1. This appeal may be described as the last round in a protracted fight that has been taking place between Kanhaiya Lal and the Agra Cantonment Board over the amount of taxes to be assessed on the premises occupied by the said Kanhaiya Lal in the Agra Cantonment. The Cantonment Board is the appellant in this case and the appeal arises out of proceedings in execution of a decree obtained by Kanhaiya Lal against the Board. On 1st August 1919, a lease of certain land within the Cantonment area in Agra was granted to Kanhaiya Lal by the Officer Commanding, Agra Division, on behalf of the Secretary of State for a period of 25 years. Condition 7(2) of the lease was in the following terms:
That the lessee will keep separate and proper accounts of the income arising from the premises hereby demised and the buildings erected thereon and that the same shall be accessible at all reasonable times to the Cantonment Authority or any person duly authorized in that behalf for the purpose of inspection, examination, checking and copying. Taxation must be based upon the not profit of the lessee while in occupation of the sarai.
2. The taxts to which the premises are liable under the Cantonments Act, 1924 and notifications issued thereunder are house tax, water tax and conservancy tax. The basis of the tax assessment is the 'annual value' of the building. 'Annual value,' as applicable to the building in question, is defined in Section 64 of the Act to be
the gross annual rent for which such building...is actually let, or, where the building...is not let...might reasonably be expected to let from year to year.
3. The assessment to the various taxes payable by Kanhaiya Lal in respect of his premises was made accordingly. Kanahaiya Lal claimed that the Cantonment Board was bound by the clause in the lease that taxation must be based on the net profits of the lessee while in occupation of the sarai. He accordingly instituted Suit No. 34 of 1927 in the Court of the Subordinate Judge, Agra, against the Cantonment Board in which he prayed for a declaration inter alia that the condition in the lease for payment of house and water taxes on the net income is binding on the defendant Board and that the Board is not entitled to realize from him more than Rs. 2 per mensem as conservancy tax. He also prayed for an injunction restraining the Board from demanding and realizing more than it is entitled to recover under the terms of his agreement. The learned Subordinate Judge decreed the claim for declaration that the clause of the lease with regard to the basing of the assessment to house and water taxes on net income was binding on the Board and for an injunction to this extent. He dismissed the rest of the plaintiff's suit. The Board did not appeal, but Kanhaiya Lal appealed to this Court in respect of the refusal of the trial Court to grant him a declaration and injunction that the Board was not entitled to realize more than Rs. 2 per mensem in respect of conservancy tax. This appeal was heard by a Division Bench of this Court consisting of Banerji and King, JJ., and was dismissed on the ground that the civil Court had no jurisdiction to question the liability of a person to be assessed or taxed and that the only method by which the plaintiff could challenge the order of the Cantonment Board was as provided in the rules made under the provisions of the Act for the assessment and collection of conservancy tax. These rules provide for an objection to the Cantonment Committee. Rule 11 provides for an appeal against the order of the Cantonment authority, while Rule 15 lays down that
no objection shall be taken as to an assessment nor shall the liability of a person to be assessed or taxed be questioned in any other manner or by any other authority than is prescribed under this ule.
4. Fortified by this decision with regard to the conservancy tax the Cantonment Board continued to assess Kanhaiya Lal to house and water taxes on the basis of gross rental. The latter appealed to the District Magistrate in accordance with the provisions of Section 84, Cantonment Act, on the ground that the decree of the civil Court in Suit No. 34 of 1927 was binding on the Board and the Board could not therefore demand a higher rate of house and water taxes than it was entitled to demand under the terms of the decree. It was about the same time that Kanhaiya Lal had made his application for the execution of the decree for injunction against the Cantonment Board under Order 21, Rule 22, Civil P.C., which has given rise to the present appeal. Section 84. Cantonment Act, empowers the officer hearing the appeal, if he entertains a reasonable doubt as to the liability to or the principle of assessment of tax, to refer the matter for the decision of the High Court. Under this provision the District Magistrate of Agra referred the matter to this Court. The reference came up before a Division Bench of this Court consisting of Mukerji and Bennet, JJ. The answer given by this Court to the reference was that:
The Cantonment Board is authorized to assess the assessee for purposes of house tax and water rate, and other taxation if necessary, on whatever basis is legal under the law and rules for the time being. The Cantonment Board is not limited in any way by Clause 7(2) in the lease in question to make its basis of taxation on net profits.
5. The learned Judges who decided the reference expressed themselves as being in entire agreement with the view taken by the Bench that decided Kanhaiya Lal's appeal as to the civil Court having no jurisdiction to interfere with the assessment made by the Cantonment Board. They pointed out that Section 84 of the Act provides for an appeal to the District Magistrate or to such other officer as may be empowered by the Local Government in this bahalf and that Section 88 provides that the order of the appellate authority shall be final. They considered that these provisions in the Act also impliedly barred the jurisdiction of the civil Court and that therefore the decision of the Subordinate Judge in the civil suit in question is a decision which is altogether without jurisdiction and of no effect. The application for execution of the decree of the Subordinate Judge was made by Kanhaiya Lal on 12th November 1931, and the order under appeal rejecting the objection of the Board and asking the Cantonment Board:
to observe and comply with the decree not to realize in excess of the agreement
was passed on 12th December 1931. This order, which is the order under appeal, was passed before the decision of the reference referred to above. It is clear to us that the appeal must be allowed. We are in entire agreement with the view already taken by two Benches of this Court that the jurisdiction of the civil Court is excluded in all matters relating to any valuation, assessment, liability to assessment or taxation by a Cantonment Board. It is contended on behalf of the respondent that the Cantonment Board was competent to make a composition of the house and water taxes and that Kanhaiya Lal was entitled to ask the civil Court to enforce such a composition agreement. To accept this contention would be to allow an evasion of the provisions of the Act, by which the jurisdiction of the civil Court is excluded in matters relating to Cantonment taxation. It is clear to us that the only way in which Kanhaiya Lal could seek to enforce the terms of his lease with regard to the basis of taxation was to appeal from the order of assessment to the District Magistrate, which he has done, but without success. It is further contended that there being a subsisting decree against the Cantonment Board passed by a civil Court the validity of the decree cannot be challenged in execution proceedings. We have however held, in agreement with the two other Benches of this Court that the decree was wholly without jurisdiction and ultra vires. The Cantonment Board is therefore justified in asking the Court to ignore it as if it were non-existing. Such a decree cannot be put into execution. We accordingly allow the appeal. In all the circumstances of the case we direct that the parties do bear their own costs in both Courts.