Judgment Case ID: 3904

Judgment:
ivil Appeal Nos. 372 382 of 1969. Appeals by Special Leave from the Judgment and order dated 10 10 1968 of the Rajasthan High Court in C.S.A. Nos. 18 and 29	 27	 28. 30 35 of 1960 and 54 and 58 of 1961. section N. Jain and section K. Jain for the Appellants. B. P. Maheshwari and Suresh Sethi for the Respondent. The Judgment af the Court was delivered by SHINGHAL	 J.	 These appeals by special leave arise out of a common judgment of the Rajasthan High Court dated October 10	 1968	 by which the suits which were filed by the present appellants were dismissed in pursuance of the earlier judgment of the same court dated November 9	 1964	 on the ground that they were governed by section 179(2) of the Rajasthan Town Municipalities Act	 1951	 hereinafter referred to as the Act	 and were barred by limitation. The facts giving rise to the appeals were different in details	 but they were examined in the High Court with reference to the common questions of law which arose in all of them and formed the basis of that Court 's	 decision against the plaintiffs. We have heard these as companion appeals	 and will decide them by a common judgment. It is not necessary to give the detailed facts of all the cases as it will be enough to refer to the suit which was filed by M/s Surajmal Banshidhar and the developments connected with it	 in order to appreciate the controversy. The plaintiff firm referred to above carried on business in "pakka arat" and exported goods of various kinds from Ganganagar. The Municipal Board of Ganganagar realist "export duty"	 by way of ter 171 minal tax	 on the exported goods. The plaintiff therefore raised a suit on October 19	 1957	 challenging the Board 's right to "impose or to reales" any export duty during the period June 5	 1954 to March 10 1957	 amounting to Rs. 10	729/ . It however confined the suit to the recovery of Rs. 10	000/ alongwith interest and gave up the balance. The Board denied the claim in the suit and pleaded	 inter alia	 that the levy of the terminal tax was in accordance with the law and the suit was barred by limitation. The trial court rejected the defence and decreed the suit	 and its decree was upheld by the District Judge on appeal. Similar decrees were passed in the other suits	 for various sums of money. The Board took the matter to the High Court in second appeals. The appeals were heard by a Single Judge who	 while deciding that the suits were governed by section 179(2) of the Act	 referred the question on the legality of the levy to a larger Bench. A Full Bench of the High Court held that the levy of the terminal tax was illegal	 and sent the cases back to the Single Judge who allowed the appeals only for those amounts which were found to be within limitation under section 179(2) of the Act and dismissed the other suits. The plaintiffs obtained special leave and have come up to this Court in these circumstances. The question which arises for consideration is whether the suits fall within the purview of section 179(2) of the Act. The first two subsection of section 179 which bear on the controversy read as follows	 "179. Limitation of suits	 etc. (1) No suit shall be instituted against any municipal board	 president	 member	 officer	 servant or any person acting under the direction of such municipal board	 chairman	 member	 officer or servant for anything done or purporting to be done under this Act	 until the expiration of two months next after notice in writing	 stating the cause of action	 the name and place of abode of the intending plaintiff and the relief which he claims	 has been	 in the case of a municipal board	 delivered or left at its office	 and	 in case of a chairman	 member	 officer	 or servant	 or person as aforesaid	 delivered to him or left at his office or usual place of abode; and the plaint shall contain a statement that such notice has been so delivered or left. (2) Every such suit shall	 unless it is a suit for the recovery of immovable property or for a declaration of title thereto	 be dismissed if it is not instituted within six months after the accrual of the alleged cause of action. " The question therefore is whether the illegal levy of terminal tax (assuming that it was illegal as held by the High Court) could be said to 172 be a thing "done or purporting to be done" under the Act. A similar question arose for the consideration of this Court ill Poona City Municipal Corporation vs Dattatraya Nagesh Deodhar(l) with reference to the provision in section 127 (4) of the Bombay Provincial Municipal Corporation Act	 1949	 and it was held that if the levy of a tax was prohibited by the Act concerned and was not in pursuance of it	 it 'could not be said to be 'purported to be done in pursuance of execution or in tended execution of the Act '. " It was observed that what was plainly prohibited by the Act could not be "claimed to be purported to be done in pursuance or intended execution of the Act. " It was therefore held that the suit was outside the purview of the section 127(4) and was not barred by limitation. We are in respectful agreement with that view	 and we have no hesitation in holding	 in the circumstances of the pre sent cases	 which are governed by a provision similar to section 127(4) or the Poona City Municipal Corporation Act	 that the suits did not fall within the purview of section 179 of the Act and were not barred by limitation. It may be mentioned that it has not been argued before us	 and is nobody 's case	 that the suits would be barred by limitation even if they did not fall within the purview of section 179(2) of the Act. The decision of the High Court to the contrary is not correct and will have to be set aside. It has however been argued on behalf of the respondents that the High Court erred in taking the view that the levy of the terminal tax was illegal	 and our attention has been invited to the relevant provisions of the law including the Bikaner State Municipal Act	 1923	 article 277 of the Constitution and section 2 of the Act. It is not in controversy before us that the Bikaner State Municipal Act	 1923	 authorised the levy of terminal tax and such a tax was levied by the Ganganagar Municipal Board under the authority of that law upto January 26	 1950	 when the Constitution came into force. On and from that date	 the power to levy export duty vested in the Parliament but article 277 saved that and some other taxes as follows	 "277. Any taxes	 duties	 cesses or fees which	 immediately before the commencement of this Constitution	 were being law fully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State	 municipality	 district or other local area may	 not withstanding that those taxes	 duties	 cesses or fees are mentioned in the Union list	 continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law. ' (1) ; 173 it was therefore permissible for the Municipal Board to continue to levy A the terminal tax until provision to the contrary was made by Parliament by law. But it so happened that the Bikaner Municipal Act	 1923 was repealed and the Act was brought into force with effect from December 22	 1951. Section 2(b) of the Act	 which dealt with the repeal of the Bikaner Act and the saving of some of its provisions	 expressly provided that on the coming into force of the Act	 the laws and enactments specified in the First Schedule of the Act shall be repealed in so far as they relate to the Town Municipalities covered by the Act. So as the Bikaner State Municipal Act	 1923	 was included in the first Schedule	 it was repealed by the aforesaid section 2. That section however contained a proviso	 clause (b) whereof was to the following effect	 "(b) all town municipalities constituted under the said laws or enactments	 and members appointed or elected	 committees established	 limits defined	 appointments	 rules	 orders and bye laws made	 notifications and notices issued	 taxes imposed	 contracts entered into	 and suits and other proceedings instituted	 under the said laws or enactments or under and laws or enactments thereby repealed shall	 so far as may be and so far as they relate to town municipalities be deemed	 unless the Government directs otherwise	 to have been respectively constituted	 appointed	 elected	 establish ed" defined	 made	 issued	 imposed	 entered into and instituted under this Act. " The repeal did not therefore affect the validity of those taxes which had already been imposed and which could be "deemed" to have been imposed under the Act	 unless there was a direction to the contrary by the State Government. It is quite clear from the provisions af the Act	 and is in fact not disputed before us	 that the terminal tax in question could not be imposed under any of the provisions of the Act. Its	 levy could not therefore be saved by clause (b) of the proviso to section (2) of the Act. On the other hand	 it could be said with justification that the State Legislature had decided to discontinue the levy by excluding it from the purview of the saving clause. The further levy of the tax therefore became illegal and it was not permissible to continue it any longer under article 277 which merely gave the authority concerned the option to continue the levy if it so desired. So as the levy of the tax after December 22	 1951	 was illegal	 there is nothing wrong with the view taken by the High Court that the amounts 174 paid by the plaintiffs by way of terminal tax were recoverable by the suits which have given rise to these appeals	 and there is no force in the argument to the contrary. The appeals are allowed with costs	 the decrees of the High Court are set aside and those of the lower appellate court restored. P.B.R. Appeals allowed.

Summary:
The respondent Board realised terminal tax on goods experted by the appellants. In suits filed by the appellants for refund of the amounts which they claimed were collected without authority of law	 the respondent Board pleaded that the levy was in accordance with law and that the suits where barred by limitation. The trial court decreed the suits and on appeal the District Judge affirmed the trial Court 's decrees. In second appeal the High Court held that the levy was illegal. The High Court	 however	 allowed the appeals in respect of those amounts which were found to be within limitation under section 179(2) of the Act and dismissed the others. On the question whether the levy could be said to be a thing done or purported to be done under the Act. Allowing the appeal	 ^ HELD: The suits did not fall within the purview of section 179 of the Act and were not barred by limitation. [172 D] 1. (a) It is well established that if levy of a tax is prohibited by an Act and is not in pursuance of it	 it could not be said to be purported to be done in pursuance of the execution or intended execution of the Act. [172 B] Poona City Municipal Corporation vs Dattatraya Nagesh Deodhar	 ; followed. (b) The terminal tax could not be imposed under any of The provisions of the Act. The High Court was right in holding that the amounts ` paid by the appellants by way of terminal tax were recoverable by the suits. [173 F G 174 Al 2. The Bikaner State Municipal Act	 1923 (which was the predecessor of the present Act) authorised the levy of terminal tax and the Board accordingly levied the tax until January 26	 1950. With the coming into force 12 SCI/78 170 of the Constitution	 by virtue of article 277 it was permissible for the Board to continue to levy the terminal tax until provision to the contrary was made by Parliament by law. But with effect from December 22	 1951 the Bikaner Act was repealed and the present Act was brought into force. the repeal	 however	 did not affect the validity of those taxes which had already been imposed and which could be "deemed` ' to have been imposed under the Act. But the provisions of the Act the clear that the terminal tax in question could not be imposed thereunder. The levy could not	 therefore	 be saved by cl. (b) of the proviso to section 2. on the other hand it is clear that the State Legislature had decided to discontinue the levy by excluding it from the purview of the saving clauses. The further levy of the tax	 therefore	 became illegal and it was not permissible to continue it any longer under article 277 which merely gave the authority concerned the option to continue to levy if it so desired. [173A	 F G]