Judgment Case ID: 554

Judgment:
Appeal No. 146 of 1955. Appeal from the judgment and decree dated February 10	 1953	 of the Bombay High Court in Appeal No. 953 of 1951	 arising out of the judgment and decree dated November 36	1951	 of the Court of 73 Joint Civil Judge	 Senior Division	 Poona	 in Special Suit No. 76 of 1950. H. D. Banaji	 R. A. Gagrat and G. Gopalakrishnan	 for the appellant. M. C. Setalvad	 Attorney General for India	 section N. Andley and J. B. Dadachanji	 for the respondent. January 16. The Judgment of the Court was delivered by DAS	 C. J. The appellant is a public limited company registered under the Indian Companies Act	 1913. It is a lessee of four cinema houses situate within the municipal limits of Poona City known respectively as " Minerva "	 " The Globe "	 " Sri Krishna " and " The Nishat ". It exhibits cinematograph films	 both foreign and Indian	 in the said four houses. The respondent	 a body corporate	 was governed by the Bombay District Municipal Act	 1901 (Bom. III of 1901) up to June 8	 1926	 and from then by the Bombay Municipal Boroughs Act	 1925 (Bom. XVIII of 1925) up to December 29	 1949	 and	 thereafter	 by the Bombay Provincial Municipal Corporation Act	 1949 (Bom. LIX of 1949). With effect from October 1	 1920	 the respondent	 with the sanction of the Government of Bombay levied on the owners and lessees of cinema houses within the limits of the erstwhile province of Bombay a tax of Rs. 2 per day as license fee. Rules for the levy and collection of the said tax were framed by the respondent. Those rules were amended on or about June 3	 1941	 enhancing the tax from Rs. 2 per day to Re. I per show. The rules were again revised on or about June 9	1948	 under which the tax was enhanced from Re. I per show to Rs. 5 per show. At all material times the tax was being collected at the last mentioned rate. Section 59 of the Bombay District Municipal Act 1901 provided that subject to any general or special orders which the State Government might make in that behalf any municipality (a) after observing the preliminary procedure required by section 60	 and (b) with the sanction of the authority therein mentioned	 might 10 74 impose for the purposes of that Act any of the taxes mentioned in that section. After enumerating ten specific heads of taxes	 which a municipality could levy a residuary category was set forth in cl. (xi) in the words following: "Any other tax to the nature and object of which he approval of the Governor in	 Council shall have been obtained prior to the selection contemplated in sub clause (1) of clause (a) of section 60 ". Ever since the appellant became a lessee of the said cinema houses	 the appellant has been making payments of the said tax under protest. After giving the necessary statutory notice to the respondent	 the appellant	 on or about March 31	1950	 filed a suit in the Court of the Civil Judge	 Senior Division	 Poona	 being Suit No. 76 of 1950	 against the respondent for a declaration that the levy and imposition of the said tax with effect from October 1	 1920	 were invalid and illegal; that the enhancement in the rates of the tax with effect first from June 3	 1941	 and then June 9	 1948	 was invalid and illegal and that the resolutions passed and rules framed in connection with the levy	 imposition	 enhancement and collection of the said impugned tax were invalid	 illegal and ultra vires	 for a permanent injunction restraining the defendants from levying or recovering and or increasing and enhancing the said tax and for refund to the appellant of the amounts of the tax collected from it and for costs of the suit and interest. By its judgment dated November 30	 1951	 the trial court held that the said tax was validly levied and imposed	 but that the increase and enhancement thereof in 1941 and 1948 were illegal and ultra vires. and that the suit was not barred under the Acts governing the respondent. The trial court decreed the suit in part by issuing an injunction restraining the respondent from levying	 recovering or collecting the tax at the enhanced rate and passing a decree against the respondent for refund of a sum of Rs. 27	072 with interest and costs. The respondent preferred an appeal and the appellant filed cross objections. But the High Court by its judgment and decree dated February 10	 1953	 75 reversed the judgment of the trial court and dismissed the suit of the appellant with costs throughout. The appellant 's cross objections were also dismissed. On December 10	 1953	 the High Court granted leave to the appellant to appeal to this Court from the said judgment. Hence this final appeal questioning the validity of the impugned tax. The first point urged in this appeal is that the law imposing this tax is not covered by entry 50 in List II of the Seventh Schedule to the Government of India Act	 1935	 but is really a tax on the appellant 's trade or calling referred to in entry 46 and that	 therefore	 the amount of tax cannot under section 142 A of the Government of India Act	 1935 exceed Rs. 100 per annum. This point need not detain us long	 for it is covered by us in the appellant 's other appeal No. 145 of 1955. The second point urged before us in support of this appeal is that section 59(1) (xi) is unconstitutional in that the legislature had completely abdicated its functions and had delegated essential legislative power to the Municipality to determine the nature of the tax to be imposed on the rate payers. Learned counsel for the appellant urges that the power thus delegated to the municipality is unguided	 uncanalised and vagrant	 for there is nothing in the Act to prevent the municipality from imposing any tax it likes	 even	 say	 income tax. Such omnibus delegation	 he contends	 cannot on the authorities be supported as constitutional. We find ourselves in agreement with the High Court in rejecting this contention. In the first place	 the power of the municipality cannot exceed the power of the provincial legislature itself and the municipality cannot impose any tax	 e.g.	 income tax which the provincial legislature could not itself impose. In the next place	 section 59 authorises the municipality to impose the taxes therein mentioned " for the purposes of this Act ". The obligations and functions cast upon the municipalities are set forth in ch. VII of the Act. Taxes	 therefore	 can be levied by the municipality only for implementing those purposes and for no other purpose. In other words it will be open to the municipality to levy a tax for giving any of the amenities therein mentioned. 76 The matter may be illustrated by reference to section 54 which enumerates the duties of municipalities. The first duty mentioned in that section is that the Municipality should make provision for lighting public streets and nobody can object if it imposes alighting tax	 which	 indeed	 is item (ix) in section 59(1). Take another example: It is the duty of the Municipality to arrange for supply of drinking water and it may legitimately charge a water rate which	 again	 is item (viii) in section 59(1). We do not for a moment suggest that the municipalities may only impose a tax directly in connection with the heads of duties cast upon it. What we say is that the tax to be imposed must have some reasonable relation to the duties cast on it by the Act. In the third place	 although the rule of construction based on the principle of ejusdem generis cannot be invoked in this case	 for items (i) to (x) do not	 strictly speaking	 belong to the same genus	 but they do indicate	 to our mind the kind and nature of tax which the municipalities are authorised to impose. Finally	 the provincial legislature had certainly not abdicated in favour of the municipality	 for the taxing power of the municipality was quite definitely made subject to the approval of the Governor in Council. Under the Indian Council Act	 1861 (24 & 25 Vic. c. 67) the Governor in Council might mean the Governor in Executive Council or the Governor in Legislative Council. If the reference in section 59(1)(xi) is to the Governor 's Legislative Council	 then there was no improper delegation at all	 for it was subject to the legislative control of the Governor in Legislative Council. The Governor 's Legislative Council was composed of all the members of the Governor 's Executive Council besides a few other persons. Therefore if the reference was to the Governor in his Executive Council even then	 from a practical point of view	 the ultimate control was left with the Governor 's Legislative Council. We need not labour this point any further	 for on the first three grounds the delegation of legislative authority	 if any	 is not excessive so as to make the exercise of it unconstitutional. In our opinion the impugned section did lay down a principle and fix a standard 77 which the municipalities had to follow in imposing a tax and the legislature cannot	 in the circumstances	 be said to have had abdicated itself and	 therefore	 the delegation of power to impose any other tax cannot be struck down as being in excess of the permissible limits of delegation of legislative functions. The last point urged by learned counsel for the appellant is that	 under el. (xi) of section 59(1)	 the enhancements of the rates of the tax in 1941 and again in 1948 were illegal in that the municipality had no power to do so under the Bombay Municipal Boroughs Act	 1925. According to learned counsel for the appellant the judgment under appeal upholding the validity of such enhancements cannot be supported under s.60 of that Act. That section runs as follows: " Power to suspend 60(1)Subject to the requirements of cl reduce or abolish ause (a)of the proviso to section any existing tax 58 municipality may except as otherwise provide in clause provided in clause (b) of the proviso to section 103 at any time for any sufficient reason	 suspend	 modify or abolish any existing tax by suspending	 altering or rescinding any rule prescribing such tax. " (2) The provisions of Chapter VII relating to	 the imposition of taxes shall apply so far as may be to the suspension	 modification or abolition of any tax and to the suspension	 alteration or rescission of any rule prescribing a tax. " Reference is made to the marginal note where the words used are " power to suspend	 reduce or abolish any existing tax ". It is suggested that the word it modify " in the body of the section in between the words " suspend " and " abolish " should be construed in the sense of reduction. The marginal note	 according to him	 shows that the several words were used in the section to indicate a progressive diminution in the quantum of tax until it was completely gone. Reference is made to the root meaning of the word " modify " which is to reduce or make less but does not cover the idea of enhancement. In the first place	 the marginal note cannot affect the construction of the language used in the body of the section if it is otherwise clear and unambiguous (see Commissioner of 78 Income Tax	 Bombay vs Ahmedbhai Umarbhai & Co.	 Bombay) (1). In the next place	 it should be borne in mind that section 67 of the Bombay District Municipal Act (Bom. III of 1901) which was formerly applicable to municipalities used the word " reduce " in between the words " suspend " and " abolish " and that that section had been reproduced is section 60 of the Bombay Municipal Boroughs Act	 1925	 but that in the process of such reproduction the word "reduce" was dropped 	and the word "modify" was introduced. In the marginal note	 however	 the word " reduce " was not substituted by the word " modify "	 apparently through inadvertence. If the word " modify " is to be read as "reduce"	 then there could be no point in the provincial legislature substituting the word " reduce " by the word "modify". This change must have been made with some purpose and the purpose could only have been to use an expression of wider connotation so as to include not only reduction but also other kinds of alteration. Section 76 of this very Act also refers to " modification not involving an increase in	 the amount to be imposed which makes the sense in which the word " modify has been used in this Act perfectly clear	 namely	 that there may be a modification involving an increase. Reference may also be made to the decision of the Court of Appeal in England in the case of Stevens vs The General Steam Navigation Company	 Ltd. (2). " Modification "	 according to Collins M. R. in his judgment at p. 893	 implied an alteration and the word was equally applicable whether the effect of the alteration was to narrow or to enlarge the provisions. In our opinion the dropping of the word " reduce " and the introduction of the word 'modify" in the body of section 60	 of the Act under consideration clearly indicate an intention on the part of legislature to widen the scope of this section and the High Court was right in so construing the same. No other point was urged in this appeal and for reasons stated above this appeal must be dismissed with costs. Appeal dismissed. (1) ; at P. 353. (2) L.R. (1903) 1 K.B. 890.

Summary:
The appellant	 a public limited company	 was a lessee of four cinema houses situated within the municipal limits of Poona City where it used to exhibit cinematograph films. The respondent	 the Municipal Corporation of Poona	 in exercise of its power under section 59(1) (XI) of the Bombay District Municipal Act	 1901	 levied with effect from October 1	 1920 a tax of Rs. 2 per day as license fee on the owners and lessees of cinema houses. That Act governed the Municipality till 1926 and thereafter it was governed by the Bombay Municipal Boroughs Act	 1925. The tax was enhanced to Re. 1 per show on June 3	 1941	 and to Rs. 5 per show on June 9	 1948. By the suit	 out of which the present appeal arose	 the appellant sought for a declaration that the levy of the said tax	 the rules framed in connection therewith and the enhancement of the tax as aforesaid were illegal and ultra vires. The trial court decreed the suit in part but the High Court in appeal reversed the decision of the trial court 72 and dismissed the suit. It was contended on behalf of the appellant that (1) the tax was not one covered by Entry 50 in List 11 of Seventh Schedule to the Government of India Act	 1935	 but was one on trade or calling covered by Entry 46 thereof	 and	 was as such governed by section 142A of the said Act and that (2) section 59(1)(XI) Of the Bombay District Municipal Act	 1901	 was unconstitutional in that the legislature had thereby delegated essential legislative power to the Municipality to determine the nature of the tax to be imposed on the rate payers and completely abdicated its function	 leaving such power wholly unguided. Held	 that both the contentions must fail. The first point was covered by the decision given in the appellant 's other appeal	 Civil Appeal No. 145 Of 1955 which must also govern this case. It was not correct to contend that the power delegated to the Municipality under section 59(1)(XI) Of the Bombay District Municipal Act	 1901	 was unguided. That section authorised the imposition of such taxes alone as were necessary for the purposes of the Act. The obligations and functions cast upon the Municipalities by ch. VII of the Act showed that taxes could be levied only for implementing those purposes and none others. Nor could it be said that the Provincial Legislature had abdicated its function in favour of the Municipality. The taxing power of the Municipality was made subject to the approval of the Governor in Council by the section itself. The marginal note to a section could not affect the construction of the section if its language was otherwise clear and unambiguous and the word 'modify ' connoted not merely reduction but also other kinds of alteration including enlargement. The substitution of the word I reduce ' by the word I modify ' in the body of section 6o of the Bombay Municipal Boroughs Act	 1925	 notwithstanding the omission to do so in the marginal note	 therefore	 clearly indicated the intention of the Legislature to widen the scope of that section and	 consequently	 it could not be said that the enhancement of the tax was not sustainable thereunder. Commissioner of Income Tax	 Bombay vs Ahmedbhai Umarbhai & Co.	 Bombay	 ; and Stevens vs The General Steam Navigation Company	 Ltd.	 	 referred to.