the Western India Theatres Ltd. v. Municipal Corporation of the City of Poona

Judgment

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 146 of 1955. Appeal from the judgment and decree dated February 10, 1953, of the Bombay High Court in Appeal No. 953 of 1951, arising out of the judgment and decree dated November 30, 1951, of the Court of 73 Joint Civil Judge, Senior Division, Poona, in Specia.l x959 Suit No. 76 of 1950. Th e Western India H. D. BanaJi, R. A. Gagrat and G. Gopalakrishnan, Theatr~s Ltd. for the appellant. M. 0. Setalvad, Attorney-General for India, S. N. Municipa1 1 h. A dz d J B Corporation o t e n ey an . Da ac anJi, 1or t e·respon ent. City of Poona 1959. January 16. The Judgment of the Court was delivered by Das c. J. DAS, C. J.-The appellant is a public limited company registered under the Indian Companies Act, 1913. It is a lessee of four cinema houses situate within the municipal limits of Poona City known respectively as "Minerva'', "The Globe ", "Sri Krishna " and "The Nishat ".

It exhibits cinematograph films, both foreign and Indian, in the said four houses. The respondent, a body corporate, was governed by the Bombay District Municipal Act, 1901 (Born. III of 1901) up to June 8, 1926, and from then by the Bombay Municipal Boroughs Act, 1925 (Born. XVIII of 1925) up to December 29, 1949, and, thereafter, by the Bombay Provincial Municipal Corporation Act, 1949 (Born. LTX of 1949). With effect from October 1, 1920, the respondent, with the sanction of the Government of Bombay levied on the owners and lessees of cinema houses within the limits of the erstwhile province of Bombay a tax of Rs. 2 per day as license fee. Rules for the levy and collection of the said tax were framed by the respondent. Those rules were amended on or about June 3, 1941, enhancing the tax from Rs. 2 per day to Re. l per show. The rules were again revised on or about June 9, 1948, under which the tax was enhanced from Re. 1 per show to Rs. 5 per show.

At all material times the tax wa,s being collected at the last mentioned rate. Section 59 of the Bombay District Municipal Act 1901 provided that subject to any general or special orders which the State Government might make in that behalf any municipality (a) after observing the preliminary procedure required bys. 60, and (b) with the sanction of the authority therein mentioned, might IO 74 '959 impose for the purposes of that Act any of the taxes The we:;;n India men~ioned in that section.. After en1;1~era:ting ten Theatres Ltd. specific heads of taxes, which a mumc1pahty could • levy, a residuary category was set forth in cl. (xi) in Mnnicipal the words following:- Corporation of the "Any other tax to the nature and object of which City of Poona the approval of the Governor in Council shall have Das c. J. been obtained prior to the selection contemplated in sub-clause (il of clause (a) of section 60 ".

Ever since the appellant became a lessee of the said cinema houses, the appellant has be!ln making payments of the said tax under protest. After giving the necessary statutory notice to the respondent, the appellant, on or about March 31, 1950, filed a suit in the Court of the Civil Judge, Senior Division, Poona, being Suit No. 76 of 1950, against the respondent for a declaration that the levy and imposition of the said tax with effect from October 1, 1920, were invalid and illegal; that the enhancement in the rates of the tax with effect first from June 3, 1941, and then June 9, 1948, was invalid and illegal and that the resolutions passed and rules framed in connection with the levy, imposition, enhancement and collection of the said impugned tax were invalid, illegal and ultra vires, for a permanent injunction restraining the defendants from levying or recovering and or increasing and enhancing the said tax and for refund to the appellant of the amounts of the tax collected from it and for costs of the suit and interest.

By its judgment dated November 30, 1951, the ~rial court held that the said tax was validly levied and imposed, but that the increase and enhancement thereof in 1941 and 1948 were illegal and ultra vires and that the suit was not barred under the Acts governing the respondent. The trial court decreed the suit in part by issuing an injunction restraining the respondent from levying, recovering or collecting the tax at the enhanced rate and passing a decree against the respondent for refund of a sum of Rs. 27,072 with interest and costs. The respondent preferred an appeal and the appellant filed cross objections. But the HighCourt by its judgment and decree dated February 10, 1953, 75 reversed the judgment of the trial court and dismissed I959 the suit of the appellant with costs throughout.

The Th w - 11 l O estern India appe ants cross o Ject10ns were a so 1smisse . n Theatres Ltd December 10, 1953, theHigh Court granted leave to the appellant to appeal to this Court from the said judg- Municipal ment. Hence this final appeal questioning the vali- Corporation of the dity of the impugned tax. City 0f. Poona The first point urged in this appeal is that the law imposing this tax is not covered by entry 50 in List II of the Seventh Schedule to the Government of India Act, 1935, but is really a tax on the appellant's trade or calling referred to in entry 46 and that, therefore, the amount of tax cannot under s. 142-A of the Government of India Act, 1935 exceed Rs. 100 per annum. This point need not detain us long, for it is covered by us in the appellant's other appeal No. 145 of 1955. The second point urged before us in support of this appeal is thats. 59(1)

(xi) is unconstitutional in that the legislature had completely abdicated its functions and had delegated essential legislative power to the Municipality to determine the nature of the tax to be imposed on the rate payers. Learned counsel for the appellant urges that the power thus delegated to the municipality is unguided, uncanalised and vagrant, for there is nothing in the Act to prevent the municipality from imposing any tax it likes, even, say, income tax. Such omnibus delegation, be contends, cannot on the authorities be supported as constitutional. We find ourselves in agreement with the High Court in rejecting this contention. In the first place, the power of the municipality cannot exceed the power of the provincial legislature itself and the municipality cannot impose any tax, e.g., income tax which the provincial legislature could not itself impose. In the next place, s. 59 authorises the municipality to impose the taxes therein mentioned "for the purposes of this Act".

The obligations and functions cast upon the municipalities are set forth in ch. VII of the Act. Taxes, therefore, can be levied by the municipality only for implementing those purposes and for no other purpose. In other words it will be open to the municipality to levy a tax for giving any of the amenities therein mentioned. Das C. ]. 76 I959 The matter may be illustrated by reference to . s. 54 which enumerates the duties of municipa- Th•T:estern L~;dia lities. The first duty mentioned in that section is eat~s that the Municipality should make provision for Munfripal lighting public streets and nobody can object if it Co,po,otion of the imposes a lighting tax, which, indeed, is item (ix) in City of Poona s. 59(1). Take another example: It is the duty of the Municipality to arrange for supply of drinking water Dos c. J. and it may legitimately charge a water rate which, again, is item (viii) in s. 59(1).

We do not for a moment suggest that the municipalities may only impose a tax directly in connection with the heads of duties cast upon it. ·what we say is that the tax to be imposed must have some reasonable relation to the duties cast on it by the Act. In the third place, although the rule of construction based on the principle of ejusdem generis cannot be invoked in this case, for items (i) to (x) do not, strictly speaking, belong to the same genus, but they do indicate, to our mind the kind and nature of tax which the municipalities are authorised to impose. Finally, the provincial legislature had certainly not abdicated in favour of the municipality, for the taxing power of the municipality was quite definitely made subject to the approval of the Governor-in-Council. Under the Indian Council Act, 1861 (24 & 25 Vic. c. 67) the Governor-in-Council might mean· the Governor in Executive Council or the Governor in Legislative Council. If the reference in s.

59(l)(xi) is to the Governor's Legislative Council, then there was no improper delegation at all, for it was subject to the legislative control of the Governor in Legislative Council. Tho Governor's Legislative Council was composed of all the members of the Governor's Executive Council besides a few other persons. Therefore if the reference was to the Governor in his Executive Council even then, from a practical point of view, the ultimate control was left with the Governor's Legislative Council. We need not labour this point any further, for on the first three grounds the delegation of legislative authority, if any, is not excessive so as to make the exercise of it unconstitutional. In our opinion the impugned section did lay down a principle and fix a standard (2) S.C.R. 77 which the municipalities had to follow in imposing a r959 tax and the legislature cannot, in the circumstances, Tl w- 1 a· ie estetn n 1a be said to have had abdicated itself and, therefore, Theatres Ltd. the delegation of power to impose any other tax cannot be struck down as being in excess of the permis- Municipal sible limits of delegation of legislative functions.

Corporation of the The last point urged by learned counsel for the City of Poona appellant is that, under cl. (xi) of s. 59(1), the enhance- Das c. J. ments of the rates of the tax in 1941 and again in 1948 were illegal in that the municipality had· no power to do so under the Bombay Municipal Boroughs Act, 1925. According to learned counsel for the appellant the judgment under appeal upholding the validity of such enhancements cannot be supported under s. 60 of that Act. That section runs as follows :- "Power to 60(1) Subject to the requirements suspend, reof clause (a) of the proviso to secduce or abotion 58 a municipality may, except as lish any exotherwise provided in clause (b) of the isting tax proviso to section 103 at any time for any sufficient reason, suspend, modify or abolish any existing tax by suspending, altering or rescinding any rule prescribing such tax. (2)

The provisions of Chapter VII relating to the imposition of taxes shall apply so far as may be to the suspension, modification or abolition of any tax and to the suspension, alteration or rescission of any rule prescribing a tax." Reference is made to the marginal note where the words used are "power to suspend, reduce or abolish any existing tax". It is suggested that the word " modify " in the body of the section in between the words " suspend" and "abolish " should be construed in the sense of reduction. The marginal note, according to him, shows that the several words were used in the section to indicate a progressive diminution in the quantum of tax until it was completely gone .. Reference is made to the root meaning of the word "modify " w hie h is to reduce or make less but does not cover the .idea of enhancement.

In the first place, the marginal note cannot affect the construction of the language used in the body of the section if it is otherwise clear and unambiguous (see Commissioner of 78 I9S9 Income Tax, Bombay v. Ahmedbhai Umarbhai & Co., The Western India Bombay) (1). In the next place, it should be borne in Theatres Ltd. mind that s. 67 of the Bombay District Municipal Act (Born. III of 1901) which was formerly applicable Munfripal to municipalities used the word "reduce" in between Corporation of the the words " suspend " and " abolish " and that that City of Poo1ta "h d b section een re pro uce 1s s. 60 o t e om a y Das c. J. Municipal Boroughs Act, 1925, but that in the process of such reproduction the word "reduce" was dropped and the word " modify " was introduced. In the marginal note, however, the word "reduce" was not substituted by the word "modify", apparently through inadvertence.

If the word "modify" is to be read as "reduce'', then there could be no point in the provincial legislature substituting the word "reduce " by the word "modify". This change must have been made with some purpose and the purpose could only have been to use an expression of wider connotation so as to include not only reduction but also other kinds of alteration. Section 76 of this very Act also refers to "modification not involving an increase in the amount to be imposed" which makes the sense in which the word "modify" has been used in this Act perfectly clear, namely, that there may be a modification involving an increase. Reference may also be made to the decision of the Court of Appeal in England in the case of Stevens v. The General Steam Naviga. tion Company, Ltd. (2). " Modification ", acc,ording to Collins M. R. in his judgment at p. 893, implied an alteration and the word was equally applicable whether the effect of the alteration was to narrow or to enlarge the provisions.

In our opinion the dropping of the word ".reduce" and the introduction of the word "modify" in the body of s. 60 of the Act under consideration clearly indicate an intention on the part of legislature to widen the scope of this section and the High Court was right in so construing the same. No other point was urged in this appeal and for reas'ons stated above this appeal must be dismissed with costs. Appeal dismissed. (1) [1950] S.C.R. 335 at p. 353· (2) L.R. (1903) I K.B. 890.