Case: Vijay Mills Company Limited and Others Vs. State of Gujarat and Others

SAWANT, J. 1. The facts leading to the common question of law which arise in these appeals may be taken from one of the appeals, viz., Civil Appeal No. 82 of 1985. The appellant-Company holds a large parcel of land admeasuring about 2 lakh square meters comprising 30 different survey numbers of Asarwa Ward of the Ahmedabad Municipal Corporation. Prior to August 1, 1976, these lands were assessed as non-agricultural lands, at the rate of 2 paise per square metre under Rule 8(2) of the Gujarat Land Revenue Rules, 1972 (the 1972 Rules) which were in force at that time. The said Rules were made under Section 214 of the Bombay Land Revenue Code, 1879 (the Code) as applicable to the State of Gujarat. At that rate, the Company paid a total land revenue of Rs. 5, 823.23 per annum. It also appears that the Company paid in addition to the land revenue, local fund cess and education cess each of which was calculated at the rate of 50 per cent of the amount of the land revenue. 2. On July 21, 1976, the State Government published draft rules amending the 1972 Rules. The principal amendment related to the rate of the assessment of the non-agricultural land whereby the erstwhile rate of 2 paise was raised to 15 paise per square metre. The amendment also classified the assessable lands on the basis of their locations, viz., whether they were in villages, towns and cities, and on the basis of the population of the area and the non-agricultural user to which the land was being put. The State Government invited objections to the draft rules before July 30, 1976. Since no objections were received, the State Government made the draft rules final and published them on July 31, 1976 bringing them into force w.e.f. August 1, 1976. Several writ petitions challenging the said rules were filed in the High Court. One of the contentions in the petitions was that sufficient time was not given to raise objections to the draft rules. During the pendency of the writ petition, the State Government on June 28, 1977 withdrew the notification dated July 31, 1976 issuing the final rules, and granted time of one month from June 28, 1977 to the members of the public to object to the draft rules published on July 21, 1976. After considering the objections received, the State Government issued a fresh notification on January 24, 1978 issuing final rules which were brought into force with retrospective effect from September 1, 1976 (the 1977 Rules). Under the 1977 Rules, the rate of assessment was increased from 2 paise to 10 paise per square metre (thus reducing the rate of assessment to 10 paise from 15 paise per square metre which was fixed under July 1976 Rules). 3. On December 10, 1980, by an Ordinance the State Government also amended Section 214 of the Code to enable the Government to give the rules made thereunder a retrospective effect. The Ordinance became an Act on February 24, 1981. 4. The writ petitions leading to the present appeals were filed before the High Court challenging the validity of the 1977 Rules on various grounds. However, ultimately, only the following issues were pressed before the High Court. "(3) Whether the impugned Amendment Rules of 1977 are bad in law and void since they seek to levy revenue on the land used for non-agricultural purposes retrospectively that is, with effect from September 1, 1976 without the power of authority to enact the rules retrospectively under Section 214 of the Code at all the relevant times(4) Whether the attempt to validate the levy, assessment and collection of the non-agricultural assessment by the Gujarat Ordinance No. 20 of 1980 or for that matter by the Gujarat Act, No. 2 of 1981 was to all intents and purposes abortive(5) Whether the impugned Amendment Rules of 1977 are ultra vires Section 48 and/or Section 45 and/or Section 52 of the Code(6) Whether the impugned Amendment Rules of 1977 are violative of Article 14 of the Constitution of India inasmuch as they are arbitrary, unjust and discriminatory(7) In any view of the matter proviso to Rule 81(2) of the impugned Amendment Rule of 1977 enjoining the assessment of the land, with effect from August 1, 1979 situate within the urban agglomerations to which the Urban Land (Ceiling and Regulation) Act, 1976 applies, at double the rates prescribed in Table.A for not putting such land to non-agricultural use for which permission is granted or deemed to be granted is ultra vires Article 14 of the Constitution. We will take up for consideration the first four points simultaneously since they are interconnected." * The High Court answered issues Nos. 3 to 6 against, and Issue No. 7 in favour of the appellants and struck down Rule 81(2) of Amendment Rules of 1977. It is against the said decision that the present appeals are filed. 5. The following contentions are raised before us by Shri Nariman on behalf of the appellants - (1) 1977 Rules promulgated on January 24, 1978 and brought into force retrospectively from September 1, 1976 are ultra vires and void to the extent that they retrospectively impose a higher rate of land revenue on land used for industrial purpose. Section 214 of the Code did not give the State Government power to frame rules with retrospective effect. The Bombay Land Revenue (Gujarat Amendment and Validation) Ordinance (which later became an Act) amending Section 214 of the Code though gave the State Government a power to make rules with retrospective effect, Section 214 itself was not substituted with retrospective effect but only came into force on February, 24, 1981. Hence, the validation of the section is ineffective insofar as it seeks to confer power on the State Government to make rules with retrospective effect from a date anterior to February 24, 1981(2) The retrospective imposition of land revenue is arbitrary, unreasonable and irrational and, therefore, violative of the appellants fundamental rights under Article 14 and 19(g) of the constitution. Insofar as the rules levied different rates of land revenue depending upon whether they were situate in cities, towns and villages with different size of population they are ultra vires Section 48 of the Code(3) The Amendment Rules are violation of Article 14 also on the ground that the geographical classification made therein for the purpose of levying different rates of assessment has no nexus with land revenue i.e., user of land as opposed to the value of land. The classification has no rational relation with the object of imposing the land revenue and, therefore, also, the classification was bad in law 6. On behalf of the respondent-State Government Shri, Poti, the learned counsel defended the validity of 1977 Rules contending that the amendment of Section 214 of the Code to vest the power in the State Government to make rules with retrospective effect was valid in law hence the 1977 Rules which enable the Government to assess the land with retrospective effect from September 1, 1976 were valid. He further contended that the classification of the land for the purpose of the assessment was necessary and the assessment can be made on the return of the land as well as on the capital value. The section does not prohibit such classification. He submitted that the retrospective of the operation of the rules was valid in the present case since revision of the assessment was undertaken after years. His further contention was that the present classification was on the basis of population and not on the basis of geography. However, according to him, even a classification on the basis of geography was also valid. 7. As regards the first contention, Section 214 of the Code before its amendment in 1981 read as follows. "214. Rules - (1) The State Government may, by notification published in the Official Gazette, make rules not inconsistent with the provisions of this Act to carry out the purposes and objects thereof and for the guidance of all persons in matters connected with the enforcement of this Act or in cases not expressly provided for therein(2) In particular, and without prejudice to the generality of the foregoing power, such rules may be made -(b) regulating the assessment of land to the land revenue and the alteration and revision of such assessment and the recovery of land revenue;(3) The power to make rules under this section shall be subject to the condition of previous publication." * The section was amended by the Ordinance dated December 10, 1980 by inserting clauses (3) and (5), among others, which read as follows "(3) Amendment of Section 214 of Bom. v. of 1879. - In the principal Act, in Section 214, in sub-section (1) for the words make rules the words make, whether prospectively or retrospectively, rules shall be substituted(5) Validation of certain rules - Any rule made retrospectively under Section 214 of the principal Act, before the commencement of this Ordinance shall be and shall be deemed always to have been validly made in accordance with law, as if the principal Act had been in force as amended by this Ordinance at all material times when such rule was made and any such rules or anything done or action or proceeding taken or purported to have been done or taken under such rule, shall not be called in question in any court or before any officer or authority whatsoever merely on the ground that such rule was made retrospectively without power to do so or that such thing was done or action or proceeding was taken or purported to have been done or taken under such rule" * 8. The Ordinance was followed by Act No. 2 of 1981 which was placed on the statute book w.e.f. February 24, 1981 and Sections 2 and 4 thereof correspond to clauses (c) and (5) of the Ordinance. 9. The effect of the amendment was that the Government acquired powers to make rules under Section 214 which would have both prospective as well as retrospective operation. Secondly, the power to make the rules whether prospective or retrospective in operation could also be deemed to have been given to the Government from the date any rules made under Section 214 were given retrospective operation. In other words, Section 214 as amended would always be deemed to have been in existence from a date from which any rule made before the amendment was made retroactively operational. 10. However, the argument on behalf of the appellant is that Section 214 itself was not substituted with retrospective effect but came into force as amended only on February 24, 1981. Hence, it is contended that the validation of the Rules (sic section) is ineffective insofar as it seeks to confer power on the State Government to make rules with retrospective effect from a date anterior to February 24, 1981. In support of this contention, Shri Nariman appearing for the appellant relied upon Janapada Sabha, Chhindwara v. Central Provinces Syndicate Ltd.( 1970 (1) SCC 509 , 514-15: 1970 (3) SCR 745 , 750-51) State of T.N. v. Thirumangal Mills. Ltd.( 1972 (1) SCR 176, 178-79: 1972 (2) SCR 395 , 397-98) and Raj Kumar v. Union of India( 1975 (4) SCC 13 , 14-15: 1975 SCC(L&S) 198: 1975 (3) SCR 963 , 965-66). Before we deal with the said decisions, it will be helpful to recapitulate the law on validation generally. 11. In Mohammadbhai Khudabux Chhipa v. State of Gujarat( 1962 (S3) SCR 875: 1962 AIR(SC) 1517) one of the grounds on which the Validation Ordinance was challenged was that inasmuch as Section 11 and 5-A of the Act and the rules impugned were not retrospectively amended by the Ordinance, the purpose of the Validating Ordinance was not achieved and it was, therefore, not effective. Repelling this contention, this Court, speaking through Wanchoo, J. ruled in paragraph 12 of the judgment as under. "The contention on behalf of the petitioners is that these provisions are insufficient to validate the defects which were noticed in the earlier judgment of this Court inasmuch as the relevant provisions of the Act and the Rules have not been retrospectively amended. We see no force in this argument for the provisions as they stand certainly validate the defects pointed out in the earlier judgment of this Court. It is true that the relevant sections and the Rules have not been retrospectively amended by the Ordinance, but this is out opinion was unnecessary. Retrospective amendment may be necessary when it is desired to change the law; but it seems that so far as Section 11 is concerned the legislature did not intend that the control of the State Government over levy of fees should be done away with for the future also. Therefore, all that was necessary in that respect was to validate the past actions and this specifically provided for by sub-sections (2) and (3) of Section 29-B. As for the establishment of market committees, an amendment has been made in Section 5-AA of the Act deleting the provision by which a market could be established only if so required by the State Government. This amendment is prospective. It could have been made retrospective also and in that case sub-section (1) of Section 29-B may not have been necessary. The legislature, however, adopted the method of amending Section 5-AA prospectively and in sub-section (1) of Section 29-B. We see no reason why it should be held that the validation made by sub-section (1) is not sufficient because the legislature has adopted one method rather than the other for carrying out its purpose. We are, therefore, of opinion that Section 29-B is sufficient to cure the defects pointed out in the earlier judgment of the Court and to validate actions taken and things done before the promulgation of the Ordinance which would otherwise have been invalid in view of the earlier judgment of this Court. The contention on this head must also be rejected." * 12. In State of M.P. v. V. P. Sharma( 1966 (3) SCR 557 : 1966 AIR(SC) 1593) the contentions were that (1) by seeking to validate past transactions of a kind which had been declared invalid by this Court without retrospectively changing the substantive law under which the past transactions had been effected the legislature was encroaching over the domain of the judicial power vested by the Constitution in the judiciary exclusively; (2) the Validating Act did not revive the notification under Section 4 which had become exhausted after the first declaration under Section 6 and no acquisition following thereafter could be made without a fresh notification under Section 4. 13. Repelling these challenges, the Constitution Bench by majority held as follows. (i) The American doctrine of well defined separation of legislative and judicial powers has no application to India it cannot be said that an Indian Statute which seeks to validate invalid actions is bad if the invalidity has already been pronounced upon by a court of law(ii) The absence of a provisions in the amending Act to give retrospective operation to Section 3 of the Act does not affect the validity of Section 4. It was open to Parliament to adopt either course e.g., (a) to provide expressly for the retrospective operation of Section 3, or, (b) to lay down that no acquisition purporting to have been made and no action taken before the Land Acquisition (Amendment and Validation) Ordinance, 1967, shall be deemed to be invalid or even to have become invalid because, inter alia, of the making of more than one declaration under Section 6 of the Land Acquisition Act, notwithstanding any judgment, decree or order to the contrary. Parliament was competent to validate such actions and transactions, its power in that behalf being only circumscribed by appropriate entries in the Lists of the Seventh Schedule and the fundamental rights set forth in Part III of the Constitution. Section 4 of the Amending Act being within the legislative competence of Parliament the provisions thereof are binding on all courts of law notwithstanding judgments, orders or decrees to the contrary rendered or made in the past 14. In Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality( 1969 (2) SCC 283 : 1970 (1) SCR 388 ) a somewhat similar situation, as obtaining in the present case, arose. Broach Borough Municipality constituted under the provisions of the Bombay Municipal Boroughs Act, 1925 purporting to act under Section 73 of the said Act and the rules made thereunder, imposed rate on land and buildings belonging to Prithvi Cotton Mills at a certain percentage of the capital value in the assessment years 1961-62 to 1963-64. Section 73 of the Boroughs Act allowed the Municipality to levy a rate on building over lands or both situate within a municipal borough. The assessment lists were published and the tax was imposed according to the rates calculated on the basis of the capital value of the property of the Mills-company, and the bills raising demand were served on the company which moved the High Court for appropriate writs, orders and directions to quash and set aside the assessment under Article 226 of the Constitution. During the pendency of the writ petition, the Gujarat Legislature passed the Gujarat Imposition of Taxes by Municipalities (Validation) Act, 1963 with the result that the company amended the writ petition questioning the Validation Act which was also challenged by the company by a separate substantive application. Both the writ petitions were dismissed by the High Court though a certificate of fitness was granted for appeal to this Court. 15. "Section 3 of the Validation Act provided that notwithstanding any thing contained in any judgment, decree or order of a Court or Tribunal or any other authority, no tax or rate assessed by a Municipality on the basis of the capital value of a building or land, or on the basis of a percentage of such capital value, and imposed, collected or recovered by the Municipality before the commencement of the Act shall be deemed to have been invalidly assessed, imposed, collected or recovered by the reason of assessment being made on the basis of the capital value or percentage thereof and not being based on annual letting value, and the imposition, collection and recovery of such tax or rate shall be valid and shall be deemed always to have been valid and shall not be called in question merely on the ground that the assessment is on the basis of the capital value, and the municipality shall be entitled to collect or recover any tax or rate so assessed before the commencement of the Act in accordance with the relevant municipal law and the rules made thereunder. It should, therefore, be noted that the Validation At, without amending the empowering Section 73 of the Corporation Act and Rule 350-A of the Rules providing for the rate of the levy, sought to validate the assessment, imposition collection and recovery. It is in this context that the Validation Act was challenged. The observations of this Court, speaking through Hidayatullah C.J. about the features of the validating statutes in general are instructive. They read as under: (SCC pp. 286-87, para 4)"Before we examine Section 3 to find out whether it is effective in its purpose or not we may say a few words about validating statutes in general. When a legislature sets out to validate a tax declared by a court to be illegally collected under an ineffective or an invalid law the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the Legislature must possess the power to impose the tax, for, if it does not the action must ever remain in effective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the Legislature does not possess or exercise. A courts decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a Court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the legislature gives its own meaning and interpretation of the law under which tax was collected and the legislative fiat makes the new meaning binding upon courts. The Legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the Legislature has the power over the subject-matter and competence to make a valid, law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a Validating Law, therefore, depends upon whether the Legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in the Validating Law for a valid imposition of the tax" 16. After setting out generally the features of validating statutes, this Court examined as to whether the Legislature had the power to impose tax. It found that under Section 99 of the Boroughs Act, the Municipality was empowered to impose a tax on buildings situate within the municipal borough on the basis of annual letting value or capital value or percentage on capital value thereof. The Court also noted that Section 99 was within the States legislative competence in view of Entry 49 of List II of the Seventh Schedule to the Constitution providing for taxes on lands and buildings which included a tax on lands or buildings on the basis of capital value. The court thereafter noted that Section 73 of the Borough Act had authorised the levy of a rate only and not a tax on lands and buildings on the basis of capital value. The Court also referred to its earlier decision in Patel Gordhandas Hargovandas case(Patel Gordhandas Hargovindas v. Municipal Commissioner, Ahmedabad, 1964 (2) SCR 608 ) that the Municipality under the Boroughs Act had no power to fix a rate on the basis of capital value since the word "rate" had acquired a special meaning in the legislative practice. the Court thereafter observed as under: (SCC p. 288, para 6) ".... Faced with this situation the Legislature exercised its undoubted powers of redefining rate so as to equate it to a tax on capital value and convert the tax purported to be collected as a rate into a tax on lands and buildings. The Legislature in the Validation Act, therefore, provided for the following matters. First, it stated that on tax or rate by whichever name called and laid on the capital value of lands and buildings must be deemed to be invalidly assessed, imposed, collected or recovered simply on the ground that a rate is based on the annual letting value. Next it provided that the tax must be deemed to be validly assessed, imposed, collected or recovered and the imposition must be deemed to be always so authorised. The Legislature by this enactment retrospectively imposed the tax on lands and buildings based on their capital value and as the tax was already imposed, levied and collected on that basis, made the imposition. levy, collection and recovery of the tax valid, notwithstanding the declaration by the Court that as rate the levy was incompetent. The Legislature not only equated the tax collected to a tax on lands and buildings, which it had the power to levy, but also to a rate giving a new meaning to the expression rate and while doing so it put out of action the effect of the decisions of the courts to the contrary. The exercise of power by the Legislature was valid because the Legislature does not posses the power to levy a tax on lands and buildings based on capital value there of and in validating the levy on that basis, the implication of the use of the word rate could be effectively removed and the tax on lands and buildings imposed instead. The tax, therefore, can no longer be questioned on the ground that Section 73 spoke of a rate and the imposition was not a rate as properly understood but a tax on capital value....." * 17. In Hari Singh v. Military Estate Officer( 1972 (2) SCC 239 : 1973 (1) SCR 515 ) it was held by majority that (a) in Northern India Caterers Pvt. Ltd. v. State of Punjab( 1967 (3) SCR 399 : 1967 AIR(SC) 1581) this Court held that Section 5 of the Punjab Premises and Land (Eviction and Rent Recovery) Act, 1959, was violative of Article 14 of the Constitution on the ground that the section left it to the unguided discretion of the Collector to take action either under the ordinary law or follow the drastic procedure provided by the section. Assuming that the 1958 Act(Public Premises (Eviction of Unauthorised Occupants) Act, 1958 (32 of 1958)) is unconstitutional on the same ground it could not be contended that the 1971 Act could not validate anything done under the 1958 Act, because the 1971 Act is effective from September 16, 1958 and provides that the action taken under the 1958 Act is deemed to be taken under the 1971 Act. It is not a case of the later Act validating action taken under the earlier Act, but a case where by a deeming provision, acts or things done under a earlier Act were deemed to be done under the later Validation Act, (b) The Legislature had competence to enact the 1971 Act and provide a speedy procedure only available and thus remove the vice of discrimination found in Northern India Caterers case. (c) The Legislature can put out of action retrospectively one of the procedures leaving one procedure only available and thus remove the vice of discrimination found in Northern India Caterers case. 18. From the above, it is clear that there are different modes of validating the provisions of the Act retrospectively, depending upon the intention of the legislature in that behalf. Where the Legislature intends that the provisions of the Act themselves should be deemed to have been in existence from a particular date in the past and thus to validate the actions taken in the past as if the provisions concerned were in existence from the earlier date, the Legislature makes the said intention clear by the specific language of the validating Act. It is open for the Legislature to change the very basis of the provisions retrospectively and to validate the actions on the changed basis. This is exactly what has been done in the present case as is apparent from the provisions of clauses (3) and (5) of the Amending Ordinance corresponding to Sections 2 and 4 of the Amending Act No. 2 of 1981. We have already referred to the effect of Sections 2 and 4 of the amending Act. The effect of the two provisions therefore, is not only to validate with retrospective effect the rules already made but also to amend the provisions of Section 214 itself to read as if the power to make rules with retrospective effect were always available under Section 214 since the said section stood amended to give such power from the time the retroactive rules were made. The Legislature had thus taken care to amend the provisions of the Act itself both to give the Government the power to make the rules retrospectively as well as to validate the rules which were already made. 19. Shri Nariman, however relied upon the following decision of this Court to contended that the amendment made by the Legislature was not enough inasmuch as Section 214 was not itself substituted with retrospective effect but came into force only on February 24, 1981 when the Amending Act was enacted. 20. In Janapada Sabha case on which Shri Nariman relied we find that the Amending Act of 1964 did not disclose either the context or even the nature of amendment. Secondly it was limited in its application only to one local board viz., Chhindwara Local Board which had enhanced the cess without the Governments permission when the principal Act of 1920 applied to all local boards. Thirdly the Amending Act applied only to three notifications under which the Chhindwara Local Board had enhanced the cess from time to time. The power given by the Amending Act to enhanced the cess was not general. In these circumstances it was held that the Act so limited in its application could not repeal the sub-section of the principal Act which applied to all local boards. Further the Amending Act did not say that the notification which were issued by the Chhindwara Local Board without the sanction of the Government must be deemed to have been issued validity. Such an intendment has to be express and cannot be implied. The Court held that it was a case of a clumsy drafting and that it was open to the legislature within certain limits to amend the provisions of an Act retrospectively to declare what the law shall be deemed to have been. For the Legislature in that case attempted to overrule the decision of the Court without amending the provision of the Act giving the power to the Board to levy the cess with retrospective effect. It would thus be evident from this case that it has no application to the facts of the present case. 21. In Thirumangal Mills case the assessee was a spinning mill. It opened a fair price shop to provide an amenity to its workmen so that commodities could be made available to them at fair prices. For the assessment year 1960-61, the assessing authority under the Madras General Sales Tax Act, 1959 included in the assessees turnover the sale value of groceries sold in fair price shop. The Tribunal held in favour of the asses and the High Court on reference found that the assessee was not carrying on business within the meaning of the provisions of the Act in the fair price shop and confirmed the orders. In appeal to this Court the State contended that the Amending Act of 1964 substituted a new definition of business in the Act which read with Section 9 of the Act, had retrospective effect. While dismissing the appeal this Court held that validation of tax which has been declared to be illegal may be done only if the ground of illegality or invalidity are capably of being removed and are in fact removed. The Legislature can give its own meaning and interpretation of law under which the tax was collected and by legislative fiat make a new meaning binding upon the courts. But in that case, none of the methods for validating the tax had been adopted. Although the definition of business was amended it was not made retrospective by the usual words that "it should be deemed to have been always substituted" nor was any other language employed to show that the substantive provisions was being amended retrospectively. On the contrary the definition of the word business was amended only prospectively. The Court, therefore, held that in the absence of retrospective effect being give to the definition Section 9 of the Act was of no avail to the Revenue. This case again is of no avail to the appellants. 22. In Raj Kumar case the services of the appellants a Government servant were terminated forthwith and he was ordered to be paid a months pay and allowances. It appears that the Central Civil Service (Temporary Service) Rules 1965 were amended with retrospective effect from May 1, 1965. The effect of the amendment was that on and from May, 1, 1965 it was not obligatory "to pay" the appellants a sum equivalent to the amounts of his pay and allowances for the period of notice. A Government servant was only entitled "to claim" such amount. The dismissal of the appellant took place on May, 15, 1965. Hence, the contention of the appellant that he was not paid the amount in question at the time of terminating his services and therefore the termination was illegal was rejected by this Court. One of the contention advanced on behalf of the appellant was that there was no validating provision of in the rules as amended and, therefore, the intention of the Government in making the amendment could not be validity given effect to. While repelling this contention this Court held that once a law is given retrospective effect as from a particular date all actions taken under the Act even before the amendment was made would be deemed to have been taken under the Act as amendment and that could be really no question of having to validate any action already taken provided it is subsequent to the date from which the amendment is give retrospective effect. The question of the particular form of the validations would always depends on the circumstances of a case and no general formula can be devised for all circumstances. Thus the view taken in this case is against the contention advanced on behalf of the appellants. 23. The contentions that the Validating Act cannot validate rules made or acts done prior to the date it was enacted if accepted will strike at the very root of the concept of retrospective validation. Law is an instrument which is forged to regulate the affairs of the society. Society can mould it to meet the needs felt from time to time. Society cannot be a salve of the instrument. The device of validating a state is forged precisely to adopt the law to meet the exigencies of the situations. The validations therefore, may be done in the manner required by the needs of the time. All that is required is that the agency which validates the statute must have the power to do it. The manner and method of doing it so to be left to the authority. If the intentions are clear the validations was to be interpreted according to the intentions. The courts have in fact upheld such validations regarding it to be an important weapon in the armory of legislative devices. It is to emphasize this aspect that we have endeavored to summarize the law on validations as above at the cost of lengthening the judgment. 24. We, therefore find no substance in Shri Narimans contentions that since the Amending Act came into force only on February 24, 1981 Section 214 of the Code as amended cannot be said to have been substituted from the original sections with retrospective effect. The law on the subject makes it clear that to give retrospective effect to the amended provisions it is enough if the Amending Act states that the said provisions will always be deemed to have been incorporated in the original provision with retrospective effect from a particulate date. This is exactly what has been done in the present case. Hence the first contention of the appellants must fail. 25. Coming to the second contention as the facts narrated earlier show for a long time the rate of assessment of the revenue of the non-agricultural land was not revised. It was after a long interval that a draft notification was issued on July 27, 1976 making the rules in question under which the assessment was revised. These rules were made final on July 31, 1976 and brought into force from August 1, 1976. Since the same were challenged among other things on the ground that no sufficient time was given for raising objections to the draft rules the notification dated July 31, 1976 making the rules final was withdrawn by a subsequent notification of June 28, 1977 and objections were invited to the original draft rules issued on July 21, 1976 with on 30 days from June 28, 1978 which were brought into force form September 1, 1976. Subsequently Section 214 itself was amended on December 10, 1980 to enable the Government to make rules with retrospect effect by issuing an ordinance for the purpose and the ordinance became the Act w.e.f. February 24, 1981. 26. What is further so far as the industrial use of the land in towns and cities like Ahmedabad was concerned the original rate of assessment prescribed under the draft rules of July 21, 1976 viz., 15 paise per square metre was reduce to 10 paise per square metre under the impugned rules published on January 24, 1978 which rules were brought into force w.e.f. September 1, 1976. 27. These facts will show that rights from July 21, 1976 the assesses were aware of the fact that the rate of assessment was sought to be enhanced. They were also give two opportunities to raise their objections to the enhanced assessment. Whatever may be the merit with regard to the first opportunity the second opportunity was admittedly fair. After considering the objections the rate of assessment was in fact reduced. As has been stated earlier even this rate of assessment was fixed after a long lapse of time during which incomes prices of products levels of profits rentals of the lands, inflations and the cost of maintenance and providing services had gone up enormously. It is therefore, not possible to accept the contention that either the enhancement in assessment was made without following the principles of the natural justice or that it was arbitrary or unreasonable. This part of the contention must, therefore fail. 28. Reliance placed on certain observations in the decision of this Court in Madan Mohan Pathak v. Union of India( 1978 (2) SCC 50 : 1978 (3) SCR 334 : 1978 SCC(L&S) 103) and and Lohia Machies Ltd. v. Union of India( 1985 (2) SCC 197 : 1985 (2) SCR 686 : 1985 SCC(Tax) 245) in support of the contention that the present assessment is arbitrary, unreasonable and irrational is in the facts and circumstances of the case misplaced. In Madan Mohan Pathak case the learned Chief Justice concurring the with the majority was commenting upon the legislation made by the Parliament which had the effect of depriving the employees of the Life Insurance Corporation of the benefits of a settlement arrived at and assented to by the Central Government under the provision of the Industrial Disputes Act 1947. It is in that context that the learned Judge stated that such settlement should not be set at naught by an Act designed to defeat its provisions and if that is the purpose of the Act which was evident it could very well be said to be contrary to public interest and not protected by Article 19 (6) of the Constitution. In Lohia Machines case Rule 19-A made under the Indian Income Tax (Computation of Capital of Industrial Undertakings) Rules, 1949 which brought about material alteration in the texture of Rule 19 of the said rules in the matter of computation of the capital had been challenged as being in conflict with sub-section (1) of the 80-J of the Income Tax Act. Different High Court took different view with regard to the validity of the said rule. Hence the Government of the India amended Section 80-J in 1980 by introducing sub-section (1-A) in the same term as rule 19-A. It was with reference to the challenged to the Amending Act which gives retrospective effect to sub-section (1-A) from April 1, 1972 that it was observed among other things as follows: (SCC p. 247, para 78) ".... The present amendment has been necessitated not as a result of any part of Section 80-J being declared invalid. There was no lacuna or defect in Section 80-J prior to the impugned amendment and the section which was perfectly valid granted relief in clear and unambiguous language to the assessee in respect of the capital employed whether assessees own or borrowed in an undertaking which qualified for relief under the section. The rule-making authority by framing an invalid rule sought to deny the assessee the benefit of the relief lawfully and validly granted by the section. The rule was contrary to the clear provisions of the statute and the invalid rule has been rightly struck down. By the present amendment the Parliament is seeking to validate not any provisions of the statute declared invalid because of any flaw or defect as there was none but is seeking to validate an invalid rule which had sought to deprive the assessee of the benefit which the Parliament had clearly bestowed on assessee by the Section. The effect of the present amendment by seeking to incorporate the provision of the rule declared invalid in the section itself is to withdraw with retrospective effect the relief which had been earlier granted by the Parliament insofar as the relief extends to borrowed capital employed in the undertaking and thereby to impose on the assessee a burden of tax which was not there for all these year. As matter of policy it may be open to the Parliament to withdraw the relief granted to borrowed capital by an amendment with prospective effect consequent on any such amendment. To withdrawn with retrospective effect the benefit of relief unequivocally granted by the Section to an assessee who qualified for such relief and was lawfully entitled to enjoy the benefit of such relief and has in fact in many cases enjoyed the benefit for all these years prior to the present amendment with retrospective effect cannot in my opinion be said to be on any just and valid grounds and cannot be considered to be reasonable. If any fiscal statue grants relief to any assessee and the assessee enjoys the benefit of that relief as the assessee is legally entitled under the statute the withdrawal of the relief validly and unequivocally granted and enjoyed by any assessee must necessarily in the absence of proper grounds be held to be unreasonable and arbitrary. The relief granted under Section 80-J before the present amendment was not merely a promise on the part of the Government relying on which the assessee might have set up new undertaking but it was in the nature of a statutory right conferred on any assessee who qualified for such relief under the section. The withdrawal with retrospective effect any relief granted by a valid statutory provisions to an assessee, depriving the assessee of the benefit of the relief vested in the assessee, stands on footing entirely different from the footing which may necessitate the passing of a Validating Act seeking to validate any statutory provision declared unconstitutional. When Parliament passes an amendment validating any provisions which might have been declared invalid for some defect or lacuna, the Parliament seeks to enforce its intention which was already there by removing the defect or lacuna. The Parliament indeed seeks to remedy the situation created as a result of the statutory provisions being declared invalid......." 29. It would thus be apparent that these observation made on the facts of the case have no relevance to the present facts. On the other hand they support the action of the Legislature in the present case inasmuch as the Validating Act in the present case has made clear what the Legislature wanted to do, viz., to validate the rate of assessment which was levied for the first time after the long lapse of time. The rate of assessment was enhanced with due notice to the assesses of its prospective impact. After examining the objection the rate was in fact reduced with retrospective effect. We are also not impressed by the fact that because the rate of assessment has been increased by five times the rate prevalent prior to September 1, 1976, the rate should be held to be either excessive or unreasonable. Considering the time lag the reduction in the purchasing power of the rupee, the increase in the cost of providing services and also considering the user of the land the rate of 10 paise per square metre cannot be said to be excessive. 30. Coming to the their contention it proceeds on the footing that the concept of land revenue is restricted to the assessment on the basis of the income from the soil of the land. The very basis of the contention is incorrect. As has been explained in Bomanji Ardeshir Wadia v., Secretary of State 1929 AIR(PC) 34) the basis of assessment of non-agricultural land is the return or the income from the user of such land to the land owner. Where the non-agricultural land is not actually put to any use, assessment can also be made on the basis of the potential income form such land. Section 48 of the Land Revenue Code purports to impose revenue on the basis of the return to the land owner. This is clear from the provisions of the said section which read as follows. "48. Manner of assessment and alteration of assessment - Prohibition of use of land of certain purpose - (1) The land revenue leviable on any land under the provision of this Act shall be assessed or shall be deemed to have been assessed, as the case may be with reference to the use of the land -(a) for the purpose of agriculture(b) for the purpose of building, and(c) for a purpose others than agriculture or building(2) Where land assessed for use for any purpose in used for any other purpose, the assessment fixed under the provisions of this Act upon such land shall notwithstanding that the term for which such assessment may have been fixed has not expired, be liable to be altered and fixed at a different rate by such authority and subject to such rules as the State Government may prescribe in this behalf(3) Where land held free of assessment or condition of being used for any purpose is used at any time for any other purpose, it shall be liable to assessment(4) The Collector or a survey officer may subject to any rules made in this behalf under Section 214, prohibit the sue of certain purpose of any unalienated land liable to the payment of the land revenue, and may summarily evict any holder who sues or attempt to use the same for any such prohibited purpose." * 31. The Section itself contemplates different rates of assessment depending upon the different purpose for which the land is used. The returns or the income form the different uses of the land is bound to be varied and therefore, under the said section it is permissible to levy different rates depending upon the income or the return from the sue to which the land is put. This proposition is not disputed by Shri Nariman. However his attack is directed against the further classification of the user based on the location of the land. According to him since the assessment is based on the sue of the land, the return or income from such use would not vary form location to location and hence the different rates of assessment fixed on the basis of the location of the industrial use is ultra vires Section 48 of the Act. We are afraid that the basic fallacy underlies the premise on which the argument is built. The land revenue is not lived on the income form the use of the land. That would amount to a tax on income. The assessment is graded on the basis of the income or the return from the land to owner thereof. In other words it is graded on the basis of the rental which the lad will fetch to the land owner. The rental will certainly different for use to sue to which the lad is put as well as with the location of the land. The land in a city or town like Ahmedabad and available for industrial use is bound to fetch more rental than the land put to the same use in a village. In fact, if irrespective of their location. Such assessment will fall foul of Article 14 of the Constitution. The assessment so made has o relation to the actual rental derived by the land owner. The rental derived have relation only to the gradations of the land made and the assessment levied on the basis of such gradations into low income and high income yielding lands. We are, therefore, unable to appreciate this argument either.

Decision:
0[ds]18. From the above, it is clear that there are different modes of validating the provisions of the Act retrospectively, depending upon the intention of the legislature in that behalf. Where the Legislature intends that the provisions of the Act themselves should be deemed to have been in existence from a particular date in the past and thus to validate the actions taken in the past as if the provisions concerned were in existence from the earlier date, the Legislature makes the said intention clear by the specific language of the validating Act. It is open for the Legislature to change the very basis of the provisions retrospectively and to validate the actions on the changed basis. This is exactly what has been done in the present case as is apparent from the provisions of clauses (3) and (5) of the Amending Ordinance corresponding to Sections 2 and 4 of the Amending Act No. 2 of 1981. We have already referred to the effect of Sections 2 and 4 of the amending Act. The effect of the two provisions therefore, is not only to validate with retrospective effect the rules already made but also to amend the provisions of Section 214 itself to read as if the power to make rules with retrospective effect were always available under Section 214 since the said section stood amended to give such power from the time the retroactive rules were made. The Legislature had thus taken care to amend the provisions of the Act itself both to give the Government the power to make the rules retrospectively as well as to validate the rules which were alreadyThe contentions that the Validating Act cannot validate rules made or acts done prior to the date it was enacted if accepted will strike at the very root of the concept of retrospective validation. Law is an instrument which is forged to regulate the affairs of the society. Society can mould it to meet the needs felt from time to time. Society cannot be a salve of the instrument. The device of validating a state is forged precisely to adopt the law to meet the exigencies of the situations. The validations therefore, may be done in the manner required by the needs of the time. All that is required is that the agency which validates the statute must have the power to do it. The manner and method of doing it so to be left to the authority. If the intentions are clear the validations was to be interpreted according to the intentions. The courts have in fact upheld such validations regarding it to be an important weapon in the armory of legislative devices. It is to emphasize this aspect that we have endeavored to summarize the law on validations as above at the cost of lengthening theWe, therefore find no substance in Shri Narimans contentions that since the Amending Act came into force only on February 24, 1981 Section 214 of the Code as amended cannot be said to have been substituted from the original sections with retrospective effect. The law on the subject makes it clear that to give retrospective effect to the amended provisions it is enough if the Amending Act states that the said provisions will always be deemed to have been incorporated in the original provision with retrospective effect from a particulate date. This is exactly what has been done in the present case. Hence the first contention of the appellants mustComing to the second contention as the facts narrated earlier show for a long time the rate of assessment of the revenue of theland was not revised. It was after a long interval that a draft notification was issued on July 27, 1976 making the rules in question under which the assessment was revised. These rules were made final on July 31, 1976 and brought into force from August 1, 1976. Since the same were challenged among other things on the ground that no sufficient time was given for raising objections to the draft rules the notification dated July 31, 1976 making the rules final was withdrawn by a subsequent notification of June 28, 1977 and objections were invited to the original draft rules issued on July 21, 1976 with on 30 days from June 28, 1978 which were brought into force form September 1, 1976. Subsequently Section 214 itself was amended on December 10, 1980 to enable the Government to make rules with retrospect effect by issuing an ordinance for the purpose and the ordinance became the Act w.e.f. February 24,What is further so far as the industrial use of the land in towns and cities like Ahmedabad was concerned the original rate of assessment prescribed under the draft rules of July 21, 1976 viz., 15 paise per square metre was reduce to 10 paise per square metre under the impugned rules published on January 24, 1978 which rules were brought into force w.e.f. September 1,These facts will show that rights from July 21, 1976 the assesses were aware of the fact that the rate of assessment was sought to be enhanced. They were also give two opportunities to raise their objections to the enhanced assessment. Whatever may be the merit with regard to the first opportunity the second opportunity was admittedly fair. After considering the objections the rate of assessment was in fact reduced. As has been stated earlier even this rate of assessment was fixed after a long lapse of time during which incomes prices of products levels of profits rentals of the lands, inflations and the cost of maintenance and providing services had gone up enormously. It is therefore, not possible to accept the contention that either the enhancement in assessment was made without following the principles of the natural justice or that it was arbitrary or unreasonable. This part of the contention must, thereforeIt would thus be apparent that these observation made on the facts of the case have no relevance to the present facts. On the other hand they support the action of the Legislature in the present case inasmuch as the Validating Act in the present case has made clear what the Legislature wanted to do, viz., to validate the rate of assessment which was levied for the first time after the long lapse of time. The rate of assessment was enhanced with due notice to the assesses of its prospective impact. After examining the objection the rate was in fact reduced with retrospective effect. We are also not impressed by the fact that because the rate of assessment has been increased by five times the rate prevalent prior to September 1, 1976, the rate should be held to be either excessive or unreasonable. Considering the time lag the reduction in the purchasing power of the rupee, the increase in the cost of providing services and also considering the user of the land the rate of 10 paise per square metre cannot be said to beComing to the their contention it proceeds on the footing that the concept of land revenue is restricted to the assessment on the basis of the income from the soil of the land. The very basis of the contention is incorrect. As has been explained in Bomanji Ardeshir Wadia v., Secretary of State 1929 AIR(PC) 34) the basis of assessment ofland is the return or the income from the user of such land to the land owner. Where theland is not actually put to any use, assessment can also be made on the basis of the potential income form such land. Section 48 of the Land Revenue Code purports to impose revenue on the basis of the return to the land owner. This is clear from the provisions of the said section which read asManner of assessment and alteration of assessmentProhibition of use of land of certain purpose(1) The land revenue leviable on any land under the provision of this Act shall be assessed or shall be deemed to have been assessed, as the case may be with reference to the use of thefor the purpose of agriculture(b) for the purpose of building, and(c) for a purpose others than agriculture or building(2) Where land assessed for use for any purpose in used for any other purpose, the assessment fixed under the provisions of this Act upon such land shall notwithstanding that the term for which such assessment may have been fixed has not expired, be liable to be altered and fixed at a different rate by such authority and subject to such rules as the State Government may prescribe in this behalf(3) Where land held free of assessment or condition of being used for any purpose is used at any time for any other purpose, it shall be liable to assessment(4) The Collector or a survey officer may subject to any rules made in this behalf under Section 214, prohibit the sue of certain purpose of any unalienated land liable to the payment of the land revenue, and may summarily evict any holder who sues or attempt to use the same for any such prohibited purpose."The Section itself contemplates different rates of assessment depending upon the different purpose for which the land is used. The returns or the income form the different uses of the land is bound to be varied and therefore, under the said section it is permissible to levy different rates depending upon the income or the return from the sue to which the land is put. This proposition is not disputed by Shri Nariman. However his attack is directed against the further classification of the user based on the location of the land. According to him since the assessment is based on the sue of the land, the return or income from such use would not vary form location to location and hence the different rates of assessment fixed on the basis of the location of the industrial use is ultra vires Section 48 of the Act. We are afraid that the basic fallacy underlies the premise on which the argument is built. The land revenue is not lived on the income form the use of the land. That would amount to a tax on income. The assessment is graded on the basis of the income or the return from the land to owner thereof. In other words it is graded on the basis of the rental which the lad will fetch to the land owner. The rental will certainly different for use to sue to which the lad is put as well as with the location of the land. The land in a city or town like Ahmedabad and available for industrial use is bound to fetch more rental than the land put to the same use in a village. In fact, if irrespective of their location. Such assessment will fall foul of Article 14 of the Constitution. The assessment so made has o relation to the actual rental derived by the land owner. The rental derived have relation only to the gradations of the land made and the assessment levied on the basis of such gradations into low income and high income yielding lands. We are, therefore, unable to appreciate this argument either