Sonik Industries, Rajkot v. Municipal Corporation of the City of Rajkot

PAnIAK, J. This appeal by special leave raises the question whether the rules for the levy of a rate on buildings and lands can be said to be published under s.77 of the Bombay Municipal Boroughs Act, 1925 if the notice published in a newspaper reciting the sanction of the State Government to the \­ rules mentions that the rules themselves are open to inspection in the Municipal office and that copies of the rules can also be purchased there. The Rajkot Borough Municipality framed Draft rules for the levy of rates on buildings and lands in Rajkot. The Draft rules were published and objections were invited, and there- ;. after the State Government accorded its sanction to the rules. In the issue dated November 28, 1964 of "Jai Hind", a Gujarati newspaper published from Rajkot, a notice was published purporting to be under s.77 of the Bombay Municipal Boroughs Act, 1925 as adopted and applied to the Saurshtra area of the~· State Gujarat (hereinafter referred to as "The Act"), for the information of persons holding buildings and illDllOvable -'. property within the Municipal limits of Rajkot that the Municipality had resolved to enforce the "Rules of the Rajkot Borough Municipality for the levy of Rate (Tax) on Buildings and Lands" sanctioned by the State Government of Gujarat with effect from January 1, 1965. Notice recited the date and serial number of the sanction. It also stated : r - "These rules can be inspected at the office of the ~­ Municipality on all days other than Holidays during office hours; moreover copies of the rules can be purchased at the Municipal Office". It appears that thereafter an assessment list was prepared and steps were taken to demand the tax. 't' r The appellant, a registered partnership firm, instituted~ a suit in the Court of the learned Civil Judge, Senior · Division, Rajkot, praying for a declaration that the aforesaid rules were invalid, and that the consequent assessment list and the related notices of demand were without authority of law. A permanent injunction was also sought to restrain the Municipality from giving effect to the rules. The trial court decreed the suit and granted the declaration and injunction ._ prayed for. An appeal against the decree of the trial court y was dismissed by the learned Extra Assistant Judge, Rajkot. A second appeal was filed by the Municipal Corporation of Rajkot (the Municipal Borough of Rajkot having been so renamed) in the High Court, and at the time of admission a learned Single SONIK INDUSTRIES v. MUNICIPAL CORPN. [PATHAK, J.) 63 '""<'Judge of the High ·Court fornulated three questions of law arising in the appeal. The appeal was ref erred subsequently to a larger Bench. A Bench of three learned Judges of the High Court took up the case and observed at the outset that the only question which required consideration at that stage was whether the courts below had erred in striking down the rules on the ground that they had not been published as required by -1-s.77 of the Act. The learned Judges held that the courts below had taken an err0neous view of·the statute and that, in their opinion, the conditions of cs.77· of the ·Act had been satisfied in the case. The case was sent back to. the learned Single Judge with that opinion for disposal in accordance with law. Chapter VII of the Act provides for Municipal taxation. \While .the different taxes .which can be levied by a Munici­ pality are enumerated in s. 73, sections 75 to 77 detail the procedure to be observed when the Municipality proposes to levy a tax. Before imposing.a tax the Municipality is required by s. 75 to pass a resolution deciding which one or other of the taxes specified in s. n would be imposed and to approve rules specifying the classes ·of persons or property. or both which are proposed· to be .. made liable, the amunt or rate proposed for assessment, the basis of valuation on which such rate on buildings and lands' is to be imposed and other related ·::>---matters. The rules so approved . by the Municipality are required to be published with a notice in a prescribed form. Objections are invited from the inhabitants of the.Municipal borough, and . the Municipality is required to take the objections into consideration, and if it decides to pursue the levy it submits the objections with its opinion thereon and ."-'any 1DOdifications proposed by it, together with the notice and J rules to the State Government. Section 76 empowers the State Government to sanction the rules with or without mdif ication, or to return them to the Municipality for further consider- ation. Section 77 provides : / "77. · Rules sanctioned under section 76 with the lllOdifications and· conditions, if any, subject to which the sanction is given shall be published by the Municipality in the Municipal borough, together with a notice reciting the sanction and the date and serial number thereof; and the tax as prescribed by the rules ~o published shall, from a ~ .v 64 SUPREME COURT REPORTS [1986) 2 s.c.R. date which shall be specified in such notice and'­ which shall not be less than one ioonth from the date of publication on such notice, be imposed accordingly, ••••••••••••" .It is contended by learned counsel for the appellant that the rules sanctioned by the State Government should have been published along with the notice reciting the sanction in th;1- same newspaper and there was no publication for the purposes of s. 77 if the notice merely mentions that the rules can be inspected in the Municipal Off ice and that copies of the rules can be purchased. Our attention· is invited to s.192 which provides for the mode of service of notice under the Act, and it is urged that the publication of the rules in this case is not in conformity with any of the modes prescribedT°" there~n. It is contended that the provisions of s.77 call for strict construction inasll1lch as the rules are intended _to levy a tax on the inhabitants of the Municipality. In the c·ase of Municipal taxation, the conventional procedure enacted in ioost statutes requires publication of the proposed rules providing for the levy and inviting objections thereto from the inhabitants of the Municipality. Thereafter when the rules are finalised and sanctioned by t.he State Government, it is mandatory that they be published so that the~ . . inhabitants of the . Municipality should know how · the levy effects them in its final form. The rules, and consequently the levy, take effect only upon publication in accordance.with the statute. The object of the requirement is that a person affected by the levy !l11St know precisely the provisions of the '·levy and its consequences for him. Section 77 requires that.,. the sanctioned rules should be published by the Municipality( in the Municipal borough together with the notice reciting the sanction. The notice published in the newspaper mentioned that / . the "Rules of Rajkot Borough Municipality for the levy of Rate (Tax) levied on Buildings and Lands" had been sanctioned by the State Government and the notice recited·also the date and serial number of the sanction. It was open to the Municipality to publish the sanctioned rules also in the newspaper, but what it did was to state in the notice that the rules could'be inspected in the Municipal office, and also that copies of the rules could be purchased at the Municipal Office. In our opinion, the requirement of s.77 was complied with inasll1lch as • ~ -: I SONIK umusnnES v. MUNICIPAL CORPN •. [PATHAK, J. I 65 information was thereby given to all persons holding buildings and im::iovable property within the Municipal limits of Rajkot that the rules mentioned therein had been sanctioned by the State Government and that the rules could be inspected in the Municipal Office. The mandatory requirement of s.77 was that the rules : should be· published and it seems to us that the . notice .. satisfies that requirement. The mode of publishing the· rules is a matter for directory or substantial compliance. It is sufficient ·u it· is' reasonably poss-ible for persons affect­ ed by the rules to obtain, with fair diligence, knowledge of those rules through the mode specified in the.notice~ Had the Act itself specified the mode. in which the rules were to be published, that. mode would have to be'. adopted· for publishing . the . rules. In the opinion of the Legislature, that was the mode through which the inhabitants of . the Mu~iClpality ·could best.be informed· of the,rules. But the Act· is· silent as· to · this•. Section 102 . specifies the Jll)des . iri . which' service of a notice contemplated by · the Act should: be . served.· There· is nothing in the section prescribing the mode for publishing the rules in question here.· Nor does s.24~of _the .. Bombay General Clauses Act help us~ We rust,. therefore, fall ··back upon the general ·principle that if the Jll)de of publication adopted is sufficient for persons, affected by the rules, with reasonable diligence to be acquainted with them, publication of the rules · has .taken place in contemplation:of law. It is nec~ssary to e"l'hasise that we are dealing with··, a ·stage defining the ·final :shape of the rules,· after obj~c:tiotis ·to the draft rules have· been considered and the ·State Government · has accorded its sanction. '"", .. the Learned counsel forthe appella~t' and learned counsel for 1 · Interveners have referred us to s. ·102 of -the Act, .which empciwers the State Government on complaint made·· or otherwise· that any tax leviable by the Municipality is unfair in its ·, incidence, or that the levy thereof; of any· part thereof, is obnoxious to the interest of the general public:, to require the Municipality to take measures for removing any objection which appears to it to exist to. the said tax •. If, within the ~.: period so·. fixed, such .requirement is 'not ·carried into effect B. to the satisfaction of the · State Govei::nment, it · may, by notification in the Official Gazette, suspeild the levy of the tax, or of sue:.~ part thereof, until such time as the objection thereto is re100ved. It.' is urged that the rules published under. · H C· 66 SUPR&'IE COURT REPORTS [1986) 2 s.c.R. s.77 of the Act are still open to challenge under s.102 of the Act and it is _for that reason that s. 77 provides that the notice published thereunder should prescribe a date, not less th.in one month from the date of such publication, as the date on which the tax as prescribed by the rules shall be imposed. It is said that this period is intended to enable persons . affected by the levy .to object again under s.102 of the Act, · and therefore the rules must be : set forth in the newspaper itself. We are unable to agree. To our mind, s.77 provides the final stage_of .the procedure enacted in sections 75 to 77 for imposing ·a levy. The period ref erred to in s. 77, after which alone the tax can be imposed, is intended to enable persons affected.by the levy to acquaint themselves with the contents of the rules, and to take preparatory measures for compliance with the. -rules. The period has not been particularly prescribed · in order to enable ·a person to , take advantage of the benefit of s.102 before the· tax is imposed. We are of opinion /that it would have been more desirable. for the Municipality to have published the rules in the newspaper along with the notice reciting_the sanction, but while saying so we are unable to hold that its omission to do so and notifying instead· that inspection of the rules was available in ·the Municipal Office does not constitute sufficient compliance with law. Reliance was placed by the appellant on Clmnni Lal v. The Municipal Board, Shri Madhopur, [1956) I.L.R. Rajasthan 568 before us. In that. case, on a difference of opinion between '· two. learned Judges of the Rajasthan High Court, a third. 'learned Judge of the High Court held that the provision for inspection of the rules· in the Municipal ,Office did not constitut~ · publication withiri the meaning of· s.62 of the Y Rajasthan Town Municipalities Act, 1951. The High Court in that - case was influenced by the particular . evidentiary material before it, on the_ basis rQf which it reached the con­ clusion that it was not reasonably possible for a member of the ·public to acquaint himself with the contents of the rules. -...__No such difficulty has been placed before us. Our attention was also invited to Gokaldas Amarshi v. Porbandar City M.mici­ pality, [1971) 12 G.L.R. 603 but "in that case the. High Court was concerned with the stage of publication of the draft rules, that is to say the preliminary procedure enacted under the Act before imposing a tax. Learned counsel for the ~ - SONIK INDUSTRIES v. MUNICIPAL CORPN. [PATHAK, J.] 67 ~,appellant has referred to Coon:lssioner of Sales-tax, Uttar Pradesh v. Modi Sugar Mills Ltd., [1961] 2 s.c.R. 189, The Municipal Corporation Bhopal, H.P. v. Misbahul Hasan and Ors., [1972] 1 s.c.c. 696, Govindlal Cbhaggan Lal Patel v. The Agri­ cultural Produce Market CoDlllittee, Godhra and Ors., [1976] 1 S.C.R. 451 and ~cipal Council, Rajahaundry v. Nidamarti Jaladurga Prasadarayudu and Anr. , [ 1926] A. I. R. Madras 800, , but nothing said therein appears to us to be of any assistance to the appellant in this case. There is no force in this appeal and it is accordingly dismissed with costs. ,A_ S.R. Appeal dismissed.