1. The suit giving rise to this second appeal was filed by 53 residents of Shahada for themselves and as representing the tax-payers of Shahada against the respondent, the Shahada-Kukdel Municipality (hereinafter referred to as the Municipality) for a declaration that the consolidated property tax imposed by the Municipality for the year 1954-55 is unjust, excessive and illegal and for perpetual injunction restraining the Municipality from levying the property tax on the plaintiffs and the other tax-payers. The material facts lie within a narrow compass and may be set out as follows: The said Municipality was superseded on April 16, 1951, and one P. Y. Darp was appointed as Administrator thereof. On April 30, 1951, Darp passed a resolution imposing the consolidated property tax at the rate of twenty per cent, of the annual letting value of residential premises and thirty per cent. of the annual letting value of business premises. Objections were invited from the tax-payers, but, when the proposals were submitted to the Director of Local Authorities, the latter refused to accord sanction to the same. Thereafter, one Khandekar succeeded Darp as Administrator and on December 1, 1951, the former passed a resolution similar to the one passed by Darp. The resolution was not sanctioned by the Director of Local Authorities, because according to the latter, a flat rate of 20 per cent. should be applied to all the premises. Khaudekar thereafter, without cancelling the previous resolution, passed a fresh resolution levying a consolidated tax at the fiat rate of twenty per cent. The assessment lists were published but it is the contention of the plaintiffs that no opportunity was given to them to put in their objections to the original proposal nor to the assessment list prepared. It is also contended that the assessment list was not kept open for public inspection. It appears that for the year 1954-55 the list prepared in 1953 was adopted by Josef, who succeeded Khandekar, and attempts were made to make recoveries on the basis of that list. Demand bills were presented to different tax-payers and it is on record that one such bill was presented to plaintiff No. 1 on September 3, 1954. The demand has been made in respect of the consolidated tax due for the year 1954-55. It is common ground that the commencement of the liability for the payment of tax for the year 1954-65 would be April 1, 1954. Plaintiff No. 1 gave a notice under Section 167A of the Bombay District Municipal Act (hereinafter referred to as the Act) on his own behalf and on behalf of the other tax-payers to the Municipality contending that the levy of tax for the year 1954-55 was illegal and ultra vires. There was no reply to the notice. Therefore, plaintiff No. 1 gave a fresh notice on February 21, 1955. Eventually, on March 30, 1955, the plaintiffs filed the present suit for the reliefs as set out above.
2. The defendant-Municipality contended that proper procedure was followed by the Municipality for levying the consolidated property tax and that the provisions of Section 60 of the Act have been complied with. The Municipality also alleged that the assessment list was kept for inspection of the tax-payers at the Municipal office. The main contention raised by the Municipality was that the suit was barred by limitation. The trial Court framed issues covering the contentions raised in the pleadings, but tried the following three issues as preliminary issues:
1. Is plaintiff's suit in his representative capacity maintainable?
4. Did the cause of action arise on 3rd September 1954?
5. Is the suit barred by limitation?
On the first issue it recorded a finding in favour of the plaintiff and held that the suit was maintainable. On the fourth issue, it came to the conclusion that the cause of action arose on April 1, 1954, and on the fifth issue, it took the view that the suit was barred by limitation. Consequently, the suit was dismissed. The plaintiffs went in appeal to the District Court and Mr. Shikhare, the then District Judge, held that it was necessary to have proper findings of the trial Court on certain questions before deciding the question of limitation. Accordingly, he sent down the following three issues for findings:
1. Do plaintiffs prove that there has been non-compliance with and contravention of the material provisions of the Bombay District Municipal Act in the matter of the imposition and levy of the consolidated tax referred to in the plaint as contended by them?
2. Whether it is proved by the plaintiffs that there has been non-compliance with and contravention of the material provisions of the District Municipal Act in the matter of preparation, publication and authentication of the assessment list referred to in the plaint as alleged?
3. Whether it is shown by the plaintiffs that there has been such non-compliance with and such contravention of the material provisions of the Bombay District Municipal Act that the acts by reason of which the plaintiffs contend that the levy of the consolidated tax and the assessment list are invalid cannot be held to be acts done in pursuance or execution or intended execution of the Bombay District Municipal Act or that the present suit is not a suit in respect of any alleged neglect or default in the execution of this Act?
The lower Court answered the first issue in the affirmative. To the second issue, its answer was that there had been non-compliance and contravention of the provisions of the said Act in the matter of publication of the assessment list. The third issue was answered in the affirmative. When the matter came up before the District Judge, he framed fresh points for determination at para. 14 of the judgment and held that there had been non-compliance with and contravention of the material provisions of the Act in the matter of imposition and levy of the consolidated tax. He further held that there had been non-compliance with and contravention of the material provisions of the Act in the matter of preparation, publication and authentication of the assessment list. At the same time, he came to the conclusion that the acts of levying consolidated tax and preparing the assessment list were acts done in pursuance or execution or intended execution of the District Municipal Act. Consequently, he came to the conclusion that the suit was barred by limitation under Section 167A of the Act. He, therefore, disallowed the appeal and dismissed the plaintiffs' suit. It is from that decision that the plaintiffs have preferred the present second appeal.
3. The main question argued by Mr. Vaidya, for the appellants was relating to limitation under Section 167A of the Act. In order to appreciate the question of limitation, it is necessary to refer to certain findings of fact recorded by the District Judge which have not been challenged before me in this second appeal. They are as follows:
1. The procedure laid down in Section 60 (a) of the Act has not been followed by the Municipality. The Director of Local Authorities by his letter dated April 5, 1952, sanctioned the schedule. But, the mere sanctioning of the schedule cannot be regarded to be in conformity with the provisions of Section 60(a) of the Act, Ex. 81 does not refer to the selection of taxes.
2. The provisions of Section 60(b) of the Act also have not been complied with by the Municipality.
3. The provisions of Section 60(c) of the Act have not been complied with.
4. The provisions of Section 62 of the Act have not been complied with.
5. The notices were not duly published and the persons proposed to be taxed were not served with notice and that the statutory period was not allowed to elapse for filing the objections. This amounts to material infringement of the provisions of law and goes to the root of the jurisdiction of imposing authorities.
6. The provisions of Section 63(1) of the Act have not been complied with. No assessment list was prepared for the year 1952-53.
7. The provisions of Sections 64 and 65 of the Act have not been complied with. There is no list on the record of this case for the year 1952-53 for the tax to be imposed. The imposition of tax for the period from March 1, 1953, to March 31, 1953, is illegal. In the same way, the assessment list for the year 1954-55 has not been prepared, authenticated and kept for inspection.
In view of the above findings, the District Judge came to the conclusion that non-compliance with the provisions of the Act in regard to imposition of the tax renders the imposition ultra vires and illegal.
4. It is in the background of the above findings of fact that we have to consider the question of limitation. Section 167A of the Act runs thus:
No suit shall lie against a municipality or against any officer or servant of a municipality in respect of any act done in pursuance or execution or intended execution of this Act, or in respect of any alleged neglect or default in the execution of this Act-
(a) unless it is commenced within six months next after the accrual of the cause of action; and
(b) until the expiration of one month after notice in writing has been, in the case of a municipality, delivered or left at the municipal office and, in the case of an officer or servant of a municipality, delivered to him or left at his office or place of abode;...
Levying of consolidated property tax at a particular rate is obviously an act of the Municipality. The main question, which was considered in the Courts below, was whether this act could be said to have been done in pursuance or execution or intended execution of the Act. It was held by the lower Courts that the act must be deemed to have been done in pursuance or execution or intended execution of the Act, because the Municipality had authority under the Act to levy a consolidated tax upto the limit proposed by the Municipality and it did not matter whether the necessary formalities in that respect have not been gone through. In my opinion, there is another aspect of the matter which requires to be considered for deciding the question of limitation and which aspect appears to have escaped the attention of the Courts below. That aspect arises by reason of the use of the words '' the accrual of the cause of action'' in Clause (a) of Sub-section (1) of Section 167A of the Act. While the words used in Sub-section (1) are 'acts done' the use of different words suggests that 'accrual of the cause of action'' does not mean the same thing. There is no reason why the Legislature should have used different words unless they intended to connote different ideas by the use of different language. Now, the act done may be a single act or a series of acts. For instance, the Municipality may pass a resolution and that resolution itself may afford a cause of action, in which case the act and the cause of action would be synonymous. Every act does not supply a cause of action. There may be an act or a series of acts done by the Municipality which may not afford any cause of action in the sense that no one is aggrieved thereby. In the present case, it is necessary to remember that the act of levying tax, which is complained of in the present suit, includes successive events and what is impugned is not the passing of a particular resolution or the publication of particular assessment list and so on but the cumulative effect of a series of acts beginning with the passing of the resolution, selecting a particular tax and ending with finalising the list and publication of notice of assessment list. Section 60 of the Act lays down the procedure that the Municipality is required to follow in imposing a tax. The first thing which the Municipality is required to do is to pass a resolution selecting a particular tax. The second is to prepare rules for the purpose of Sub-section (i) of Section 46 of the Act prescribing the tax selected. Thereafter, the Municipality has to submit the rules to the State Government or the Commissioner, as the case may be, for sanction. The Government or the Commissioner, as the case may be, may sanction the proposal in its entirety or with necessary modification or may refuse to accord sanction. The sanctioned rules along with the modification subject to which the sanction is given are to be published by the Municipality under Section 62 of the Act. Under Section 63 of the Act the Municipality is required to cause an assessment list to be prepared and kept for inspection. The owner or occupier of a building can ask for true information in regard to the list. Thereafter, under Section 64 of the Act a public notice is required to be given in regard to the assessment list. Under Section 65 of the Act the Municipality is required to give public notice of time fixed for revising the valuation and bringing the revised valuation into effect. Objections to the valuation must be considered by the Municipality according to the procedure laid down in Sub-sections (2) and (3) of Section 65 of the Act. After these objections are disposed of, the list is to be authenticated.
5. Now, the levying of tax presupposes that necessary steps mentioned in Sections 60 to 65 of the Act have been taken. No particular single act can be said to afford a cause of action to the tax-payer challenging the levy of taxation. Furthermore, there are several stages through which the process of levy is required to be gone through and at each stage, the tax-payer gets an opportunity of knowing what is going on and of putting forward his objections in regard to the same. When all these steps have been taken in accordance with the provisions of the relevant sections of the Act, then the tax-payers could be fixed with knowledge in regard to the same, and it would not be open to the tax-payer ordinarily to complain that he was not aware of what had happened. In the present ease, as stated above, none of the essential steps which are conditions precedent to the levy of taxation have been taken. The list has not been properly published and there are several irregularities committed by the Municipality. That being the case, it is difficult to understand how a cause of action to the tax-payer accrues unless a demand is made by the Municipality on the tax-payer in respect of the taxation. It would not be legitimate for the taxpayer to presume that the Municipality would behave in an irregular way and without following the proper procedure would proceed to finalise and authenticate the list. In the peculiar circumstances of the case, I feel no hesitation in holding that the accrual of the cause of action will have to be separated from the various acts, which the Municipality is required to do but which it did not do, under the provisions of the Act in the matter of preparation, completion and publication of the list. The tax-payer is entitled to proceed on the footing that the Municipality will follow the rules and there will be no imposition of tax until all the requirements of law have been duly fulfilled. A few acts irregularly done will not and cannot afford a cause of action. The taxpayer will be justified in assuming that the Municipality may yet refrain from proceeding to effect recoveries, thus giving the lows pcenitentice. A cause of action can accrue only when specific demands have been made from specific tax-payers. Limitation will begin to run from that date. Now, so far as plaintiff No. 1 is concerned, the bill is presented to him on September 3, 1954. The dates of presentation of the bills to the other plaintiffs are not on record. Taking, however, the date of presentation of the bill on plaintiff No. 1 which is September 3, 1954, the question is whether the plaintiffs' suit is in time under Section 167A of the Act. The suit has been filed on March 30, 1955. The notice of the suit was given on September 16, 1954, and second notice was given on February 21, 1955. Under Section 15(2) of the Indian Limitation Act
In computing the period of limitation prescribed for any suit of which notice has been given in accordance with the requirements of any enactment for the time being in force, the period of such notice shall be excluded.
It is not disputed that if this period is excluded, the suit filed by plaintiff No. 1 will be in time.
6. Mr. Rajani Patel, for the respondent, however, contended that Section 15(2) of the Indian Limitation Act does not apply to the present case, because Section 167A of the Act itself prescribes the two points of terminus. The first is 'until after the expiration of one month after notice' and the second is 'six months from the accrual of the cause of action' . Clause (a) of Section 167A (1) of the Act in effect prescribes a period of limitation which is six months from the accrual of the cause of action. I am, therefore, unable to understand as to why in computing the period of limitation prescribed by a local enactment the period required by the statutory notice cannot he excluded. Although the dates of the demand notices as against the other plaintiffs are not on the record, there is a general averment in the plaint to the effect that similar notices were given to them. The notice under Section 167A of the Act given by plaintiff No. 1 was given by him in his representative capacity. The suit was filed as a representative suit. In my opinion, therefore, the difficulty of limitation would not arise so far as the present suit is concerned.
7. In view of the above finding, it is not necessary to consider the question, whether the act of levy can be said to be done in pursuance or execution or intended execution of the Act in any detail. At the same time, since the decision in the Courts below have turned on a consideration of that point and the matter was argued before me in full, it would be worthwhile to say a few words on that aspect. In Jalgaon Mun. v. Khandesh Spg. Etc Co. (1952) 55 Bom. L.R. 65 the borough Municipality levied octroi duty on fuel oil or furnace oil. The proper procedure was followed. Rules and by-laws were framed. The sanction of the Government was obtained and the assessment list was properly published. It was, however, found that the Municipality was not entitled to levy any octroi duty on fuel oil and furnace oil which was not comprised within the items enumerated in the octroi rules and by-laws. The question, therefore, arose as to whether the act of the municipality in levying the octroi duty could be said to have been done in pursuance of the Bombay Municipal Boroughs Act within the meaning of the expression in Section 206 of that Act. The Division Bench held:
that what the Municipality did was not an act done in pursuance of the Act, but it was an act which it purported to do in pursuance of the Act, and, that, therefore, its action was well within the terms of Section 206 of the Act.
8. The learned Judges further observed:
The acts which would fall within the category of those 'done or purporting to have been done in pursuance of this Act' could only be those which were done under a vestige or semblance of authority or with some show of a right. If an act was outrageous and extraordinary or could not be supported at all, not having been done with a vestige or semblance of authority, or some sort of a right invested in the party doing that act, it would not be an act which is done or purports to have been done in pursuance of the Act. The distinction is really between ultra vires and illegal acts, on the one hand, and wrongful acts, on the other-wrongful in the sense that they purport to have been done in pursuance of the Act; they are intended to seem to have been done in pursuance of the Act and are done with a vestige or semblance of authority, or sort of a right invested in the party doing those acts.
9. Mr. Patel contended that admittedly the Municipality had authority to levy the consolidated tax. That being the case, the levying of the tax would not be ultra vires merely because the procedure laid down in that respect has not been followed. According to him, the act would still be a wrongful act, because the same has been done under a vestige or semblance of authority. Now, the wording of Section 206 of the Bombay Municipal Boroughs Act is somewhat different from the wording of Section 167A of the District Municipal Act. In another case reported in Municipality of Chopda v. Motilal (1957) 60 Bom. L.R. 48, the Division Bench of this Court held that difference in phraseology does not justify the view that the principle of Jalgaon Municipality case is inapplicable. In the Municipality of Chopda case also the same distinction viz., ultra vires and illegal acts on the one hand and wrongful acts on the other, was emphasized and it was held that so far as ultra vires acts are concerned, those acts cannot be said to have been done in pursuance or execution or intended execution of the Act. As pointed out above, in the present case, none of the essential requirements laid down in Sections 60 to 63 of the Act have been followed. Even the sanction of the Government which is the very basis of the levy has not been obtained. In these circumstances, it is difficult to style the levy as an act done in pursuance of execution or intended execution of the Act. The levy is clearly illegal, and though not beyond the powers of the Municipality, still in so far as the conditions precedent have not been complied with, stands on the same footing as an act which is ultra vires.
10. In Amalner Municipality v. Pratap Mill (1951) 54 Bom. L.R. 431 a Division Bench of this Court was considering a similar case where the provisions of Sections 78 to 81 of the Municipal Boroughs Act relating to the levy of taxes were not complied with. It was held
that failure of the Municipality to comply with the requirements of Section 78 (1) of the Act would be enough to make the assessment list so defective as to be unenforceable.
It was further held:
If the procedure laid down in Sections 80 and 81 of the Act is not followed by the Municipality in preparing and finalising the assessment list, the list prepared by the Municipality ex-parte under Section 78 of the Act would not be a valid list.
In discussing the argument that was addressed to the learned Judges viz., that the rule of benevolent construction should be adopted in considering the question of ultra vires, the learned Judges observed: (p. 458) :.But it must be remembered that this approach would be wholly inappropriate where the rule is challenged on the ground that it is ultra vires the power conferred upon the local body or where the assessment list is impugned on the ground that the condition precedent for making it final has not been complied with.
These observations point to the conclusion that when steps, which are necessary to be taken for imposing a tax, are not taken, in other words, when the conditions precedent are not fulfilled, then the imposition is illegal and ultra vires. This principle, of course, does not apply to mere irregularities which are of an unessential character. Whether we go to the length of holding that the action of the Municipality in proceeding to levy the consolidated tax is ultra vires or not, it is clear to my mind that the act is without jurisdiction. In my opinion, that would put the case on par with the case where there is a clear want of jurisdiction or authority on the part of the Municipality to levy the tax. We have a clear case, or we might even say, a flagrant case of the act being ultra vires where there is no power of imposing a particular tax and an attempt is made to do so. But, the case of an ultra vires act is not the only case where it can be said that the act has been done Without vestige or semblance of authority. If the language of ultra vires is appropriate to a case where taxation is attempted without statutory power, then we may refrain from using that phraseology in the present context. We can, however, legitimately make a distinction between inherent or initial lack of jurisdiction or power and discovery of excessive exercise of jurisdiction or power by judicial process. In the former case, there is no vestige or semblance of authority; in the latter, there is such vestige or semblance of authority. In my opinion, despite the difference in phraseology, the substance of the two decisions cited above viz., Jalgaon Municipality v. Khandesh Spinning & Weaving Co. and Municipality of Chopda v. Motilal, is to draw a line between a case of inherent lack of power and a case where excessive exercise of power has been discovered by applying judicial process. In view of the egregious character of non-compliance of the essential pre-requisites, I feel no hesitation in holding that the Municipality and its administrators were acting without a vestige or semblance of authority, when they tried to finalise the assessment list without fulfilling the conditions laid down in the Act and proceeded to demand the tax. Such an act cannot be said to have been done in pursuance or execution or intended execution of the Act.
[The rest of the judgment is not material to this report.]