1. This appeal arises out of a suit filed by the respondent for recovery of a sum of Rs. 34,706-15-0 on the footing that the defendant-appellant collected by way of property tax a sum far in excess of what was legitimately payable by the respondent. The appellant is the Municipal Council, Bezwada, and the respondent is the Madras and Sou. them Maharattah Railway Co. Ltd. Under the provisions of the Madras District Municipalities Act, the appellant Council levied a tax of Rs. 12,263-1-7 for each of the four half years of 1935-36 and 1936-37. The respondent paid the amount under protest and seeks to recover a major portion of the same on the ground that though the levy was otherwise proper, the District Collector of Kistna has fixed under Section 135, Clause (2), Railways Act (hereinafter referred to as the Act) a sum of Rs. 7178-1-8 as the amount payable for two half years. The amount involved in the suit and the appeal is the difference between the amount collected by the appellant and the amount fixed by the Collector as stated above. The suit was defended by the appellant on various grounds and the lower Court repelling all the defences gave a decree for the sum claimed. The defendant appeals and urges that the judgment of the lower Court is wrong.
2. It will be convenient at this stage to refer to the relevant provisions of the Act. Section 135 states that notwithstanding anything contained to the contrary in any enactment or in any agreement or award passed on any agreement, the rules laid down in the section shall regulate the levy of tax in respect of rail-ways and railway administrations. Clause (1) provides that a railway administration shall not be liable to pay any tax in aid of the funds of any local authority unless the Governor-General in Council has by notification in the official gazette declared the railway administration to be liable to pay the tax. Then comes Clause (2) which runs thus:
While a notification of the Governor-General in Council is in force, the railway administration shall be liable to pay to the local authority either the tax mentioned in the notification or, in lieu thereof, such sum, if any, as an officer appointed in this behalf by the Governor-General in Council may, having regard to the circumstances of the case, from time to time, determine to be fair and reasonable.
By a notification dated 14th February 1929 (ex. c) the Governor-General in Council declared that the administration of the M. & S. M. Railway Company shall be liable to pay in aid of the funds of the local authority -the Municipal Council of Bezwada-the general property tax and drainage tax. An explanation was added to it that the expression,
'General property tax' means so much of the property tax levied under Section 81, Madras District Municipalities Act, V of 1920, as comprises a tax for general purposes and 'water and drainage tax' means so much of the said property tax as is levied in accordance with Clause (a) of Sub-section (1') of the said section as a water and drainage tax.
It is under the provisions of this notification; that the appellant-council levied the tax in question from the respondent. A valuation committee was appointed of which a nominee of the respondent company was a member and in accordance with the recommendations of the valuation committee, the chairman of the appellant-council fixed the sum of Rupees 12,263-4-7, as the tax payable by the respondent for each half year. The tax levied for the two half years of 1935-36 was paid on 1st February 1936, the tax for the first half of the year 1936-37 was paid on 16th September 1936 and that due for the second half-year of 1936-37 was paid on 22nd December 1936. All these payments were made under protest. In June 1937, the respondent-company applied to the Collector of Kistna district who had been appointed as the officer concerned for the purpose of Section 135 (2) of the Act and requested him to fix a fair and reasonable amount to be paid by it to the appellant. The District Collector heard the parties and made an order (Ex. K) on 20th May 1938 determining that a sum of Rs. 14,346-3-4 was a fair and reasonable sum to be paid for the two years 1935-36 and 1936-87. The appellant-company had collected for each half year a sum of Rs. 12,263-4-7. The respondent, therefore, made a demand of the appellant council for a refund of Rs. 84,706-15-0 being the difference between the amount of tax collected and the sum which it had to pay as per order of the Collector under Ex. K. The appellant denied the claim and this suit is the result.
3. For the previous years there were disputes between the appellant and the respondent which turned mainly on the method of assessment followed by the appellant-municipality in fixing a particular sum as the tax payable by the respondent company. Those disputes culminated in O.S. No. 61 of 1935 on the file of the Court of the Subordinate Judge of Bezwada. Except for a small sum, the claim of the respondent company was negatived and the decision was upheld by this Court in M. & S.M. By.Co., Ltd. v. Municipal Council, Bezwada A.I.R. 1941 Mad. 641. An appeal has been filed to His Majesty in Council and the said appeal is pending.
4. In the present suit the questions that were mooted in the prior proceedings do not arise. The only question raised in this suit is about the effect of the order under Section 135 (2) of the Act. The section is clear and gives authority to the officer appointed by the Governor-General in Council in that behalf to determine and fix a sum which appears to him to be fair and reasonable amount instead of the tax payable to the local authority. When that is done, the railway administration will no longer be liable to pay to the local authority the tax mentioned in the notification under Clause (1). In this case the notification under Clause (1) was that the respondent company should pay to the appellant-municipality the general property tax and water and drainage tax. But for the action taken under Section 135, Clause (2) it is common ground that the railway company was liable to pay these taxes. The difficulty arises in this case on account of the fact that the railway company moved the District Collector to take action under Section 135, Clause (2) months after the last of the payments in question was made. The last of the payments made by the respondent company was, as already stated, on 22nd December 1936. It was only in June 1937 that the respondent-company moved the Collector to take action under Section 185 (2) of the Act. Exhibit K was passed by the Collector of Kistna on 20th May 1938. On 21st September 1938 the appellant-council pointed to the District Collector of Kistna (Ex. v) that after the collection by the municipal council of the amounts levied under the District Municipalities Act, no action could be taken in respect of those sums under Section 135, el. (2). By this time the officer who had passed the order evidenced by Ex. K, had left the station and one Mr. Karamatullah was the Collector in charge of the Kistna District. This officer passed proceedings evidenced by Ex. N on 4th May 1939, agreeing with the contention of the appellant-council that after the expiry of the quinquennium for which the valuation committee had made its recommendations and after payment of the tax by the railway company, the provisions of Section 135 (2) of the Act cannot be invoked. The order of 20th May 1938 (Ex. k) was, therefore, recalled. In this appeal two questions are raised; (i) whether the order made on 20th May 1938 was validly cancelled by the subsequent order of 4th May 1939, and (ii) whether Section 135 (2) can be invoked after the payment of the tax by the respondent-company.
5. For the position that an order under Section 135 (2) may be varied subsequently the appellant's learned advocate relies upon the wording of the section and on Section 21, General Clauses Act. First taking Section 135 (2), it is said that the officer appointed by the Governor-General in Council to determine a fair and reasonable amount to be paid by a railway administration is expressly given power to change the figure from time to time. The wording of Sub-section (2) which has already been set out, says that the railway administration shall be liable to pay such sum as an officer appointed by the Governor-General in Council may, having regard to all the circumstances of the case, from time to time determine to be fair and reasonable. We are unable to agree with the learned advocate for the appellant that the expression 'from time to time determine' involves an authority to alter an order which has once been passed for a particular period. The wording relied on only gives the power to the officer to change the sum which he or his predecessor might have fixed for a prior period if the exigencies of the situation require that the amount should be varied for a subsequent period. There may be a rise or fall in the value of properties and there may be other circumstances as well which might render necessary an alteration in the sum fixed for a particular period. That we consider is the only result of the wording referred to and it does not, in our opinion, enable the officer concerned to vary the amount fixed by him for the period for which it was fixed. It is urged that if this is so, the Collector would not have the power even to rectify formal or clerical or arithmetical errors. But when the Collector merely corrects such an error he is only bringing the wording of the order in conformity with the real decision arrived at by him. But where it is not a formal defect or error that is sought to be rectified-in which ease it might be said that the change brought out only the real meaning of the officer-and where the change involves an alteration in the substance of the decision itself, it appears to us that there is no power given to the Collector to effect such a change.
6. We will now deal with the argument based upon Section 21, General Clauses Act. That section occurs in the group of sections which are headed 'provisions as to orders, rules, etc., made under enactments.' Section 20 provides that,
Where, by any Act of the Governor-General in Council or regulation, a power to issue any order, notification, scheme, rule, form or by-law is conferred, then the expressions used in the order, notification, scheme, rule, form or by-law, if it is made after the commencement of the Act, shall, unless there is anything repugnant in the subject or context, have the same respective meanings as in the Act or Regulation conferring the power.
7. Then comes Section 21 which runs thus:
Where by any Act of the Governor-General in Council or regulation, a power to issue notifications, orders, rules or by-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any) to add, to amend, vary or rescind any notifications, orders, rules or bye-laws so issued.
8. The appellant's argument is that the Indian Railways Act, 1890, conferred upon the officer mentioned in Section 135, Clause (2) a power to issue orders fixing a fair and reasonable sum as payable by railway administration to a local authority, and that therefore a power to vary it is also expressly conferred by Section 21, General Clauses Act. Section 21, General Clauses Act, does not, in our opinion, apply to this case. Under Section 135 (2) of the Act, the Governor-General in Council appoints an officer and that officer is given by' the Legislature power to determine, having regard to all the circumstances of the case, a sum which is reasonable and fair and this power may be exercised from time to time. The determination by the officer concerned of a fair and reasonable sum under Section 135, Clause (2) is not issuing an order under a legislative enactment. Section 21 applies to cases where under various enactments a power to issue notifications, orders or rules or by-laws is conferred. The section as it now stands is the result of an amendment by Act l of 1903. As it was originally enacted in 1897, Section 21 ran thus:
Where by any Act of the Governor-General in Council or regulation, a power to make orders, rules or by-laws is conferred, then that power includes a power exereisable in like manner and subject to the like sanction and conditions (if any) to add, to amend, vary or rescind any orders, rules or by-laws so made.
Under various enactments power was given to make rules, by-laws or orders. Before Act 10 of 1897, it was considered doubtful whether a power conferred by an enactment of the Governor-General or regulation to make orders or rules or by-laws included a power to add, to amend, vary or rescind such orders, rules or by-laws. The matter was classified by the enactment of Section 21. Section 21 of Act 10 of 1897 corresponds to Section 32, Clause (3), Interpretation Act, 52 and 53 Vict. Ch. 63. That section runs thus:
Where an Act passed after the commencement of this Act confers a power to make any rules, regulations, or by-laws, the power shall, unless the contrary intention appears, be construed as including a power, exercisable in the like manner and subject to the like consent and conditions, if any, to rescind, revoke, amend or vary the rules, regulations, or by-laws.
9. As pointed out by Crais on Statute Law (p. 260, Edn. 4):
In Acts prior to 1890 which authorize the making of rules, regulations or by-laws, a power of rescission or variation must, it would seem, be given expressly or by necessary implication in order to authorize any alteration of the rules etc., when once made, and without such power the rule making authority is functus officie on the first exercise of the power.
It is in order to remedy this state of things which necessitated a fresh enactment whenever a change in the rules or by-laws was felt necessary that Section 32, Clause (3), English Interpretation Act, was enacted and Section 32, el. (3) applies to cases where by an Act passed after 1889 a power is conferred to make rules, regulations or by-laws and it is only in such cases that the power to make rules, etc., includes the power to vary, rescind, revoke or amend the rules, regulations, or by laws. In India prior to the enactment of 1897 a doubt was felt whether the power to make orders and rules included a power to vary or rescind those orders or rules. Sections 20 to 24, General Clauses Act, relate to powers conferred upon, what we may call, a subordinate legislative authority. In several cases the Legislature instead of making orders and rules and notifications in the Act itself, enacts that a particular authority shall have, subject to the conditions mentioned in the enactment, the power to issue or make notifications, orders, or rules. In such cases the authority to which the power to issue or make orders or notifications is given is to have the power to modify, vary or rescind them. Some cases of delegated authority to issue orders and rules are set out in 'Local rules and orders in the Madras Presidency,' published from time to time. It does not apply to a decision as to the rights of parties made by the particular judicial or quasi judicial or administrative authority. If Section 21 is held to apply to all cases where an order is passed under an enactment, the result would be startling. A District Munsif is authorized to pass several orders by the Code of Civil Procedure and if the interpretation urged by the appellant is accepted, then the same Court or officer can vary or rescind them. This certainly is not the law. It has been ruled by the Judicial Committee that except as provided by the statute there is no power in a Court to modify or vary a judgment once passed by it. We therefore hold that the Collector of Kistna district had no power to modify or alter an order once passed by him under Section 135 (2) of the Act. The order] passed under Ex. N must therefore be held to be ultra vires of Mr. Karamatullah.
10. The next question is whether action under Section 135, Clause (2) of the Act can be taken after the collection by the local authority of the assessment levied by it. A two-fold argument is advanced. One is that the Act speaks of the power to be exercised by the Collector as regards the future. It is pointed out that no power is given to the Collector to fix a fair and reasonable sum where years and years have passed after the levy of assessment and the collection thereof. Mr. Satyanarayana Rao, the learned advocate for the appellant, urges that if it were otherwise, a municipality which levies assessment and recovers and spends the amount for the general purposes of the municipality may, by action taken under Section 135 (2), 10, 20 or 30 years later, be called upon to refund sums which had been collected and spent long before. The second argument is based upon the wording of Section 354, Clause (2) , District Municipalities Act. That section provides that,
No suit shall be brought in any Court to recover any sum of money collected under the authority of this Act or to recover damages on account of any assessment, or collection of money made under the said authority:
Provided that the provisions of this Act have been, in effect, complied with.
It is urged that the respondent-company does not allege that the provisions of the District Municipalities Act have not been complied with and that therefore no suit can be brought in any Court to recover the sum collected under the authority of the District Municipalities Act. As regards the wording of Section 135, Clause (2) of the Act, it does not impose any condition that the order made by the Collector shall apply only in respect of future. The wording is general and it seems difficult to escape the conclusion that the Legislature designedly gave the Collector very wide powers and expected the officer to exercise them reasonably. If several years after the assessment and collections are made action is requested under Section 135, Clause (2), the Collector will, we have no doubt, decline to act under that section. But we cannot say that where, as in this ease, action under Section 135, Clause (2) was invoked within a year after the first collection that the power under that section cannot be exercised by the Collector. It is to be presumed that the Collector knew that he was asked to determine the sum payable for two years which had already expired and he was aware of the fact that the amount had already been collected. If nevertheless the District Collector proceeded to exercise the power given under Section 135, Clause (2) we must take it that he considered all the circumstances of the case and considered that this is a proper case for taking action under that section. As regards Section 354, Clause (2), District Municipalities Act, it has been held by this Court that where the person from whom a certain amount has been levied by way of profession tax or general tax under the Act is not at all liable to pay the tax, it is a case where the provisions of the Act have not been complied with. Seeking to tax a person who is not liable at all to pay the tax is held not to be covered by the provisions of Section 354 (2) and such a person can file a suit to recover the amount collected from him notwithstanding the fact that all the formalities of the Act were duly complied with : see Municipal Council, Cooonada v. Standard Life Assurance Co. (1901) 24 Mad. 205 and Municipal Council, Kumbakonam, v. Messrs. Ralli Brothers A.I.R. 1931 Mad 49 provides that the railway administration is to pay either the tax mentioned under the notification issued by the Governor-General in Council under Section 135 (1) or in substitution therefor the sum fixed by the Collector as fair and reasonable. Once the Collector fixes a sum as a fair and reasonable amount to be paid by the railway 'administration the liability to pay the tax mentioned under the Governor-General's notification no longer exists. That liability altogether disappeared and a fresh liability takes its place and the fresh liability imposed upon the railway administration is not a tax collectable under the provisions of the District Municipalities Act but an amount which is collectable under the order of the District Collector made under Section 135, Clause (2). Under the notification of the Governor-General in Council (Ex. c), the railway administration was liable to pay a general property tax, water and drainage tax. This liability was put an end to in accordance with the directions under Section 135, Clause (2). Therefore there was no tax payable by the railway administration either by way of a general property tax or water and drainage tax. That being so, the provisions of Section 354 (2), District Municipalities Act, do not apply and a suit lies for the refund of an amount which was levied as a tax, when in fact no tax was payable or leviable. The appeal fails and it is dismissed with costs.
11. The respondent has filed a memorandum of objections as regards costs. The Subordinate Judge directed the parties to bear their own costs. In para. 21 of the judgment the Judge said that in the circumstances of the case and in view of Ex. N, he would direct the parties to bear their own costs. Having regard to the fact that the railway administration moved the Collector after the levy of assessment and after the collection of the tax and to the fact referred to by the Judge that a later Collector cancelled the order under Ex. K, we do not think that the Subordinate Judge erred in making the order that he passed as regards costs. It is a matter in the discretion of the lower Court and we cannot say that there is any error of principle in the order that he made. The memorandum of objections is also dismissed with costs.