1. This is a reference by the Joint Civil Judge, Junior Division, Dhulia, in a suit raised by the present plaintiffs against the Municipal Borough, Dhulia. The plaintiffs filed the suit for an injunction restraining the Municipal Borough from proceeding under the provisions of Section 104 and onwards of the Bombay Municipal Boroughs Act, 1925, in pursuance to the notice issued under Section 104(4)(c) of the Act. It seems that plaintiff is a purchaser in an execution proceeding of properties in respect of which the Municipal Borough sought to recover the taxes due. According to him, he got possession on November 10, 1961. It is not necessary to refer to the several contentions raised by the plaintiff, except one contention in the plaint by which he contended that the provisions of Sections 104, 105, 112, 113 and 113A of the Bombay Municipal Boroughs Act, 1925, were ultra vires Article 14 of the Constitution. As this ground was a challenge to the Act itself under the Constitution, the learned Judge has made a reference, at the same time expressing his own opinion that these provisions offend Article 14 of the Constitution of India. In the present case he followed the decision of the Calcutta High Court in S.M. Nawab Ariff v. Corporation of Calcutta : AIR1960Cal159 S.B.
2. So far as Article 14 of the Constitution is concerned, the principles are now well crystallised and have been re-stated by the Supreme Court in Shri Ram Krishna Dalmia v. Shri Justice S.R. Tendolkar : 1SCR279 . After referring to several cases till then decided, the learned Chief Justice observed as follows (p. 296):.It is now well established that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and, (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.
The learned Chief Justice also formulated certain principles which emerged from decided oases. It is not necessary to refer to all the principles formulated by the learned Chief Justice, except only a few of them as appear to be relevant for the present discussion. They are (p. 297):
(b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles;
(c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds;...
(e) that in order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation;
3. While referring to this case, Mr. Vaidya relied in particular on classifications Nos. (iii), (iv) and (v) of the several classes of cases which might arise for consideration, and argued that the present case falls within classifications (iii) and (iv). He contended that Section 104 of the Bombay Municipal Boroughs Act allows a summary procedure for recovery of the dues of the Borough, and Section 203 of the Act permits a suit to be filed, and since no principles are laid down by the Legislature in making the selection of a particular individual or that of a particular case, for the procedure that is to be adopted, nor are any principles discernible from the scheme of these provisions, the coercive sections must be regarded as constitutionally invalid, being more onerous. In connection with somewhat similar provisions in the Calcutta Municipal Act of 1951, the Calcutta High Court accepted these contentions. The Court there observed that the coercive procedure was undoubtedly more onerous and, there being no principles laid down by the statute discernible from the scheme of the Act for the exercise of the discretion by the Commissioner, the sections were hit by Article 14 of the Constitution and hence invalid. Mr. Justice Bose, the third member of the Bench, disagreed with this opinion on the ground that in order that such municipal administration may run it was absolutely necessary that there should be a procedure for recovery of taxes within the shortest possible time and that as there was sufficient guidance in the Act for selecting particular cases in which suit should be filed, the provisions were valid.
4. We will now proceed to consider the scheme of the Bombay Municipal Boroughs Act, 1925, and examine the contentions now made before us. Sections 78 and onwards relate, to the preparation of assessment lists and defining the liability of the properties for rates on buildings or lands. There are detailed provisions which enable the tax-payer to raise such objections as he deems proper at several stages of the proceeding. Section 90 relates to fees regarding licences. The subsequent provisions relate to different kinds of taxes. Section 93 to Section 101 are provisions for collection of octroi duties. Recovery of taxes is provided by Chapter VIII. Sub-section (1) of Section 104 requires the Chief Officer to cause to be presented to the person liable for payment of the tax a bill for the sum which is claimed as due 'with the least practicable delay when the amount shall become due'. Sub-section (2) requires the bill to specify the period for which and the property in respect of which the sum is claimed and also to give notice of the liability incurred in default of payment and of the time within which an appeal may be filed as subsequently provided. Sub-section (3) enables the Chief Officer to serve a notice of demand as per Form of Schedule V or similarly worded, if within fifteen days from the presentation of the bill under Sub-section (1) such person (1) does not pay the sum claimed, or (2) show cause to the satisfaction of the Chief Officer why ho is not liable to pay the same, or (3) prefer air appeal under Section 110 against the claim. Section 105 enables a warrant to be issued against the defaulter. Recovery may be made under the warrant if the person, on whom the notice of demand has been served under Section 104(3), does not, within fifteen days from the service of the notice, pay the sum demanded in the notice by distress and sale of moveable property or by the attachment and sale of immoveable property of the defaulter. The rest of the provisions are not very relevant. Sub-section (2) of Section 105 relates to the method of issue of warrant. Sub-section (3) enables the officer to whom the warrant is addressed, if there is such authorisation, to break open the door or window of a building in order to make any distress directed by the warrant under circumstances there mentioned. Sub-section (4) provides for the manner of execution of the warrant. Section 106(1) provides for the sale of goods distained in special cases and Sub-section (2) provides for the sale of goods which are distained and to which Sub-section (1) is not applicable. Sub-section (2A) enables the Chief Officer to put the person who has purchased the property in possession and to grant him certificate of purchase. Sub-section (2B) enables the municipality to offer a nominal bid in cases of immoveable property where there are no bidders. Sub-section (3) deals with the surplus obtained by sale. Section 107 concerns sales outside the district. Section 108 is concerned with fees and costs chargeable for the process. Section 109 enables the Chief Officer to take recourse to summary proceedings against persons who are about to leave the Borough, by directing immediate payment of the sum due or about to become due, and in case of default issue distress as previously mentioned. Section 110 enables an appeal to be filed against the claim made in the bill to the Judicial Magistrate or Bench of such Magistrates by whom the case is triable under the direction of the Sessions Judge, provided certain conditions are satisfied. These are that the appeal must be filed within fifteen days of the presentation of the bill and that an application in writing stating the grounds on which the claim of the Municipality is disputed has been made to the Standing Committee, in the case of a rate on buildings or lands, within the time fixed under Sections 81 and 82 of the notice of assessment or alteration of the assessment, according to which the bill is prepared; and the amount claimed has been deposited in the Municipal office. By Sub-section (3) the decision of the Magistrate or Bench of Magistrates is made revisable by the Court of appeal. Section 203 says that in lieu of any process of recovery allowed by or under the Act or in case of failure to recover by such process the whole or any part of any amount recoverable under Chap. VIII, or of any compensation, expenses, etc., it shall be lawful for a municipality to sue in any Court of competent jurisdiction the persons liable to pay the same.
5. It is argued that as the procedure by suits is far different from the one under the coercive process, the latter restricting the opportunities of the appellant to contest the claim of the municipality in several respects, this latter provision must be held to be invalid. It is undoubtedly true that the process provided by Sections 104 and 105 and onwards is indeed a summary process and a litigant would not have as many opportunities under such process as he has in a suit to contest the claim. If a Municipal Corporation were to file a suit, it would take days before a written statement is required to be filed, it might take many more days before which evidence is recorded; and it might take still more days when judgment is given. It would also enable the tax-payer to raise all sorts of objections, including the validity of appointment of the officer, the validity of the procedure adopted for the levying of the tax and also the genuineness of the books of the municipality. Viewed from these points of view, it must be accepted that the procedure under the summary provision is undoubtedly onerous. Yet the summary process gives ample opportunities to the tax-payer to raise any genuine grievance that he may have. He is also entitled to file a suit for injunction if a Municipal Corporation attempts to recover a, tax which it is not entitled to recover. The question is, is the discretion so uncontrolled or, assuming that it is uncontrolled, even so are the provisions such as to be struck down under that article? Municipal and such other Corporations are public bodies, meant for public benefit and must be financially sound so that they can discharge the important duties that they must perform efficiently and expeditiously. In order to effect this it can hardly be emphasised that they should be able to collect the taxes as expeditiously as possible. One may well imagine the consequences that may ensue if such bodies were required to file suits for collection of taxes. It must, therefore, be admitted that summary process of recovery is an absolute essential for governmental purposes. We also cannot disregard the experience gained over years of the working of such Acts to the effect that though alternative procedure for recovery is available to the Municipal Corporation, it is rarely that one hears of a suit having been filed for such recovery. It must also be accepted that it is because of the existence of this procedure that the taxpayers pay their taxes. As held in the ease of Manna Lal v. Collector of Jhalawar : 2SCR962 , special facility for the recovery of Governmental dues is absolutely essential and we think equally so for municipal dues. On similar considerations, in Lachhman Dass v. State of Punjab : 2SCR353 , the special mode of recovery of dues provided for the State Bank in preference to other Banks was upheld.
6. Coming now to the question as to whether the Act lays down some principles which furnish guidance to the Chief Officer of the Corporation to select a particular procedure in a given case, one cannot disregard the specific provisions of Sections 104 and 105 of the Municipal Boroughs Act. These sections being penal sections, in the sense that they provide a summary remedy, must be construed strictly, no doubt, at the same time not rendering them infructuous. Consistently with these principles, it has been held that before this coercive machinery can be utilised by the Corporation, the conditions laid down in these sections must be strictly obeyed. The two main and essential conditions are : That the bill for the tax must be presented with the least practicable delay on the tax becoming due, and that the bill must contain the particulars required by Sub-section (2) of Section 104. Unless there is, therefore, this foundation for the exercise of powers under Section 105, the coercive machinery is not available to the Municipal Corporation. It may be that once this preliminary foundation has been laid, as held by this Court in Lokmanya Mills Ltd, v. Municipal Borough, Barsi : (1939)41BOMLR937 , subsequent warrant may be issued much later without any period of limitation applying. It is abundantly clear, therefore, that it is only those cases where the bill has been issued with 'the least practicable delay' that the coercive machinery can be utilised, while in all other cases the Corporation must proceed by the alternative method of suit. The Act itself lays down the principles for the guidance of Chief Officer for choosing one case for coercive machinery and another for the filing of a suit.
7. Apart from this, it appears to us that the power to file a suit in lieu of the process under Chap. VIII is an additional power which is supplementary to the other power and which is necessary for special reasons. Section 105 can reach only such property as apparently appears to belong to the tax-payer. It cannot reach property which he has put out of its reach by the coercive process. In order, therefore, that such other properties could be reached without multiplication of processes for recovery of the tax, a process of suit is also permitted. It may also be that there may be other complications involved which may make it more convenient to file a suit against a defaulter for recovery of taxes. Though the words 'in lieu of' appear to support the contention that it is an alternative remedy, it seems to us that it is an additional remedy which is available to the Municipal Corporation for the recovery of taxes and which it is necessary for it to have. In such a case, Section 203 must be regarded as not offending Article 14 of the Constitution, in view of the decision of the Supreme Court in Purshottam Govindji Halai v. Shree B.M. Desai, Additional Collector of Bombay : 1956CriLJ129 in connection with Section 46(2) of the Indian Income-tax Act, 1922. We, therefore, with respect, cannot agree with the ratio of the decision of the Special Bench in S.M. Nawab Ariff v. Corpn. of Calcutta.
8. Costs will be costs in the cause. Plaintiffs will pay costs of the Government Pleader in this Court.