Modi, J.:— This is an application under Art. 226 of the Constitution in the matter of the levy and collection of the octroi tax by the Municipal Board Rajsamand, opposite party No. 2. The Rajasthan State has also been impleaded as opposite party No. 1.
2. The petitioners are residents of two towns named Rajnagar and Kankroli (Tehsil Rajsamand) which together are said to constitute the Rajsamand ???. According to the petitioners, this municipality has been functioning as such since 1952, having been apparently established under the Rajasthan Municipalities Act, (No. XXIII) of 1951 (herein after referred to as the Rajasthan Act). The case of the petitioners is that the Municipal Board Rajsamand has introduced the octroi tax (see the Octroi Schedule and the By-laws Ex. 3) with effect from the 1st October 1955 and with a view to achieving this result, the Board passed certain by-laws and rules including the schedule of octroi to be levied on various articles entering into this municipality. The contentions of the petitioners briefly put are that the preliminary steps taken and the procedure adopted for the passing of the rules and the by-laws and the schedule of taxes are open to objections in essential respects and the relevant provisions of the Rajasthan Act have been disregarded. We refrain from stating their case in detail in the above respects in view of a more vital objection. That objection is that the limits of the Rajsamand Municipality were never defined by the State in accordance with law and that this latter defect goes to the very root of the matter. This objection was argued before us from a two-fold angle. Firstly, from the view point of area; and it was contended that as the boundaries of this municipality had not been laid down according to law, the local area over which this organization was to function remained uncertain and indefinite and, therefore, any levy or collection of taxes therein was not a practical proposition. In the second place, it was contended that a municipality which is to be governed by an elected board but the limits whereof are not prescribed according to law, cannot Page: 404he considered to be properly constituted or brought into valid existence for the important reason that owing to the lack of such definition of limits, the entire structure of the board is thereby inevitably affected and a body which springs out of such imperfect and uncertain source cannot be held to be a properly constituted body. The prayer of the petitioners, therefore, is that the opposite parties be restrained from levying or collecting the octroi and that the rules and by-laws framed by the board be declared to be void and of no effect, and lastly that the Board be directed to refund the moneys collected by way of octroi from the petitioners. We may also state here that an application for an interim stay came before us on the 23rd January, 1956, and we agreed not to pass a stay order because the learned Government Advocate gave an undertaking before us that if the decision went against the municipality, the latter will refund to the petitioners all moneys collected from that date i.e 23rd January, 1956 up to the date of our decision by way of octroi from the petitioners, and the case was directed to be posted for hearing at an early date. This application is opposed by the municipal board and the State but the latter did not file any written reply and only the board submitted its reply in writing. It appears from the reply of the board that it was during the regime of the former State of Mewar that Rajnagar was declared to be a town area. Thereafter when the State of former Rajasthan was formed, that State published a notice No. 927.Mu of 1949 dated the 2nd March, 1949, declaring its intention to constitute Rajnagar as a municipality. It is said that this notice was issued in accordance with sub-sec. (2) of sec. 3 and sec. 4 of the U.P Municipalities Act (No. II) of 1916 (hereinafter referred to as the U.P Act) as adapted to the former State of Rajasthan. The same Act continued to remain in force until the Rajasthan Act was brought into force on the 22nd December, 1951. In other words, this was only a preliminary step to the issue of a notification under sec. 3, and it is also to be noted that this notice was confined to Rajnagar town only. We are not told whether any objections were filed in response to this notice by the people concerned; but soonafter the present State of Rajasthan was formed, a further notice No. 848.Mu/1949 dated the 4th May, 1949, came to be issued also under sub-sec. (2) of sec. 3 and sec. 4 of the U.P II. Act along with a draft notification (the terms whereof we propose to give below) inviting objections thereto within a period of two months. The draft notification was in these terms—
“In exercise of the powers conferred by sub-sec. (1) of sec. 3 of the U.P Municipalities Act, 1916, as applied in the United State of Rajasthan, the Government of the United State of Rajasthan hereby declare the following towns as Municipalities with their limits as defined against each of them.
1. Kankroli and Rajsamand—
The limits of the town of
Kankroli and Rajsamand.
By order
Sd/- G.R Gupta,
Dy. Secretary,
Law and Local Self Government.
3. It was pressed before us that this notification was issued with a view to the formation of a single municipality for the towns of Kankroli and Rajnagar. Before we proceed further, we feel constrained to remark that this notification appears to us to have been drafted in an extremely careless manner and its language is thoroughly inapt and unhappy. We do not understand why the word “municipalities” in plural was used when the intention was to create a single municipality. It is said that there was an earlier draft notification under which several municipalities had been dealt with including the one for Rajnagar and the same language was somehow repealed in the notification in question even though it was intended to propose the formation of only one municipality for Rajnagar and Kankroli. The use of the word “their” before “limits” was also wrong, and so also the expression “against each of them”. It is further conceded that while the limits of the municipality were sought to be indicated, the mention of “Rajsamand” was a mistake for “Rajnagar” as there is no town bearing the name of Rajsamand as such. One result of this careless drafting has been that it has cost us considerable time and labour to interpret this notification in its correct perspective. Our attention was, however, drawn to a further notification No. F.-1(994) L.S.G/50 published in the Rajasthan Rajpatra, dated the 23rd December, 1950, in which it was stated that the intention of the Government was to provide a combined Municipal Board for Rajnagar and Kankroli with its headquarters at Rajnagar. The same intention is deducible from certain correspondence which was placed before us for our perusal; but we consider it unnecessary to refer to it here in detail. Our attention was also invited to the numeral 1 occurring before the words Kankroli and Rajsamand in the draft notification, dated the 4th May, 1949, as a further indication in the same direction. Having regard to all the material placed before us in this connection, we are disposed to agree that the idea of the State was to set up a single combined municipality for the two towns of Kankroli and Rajnagar. Even so, it must be remembered, as it has not been, that this was only a draft notification, the object where of was to invite objections if any, to the proposed establishment of a single municipality for the two towns of Kankroli and Rajnagar, and this could by no means amount to a declaration under sec. 3(1)(a) of the U.P Act. We may as well reproduce the relevant portion of sec. 3 at this stage—
“3. Declaration and definition of municipalities and cities.—
(1) The State Government may by notification—
(a) declare any local area to be a municipality;
(b)………………………
(c) define the limits of any municipality;
(d)……………………..
(e)……………………..
(2) The power to issue a notification under sub-sec. (1) shall be subject to the condition of the notification being issued after the previous publication required by sec. 4…………….”
4. Sec. 4 provides that not less than two months before the issue of a notification under sec. 3, the State Government shall publish in the Official Gazette and cause to be posted up, in the court room of the District Magistrate and in one or more conspicuous places, within or adjacent to the local area concerned, a draft (in the official language of the State) of the proposed notification along with a notice stating that the draft will be taken into consideration on the expiry of two months from the date of publication in the Official Gazette. It is further provided that the State Government shall, before issuing the notification, consider any objection or suggestion in writing which it receives from any person, in respect of the draft, within the said period of two months. It will thus be observed that the draft notification under sec. (4) is nothing more than a condition precedent to the valid issue of a notification by the State Government under sec. 3(1)(a). and cannot be considered to be a substitute for it. It is conceded before us on behalf of the opposite parties that the notification dated the 4th May, 1949, reproduced above was not followed by any further notification declaring the areas under consideration as a municipality either under sec. 3(1)(a) of the U.P Act or the corresponding sec. 5 of the Rajasthan Act until the present application was filed on the 26th November, 1953. The contention on behalf of the opposite parties, however, is that in 1952, a notification No. F-1(b)(16)/LSG/A/51 dated the 6th November, 1952, was issued under sec. 10 of the Rajasthan Act by which certain constituencies were fixed for the “ensuing municipal general elections at Rajsamand” and it is said that thereafter elections were held and that one of the petitioners was himself elected as a member of the board. It is contended that all this was sufficient to show, despite the absence of a notification under sec. 3 of the U.P Act or sec. 5 of the Rajasthan Act, that there was a validly constituted board in the present case, and that in any event, the petitioners had acquiesced in its existence and, therefore, they were not at all entitled to question its validity. It was also contended that the limits of the municipality at Rajsamand were stated in the draft notification dated the 4th May, 1949, cited above, and that further they have been defined beyond a shadow of doubt in a notification No. F. 3, 1 L.S.G 56 dated the 19th January, 1956, in which it is stated that whereas a combined municipality for the towns of Kankroli and Rajnagar was proposed to be established by the former State of Rajasthan under sec. 4 of the U.P Act as adapted to Rajasthan and that the municipality had been functioning since 1950, it is now declared under sec. 5(1) of the Rajasthan Act that the towns of Rajnagar and Kankroli will be formed into one municipality, and that it will be called by the name of Rajsamand Municipal Board and this notification then proceeded to define the boundaries of the said local area, which it is not necessary to reproduce here. It is submitted that in view of this notification, we should hold the levy and collection of octroi within the area of the municipality as valid, and, in any event, from the 19th January, 1956. As regards the preliminary steps and the procedure adopted by the Board for the levy of the octroi, it is contended by the opposite parties that the requirements of law had been substantially complied with; but as we have already hinted above, we do not propose to address ourselves to this aspect of the case and would, therefore, not pursue the matter further.
5. The first and foremost question which emerges for decision, on the facts and circumstances as set forth above, is whether the Rajsamand municipality was a properly constituted body in law at all relevant times, that is, when it dealt with the question of introduction of the octroi tax within its area or subsequently when it passed or published the necessary rules and by laws in that connection. Learned counsel for the petitioners invited our attention to two cases of this Court, namely, Somnathmal v. The State of Rajasthan(1) and Jainarain v. The State of Rajasthan(2), and his submission was that the first case was a clear authority for the contention raised by him that a municipality the boundaries whereof were not fixed with precision and by authority had no legal existence. Support was sought by learned counsel from a passage in the judgment of that case which is in these terms—
“It is indeed elementary that before the schedule of taxes sanctioned under the resolution of 1948 could receive legal recognition or operation, the limits of the Bhinmal Municipality must have been defined by or under competent authority. As this was not done, we have no hesitation in holding that the levy or collection of taxes mentioned in the schedule was impossible, and, therefore, the realisation of the taxes in question was and is illegal.”
6. Both of us were parties to that case and we think it right to point out that while it is true that the passage quoted above lends indirect support to the contention raised on behalf of the petitioners the precise question which has been argued in the present case was not raised in the earlier one. The principle point which arose and was considered in that case was whether the Council Resolution passed by His Highness the Maharaja in Council was merely an executive order or was law within the meaning of Art. 265 of the Constitution, and we came to the conclusion that the said resolution was nothing but an executive order and that it did not possess the character and force of law, and we, therefore, held that the recovery of the taxes, in that case by the Municipal Board of Bhinmal could not be justified on the basis of that order after the Constitution came into force. Having come to that conclusion, we also observed that as the boundary limits of Bhinmal Municipality were not fixed by the Page: 406former Jodhpur Government and were therefore not certain it was impossible to realise the taxes sought to be imposed, the reason being that such taxes were sought to be imposed on goods imported by rail or road into the municipal limits of the Bhinmal town and these limits had not been defined. The further question whether the Municipal Board of Bhinmal was itself not properly constituted because of lack of definition of its boundaries was not raised in that case, and, therefore, properly speaking, we do not consider it any authority on the point before us although we do feel that the questions raised in this case is an extension of the same argument.
7. Similarly, in Jainarain's case(2) although the question of the importance of delimiting the boundaries of the municipality again arose and the view taken in Somnathmal's case was approved and followed, the matter was again decided from the angle of territorial limits and not from the angle of the validity of the Municipal Board as such for failure to define the boundaries.
8. There is yet another decision in Firm Sukhanchand Radheyshyam v. State of Rajasthan and Ramswaroop v. State of Rajasthan D.B Misc. Writ Nos. 32 and 42 of 1953, decided on 26th April, 1954, which was given by this very Bench and to which our attention was drawn during the course of arguments in which the question of the recovery of certain taxes in the Nawa Municipality arose, and such recovery was attacked because the boundary limits of that municipality had not been fixed and such recovery was held to be bad; but in that case also the point was not considered as to how far the failure to define the boundaries of a Municipality would affect the validity of a Municipal Board constituted to govern it. In this state of affairs, the question which has been raised before us requires to be further examined.
9. In order to be able to answer this question, we consider it proper to draw attention to the relevant provisions of the Rajasthan Act as regards the constitution of a municipality. Sec. 2(9) defines “municipality” as below—
“Municipality” shall mean any local area which is at present a town municipality and any local area which may hereafter be constituted or declared as a town municipality under sec. 5, if such municipality has not ceased to be a town municipality.
10. Clause (8) defines “municipal board” as board of a town municipality. Then we come to sec. 5. The relevant portion is in these terms—
(1) Subject to the provisions of secs. 6 and 7, the Government may, from time to time, by notification in the Rajasthan Gazette, declare any local area to be a town municipality,………
(2) Every such notification constituting a new town municipality…..shall clearly set forth the local limits of the area to be included in……such municipality…….
11. Then sub-sec. (3) lays down that it shall be the duty of the Municipal Board in every town municipality to erect and maintain at its own cost substantial boundary marks defining the limits as set forth in the notification under sec. 5(2). Sec. 6 is not material for our present purposes. Section seven envisages that before a declaration is made under sec. 5(1), a proclamation declaring any local area to be a town municipality shall be published in the State Gazette and posted up in other conspicuous places in the local area concerned, announcing that it was proposed to constitute such local area a town municipality and inviting objections thereto within two months from the date of the said proclamation, and that the officer appointed for the purpose shall, with all reasonable dispatch, forward such objections to the Government and the latter is then charged with the duty of duly considering them. Sec. 8 again lays down that there shall be a Municipal Board in every municipality, which clearly implies that the Municipal Board is to be constituted with respect to a particular area and the whole of that area, and it is impossible to be certain about this area unless it is clearly and definitely defined. We may point out that secs. 5 and 7 of the Rajasthan Act are in effect the same as secs. 3 and 4 of the U.P Act. The effect of these sections, in our opinion, clearly is that before a municipality can be said to have legal sanction behind it, it must have been brought into existence by a notification under sec. 5 preceded by a prior notification under sec. 7. It is further clear to us that what is declared as a municipality is a local area, and it is, therefore, implicit that such local area must be defined as regards its geographical limits without which it would be impossible to know which area has been made the subject-matter of the notification. In fact sub-sec. (2) of sec. 5 makes it abundantly clear that every notification constituting a new municipality or altering the limits of an existing town municipality) shall clearly set forth the local limits of the area to be included in the municipality. Further emphasis is laid on the same requirement in sub-sec. (3) which enjoins that every municipality under the Act must set up substantial boundary marks around its own area and maintain them at its own cost. We further think that it is on the basis of its geographical limits that it is in due course divided into certain constituencies which are charged with the duty of electing members who then constitute a municipal board. Where therefore, the territorial limits of a municipality are not defined according to law, and in precise terms, it seems to us that it would be impossible to hold that a municipality or particular municipal board governing it at any particular time has been effectively brought into existence or that it can function effectually and compel submission without which all government is rendered futile. We would also draw attention to the fundamental principle that municipality is a delegate from the State and its authority to function is dependent upon the limits of the authority delegated and, therefore, it can only tax persons or property strictly within its own limits and not outside them and these limits must therefore be certain and require to be defined. We therefore, hold that it is essential for a properly constituted Page: 407municipality to come into existence that its limits must be clearly defined by or under competent authority and such limits must be duly published in accordance with law and in the absence of such delimitation, it would not be possible for it in law to levy and recover any taxes, and further, the very existence of its governing body would become open to a vital defect and its ability to function legally and effectively would stand 1 impaired and destroyed.
12. What we must, however, further point out is that apart from the question of defining the boundaries of a local area so as to invest it with the status of a municipality, what is of paramount importance is that the State Government must make a declaration that it is constituting a particular area as a municipality. We are altogether unable to accept the contention that a valid municipality can come into existence without any such declaration by mere acquiescence or implication. As the policy of the legislature is to provide a democratic base for the constitution of such self-governing organisations, provision has been made for making a proclamation that the Government intends to constitute a particular area as a municipality and the publicity is required to be given and machinery is provided for eliciting objections and duly considering them. In other words, this preliminary proclamation is a condition precedent to finally declaring such area to be a municipality. It must be remembered, however, that it is this final step which is the decisive step and without it no municipality can come into existence in accordance with law. We also desire to point out that this last requirement is not a mere technicality but is a matter of vital substance, and we wholly repel the idea that a municipality under the Rajasthan Act or for that matter under any other Act can be validly created without any such notification. A similar question arose in connection with a Panchayat before a Division Bench of this Court in Rangraj v. Gram Panchayat, Khinwel(3), and that question was whether the Panchayat in that case could be said to be legally constituted in the absence of a notification in the State Gazette under sec. 4 of the Marwar Village Panchayat Act, 1945, now repealed. The terms of sec. 4 were as follows—
“The Minister is Charge may, by notification in the Jodhpur Government Gazette, establish a panchayat in any village or any group of villages not included within the limits of a Municipality.”
13. The contention was raised that as no notification under sec. 4 had ever been issued establishing a panchayat in the village concerned, the body which was acting as a panchayat had no legal sanction and could not function as such. It was held that a notification under sec. 4 was the foundation for the coming into existence of a panchayat and where no such notification had been made, no panchayat under the Act could function in any village. We are of opinion that the principle of the decision in the above case clearly applies to the case before us. Sec. 5 of the Rajasthan Act is analogous to sec. 4 of the Marwar Panchayat Act referred to above, and it is impossible for us to assign any lesser importance to the requirement embodied in sec. 5 in the case of municipalities than to the requirement contained in sec. 4 of the Panchayat Act in the case of panehayats. We, therefore, hold that a notification under sec. 5 of the Rajasthan Act is a sine qua non for the establishment of a municipality in any local area according to law, and where no such notification has been issued, the so-called municipality cannot be recognised to have any legal existence nor can it function as such.
14. Let us test the case before us in the light of the propositions we have set forth above. It is admitted that no notification under sec. 3 of the U.P Act or under sec. 5 of the Rajasthan Act was ever issued in the case of the Rajsamand municipality. The inevitable result must, therefore, be that there is no legal basis for the existence or functioning of the said Municipality. It is true that certain notices were issued inviting objections for the setting up of this municipality as a combined organisation for the two tow no in question, but these notices were not followed up by any notice under sec. 5 of the Rajasthan Act or prior to that under sec. 3 of the U.P Act. We are altogether unable to appreciate the contention, which was faintly raised before us that before the Rajasthan Act came into force, this municipality was already in existence and, therefore, it was saved under the saving section of the Rajasthan Act. This argument overlooks the salient position that a municipality in Rajsamand had also not been created according to law even under the provisions of the U.P Act. It was nothing but an unauthorised body before the Rajasthan Act came into force and, therefore, nothing under the latter Act can save it. Having given our very anxious and careful consideration to the history of the so-called municipality, the utmost that we can say is that for the first time it was validly constituted when the State issued its notification dated the 19th January, 1956, wherein it stated that it declared the local area covered by the two towns of Kankroli and Rajnagar as defined in the notification to be a town municipality. We may make it clear that in arriving at this conclusion, we have considered that the earlier notification dated the 4th May, 1949, was a draft notification within the meaning of sec. 4 of the U.P Act corresponding to sec. 7 of the Rajasthan Act) no matter that notification was unhappily drafted as the intention of the Government was even then to constitute the two towns of Kankroli and Rajnagar into a single municipality for both of them.
15. In this connection we wish to make it clear that the contention that this municipality was impliedly constituted in 1952, as the State by some of its notifications either notified the strength of the elected members for it or fixed certain constituencies for purposes of election therein, is devoid of all force. The reason is that the acceptance of such a position would be in the nature of putting the cart before the horse. It is only when a municipality has been brought into existence Page: 408by a proper declaration under the relevant statute and its territorial limits are defined according to law that one can understand its division into various sub-divisions or wards or similar other incidental or consequential matters as being of any value or efficacy, but not otherwise. If the very foundation is lacking, no amount of superstructure can stand on it. Similarly, the notion that the inhabitants of a town can invest it with the status of a municipality by mere acquiescence is completely fallacious. The law is uniform throughout India (and this State is no exception) that a municipality can be created only by the State under the relevant municipal law and not by mere acquiescence on the part of the people residing therein.
16. The result of this discussion therefore, is that it was on the 19th January, 1956, that a legally constituted municipality for the towns of Kankroli and Rajnagar came into existence and not before that date and that the body which existed before was unauthorised and could not have functioned earlier under the law at all.
17. On the finding at which we have arrived it is impossible for us to give effect to the contention that the imposition of the octroi fax may be held to be valid in any event from the 19th January, 1956, because the municipality had no valid existence under the law at all before that date and, therefore, the various by laws and the rules including the schedule of taxes which were framed by it do not and cannot possess any authority of law behind them and were all unauthorised acts. It would of course be open to the municipality to take the necessary steps over again in accordance with the provisions of the Rajasthan Act with a view to introduce octroi within its area and it is very much to be hoped that authorities concerned will carefully comply with the relevant provisions laid down in the Act in this connection so that no further trouble may arise. We also wish to add that we are very sorry for the result at which we have arrived which is likely to cause considerable complications but the responsibility for this result must obviously lie elsewhere, for we are certain that if care had been taken to comply with the provisions of the relevant Acts, all this trouble could not have arisen. So far as we are concerned, we deem it light to point out that we can only administer the law as it stands and that if this results in certain untoward consequences, it is for the legislature to step in and regularise the things done.
18. The result is that we allow this application and prohibit the Municipal Board. Rajsamand, as well as the State from levying and collecting the octroi tax in the Rajsamand municipality on the footing of the rules and by-laws framed or sanctioned before the 19th January, 1956. We also hold that these rules and by-laws are in operative. We further direct that the Municipal Board do refund the amount of octroi tax recovered from the petitioners between the period when we were asked to pass an interim stay order, that is, on the 23rd January, 1956, and the date of our decision; but otherwise reject the prayer for refund and would leave the petitioners to seek their remedy in proper courts of law, if so advised. The petitioners will be entitled to one set of costs from the opposite parties.
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