Das Gupta, J.
1. This appeal is by the defendant, the Municipal Corporation for the Cityof Poona, in a suit for recovery of money. The Poona Municipality was formerlya Municipality under the Bombay District Municipal Act of 1901 (Act 3 of 1901).In 1925 it became a Municipal Borough under the Bombay Municipal Boroughs Actof 1925 (Act XVIII of 1925). Later, under the Bombay Provincial MunicipalCorporation Act, 1949, Municipal Authority for the City of Poona became aCorporation known by the name of Municipal Corporation for the City of Poona.
2. It appears that from the time when the City was a Municipality under Act3 of 1901, an octroi duty was being levied on goods imported within theMunicipal limits of the City. When such goods were exported out of the citymunicipal limits within specified periods, refund used to be given in respectof the duty so recovered.
3. The respondent has for many years been carrying on business of securingrefund of octroi duty on behalf of persons who had paid the duty and wereentitled to refund. In respect of the period from the 15th February, 1950 tothe 14th September, 1950, the respondent made a claim on behalf of hisprincipals, for the refund of Rs. 73,650/- to which, according to him, theywere entitled. The Municipality however paid to him only 90 per cent of thisamount. The remaining 10 per cent was deducted in accordance with Rule 18(3) ofthe Octroi Rules which had been framed by the Municipal Authorities.
4. The respondent then represented to the Corporation that with effect fromthe 15th February, 1950, the date from which the Corporation came intoexistence under the Provincial Municipal Corporation Act, 1949, this deductionof 10 per cent had become invalid in law and claimed that this amount should bepaid to him. The Corporation however refused to concede this claim. Therespondent then brought this suit for recovery of Rs. 7,364/15/- (being 10 percent of Rs. 73,650/- the amount alleged to have been illegally withheld) withinterest.
5. The main defence raised by the Corporation to the plaintiff's claim wasthat the deduction of 10 per cent was legally valid. It was further urged that,in any case, the plaintiff who was not the person who paid the amount, was notentitled to bring the suit. Lastly, it was contended that the suit was barredby limitation.
6. The trial Court held that the plaintiff was entitled to bring the suitand also that it was not barred by limitation. It held however that thededuction of 10 per cent from what was paid as tax was valid. Accordingly, itdismissed the suit.
7. On appeal by the plaintiff, the District Court, Poona, held, disagreeingwith the trial Court, that the deduction of 10 per cent of what had beenrealised was not valid in law. It was however of opinion that the plaintiff wasnot entitled to bring such a suit. It was also of opinion that the suit wasbarred by limitation. In this view, it dismissed the appeal.
8. The plaintiff then appealed to the High Court of Judicature at Bombay.The High Court has found in favour of the plaintiff on all the three pointsraised. It held that the deduction of 10 per cent was invalid in law, that theplaintiff was entitled to sue, and that the suit was not barred by limitation.Accordingly, the High Court allowed the appeal, and made a decree in favour ofthe plaintiff for Rs. 7,364/15/- with interest thereon at 4 per cent from thedate of the suit and interest at the same rate from the date of the judgment,with costs throughout.
9. The appellant Corporation challenges the correctness of the High Court'sdecision on all the three points.
10. The principal question for decision in this appeal is whether thededuction of 10 per cent as provided for in Rule 18(3) is invalid at least fromthe 15th February, 1950. The Rule runs thus :-
A deduction of ten per cent shall in all cases bemade before refunding the amount of octroi duty on exportation of goods eitherin transit as per rule 13 or otherwise under rule 11(2).'
11. It is necessary to mention here that the legality of such a deductionprior to February 15, 1950 is not in controversy before us. We shall proceed onthe basis that this provision in Rule 18(3) was valid in law prior to the 15thFebruary, 1950. The question is whether even though valid then, it has ceasedto be valid in law. To find the correct answer to this question it is necessaryto be clear first as to the legal basis on which this levy by way of deductionwas being made prior to 15th February, 1950.
12. It appears from Ex. D 72, the copy of the Government resolution datedthe 6th March, 1922, that the Poona Municipality started this practice oflevying this 10 per cent deduction from February 1921. The question of itslegality appears to have been raised quite early. The Legal Remembrancer to theGovernment of Bombay expressed his view on this question in these words :-
The special powers conferred in the last sentenceof clause (f) of section 48(1) of the Bombay District Municipal Act seems tonegative the power of the Municipality (of Shirpur) to make any deduction fromthe refunds by means of rules regulating the system, for making refundsreferred to in the earlier part of the clause. The charge on refunds appears,however, to be a kind of tax which may be imposed under s. 59(b)(xi) of theAct.'
13. On this, the Councillors of the Municipality passed a resolution that a10 per cent tax should be levied on all octroi refund, under section 59(b)(xi).This proposal was submitted to the Government of Bombay for sanction and wasduly approved. It may be mentioned here that s. 59(b)(xi) of Act 3 of 1901which deals with the question of a Municipality's powers to impose taxes setsout in the cls. (i) to (x) various taxes which the Municipalities can imposeand then mentions in clause (xi) the words 'any other tax'. TheGovernment appears to have accepted the view of the Legal Remembrancer that thelevy by way of deduction of 10 per cent from the amount to be refunded shouldbe authorised as a tax on octroi refund, this being 'any other tax'within the meaning of s. 59(b)(xi). It is no longer open to dispute that afterGovernment's sanction was received, the Municipality could under the old Actlegally levy such tax. It is also not disputed that the deductions thatcontinued to be made under Rule 18(3) were all along made under this authority,as a tax levied under s. 59(b)(xi) of the Bombay District Municipal Act, 1901.The levy of the tax continued even after Act 3 of 1901 ceased to be applicableto Poona and it became a Municipal Borough under the Bombay Municipal BoroughsAct, 1925. The validity of such continuation does not also appear to have beenchallenged. The Bombay Provincial Municipal Corporation Act 1949 was applied toPoona on the 15th February, 1950. From that date therefore the powers oftaxation of the municipality became governed by s. 127 of the Act. This sectionfirst authorises a Corporation under the Act to impose, (a) property taxes; (b)a tax on vehicles, boats and animals. It then mentions in the secondsub-section certain other taxes which the Corporation may impose. In cls. (a)to (f) - (a) is octroi, (b) a profession tax, (c) a tax on dogs, (d) a theatretax, (e) a toll on animals and vehicles and (f) mentions 'any other taxwhich the State Legislature has power under the Constitution to impose in theState'. Sub-section (4) provides :-
Nothing in this section shall authorise theimposition of any tax which the State Legislature has no power to impose in theState under the Constitution.'
14. A tax on octroi refund is not thus one of the taxes which the BombayMunicipal Corporation could impose. It is not one of the specified taxes. Noris it a tax which the State Legislature has power under the Constitution toimpose in the State. Apart from this absence of power to impose such a tax,which is clear from the earlier parts of s. 127, we have the categoricalprohibition in sub-section 4 against the imposition of any such tax by theCorporation.
15. Mr. Patwardhan next tried to persuade us that even if this levy couldnot be made under the new Act as a tax, it could be made as a fee. In supportof his argument he drew our attention to s. 147 and s. 466 of the new Act. Thefirst sub-section of section 466 provides that the Commissioner of the Corporationmay make standing orders consistent with the provisions of the Act and therules and bye-laws in respect of the matters specified. One of the mattersspecified is 'determining the supervision under which, the routes by whichand the time within which the goods intended for immediate exportation shall beconveyed out of the City and the fees payable by persons so conveying thegoods.' [s. 466(1) A(f)]. Section 147 dealing with a controversy, that mayarise, whether the importation of some goods into the City has been for thepurpose of consumption, use or sale therein, says : 'Until the contrary isproved any goods imported into the City shall be presumed to have been importedfor the purpose of consumption, use or sale therein, unless such goods areconveyed from the place of import to the place of export by such routes, withinsuch time, under such supervision and on payment of such fees therefor as shallbe determined by the standing orders.'
16. It is obvious that reference to fees in this section is to such fees asmay be prescribed by standing orders under the provisions of s. 466(1) A(f). Itis unnecessary for us to decide for the purpose of the present appeal, whetherthe provision of s. 466 for determination of fees payable by persons conveyinggoods imported into the City is valid in law or not. Assuming, withoutdeciding, that such a levy can be validly made by way of fees under s. 466,what we find is that in fact there has been no standing order prescribing anyfees. It may be mentioned in this connection that sub-section 2 of s. 466 laysdown that no order made by the Commissioner under clause A of sub-section (1)shall be valid unless it is approved by the Standing Committee and confirmed bythe State Government. It is not the case of the appellant Corporation that anyStanding Order was made at all under s. 466 prescribing any fees. It is notpossible therefore to justify the deductions that were made in the present caseas a levy of fee.
17. The appellant relied next on clause 5(a) of Appendix IV to the Act readwith s. 493. Section 493 provides that provisions of Appendix IV shall apply toconstitution of the Corporation and other matters specified therein. AppendixIV is headed 'Transitory Provisions' and is plainly intended to deal withthe position that arose as a result of the repeal of the old Act. (s. 490). Therelevant portion of clause 5(a) is in these words :-
Save as expressly providedby the provisions of this Appendix or by a notification issued under paragraph22 or order made under paragraph 23,
(a) any appointment,notification, notice, tax, order, scheme, licence, permission, rule, bye-law,or form made, issued, imposed or granted under the Bombay District MunicipalAct, 1901 or the Bombay Municipal Boroughs Act, 1925 or any other law in forcein any local area constituted to be a City immediately before the appointed dayshall, in so far as it is not inconsistent with the provisions of this Act,continue in force until it is superseded by any appointment, notification,notice, tax, order, scheme, licence, permission, rule, bye-law, or form made,issued, imposed or granted under this Act or any other law as aforesaid as thecase may be;'
18. Mr. Patwardhan readily conceded that the 10 per cent deduction, as a taxon octroi refund could not get the protection of clause 5(a) for the simplereason that such taxation is on the face of it inconsistent with s. 127(4) ofthe Act. He asked us, however, to regard this levy as a fee, and on that basis,argued that this should continue in force under clause (a) of s. 5 of AppendixIV since the levy of such a fee is consistent with the provisions of s. 466 ofthe Act. If in fact a fee was being realised under the old Act, it may be thatlevy of such fees could continue in force until superseded by any order underthe new Act as coming under an order issued 'under the District MunicipalAct, 1901, or the Bombay Municipal Boroughs Act, 1925'. In fact, however,this was not levied as a fee, but was levied as a tax. The tax did not become afee merely because the new Act (Act LIX of 1949) prohibited the imposition ofsuch a tax. We are clearly of opinion therefor that clause 5(a) of Appendix IVfurnishes no justification for the levy of the ten per cent deduction, afterthe 15th February, 1950 when the Act LIX of 1949 with its categoricalprohibition in s. 127(4) against the imposition by the Corporation of a taxwhich the State legislature had no power to impose under the Constitutionbecame applicable. The defence that the deduction of 10 per cent of the amountcollected as octroi was legally valid has thus been rightly rejected by theHigh Court.
19. We also agree with the High Court's conclusion that the plaintiff wasentitled to bring the present suit. The Poona City Municipality's Octroi Rulesand Bye-laws under which the claim for refund can be made define 'aclaimant' as a person 'who produces the duly receipted import billand the corresponding export certificates.' [Rule 2, clause (g)]. It isnot disputed that for the several cases in respect of which this deduction often per cent had been made by the Corporation the plaintiff was the person whoproduced 'the duly receipted import bill and the corresponding exportcertificate.' Indeed, it is on that basis that 90 per cent of the amountpaid by different exporters was refunded by the Corporation to the claimant. Itis difficult to understand how if the plaintiff was entitled to claim andobtain refund in respect of 90 per cent of the amount paid, he was not entitledto make the claim with respect to the remaining 10 per cent.
20. It may be pointed out that as the receipted import bill and thecorresponding export certificates in respect of the goods in question havealready been made over by the plaintiff to the defendant Corporation, it willnot be possible for the merchants who actually imported the goods and thenexported them, to make any fresh claim. For, no claim would be accepted withoutthe receipted import bill and the corresponding export certificates. Mr.Patwardhan faintly argued that the definition of a claimant in the Rules isonly in respect of 90 per cent of the octroi refund. There is obviously nosubstance in this argument. Rule 11 deals with the procedure of claims torefund and requires that claimant should produce a duly receipted import billand an export certificate relating to such goods. [Rule 11(2)(iv)]. Theseprovisions are entirely independent of Rule 18(3) which lays down that adeduction of ten per cent shall in all cases be made before refunding the amountof octroi duty in certain circumstances. It is, in our opinion, clear that theplaintiff having made the claim in accordance with the rules was the personentitled to receive what amount was legally refundable. As we have found thatthe deduction of ten per cent could not legally be made, in other words, theentire amount paid was refundable, it follows that the plaintiff was the personentitled to obtain the refund and so he was also entitled to bring the suit.
21. There remains for consideration the appellant's plea of limitation. Forthis plea, the appellant relies on s. 487 of Act LIX of 1949. The material partof the section runs thus :-
(1) No suit shall be institutedagainst the Corporation or against the Commissioner, or the Transport Manager,or against any municipal officer or servant in respect of any act done orpurported to be done in pursuance or execution or intended execution of thisAct or in respect of any alleged neglect or default in the execution of thisAct :-
(a) until the expiration of onemonth next after notice in writing has been, in the case of the Corporation,left at the chief municipal office and, in the case of the Commissioner or ofthe Transport Manager or of a municipal officer or servant delivered to him orleft at his office or place of abode, stating with reasonable particularity thecause of action and the name and place of abode of the intending plaintiff andof his attorney, advocate, pleader or agent, if any, for the purpose of suchsuit, or
(b) unless it is commencedwithin six months next after the accrual of the cause of action.'
22. The benefit of this section would be available to the Corporation onlyif it was held that this deduction of ten per cent was 'an act done orpurported to be done in pursuance or execution or intended execution of thisAct.' We have already held that this levy was not in pursuance orexecution of the Act. It is equally clear that in view of the provisions of s.127(4) (to which we have already referred) the levy could not be said to be'purported to be done in pursuance or execution or intended execution ofthe Act.' For, what is plainly prohibited by the Act cannot be claimed tobe purported to be done in pursuance or intended execution of the Act. Ourconclusion is that the High Court has rightly held that the suit was not barredby limitation.
23. All the points raised in the appeal fail. The appeal is accordinglydismissed.
24. Appeal dismissed.