Secretary Of State For India v. Municipal Corporation Of The City Of Bombay

Davar, J.:—

[After stating the facts and setting out the issues his Lordship continued:—] The City of Bombay Municipal Act (III of 1888), is an Act of the Government of Bombay. The Chapter with which I have got to deal principally in this case is Chapter VIII. It defines Municipal taxation, and describes what the three taxes leviable under the Act are. Section 140 and the following sections deal with property-taxes leviable, and clause (c) of that section deals with General tax.

By section 143, clause (1)(a), all buildings and lands, except buildings exclusively occupied for public worship or charitable purposes, are made the subject matter of the General tax. Then clause (1)(b) of that section states:—

“Buildings and lands vesting in her Majesty used solely for public purposes and not used or intended to be used for the purposes of profit or in the corporation, in respect of which the said tax, if levied, would under the provisions hereinafter contained be primarily leviable for the Secretary of State for India in Council, or the corporation, respectively.”

We are not concerned with the rest of that section. It may be pointed out that the words “not used or intended to be used for the purposes of profit” were inserted by Bombay Act X of 1928, section 12.

A great deal in this case turns upon the construction of the sections. It is important to observe that section 143(1) contemplates General tax on all buildings and lands in the city of Bombay. It is also necessary to observe that in section 212, the words are exactly the same. It is to be noticed that under clause (1)(b) of section 143, namely, the buildings and lands vested in the Crown in respect of which tax would be primarily leviable from the Secretary of State for India, forms part of exceptions.

In the present case, the tax is not leviable primarily from the Secretary of State for India, as the actual occupier of the land and building were Narayan and his son Bhicoo, defendant No. 1. In my opinion, even if the words were not there, this case would not fall within the exception,—because if it did, tax would have been fixed under section 144, which provides for awards to be made in a particular manner. Two of such awards have been exhibited here,—exhibits I and J, and it is clear from the two awards that this land and structure were not included as property covered by section 144, as exception contemplated by section 143(1)(b). By the amendment made in this section by Bombay Act X of 1928, section 12, an additional condition for exemption is imposed, namely, the condition which requires that “land and buildings” intended to be used for purposes of profit would not be included. If it is to form part of the exception, it should not be used for purposes of profit.

The next section of importance is section 144, and it deals with payment to be made to the Corporation in lieu of the general tax by the Secretary of State for India in Council. Clause (1) of that section shows that there is a distinct liability on the Secretary of State for India to pay annually the tax to the Municipality, in lieu of the General tax, from which buildings and lands vested in His Majesty are exempted by clause (b) of section 143. That tax has to be an ascertained sum,—ascertainable in manner provided by sections (2) and (3) of section 144.

The next section of importance is section 146. Under this section, under clause (1), the tax is primarily leviable from the actual occupier of the premises on which the taxes are assessed,—if such occupier holds the said premises immediately from Government or Corporation or Fazendar. Under clause (2) of section 146, the tax, otherwise, shall be primarily leviable, …

(a) if the premises are let, from the lessor;

(b) if the premises are sub-let, from the superior lessor, in whom the right to let is vested; and

(c) if the premises are unlet, from the person in whom the right to let the same vests.

Clause (3) of section 146 provides that if land has been let for a term exceeding one year to a tenant, and if the tenant has erected any building thereon, the taxes shall be primarily leviable from the tenant or his legal representative,—whether the premises be in the occupation of the tenant, his legal representative, or sub-tenant. This section is of importance for the purpose of ascertaining, who is the person primarily liable, and also on whom the notice should be served, and on this point clause (2) of section 146 is material on the question of notice.

Section 149 provides for notice to be given to the Municipality of all transfers of title of persons primarily liable for payment of property tax. The notice as required by this section does not appear to have been given to the plaintiffs.

Section 150 prescribes the form of notice with particulars as contained in Schedule E or F.

Section 151 provides for payment of property-tax as continuing in the absence of any notice of transfer contemplated by sections 149 and 150, and it is important to notice that under clause (2) of section 151, nothing shall diminish the liability of the transferee for the property taxes, or affect the prior claim of the Municipal Commissioner on the premises conferred by section 212 for the recovery of such taxes.

The next batch of sections, which are important in, this case, are sections dealing with Assessment and the Assessment Book.

Section 156 deals with the method in which the Assessment Book should be kept, and what details or information it should contain.

And section 166 provides for the authentication of Wards Assessment Book,—when all the complaints regarding assessment have been disposed of.

Section 167 provides how assessment books may be amended by the Commissioner during the official year.

And section 170 shows how Government and Port Trust are charged with measurement for water consumed by them.

The next series of sections, which are of importance, are sections appertaining to the collection of taxes, and they begin with section 197.

Section 197 provides that taxes shall be payable half-yearly in advance.

Section 200 provides that the bills for taxes payable on property “shall be presented to the person liable thereon”. Looking at the provisions of the Act, and to the foregoing sections, to which I have already referred, “the person liable thereon could be the persons in the first instance primarily liable” thereon or personally liable thereon.

Section 202 provides for the form of notice of demand, and it further provides for service “upon the person liable for payment”. That again would mean the person primarily liable.

Section 203 provides for recovery of the taxes under a warrant by distress.

Section 204 provides that the goods of the defaulter may be distrained “wherever found”.

Section 219 refers to unappealed values and taxes and decisions on appeal, which would be final.

For a minute, it becomes necessary to turn, to section 212, which clearly provides that property taxes shall, subject to the prior payment of land revenue, if any, due to Government thereupon, be a first charge upon the building, land or goods belonging to the person liable for such taxes. On the construction of this section (section 212), it is submitted for the plaintiffs that the Crown being made expressly liable, the charge contemplated under this section is only postponed, if there is liability for any payment for land revenue,—and postponed only to the prior payment of such land revenue.

It may be observed that the period for assessment covered by the claim is from April 1, 1927, to March 31, 1930. The learned counsel for the plaintiffs argues that the exemption contemplated by section 143(1)(b), does not apply, if the land makes profit; and if the words covering the exemption are omitted from the section,—exception applies to all lands and buildings vested in the Crown, and the amendment made by Bombay Act X of 1928, section 12, makes no difference. He further argues that in order to get the exemption, the Secretary of State for India would have to show that the lands and buildings were such as, that, if the tax were levied, the person primarily liable would be himself, namely, the Secretary of State for India. Looking at section 146 there can be no doubt that when land is let by Government, the occupier or the tenant is the person primarily liable. But if Government choose not to let it or make profit from it, the occupier would be the Government, and in such a case, the exemption would apply. See also section 146(b).

On the construction of the various sections, Mr. Desai argues,—and to my mind rightly,—that the person primarily liable in this case was defendant No. 1, and that being so, defendant No. 2, the Secretary of State for India—though the land vests in him,—he not being the person primarily liable, is not exempt from the operation of the section.

The only witness called in the case was Mr. Madhushudan P. Wagh, the Assistant Assessor of the Bombay Municipality, and all the exhibits, that are mentioned above, were put in through him. He was cross-examined by the learned Advocate-General for a little while,—but by the agreement between counsel, which I have recorded,—whatever differences there existed, with reference to plot No. 5537 (1 to 2) or (1 to 3), were set at rest.

There was also a small dispute with reference to the apportionment of the assessment for a sum of Rs. 88, which has also been set at rest by an agreement between counsel.

The learned Advocate-General for the Secretary of State for India argued as follows:—His first point is that the sections in the Municipal Act, under which the Municipality claim a charge on the land belonging to Government, for recovery of taxes, so far as they purport to affect Government, are ultra vires. He submits that the principles laid down by all the Courts are the same in this country as in England, namely, that the Crown is not affected by any provision in Statutes, unless it expressly or impliedly touches the Crown or affects the interests of the Crown, and by which he meant, the prerogative of the Crown. According to him, the Bombay Municipal Act is a local Act made in 1888, and barring the amendment, which was made in 1928, to which I have already referred, it only effects exemptions of lands vested in Government, and the alteration affected in 1928 is restricted to lands vested in the Crown, which were not used by the Crown. He further submits that section 143 of the Municipal Act is the only empowering section, under which taxes can be levied, and he says that the liability at the date of his argument was exactly the same as it was in 1888, when the Municipal Act was passed. He argues that under section 143, if the Municipal Corporation contend that the Crown is liable, then that means that the Act is intended to cut down the prerogatives of the Crown, and he relies on the following enactments in support of his argument. He says in 1888 Bombay Government had no power to legislate, whereby the prerogative of the Crown could be affected or touched; and whether one reads expressly or impliedly any provisions so made, are ultra vires of the Bombay Legislature, and they cannot bind the Crown, and therefore the Crown is not bound to pay any tax under section 143. He admits that the power was for the first time given to local Government in 1916 by the Government of India Act, and in support of his argument, on what I have already stated, he has referred me to various Statutes. The earliest Statute is William the iv (3 & 4), chapter 85, section 43. For the sake of facility, I am quoting the important portions of the Statute, and it runs as follows:—

“And be it enacted, That the said Governor General in Council shall have Power to make Laws and Regulations for repealing, amending, or altering any Laws or Regulations whatever now in force or hereafter to be in force in the said Territories or any Part thereof, and to make Laws and Regulations for all Persons, … save and except that the said Governor General in Council shall not have the Power of making any Laws or Regulations which shall in any way repeal, vary, suspend, or affect any of the provisions of this Act, or any of the Provisions of the Acts for punishing Mutiny and Desertion of Officers and Soldiers,….which shall in any way affect any Prerogative of the Crown, or the Authority of Parliament, or the Constitution or Rights of the said Company, …”

In that section, as it clearly appears, the power to affect the prerogative of the Crown is exempted.

This Statute was altered by 16 & 17 victoria (1853), chapter 95, section 26,—which runs as follows:—

“No Law or Regulation made by the Governor-General in Council shall be invalid by reason only that the same affects any Prerogative of the Crown, provided such Law or Regulation shall have received received the previous Sanction of the Crown, signified under the Royal Sign Manual of her Majesty, countersigned by the President of the Board of Commissioners for the Affairs of India.”

The next Statute is one of 1861, namely, 24 and 25 Victoria, Chapter 67, section 24. This Act was passed when the Crown took over India from the East India Company, and for the first time, power was given to the Governor-General to affect the prerogatives of the Crown. Section 24 runs as follows:—

“No Law or Regulation made by the Governor General in Council (subject to the Power of Disallowance by the Crown, as hereinbefore provided), shall be deemed invalid by reason only that it affects the Prerogative of the Crown.”

The next enactment I was referred to is 5 and 6, George the V, Chapter 61, section 84. It is the Government of India Act, 1915. And there, in clause (a) of section 84, the only authority given is to the Governor-General and to nobody else. It says:

“A law made by any authority in British India shall not be deemed invalid solely on account, of any one or more of the following reasons:—

‘(a) in the case of a law made by the Governor-General in Legislative Council, because it affects the Prerogative of the Crown.’”

He next referred me to 6 and 7, George the V, Chapter 37, section 2. Section 2, sub-section (2) runs as follows:—

“In section eighty-four of the principal act, after the words ‘Governor-General in Legislative Council’ shall be inserted the word ‘or a local legislature’,”

And in sub-clause (3) of that section, the following words appear:—

“This section shall apply to and shall validate laws made as well before as after the commencement of this Act.”

The learned Advocate-General argued that the amendment was intended to take effect from the date of the previous Act, namely, the Act of 1915, but not any Act prior to 1915. And he argues that till 1916, Bombay Government or local Legislature had no power to affect the prerogative of the Crown. Therefore, under the Bombay Municipal Act, which is a local Act of 1888, the prerogative of the Crown cannot be touched, and is ultra vires of the Bombay Legislature to have attempted to do so. He further argues that section 212 of the Bombay Municipal Act was enacted in the year 1888, and he says that so far as the amendments made in that Act are concerned, they merely affect the portions so amended, and do not extend to the whole of the Act not so amended; and he contended till July 1915, when the Government of India Act of 1915 came into force, the local Legislature could not legislate so as to affect the prerogative of the Crown.

This point, in my opinion, is not difficult to answer. Counsel on both sides experienced a little difficulty in defining correctly what is “ultra vires”. Mr. Desai, the learned counsel for the plaintiffs, described “ultra vires” as (1) legislating against any express prohibition, and (2) legislating so as to affect the prerogative of the Crown. The learned Advocate-General would not accept that definition, but he in his turn was not able to define what “ultra vires” means, except by illustrations. I do not propose to take upon myself the onerous task of doing it, as I am conscious of the fact that the two learned Authors, who have written valuable books on the doctrine of Ultra Vires, have not themselves been able to define the exact meaning of this term. I am referring to Mr. Brice's Book on the Doctrine of Ultra Vires, and to Mr. Street's valuable treatise on the Doctrine of Ultra Vires. Mr. Brice's book ceased to appear since 1893, and Mr. Street has endeavoured to bring out a new volume based more or less on the lines of Mr. Brice's work.

In Part I, Chapter I, the learned Author Mr. Street has endeavoured to spell a meaning or give these two words a meaning. It begins with its early judicial meaning. Then in section 2, he compares what is Ultra Vires and what is Illegality. In section 3, he talks of supposed secondary meaning; and in section 4, he talks of the modern meanings. The nearest attempt at success is on page 8 of his book, and this is how he attempts to solve the problem. In section 4, at page 8, he says:—

“Starting therefore with the conception of an ultra vires act as an absolute nullity, and rejecting the secondary meaning referred to in the preceding section, it nevertheless becomes necessary to adopt the term ‘secondary’ for a use of the phrase ultra vires which requires some distinguishing epithet. A difficulty from which one cannot escape is that, whereas a finding of ultra vires in the primary sense entails a nullity, yet there are certain classes of cases, those of tort against corporations, of abuse of privilege and of breach of trust against officials, which depend for their success on a finding of ultra vires, and in which the ultra vires act is the very cause of action. The explanation lies in the different points of view from which the word ‘vires’ may be regarded. It means, no doubt, ‘special powers,’ but it may reflect either the corporate view, and mean the ‘special activities’ of which the corporation is capable, or the outsider's view, and mean the ‘special privileges’ which the corporation or official enjoys in limitation of the rights of others. As a rule it is the corporation which seeks to take advantage of the doctrine. It seeks to show that the act on which the opposite party relies is not its act, on the ground that such act is incompatible with its nature. But not infrequently the act of the corporation, which it claims the right to do, is attacked as ultra vires, the phrase then meaning ‘beyond the privileges’ of the corporation.”

Mr. Brice in his book (an edition of 1893) in Chapter II, at page 43, begins with the various meanings that have been given to the term “ultra vires”. But in no part of the book do I find any definite meaning given, but wherever the meaning is sought to be spelt, it is fully illustrated by decided cases. As an instance of the anomalies and the uncertainty that shrouds the application of this doctrine, he states at page XX of his Preface as follows:—

“It is often impossible to predicate beforehand what transactions will be held within the powers of a given corporation. It is Ultra Vires of the Great. Eastern Railway Company to run steam-packets from Harwich (Colman v. Eastern Counties Railway Company(1)) but not of the South Wales Railway Company to run them from Milford Haven (South Wales Railway Company v. Redmond(2)). It is Ultra Vires of a steam-ship company to sell the whole of its vessels except two, (Gregory v. Patchett(3)), but perfectly legal thus to dispose at one swoop of every one of them (Wilson v. Miers.). It is Ultra Vires of railway companies to enter into partnership (Charlton v. The Newcastle and Carlisle Railway Company), but not Ultra Vires to make arrangements for dividing the whole of the joint profits among themselves in fixed proportions (Hare v. London and North-Western Railway Company). It is Ultra Vires of the town of Southampton (The Attorney-General v. Andrews(4)), or Sheffield (The Queen v. Mayor of Sheffield(5)), to incur expense in order to obtain a proper supply of water for their respective inhabitants, but not so for Ashton-under-Lyne (Bateman v. Mayor, etc., of Ashton-under-Lyne(6)) or Wigan (Attorney-General v. The Mayor, Aldermen and Burgesses of Wigan(7)) to do exactly the same thing.

“As a necessary result the decisions and dicta upon this subject are very conflicting, and some absolutely irreconcilable, while the principle itself is become, if not an excrescence upon, at least a very disturbing element in, the legal system.

“But it soon showed itself almost as inimical and dangerous as a friend as unquestionably it was as an enemy. From being a protector to shareholders by preventing their companies from embarking in hazardous enterprises, it has developed into their terror by putting on the list of contributories persons whose, shares were surrendered or forfeited years before, but which surrender or forfeiture was Ultra Vires (Ten years afterwards, in Stanhope's Case).(8) Acquiescence and lapse of time will lay the ghost of most misdeeds, but they are unavailing when this doctrine is concerned, and Ultra Vires compromises, bona fide made, have been opened after the lapse of well nigh a quarter of a century, in order to fix with liability the parties thereto (Spackman v. Evans).(9)

So far as this question of ultra vires in this case is concerned. I do not find much difficulty in deciding it. It is unnecessary to investigate or to go into the Acts cited by the learned Advocate-General; and in my opinion, the provision made by the Government of India Act, 1916, and the Amending Act of 1916, quite clearly give the Governor-General power to legislate so as to affect the prerogative of the Crown; and in Chapter 37 of the Act, 6 and 7 Geo. V, it is quite clear that by sub-clause (2) of section 2 in that Chapter, power is given to “a local legislature” to legislate in a manner which may affect the prerogative of the Crown, and by clause (3) of that section, the section is made applicable to and validates the laws made as well before as after the commencement of that Act. And in my opinion, the amendment made in the Bombay Municipal Act itself is a very forceful argument that Legislature would not try to amend the section, which was otherwise ultra vires.

I now go to the second point urged by the learned Advocate-General. Shortly put, his argument is this. He says section 212 of the Municipal Act, when it speaks of buildings and lands, it cannot refer to Crown lands, because they are not made subject to any kind of charge. He says section 143 makes an exception or; all lands vested in the Corporation, and all lands vested in the Crown,—with this provision in both cases, that the tax must be primarily leviable from the Secretary of State for India or the Corporation. Section 146 and the sections that follow provide for the liability to pay taxes; and he argues that it is important to bear in mind—from the schema of the Act—that taxes are recoverable from persons primarily liable, if not so recovered from persons in actual possession of the premises, and that section defines “persons liable”, and the word “owner” is not advisedly used in section 146. He further contends that under section 146, it is meant that the Corporation, Government and the Fazendar are owners, and that the tax is not leviable, but it could be recovered from the actual occupier of the premises; and that in so far as the Corporation, the Government and the Fazendar are concerned, they could never be liable. That the word used in clause (2) of section 146 is not “owner” but lessor, superior lessor, etc., and that in clause (2)(c) of section 146, the person in whom the right to let vests may be Government or Corporation. That when lands or buildings or both are held by Government or Corporation as contemplated by section 143(1), he contends that section 146(1) cannot apply to lands or buildings or either, held by Government or Corporation, and further, that section 146(1) cannot apply to Corporation or Government. He submits that under section 146,(2)(c), Government become liable, and in section 143(1) exception is with regard to buildings and lands in respect of which. Corporation or Government would not be personally liable. He further points to section 156 (section under Assessment), and the following sections, and he submits that the scheme of the Act is that the person in possession, or occupation actually should be taxed.

Then he relies on sections 197 to 200, 202, 203, and 209 to show who the persons primarily liable for payment would be. He then argues,—and with some emphasis, that section 212 could under no circumstances apply to Government land at all, inasmuch as it purports to save a smaller right of Government, namely, their right to land revenue, and he argues from that the Legislature could not have contemplated that it would permit the land to be sold, when it protected smaller interest in that land, namely, the land revenue.

In further support of his argument, he asks why in section 146 the word “Fazendar” is put in clause (1), and not in clause (2), and he submits that it is because the Fazendari land could not be sold, and he says that is the reason why Government, Corporation and Fazendar are not primarily liable. He continues his argument by saying that interest in land contemplated by the Act and the relevant sections means the interest of persons primarily liable to pay, and that interest alone can be made the subject matter of the charge.

Harking back for a moment on section 212, his submission is that section does not permit giving to Corporation or the Municipality any charge on Government land, because it is not so expressly stated in that section that the charge contemplated there could be a charge on Government or Crown land. He submits that if such a charge on Government or Crown land was contemplated, then it would be expressed there by express words or implication. Instead, the implication, if any, is negatived by the words “Government land revenue.”

The argument of the learned Advocate-General,—ingenious as it may appear at first sight—has a good many apparent fallacies underlying it. When he deals with section 212, he argues on the hypothesis, that the Court should supply some words that are missing, in, order to give support to his contention. His argument would be an extremely cogent one, if the following words were read in section 212, namely, “except in cases provided for in section 146(a).” These words, unfortunately for Government, are not there, and I cannot even by implication include them in the section. Then coming to the second part of his argument on section 212, namely, that if Government land revenue is saved, the land itself cannot be sold, the argument omits to take into consideration the fact that the Legislature, when drafting section 212, had the rights of Government present in their mind, and for that reason, they specifically provided for saving of the land revenue by inserting express words there, namely, “land revenue, if any, due to Government”, and so far as Government rights are concerned, that exception limiting Government's right to land revenue clearly ignores all other rights that Government may have in the land. Just as the Legislature saved the limited right of Government in land revenue by express word?, there was nothing to prevent them to save Crown property from the operation of the section by expressly so mentioning it in plain words. The learned Advocate-General desires the Court to read into the words of the section “all the rights of Government in the land or property standing on Government land”, which I am afraid I cannot do. Further, if Government intended that there should be at no time a charge contemplated on Government land, nothing could have been easier than to collate or incorporate in that section all the exceptions in favour of Government. Section 212 includes, and in my opinion contemplates all interest in building and land to the extent to which the property taxes are due under the Act in respect of that land or building standing thereon. It does not contemplate merely a tax recoverable from an individual only, whose interest is to be sold,—but the tax due under the Act. For reasons I have given above, when construing the meaning and effect of the sections of the Act,—I do not propose to reiterate what I have already said. In my opinion, therefore, section 212 is an extension or addition to the primary liability under the Act. Primary liability is personal liability, and the additional liability is property liability. This is clearly illustrated by the last three lines of the section where it deals with “building or land”, and secondly, with “goods and chattles, if any, found within or upon such building or land belonging to the person liable for such taxes.” When the section mentions “goods and chattles”, there is a limitation that they must belong to the person liable,—whereas in the case of building or land, there is no such limitation, namely, that interest in land need not necessarily belong to the person, who is liable for the taxes, namely, primarily liable. In this connection, I should like to refer to a Judgment of the Bombay High Court in Appeal No. 145 of 1933 (from Original Decree). It was a Reference from the Small Causes Court of Bombay to the Appellate Court here. The name of the case is Hiranand Kirpalani v. Secretary of State. Although, what I am relying on in this Judgment, is pure obiter, still the observations made by their Lordships in their Judgment in that case are valuable for my purposes, inasmuch as they seem to have carefully scanned all the relevant sections of the municipal act in coming to the conclusion whether in that case the Municipal Commissioner or the Secretary of State for India was right.

Referring there to the Bombay Municipal Act, the learned Chief Justice said as follows at p. 822:—

“Mr. Kemp's next point is that the Crown is by necessary implication named in this Act. Now, it is no doubt clear that some of the provisions of the Act do bind the Crown. The provisions relating to Municipal taxes included in Chapter VIII, in my opinion, bind the Crown, where not expressly excepted. That, I think, is the general effect of the sections in that chapter.”

Mr. Justice Rangnekar, the other presiding Judge, on this point states as follows (p. 826):—

“No, almost all of these sections occur in Chapter VIII of the Act, the heading of which is “Municipal Taxation,” and deal with the question of taxation. This chapter has nothing to do with the matter with which we are concerned. It is clear from those sections that with regard to taxations, the Crown expressly agreed to waive its prerogative and to be bound in a particular manner.”

Under the circumstances, I am of opinion that the Secretary of State for India is liable to the plaintiffs as prayed for in prayer (b) of the plaint.

The Secretary of State for India in Council appealed from this Judgment.

Kenneth Mcl. Kemp, Advocate General, with R.J Kolah, for the appellant. The principal points for consideration are:—

(1) Whether the Bombay Municipal Act, 1888, purports to apply to Government. If so, is it ultra vires the Legislature?

(2) Suppose it is ultra vires, then by itself it does not bind the Crown.

(3) Even assuming it does bind the Crown there is nothing in section 212 to justify the charge against the Government.

Up to 1888 there was no power in the Local Legislature to take away prerogative of the Crown. The relevant statutes are:

(1833) 3 and 4 Will. IV c. 85, sections 43 and 59; (1853) 16 and 17 Vic. c. 95, section 26; (1861) Indian Council's Act 24 and 25 Vic. c. 67, sections 22, 24; (1915) 5 and 6 Geo. V, section 84; (1916) 6 and 7 Geo. V. (Amending Act) section 2; (1919) Government of India Act.

Under (1833) 3 and 4 Will. IV c. 85, section 43, Governor General did not have power to affect prerogative of the Crown and under section 59 of that act the Local Legislature were only given the power to make laws in certain cases of urgent necessity.

Under (1853) 16 and 17 Vic. c. 95, section 26: Act to provide for the Government of India: power was given to Governor General in Council to pass laws even though they affect prerogative provided that previous sanction of the Crown is obtained.

Under (1861) Indian Councils Act, 24 and 25 Vic. c. 67, sections 22, 24, the Governor General in Council was given power to make laws affecting prerogatives of the Crown but under sections 42 and 43 the Local Legislatures were not given the power to affect the said prerogative.

Then there are (1915) 5 and 6 Geo. V, section 84—Validity of Indian Laws. (1916) 6 and 7 Geo. V the Amending Act.

Under the 1915 Act 5 and 6 Geo. V, section 84 it was provided that an Act was not invalid, solely because it affected the prerogative of the Crown. That section merely dealt with the powers of the Imperial Legislature and not with the local ones.

In 1916 the Amending Act 6 and 7 Geo. V, c. 37, was passed and by section 2 of that Act section 84 was amended so as to include therein also the Provincial Legislatures.

Since 1916 Local Legislatures have been placed on the same footing as the Imperial Legislature.

By section 3 of that Act the amendment is to be taken to have been made before 1916 (i.e, retrospective as far as 1915). 1916 Act is the Act amending 1915 Act therefore it cannot go earlier.

The prerogative affected is immunity from taxation and exemption of Government properties from being taken in execution and sold; see Craies on Statute Law, 3rd Edn., pp. 359-360 Crown mere receives but does not pay taxes.

Where a Legislature intends to make an Act retrospective it generally says so in very clear terms. It would not say “shall be deemed to be” but it would say “shall be deemed and shall always be deemed to be”, e.g, Indian Registration (Amendment) Act, II of 1927; Indian and Colonial Divorce Jurisdiction Act, 1926 (16 and 17 Geo. V, c. 40). See Maxwell on interpretation of Statutes, 7th Edm., page 186. Having regard to that canon of construction, I submit that the Act of 1916 should not be given retrospective effect beyond 1915.

I submit the whole Chapter on taxation in the Bombay Municipal Act, 1888, does affect the prerogative of the Crown.’ Therefore it is ultra vires. Because the power to affect these prerogatives was for the first time given to the Local Legislatures in 1915.

If the Act itself is valid then whether the Act names the Crown specially or by implication the burden is on those who allege that the Crown is bound. The Crown is not specifically mentioned neither does any necessary implication arise.

It is not retrospective unless the statute specially says so.

[Beaumont, C.J Look at the marginal note to section 2 of the statute of 1916 “to remove doubts, etc.”]

Kemp. Marginal note cannot control the section. (Counsel then dealt with various sections in Chapter VIII of the City of Bombay Municipal Act, 1888, viz., sections 139, 140, 143, 144, 146, 200, 202, 203, 209 and 212 and proceeded) I submit that section 212 cannot touch a person other than the one liable; and it cannot touch land belonging to Government.

Its proper meaning is that it creates a charge on the interest of the person liable.

I submit that there is no necessary implication in this section that Crown is bound by it.

If Government were intended to be hit by section 212, why should the Legislature in that section except the land revenue due to Government? Can any one attribute any common sense to the view that the Legislature will allow Government to collect land revenue payable by other people, and at the same time allow the Municipality to have a charge on Government land in respect of property taxes payable by other persons? I submit that the intention of the section is not to interfere with Government.

Unless Legislature uses the power by naming the Crown either expressly or by implication, it does not bind the Crown.

And the fact that the Crown is bound to pay certain taxes under certain sections does not necessarily provide the implication necessary to bind the Crown. See Perry v. Eames: Salaman v. Eames and Hornsey Urban Council v. Hennell

M.C Setalvad, for respondent.

Re Ultra Vires:—

The words of section 84 of 1915 Act read along with the 1916 Amending Act make the position clear. They clearly refer to laws which have already been made. See the marginal note to the section “Removing Doubts …” cannot apply to future Legislation, but to existing Acts. Therefore I submit that these words give the Local Legislatures retrospectively the power to legislate on matters affecting the prerogative of the Crown.

See Maxwell on Interpretation of Statutes, 7th Edition, page 37.

Marginal notes to a section are of some assistance, as it shows the drift of the section. Section 84, sub-section (3) removes all further doubts. It validates all Acts of Local Legislature which may have affected the prerogative of the Crown. Sub-section (3) is put in by way of abundant caution.

Section 65 of 1915 Act defines powers of future Legislature.

It was suggested that the expression “Local Legislature” was not known before 1915. But, I submit, there was local legislative authority, and the mere fact that the expression “Local Legislature” was used for the first time in 1915 does not affect the Acts passed by the Provincial Governors in Council.

If the effect of the amending Act of 1916 was not to validate the laws of the Provincial Legislature passed before 1915 affecting the prerogative of the Crown, then the Imperial Legislature would have said so in clear terms, as was done in sections 14 and 33 of the Indian Councils Act of 1861, 24 and 25 Vic, c. 67, where the words used are “in accordance with the provisions of this Act”. There are no such words in the Act of 1916, and instead of them the words used are only “this Act”.

I rely on a decision of the Madras High Court in Bell v. The Municipal Commissioners for the City of Madras, where it was laid down that the powers of the Provincial Legislature to enact a law affecting the prerogative of the Crown were derived in 1861 from 24 and 25 Vic, c. 67, when the powers of the Provincial Governments to legislate for the peace and good government of their respective provinces, which were taken away by the Act of 1833, were restored. The reasoning is this that when you come to the powers of the Provincial Legislatures under section 42 of the Act of 1861, there is no restriction on their power to make a law affecting the prerogative of the Crown. In 1861, that restriction as regards the Indian Legislature, which was imposed in 1853 by section 26 of 16 and 17 Vic, c. 95, was taken away by section 24 of the Act of 1861. There was no such restriction before 1861 in the case of the Provincial Legislatures, and, therefore, there was no necessity to enact in the Act of 1861 a provision similar to section 24 as regards. the Provincial Legislatures. Therefore, according to the Madras case a Local Legislature had, undoubtedly, the authority to make a law affecting the prerogative of the Crown since 1861. The combined effect of 1915 and 1916 Acts is that notwithstanding the fact that the Act does affect the prerogative, it shall not be invalid. Therefore I submit that powers are expressly conferred by Legislature to affect the prerogative of the Crown.

Whether the Crown is affected or not, it must be governed by the ordinary construction of the Statute. In this section (212) the Crown is brought in by necessary implication.

Counsel refers to various sections of the City of Bombay Municipal Act, 1888; sections 140, 143, 144(3), 197, 200, 203, 209 and 212.

The words “subject to payment of land revenue” in section 212 do not exempt Government. There is no intention to totally exempt Government. Whether there is necessary implication, one must look at the scheme of sections.

When the Crown is not exempted where primarily liable, and where the lands are not used for public purposes, then why should section 212 be construed to give absolute exemption?

Counsel then referred to sections 146, 148, 170.

Same provisions as to water tax, Halalkhor Tax. Section 169, schedule 3.

In section 212 the Crown is included by necessary implication, because the Crown is referred to in the other sections in the Chapter. Section 212 cannot be isolated but must be read together with the whole scheme of the Act. Ultimate liability is on lands and buildings.

See Maxwell pages 120, 121. Reference was also made to Hiranand Kirpalani v. Secretary of State.

Kemp in reply. The intention of sub-section (3) of section 2 of the Act of 1916, 6 and 7 Geo. V, c. 37, was to remove doubts arising in future. In a way that sub-section was superfluous. The marginal notes to section 2 of that Act and to section 84 of the Government of India Act of 1915 remove any doubt as to future legislation. The decision in Bell v. The Municipal Commissioners for the City of Madras was based on the footing that there was no previous restriction on the Provincial Legislature's power to affect the prerogative of the Crown. That is wrong; what is necessary is that there should be a consent to the affecting of the Crown's prerogative.

If the argument that it is the land which is liable for the payment of taxes is correct, then in similar cases the land belonging to the Municipal Corporation would also be liable. In section 143 of the City of Bombay Municipal Act Her Majesty is put on the same footing as the Corporation.

At any rate the lower Court was wrong in allowing a charge on the land for the costs of the suit and interest on judgment.

Beaumont, C.J:—This is an appeal by the Secretary of State for India in Council against a decision of Mr. Justice Davar, and the question raised is whether lands in the City of Bombay belonging to Government are liable to a charge for property tax arising under section 212 of the City of Bombay Municipal Act, 1888. The facts are not in dispute. The land in question was let on lease, and the liability for tax arose during the currency of the lease, and that liability was not discharged by the lessee. The lease has now been terminated, and possession of the land has been recovered by Government, and the question is whether the unpaid tax for which the lessee was primarily liable is a charge upon the land in the hands of Government under the Act.

The first contention of the Advocate General is that if the City of Bombay Municipal Act purports to impose a charge upon land of the Crown, it is, to that extent, ultra vires, because in the year 1888 the local legislature had no power to legislate in derogation of the prerogative of the Crown, and in support of his argument he refers to various old Acts. There is first the Act 3 and 4 Will. IV, c. 85, section 43, which, in conferring power to legislate upon the Governor-General in Council, excepts matters which shall in any way affect any prerogative of the Crown. The Government of India Act, 1883, 16 and 17 Vic, c. 95, section 26, contains a saving provision that no law or regulation made by the Governor-General in Council shall be invalid by reason only that the same affects any prerogative of the Crown, but that saving provision does not extend to the Act of any local Legislature. A similar provision is to be found in section 24 of the Indian Councils Act, 1861. There is, therefore, undoubtedly force in the contention of the Advocate General that in the year 1888 the local Legislature had no power to affect the prerogative of the Crown. But the question is whether that position has not been altered by recent legislation. Section 84 of the Government of India Act, 1915, provides that:—

“A law made by any authority in British India shall not be deemed invalid solely on account of any one or more of the following reasons:—(a) in the case of a law made by the Governor-General in Legislative Council, because it affects the prerogative of the Crown.”

Then comes the amending Act of 1916, which provides in section 2(2) that in section 84 of the Act of 1915, after the words “Governor-General in Legislative Council” shall be inserted the words “or a local Legislature”, and sub-section. (3) of that section provides:

“This section shall apply to and shall validate laws made as well before as after the commencement of this Act.”

If the provisions of section 84 of the 1915 Act only extend to future legislation, then, no doubt, sub-section (3) of section 2 of the amending Act would not carry the matter much further, because the amending Act only puts the Acts of a local Legislature on the same footing as Acts of the Governor-General in Legislative Council, and the only effect of sub-section (3) would be to cover the period between the two Acts. But at any rate sub-section (3) shows that the Legislature was not averse to passing legislation of a retrospective character in this connection. The real question, therefore, is whether section 84 of the Act of 1915 applies only to future legislation, or is a validating section applying to past, as well as future, legislation. If the section is of the latter character, it is clear that the ordinary rule of construction by which Acts are construed in a prospective, rather than in a retrospective, sense, if the words so permit, has no application. Now the position of the section is of some consequence. It comes at the end of Part VI of the Act, which is entitled “Indian Legislation”, and the power of the Governor-General to legislate so as to affect the prerogative of the Crown is not inserted amongst his general legislative powers conferred by section 65. That rather suggests that the section was intended to do more than merely deal with the power of future legislation. Then the marginal note to the section is strongly in favour of the view that it was intended to validate past Acts. The marginal note is, “Removal of doubts as to validity of certain Indian laws.” The Legislature can hardly have intended to remove doubts which might arise under Acts which had not yet come into existence. Marginal notes can, as it has been said, be looked at in order to see the general trend of the section, and here I think the marginal note is certainly of consequence when we have to consider whether the general trend of the section is to validate past Acts or to deal only with future Acts. The actual words of the section also favour the view that it extends to past legislation, because the opening words are, “A law made” and not “laws to be made”. There are other sub-sections (b) and (c) besides sub-section (a), which I have already read, and they may have some bearing on the construction of the section. Sub-section (b) provides that a law made by any authority in British India shall not be invalid because the requisite proportion of members not holding office under the Crown in India was not complete at the date of its introduction into the Council or its enactment. That no doubt has reference to the provisions of sub-section (3) of section 63, but it may also cover cases arising under corresponding provisions in earlier Acts, particularly the Act of 1861, section 33 of which was substantially in the same terms as the sub-Section in question. Then sub-section (c) deals with the case of laws made by local Legislatures relating to the powers of Magistrates over European British subjects. We have not been referred to any existing local law to which that sub-section is directed, but I apprehend that it is probably directed to existing local laws—it may be laws in other provinces, certainly from the phraseology of the sub-section I should assume that it is directed to some existing local laws, and not merely to possible future local laws. Taking the language of the section as a whole, its position in the Act, and the marginal note, I feel no doubt that this section taken in conjunction with the amending Act has the effect of validating not only future Acts of legislative authorities in India, but also past Acts. That being so, I think that it is not open to us to hold that the Bombay Municipal Act of 1888 is invalid merely by reason of the fact that it affects the prerogative of the Crown, and no other ground of invalidity is suggested.

The next question to consider is, whether on the terms of the Act, lands of the Crown fall within section 212. The Advocate General relies on the general canon of construction that the Crown is not bound by Acts of Parliament unless named expressly or by necessary implication, a canon of construction which this Court applied in favour of the Crown to a different part of this very Act in the case of Hiranand Kirpalani v. Secretary of State. In that case, however, we were dealing with the portion of the Act relating to streets, by which we held the Crown was not bound. In the case of the sections relating to taxation it is not disputed that the Crown is bound except where exempted from payment. Property taxes are imposed by section 140 on buildings and lands in the City. Section 143 provides that the general tax, which is part of the property taxes, shall be levied in respect of all buildings and lands in the City except (as far as relevant) “buildings and lands vesting in her Majesty used solely for public purposes and not used or intended to be used for purposes of profit or in the corporation, in respect of which the said tax, if levied, would, under the provisions hereinafter contained, be primarily leviable from the Secretary of State for India in Council or the Corporation, respectively.” So that it was clearly contemplated there that, in cases not excepted, buildings and lands vested in the Crown were liable to the tax. Then section 146, which deals with the liability of persons to pay the tax, provides that property taxes shall be leviable primarily from the actual occupier of the premises upon which the said taxes are assessed, if such occupier holds the said premises immediately from Government or from the corporation or from a fazendar. Otherwise the property taxes are primarily leviable, if the premises are let, from the lessor, and if the premises are sub-let, from the superior lessor. In the present case the property having been let, and held immediately from Government, the primary liability is no doubt on the lessee. Section 203 gives a right of distress for recovery of the tax, and section 209 imposes a secondary liability on the actual occupier when default is made by the person liable and that person is not the occupier. Then comes the relevant section 212, which provides that—

“Property taxes due under this Act in respect of any building or land shall, subject to the prior payment of the land revenue, if any, due to Government thereupon, be a first charge upon the said building or land and upon goods and chattels, if any, found within or upon such building or land and belonging to the person liable for such taxes.”

It is suggested by the Advocate General that the charge under that section is only imposed upon the interest in the land of the person liable to pay the tax. But in my opinion, that construction is quite impossible. The tax is charged in terms upon the building or land, and not upon any particular interest therein, and if it were held that the charge only extends to the interest of the person liable to pay, difficulties' would arise, particularly in cases in which the property had been sub-let, where the superior lessor would be liable under section 146, and possibly the occupier, under section 209, but the owner of a beneficial head-lease would not be liable, and his interest would escape the charge under section 212. I have no doubt that section 212 means what it says, i.e, that the tax is to be a first charge upon the building or land liable to tax. It is then said that even if that is so, the Crown is not bound, because the Crown is not named expressly in the section. That, no doubt, is true, but the question is whether the Crown is not referred to by necessary implication. In my opinion, it is. The scheme of the Act is to levy taxes in respect of land and buildings, and then to impose a liability to pay the tax on persons having certain interests in the land and buildings, with the ultimate remedy, if the tax is not paid, of a charge under section 212 on the land or buildings. If we once hold that land of Government is subject to the tax, it seems to me that we should not be giving proper effect to the remedies given for recovery of the tax, if we were to hold that land of Government is excluded from the charge under section 212. We should then be treating Government land as liable to the tax, but the Corporation as having no ultimate remedy against that land. In my opinion, the Crown is bound by necessary implication in respect of the charge which arises under section 212, that section being an integral part of the general scheme of the Act imposing taxation on land in Bombay including Government land. I think, therefore, the judgment appealed from was right, and the appeal must be dismissed with costs, with the variation that the provisions about costs and interest in the judgment should be struck out.

Rangnekae, J.:—I agree. The first question raised by the appellant is that section 212 of the Bombay Act III of 1888 is ultra vires the local Legislature inasmuch as it affects the prerogative of the Crown. In Hiranand Kirpalani v. Secretary of State the same question was incidentally raised before us in the course of discussion. I then expressed an opinion that there was force in the contention that the Act is ultra vires the local Legislature. The question was not then fully argued and we had not the advantage of hearing the other side as it was not material for our decision in that case. Having now had the benefit of a fuller argument, I am clear in my mind that the question must be answered against the Crown.

It is well established by authorities that the Crown cannot be bound by a statute except with its consent. It is clear that up to 1853 no authority in British India had any power to enact a law which would affect the prerogative of the Crown. Then came the Act of 1853, section 26 of which provided that no law enacted by the Governor-General in Legislative Council shall be invalid by reason of its affecting the Crown, provided the previous sanction of the Crown was obtained. The local Legislature was, however, denied the saving provision. This Act was followed by the Act of 1861. Section 24 of that Act contained a similar saving provision as in the Act of 1853, except that previous sanction of the Crown was not necessary. Section 42 defined the extent of the power of the Governor of a Presidency in Council to make laws and regulations, but there was no power in him to make any laws affecting the prerogative of the Crown. There is force, therefore, in the Advocate General's contention that what may be called a Provincial Legislature had no authority in 1888, when the City of Bombay Municipal Act was passed, to enact any laws affecting the prerogative of the Crown. The Act of 1861 was followed by that of 1915, which is entitled the Government of India Act, 1915. Section 84 of that Act clearly provided that any law made by any authority in British India shall not be deemed invalid solely on account of

“(a) in the case of a law made by the Governor-General in Legislative Council, because it affects the prerogative of the Crown.”

This also does not seem to extend the powers of a provincial legislative authority to make laws affecting the Crown. This Act, however, was followed by the amending Act of 1916, section 2(2) of which provides that after the words “Governor-General in Legislative Council” the words “or a local legislature” should be inserted, and the rival contentions in this case are based upon the construction and effect of these two statutes. On the one hand it is argued that the Act of 1915 is not retrospective but applies to future legislation only, on the other, that section 84 is merely a validating section and validated laws already enacted by a local Legislature. The real question in this appeal is which of these contentions is correct.

It seems to me plain from the language of the section itself, apart from its position in the Act, that it is a validating section, and this view is further supported by the marginal note to the section as also the sub-heading of the chapter in which that section is placed. It seems to me to be difficult to take any other view, having regard to the language of the section, which, if it was intended to cover future legislation only, is not expressed in the same affirmative manner, as for instance, sections 65 and 80a of the same act, which conferred upon the Governor-General in Legislative Council and the local Legislature respectively the power to enact future laws for their respective territories. Then the question is, what is the effect of the amending Act of 1916? In my opinion, the effect is to validate the laws already made by a local Legislature in the past to the same extent as in the case of lows made by the Governor-General in Legislative Council. In other words the amending Act puts the local Legislature on the same footing as what may be called the Imperial Legislature in this respect.

It is contended, however, that sub-section (3) of section 2 of the amending Act shows that the intention was to validate laws made by a local legislature after 1915 and thereafter. Sub-section (3) is in these terms:

“This section shall apply to and shall validate laws made as well before as after the commencement of this Act.”

But if section 84 of the Act has a retrospective operation, then it must follow that the amending Act has it too. In my opinion this sub-section was clearly enacted ex majore cautela, and that is clear from the fact that it refers not only to laws made before the commencement of the amending Act, but even after the commencement of the amending Act. If section 84 applied only to Acts which were to be made after 1915, it clearly was not necessary to provide in the sub-section (3) of the amending Act that amendment would validate laws made after the commencement of the Act, that is after 1916, and, I think, therefore, there is no force in the contention that the whole intention of the Legislature was to make section 84 as also section 2(2) of the amending Act of 1916 applicable to the laws which any authority in British India might make in the future. I am, therefore, clearly of opinion that the Act of 1888 was intra vires.

The next question is whether the Crown is bound by the provisions of section 212. The principle is well established that no Act of Parliament would bind the Crown unless the Crown is named therein expressly or by necessary implication. The Crown is not named expressly in section 212. But it is impossible to hold that the Crown is not bound by this section as a result of necessary implication, having regard to the scheme of the Act and the other sections in this particular chapter, which deals with the question of taxation. This question has been dealt with in the judgment which has been delivered by my Lord the Chief Justice, and as I entirely agree with it, I do not think it necessary to go into any detailed discussion on this question.

The whole scheme of the Chapter under the heading “Municipal Taxation” is to impose the tax on all lands and buildings in the City. Then follow the provisions as to persons primarily liable to pay the tax and as to certain, persons otherwise liable. Then there is a provision as to recovery of the tax by distress. It is clear that the lands and buildings vesting in the Crown are not exempted except in regard to some specifically mentioned in clause (b) of section 143(1). Then comes the provision in section 212 at the end of the chapter which imposes a first charge on all lands and buildings in respect of the tax assessed on them. Upon the plain language of the section, I am unable to accept the contention that it refers to the interest of the person liable to pay the tax on the lands and buildings. This being the scheme, in my opinion, the Crown is named in the section by necessary implication.

I agree, therefore, that the appeal must be dismissed with costs, with the variation that the words about costs and interest should be struck out in the judgment.

Attorney, for appellant: Mr. G. Louis Walker.

Attorneys for respondents: Messrs Crawford, Bayley & Co.

Appeal dismissed.

B.K.D