Case: Municipal Corporation For The City Of Poona Etc Vs. Bijlee Products (India) Ltd. Etc. Etc

The facts of the case insofar as they are pertinent to the decision of the points in issue lie within a very narrow compass. The entire case turns upon the interpretation of some of the provisions of th e Bombay Provincial Municipal Corporation Act 1949 (hereinafter called the Act) and certain notifications issued thereunder. It appears that under section 127(1) of the Act the Corporation has got the power to impose property taxes and taxes on vehicles, boats and animals. By sub-section (2) it has the option to impose other kinds of taxes one of which is octroi with which we are primarily concerned in these appeals Sub-section (3) provides that the Municipal taxes shall be assesse d and levied in accordance with the provisions of the Act and the rules. Section 149 sub-section (1) enjoins the Corporation to make detailed provisions in connection with the assessment and collection of any of the taxes and sub-section (2) of section 149 enables the Government either to refuse to sanction the rules and refer the same back to the Corporation for consideration or to sanction the same with or without modifications. We shall extract the relevant sections in a later part of our judgment.It appears that some time in the year 1957 the Corporation in order to boost industrial development and to encourage the industrialists to establish an industrial estate in the city had decided to give certain concessions in the nature of exemption of octroi duty on certain products under certain conditions. In pursuance of this objective the Corporation made the following ruleIndustrial Estate or Area" means the areas which Corporation may from time to time demarcate for the purposes of the rule as the area in which industries can be suitably located in the interest of industrialisation of the city of Poona.In respect of any raw materials or machinery imported by any industrial manufacturing concern established or to be established in the industrial estate solely for the purpose of manufacturing finished article s in the said Industrial Estate, the commissioner shall not, for a period of twelve years only, from the date on which this rule comes into force, levy octroi ..Corporation invited applications for allotment of plots in the industrial estate guaranteeing that for a period of 12 years no octroi will be levied as provided in rule 62-B. Acting on the representation made by the Corporation, the respondents, namely, the Bijli Products (India) Ltd., Henley Cables India Ltd., Indian Hume Pipe Co. Ltd. and Kirloskar Pneumatic Co. Ltd. applied for the allotment of plots and sale deeds were executed as mentioned below:- Sum for Name of the Area purchased which area Date of Company was purchaseconveyances executed by the respondents contained the following clause at item (B):"(B) Octroi will be excused following and according to the rule made by the Poona City Municipal Corporation from the date 1-11-1957 in respect of Octroi for Hadapsar Industrial Colony Scheme. We have agreed and hereby assure that we will not rescind or alter the octroi rule made by the Poonam City Municipal Corporation during the period upto 10-10-1969 in such a way as to reduce the facilities given to you according to the saidCorporation however made rule 5(8) which runsrespect of any new materials or machinery belonging to and imported by any industrial, manufacturing, processing or assembling concern established or to be established in the Industrial Estate or Area for the purpose of manufacturing processing or assembling finished articles in the said Industrial Estate or Area the Commissioner shall not levy octroi for a period of 10 years from the date of demarcation of such area as an industrial estate or area; provided that this exemption shall not be given in respect of any raw materials imported for the purpose of refilling packing or repacking only.Provided that no exemption from octroi shall be given or claimable unless the importer produces at the time of import but not afterwards a certificate in the form prescribed in Schedule P signed by the proprietor or the manager of the said industrial concern certifying that the raw ma terials or the machinery that are being imported are the property of the ownership of the said industrial concern and that the said materials or machinery are to be used or are intended to be used by the said industrial concern for the purpose of manufacturing processing or assembling finished articles in the said Industrial Estate orcombined effect therefore of rule 62-B and rule 5(8) was that the industrialists who were allotted plots in the City of Poona were to be exempted from octroi duty on any new materials or machinery belonging to them and imported by them in the industrial estate or Area for manufacturing, processing or assembling articles in the said area. The exemption was to last for a period of 10 years from the date of demarcation of suchyears later the Corporation by a resolution dated 30-5-1968 recommended to the Government to bring about an amendment in rule 62-B. This resolution may be extractedthe reasons and recommendations given by the Municipal Commissioner in his letter under reference and considering the objections and suggestions received from citizens in respons e to the notification, it is resolved that concessions already granted by the Corporation should not be stopped before deletion of the Octroi Rule 5(8). However, new demarcation of industrial areas should not hereafter be made on the ground of octroi Rule 5(8) and no new concession of Octroi Rule 5(8) hence forth be granted to any industry. Hence, the Octroi Rule 5(8) should be deleted and instead the following amendment is hereby sanctioned .Sanction of the Maharashtra State Government to this amendment should be obtained by the Municipal Commissioner as required under section 455(1) of the Bombay Provincial Municipal Corporations Act, 1949. Proposed octroi Rule 5(8).Octroi Rule 5(8) is hereby repealed. Provided that not withstanding such repeal the exemption already granted shall continue until the expiry of the respective periods of their grants"-It appears that this resolution was passed on the recommendation of the Municipal Commissioner as the purpose of giving initial concessions had already been achieved and rule 5(8) had become superfluous. The resolution however took care to keep the commitment of the Corporation intact and it was therefore recommended that there should be a proviso to the effect that the exemptions already granted under rule 5(8) were to continue until the expiry of the respective periods of the grants. Thus, the recommendation for maintaining the exemption from octroi duty to industrial areas which had already been demarcated and allotted, was made by the Corporation. When the matter reached the Government of Maharashtra it passed a resolution dated 30-7-1968 to be effective from 1-9-1968 which runs thus:-"Government Resolution, Urban Development, Public Health and House, Department No. PMC/2862/15/C dated 28th January, 1963.Government Circular, Urban Development, Public Health and Housing Department No. MUN/1164/58163/A dated 25th February, 1966.Letter No. MC/101 dated 2nd June, 1968 from the Municipal Commissioner, Poona Municipal Corporation."Resolution: In exercise of the powers conferred by sub-sections (2) and (5) of section 149 and sub-section (1) of section 455 ofthe Bombay Provincial Municipal Corporation Act, 1949 Government is pleased to accord sanction to the deletion of Clause (8) of Rule 5 of the Octroi Rules of the Poona Municipal Corporation.2. In exercise of the powers conferred by sub- section (3) of section 149 of the Bombay Provincial Municipal Corporation A ct, 1949 Government is pleased to specify 1st September, 1968 as the date on which this sanction shall be comethe Government accepted the recommendation of the Corporation and granted sanction to the dele tion of clause (8) of rule 5 of the octroi Rules of the Corporation. The Corporation in pursuance of the Government sanction sought to realise the octroi duty from the respondents and other industrialists. The respondents therefore filed separa te writ petitions in the Bombay High Court for quashing the order on the ground that the Corporation having allotted the plots to the respondents on the distinct assurance and representation that the octroi duty will not be levied, was estopped from realising the octroi duty on the doctrine of promissory estoppel.It was also argued before the High Court that the Government order in question could not take away the vested rights of the respondents. The plea taken by the respondents in the High Court found favour with the Court which allowed the petitions and quashed the Government order and injuncted the Corporation from realising any amount from the respondents by way of octroi duty. The High Court, however, gave certificates of fitness and hence these appeals before us.

Reasoning:
We have given our anxious consideration to the arguments advanced before us by counsel for the parties. We feel that in the circumstances of this case and in the view that we take, it is not at all necessary for us to travel into the domain of promissory estoppel. We are clearly of the opinion that reading the order dated 30-7-1968 against the history and background of the recommendation of the Corporation, the first contention of the respondents mustis not disputed that the Corporation in its resolution dated 30-5-1968 while recommending to the Government to delete rule 5(8) expressly recommended that the exemption already granted would continue. The last paragraph of the resolution runsRule No. 5(8) is hereby repealed. Provided that notwithstanding such repeal the exemption already granted shall continue until the expiry of the respective periods of theirthis, the Corporation itself had take n a policy decision that the industrialists choosing to set up industries in the demarcated area would be given exemption from octroi duty as contained in rule 62B. It was on this representation that the respondents applied for allotment of the plots and spent huge amounts of money for the import of machinery and the materials and set upresolution of the Government deleting rule 5(B) read as a whole also clearly indicates that it did not intend to depart from the recommendation made by the Corporation or to modify the same in any manner. On the other hand, the resolution clearly indicates that it was being passed on the basis of the letter of the Municipal Commissioner dated 2nd June, 19 68 as would be manifestly clear from the citations in the resolution which may be extractedGovernment Resolution, Urban Development, Public Health and House Department No. PMC/2862/15/C dated 28th January, 1963 .Government Circular, Urban Development Public Health and Housing Department No. MUN/1164/58163/A dated 25th February, 1966.Letter No. MC/101 dated 2nd June, 1968 from the Municipal Commissioner, Poona Municipalis, therefore, evident that while exercising its power to delete rule 5(8) the Government had the following materials before it, (1) It knew that Rule 5(8) had granted exemption for a period of 10 years to some industrialists, who on the basis of the representation made by the Corporation had set up their industries; (2) the Municipal Corporation had made an express recommendation that while deleting rule 5(8) the previous concessions regarding exemption from octroi duty must continue, (3) the Government could delete rule 5(8) in the exercise of the powers conferred on it by sub-sections (2) and (5) of section 149 and sub-section (1) of section 455 of theThe rules shall b e submitted by the Corporation to the Provincial Government and the Provincial Government may either refuse them or refer them back to the Corporation for further consideration or sanction them either as they stand or with such modifications as it thinks fit, not, however, involving an increase in the rate or rates of the levy or the extent94 of 1971FAZAL ALI,appeal by special leave is directed against the order of the High Court dated 21st December, 1970 dismissing the petition in limine. In view of the findings given and the decision rendered by us in Civil Appeals No. 2009 and 2081 of 1969 and 355 & 356 of 1970 it is not necessary for us to go into the details of the facts of this case as we have already held that the Government order dated 30-7-1968 must be read to this effect that rule 5(8) is deleted but the previous concessions given to the industrialists concerned will continue. It appears, however, that so far as the appellant is concerned, it has not executed any sale-deed though it was allotted a plot which was also demarcated. Apart from the point which we decided in the other appeals there being additional points of law involved in this case, we do not think that this was a fit case which should have been dismissed in limine by the Bombay High Court. We, therefore, allow this appeal and remit the case to the High Court for re-admitting and disposal of t he writ petition according to law. The point regarding the interpretation of Government order dated 30-7-1968 has already been decided by us in Civil Appeals No. 2009 and 2081 of 1969 and 355 & 356 of 1970 referred to above and will apply to the present case also, if the appellant is able to prove that it falls within the four corners of the Government order.