Amraoti Town Municipal Committee v. Shaikh Bhikan Shekh Latif

1. This revision application and revision applications Nos. 374 to 384 of 1937 arise out of several suits filed against the Amraoti Town Municipal Committee to recover some amounts which had been illegally collected from the plaintiffs. The suits have been decreed and the defendant has filed the applications for revision. This order governs the disposal of all of them. In 1932 the defendant Municipal Committee proposed enhancement of a tax, then already in force, on every animal that was brought to the slaughter house from one anna to four annas. The Committee passed a resolution proposing enhancement of the tax and caused its proposal to be published in the Central Provinces Gazette in March 1932 in the manner prescribed by rules made under the Municipalities Act. No objection having been received, it again caused a fresh notice to be published in the Gazette in May 1932. Some objections were received thereafter and the Committee, without considering them, forwarded its proposal as well as the objections to the Local Government which issued a notification imposing the enhanced tax. In pursuance of the Local Government's notification which reasonably led the Committee to believe that it could collect the tax at the enhanced rate, it began to collect it from 1st May 1933. The butchers who were aggrieved filed Civil Suit No. 447 of 1933 for a declaration that the enhancement of the tax was illegal as their objections had not been considered. Their suit ended in a decree passed on 5th April 1934 since when the Committee ceased to collect the tax at the enhanced rate.

2. As the plaintiffs succeeded in their civil suit in getting a declaration that the enhancement of the tax was illegal they have sued to recover the amounts collected from them in excess of the lawful rate of one-anna per animal from 1st May 1933 to 5th April 1934.

3. It is urged on behalf of the applicant that the suits were barred by time, regard being had to Section 48 of the Municipalities Act. That Section is as follows:

No suit shall be instituted against any committee or any member, officer or servant thereof or any person acting under the direction of any such committee, member, officer or servant for anything done or purporting to be done under this Act, until the expiration of two months next after notice in writing……(2) every such suit shall be dismissed unless it is instituted within six months from the date of accrual of the alleged, cause of action.

4. The question is whether the collection of the tax at the enhanced rate of four annas per animal was an act which falls within the ambit of the expression “anything done or purporting to be done under this Act.” In 26 NLR 81 Buldana, (1930) 17 AIR Nag 179 , 123 IC 903 , 26 NLR 81 at page 87 an expression, almost identical with the expression used in Section 48 of the Municipalities Act, was construed as relating only to an act done or purporting to be done in direct execution of the Act. It is urged on the other side that the Municipal Committee, in not having considered the objections filed against their proposal for the enhancement of the tax acted beyond their powers with the result that the tax at the enhanced rate became illegal and could not be recovered. As the act was illegal, that is to say, contrary to law, it is contended that it could not fall within the scope of Section 48 of the Municipalities Act. Reliance is placed on AIR 1929 Mad 409, Municipal Council, (1929) 16 AIR Mad 409 , 120 IC 867 , 52 Mad 207 , 56 MLJ 525 32 All 491 Rajputana Malwa Railway Co-operative Stores, (1910) 32 All 491 , 6 IC 401 , 7 ALJ 496 and 30 Cal 317. (1903) 30 Cal 317 , 7 CWN 329 The last mentioned, case does not appear to be in point and need not be discussed. The other two cases are distinguishable on the ground that the authority which imposed or collected the tax had no power to do so. It was acting, entirely beyond the scope of its jurisdiction and therefore it contravened the statute which created it. In AIR 1929 Mad 409 Municipal Council, (1929) 16 AIR Mad 409 , 120 IC 867 , 52 Mad 207 , 56 MLJ 525 the question was whether the committee was entitled to levy the tax on the plaintiff Page: 457under Section 92 of the District Municipalities Act. It was held that the Municipal Committee had no power at all, and consequently the Municipal Committee's action was not regarded as one which was in pursuance of the Act. In fact the only provision in the Madras District Municipalities Act which was somewhat akin to Section 48 of the Central Provinces Municipalities Act, was S. 350 which provided that no suit for damage or compensation shall be instituted against the Municipal Council in respect of any act done in pursuance or execution or intended execution of this Act or any rule, regulation or order made under it or in respect of any alleged neglect or default in the execution of this Act, etc.

5. It further provided that every such suit shall be commenced within six months after the date on which the cause of action arose. It must be observed that the scope of Section 350 of the District Municipalities Act, Madras, is much restricted as compared with that of Section 48 of the Central Provinces Municipalities Act. It only speaks of “suit for damage or compensation,” whereas Section 48(1) of the Central Provinces Municipalities Act, speaks of “no suit” in quite general terms. Their Lordships of the Madras High Court were only invited to decide the question whether the suit which was brought there for refund of the amount illegally collected was a suit to recover moneys had and received or was one for damage or compensation. Their Lordships held that was not a suit for damage or compensation and on that view the suit was excluded from the scope of Section 350 of the District Municipalities Act, Madras. In 32 All 491 Rajputana Malwa Railway Co-operative Stores, (1910) 32 All 491 , 6 IC 401 , 7 ALJ 496 the decision turned on the same issue, namely whether the Ajmere Board in imposing and collecting octroi duty for goods imported into India by sea was acting within its powers. It was found that a resolution of the Government of India which was in force within the territorial limits of the Ajmere Board exempted seaborne goods from liability to any octroi duty. It was therefore rightly held that the Ajmere Board was not entitled to the protective Section of the Municipal Act. The principle of the decision in the two cases was that if the Municipal Committee exercised a power which it did not possess it should not be regarded as acting in pursuance of the statute governing its powers, and its acts should not be regarded as being those done under the statute. I am in full agreement with that view, but that does not assist the non-applicants in this case where the facts are totally different.

6. Here the admitted facts are that the Municipal Committee had power to enhance the tax from one anna to four annas and that it did follow the procedure laid down in Section 68 of the Municipalities Act, but in doing so it lapsed into an irregularity, namely Commission to consider the objections filed by the butchers, which rendered the tax illegal. Now there can be no question that the Municipal Committee, in imposing and collecting tax at four annas per animal, was acting exactly in accordance with S. 68. It must be observed that there is a difference between a case when a corporate body exercises a power which is wholly absent and a case where it has power but it exercises it illegally or with material irregularity. In the former case the Municipal Committee's act from beginning to end is illegal; whereas in the latter case the act is quite legal in the beginning but becomes illegal in the end. The distinction is pointedly expressed by a learned Judge of an English Court in (1864), 16 C.B 568 cited at page 9 in the Street's Doctrine of Ultra Vires. It is as follows:

Though in one sense unlawful it is still a thing done within the general scope of the authority of the Board. The act was intra vires as it was within the scope, but doing the act without complying with a statutory condition was ultra vires.

7. The present case, unlike those of Madras and Allahabad referred to above, falls within this principle. The enhancement of the tax was intra vires, as being within the scope of the Act, but became ultra vires only because the Committee did not comply with certain statutory conditions. In enhancing the tax and collecting it the Municipal Committee was certainly exercising, although irregularly, the power conferred on it by S. 68 and to that extent it appears to me that the contention that they were not acting under the statute is untenable. Much learned argument is addressed to show that Section 48 of the Central Provinces Municipalities Act, does not come into operation when moneys are collected under a contract or a quasi contract, but it appears obvious that these considerations have no bearing on the issue. The payment made by the butchers was not under a contract but a payment, made under compulsion of a tax which the Municipal Committee had power to impose and collect; nor can it be said that the money was collected under an implied contract. For the foregoing reasons I hold that the suits are governed by Section 48 of the Central Page: 458Provinces Municipalities Act, and they not having been filed within six months as provided in Section 48(2) of the C.P Municipalities Act, are barred by time. They are therefore dismissed with costs in both Courts. Pleader's fees Rs. 5 in each case.

D.S/R.K

8. Applications dismissed.