1. Appellant is the plaintiff the Hanuman Transport Company, Udipi. The respondent is the Udipi Municipality the defendant in the trial Court. The defendant Municipality has been levying a fee in respect of every stage carrier at the Municipal Bus Stand, Udipi, in exercise of the power conferred upon it under S. 270B of the Madras District Municipalities Act (Madras Act V of 1920). By a resolution dt. 18-4-58, the Udipi Municipal Council, enhanced the said fee from 25 paise to Re. 1 with effect from 1-5-58. The plaintiff objected and thereupon the rate was reduced by the Municipality to 50 paise per bus. The plaintiff's case is that tee rate of fee was fixed by the defendant without any justification and out of all proportion to the amenities provided, that the income at the old rate of 25 paise was sufficient to meet the expenses of the maintenance of the ??? land and the amenities provided by the defendant at the bus stand and there is no justification for the increase to 50 paise. He pleaded that the fee is not commensurate with the expenses incurred by the defendant, that it has become a source of revenue and amounts to a tax under the guise of a fee. According to him, the cost of maintenance of the bus stand of Udipi will not come to more than Rs. 1000 per year and the fee levied at 50 paise will exceed Rs. 10,000 per year even apart from the rents received from the stalls and from the booking office which would amount to Rs. 3000 per year. He has alleged that the excess amount collected over and above 25 paise has been collected illegally and that the first defendant is bound to refund the excess amount. He has also claimed interest on the principal from the date of suit till payment at 6¼% per annum.

2. The defendant pleaded that the rate of 50 paise is reasonable in view of the amenities provided at the Udipi bus stand, that there is sufficient accommodation for passengers to take rest, there is a latrine provided and pure drinking water is made available for the convenience of the passengers, that even if the income has to some extent increased, the cost of white-washing, repairs, wages of sweepers, cost of lighting charges, services of a part-time employee to supply drinking wafer have to be considered, that there are incidental expenses over supervising charges, cost of collection and the engineering staff, that officers' building have been constructed by the defendant with its own funds and are being maintained by the defendant, that it has provided booking offices, retiring hall for the passengers and that therefore, it is entitled to receive by way of fee for the services rendered and that the not collection made by the defendant and the amounts expended for staff etc., should in the existing circumstances be considered to be fetching a reasonable return from the property, that as such there is reasonable correlation between the fee levied and the services rendered by the defendant and that correlation between the receipts and expenses thereof exists. It denied that the maintenance of the bus stand costs less than Rs. 100 per year as alleged by the plaintiff and stated that in the year, 1953-1954 the collections amounted to Rs. 2162 and that there is no guarantee of any particular income from the levy of this fee. It also pleaded that the suit is barred under S. 354 of the Madras District Municipalities Act. The two material issues framed by the trial Court are the following:

(1) Whether the levy of 50 paise per bus per day, as cart stand fee is illegal, and beyond the competence of the defendant?

(2) Whether the suit is barred by S. 354 of the Madras District Municipalities Act?

3. Both the lower Courts have held relying on the decision in Appanna v. Corporation of City of Bangalore(1) that the plaintiff has not established the absence of correlation between the net income derived by the levy of the fee and the expenditure incurred by the defendant for the maintenance of and providing amenities at the bus stand. The plaintiff has therefore filed the present second appeal. His contention is that the finding of the Courts below with regard to the validity of the fee levied is wrong. In that case, referred to above, the licence fee levied by the Bangalore City Municipality on hotels was enhanced from Rs. 200 to Rs. 300 a year. It was found that the expenditure incurred on the Health Department of the Municipality had increased more than 125 per cent whereas the licence fee which was increased from Rs. 200 to Rs. 300 in the case of the petitioner was enhanced by not more than 50 per cent. It was found that the nine items of services relied on by the Municipal Corporation were being rendered to every hotelier. The increase in the salaries to staff during the period of ten years was found to be 300 per cent. It was held that it was not possible for the Municipality to set apart an exclusive establishment for the services to be rendered to hoteliers or to the establishments owned by them and that since the services rendered by the Corporation to the hoteliers were of the same nature if not more extensive than those which were rendered to the other rate payers within the area of the Corporation, it was inevitable that the total expenditure incurred by the Corporation in that way must necessarily include the expenditure incurred for the services rendered to the other rate payers. It was further observed that in a case like the one dealt with, it was not necessary for the Corporation to establish with mathematical nicety the exact correlation between the fee prescribed and the services rendered, and that what should be established is that the prescribed fee, on a proper construction of the materials produced before the Court is commensurate with the services rendered. It was held that it was impossible to insist on the Corporation to produce before Court the precise information as to the expenditure which is attributable to the hoteliers as distinct from the expenditure incurred over the other rate payers and to produce proof of correlation in that way. It was held proved that the total expenditure incurred over the various spheres of the Corporation activities increased by 125 per cent during the period in question, whereas the enhancement of the licence fee was only by 50 per cent. Under these circumstances, it was held that no further proof was necessary to be produced by the Corporation as to the existence of correlation as between the income and the expenses incurred.

4. But in this case it is admitted by D.W 1, the Revenue Inspector of the defendant Municipality, that separate accounts of collection and expenditure of the bus stand has been maintained in the office of the defendant. It was therefore possible for the defendant to adduce evidence to show what was the exact income derived from the levy of the fee and the expenses incurred by the defendant for providing the amenities and maintaining the bus stand. One of the questions involved in the decision in A.B Transport v. Dharapuram Municipality(2) relied on by the appellant, was the validity of the fee levied by the Dharapuram Municipality on the appellant for the use by the buses belonging to the appellant coming to the bus stand situated within the Municipality. It was pleaded in that case that the licence fee collected amounted to Rs. 1800 whereas the cost incurred by the Municipality was about Rs. 2144. In the cost of services Incurred were included the proportionate pay of the officials of the Municipality like the Municipal Commissioner, Health Officer, Sanitary Inspectors etc. Since it was alleged that they paid weekly or fortnightly visits for inspection, the proportionate cost of their service was also included. It was held that there was no material placed before the Court to show that all or any of the officers referred to were required to inspect the premises and whether or not the officers actually inspected them. It was also held that the conservancy charges and the cost of maintenance of drains are services to which the appellant as a rate-payer of the Municipality would be entitled to and that there was nothing to show that the use of the premises as bus stand for his buses required extra service over and above those the appellant is entitled to as a rate-payer and that therefore, the said items will have to be excluded in deciding whether the licence fee demanded by the Municipality bore a just and reasonable relation to the services the Municipality had to render in return. It was further held that it was only the Municipality that was in a position to furnish the data on the basis if which an evaluation of the services could be attempted, to verify if there was a just and proper relation between the fee levied and the services rendered in return. If was therefore held that on the materials furnished before the Court the allegation of the appellant that there was no such just relation ??? unrebutted. The levy was therefore held to be invalid. The other case relied upon by the appellant is the one in Commr. Municipal Council v. B. Venkateswara Rao(3). In that case the validity of the tax levied on the vendors of articles on road margin was challenged. In that case, there was no material placed before the Court by the Municipality to show that it incurred any extra expenditure other than what it incurred for maintaining the roads as they are bound to do under the Municipal Act. The only expenditure that could be attributed to the vending of articles was held to be supervisory charges incurred by the Municipality its officers, but under that head there was no specific evidence as regards the approximate expenditure. The Municipality was held to be in a petition to satisfy the Court as to the expenditure incurred by it, but did not attempt to place before the Court the nature of the services rendered. In view of the scanty evidence placed before it the Court held that the levy is not Commensurate with the services rendered by the Municipality and that the levy is unreasonable and therefore invalid.

5. The appellant also relied on the decision in Nagar Mahapalika Varanasi v. Durga Das(4). In that case, the validity of the licence fee of Riksha owners, and Riksha drivers imposed by the Municipal Board of Varanashi was in question. It was observed as follows:

“It is true that there is no generic difference between a tax and a fee; both are compulsory exaction of money by public authorities but whereas a tax is imposed for public purposes and is not supported by any consideration of service rendered in return, a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it.”

6. It was held that it was the statutory duty of the Municipality to light public streets and places and to construct and maintain public streets, culverts etc., and that the expenditure incurred therefor by the Municipality in the discharge of its statutory duty could not be equated to the income derived from the licence fee for reimbursing the cost of ordinary municipal services which the Municipal Board was bound under the statute to provide to the general public. Excluding that expenditure, the other expenditure incurred by the Municipal Board was found to constitute 44 per cent of the total income of the Municipal Board derived from the licences. It was held that there was no sufficient quid pro quo established in the circumstances of the case and the licence fee was held to be ultra vires and illegal.

7. The next decision relied on by the appellant is the unreported decision of the Supreme Court in Municipal Council, Cannanore v. C.T Raman Nambiar(5). In that case, the Cannanore Municipal Council enhanced the fee for the use of the bus stand from the bus operators from 50 P. per bus per day to Rs. 1 per bus per day. The enhanced levy was challenged on the ground that it was not authorised under S. 270B(1) of the Madras District Municipalities Act (Madras Act V of 1920) the very provision under which the defendant-Municipality has imposed the levy in the present case. The collections amounted to Rs. 2,500 per month whereas the expenses incurred by the Municipality for the maintenance of the bus stand and incidental matters amounted to about Rs. 381 per month. The Municipality alleged that the land set apart for the bus stand, if let out in small plots, would fetch about Rs. 4,000 per month and that this loss of rent should be treated as another item of expense. But, then was no attempt to prove this. In the Municipal Accounts, the income from the bus stand was shown under the head “remunerative enterprise”. The affidavits filed on behalf of the Municipality gave the impression that she surplus income was spent for maintaining all the main roads in the town. It was held that since the income from the bus stand wad considerably higher than the expenses incurred for maintaining it there was no reasonable correlation between the increased levy and the expenses incurred for rendering the services.

8. It is in the evidence of DW. 1 that the income from the collection of lees does not exceed Rs. 8,000 to Rs. 9,000 per year and that the income from the bus stand including everything is about Rs. 10,000 per year. According to the evidence of DW. 1, there are a number of amenities provided for the bus stand. There is separate accommodation for male and female passengers at the bus stand. There is a septic tank and W.C at the bus stand. Arrangement has been also made for supplying filtered water to the passengers. The bus stand is white-washed and maintained well every year. The bus stand is equipped with electricity. There is a sweeper exclusively to look after its cleanliness. There is supervising staff to maintain and keep the accounts. There is a booking office and parcel room within the bus stand. He has further stated that the amount collected by way of fees is just sufficient for the maintenance of the bus stand in good condition. He has also stated that there is a separate account for collection and expenditure for the bus stand. The rent of the Muslim hotel and also the rent recovered from the bunks in the bus stand go to the General Revenue fund of the Municipality. The sweeper is paid Rs. 65 per month and the waterman is paid Rs. 10 per month. It is also elicited in cross-examination that he cannot say what is the total expenditure incurred by the Municipality for maintaining the bus stand. From this evidence, it is clear that the salaries of the sweeper and the waterman amount to Rs. 950 per year. The evidence of the plaintiff is to the effect that the income from the bus stand is over Rs. 10,000 and the expenses required for the maintenance of the bus stand would be about Rs. 1,000 per annum. It is contended on behalf of the respondent that there is no reason why the evidence of DW. 1 should not be accepted. The evidence of DW. 1, if accepted, shows that a sum of Rs. 950 is being incurred by the defendant towards the salaries of the sweeper and the waterman. Though he has stated that a separate account is maintained for the bus stand, the account books have not been produced. He also stated that he is unable to say as to what is the total expenditure of the bus stand.

9. In Gopal Krishnaji Ketkar v. Mohamad Haji Latit(6) following the decision of the Privy Council in 44 Indian Appeals page 98, it has been observed as follows:

“Even if the burden of proof does not lie on a party the Court may draw an adverse inference if he withholds important documents in his possession which can throw light on the facts at issue. It is not, in our opinion, a sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the best evidence which is in their possession which could throw light upon the issues in controversy and to rely upon the abstract doctrine of onus of proof.”

10. It is the case of the defendant, in the present case, that there is correlation between the income derived from the bus stand and the expenses incurred for its maintenance. Even if it is to be held that the burden of proof was on the plaintiff to prove that the levy of the enhanced fee was invalid, the defendant was bound to produce the accounts in its possession to substantiate its plea that the enhanced fee was justified. Admittedly, separate accounts were maintained about the income and expenses of the bus stand. DW. 1, the only witness examined on behalf of the defendant, is the Revenue Inspector of the Udipi Municipality. He has admitted that he does not know what is the total expenditure for the bus stand. In the nature of things, this witness cannot be expected to know the details of the income and the expenses for the bus stand. In any case, the best evidence would have been the accounts maintained by the defendant-Municipality. In this respect, since the accounts have not been produced, an adverse inference has to be drawn that, if produced, they would not support the case of the defendant. Hence, it is to be held that there is no correlation established between the income and the expenditure and the enhancement of the fee is, therefore, invalid.

11. The respondent contended that the suit is barred under S. 354, clause (2) of Madras Act V of 1920 which reads as follows:

“No suit shall be brought in any Court to recover any sum of money collected under the authority of this Act or to recover damages on account of any assessment, or collection of money made under the authority:

Provided that the provisions of this Act have been, in effect, complied with.”

12. In Municipal Council, Kumbakonam v. Ralli Bros.(7) it has been held with reference to this very provision that when the action of the Municipal Council in fixing rates of license fees is ultra vires, it necessarily follows that the provisions of the Act have not in substance and in effect been, complied with and the bar of suit provided for in S. 354(2) cannot consequently avail them. In State of Mysore v. Shankar Vittal Motor Co.(8), construing S. 18 of Madras Act 16 of 1932 which provided that:

“No suit or other proceeding shall be instituted against the State and no suit, prosecution or other proceeding shall be instituted against any officer or servant of the Government in respect of any act done or purporting to be done under this Act, unless the suit, prosecution or other proceeding is instituted within one year from the date of the act complained of.”

13. It was held that the said provision applies only to suits in respect of acts done under the Act and not to suits for refund of tax alleged to have been illegaly collected. It was further held that where the act complained against was wholly outside the law and did not involve an error in the exercise of jurisdiction, it could not be said that the act complained against was an act done or purporting to be done under the Act. Relying upon the decision of the Supreme Court in 15 STC. 144, it was held that in order to invoke the bar of jurisdiction under S. 354 clause (2) of the Act, the defendant, has to prove that the enhanced levy is imposed under the authority of the Act. Since I have already held that the said levy is illegal, the defendant has acted beyond its authority under the Act. Hence the bar of jurisdiction under S. 354, clause (2) has no application.

14. It was next contended on behalf of the respondent that a specific issue with regard to the correlation between the income and the expenses of the bus stand has misled the defendant and has caused prejudice to it. The plaintiff alleged that the income is about 10 times the expenses, rendered by the defendant for the maintenance of the bus stand. In the written statement, the defendant denied that allegation and pleaded that there are various amenities provided by the defendant at the bus stand for the convenience of the passengers; that the buildings are being repaired and maintained. It set out the various items of amenities provided. But the actual figures in respect of each amenity were not given. It merely pleaded that the net collections made by the defendant, after meeting all expenses of maintenance, repairs, salary of necessary staff etc., should, in existing circumstances, be deemed to represent a reasonable return from the property, and that as such there is a reasonable correlation between the fee levied and the service rendered by the defendant. That both the parties understood that the fact in issue was the existence or otherwise of the correlation between the income and the expenditure of the bus stand, is clear from the evidence adduced by the parties. The clerk of the plaintiff was examined as P.W 1. He stated in his evidence that the defendant is getting an income of over Rs. 10,000 apart from about Rs. 3,500 from the stalls and the bus stand. Exts. A-13 to A-18 are the certified extracts from the Register of Miscellaneous demands kept by the defendant produced on behalf of the plaintiff to show that the average income from the bus stand was about Rs. 10,000 annually. In cross-examination, it was elicited that the defendant provides all amenities at the bus stand, that there is a sweeper, and that there is supply of drinking water. In answer to a question in cross-examination, P.W 1 stated that the expenditure of Rs. 1,000 required for the bus stand would cover the salaries of the sweeper, the water-man and expenses for white-washing of the building. In answer to another question he stated that he cannot say as to the amount spent by the defendant for construction of the building at the bus stand. The Revenue Inspector of the defendant Municipality is examined as DW. 1. In examination-in-chief it was elicited that the defendant provides all the necessary amenities from the point of view of the transport owners and the travelling public. He spoke to the items of amenities as already referred to above. He stated that the income from the fees does not exceed Rs. 8,000 to 9,000 per year. It was also elicited that the defendant does not derive any income from the fees collected nor is the amount so collected appropriated for any other purpose except the maintenance of the bus stand, and that the amount collected by way of fees is just sufficient for the maintenance of the bus stand in good condition. The questions in cross-examination of this witness have been directed to show that the income is much more than the expense's for maintaining the bus stand. Thus it cannot be said that the parties were not aware of the fact in issue viz., the existence or otherwise of the correlation between the income derived from the bus stand by the enhanced fees and the expenses incurred by the defendant for maintenance of the bus stand. Hence, it cannot be said that any prejudice has been caused to the defendant. It is contended on behalf of the respondent that both the lower Courts have accepted the evidence of DW. 1 and held that there is corelation established between the income anil expenses, and that the question of adverse inference being drawn also is a matter which relates to a finding of fact and appreciation of evidence. The lower appellate Court relied on 1963 (1) Mysore Law Journal page 571 wherein it is held that the Municipal Corporation cannot be expected to prove the actual expenses to a mathematical accuracy, but in that case there was evidence to show that the expenses incurred rose by 125 per cent during the relevant period whereas the increase in the fee was only of 50 per cent. Since there was no evidence as to the actual amount spent by the defendant-Municipality for the maintenance of the bus stand and in the face of the admission of DW. 1 in cross-examination that he is unable to say what is the amount spent by the defendant for the maintenance of the bus stand, the finding of the lower Courts is based on no evidence. Hence, it is liable to be interferred with in second appeal.

15. Hence, the decrees of the lower Courts are set aside and the appeal is allowed with costs.