Appeal No 146 of 1955
Appeal from the judgment and decree dated February 10 1953 of the Bombay High Court in Appeal No 953 of 1951 arising out of the judgment and decree dated November 361951 of the Court of 73 Joint Civil Judge Senior Division Poona in Special Suit No 76 of 1950
H D Banaji R A Gagrat and G Gopalakrishnan for the appellant
M C Setalvad Attorney General for India section N Andley and J B Dadachanji for the respondent
January 16
The Judgment of the Court was delivered by DAS C J
The appellant is a public limited company registered under the Indian Companies Act 1913
It is a lessee of four cinema houses situate within the municipal limits of Poona City known respectively as  Minerva   The Globe   Sri Krishna  and  The Nishat 
It exhibits cinematograph films both foreign and Indian in the said four houses
The respondent a body corporate was governed by the Bombay District Municipal Act 1901 Bom
III of 1901 up to June 8 1926 and from then by the Bombay Municipal Boroughs Act 1925 Bom
XVIII of 1925 up to December 29 1949 and thereafter by the Bombay Provincial Municipal Corporation Act 1949 Bom
LIX of 1949
With effect from October 1 1920 the respondent with the sanction of the Government of Bombay levied on the owners and lessees of cinema houses within the limits of the erstwhile province of Bombay a tax of Rs 2 per day as license fee
Rules for the levy and collection of the said tax were framed by the respondent
Those rules were amended on or about June 3 1941 enhancing the tax from Rs 2 per day to Re
I per show
The rules were again revised on or about June 91948 under which the tax was enhanced from Re
I per show to Rs 5 per show
At all material times the tax was being collected at the last mentioned rate
Section 59 of the Bombay District Municipal Act 1901 provided that subject to any general or special orders which the State Government might make in that behalf any municipality a after observing the preliminary procedure required by section 60 and b with the sanction of the authority therein mentioned might 10 74 impose for the purposes of that Act any of the taxes mentioned in that section
After enumerating ten specific heads of taxes which a municipality could levy a residuary category was set forth in cl
xi in the words following Any other tax to the nature and object of which he approval of the Governor in Council shall have been obtained prior to the selection contemplated in sub clause 1 of clause a of section 60 
Ever since the appellant became a lessee of the said cinema houses the appellant has been making payments of the said tax under protest
After giving the necessary statutory notice to the respondent the appellant on or about March 311950 filed a suit in the Court of the Civil Judge Senior Division Poona being Suit No 76 of 1950 against the respondent for a declaration that the levy and imposition of the said tax with effect from October 1 1920 were invalid and illegal that the enhancement in the rates of the tax with effect first from June 3 1941 and then June 9 1948 was invalid and illegal and that the resolutions passed and rules framed in connection with the levy imposition enhancement and collection of the said impugned tax were invalid illegal and ultra vires for a permanent injunction restraining the defendants from levying or recovering and or increasing and enhancing the said tax and for refund to the appellant of the amounts of the tax collected from it and for costs of the suit and interest
By its judgment dated November 30 1951 the trial court held that the said tax was validly levied and imposed but that the increase and enhancement thereof in 1941 and 1948 were illegal and ultra vires
and that the suit was not barred under the Acts governing the respondent
The trial court decreed the suit in part by issuing an injunction restraining the respondent from levying recovering or collecting the tax at the enhanced rate and passing a decree against the respondent for refund of a sum of Rs 27072 with interest and costs
The respondent preferred an appeal and the appellant filed cross objections
But the High Court by its judgment and decree dated February 10 1953 75 reversed the judgment of the trial court and dismissed the suit of the appellant with costs throughout
The appellant s cross objections were also dismissed
On December 10 1953 the High Court granted leave to the appellant to appeal to this Court from the said judgment
Hence this final appeal questioning the validity of the impugned tax
The first point urged in this appeal is that the law imposing this tax is not covered by entry 50 in List II of the Seventh Schedule to the Government of India Act 1935 but is really a tax on the appellant s trade or calling referred to in entry 46 and that therefore the amount of tax cannot under section 142 A of the Government of India Act 1935 exceed Rs 100 per annum
This point need not detain us long for it is covered by us in the appellant s other appeal No 145 of 1955
The second point urged before us in support of this appeal is that section 591 xi is unconstitutional in that the legislature had completely abdicated its functions and had delegated essential legislative power to the Municipality to determine the nature of the tax to be imposed on the rate payers
Learned counsel for the appellant urges that the power thus delegated to the municipality is unguided uncanalised and vagrant for there is nothing in the Act to prevent the municipality from imposing any tax it likes even say income tax
Such omnibus delegation he contends cannot on the authorities be supported as constitutional
We find ourselves in agreement with the High Court in rejecting this contention
In the first place the power of the municipality cannot exceed the power of the provincial legislature itself and the municipality cannot impose any tax eg income tax which the provincial legislature could not itself impose
In the next place section 59 authorises the municipality to impose the taxes therein mentioned  for the purposes of this Act 
The obligations and functions cast upon the municipalities are set forth in ch
VII of the Act
Taxes therefore can be levied by the municipality only for implementing those purposes and for no other purpose
In other words it will be open to the municipality to levy a tax for giving any of the amenities therein mentioned
76 The matter may be illustrated by reference to section 54 which enumerates the duties of municipalities
The first duty mentioned in that section is that the Municipality should make provision for lighting public streets and nobody can object if it imposes alighting tax which indeed is item ix in section 591
Take another example It is the duty of the Municipality to arrange for supply of drinking water and it may legitimately charge a water rate which again is item viii in section 591
We do not for a moment suggest that the municipalities may only impose a tax directly in connection with the heads of duties cast upon it
What we say is that the tax to be imposed must have some reasonable relation to the duties cast on it by the Act
In the third place although the rule of construction based on the principle of ejusdem generis cannot be invoked in this case for items i to x do not strictly speaking belong to the same genus but they do indicate to our mind the kind and nature of tax which the municipalities are authorised to impose
Finally the provincial legislature had certainly not abdicated in favour of the municipality for the taxing power of the municipality was quite definitely made subject to the approval of the Governor in Council
Under the Indian Council Act 1861 24  25 Vic c 67 the Governor in Council might mean the Governor in Executive Council or the Governor in Legislative Council
If the reference in section 591xi is to the Governor s Legislative Council then there was no improper delegation at all for it was subject to the legislative control of the Governor in Legislative Council
The Governor s Legislative Council was composed of all the members of the Governor s Executive Council besides a few other persons
Therefore if the reference was to the Governor in his Executive Council even then from a practical point of view the ultimate control was left with the Governor s Legislative Council
We need not labour this point any further for on the first three grounds the delegation of legislative authority if any is not excessive so as to make the exercise of it unconstitutional
In our opinion the impugned section did lay down a principle and fix a standard 77 which the municipalities had to follow in imposing a tax and the legislature cannot in the circumstances be said to have had abdicated itself and therefore the delegation of power to impose any other tax cannot be struck down as being in excess of the permissible limits of delegation of legislative functions
The last point urged by learned counsel for the appellant is that under el
xi of section 591 the enhancements of the rates of the tax in 1941 and again in 1948 were illegal in that the municipality had no power to do so under the Bombay Municipal Boroughs Act 1925
According to learned counsel for the appellant the judgment under appeal upholding the validity of such enhancements cannot be supported under s60 of that Act
That section runs as follows  Power to suspend 601Subject to the requirements of cl reduce or abolish ause aof the proviso to section any existing tax 58 municipality may except as otherwise provide in clause provided in clause b of the proviso to section 103 at any time for any sufficient reason suspend modify or abolish any existing tax by suspending altering or rescinding any rule prescribing such tax
 2 The provisions of Chapter VII relating to the imposition of taxes shall apply so far as may be to the suspension modification or abolition of any tax and to the suspension alteration or rescission of any rule prescribing a tax
 Reference is made to the marginal note where the words used are  power to suspend reduce or abolish any existing tax 
It is suggested that the word it modify  in the body of the section in between the words  suspend  and  abolish  should be construed in the sense of reduction
The marginal note according to him shows that the several words were used in the section to indicate a progressive diminution in the quantum of tax until it was completely gone
Reference is made to the root meaning of the word  modify  which is to reduce or make less but does not cover the idea of enhancement
In the first place the marginal note cannot affect the construction of the language used in the body of the section if it is otherwise clear and unambiguous see Commissioner of 78 Income Tax Bombay vs Ahmedbhai Umarbhai  Co Bombay 1
In the next place it should be borne in mind that section 67 of the Bombay District Municipal Act Bom
III of 1901 which was formerly applicable to municipalities used the word  reduce  in between the words  suspend  and  abolish  and that that section had been reproduced is section 60 of the Bombay Municipal Boroughs Act 1925 but that in the process of such reproduction the word reduce was dropped and the word modify was introduced
In the marginal note however the word  reduce  was not substituted by the word  modify  apparently through inadvertence
If the word  modify  is to be read as reduce then there could be no point in the provincial legislature substituting the word  reduce  by the word modify
This change must have been made with some purpose and the purpose could only have been to use an expression of wider connotation so as to include not only reduction but also other kinds of alteration
Section 76 of this very Act also refers to  modification not involving an increase in the amount to be imposed which makes the sense in which the word  modify has been used in this Act perfectly clear namely that there may be a modification involving an increase
Reference may also be made to the decision of the Court of Appeal in England in the case of Stevens vs The General Steam Navigation Company Ltd 2
 Modification  according to Collins M R in his judgment at p 893 implied an alteration and the word was equally applicable whether the effect of the alteration was to narrow or to enlarge the provisions
In our opinion the dropping of the word  reduce  and the introduction of the word modify in the body of section 60 of the Act under consideration clearly indicate an intention on the part of legislature to widen the scope of this section and the High Court was right in so construing the same
No other point was urged in this appeal and for reasons stated above this appeal must be dismissed with costs
Appeal dismissed
1  at P 353
2 LR 1903 1 KB 890


Summary:
 The appellant Bank filed a suit against respondents including respondent firm and its partners who were agriculturists for recovery of a sum of Rs181481791 being balance of three principal amounts severally advanced by the Bank to the firm under cash credit account on three different dates
The last loan was advanced by the Bank after its nationalisation on July 7 1969
The Bank alleged that to secure repayment of the aforesaid amount of loan in addition to hypothecation made in its favour of the properties in A  andB Schedules of the plaint equitable mortgage of properties in Schedule C  D  and E  was also created in its favour by respondent No 2 respondent No 3 and his deceased father
The appellant Bank prayed for the sale of the said properties for the recovery of the amounts claimed by it
The respondents including the firm and Respondents No4 to 12 who were alienees denied creation of any equitable mortgage in favour of the appellant Bank
The respondent firm and its partners namely third respondent s deceased father and the second respondent also filed counter claim against the appellant Bank
Dismissing the suit against respondent Nos 4 12 the Subordinate Judge held that no equitable mortgage was created in favour of the appellant Bank and that the claim of the appellant Bank except to the extent of Rs10041855 was barred by limitation
The counter claim against the Bank was decreed
962 Setting aside the Judgment and decrees of the Subordinate Judge the High Court in appeal decreed the suit instituted by the appellant but held that the Bank was entitled to recover the amount claimed by it only after scaling down the debt in accordance with the provisions of the Andhra Pradesh Andhra Area Agriculturists Relief Act IV of 1938
In the appeal by special leave it was submitted on behalf of the appellant Bank that in view of section 4e of the Act the provisions of the Act were not applicable to the appellant Bank and as such it was entitled to recover the entire amount without the same being scaled down as provided in section 13 of the Act and that the words special Indian Law in section 4e referred to and related to law made by an Indian Legislature
On behalf of the respondents it was contended that the words special Indian law meant a special Indian Law enacted by the Parliament of the United Kingdom that even assuming that the expression special Indian law meant a law enacted by the Indian Legislature and that the Banking Act was such a law still the provision of section 4e of the Act did not apply inasmuch as the appellant Bank was not formed in pursuance of special Indian law but by or under special Indian law that is the Banking Companies Act and as such it was not a Corporation within the meaning of section 4e of the Act that as the appellant Bank was nationalised andor created under Ordinance VIII of 1969 promulgated on July 19 1969 and the Banking Companies Act only ratified the already created bank under the said Ordinance it was not formed or created under any special Indian Law  and that since a major part of the loan was contracted before the nationalisation of the appellant Bank the provision of section 4e was not applicable
Allowing the appeal  HELD 1
The provisions of the Act are not applicable to the appellant Bank and there is no question of scaling down the debt due to the Bank by the respondents
972E In the instant case the amounts of loan were advanced by the Bank to the firm under the cash credit account opened in favour of the firm
Normally the advances that are made from the cash credit account are repaid and thereafter fresh advances are made
It is not known what was the actual balance on the date the Bank was nationalised and whether the first two amounts were repaid by the firm and thereafter fresh advances were taken on the cash credit account
971B D 963 24 The Banking Companies Act is a special Indian law and the provision of section 4e Andhra Pradesh Andhra Area Act IV of 1938 is applicable to the appellant Bank969G 22 In interpreting the words of the provision of a statute while it may sometimes be necessary to take into consideration the setting in which such words are placed that is not the only and the surest method of interpretation and when such words convey a clear meaning a different interpretation or meaning need not be given to them because of the setting
968D RL Arora vs State of Uttar Pradesh   referred to
In the instant case the expression special Indian law  has a clear and unambiguous meaning
There is no reasonable justification to think that the expression must be an enactment of the British Parliament since there were in existence Indian Legislatures including a Legislatures at the Centre
968E Section 327a of the General Clauses Act as it stood on the day the Act was passed defines Indian Law  as meaning any Indian law enacted by the Indian Legislature
The expression special Indian law  therefore means a special Indian law enacted by the Indian Legislature
968F G Indian Bank Alamuru vs Krishna Murthy AIR 1983 Andhra Pradesh 347over ruled
23 Inasmuch as the words any special Indian law  in section 4e of the Act refer and relate to a law made by the Indian Legislature and not by the British Parliament the Banking Companies Act is quite legal and valid
972C D 24 Theoretically there may be a distinction between the words in pursuance of  and the words by or under  but by using the expression in pursuance of  in section 4e the Legislature has not meant that the corporation in question should be formed by a third party in pursuance of the law and not by the law itself in order to come within the purview of section 4e of the Act
The intention of the Legislature is very clear in that the provision of section 4e would apply to a corporation which is the creature of a special Indian law whether it is created in pursuance of or by or under the special Indian law
There is no difference 964 Or distinction whatsoever between the corporation formed in pursuance ofand a corporation by or under a special Indian law
969E F 25 An Ordinance is as much a law as an enactment of Parliament or Legislature
Therefore it must be held that the bank was created under a special Indian law even assuming that the bank was created under the Ordinance VIII of 1969 and not under the Banking Companies Act
It is also manifestly clear from sub section 1 of section 3 of the Banking Companies Act which provides that on the commencement of the Banking Companies Act there shall be constituted such corresponding new Banks as are specified in the first Schedule that the appellantBank which is mentioned in the first Schedule has been created under the provisions of the Banking Companies Act with effect from July 19 1969970CE F RC Cooper vs Union of India  and Life Insurance Corporation of India vs Kota Ramabrahmam   referred to