B.J. Divan, J.
1. The second appeal raises an interesting question regarding the imposition of Vehicle Tax by the Porbandar City Municipality, respondent in the second appeal, and the main contention is that the tax was not imposed in accordance with the procedure laid down by the relevant section of the Bombay District Municipal Act, 1901, as adapted and applied to State of Saurashtra. In the Special Civil Application, the same tax is challenged and besides this ground which has been canvassed in the Second Appeal, the petitioner has raised several other contentions. But when the matter reached for hearing before us, Mr. Vyas, learned advocate for the petitioner, stated that apart from the ground regarding non-compliance with the procedure laid down in the relevant section of the Act, he was not relying upon any other challenge to the Vehicle Tax imposed by the respondent Municipality and, therefore, it will be convenient to dispose of both the second Appeal and the Special Civil Application by this common judgment.
2. For the purposes of this judgment, the relevant sections and the necessary facts may be stated at this stage. The Bombay District Municipal Act, 1901 was applied to the State of Saurashtra in 1949 (hereinafter referred to as the Act). Under Section 59 of the Act, subject to any general or special orders which the State Government may make in this behalf, any municipality, after observing the preliminary procedure required by Section 60 and with the sanction of the State Government in the case of City Municipalities and in other cases of the Director of Local Authorities and subject to such modifications or conditions as under Section 61 the State Government or the Director of the Local Authorities respectively in according such sanction, deems fit, may impose, for the purposes of this Act, any of the following taxes, that is to say, (i) xx xx xx (ii) a tax on all or any vehicles xx xx xx kept for use within the said District, whether they are actually kept within or outside the said District. Section 60, which is the material section, provides as follows:
Every municipality before imposing a tax shall observe the following preliminary procedure:
(a) They shall, by resolution passed at a General Meeting:
(i) select for the purpose one or other of the taxes specified in Section 59.
(ii) prepare rules for the purposes of Clause (i) of Section 45 prescribing the tax selected.' and shall by such resolution and in such rules specify:
(iii) the class or classes of persons or of property, or of both, which the Municipality desire to make liable, and any exemptions which they desire to make;
(iv) the amount for which, or the rate at which it is desired to make such classes liable;
(b) When such resolution has been passed the Municipality shall publish the form of rules so prepared with a notice in the form of Schedule A prefixed thereto.
(c) Any inhabitant of the municipal district objecting to the imposition of the said tax, or to the amount or rate proposed, or to the class of persons or property to be made liable thereto, or to any exemptions proposed, may within one month from the publication of the said notice send his objection in writing to the Municipality and the Municipality shall take all such objections into consideration or shall authorize a committee to consider the same and report thereon and unless they decide to abandon the proposed tax in accordance with such objections shall submit the same with their opinion thereon (and any modifications proposed in accordance therewith) together with the notice and rules aforesaid in the case of a City Municipality, to the (State) Government and in the case of any other Municipality, to the Commissioner.
3. A resolution was passed by the General Committee of the Porbandar Municipality on July 9, 1951, selecting the Vehicle Tax. After that selection was made, certain procedure was bound to be followed and ultimately new resolution was passed by the Porbandar Municipality on March 6, 1954. The copies of the rules which had been earlier approved were amended and a notice was published on April 1, 1954. A copy of that notice is at Ex. 46 of the record of the case. Ex. 46 mentions 'Residents within the limits of Porbandar City Municipality are hereby given notice that the General Board of the Porbandar City Municipality has passed resolution in its meeting of March 6, 1954, being resolution No. 2 approving the rate of Vehicle Tax and the rules in connection with that tax and the Municipality intends to impose the Vehicle Tax after making amendment in the present Vehicle Tax. Rules. Copies of these rules are appended hereto and have also been placed at the following places for public information:
(1) Office of the Porbander City Municipality.
(2) Bharatoday Mandal Library;
(3) Desai Nanji Gokhalji & Shah Z. M. Public Library Town Hall.
(4) Shri Lohana Library, Bandar Road,
(5) V. J. Madrasa Library, Mahatraa Gandhi Road.
If any of the residents residing within the limits of Porbandar City Municipality have any objection against the proposed tax, he should send his objections in writing to the Municipality within one month from the date of this notice.' Copies of this notice dated April 1, 1954, were placed at a public place, Manek Chawk. It is the case of the plaintiff that no objections were received from any of the residents residing within the limits of Porbandar City Municipality and thereafter a subsequent resolution was passed on September 2,4, 1954 resolving to send the amended rules to the Government for sanction. Those rules were so forwarded and ultimately Government sanctioned those rules by the resolution dated June 8, 1955. After, the rules were sanctioned by the Government, the Municipality resolved on August 18, 1955, that the rules should be brought into force with effect from October 1, 1955. Subsequently the date of coming into force of the rules was changed to 1st January, 1956. Both in the Second Appeal and in the Special Civil Application, it is the imposition of the Vehicle Tax in this manner which has been challenged. The main question that is to be borne in mind is that notice Ex. 46 which was undoubtedly in form laid down in Schedule 'A' to Bombay District Municipal Act, 1901, stated that a copy of the rules was appended to the notice. In fact, the rules were not so appended, and that is the basic fact which has to be borne in mind while deciding this matter. A similar question on a similar section of the U.P. Municipalities Act (2 of 1916) came up for consideration before the Supreme Court in Raza Buland Sugar Co. Ltd. Rampur, v. The Municipal Board, Rampur : 1SCR970 . The provisions of Section 131(3) of the U.P. Municipalities Act are very similar to the provisions of Section 60(b) of the Act before us with a slight difference which will immediately be pointed out. As pointed by Wanchoo, J. who delivered the judgment of the majority of Learned Judges in that case, Section 131 of the U.P. Act provides that when a Board desires to impose a tax, it shall by special resolution frame proposals specifying the tax, persons or class of persons to be made liable, and the description of property or other taxable thing or circumstances in respect of which they are to be made liable, the amount or rate leviable from each such person or class of persons, and any other matter required by the Rules framed by the State Government. The Board has also to prepare a draft of the rules which it desires the State Government to make in respect of the tax, namely, for assessment, collection, exemption and other matters relating to tax. Section 131(3) of the U.P. Municipalities Act provides that the Board shall, thereupon publish in the manner prescribed in Section 94 the proposals framed under Sub-section (1) and the draft rules framed under Sub-section (2) along with a notice in the form set forth in Schedule III. Section 94(3) which provides for the manner of publication in the U.P. Municipalities Act, provides that every resolution passed by a Board at a meeting shall, as soon thereafter as may be, be published in a local paper published in Hindi and where there is no such local paper, in such manner as the State Government may, by general or special order, direct. Analysing the provisions of Section 131(3) in paragraph 9 at page 900, Wanchoo, J. observed. 'The provisions with which we are concerned, namely, Section 131(3), can be divided into two parts. The first part lays down that the Board shall publish proposals and draft rules along with a notice inviting objections to the proposals or the draft rules so published within a fortnight from the publication of the notice (sec. Schedule III). The second part provides for the manner of publication and that manner is according to Section 94(3). We shall first deal with what we have called the first part of Section 131(3). This provisions deals with taxation. The object of providing for publication of proposals and draft rules is to invite objections from the inhabitants of the municipality, who have to pay the tax. The purpose of such publication obviously is to further the democratic process and to provide a reasonable opportunity of being heard to those who are likely to be affected by the tax before imposing it on them. It is true that finally it is the Board itself which settles the proposals with respect to taxation and submits them to Government or the prescribed authority, as the case may be, for approval. Even so we have no doubt that the object behind this publication is to find out the reaction of tax-payers generally to the taxation proposals, and it may very well be in a particular case that the Board may drop the proposals altogether and may not proceed further with them, if the reaction of the tax-payers in general is of disapprobation. Further the purpose served by the publication of the proposals being to invite objections, in particular from the tax-payers, to the tax proposed to be levied on them, the Legislature in its wisdom thought that compliance with this part of Section 131(3) would essentially carry out that purpose. In the circumstances if we are to hold that this part of Section 131(3) was merely directory, the whole purpose of the very elaborate procedure provided in Section 131 to 135 for the imposition of tax would become meaningless, for the main basis of that procedure is the consideration of objections of tax-payers to the proposals of the Board. If such publication is merely directory, the Board can proceed to levy the tax without complying with them and that would make the entire elaborate procedure provided in the Act before a tax is imposed, nugatory. We are therefore of opinion that this part of Section 131(3) is mandatory and it is necessary to comply with it strictly before any tax can be imposed. We shall consider the interpretation of Section 135(3) later; but we have no doubt that in the present case, inspite of Section 135(3), the Legislature intended that there must be publication as provided in what we have called the first part of Section 131(3). We therefore hold that this part of Section 131(3) is mandatory considering its language, the purpose for which it has been enacted, the setting in which it appears and the intention of the Legislature which obviously is that no tax would be imposed without hearing tax-payers. Lastly we see no serious general inconvenience or injustice to any one if this part of the provision is held to be mandatory, of the other hand it will be unjust to tax-payers if this part of the provision is held to be directory, inasmuch as the disregard of it would deprive them of the opportunity to make objections to the proposals and the draft rules. We therefore held that this part of Section 131(3) is mandatory.' The majority of the learned Judges then proceeded to consider the second part of sec 131, namely, that part which provides for the manner of publication, that manner being as laid in Section 131(3) of U.P. Municipalities Act and it was held by the majority of the learned Judges that the manner of publication was directory though the publication itself was mandatory, In paragraph 14 at page 902, Wanchoo, J. considered the prevision of sec; 133(3). That section provides for conclusive nature of the final notification published by the State Government notifying the imposition of tax after all the formalities have been gone through and is in these tariffs 'a notification of the imposition of a tax under Sub-section (2) shall be conclusive proof that the tax has been imposed in accordance With the provisions of this Act.' In paragraph 14, Wanchoo, J. has clearly pointed out that the majority of the learned Judges did not think it necessary in that case to decide what would happen if there is no compliance at all with the Various procedural provisions including Section 131(3) by a Board before imposing a tax and the evidence consisted only of a notification Under Section 135(2). Thus the majority of the learned Judges have decided the matter purely on interpretation of Section 131(3), dividing it into the mandatory part and the directory part and clearly indicating as to which part and to what extent they considered the provisions of Section 131 mandatory and to what extent they considered the remaining provisions to be directory.
4. In The Municipal Board, Hapur v. Raghuvendra Kripal and Ors. : 1SCR650 , question again came up before the Supreme Court regarding the provisions of Section 131(3), Section 135(3) and Section 94(3) of the U.P. Municipalities Act, 1916. Judgment of Hidayatullah J. (as he than was) who spoke for the majority in Hapur Municipality's case in paragraph 5, clearly shows that in that particular case there was a special resolution passed by the Hapur Municipality imposing a particular tax as required by Section 131 of the Act but the rules which ought to accompany the resolution were not published along with the copy of the resolution itself. In that case, Hidayatullah J. at page 696 in paragraph 8 dealt with the conclusive nature of Section 135(3) of the U.P. Municipalities Act. He posed the question in this manner. 'The question arises : Is this rule of conclusive evidence such as to shut out all enquiry by Court? We have no hesitation in answering the question in the negative. There are certain matters which, of course, cannot be established conclusively by a notification under Section 135(3). For example, no notification can be issued unless there is a special resolution. The special resolution is the sine que non of the notification. The State Government cannot impose a tax all by itself by notifying the imposition of the tax, without a resolution by the Board. Again, the notification cannot authorise the imposition of a tax not included, in Section 128 of the Municipalities Act. Neither a Municipal Board nor the State Government can exercise such a power. A tax can only be said to be imposed in accordance with the provisions of the Municipalities Act, if it is contemplated by the Act. There is a difference between the tax and the imposition of the tax. The former is the levy itself and the latter the method by which the levy is imposed and collected. What the Sub-section (3) of Section 135 does is to put beyond question the procedure by which the tax is imposed, that is to say, the various steps taken to impose it.' At the end of paragraph 11 of his judgment at page 297, Hidayatullah J. observed, 'The defect in the imposition of the tax here being of the same character as in the two cases of this Court above cited, the imposition would have the protection of Section 135(3) and the tax must be deemed to be imposed according to the procedure laid down in the Act.' We are emphasising this aspect of the decision of the Supreme Court because one of the main grounds for objecting to the imposition of the tax by the Hapur Municipality was that the rules framed for the imposition of the tax did not accompany the resolution which was affixed on the notice board at the office of the Hapur Municipality in purported compliance with the requirements for publication. The majority have taken in view in Hapur Municipality's case that Sub-section (3) of Section 135 puts beyond question procedure by which tax is imposed i.e. various steps taken to impose it. It was natural that though one of the steps for imposition of the tax was held to be mandatory in Raza Buland Sugar Co. Lid's case (supra), the protection of Section 135(3) would be available to that particular tax also because the publication of the approved rules along with the copy of the resolution as required by Section 131(1) in one of the various steps required to be taken to impose the tax. Under these circumstances it is obvious that this objection which is referred to as objection (b) in paragraph 1 of the judgment of Hidayatullah, J. at page 694 was not required to be dealt with in the judgment of the majority of the learned Judges of the Supreme Court and has not, in fact, been dealt with in that judgment. Mr. J.R. Nanavati, learned Counsel for the Porbandar Municipality, contended before us that inasmuch as the Supreme Court allowed the appeal of Hapur Municipality and set aside the judgment of the Allahabad High Court, though the Allahabad High Court had based its judgment on those rules not accompanying the resolution which was affixed to the notice board, it must be deemed that objection was also decided upon and overruled by the Supreme Court. We are unable to accept this contention because the judgment of the Supreme Court in Hapur Municipality's case clearly shows that the Supreme Court based its conclusions on Section 135(3) of the U.P. Municipalities Act and it was not necessary for it to go into this aspect regarding the rules not accompanying the resolution which was affixed on the notice board at the office of the municipality.
5. In the statute before us, there is no provision similar to Section 135(3) of the U.P. Municipalities Act and, therefore, the protection which Section 135(3) gave to the imposition of the tax in Hapur Municipality's case, is not available to the Porbandar City Municipality. A faint attempt was made by Mr. Nanavati to rely upon the provisions of Section 154(4) for the purpose of showing that such protection is given by the legislature even under the Bombay District Municipal Act, 1901. Sub-section (4) of Section 154 provides 'No notice or bill shall be invalid for defect of form'. It is nobody's case in the instant case that the form for notice set out in Schedule 'A' to the Act was not complied with or that the notice, Ex. 46, was defective in any manner. The objection is that the mandatory provisions of Section 60 of the Act were not complied with. In our opinion, the decision of the Supreme Court in Hapur Municipality's case (supra) in no manner departs from the principles laid down in the earlier decision in Raza BulandSugar Co. Ltd.'s case (supra) and hence the principles laid down in Raza Buland Sugar Co. Ltd.'s case are still good law. In view of the what has been stated in paragraph 9 in Raza Buland Sugar Co. Ltd.'s case (supra), it is clear that Section 60(b) of the Bombay District Municipal Act, in so far as it lays down that the municipality shall publish the form of rules prepared by it with a notice in the form of Schedule A prefixed thereto, is mandatory. The purpose for such publication is that preliminary process of inviting objection from the public will be properly and correctly gone through and for the reason set out in paragraph 9 of the judgment in Raza Buland Sugar Co. Ltd.'s case, we hold that in the instant case, Clause (b) of Section 60 is mandatory. It nowhere lays down the manner of publication but only deals with publication itself. Even Schedule 'A' to the Act does not lay down the manner of publication. It merely sets out the form in which the notice, which must accompany the resolution and the rules, has to be given by the municipality. Under these circumstances, we have come to the conclusion that Section 60(b) is a mandatory provision and that mandatory provision has obviously not been complied with in the instant case because the rules were not published along with the notice. Merely keeping the rules at different places for information of the public is not publication within the meaning of the Act.
6. In Special Civil Application No. 1213 of 1967 decided by us on April 22, 1970, we considered these different decisions of the Supreme Court and also the decision in Pioneer Motors Ltd. v. Nagercoil Municipal Council : 3SCR609 . After considering the decisions we observed:
The following principles emerge from the three decisions of the Supreme Court referred to above:
(1) The notification of the proposal to levy a particular tax is mandatory.
(2) The manner of publication of such notice is directory and if the actual notice published substantially complies with the requirements of law they can be said to be complied with and the publication will be considered proper publication.
We see no reason to depart from our conclusions as set out in that decision.
7. Under these circumstances, we have come to the conclusion that in the instant case, the provisions of Section 60(b) of the Bombay District Municipal Act as applied to Saurashtra are mandatory provisions and since those mandatory provisions were not complied with inasmuch as the rules were not published and did not accompany the notice which was affixed at a public place, the tax cannot be said to be legally imposed.
8. Mr. I.M. Nanavati, appearing for the appellant in the Second Appeal has drawn our attention to the decision of the Rajasthan High Court in Malchand v. State of Rajasthan I.L.R. 1955(5) Rajasthan 327, For the reasons which appealed to the learned Judges of the Division Bench of that Court, they have come to the same conclusion as we have done, namely that where the draft rules regarding the tax are not appended to the notice, the imposition of the tax is not valid. The reasons which appealed to the learned Judges of the Rajasthan High Court were different from the reasoning which has appealed to us but the conclusion was the same.
8.1 Under these circumstances, the Second Appeal is allowed and it is declared that the rules framed by the Porbandar City Municipality regarding Vehicle Tax are illegal and invalid and we also issue a permanent injunction restraining the respondent Municipality from levying, collecting or recovering Vehicle Tax as sanctioned by the Government on June 8, 1965. The appellant will get the costs all throughout and the decree of the lower appellate Court confirming the decree of the trial Court is set aside.
9. In Special Civil Application No. 816 of 1969 a writ of mandamus will be issued directing the Porbandar City Municipality not to levy, collect or recover Vehicle Tax as sanctioned by the State Government by its resolution dated June 8, 1965. The petitioner will get the costs of the Special Civil Application from the Respondent, Rule is made absolute. Orders accordingly.