b) of
sub-s. (!) of sec. 66 of the said Act, for imposing a tax on
persons carrying on the trade of ginning and pressing cotton
by means of steam or mechanical process within its limits: -
Rule
1be committee shall levy from all persons cartying on
within its limits the trade of ginning or pressing cotton into
bales by means of steam or mechanical process a tax at the
following rates from the date of the publication of this notification in the Central Provinces Gazette: -
(a) For each bojha of 392 lbs. ginned-I anna.
(bl For each bale of 392 lbs. pressed-I ·anna.
By order of the Government,
(Ministry of Local Self-Government),
Sd / - R. N. Bannerjee,
Si:cretary to Government,
Central ·Provinces,
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!\'.ALA nRANDAR t'. MUKC. COMMITTEE (Mud/wtkar, J.)
503
The Notified Area Committee of Dhamangaon decided to
raise the rate from I anna per bojha and I anna per hale 10 four
annas per bojha and four annas per bale. Soon after this decision it
caused the following notification to be published in tl1e ofticictl
Ga7e1te on April IO. 1941. The Notification runs thus: --
"The following amendment to the rule for imn•.1'ition of
the tax by the Municipal Committee,
in the
Amraoti district, under cl. (b) of sub-sec. (!) of sec. 66 of the
Central Provinces Municipalities Act, 1922 (II of 19221 <:s '•P·
"lied to Berar, on persons carrying on the trade of ginning <ind
pressing cotton hy means of steam or mechanical process within its limits, published in the Central Provinces and Bcrar
Gazette Notification No. 7911-3242-M/VllI, dated the 22nd
Dec. 1936, is published for the information of the public, the
same having hceri p"evionsly published as required by subsection (3) of sec. 68 of that Act, and in exercise of the powers
conferred by s.ub-sec. (7) of sec. 68 of that Act. the municipal
C<lmmittee directs that the said amendments shall come into
operation on the !st August, 1941 :-
Amendment
For the figure and the word 'I anna' occurrmg in
clauses
(a) and (b) of the rule, the figure and word '4 annas' shall be
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substituted.
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Sd/- B. S. Mundhada,
President, Municipal Committee
No. 2418-M-XIIL"
Certain rules were framed by the Government for the assessrneut and collection of tax which were also published on Dec. 22,
1936. These rules were, however, amended by the Local Government and the amended rules were published in the Gazette on
July 30. 1941. It is these latter rules which are now in force.
Consequent upon the amendment of the rules the appellants in
the two appeals and the proprietors of the ginning factory in
Dhamangaon have been paying these taxes at the new rate of
4 annas per bojha and 4 annas per bale.
It may be mentioned that in Dec. 1951 the Municipal Committee. Dhamangaon, which by then had replaced the Notified
Area Committee proposed to raise the tax from four annas to one
rupee per bojha and per bale but eventually dropped the proposal.
Apparently being alarmed at the abortive attempt of the Municipal
Committee to raise the tax further, the appellant and other factory
owners in Dhamangaon instituted suits for recovery from the
Municipal Committee of excess tax paid by them within 3 years of
the dates of the respective suits. The Company claimed refund of
Rs. 12,511-6-6 on the ground that it was recovered from it illegally
SUPREME COURT REPOHTS
(l 91i5] 3 S,C,R.
by the Municipal Committee and paid by it under a mistake. The
amount has been computed by them thus: Rs. 6,905-14-6 recovered
from them in respect of ginned cotton between 29-3-49 and some
date in the year 1952 plus Rs. 8,048-8-0 in respect of pressed cotton
recov?red from them during the same period less Rs. 3,738-9-6
which was legally due from them thus totalling to Rs. 11 ,215-13-0.
To this they added Rs. 1,295-9-6 as interest by way of damages on
the aforesaid said amount at the rate of 9 per cent. p.a. In the plaint
it was contended by the Company that after the coming into force
of s. 142A of the Government of India Act, 1935 (which came
into effect ·from 1-4-1939) till January 25, 1950 a tax on trade,
profession or calling in excess of Rs. 50 /- per annum could not
be imposed either by a Provincial Government br by a Local
Body. Nor again, could an existing tax on trade, profession or
caLLing be raised further so as to exceed Rs. 50 /- per annum. T))e
Company further pointed out that after the coming into force of
the Constitution the upper limit of the tax was raised to Rs. 250 I -
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per annum and that as the Company was already paying more
than this amount per year even at the rate of one anna per bbjha · D
and one anna per bale recovery from tllem at the enhanced rate
of 4 annas was illegal with effect from April 1, 1939. The Municipal Committee contended in its written statement that the provision of s. 142A of the Government of India Act and Art. 276 of
the Constitution which limit the tax on professions. ·trades or
callings or employments to Rs. 50 and Rs. 250 per annum respectively do not apply to a case such as the present where therti is
no imposition of a new tax but only an enhancement of the rate
of an existing tax. It further contended that the tax in question at
the rate of 4 annas per bojha and 4 annas per bale was in existence
when Art. 276 came into force and is saved by thut Article. According to the Committee. the Company is not ent;tled to claim
back the amount paid by it under s. 72 of the J ndian Contract
Act or the general law; This contention, however, was negatived
by the trial court and does not appear to have been reiterated before
the High Court. Nor again was it pressed before us by Mr.
Viswanatha Sastri who appears for the Municipal Committee. The
principal contention which was. pressed before the trial court and
raised before the High Court was that the Company's suit was
bad for non-compliance with the requirements of s. 48 of the
Act and that is the point which we have to consider in this appeal.
Sec. 48 of the Act reads thus:
"(!) No suit shall be instituted against any Committee or
any member, officer or servant thereof or any person
under the direction of any such committee, member, officer 0;
servant for anything done or purporting to be done under this
Act, until the expiration of two months next after notice in
writing statin¥ the .cause ?f .action, the name and place of
abode of the mtending plamttff and the relief which he claims,
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KAI.A BHA"DAR I!. """('.· CO>!>!l1'TEE (,llwllwlkm, J.)
50G
has been, in the case of a committee, delivered or left at ils
office, and, in the case of any such member, officer or servant
or person as aforesaid, delivered to him or. left at his office
or usual place of abode, and the plaint shall contain a state·
ment that such notice has been w delivered or left.
(2) Every such suit shall be dismissed unless it is instituted
within six months from the date of the accrual of the alleged
cause of action."
Mr. Patwardhan for the appellant contends that this was a case
of recovery of an illegal tax and. therefore a claim for its refund
tdl outside the provisions of s. 48 of the Act. In support of his
contention he relied upon a number of decisions and we will
proceed to examine them.
The first of these cases is Municipal Committee, Karanja v.
New East India Press Co. Ltd., Bombay('). That was also a case
where enhancement of a tax was made by the Municipal Committee
of Karanja after March 31, 1939 in excess of Rs. 50 per year payable by one person. There, a Division Bench of the High Court
held, that the enhancement was in contravention of s. l 42A of the
Government of India Act, 1935 and was illegal, that a suit for
refund of the tax is maintainable by the person who has paid
the tax and that such a suit is not barred by the provisions of
ss. 148, 83 or 84 of the Act. The relevant observations of Bose
A.C.J. (as he then was) who delivered the judgment are as follows:
"It was then argued that the Civil Courts have no jurisdiction because of sections 83 and 84 of the Central Provinces
Municipalities Act as applied to Berar. It was said that that
Act provides for remedies in cases of wrongful recovery of
taxes. Therefore, the jurisdiction of the civil courts is barred.
A large number of cases have dealt with this question but
we need consider only two of the latest decisions. In District
Council, Bhandara v. Kishorilal (Civil Revision No. 220 of
of 1946 decided on the 25th June, 1948) one of us (Bose, J.)
held that provisions corresponding to sections 83 and 84 come
into play only when the Municipal Committee acts within the
scope of its authority, that is to say, when it is acting or purporting to act under the Municipalities Act. It is pointed out
there in respect of this very section of the Government of
India Act, sec. 142-A, that when a Municipality is prohibited
by law from imposing a tax in excess of a certain amount
then it cannot be said to be acting either under the Act or
purporting to act uncler the Act if it exceeds that amount.
and in such a case the jurisdiction of the Civil Courts is not
barred. Here again we may refer to the fact that in the Privy
Council case Radha Kishan Jaikishan (Firm) v.
Municipal
Committee, Khandwa('), this objection does not appear to have
(') l.L.R. [19481 Nag. 971.
(') [l93n] 30 Nag. L.R. 12! \P.C.)
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SUPREME COURT REPORTS
[1 !JG5] :l s.o.R.
been taken. It is hardly 1;kcly that it would have been omitted
had there been any force in the contention.
In the present case, as in District Council. Blwndara v.
Kishori/a/ the Municipality is seeking to recover sums which
thl' hw has prohibited it from taking, in the shape of taxes.
Accordingly, as it is acting wholly without jurisdiction, the
claims lie and are not barred by reason of sections 83 and 84.
Then it was stated that the claims are barred by sec. 48 of
the Municipalities Act. There again the same considerations
apply. Sec. 48 comes into play only when the act is done or is
purported to be done under the Municipalities Act.
As we have said, that is not the case here because its action
is something which is prohibited by law, and so wholly beyond
its jurisdiction, and therefore section 48 does not apply. The
distinction between a case where section 48 applies and a case
where it does not is
clearly shown
in The A mraoti Town
Municipal Committee v. Shaikh
Kishorilal's case to which reference is made in the above quotation is a decision of a Division Bench upon a reference made by
Bose J. and which, though rendered earlier, has been reported in
1.L R. 1949 Nag. 87. In that case a tax imposed by the District
Council, Bhandara under a similar provision of the Local SelfGovernment Act, 1920 at the rate of three pies per khandi on
persons carrying on trade of husking, milling or grinding of grains
was raised by it to one an11a as from April I. 1942 with the sanction of the Provincial Government. ft was contended on behalf
of the respondent that the recovery was illegal. Since the matter
involved. the interpretation of s. I 42A of the Government of India
Act, 1935 Bose J, acting under me of the rules of the High Court
referred it to a Division Bench. This is what the Division Bench
held:
"We are clear that the tax in question is a tax which can be
so termed. This was in fact conceded in the Court below and
the contention raised before us that the persons who gave grain
to Kishorilal for grinding and not he were the trader'
ed was plainly devoid of force. He had a mill "nc! with it
carried on the trade of milling grain. The tax in question was
recovered from him because of this and it was one of the taxes
hit by section 142-A of the Government of India Act, !935.
and the Professions Tax Limitation Act, 1941 (XX of 1941)."
When the matter went back before Bose J., it was contended
on behalf of the District Council that the suit was barred altogether
by the provisions of s. 71 and that the provisions of s. 73 make the
issue of ;1 notice by the Distt. Council a pre-condition for the institution of a suit of the kind before him. Reliance was placed on a
'
(') I.L.R. [!939) Nag. 216, 219, 220.
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KALA BHANDAR v. MUNC. COMMIITEE (M11dholka.r, J.)
507
certain rule framed under s. 79(1) (xxix) of the Central Provinces
Local Self-Government Act, 1920 After quoting s. 71 and the rule
relied on the learned Judge observed :
"It will be observed that both section 79 and the rule are
confined to orders and decisions given under the Act. It is
impossible to say that an order which contravenes the law or
is made in the face of an express statutory prohibition can be
said to be under the Act. The words "purporting to be given"
or "made under the Act" are not present in this section and so
the difficulty which arises regarding the other point is not
present here. I hold that the suit is not incompetent on this
score."
Pointing out that the other question urged before him was
more difiicult the learned Judge said that his conclusion was that
what was done in the case was not "under the Act" and. therefore.
what remained for consideration was whether it was "purported to
be done" under the Act. He came to the conclusion that what was
done was not "purported to be done under the Act" and expressed himself thus:
"Now this expression has recently been interpreted by their
Lordships of the Privy Council in H.H.8. Gill v. The King(')
also in Hori Ram Singh v. The Crown(') of which their Lordships approved. The question is a difficult one and as Varadachariar J. observed in the Federal Court decision at p. 187. it
is neither possible nor desirable to lay down any hard and fast
rule. The question is substantially one of fact and "must be
determined with reference to the act complained of and the
attendant circumstances." I think, however, that the following
test which their Lordships of the Privy Council laid down concludes the matter so far as this Act is concerned. Their Lordships say: "A public servant can only be said to act or to purport to act in the discharge of his official duty, if ·his act is
such as to lie within the scope of his official duty." Now I can
understand it being said that an act which is within the scope
of an official duty cannot be taken out of that category simply
because it is carelessly or negligently performed, but I cannot
see how an act which is expressly prohibited by Jaw can be
said to lie there. If a magistrate directed to supervise a sentence
of whipping duly imposed by a competent Court has the wrong
man whipped by mistake or imposes more lashes than warranted. I can understand him being protected. He is there acting within the scope of his duty. But if. instead of having
the man whipped. he has him branded with a hot iron he
would not, in my opinion, be able to claim the protection. In
the same way I cannot see how a Municipal Committee can
(') A.LR. [1948] P.C. 128.
c•r 19391 F.c.R. 159.
508
COUUT Rl<iPORTS
[J 96ii) :J S.C.R.
be said to be acting 'under the Act.' when it does that which is
A
expressly prohibited by "the Legislature. Say it purported to tax
salt. Its action would not be covered by sec. 73 because the
Constitution Act makes that an exclusively Central subject.
Say also a municipality attempted to tax marriages or births.
that would be completely beyond its province and it could not
be heard to say that because it has been given certain limited
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powers of taxation, therefore it 'purports to act' under the Act
wha tcver the nature of the tax it attempts to impose. In the
same way, if the Le:;islature limits the authority of the Committee tc a '.Tiaximum of Rs. 50 I do not think it can be sciid
to purport to act within the scope of the Act if it
beyond its limited provisions."
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A reference may be made to the decision in The Amraoti
Town Municipal Committee v. Shaikh Bhikan(') which apparently
takes a contrary view. There f:'liyogi J., sitting singly has held that
a suit against a munic;pal committee for the recovery of a tax illegally collected is governed bys. 48 of the Central Provinces Municipalities Act, and, is, therefore, barred by limitation if not filed
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within six months of the. date of the co1J11ction of the tax. That case
is, however, distinguishable in that there was no prohibition to the
levy of the tax and all that had happened was that proper procedure
had not been followed in imposing the tax. This was thus a case of
something purporting to be done under the Act but not done strictly in accordance with the provisions. That such a case would
E
squarely fall within the ambit of s. 48 cannot be questioned. But the
point is whether what was done by a local body under the colour
of an Act can be regarded as something purported to be done
under the Act even though neither the local body nor even the
State Legislature has the power to do what was in fact done.
The next case referred to was Gajadhar Hirata/ v. Municipal
Committee, Washim('). That was also a case in which a tax on
bojhas and bales of ginned cotton was raised from Re. 0-2-3 per
bale to Re. 0-4-0 per bale and the learned Judges held, following
the decision in the New East India Press Co.'s case(') that the
enhancement was ultra vires of Art. 276 of the Constitution. The
· other question did not arise for consideration in this case. This
decision is, therefore, of little assistance to us, because it is not
contended before us that the enhancement of the tax is valid.
There is, however, another decision in the. same volume at
p. 483 (The Municipality of Chopda v. Motila/ Manekchand)
which is relevant for consideration in this appeal. In that case a
Division Bench, while pointing out that the particular tax which
was levied by the Municipality was in ·substance a tax on trade
within the meaning of Art. 276 of the Constitution and being in
(') I.L.R. [1939) Nag. 216.
(') I.L.R. [1958) Born, 625.
,_
(') T.L.R. [19-18) Nog. 971.
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KALA BRANDA!\ V. MUNO. COMMITTEE (Mudholkar, J.)
509
excess of Rs. 250 p.a. was beyond the competence of the Municipality, held that a suit for its refund beyond the time prescribed by
rules was barred by limitation. According to the learned Judges the
levy of the tax though beyond the authority of a Municipality was
"an act done in pursuance or execution or intended execution of
the Bombay District Municipal Act" and was merely a wrongful
act as distinguished from an ultra vires or illegal act. In coming to
this conclusion they followed a previous decision of the High
Court in Jalgaon Borough Municipality v. The Khandesh Spin·
ning and Weaving Mills Co. Ltd.('). Incidentally we may mention
that an appeal was brought before this Court from that part of
the decision in The Municipality of Chanda, East Khandesh v.
Motilal Manekchand Press Factory, Chanda(') which held that
the levy was unconstitutional. Ayyangar J. who spoke for the
Court has stated towards the end of the Judgment as follows:-
"In the circumstances the correctness of the decision of the
High Court in holding the impugned levy to be a tax on
'callings or employments' and therefore subject to a pecuniary
limit of Rs. 250 per year does not really arise for consideration. The respondents had in their plaint, no doubt, challenged
the entirety of the levy and sought relief on that basis, but they
had however pleaded in the alternative that the tax might be
held to be one on 'a trade etc.' and therefore within Art. 276(2)
and claimed relief on this footing in the alternative. The learn·
ed Civil Judge had accepted this alternative contention
and had granted them a decree on that basis and
the respondents had not challenged the correctness of that
decision by preferring an appeal; and the learned Judges of the
High Court had accepted this view of the nature of the levy.
We however consider it proper to add that there is considerable force in the opinion expressed by the High Court that the
tax in question. at the date when the same was challenged,
being a levy imposed on persons carrying on the business of
pressing cotton, was a tax on 'professions, trades, callings, or
employments' and that the learned Jndges of the High Court
came to a correct conclusion that the respondents were entitled
to the declaration which was granted as regards the maximum
amount of the tax th2t could be levied from the respondents "
In
Bornur,h Municipality's case(') on which the High
Court :eiied in Mo'.i'.al
case, what had happened
H
was !h.1s: The Mumc1pahty actmg under s. 73(iv) of the Bombay
Mumc1pal Boroughs Act, 1925 levied octroi duty on fuel oil or furnace oil under certain rules and by-laws framed by it with the
sanction of the Government which provided for thP levy bf an
octroi duty on various articles including 'oils used for machinery'.
(') M Bom. L.R. 65.
(1) C.A. No. 168of1901 decided on Mo.rob !!, 1962
(1) 55 Bom. L.R. 65.
'
Lfl'I!{} '30 [ -5
510
SUl'l\Wi'.111 OOUl\T l\EPOIITB
[1966] 3 a.o;a.
It was found that the Municipality was not entitled to levy any
octroi duty on fuel oil or furnace bi1 which was not comprised
within the items enumerated in the octroi rules and by-laws. The
respondent who had paid the tax instituted a suit for its recovery.
One bf the questions which arose for consideration was whether
the provisions of s. 206 of the Bombay Municipal Boroughs Act,
1925 corresponding to those of s. 48 of the Central Provinces
and Berar Municipalities Act, 1922 applied tb the case. The
learned Judges of the High Court held that what the municipality
did was not an act done in pursuance of the Act. but it was an act
which it purpcY'ted to do in pursuance of the Act and that there·
fore its action was well within the terms of s. 206. In the course
of the judgment Bhagwati J.. observed that the acts which fell
within the c;ltegory of those "don.e or p11rporting to have been
done in pursuance bf this Act" could only be those which were
done under a vestige or semblance of authority or of a shadow
of right. If an act was outrageous and extraordinary or ·<;ould not
be supported at all, not having been done with a vestige or
bf
or a shadow of
!nvested in the party
domg that act, 1t would not be an act which ls done or purported ·
to have been done in pursuance of the Act. The distinction is
really between ultra vires and illegal acts, on the one hand, and
wrongful acts, on the other-wrongful in the sense that they purport
to have been done in pursuance of the Act; they are intended to
have been done in pursuance of the Act if they are done with a
vestige or semblance of authority, or a sort of a right invested in
the party doing those acts. The learned Judge then referred to cer·
tain decisions and said that under s. 73(iv) of the Act power was
given to the Municipality to impose octroi duty on articles and
goods imported within its jurisdiction. What had happened there
was that the defendants, on the interpretation which they gave to
the words "oils used for machinery", did something which ultimately, on an adjudication in that behalf, the court found tb be wrong.
By acting in that way what the Munidpality purported to do could
not be said to be illegal or outrageous and extraordinary or done
without having any vestige or semblance of authority or without
even a shadow of a right.
Apart from the fact that much of what was said In this case Is
opposed to a recent decision of this Court to which we will presently
make a reference certain observations made by Bhagwati J., in fact
lend support to the <irgument advanced before us by Mr. Patwardhan. The observations we have in mind are to the effect that where
a municipality, not having the power to levy a particular tax at all,
either wholly or in regard to some classes of goods, had purported
to levy the same it would certainly be an act which was "outrageous
and extraordinary, or done without having any vestige or sernb·
lance of authority or without even a shadow of a right". Here, the
overstopping of its authority by the Municipality con.sists not in the
matter of the selection of a class of good11 but of that of the rate at
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LlL.l BllANDAB v. KUNC. COWIITTEE (Mwfholkar, J.)
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which it has levied and collected a tax. It has levied and collected a
tax beyond constitutional limits. Therefore, to the extent it has done
so the tax could properly be said to have been levied without a
vestige or semblance of authority or even of a shadow of right.
We may now refer to the recent decision of this Court in The
B Poona City Municipal Corporation v. Dattatraya Nagesh Deodhar('). That was a case in which the Municipal Corporation had
imposed a tax on the refund of octroi duty collected by it on goods
imported within the Municipal limits of the city. Its practice was to
deduct the tax from the amount which it was required to refund
a
and pay the person entitled to the refund only the balance. A suit
was instituted by the respondents for refund of the amount illegally
deducted by the Corporation from the octroi refund made by the
Corporation to the respondents. It was contended on behalf of the
Corporation that the deduction made by it was valid and that the
suit was barred by limitation. This Court upheld the contention of
the respondents that the Corporation had no power to impose the
D tax and that in fact there was a prohibition against the imposition
of such a tax by the Corporation. On the plea of limitation, which
was founded upon the provisions of s. 487 of the Bombay Act
which are almost the same as those of s. 48 of the Act with which
we are concerned, this Court observed :
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"The benefit of this section would be available to the Corporation only if it was held that this deduction of ten per cent
was 'an act done or purported to be done in pursuance or
execution or intended execution of this Act.' We have already
held that this levy was not in pursuance or execution of the
Act. It is equafty clear that in view of the provisions of s. 127
(4) (to which we have already referred) the levy could not be
said to be 'purported to be done in pursuance or execution or
intended execution of the Act.' For, what is plainly prohibited
by the Act cannot be claimed to be purported to be done in
pursuance or intended execution of the Act.''
Sub-sec. (4) of s. 127 of the Act to which this Court has
referred is in the following terms :
"Nothing in the section shall authorise the imposition of any
tax which the State Legislature has no power to impose in the
State under the Constitution."
It is pertinent to bear in mind that the conclusion of this Court
on the question whether the act was "done or purported to be
done" under the Act was not based solely on this provision and
reliance was placed upon it as affording additional support to the
conclusion already arrived at. It seems to us that this provision was
enacted by way of abundant caution. For, the Constittltion is the
(') [1914] I S.C.B. 178.
t>l2
SUPREME COURT REPORTS
[1965] 3 s.c.R.
fundamental law of the land and it is wholly unnecessary to provide in any law made by the Legislature tha!t anything done in
disregard of the Constitution is prohibited. Such a prohibition has
to be read in every enactment. This decision does appear to conclude the matter.
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During the pendency. of the suit before the trial court the appellant had preferred a writ petition before the High Court at Nag;
pur in which it contended that the notification of April 10, 1941
enhancing the tax from one anna per bojha and one anna per bale
to four annas per bojha and four annas per bale was illegal and
ultra vires and should therefore be ·quashed. This petition was ,
granted by the High Court on April 12, 1955. There was, therefore,
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a direct decision before the trial court and the appellate court
which though it could not be treated as res judicata was binding on
those courts and was treated as such by them and it is perhaps
because of this that it was not sought to be urged on behalf of the
Municipal Committee when the second appeal was argued before
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the High Court that the notification is valid and, therefore, the
Municipal Committee could recover the tax at the enhanced rate.
Though Mr.