Jethalal Nagji Shah v. Municipal Corporation For Greater Bombay, Bombay High Court, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

First Appeal No. 481 of 1952 with F.A No. 482 of 1952

Attorney(S)

M.V Desai, with B.J Diwan, with Daphtary Ferreira & Diwan,
G.A Thakkar with B.G Desai and P.D Dalal,
G.A Thakkar with B.G Desai and P.D Dalal,
R.J Joshi, with N.K Petigara,
F.A No. 481 of 1952.
F.A No. 482 of 1952.

Judges

Mr. M.C Chagla, C.J
Mr. Dixit, J.

Acts

LAND ACQUISITION ACT 1894
Act No. XLVIII of 1948 by adding sub-s. (5A) to section 46, that new sub-section
Improvement Act, 1911, and those provisions of the Land Acquisition Act, 1894,
provisions of those sections were provisions of the Excess Profits Tax Act,
Excess Profits Tax Act makes the sections of the Indian Income-tax Act
Indian Income-Tax Act, 1948, applies to the Excess Profits Tax Act
sub-s. (5A) of s. 46 read with s. 21 of the Excess Profits Tax Act
INDIAN INCOME TAX ACT
Indian Income-tax Act without the Excess Profits Tax Act
provisions of the Indian Income Tax Act applicable s. 21
provisions of the Indian Income-Tax Act, 1922,
sections of the Indian Income Tax Act, 1922,
section 46 to the Excess Profits Tax Act;
section 21 in the Excess Profits Tax Act
Section 21 of the Excess Profits Tax Act
INDIAN INCOME TAX ACT
Excess Profits Tax Act sub-s. (5) of s. 46
s. 21 of the Excess Profits Tax Act
section 80 of the Code of Civil
sub-s. (5). The Income tax Act
Indian Income-tax Act, 1922,

See more information ...

Smart Summary

Factual and Procedural Background

This appeal arises from a judgment of Mr. Hathi, Judge of the City Civil Court, Bombay, which dismissed the plaintiff's suit. Facts as set out in the opinion:

Rowji Sojpal had a contract with the Municipal Corporation of Bombay for construction of sewers. Under that contract the Municipality admittedly owed Rowji Rs. 14,517-10-0 as of 31 March 1950.
On 20 March 1950 Rowji assigned the benefit of the contract to the plaintiff; the plaintiff sued the Municipality to recover Rs. 14,517-10-0.
The Municipality did not dispute the contractual liability, but defended on the ground that it had paid the sum to the Union of India following a notice from the Excess Profits Tax Officer (notice dated 29 April 1950; payment made 5 May 1950), and that such payment discharged the Municipality's debt to Rowji.
The trial Judge upheld the Municipality's defence and dismissed the suit. A third-party notice had been issued against the Union of India claiming the sum in the event the Municipality's payment to the Union was unjustified; the trial Judge held that, if appeal court took a different view, the third-party notice was bad because no notice had been given to the Union under section 80 of the Code of Civil Procedure.
The appellate Court was called upon to decide (a) whether the Excess Profits Tax Officer was empowered to recover the sum from the Municipality under provisions made applicable by section 21 of the Excess Profits Tax Act read with sub-section (5A) of section 46 of the Income-Tax Act (as amended in 1948), and (b) whether the deed of assignment from Rowji to the plaintiff was effective to permit the plaintiff to sue.
Two appeals are noted: Appeal No. 481 of 1952 (plaintiff v. Municipality) and Appeal No. 482 of 1952 (Municipality v. Union of India, relating to the third-party claim and s. 80 CPC).

Legal Issues Presented

Whether sub-section (5A) of section 46 of the Indian Income-Tax Act (added by Act No. XLVIII of 1948) applies to the Excess Profits Tax Act by virtue of section 21 of the Excess Profits Tax Act (i.e., whether the 1948 amendment to the Income-Tax Act operates to give the Excess Profits Tax Officer the recovery powers contained in sub-s. (5A)).
Whether the Municipality's payment to the Union of India (pursuant to a notice said to be under sub-s. (5A) of s. 46) discharged the Municipality's liability to Rowji Sojpal (and therefore to the plaintiff, the assignee).
Whether the deed of assignment executed by Rowji Sojpal (in which he described himself as karta of a joint undivided Hindu family, whereas the original contract was entered into by him as sole proprietor of Rowji Sojpal & Sons) was effective so that the assignee could sue the Municipality.
Whether a third-party notice against the Union of India was invalid for want of service under section 80 of the Code of Civil Procedure, or whether that requirement did not apply because the third-party notice was not a suit.

Arguments of the Parties

First Defendant (Municipality) — summarized arguments

The Municipality did not deny contractual liability but asserted that it had been validly discharged by payment to the Union of India made pursuant to a notice served by the Excess Profits Tax Officer (notice dated 29 April 1950; payment on 5 May 1950).
The Municipality's position was that the payment was made under the authority of sub-s. (5A) of s. 46 of the Indian Income-Tax Act as applied to the Excess Profits Tax Act under s. 21, and hence the payment operated as a discharge of the Municipality's debt to Rowji/assignee.
The Municipality also raised a challenge to the assignment on the ground that the deed described Rowji as karta of a joint family while the original contract had been entered into by him as sole proprietor (arguing a potential risk that payment to the assignee might not be a complete discharge because of possible claims by co-parceners).

Union of India — summarized arguments

The Union's representative (Mr. Joshi) conceded on the merits that the Union would have no substantive defence to the Municipality's claim if the payment to it was held unjustified; the Union's only remaining defence was a technical one under section 80 of the Code of Civil Procedure concerning service of notice.
On the point whether s. 80 applied to the third-party notice, Mr. Joshi fairly conceded the Union had no substantive answer and ultimately agreed to represent the Court's view to the proper authorities that the Union should not refuse payment merely on the s. 80 technicality; pending decision by the Union the appeal was to stand over.

The opinion does not contain a detailed, separate summary of the plaintiff's counsel arguments in the same granular way as for the Municipality and the Union; the plaintiff's position (that it was entitled to recover the contractual sum as assignee) is evident from the relief sought and the Court's disposition.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Secretary of State for India v. Hindusthan Co-operative Insurance Society (Privy Council)	When a later/local Act incorporates provisions of an earlier Act by reference, those provisions become part of the later Act and their subsequent modification in the earlier Act (without express application to the later Act) does not automatically alter the incorporated provisions.	The Court relied on this authority to support the principle that incorporation by reference can make provisions part of the later Act, and to explore whether s. 21 of the Excess Profits Tax Act effected such incorporation.
In re Wood's Estate	If a subsequent Act brings into itself by reference clauses of a former Act, those clauses are to be treated as written into the later Act — i.e., one need not refer back to the former Act once incorporated.	The Court cited this view to explain the legal effects of incorporation by reference, as part of its analysis whether the Income-Tax Act provisions (including later amendments) applied to the Excess Profits Tax Act.
The Queen v. Smith (per Chief Justice Cockburn)	When an Act or part of an Act is incorporated into a subsequent Act, repeal of the first Act does not repeal the part incorporated in the second Act without express words to that effect; incorporation may be effected by various forms of words.	The Court used this proposition to show that incorporation can be by any form of words, and then examined the specific language of s. 21 to determine whether it amounted to incorporation which would preserve or exclude later amendments.

Court's Reasoning and Analysis

The Court's reasoning proceeds in two principal strands: (A) whether the 1948 amendment (s. 46(5A) of the Income-Tax Act) applied to the Excess Profits Tax Act by virtue of s. 21; and (B) whether the assignment to the plaintiff was effective.

A. On whether s. 46(5A) applied to the Excess Profits Tax Act

The Court began by identifying statutory mechanics: section 21 of the Excess Profits Tax Act makes certain sections of the Indian Income-Tax Act applicable to the Excess Profits Tax Act "as if the provisions of those sections were provisions of the Excess Profits Tax Act", and s. 21 also contemplates modifications by rules made under the rule-making power conferred by s. 27 on the Central Board of Revenue.
The Court observed that the rules framed under s. 21 had deleted sub-s. (5) of s. 46 for purposes of the Excess Profits Tax Act, leaving the first four sub-sections as the only mode of recovery applicable under the Excess Profits Tax Act.
The Income-Tax Act was amended in 1948 by adding sub-s. (5A) to s. 46, which conferred a wide power on the Income-tax Officer to require any person from whom money was due (or might become due) to the assessee to pay that amount to the Income-tax Officer; the subsection expressly deemed payment in compliance with such a notice to be made under the authority of the assessee and to constitute a good discharge of that person's liability to the assessee to the extent of the receipt.
The core question was whether that new statutory power (s. 46(5A)) in the Income-Tax Act applied to the Excess Profits Tax Act without express amendment to the Excess Profits Tax Act. The Court examined the intent and language of s. 21, stressing that when s. 21 was enacted (in 1940) the legislature had before it the Income-Tax Act as it then stood; the legislature could only have intended to apply those sections as they existed and to permit only such modifications as might be prescribed by rules — i.e., modifications by subordinate rule-making, not by later legislative amendment to the Income-Tax Act.
The Court applied established principles (cited authorities) on incorporation by reference: incorporation makes the incorporated provisions part of the later Act, and normally subsequent changes in the earlier Act do not affect the provisions as incorporated in the later Act unless expressly made applicable. The Court noted that s. 21 uses particularly clear language — "as if the said provisions were provisions of this Act" — which strongly indicates that the Income-Tax provisions were to be treated as part of the Excess Profits Tax Act itself as it stood under the terms contemplated in s. 21, subject only to rule-based modifications permitted by s. 21 and not to later legislative amendments of the Income-Tax Act.
The Court concluded that Act No. XLVIII of 1948 (which added s. 46(5A) to the Income-Tax Act) did not, by itself, apply that new sub-section to the Excess Profits Tax Act. Consequently the Excess Profits Tax Officer had no authority under sub-s. (5A) to call upon the Municipality to pay the amount due to Rowji; the payment by the Municipality to the Union thus did not discharge the Municipality's debt to Rowji under the contract.

B. On the assignment and description of Rowji as karta

The Municipality argued that the deed of assignment was executed by Rowji describing himself as the karta of a joint family, whereas the original contract had been entered into by Rowji as sole proprietor, and that therefore payment to the assignee might not give the Municipality a complete discharge due to potential claims by co-parceners.
The Court analysed privity and the nature of the contractual relationship: the only privity under the contract was between the Municipality and Rowji personally (as sole proprietor); the joint family had no privity with the Municipality and could not have sued on the contract.
The Court held that the critical question for the debtor (Municipality) was whether payment to the assignee would give a full and proper discharge. If Rowji had conveyed his complete interest under the contract to the assignee, payment to the assignee would give the same discharge as payment to Rowji himself. The Court found that whatever interest Rowji had in the contract had been assigned to the plaintiff and therefore rejected the Municipality's contention as to the assignment.

C. On the third-party notice and section 80 CPC issue

The trial Judge had held the third-party notice against the Union of India bad for want of service under s. 80 of the Code of Civil Procedure. The Municipality argued before the appellate Court that s. 80 did not apply because the third-party notice was not a suit.
The Union (through its counsel Mr. Joshi) conceded that on the merits the Union had no defence to the Municipality's claim (i.e., that the payment should be refunded since it was made under a mistake of law). The Union's only apparent defence was the technical point under s. 80.
The Court persuaded the Union's counsel to represent to the proper authorities that the Union should not refuse to refund the amount merely on the s. 80 technicality; pending the Union's decision the appeal relating to the third-party claim was directed to stand over.

Holding and Implications

Holding (core rulings)

Appeal No. 481 of 1952 — APPEAL ALLOWED. The trial Court's order of dismissal was set aside. There will be a decree in favour of the plaintiff and against the first defendant (Municipality) for Rs. 14,517-10-0 with interest at 4% from 3 October 1950 until judgment, costs of the suit including High Court costs, and interest on the judgment at 4%. The respondent (Municipality) to pay the costs of this appeal.
Appeal No. 482 of 1952 — STAY / STAND OVER. On the appeal by the Municipality against the Union of India (relating to the third-party claim and the trial Court's finding on s. 80 CPC), the Court held that the payment by the Municipality to the Union was not justified in law and that the Union would be liable to refund the amount paid (since it was paid under a mistake of law). Because the Union's only remaining defence was the technical point under s. 80, and because the Union's counsel agreed to represent the Court's views to proper authorities, the matter was left pending for decision by the Union; the appeal stands over.

Implications

Direct effect: The plaintiff recovers the contractual sum from the Municipality; the Municipality is entitled to seek refund from the Union of India, subject to the Union's decision on the s. 80 issue and any administrative steps the Union may take.
The Court's decision turns on statutory interpretation of s. 21 of the Excess Profits Tax Act and the nature of incorporation by reference: the Court concluded that the 1948 legislative amendment to the Income-Tax Act (s. 46(5A)) did not automatically apply to the Excess Profits Tax Act in the absence of express provision to that effect and given the wording and rule-making structure of s. 21.
The opinion applies and discusses established authorities on incorporation by reference; it does not state that a broader new precedent beyond the case outcome was being created, but it articulates and applies longstanding principles to the statutory wording before the Court.

Order accordingly. (Appeal allowed as to Appeal No. 481; Appeal No. 482 to stand over pending the Union of India's decision.)

Show full summary ...

Jethalal Nagji Shah v. Municipal Corporation For Greater Bombay

Chagla, C.J:—

This is an appeal from a judgment of Mr. Hathi, Judge of the City Civil Court, Bombay, by which he dismissed the plaintiff's suit. The suit came to be filed under the following circumstances.

One Rowji Sojpal entered into a contract with the first defendant, the Municipal Corporation of Bombay, for construction of certain sewers and admittedly under that contract a sum of Rs. 14,517-10-0 was due by the Municipality to Rowji Sojpal on the March 31, 1950. On March 20, 1950, Rowji Sojpal assigned the benefit under this contract to the plaintiff and the plaintiff has sued the Municipality to recover this sum of Rs. 14,517-10-0. The Municipality does not dispute its liability under the contract. Its defence is that it made this payment to the Union of India under a notice served by the Excess Profits Tax Officer on the April 29, 1950 and the payment was made on May 5, 1950. The contention of the Municipality is that this payment discharges the Municipality's debt to Rowji Sojpal and therefore the plaintiff is not entitled to sue on the assignment. The trial Judge upheld the contention of the Municipality and dismissed the suit. A third party notice was also taken out against the Union of India claiming this sum of Rs. 14,517-10-0 in the event of the Court holding that the payment made by the Municipality to the Union of India was unjustified. No question arose with regard to the decision on the third party notice in view of the decision of the trial Court that the plaintiff was not entitled to sue the Municipality, but the learned Judge held that in the event of the appellate Court taking a different view the third party notice was bad, inasmuch as, no notice was given to the Union of India by the Municipality under section 80 of the Code of Civil Procedure.

It seems that a sum was due by Rowji Sojpal for excess profits tax and the Municipality being the debtor of Rowji Sojpal, the Excess Profits Tax Officer called upon the Municipality to pay the sum of Rs. 14,517-10-0 towards the liability of Rowji Sojpal for excess profits tax. This demand was made under s. 21 of the Excess Profits Tax Act and the question is whether this demand was justified in law. Section 21 of the Excess Profits Tax Act makes certain sections of the Indian Income Tax Act, 1922, applicable with such modifications, if any, as may be prescribed and the mode of bringing about these modifications is by making rules under the rule making power conferred under s. 27 upon the Central Board of Revenue. In making these provisions of the Indian Income Tax Act applicable s. 21 specifically states that these sections shall apply as if the provisions of those sections were provisions of the Excess Profits Tax Act, and one of the sections which is made applicable is s. 46 with which we are concerned in this case. Section 46 deals with the mode of recovery of income tax and the first four sub-sections of that section deal with the mode of recovery through the Collector. Sub-s. (5) provides for a different mode of recovery and that mode is where an assessee is in receipt of any income chargeable under the head “Salaries”, the Income-tax Officer is given power to require any person who has to pay the salary to deduct from the payment of the salary any amount which is due for arrears of income-tax. Now, under the rules framed under section 21 which authorised the Central Board of Revenue to make modifications in the sections of the Indian Income-Tax Act made applicable to the Excess Profits Tax Act sub-s. (5) of s. 46 was deleted. Therefore, as far as the Excess Profits Tax Act was concerned, the only mode of recovery was the mode prescribed in the first four sub-sections and not the mode prescribed in sub-s. (5). The Income tax Act was amended by Act No. XLVIII of 1948 and by that amendment a new sub-section was enacted to s. 46 and that sub-section was sub-s. (5A). This sub-section gave a very wide power to the Income-tax Officer to require any person from whom money was due or may become due to the assessee to pay the amount so due to the Income-tax Officer in respect of arrears of income-tax and the sub-section further provided that

“any person making any payment in compliance with a notice under this sub-section shall be deemed to have made the payment under the authority of the assessee and the receipt of the Income-tax Officer shall constitute a good and sufficient discharge of the liability of such person to the assessee to the extent of the amount referred to in the receipt”.

Now, the Excess Profits Tax Officer purporting to act under sub-s. (5A) of s. 46 read with s. 21 of the Excess Profits Tax Act served upon the Municipality the notice to which reference has already been made and the Municipality made the payment under sub-s. (5A) of s. 46, and it is under that sub-section that it now claims that the payment made to the Excess Profits Tax Officer constitutes a valid discharge of its liability to Rowji Sojpal and, therefore, is binding upon him.

The question that falls for determination is whether sub-s. (5A) which was incorporated into the Indian Income-Tax Act, 1948, applies to the Excess Profits Tax Act or in other words whether the provision of law which empowers the Income-tax Officer to recover arrears of income-tax according to the mode prescribed in sub-s. (5A) of s. 46 also empowers the Excess Profits Tax Officer to recover arrears of excess profits tax by a similar mode. The main and the most important fact to bear in mind is that when the Excess Profits Tax Act was passed in 1940 and when certain provisions of the Indian Income-Tax Act were made applicable to the Excess Profits Tax Act, the Excess Profits Tax Officer was given no such power to recover excess profits tax as provided subsequently in sub-s. (5A) of s. 46. The question for our determination is whether the subsequent amendment of the Indian Income-Tax Act without the Excess Profits Tax Act being amended automatically applied the amendment not only to the Indian Income-Tax Act but also to the Excess Profits Tax Act. Apart from authorities which we will presently refer, it is clear that when the legislature enacted s. 21 and when it applied certain provisions of the Indian Income-Tax Act, 1922, what it had before itself was the Indian Income-Tax Act as it stood in 1940 and amended up to that date. The legislature could only apply its mind to the legislative provisions of the Indian Income-Tax Act in 1940. It could not possibly contemplate what form or shape the Indian Income-Tax Act might take in 1948. The legislature was dealing with a special branch of taxation viz. Excess Profits Tax Act and it desired that certain provisions of the Indian Income-Tax Act should also apply to the Excess Profits Tax Act and, therefore, in s. 21 it specifically referred to those sections of the Indian Income-Tax Act which it intended should apply to the Excess Profits Tax Act. It is also significant that the only modifications of these sections which the legislature contemplated were the modifications which may be prescribed and it is clear looking to the definition of “prescribed” that “prescribed” meant prescribed not by a legislative amendment but by rules made under the Excess Profits Tax Act. Therefore if the language has any meaning at all, it is clear that in enacting s. 21 the legislature did not contemplate any modification of the provisions set out in that section by a legislative amendment of the Indian Income-Tax Act. If that had been the intention of the Indian legislature, nothing would have been easier than for the legislature so to have provided in s. 21. It could have stated that the provisions of the various sections set out in section 21 shall apply to the Excess Profits Tax Act as amended from time to time or as may be made by a competent legislature. But, to repeat, the legislature confined itself to contemplating only one type of modification and that was a modification by rules and not by a legislative amendment.

Now, the principle has been fairly well established that if you have a prior Act and the legislature passes a subsequent Act and the legislature wishes to incorporate into the subsequent act certain provisions of the prior act, the legislature instead of bodily incorporating all those provisions may incorporate them merely by reference. This the legislature does for convenience. But the incorporation in the subsequent Act makes the incorporation such a part of the subsequent Act as if it had been expressly put in that subsequent act. once the provisions of the prior act have been incorporated into the subsequent Act, those provisions have, as it were, an independent existence and that existence is in no way affected by the fate of those provisions in the prior Act, whether the prior Act is repealed or the prior Act is modified. Therefore, applying that principle to s. 21, once the legislature incorporated certain sections of the Indian Income-Tax Act by refernece in the Excess Profits Tax Act, then the fact that those sections were subsequently modified or those sections were repealed would not in any way affect these sections to the extent that they were incorporated in the Excess Profits Tax Act and become part of the Excess Profits Tax Act itself. There is a decision of the Privy Council in Secretary of State for India v. Hindusthan Co-operative Insurance Society(4) where their Lordships were considering the Calcutta Improvement Act, 1911. It was a local Act and the earlier Act—the Land Acquisition Act, 1894, and certain sections of the Land Acquisition Act, 1894, were incorporated in the Calcutta Improvement Act, 1911, and those provisions of the Land Acquisition Act, 1894, were subsequently modified by Act XIX of 1921 and Sir George Lowndes delivering the judgment of the Board says (p. 266):

“Their Lordships regard the local Act as doing nothing more than incorporating certain provisions from an existing Act, and for convenience of drafting doing so by reference to that Act, instead of setting out for itself at length the provisions which it was desired to adopt”.

Again at page 267:

“It seems to be no less logical to hold that where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, can be deemed incorporated in it, at all events if it is possible for the subsequent Act to function effectually without the addition”.

Now, it is hardly necessary to state that Act No. XLVIII of 1948 did not expressly apply the amendment of section 46 to the Excess Profits Tax Act; nor is it necessary to state that the Excess Profits Tax Act could function and did function effectually without the addition introduced by sub-s. (5A). Sub-s. (5A) merely added a new mode of recovery tax. The excess profits tax was being recovered and the mode of recovery was as laid down in the several provisions of the Indian Income-Tax Act. Therefore, it could not be said that without the application of sub-s. (5A) the taxing authorities could not recover the excess profits tax from the assessees. There is also a leading English decision to which reference may be made and that is In re Wood's Estate(5) and Lord Esher says this (p. 615):

“If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the new Act just as if they had been actually written in it with the pen, or printed in it, and, the moment you have those clauses in the later Act, you have no occasion to refer to the former Act at all”.

Both Mr. Thakkar who appears on behalf of the Municipality and Mr. Joshi who appears on behalf of the Union of India fairly concede, as indeed they must, that in face of these authorities it is not possible for them to contend that if the provisions of the Indian Income-Tax Act were incorporated in the Excess Profits Act by reference, then the subsequent amendment of the Indian Income-Tax Act could not possibly affect the Excess Profits Tax Act. But the argument put forward before us by both the counsel is that when you look at the language of section 21, there has been no incorporation of the provisions of the Indian Income-Tax Act. What is emphasised is that s. 21 provides that the sections of the Indian Income-Tax Act mentioned in section 21 shall apply and not shall be incorporated in the Excess Profits Tax Act and the contention is that because the Excess Profits Tax Act makes the sections of the Indian Income-Tax Act to apply, what is made applicable is not the sections of the Indian Income-Tax Act as they stood in 1940 but the sections of the Indian Income-Tax Act as may be amended from time to time. We do not propose to express any opinion as to what would be the true legal position if section 21 had merely made the provisions of the Indian Income-Tax Act applicable and had said nothing more, although it seems to us difficult to understand how in principle the position would be different if the legislature had applied certain section of a prior Act to what the position would be if the legislature had incorporated the provisions of those sections in the subsequent Act and made it part of the Act, because, as pointed out by Chief Justice Cockburn in The Queen v. Smith(6) (p. 150):

“Upon the whole, however, I think the principle is sound, that when an Act, or part of an Act, is incorporated by any form of words in a subsequent Act, the repeal of the first Act does not repeal the part incorporated in the second Act, without express words to that effect”.

Therefore, according to the learned Chief Justice, incorporation may be by any form of words and no particular form of words is necessary. But in this particular case s. 21 does not merely apply the sections of the Indian Income-Tax Act but goes on to provide “as if the said provisions were provisions of this Act.” No clearer language could have been used to suggest that the legislature was incorporating the sections mentioned in section 21 in the Excess Profits Tax Act itself, in other words instead of taking pen and paper and writing out these sections in a schedule to the Excess Profits Tax Act, the legislature thought it more convenient and less laborious to merely make a reference to the sections which could be found by turning up the Indian Income-Tax Act.

Mr. Joshi has drawn our attention to a large number of statutes where provisions of some earlier Acts are made applicable. We express no opinion as to what would be the effect of any subsequent amendment of the prior statutes; nor is it necessary for us to express any opinion because, as already pointed out, the language used in s. 21 is different from the language used in the other statutes and the expression “as if the said provisions were provisions of this Act” do not occur in any other statute, nor does the clear intention of the legislature become apparent in the earlier statute as to what modifications the legislature was contemplating to the section which has been incorporated from the earlier statute. Therefore, in our opinion, when the Indian Income-Tax Act, 1922, was amended by Act No. XLVIII of 1948 by adding sub-s. (5A) to section 46, that new sub-section did not apply to the Excess Profits Tax Act and the Excess Profits Tax Officer had no authority to call upon the Municipality to pay the amount due to Rowji Sojpal and the payment by the Municipality to the Union of India of the debt due to Rowji Sojpal towards the liability of Rowji Sojpal to the Union of India for excess profits tax did not discharge the Municipality from its debt due to Rowji Sojpal under the contract.

There is one other point which was taken before the lower Court to which reference might be made and which has been urged before us by Mr. Thakkar and that is with regard to the assignment made by Rowji Sojpal in favour of the plaintiff. Now, the contract which Rowji Sojpal entered into with the Municipality was as the sole proprietor of Rowji Sojpal & Sons. In the deed of assignment which was executed in favour of the plaintiff Rowji Sojpal describes himself as the karta of a joint and undivided Hindu family and describes the firm of Rowji Sojpal & Sons as a joint family firm and the deed of assignment is executed by Rowji Sojpal as the manager and karta and the contention put forward is that there is no libility upon the Municipality to pay the assignee inasmuch as the assignment is by Rowji Sojpal as the karta of a joint and undivided Hindu family, whereas the contract was entered into by Rowji Sojpal as the sole proprietor of Rowji Sojpal & Sons. In our opinion, it is rather difficult to understand this contention. The only privity that was established under the contract was between the Municipality and Rowji Sojpal as an individual and as the sole proprietor of the firm. There was no privity between the Municipality and any coparcenary of which Rowji Sojpal was the karta. In order that the assignment should be effective all the interest of Rowji under the contract must be transferred and conveyed to the assignee and the only question that the Court had to consider with regard to assignments is whether if the debtor paid the assignee, he would get a complete and proper discharge. Mr. Thakkar says that inasmuch as the assignment is made by the joint family and if the Municipality were to pay the assignee, some question may arise as to whether the assignment was made for the benefit or legal necessity of the joint family and Mr. Thakkar apprehends that some sort of claim might be made against the Municipality by the co-parceners other than Rowji of the joint family. For every apprehension there must be some reasonable basis and it is difficult to understand what possible reasonable basis there is for this apprehension on the part of the Municipality. It cannot be seriously disputed that the only person who could have sued on the contract is Rowji Sojpal. The joint Hindu family could not have sued on the contract because, as already pointed out, it had no privity with the Municipality. If in fact the contract was for the benefit of the joint family, the joint family might have had some claim against the karta. It might have been a matter of accounts in a partition between the karta and other members of the joint family, but as far as the Municipality was concerned, it had entered into a contract with Rowji Sojpal as an individual and not as representing the family and it had not entered into any contract with the family itself. If Rowji Sojpal had filed a suit against the Municipality and the Municipality had paid Rowji Sojpal, it would have received a complete discharge. If Rowji Sojpal conveys his complete interest in the contract to the assignee and the Municipality pays the assignee, it would have received the same discharge as it would receive if it had paid to Rowji himself. It cannot possibly be suggested that Rowji could have made any claim against the Municipality, if the Municipality had paid the assignee under the deed of assignment. The fact that Rowji describes himself as the karta and not as the sole proprietor has nothing whatever to do with the Municipality. All that the Municipality has got to see is whether the assignee has been conveyed all the rights of its creditor and whether in paying the assignee it would get as good a discharge as if it had paid to its own creditor. It may be that for greater caution the assignee wanted in the deed of assignment the coparceners to join and the joint family to be represented. But that does not in any way affect the liability of the Municipality to pay the creditor and also in law to pay the assignee of the creditor. The only question is, is the plaintiff the assignee of the Municipality's debt and there can be no doubt that whatever the interest Rowji has in the contract has been assigned to the plaintiff under the deed of assignment. Therefore, in our opinion, there is no substance in this contention put forward by the Municipality.

As far as appeal No. 481 of 1952 is concerned, these are the only two contentions that have been urged before us.

The result, therefore, is that the appeal must succeed. The order of dismissal by the trial Court will be set aside and there will be a decree in favour of the plaintiff and against the first defendant for Rs. 14,517-10-0 with interest at the rate of 4 per cent from October 3, 1950 till judgment costs of the suit including the costs of the High Court suit and interest on judgment at 4 per cent. Respondent to pay the costs of this appeal.

Appeal allowed.

F.A No. 482 of 1952

With regard to appeal No. 482 of 1952, that is the appeal by the Municipality against the Union of India and as we have already stated, the view taken by the trial Court was that as no notice had been served upon the Union under s. 80 of the Code of Civil Procedure, the third party notice was bad. Mr. Thakkar wanted to contend before us that inasmuch as the third party notice was not a suit, s. 80 would not apply and it would not be necessary to serve a notice upon the Union. Mr. Joshi for the Union fairly concedes that on the merits the Union would have no answer to the claim of the Municipality. Inasmuch as we have now held that the payment by the Municipality to the Union was not justified and that the amount was paid obviously under a mistake of law, the Union would be liable to refund the amount to the Municipality. The only defence which the Union seems to have is a very technical defence under s. 80. We have persuaded Mr. Joshi to represent to the proper authorities that it would not be proper for the Union of India to refuse to pay the Municipality the amount which in law it is entitled to merely on the ground that no proper notice was given under s. 80. Mr. Joshi has promised to convey our views to the proper authorities and pending the decision of the Union of India, this appeal will stand over.

Order accordingly.

K.B.S

Jethalal Nagji Shah v. Municipal Corporation For Greater Bombay

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

First Defendant (Municipality) — summarized arguments

Union of India — summarized arguments

Table of Precedents Cited

Court's Reasoning and Analysis

A. On whether s. 46(5A) applied to the Excess Profits Tax Act

B. On the assignment and description of Rowji as karta

C. On the third-party notice and section 80 CPC issue

Holding and Implications

Jethalal Nagji Shah v. Municipal Corporation For Greater Bombay

Comments