1. The suit giving rise to these two appeals was filed under the following circumstances.
2. Plaintiff No. 1 owns three houses which are municipal Nos. 7717, 7724 and 7739 and which are situate within the limits of the Hubli Municipality. As owner of these houses the plaintiff has to pay certain taxes, viz. (1) house-tax (2) general water-tax and (3) sanitary cess. In respect of these taxes he was assessed for 1938-39 to pay respectively Rs. 10, Rs. 24 and Rs. 3-8-0 in all Rs. 37-8-0.
3. It appears that the Municipality was in January, 1939, superseded and under Section 219(2)(b) of the Bombay Municipal Boroughs Act, 1925, an administrator was appointed.
4. On March 31, 1939, the Chief Officer of the municipal borough issued notice under Sections 80 and 81 of the Act calling upon all persons interested in the new revised assessment-list for 1939-40 to inspect it and to file objections against the valuation or assessment on or before May 15, 1939. On April 15, 1939, plaintiff No. 1 received notice of the proposed increased and revised taxes. About ten thousand persons also received similar notices at about the same time. Upon an inspection of the new assessment-list plaintiff No. 1 noticed that the taxes of his houses had been increased. This too happened in the case of other persons also. Plaintiff No. 1 lodged his objections to the revised assessment and so did others also. The plaintiff's objections were heard on August 9, 1939, and on August 13, 1939, and in regard to the first house the revising authority reduced the assessment to Rs. 10; in regard to the second house it was reduced to Rs. 29 and he confirmed the revised assessment in respect of the third house. Thereafter bills for payment of the above taxes were presented to the plaintiff on September 29, 1939. On October 18, 1939, plaintiff No. 1 was informed of the result of the hearing of his objections which was that plaintiff No. 1 had to pay Rs. 48-8-0 which showed an increase of Rs. 11 over the previous assessment.
5. On October 2, 1939, plaintiff No. 1 sent to the defendant a notice under Section 206 of the Act and Section 80 of the Civil Procedure Code to which the defendant replied on October 6, 1939, saying that the assessment levied was legal.
6. On December 13, 1939, plaintiff No. 1 filed against the Administrator, Hubli Municipal Borough, the present suit for a declaration and injunction-declaration that the revised new assessment-list and enhancement of taxes for the year 1939-40 were illegal, and injunction that defendant be restrained permanently from collecting illegally such taxes from the plaintiff and others on whose behalf the suit was brought. The plaintiff alleged that the action of the defendant in preparing the revised assessment-list was illegal and ultra vires and had contravened the provisions of the Act in not revising the same completely. He also alleged that the defendant had not complied with the provisions of the Act and the bye-laws made thereunder, that the notices issued by the Chief Officer under Sections 80 and 81 of the Act were illegal and that the assessment and enhancement were not made legally. In paragraph 10 of the plaint it was stated as follows:
Plaintiff sent notice to the defendant as required by law on October 2, 1939, and defendant by his letter dated October 6, 1939, replied that the assessment was legal and that the plaintiff may go to the Court if he is dissatisfied. Hence the plaintiff is forced to file this suit on his own behalf and also on behalf of others similarly affected for a declaration that the revised assessment-list and enhanced taxes are illegal and also for injunction restraining defendant from recovering the same from persons mentioned above.
7. Some time after the suit was filed plaintiff No. 1 paid the amount of the taxes.
8. The defendant, by his written statement, contended that the assessment-lists were completely revised, that the revision was legal and intra vires, that no provisions of the Bombay Municipal Boroughs Act had been contravened, that the provisions of Sections 80 and 81 of the Act had been complied with, that the plaintiffs were bound to pay the enhanced taxes according to the list published on March 31 1939, that the non-observance of any of the rules mentioned by the plaintiffs would not vitiate the assessment-lists nor bar the recovery of the taxes, that the defendant being a public officer was entitled to a notice under Section 80 of the Civil Procedure Code, that the notice given did not contain the necessary particulars and so defective, that the suit was barred by limitation under Section 206 of the Act that all the properties being vested in His Majesty by reason of Section 219 of the Act' Government was a necessary party and that as the interest of all the plaintiffs was not the same, a representative suit did not lie.
9. Upon these pleadings the learned trial Judge raised several issues, some of which he tried as preliminary issues. His findings were that the notice given by the plaintiff complied with the requirements of Section 206 of the Act, that the suit was not barred by limitation under Section 206 of the Act, that the jurisdiction of the Court to try the suit was not barred by reason of Section 32 of the Bombay Civil Courts Act, that the Secretary of State was not a necessary party to the suit, that the notice given by plaintiff No. 1 was not available to plaintiff's other than plaintiff No. 1, that the representative suit on behalf of the 'other taxpayers whose taxes were enhanced' was not maintainable, that the co-plaintiffs Nos. 2 to 94 were not entitled to remain on record as plaintiffs and that the value of the suit for calculating pleaders' fees was Rs. 65. Accordingly the learned trial Judge by his judgment dated February 20, 1942, directed that the names of plaintiffs Nos. 2 to 94 should be struck off as they had not given the notices under Section 206 of the Act, that the suits should continue so far as it related to the individual interest of plaintiff No. 1 and that the suit should be heard on the remaining issues.
10. Thereafter the learned trial Judge proceeded to hear the suit with respect to the remaining issues which he answered by saying that the procedure prescribed by the Municipal Boroughs Act in the rules and the bye-laws of the Municipality was not followed in the particulars mentioned in the plaint and that the enhancement of the assessment was vitiated thereby. In the result he passed in favour of plaintiff No. 1 a decree declaring that the enhancement of Rs. 11 in the three taxes, viz. (1) house-tax, (2) water rate and (3) sanitary cess in respect of the plaintiff's three houses for the year 1939-40 was illegal. He made a further order saying that in view of the declaration it was recommended that the Municipality should consider any application which the plaintiff might make for the refund of the amount of Rs. 11 recovered from him for the year 1939-40. This order was made by him on March 31, 1942.
11. Against that decree the defendant filed in the District Court, Dharwar, appeal No. 138 of 1942 and plaintiff Nos. 1 to 94 filed appeal No. 139 of 1942 in the same Court. The learned First Class Subordinate Judge with appellate powers allowed the defendant's appeal and dismissed the plaintiff's appeal, holding that the enhancement of Rs. 11 in respect of the taxes payable by plaintiff No 1 in regard to the three houses was not illegal and that it was not open to plaintiff No. 1 to bring the suit under Order I, Rule 8, of the Civil Procedure Code, on behalf of the other taxpayers who had not given notices under Section 206 of the Bombay Municipal Boroughs Act. It is from these appellate decrees that the present appeals have been brought. It may be mentioned that second appeal No. 769 of 1943 has been brought by plaintiff No. 1 in his individual capacity while second appeal No. 770 of 1948 has been brought by him in his representative capacity. It may also be mentioned that the respondent to these appeals is the Chief Officer of the Hubli Municipality.
12. On these appeals it has been argued that the municipality had no right to recover for 1989-40 the increased amount of taxes. It is said that the plaintiff's liability is governed not by the preliminary list published under the provisions of Section 80 and Section 81(1) of the Act but the same is governed by the final list as would emerge in consequence of the amendments made in accordance with Section 81(3)(c) of the Act. It is also said that the defendant cannot recover the increased amount of the taxes determined at any time during the year.
13. In support of this contention reliance is placed upon certain provisions of the Act and the rules framed thereunder. It is, therefore, necessary to turn to the material provisions of the Act. Section 3(13) provides that 'Official year' shall mean the year commencing on the first day of April. Section 37 provides for the formation of a standing committee and defines its powers. Section 58 provides by Clause (j) that the Municipality shall make rules not inconsistent with this Act and may from time to time alter or rescind them, prescribing the taxes to be levied in the municipal borough for municipal purposes.and the time at which and the mode in which such taxes, charges, payments, fees or rates shall be levied or recovered or be payable and the persons authorised to receive payment of the same.. The subject of municipal taxation is dealt with in Chapter VII. By Section 73 the Municipality is given power to impose certain taxes. Section 73 Clause (i) refers to the rate on buildings or lands or both situate within the Municipal Borough; Clause (vii) refers to a special sanitary cess and Clause (x) refers to a general water-rate. Under Section 75 the Municipality before imposing taxes has to observe preliminary procedure as laid down in that section. According to that procedure the Municipality has to approve certain rules prepared for the purposes of Clause (j) of Section 58. According to Section 76 after the rules are sanctioned by Government they are required to be published by the Municipality in the manner as laid down in that section. It is after these formalities are observed that one gets in Section 78 the mode in which an assessment-list is to be prepared. Section 80 provides that when the assessment-list has been completed, the Chief Officer shall give public notice thereof and of the place where the list or a copy thereof may be inspected; and every person claiming to be either the owner or occupier of property included in the list, and any agent of such person, shall be at liberty to inspect the list and to make extracts therefrom without charge. According to Section 81(1) the Chief Officer has at the time of the publication of the assessment-list under Section 80 to give public notice of a date, not less than one month after such publication, before which objections to the valuation or assessment in such list shall be made. By Sub-section (2) it is provided that the objections to any such list shall, if the owner or occupier of such property desires to make an objection, be made by such owner or occupier or any agent of such owner or occupier to the standing committee before the time fixed in the aforesaid public notice, by application in writing, stating the grounds on which the valuation or assessment is disputed; all applications so made shall be registered in a book to be kept by the standing committee for the purpose. Sub-section (3)(a) and (b) of section 81 then goes on to provide that the standing committee shall investigate and dispose of the objections and cause the result thereof to be noted in the book kept under Sub-section (2). Section 81(3)(c) provides that the standing committee, after allowing the applicant an opportunity of being heard in person or by agent, shall cause any amendment necessary in accordance with such result to be made in the assessment-list. Sub-section (4) of Section 81 provides for authentication of the assessment-list and Sub-section (6) then goes on to provide that subject to such alterations as may be made therein under the provisions of Section 82 and to the result of any appeal or revision made under Section 110, the entries in the assessment-list so authenticated and deposited and the entries, if any, inserted in the said list under the provisions of Section 82 shall be accepted as conclusive evidence. Sub-section (1) of Section 82 empowers the standing committee to alter the assessment-list in respect of any property in the circumstances mentioned in that section. By Sub-section (2) of Section 82 an objection made by any person interested in the alteration has to be dealt with in the manner laid down in Section 81(2), and Section 82(3) speaks of the effect of amendment.
14. Section 84 provides as follows:
(1) It shall not be necessary to prepare a new assessment-list every year. Subject to the condition that every part of the assessment-list shall be completely revised not leap than once in every four years, the Chief Officer may adopt the valuation and assessment contained in the list for any year, with such alterations as may be deemed necessary, for the year immediately following.
(2) But the provisions of Sections 80, 81 and 82 shall be applicable every, year as if a new assessment-list had been completed at the commencement of the official year.
15. Section 104, Sub-section (3), says that if the sum for which any bill has been presented as aforesaid is not paid at the municipal office or to a person authorized by any rule in that behalf to receive such payments, within fifteen days from the presentation thereof, the Chief Officer may cause to be served upon the person to whom such bill has been presented, a notice of demand in the form of Schedule V, or to the like effect. Section 110 provides for preferring appeals to Magistrates within fifteen days next after service of notice of demand complained of.
16. Section 84(1), the terms of which I have set out above, contemplates two things : (1) preparation of an assessment-list and (2) complete revision of an assessment-list once in every four years. Section 84(2) shows that the provisions of Sections 80, 81 and 82 are to be applied every year as though a new assessment list has been completed at the commencement of the official year, which according to the definition in Section 3(13) of the Act means the first day of April. In our opinion, the effect of Sub-section (2) of Section 84 is that it is applicable both to an annual assessment-list as well as to a revised assessment-list prepared once in every four years ; so that, an annual assessment-list or a revised assessment-list becomes effective at the commencement of the official year, i.e., from April 1.
17. It is contended that the assessment-list does not become effective until it is made final, that is to say, until after the objections are considered and amendments made as contemplated by Section 81(3)(c) and after the result of an appeal or a revision, if any, under Section 110. We are unable to accept this contention. Section 82(3) shows that although amendments are made in the course of the year they become effective from the commencement of the year. Section 82 refers to alterations made in consequence of the discovery of fraud, accident or mistake or in consequence of the completion of a building after the preparation of an assessment-list. In such a case the assessment-list becomes effective as though from the commencement of the official year. It is said that Section 84 refers only to an annual assessment-list and not to a revised assessment-list once in every four years and that although the annual assessment-list becomes effective as if it had been completed at the commencement of the official year, the revised assessment-list does not become effective until the objections are heard, amendments made or the result of an appeal or a revision is known. We do not think that such a construction of Section 84 is justified.
18. It is said that whereas retrospective effect is contemplated by Section 82, no such effect is contemplated by Section 81, and it is, therefore, argued that it must be the intention of the legislature that the revised assessment-list does not become effective until after the disposal of the objections or until after the result of an appeal of revision is known. We do not think that such a construction is justified either. Sections 78, 79, 80, and 81 deal with the procedure which is to be followed in regard to an assessment-list. Section 81 lays down the stages before an assessment is authenticated. Section 82 deals with a special subject and Section 84 deals generally with an annual assessment-list and a revised assessment list once in every four years. The omission, therefore, to make in Section 81 a provision similar to the one contained in Section 82 is not at all of any significance. The subject of an annual assessment-list or a revised assessment-list is dealt with in Section 84 and retrospective effect to an annual assessment-list or to a revised assessment-list is given by virtue of Sub-section (2) of Section 84. To hold that an assessment-list is not effective from the commencement of the official year and that it will become effective only after the procedure laid down in Section 81 is followed, would involve many difficulties. It may be that a number of persons may prefer objections. It may also be that those objections may not be disposed of as expeditiously as possible. Again, it may be that appeals may be preferred against notices of demand under Section 110 and it may well be that those appeals may not be heard as expeditiously as possible. That is why it is enacted both in Section 82(3) and Section 84(2) that an assessment-list becomes effective as though from the commencement of the official year. If an assessment-list as contemplated by Section 82 can became effective from the commencement of the year in which case too the provisions of Section 81(2) are to be followed, it is difficult to see why in the case of a revised assessment-list it should not be effective from the commencement of the official year in which case too the procedure laid down in Section 81 has also to be followed. In the one case the amendments may be few; in the other the amendments may be numerous. But there is no sound reason to suggest why whereas in the one case it should take effect from the commencement of the official year, in the other case it should not take effect also from the commencement of the official year.
19. The learned advocate for the appellant has strongly relied upon a decision reported in Ambalal Sarabhai v. Ahmedabad Municipality (1920) 23 Bom. L.R. 48. In that case this Court was considering the effect of an assessment-list prepared under the provisions of the Bombay District Municipal Act, 1901. The tax which was the subject of dispute was the house and property tax which was levied by the Municipality of Ahmedabad for 1911-12. The Municipality published the revised list of assessment on April 24, 1911, and the official year commenced on April 1, 1911. According to Rule 74 of the rules framed by the Municipality certain dates were fixed in regard to the preparation of the assessment-list. Those dates were that on February 1, in every year the Chief Officer was to place before the managing committee the return of all the houses subject to the payment of the house and property tax, that the managing committee after adopting or amending the alterations prescribed was to notify to the house-owners before March 1, that the objections to alterations were to be lodged before March 15, and that the managing committee after investigation was to communicate its decision to the owner or tenant before April 1, when the payment of the tax was to be considered as due on that day. In spite of this rule the Municipality gave to the plaintiff a notice of the proposed increase in the house and property tax on June 20, 1911. Thereafter the plaintiff filed objections on July 12, 1911, which were heard on December 22, 1911, after which the tax was confirmed and a formal notice of demand was made on January 27, 1912. The plaintiff paid the amount of the tax under protest and sued the Municipality for a declaration that the valuation made by the defendant of his properties was made against rules and was illegal. The trial Court decreed the plaintiff's claim in part which was modified in appeal. On second appeal to this Court it was held that the rule was binding equally upon the municipality and the house-owners; and that its non-compliance by the Municipality entitled the plaintiff, who was the house-owner, to recover what was levied from him by way of house and property tax in excess of what was payable by him at the beginning of the year. It is to be noted that in that case the Municipality had by Rule 74 fixed certain dates, all before April 1, on which date the tax was to be considered as due. It is also to be noted that the Municipality published the revised list of assessment-list on April 24, 1911, which was after the commencement of the official year and after the date fixed by the rule as the date of payment. It is in reference to these facts and the rule in question that this Court was considering the question. At p. 53, Mr. Justice Shah observed as follows:
The effect of the rule seems to me to be that for the year 1911-12 the Municipality would be entitled to such amount as is determined by the beginning of the year and not to any increase that may be determined at any time during the year. I am unable to agree with the lower appellate Court on this point. The question is not whether the levy of the tax is illegal apart from Rule 74, but the question to my mind is as to what was due to the Municipality by the present plaintiff by way of house and property tax according to law. The rule distinctly indicates that the amount payable for the year is the amount fixed at the commencement of the year. Unless the increased amount was determined in the manner contemplated by Rule 74 the only amount that could be said to be due by the owner for 1911-12 was the amount which was fixed for the next preceding year. I do not see anything unreasonable in this rule, and if it is consistent with the provisions of the present Act, I am of opinion that it should be given effect to. If effect is given to it, it follows that the levy of the increased tax for the year 1911-12 was not justified.
In considering the effect of Section 67(2) which corresponds to Section 84(2) of the present Act, Mr. Justice Shah further observed as follows (p. 53):
On a careful consideration of the scheme of the Sections 63, 64, 65, 66 and 67, it is clear that under Sub-section (2) of Section 67 it is permissible to the Municipality to deal with the matters arising under Sections 64, 65 and 66 after the commencement of the official year in question. But there is nothing in the Act to show that the matters intended to be dealt with under Section 65 must necessarily be dealt with after the commencement of the official year.
It is true that there are certain observations in the judgment of Mr. Justice Shah which seem to support the contention raised on behalf of the appellant, but on a careful examination of the facts of that case and bearing in mind the terms of the rule which was under consideration, we think, with respect, that the Court was justified in holding that the plaintiff was not liable to pay the amount of the increased tax.
20. We are next referred to the rules framed by the Municipality. According to Rule 1 (exhibit 74) the house-tax is payable in one instalment in advance in the beginning of every official year by the owners or their agents and in their absence by the occupants. According to Rule 5 the managing committee or Chief Officer shall under Section 82 of the Act cause a bill for the rate due to be presented to the person liable for the payment of it at the commencement of each official year. These rules show that the plaintiff had to make payment in respect of the house-tax in April 1939. In respect of the water-tax Rule 6 (exhibit 76) provides that the water rate shall be payable in advance on April 1 in one instalment for the whole of the official year, no refund being allowed under any circumstances. This also shows that the water-tax is payable on the commencement of the official year. With regard to the sanitary cess the rules are a little different. The material Rules are 5, 6, 7 and 8. According to Rule 6 (exhibit 75) the tax becomes payable in the month of May. According to Rule 7 an appeal against the levy of assessment of the general sanitary cess is to be made to the general committee within one month from the publication of the assessment-list and the appeal is to be disposed of before the end of April. It is suggested in reference to the rules relating to the sanitary cess that the liability would arise only after the appeal is disposed of before the end of April. It is also suggested that since the tax is payable in the month of May, therefore, the same becomes due after the objections, if any, are disposed of. If the meaning of Rules 6 and 7 is that the liability to pay the tax does not arise on April 1, the Rules are, in our view, ultra vires. But these rules are in our opinion merely directory and not imperative. See The Queen v. Ingall (1876) 2 Q.B.D. 199. In that case the Court was considering the effect of the provisions of the Valuation (Metropolis) Act, 1869. There was delay in making, depositing, transmitting, and approving the valuation list within the times prescribed by Section 42 of the Metropolis (Valuation) Act, 1869, and the Court held that delay did not make it a nullity, for the provisions of that section were directory and not imperative. With regard to the construction of the Act this is what Mr. Justice Lush said (p. 208):
But we must, in construing the Act, strike a balance between the inconvenience of holding the list to be null and void and the risk of allowing injury to be done by the delay in making the list; the former seems to me the greater evil, and therefore in my opinion we ought to hold the list to be valid.
21. In the present case the assessment-list was admittedly published on March 31, 1939. It may be that the plaintiff raised objections to the assessment and those objections were not considered until August, 1939. It may also be that it was not until October 18, 1939, that he was informed of the result of the hearing of his objections. Even so, we are unable to hold that the plaintiff's liability would arise not on April 1, 1939, but that it would arise only when his objections are considered and disposed of and after a final assessment-list is made. In our opinion, the liability to pay the tax arises independently of the objections or of the disposal of the objections and it is not as if that the plaintiff is without a remedy. If his objections are upheld, it only means that he is entitled to a refund of the amount paid in excess. We reject the plaintiff's contention and hold that the claim of the defendant to recover the increased taxes payable by the plaintiff in regard to his three houses was legal and justified.
22. [His Lordship after dealing with the other contentions in the case, concluded:] The result of the above discussion is that the appellant fails except on the question of the pleaders' fees. The decree of the lower appellate Court will, therefore, be varied to that extent. Subject to this variation, both the appeals fail and must be dismissed with costs.