NAGAR NIGAM, ALLAHABAD THROUGH ITS MUNICIPAL COMMISSIONER  versus LIFE INSURANCE CORPORATION OF INDIA & ORS.
[2017] 7 S.C.R. 518, Supreme Court of India, 2017
Outcome: Dismissed (Dismissed)
Segment: Arguments
[2017] 7 S.C.R. 518 
A 
NAGAR NIGAM, ALLAHABAD THROUGH ITS 
B 
MUNICIPAL COMMISSIONER 
v. 
LIFE INSURANCE CORPORATION OF INDIA & ORS. 
(Civil Appeal No. 7460 of2009) 
AUGUST 03, 2017 
[R.F. NARIMAN AND SANJAY K.ISHAN KAUL, JJ.I 
C 
Uttar Pradesh Municipal Corporation Act, 1959 - ss.438, 
452, 541 - Licence Fee - Levy of - On business of insurance -
Propriety - Held: s.438 deals with licence fee which is chargeable 
for activities related.to functions of Municipal Corporations, which 
activities refer to premises in which goods or animals are kept for 
sale or any other purpose, and to premises in which manufacture of 
D 
goods takes place - Licence fee can be levied uls.438(d) only if 
any trade or operations connected with any trade are specified in 
bye-laws and expression 'trade' would not include business of 
insurance. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7460 
E 
of2009. 
F 
From the Judgment and Order dated 19.01.2005 of the High 
Court of Judicature at Allahabad in Civil Misc. Writ Petition Nos. 386, 
16861, 16948, 13287, 14251, 14253and14255 of2004 
T. N. Singh, Adv. for the Appellant. 
B. B. Sawhney, Sr. Adv. Ms. Indra Sawhney, Aditya Shandilya, 
Advs. for the Respondents. 
The Judgment of the Court was delivered by 
R.F. NARIMAN, J. I. Mr. T.N. Singh, learned counsel 
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appearing on behalf of the appellant-Nagar Nigam has assailed the 
judgment of the Allahabad High Court in which the respondent-Life 
Insurance Corporation of India was held not to be
covered by the 
expression "insurance company" under a notification dated 30.01.1999 
issued by the appellant. 
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518
NAGAR NIGAM, ALLAHABADTHR.ITS MUNICIPAL COMMR v. 
LIFE INSURANCE CORPORATION OF INDIA [ R. F. NARIMAN, l]. 
2. The judgment under appeal has held: 
"We also notice that in Item No. 25 of the Schedule annexed with 
the Nagar Nigam, Allahabad Notification dated 13.01.99/ 
Annexure-2 to the writ petition without an exception various 
establishments, undertakings etc. are all in essence pure and simple 
business or commercial units. In category Ga, Serial No.l of the 
list refers to Finance Company/Chit Fund. It is followed by Item 
No.2 referring to Insurance Company '(each Branch)'. It goes 
to show that respondents provided license fee with respect to 
business of a Company in the nature of 'Financial Companies' 
'Chit Fund Companies' and the like Insurance Companies dealing 
in general insurance (i.e. other than Life Insurance-exclusively 
carried on by LIC of India). 
Aforesaid conclusion is further discernible from the fact that 
the list does not embarrass in itself any charitable hospital or 
government hospital or other likewise establishments. 
In that view of the matter we do find a clear distinction between 
Insurance Company (carrying on business under Insurance Act 
1958) vis-a-vis the Life Insurance Corporation carrying business 
of life insurance under Life Insurance Corporation of India Act, 
1956. Otherwise also Principle of Interpretation. It is an accepted 
principle of Statutory Interpretation that in a case where two 
interpretations of a provision imposing
tax/fee is possible, Court 
should accept the interpretation which leans in favour of the 
assessee i.e. the person who is sought to be burdened." 
3. Mr. B.B. Sawhney, learned Senior Counsel appearing on 
behalf of the respondents has sought to support the judgment under appeal 
by advancing slightly different arguments, which we have permitted him 
to advance. He has referred to the statutory authority to levy licence 
fee and read to us Section 438 of the Uttar Pradesh Municipal 
Corporations Act, 1959, which reads as follows:-
"438. Certain things not to be kept, and certain trades and 
operations not to be carried on without licence.- ( 1) Except under 
and in confonnity with the terms and conditions of a licence 
granted by the Municipal Commissioner, no person shall-
519 
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520 
SUPREME COURT REPORTS 
[2017) 7 S.C.R. 
A 
(a) keep in or upon any premises any article specified in the bye-
laws in any quantity or in excess of the quantity specified in the 
bye-laws as the maximum quantity of such article which may at 
one time be kept in or upon the same premises without a licence; 
and 
B 
(b) keep in or upon any building intended for or used as a dwelling 
or within fifteen feet of such building cotton, in pressed bales or 
boras or loose, in quantity exceeding four hundred-weight; 
c 
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E 
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(c) keep, or allow to be kept, in or upon any premises horses, 
cattle or other four-footed animals-
(i) for sale, 
(ii) for letting out on hire, 
(iii) for any purposes for which any charge is made or any 
remuneration is received, or 
(iv) for sale of any produce thereof; 
( d) carry on or allow to be carried on, in or upon any premises-
(i) any trade or operations connected with any trade specified in 
the bye-laws, 
(ii) any trade or operation which is dangerous to life or health or 
property, or likely to create a nuisance either from its nature or by 
reason of the manner in which or the conditions under which, the 
same, is or is proposed to be carried on; 
( e) carry on within the City, or use any premises, for the trade or 
operation of a farrier." 
He has referred to and relied upon sub-clause (d) of Section 
43 8 which states that a licence fee can be levied only if any trade or 
operations connected with any trade specified in the bye-laws is
there. 
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According to him, the expression "trade" would not, by any stretch of 
imagination, include the business of insurance since what is referred to 
in Section 438 is keeping for sale or otherwise goods or animals or the 
manufacture of goods in premises. To buttress his submission, he has 
referred to Section 2 sub-sections (78), (79) and ( 80) which reads as 
follows:-
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NAGAR NIGAM, ALLAHABADTHR.ITS MUNICIPAL COMMR v. 
521 
LIFE INSURANCE CORPORATION OF INDIA [ R. F. NARIMAN, J.]. 
"(78) "trade effluent" means any liquid either with or without 
A 
particles of matter in suspension therein, which is so wholly or in 
part produced in the course of any trade or industry carried on at 
trade premises and in relation to any trade premises, means any 
such liquid as aforesaid which is so produced in the course of any 
trade or industry carried on at those premises, but does not include 
domestic sewage; 
B 
(79) "trade premises" means any premises used or intended to be 
used for carrying on any trade or industry; 
(80) "trade refuse" means and includes the refuse of any trade, 
manufacture or business;" 
4. When the Court questioned learned counsel for the appellant 
as to this interpretation, the answer it got was that bye-laws can be 
framed, in any event, under Section 541 and, in particular, sub-clause 
(41) which reads as follows:-
c 
"( 41) fixing offees for any licence, sanction or permission to be 
D 
granted by or under this Act;" 
5. We were also refen-ed to Section 452 which reads as follows:-
"452. Licence fees, etc.- The Municipal Commissioner may charge 
a fee to be fixed by bye-law for any licence, sanction or permission 
which he is entitled or required to grant by or under this Act." 
6. It will be noticed that both the aforesaid provisions, namely, 
Section 541 as well as Section 452 only refer back to a provision in the 
Act
which specifies that a levy may be made for licence fees. We were 
not 1:eferred to any provision other than Section 438 for the purpose of 
locating such levy. 
7. In our opinion, learned counsel for the respondents appears 
to be correct in his submission, inasmuch as Section 4 38 deals with licence 
fee which is chargeable for activities related to functions of Municipal 
Corporations, which activities refer to premises in which goods or animals 
are kept for sale or for any other purpose, and to premises in which 
manufacture of goods takes place. This becomes further clear when 
we refer to Section 438(8) of the Act which reads as under:-
"(8) Nothing in sub-sections ( 6) ad (7) shall be deemed to apply to 
mills for spinning or weaving cotton, jute, wool or silk to any other 
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522 
SUPREME COURT REPORTS 
[2017] 7 S.C.R. 
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large mill or factory which the Municipal Commissioner may from 
time to time with the approval of the Executive Committee, 
specially exempt from the operation thereof." 
B 
c 
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8. Mr. B.B. Sawhney, learned Senior Counsel, also referred to 
Section 541(20) which reads as under:-
"20. the control and supervision of all premises used for any of 
the purposes mentioned in Section 438 and of all trades and 
manufactures carried thereon and the prescribing and regulating 
of the construction, dimensions, ventilation, lighting, cleansing, 
drainage and water-supply of any such premises;" 
This provision also has direct reference to Section 438 and 
supports the interpretation that he has suggested. 
9. In the premises, we dismiss the appeal, but for the reasons 
stated by us. 
Ankit Gyan 
Appeal dismissed.