1. This order will also govern the disposal of Civil Revisions Nos. 427, 634, 635, 636, 637, 702, 703, 704 and 705, all of 1964.
2. These ten revision petitions by the Municipal Council, Balaghat, are directed against decisions of the Court of Small Causes, Balaghat, giving to the plaintiff-opponent in each case a decree against the Municipal Council for the refund of the amount of terminal tax realized by the Council from each of the plaintiffs in circumstances to be presently stated. By a notification issued on 7th March 1935 under Section 66(1)(o) of the Central Provinces and Berar Municipalities Act, 1922, the Municipal Committee of Balaghat imposed terminal tax on import and export of goods by rail or roads within its limits at rates mentioned in the schedule appended to the notification. On 6th December 1960 another notification was issued by Government under Sub-sections (5) and (7) of Section 67 of the Act amending the notification issued on 7th March 1935 so as to impose a terminal tax for the first time on certain goods and enhance the rate of tax on taxable articles included in the schedule appended to the notification of 7th March 1935. In 1961 the Municipal Committee authorized the railway authorities to recover terminal tax on goods imported or exported by rail, and accordingly the railway authorities recovered terminal tax from the plaintiffs. The notification dated 6th December 1960, in so far as it imposed terminal tax on certain goods for the first time and enhanced the rates of tax on articles included in the schedule appended to the notification dated 7th March 1935, was declared to be illegal and quashed by this Court in a petition under Article 226 of the Constitution in Radhakishan v. State of M.P., Misc. Petn. No. 59 of 1962, D/- 9-4-1962 (Madh Pra) filed by one Radhakishan. Relying on its earlier decision in Bhikamchand v. Municipal Committee, Chhota Chhindwara, 1961 M.P. LJ 937 it was held by a Division Bench of this Court in Radhakishan's Case, Misc. Petn. No. 59 of 1962, D/-9-4-1962 (Madh Pra) that the terminal tax imposed by the Municipal Committee 1960 was a fresh imposition which the Committee was not competent to do by reason of item No. 89 of List I of the Seventh Schedule and the imposition was not saved under Article 277; that the notification dated 6th December 1960 superseding the previous imposition of terminal tax imposed a new tax and was not one merely continuing the levy of the terminal tax which was lawfully levied at the commencement of the Constitution; and that, therefore, the imposition of terminal tax on certain goods for the first time and enhancement of the rate on other goods was altogether ultra vires the powers of the Municipal Committee and, therefore, illegal. Consequent to the quashing of the notification dated 6th December 1960 each of the plaintiff-non-applicants filed suits giving rise to these petitions for the refund of the amount of terminal tax which had been recovered from him and the imposition of which, according to this Court's decision in Radhakishan's Case Misc. Petn. No. 59 of 1962, D/-9-4-1962 (Madh Pra) was ultra vires and illegal.
3. There was no dispute in any suit about the amount realized by way of terminal tax from any of the plaintiffs. The Municipal Council contested the suits mainly on two grounds, namely, that they were not maintainable in view of Section 85(2) of the C. P. and Berar Municipalities Act, 1922, and Section 133 (2) of the Madhya Pra. Municipalities Act, 1961; and that the suits not having been filed within six months of the date of the accrual by time under Section 48 (2) of the Act of 1922 as well as under Section 319 (2) of the Act of 1961. Both these pleas were negatived by the learned Judge of the Court of Small Cause who, relying on Mesuram Kishunpershad v. Municipal Committee, Jubbulpore, ILR (1948) Nag 766 : (AIR 1949 Nag 270 and Municipal Committee, Karanja v. New East India Press Co. Ltd. Bombay ILR (1948) Nag 971: (AIR 1949 Nag 215), held that the suits, being for the recovery of terminal tax which the Municipal Council had no authority whatsoever to impose, were maintainable and that neither Section 48(2) of the Act of 1922 nor Section 319(2) of the Act of 1961 was applicable; and that the suits had been filed within the period of limitation prescribed by the Indian Limitation Act. Accordingly, the learned judge gave to the non-applicant a decree for the recovery of the amount claimed by in his suit.
4. In all these revision petitions the Municipal Council has reiterated the contentions which did not find favour with the trial Court. Taking first the objection against the maintainability of the suits, it rests on Section 85 of the Act of 1922 and the analogous provision in Section 133 of the Act of 1961 which, repealing, inter alia, the Act of 1922, came into force on 1st February 1962, Section 85 is as follows :
'85(1) The Provincial Government may make rules under this Act regulating the refund of taxes, and such rules may impose limitation on such refunds.
(2) No refund of any tax shall be claimable by any person otherwise than in accordance with the provisions of this Act and the rules made thereunder.'
Section 133 of the Act of 1961 is also similarly worded.
5. Rules have been framed under the aforesaid provisions prescribing the procedure for the refund of any tax amount and laying down the limitation period of three months within which an application for refund must be made to the Municipal Council. Section 83 of the Act of 1922 gave a right of appeal to the Deputy Commissioner, or to such other officer empowered by the State Government in that behalf, against an order of the Municipal Committee refusing a refund of tax amount. A revision also lay against a decision of the appellate authority to the State Government on the ground that the decision was contrary to law, or repugnant to any principle of assessment of the tax, or that the Deputy Commissioner or the competent appellate authority had failed to exercise the jurisdiction vested in him by law. There was also a provision for a reference to the High Court if the appellate or the revisional authority entertained a reasonable doubt on any question as to the liability or the principles of assessment of a tax. The rules made under the Act of 1922 have been continued under the Act of 1961. But the Act of 1961 does not contain provisions similar to those of Section 83. That does not, however, affect the precise question that requires determination in the present case.
6. Shri Sen, learned counsel appearing for the petitioner-Council, did not dispute that the suits filed by the non-applicants were for the recovery of the amount of terminal tax which, according to the decision of this Court in Radhakishan's Case Misc. Petn. No. 59 of 1962 D/-9-4-1962 (Madh Pra) (supra), the Municipal Committee had no authority whatsoever to impose. He, however, argued that both, Section 85 of the Act of 1922 and Section 133 of the Act of 1961, barred a suit for the refund of a tax not only when the imposition was within the powers of the Municipal Council though the tax had been imposed irregularly or illegally in the exercise of that power, but also when the Municipal Council had no power at all to impose the tax. Learned counsel sought to support his argument by relying on certain observations in Raleigh Investment Co. v. Governor-General in Council AIR 1947 PC 78 : 74 Ind App 50, Azimunnissa v. Deputy Custodian, Evacuee Properties AIR 1961 SC 365, Burmah Construction Co. v. State of Orissa AIR 1962 SC 1320 and Firm L. S. Chetty and Sons v. State of Andhra Pradesh AIR 1964 SC 322.
7. I am unable to accept this contention. Section 9 of the Code of Civil Procedure lays down, inter alia, that the Courts shall have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. It is now firmly settled that in construing this provision the fundamental principle of law that a person having a grievance of a civil nature has, independently of any statute, a right to institute a suit in some Court must be remembered and every presumption must be made in favour of the jurisdiction of a civil Court and the exclusion of jurisdiction of a civil Court is not to be readily inferred. The cognizance of a suit of a civil nature must be expressly or impliedly barred and a provision of law ousting the jurisdiction of a civil Court must be strictly construed. These principles have been laid down in many cases including the recent cases of the Supreme Court, namely, Firm Radha Kishan v. Ludhiana Municipality AIR 1963 SC 1547, AIR 1964 SC 322 (supra) and Provincial Govt. Madras v. J.S. Basappa AIR 1964 SC 1873.
8. Now, Section 85 of the Act of 1922 and Section 133 of the Act of 1961 no doubt in express and unambiguous terms lay down that no refund of any tax shall be claimable by any person otherwise than in accordance with the provisions of the Act. This by necessary implication, excludes from the cognizance of a civil Court, a suit for the refund of any lax imposed under the Municipalities Act. The question is whether a tax imposed under the Act includes a tax which the Municipal Council has no authority to impose under any circumstances or for any purpose. A Municipal Committee or Council is clearly a creature of the statute under which it has been constituted. Its powers and functions and their limits are defined by the provisions of the relevant Municipalities Act. Such a body relying on statutory authority for the exercise of its powers and functions must strictly act within the scope of the authority conferred and if the Committee or the Council steps outside the statutory limits, then its action will clearly be a nullity as being beyond the powers conferred. If the Municipal Council has no power whatever to impose a certain tax, then the imposition would be illegal because of its ultra vires nature. But if the Council has the power to impose a tax but commits a mistake or irregularity in imposing it, then it would be a case of the Municipal Council acting within the powers conferred on it by the statute but exercising it irregularly. All the provisions contained in the Act of 1922 or of 1961 with regard to the procedure for imposition, assessment, levy or refund of tax obviously deal with a tax which the Municipal Council has the power to impose under the Act. The fundamental principle being that a Municipal Council, being a body created by a statute on whom certain powers have been conferred by the statute, must keep within the scope of the authority granted to it, it would be altogether unreasonable to regard the provisions with regard to the procedure, assessment, levy or refund of tax contained in the Municipalities Act as covering a tax which the Municipal Council has no authority at all to impose. It follows, therefore, that the remedy provided in Section 85 of the Act of 1922 or Section 133 of the Act of 1961 must be taken as confined to the refund of those taxes which the Municipal Council has power to impose but which it has imposed in an irregular manner in the exercise of its powers. The bar under those provisions does not apply to a refund claim of a tax, the imposition of which was not permitted under the relevant municipal Act.
9. There is a long catena of decisions of the Judicial Commissioner's Court and of the Nagpur High Court in which it has been held that a suit for refund of a tax, which a Municipal Committee had no authority whatsoever under the relevant municipal Act to impose, is maintainable. It is not necessary to refer to all those cases. It would be sufficient to refer to the earliest case of G.I.P. Rly. Co. v. Amraoti Municipality 8 Nag LR 107 and to the two decisions of the Nagpur High Court relied on by the lower Court. In 8 Nag LR 107 (supra) Stanyon A.J.C. held that Section 53 of the Berar Municipal Law, 1886, did not oust the jurisdiction of the civil Courts to try the question whether a particular tax, which purported to have been imposed under the Law, had any legal existence at all; that the grant of a special jurisdiction did not carry with it the power to act beyond and outside that jurisdiction; and that action which was ultra vires the Municipal Committee gave a cause of action for a suit in a civil Court. He further held that a statute creating a special jurisdiction must be very strictly construed, especially when it has the effect of depriving the subject of a common law right.
A similar proposition was laid down in ILR (1948) Nag 766 : (AIR 1949 Nag 270) (supra) In that case the plaintiff's suit for the refund of a portion of octroi tax collected from it by the Jabalpur Municipal Committee by adding the amount of excise duty paid by the assessee under the Central Excises and Salt Act, 1944, to the cost price and transport cost of the articles imported within the municipal limits was dismissed by the trial Court on the ground that it had no jurisdiction to entertain the suit. It was held by the Nagpur High Court that the Municipal Committee acted ultra vires when it added excise duty to the cost price; that the powers of a Municipal Committee to impose an octroi tax under Section 66(1) (e) of the C.P. and Berar Municipalities Act, 1922, were limited; and that so long as the Committee acted within its powers no Court had jurisdiction to interfere with its action but as soon as it transgressed those limits it acted ultra vires and civil Courts had jurisdiction to impugn the validity of its action and grant relief when the assessment of the tax was in clear violation of the provisions of the Act and the Rules thereunder. To the same effect is the decision in ILR (1948) Nag 971 : (AIR 1949 Nag 215) (supra) where a suit for the refund of a tax which the Municipal Committee, Karanja, had no power to impose in view of the provisions of Section 142A of the Government of India Act, 1935, was held to be maintainable. It was held in that case that a suit for refund of a tax illegally imposed by a Municipal Committee is not barred by reason of Sections 48, 83 and 84 of the C.P. and Berar Municipalities Act, 1922, as the Municipal Committee does not act or purport to act under the Act in imposing the illegal tax.
10. The matter is really concluded by the decisions of the Supreme Court in AIR 1963 SC 1547 (supra) and AIR 1964 SC 1873 (supra). In the first case the plaintiff Firm Radha Kishan filed a suit against Ludhiana Municipality for recovery of excess terminal tax collected from it on Sambhar salt alleging that Sambhar salt was common salt on which terminal tax payable by him was at the rate of 3 pies per maund and that the Municipal Committee was not justified in recovering from him tax at the rate of -/10/- per maund payable 'in respect of salt of all kinds other than common salt.' The Punjab High Court held that the civil Court had no jurisdiction to entertain the suit as the Punjab Municipal Act, 1911, provided a remedy by way of appeal against wrong orders of the municipal authorities. The firm then preferred an appeal to the Supreme Court against the decision of the Punjab High Court. The Supreme Court, after considering the provisions of Section 9 of the Code of Civil Procedure and the relevant provisions of the Punjab Municipal Act, including Section 86(2) of that Act which provided that no refund of any tax would be claimed otherwise than in accordance with the provisions of the Act and the rules thereunder upheld the conclusion of the Punjab High Court that the civil Court had no jurisdiction to entertain the suit of the firm. Subba Rao J., who delivered the judgment of the Court, stated the law on the subject thus:
'Under Section 9 of the Code of Civil Procedure the Court shall have jurisdiction to try all suits of civil nature excepting suits of which cognizance is either expressly or impliedly barred. A statute, therefore, expressly or by necessary implication, can bar the jurisdiction of civil Courts in respect of a particular matter. The mere conferment of special jurisdiction on a tribunal in respect of the said matter does not in itself exclude the jurisdiction of civil Courts. The statute may specifically provide for ousting the jurisdiction of civil Courts; even if there was no such specific exclusion, if it creates a liability not existing before and gives a special and particular remedy for the aggrieved party, the remedy provided by it must be followed. The same principle would apply if the statute had provided for the particular forum in which the remedy could be had. Even in such cases, the Civil Court's jurisdiction is not completely ousted A suit in a civil Court will always lie to question the order of k tribunal created by a statute, even if its order is, expressly or by necessary implication, made final, if the said tribunal abuses its power or does not act under the Act but in violation of its provisions.'
It was urged before the Supreme Court on behalf of the firm Radha Kishan that the levy of terminal tax at the rate of -/10/- per maund of Sambhar salt was not made in accordance with the Act but in derogation of the provisions thereof. Rejecting this contention the Supreme Court said:
'The Committee has, therefore, ample power under the Act and the Notification issued by the State Government to impose the said tax. The only dispute was as regards the rate of tax payable in respect of the salt brought by the appellant into the limits of the Municipal Committee. The rate depended upon the character of the salt. The ascertainment of the said fact is necessary step for fixing the rate and it is not possible to say that in ascertaining the said fact the authorities concerned travelled outside the provisions of the Act. The learned council contends that if a municipal committee levies terminal tax on an article not liable to tax under the Act, a suit would lie and, therefore, the same legal position should apply even to a case where the municipal committee levies the tax in respect of an article under an entry not applicable to it. We do not see any analogy between these two illustrations, in the former, the municipal committee does not act under the Act, but in the latter it only commits a mistake or an error in fixing the rate of tax payable in respect of a particular commodity; one is outside the Act and the other is under the Act; one raises the question of jurisdiction and the other raises an objection to a matter of detail.'
The decision of the Supreme Court in the case of Firm Radha Kishan, AIR 1963 SC 1547 which is on all fours with the present case, clearly lays down that a Municipality, in imposing a tax which it has no authority or power to impose under the relevant statute, acts outside the Act and not under the Act; and that a suit for the refund of an amount of such an ultra vires tax is not excluded from the cognizance of a civil Court. To the same effect is the decision in AIR 1964 SC 1873 (supra). While considering the effect of Section 18-A of the Madras General Sales Tax Act, 1939, barring a suit in any Court for setting aside or modifying any assessment made under the Sales Tax Act, the Supreme Court held that under that provision the jurisdiction of the Civil Court would not be taken away where the action of the authorities is wholly outside the law and is not a mere error in the exercise of jurisdiction. On these authorities there can be no doubt that the suits filed by the non-applicants before me for refund of the tax amount, which the Balaghat Municipal Council had no power at all under the C.P. and Berar Municipalities Act, 1922, to impose, were clearly maintainable.
11. In the face of the decisions of the Supreme Court just referred to above, the argument of Shri Sen based on AIR 1947 PC 78 : 74 Ind App 50 (supra) that the imposition of a tax, even if ultra vires the powers of a Municipality under a municipal Act, would be one under the Act so as to attract the prohibition contained in Section 85 of the Act of 1922 or Section 133 of the Act of 1961 cannot be accepted. It is true that in AIR 1947 PC 78 : 74 Ind App 50 (supra) the Privy Council held with reference to Section 67 of the Income-tax Act, 1922, that an assessment made under the machinery provided by the Act, if based on a provision subsequently held to be ultra vires, is not a nullity but a mistake of law made in the course of its exercise; and that, therefore, the assessment was one 'made under the Act,' and a suit for declaration that any of the provisions of the Income-tax was ultra vires and for repayment of tax on that basis was barred by Section 67. But, as pointed out by a Division Bench of this Court in Bhailal Bhai v. State of M.P. 1960 M.P.L.J 601 the effect of the Privy Council decision in Raliegh Investment Co's case AIR 1947 PC 78 : 74 Ind App 50 has been considerably whittled down by the decision of the Supreme Court in The State of Tripura v. Province of East Bengal 1951 SCR 1 : AIR 1951 SC 23. The observations which the Supreme Court made in AIR 1964 SC 322 (supra) on the decision of the Privy Council in Raliegh Investment Co.'s case AIR 1947 PC 78 : 74 Ind App 50 are noteworthy. They are:
'It is true that the judgment shows that the Privy Council took the view that even the constitutional validity of the taxing provision can be challenged by adopting the procedure prescribed by the Income-tax Act; and this assumption presumably proceeded on the basis that if an assessee wants to challenge the vires of the taxing provision on which an assessment is purported to be made against him, it would be open to him to raise that point before the taxing authority and take it for a decision before the High Court under Section 66(1) of the Act. It is not necessary for us to consider whether this assumption is well founded or not.'
The above observations plainly show that the Supreme Court is not inclined to accept as correct the view expressed by the Privy Council in the aforesaid case that an assessment ultra vires the Income-tax Act would be an assessment 'made under the Act'. The decisions of the Supreme Court in AIR 1963 SC 1547 (supra) and AIR 1964 SC 1873 (supra) where it has been held that the imposition of a tax which is ultra vires as being wholly outside the law is not an imposition under the relevant taxing provision only reinforce this conclusion. The observations in AIR 1962 SC 1320 (supra) on which learned counsel for the petitioner relied only say that the granting of refund of tax improperly or illegally collected and the restriction on the exercise of that right are both ancillary or subsidiary matters relating to the primary head of tax. These observations do not appear to me to have any bearing on the question raised in these petitions.
12. Turning to the other contention of the petitioner-Council that the non-applicants' suits were barred by time under Section 48 of the Act of 1922 and Section 319 of the Act of 1961, that must also be rejected. The wording of both these sections is similar and is as follows:
'48(1) No suit shall be instituted against any committee or any member, officer or servant thereof or any person acting under the direction of any such committee, member, officer or servant for anything done or purporting to be done under this Act, until the expiration of two months next after notice in writing, stating the cause of action, the name and place of abode of the intending plaintiff and the relief which he claims, has been, in the case of a committee, delivered or left at its office, and, in the case of any such member, officer, servant or person as aforesaid, delivered to him or left at his office or usual place of abode; and the plaint shall contain a statement that such notice has been so delivered or left.
(2) Every such suit shall be dismissed unless it is instituted within six months from the date of the accrual of the alleged cause of action.
(3) Nothing in this section shall be deemed to apply to any suit instituted under Section 54 of the Specific Relief Act, 1877.'
As has been held in ILR (1948) Nag 971 :(AIR 1949 Nag 215) (supra), Section 48 does not apply to a case where the action of the Municipal Committee is prohibited by law, wholly beyond its jurisdiction and ultra vires the Municipal Act. A similar contention raised in that case was disposed of by the following observations:
'Then it was stated that the claims are barred by Section 48 of the Municipalities Act. There again the same considerations apply. Section 48 comes into play only when the act is done or is purported to be done under the Municipalities Act. As we have said, that is not the case here because its action is something which is prohibited by law, and so wholly beyond its jurisdiction, and therefore Section 48 does not apply. The distinction between a case where Section 48 applies and a case where it does not is clearly shown in Amraoti Town Municipal Committee v. Shaikh Bhikan ILR (1939) Nag 216 at pp. 219 and 220 : (AIR 1938 Nag 455 at p. 457).'
13. To support his contention that the imposition by a Municipal Committee of a tax wholly beyond its jurisdiction and power and ultra vires the Municipal Act was an act 'purporting to be done under the Act' so as to attract Section 48 of the Act of 1922 and Section 319 of the Act of 1961, Shri Sen, learned counsel for the petitioner Council, prayed in aid the observations of the Supreme Court in AIR 1961 SC 365 (supra) on the meaning of the word 'purport'. In that case the Supreme Court said:
'The word 'purport' has many shades of meaning. It means fictitious, what appears on the face of the instrument, the apparent and not the legal import and therefore any act which purports to be done in exercise of a power is to be deemed to be done within that power notwithstanding that the power is not exercisable; Dicker v. Angerstein (1876) 3 Ch. D. 600 at p. 603. Purporting is therefore indicative of what appears on the face of it or is apparent even though in law it may not be so.'
These observations do not advance the case of the petitioner any further. They were made while considering the effect of Section 8 (2-A) of the Administration of Evacuee Property Act, 1950, by which all property which under certain repealed Acts was purported to have vested as evacuee property in any person exercising the powers of Custodian in any State was declared to have validly vested in that person notwithstanding any defect in or the invalidity of, such law or any judgment, decree, or order of any Court. In the context of the provisions of the Administration of Evacuee Property Act, 1950, the Supreme Court held that in the provision that was before them for consideration, the word 'purport' meant the meaning given to it by them. The very first sentence in the passage reproduced above, namely, 'The word 'purport' has many shades of meaning' itself shows that for purposes of some statutes the word 'purport' can have a different shade of meaning than that given to it by the Supreme Court in Azimunnissa's Case AIR 1961 SC 365 (supra); and that the expression 'purporting to be done under the Act' will not include an act which is wholly outside the provisions of the Act and thus ultra vires. I am fortified in this view by the decision of the Supreme Court in AIR 1964 SC 1873 (supra) on the question of the applicability of Section 18 of the Madras General Sales Tax Act, 1939. That Section is as follows:
'No suit shall be instituted against the Government and no suit, prosecution or other proceeding shall be instituted against any Officer or servant of the State Government in respect of any act done or purporting to be done under this Act, unless the suit, prosecution or other proceeding is instituted within six months from the date of the act complained of.'
In regard to this provision the Supreme Court made the following observations:
'This section applies to suits for damages and compensation in respect of acts under the Act. It is worded in familiar language by which authorities, including Government, are protected and indemnified in respect of bona fide acts done or purporting to be done under powers conferred by the statute. The period of limitation prescribed in the section does not apply to the kind of suits which were filed by Basappa.'
It must be noted that in his suit Basappa contended that the whole assessment of sales-tax made against him was invalid as it included certain items of taxes which were not at all taxable by the State and were thus illegal. Thus, by the above observations the Supreme Court held that Section 18 of the Madras General Sales Tax Act was not applicable to a suit for refund of a tax, the imposition of which was wholly ultra vires the powers of the Madras State. In effect, Section 48 of the Act of 1922 and Section 319 of the Act of 1961 are not different from Section 18 of the Madras General Sales Tax Act, 1939. In view of the decision of the Supreme Court in Basappa's Case AIR 1964 SC 1873 (supra) the petitioner's contention that the non-applicants' suits were barred by time under Section 48 of the Act of 1922 and Section 319 of the Act of 1961 must be rejected.
14. For the foregoing reasons, my conclusion is that the learned judge of the Court of Small Causes, Balaghat, was right in decreeing the plaintiff-non-applicant's claim against the Municipal Council, Balaghat. The result is that all these petitions are dismissed with costs. Counsel's fee in each case is fixed at Rs. 50/-.