Varkey Tharakan v. Alleppey Municipality — 1960 DIGILAW 278 (KER)

JUDGMENT : M.A. Ansari, J. 1. These three suits have been brought to this Court under Article 228. The suits had been filed in the District Court of Alleppey to recover amounts previously collected as tax by the Municipality of the aforesaid town under provisions to be mentioned hereafter. The defence to the claims is that the collections of the amounts, sought to be recovered, have since been validated under a later enactment, and the claimants' reply to the defence is that the enactment is not constitutional. The issue has, therefore, arisen whether the validating enactment, that has justified levying the tax held earlier not to have been legally collected, is constitutional. Thereafter, jurisdiction of this Court under Article 228 has been invoked for summoning records of these cases before the aforesaid lower court; for ascertaining whether a constitutional issue has arisen, deciding such issue, and directing the tribunal to adjudicate according to the decision on the constitutional issue. 2. The further details of how the claims came to be instituted, are as follows:- Section 77 of the Travancore District Municipalities Act, No. XXIII of 1116, enumerates the taxes, which the local authorities can levy. The list contains seven classes, and, of these, the last is the tax on entertainments. The two subsequent sections of the aforesaid Act, relevant for the purposes of the tax, were sections 122 and 123; and the first of the sections had provided for the liability to pay the entertainments tax fixed according to the rates given by the Council and in the manner provided by the Council, with the approval of the Government. Both the sections were repealed by section 13 of the Travancore-Cochin Local Authorities Entertainments Tax Act, VI of 1951. The preamble of the later Act shows that it was passed in order to give to the local authorities power to impose a tax on amusements and other entertainments; and its section 3 confers on the local authority of the area, in which it be in force, the power to levy the tax, at a rate not less than 10 per cent, nor exceeding 25 per cent, on all payments for admission to any entertainment. Section 5 enacts for permission of person to entertainment, subject to the tax; section 10 provides for penalty, and section 12 confers power to frame rules for levying the tax. Section 5 enacts for permission of person to entertainment, subject to the tax; section 10 provides for penalty, and section 12 confers power to frame rules for levying the tax. This last section enacts that any local authority, before levying entertainments tax, shall make bye-laws, not inconsistent with the Act; and it is common ground that local authorities had not framed any rules, but had continued to levy the tax on entertainments according to the rates fixed under the repealed sections. Such levies were challenged by the plaintiffs in the three suits now before us, and the Travancore-Cochin High Court sustained the objections to the legality of the tax in Bhaskara Reddiar v. Alleppey Municipality 1955 K.L.T. 912. The learned Judges took the view that framing the rules was sine qua non, and the right to charge did not arise, unless the rules be framed. Joseph Vithayathil, J., who delivered the judgment, has observed at p. 920 as follows: “Admittedly no bye-laws were made by the Municipality under the District Municipalities Act in respect of matters mentioned in Section 12 of Act VI of 1951. Section 12 contains a mandatory provision, and until the condition laid down in the section is fulfilled, a local authority cannot levy entertainments tax under Section 3 of the Act. So long as the Alleppey Municipality has not satisfied the condition, we do not think that it can levy entertainments tax under the new Act treating the rule made by Government under Section 77 (g) of the District Municipalities Act as bye-laws made by the Municipality under section 12 of Act VI of 1951." 3. Thereafter the plaintiffs in all the three suits, who own cinemas and had obtained the judgment in their favour, filed claims to recover the amounts got from them as entertainments tax. These three are against the Alleppey Municipality, and there are two other such suits against the Kottayam Municipality by the plaintiffs, who had filed writ petitions earlier. In addition to the aforesaid five claims, two suits have been instituted against the Municipal Council of Quilon to recover similar tax collected earlier; but they do not appear to be by persons, who had succeeded in writ petitions. In all these suits, the defence rests on the Travancore-Cochin Entertainments Tax (Validation of Levy and Collection) Act, XXVI of 1955, hereinafter to be referred to as the Act. In all these suits, the defence rests on the Travancore-Cochin Entertainments Tax (Validation of Levy and Collection) Act, XXVI of 1955, hereinafter to be referred to as the Act. Section 3 is relevant for the purposes of our decision; and, excluding the proviso, it reads as follows:— "Notwithstanding that bye-laws under Section 12 of the Travancore-Cochin Local Authorities Entertainments Tax Act, 1951, have not been made by a local authority, all entertainments tax levied and collected by it on and from the 10th day of December 1951, and all orders passed and all actions taken by it on and from the said date in connection with the levy or collection of entertainments tax in the exercise or purported exercise of jurisdiction or powers conferred by or under any law authorising the levy and collection of entertainments tax by local authorities, are hereby declared to have been validly made, passed or taken, as the case may be, and shall not be called in question on the ground only that the said bye-laws have not been made by it, and any judgment, order or decree pronounced or passed by any Court, in so far as such judgment, order or decree is based on the ground only that a local authority has not made bye-laws under Section 12 of the Travancore-Cochin Local Authorities Entertainments Tax Act, 1951, shall be void and of no effect." 4. The Section is not only made the ground for the defence in the aforesaid suits, but has become the basis of claiming entertainment tax in two other suits. Those are by the Kottayam Municipal Council and are to recover the tax for later years. All these suits have been transferred to this Court under Article 228, and we propose to decide the common constitutional issue in the claims against the Municipality of Alleppey. We would then apply the decision to similar issues in the other cases, without repeating the reasons in each case for our conclusions on the issue. In reaching the decision, we have been afforded great help by the arguments of the advocates for the tax- payers as well as the local authorities, which we must acknowledge at this stage. 5. Now, the objections to the validity of the Act may be grouped under two heads. In reaching the decision, we have been afforded great help by the arguments of the advocates for the tax- payers as well as the local authorities, which we must acknowledge at this stage. 5. Now, the objections to the validity of the Act may be grouped under two heads. The one is that the legislature has transgressed its power to enact, by adjudicating on disputes already determined by the High Court, and has erred in providing for the reversal of the judgment in the section. In support of this objection, it is argued that the legislature cannot decide claims, which can only be done by Courts; and by enacting section 3 of the Act, the legislature of the State has done that. The next group of objections is that the Act violates Articles 265 and 207 (1), and, is, therefore, void. 6. It is common ground that our Constitution has not accepted any rigid separation of powers; but it is equally clear that the executive, legislative, and judicial functions have been differentiated. It follows that one organ cannot assume powers that essentially been entrusted to others; and the State legislatures, being vested with the powers to enact what are enumerated in Lists II and III to the Seventh Schedule of the Constitution, are precluded from abrogating what is judicial function of the States. In other words, the difference between making laws and deciding rights, which has become known as the judicial powers, is obvious, and the organ in exercise of the enacting power must not decide disputes, just as the judiciary, in interpreting laws, must not assume the function of the legislature. What powers each of the two organs' the legislature and the judiciary possess, is well settled, and we would now cite the decisions, where such limitations missing have been laid. 7. missing special Courts set up by Ordinance No. 2 of 1942, were challenged. The former Ordinance had been passed because in an earlier case the Federal Court had held the Courts constituted under the latter Ordinance, not to be invested with jurisdiction to try the cases, in view of the provisions contained in sections 5, 10 and 16 of the latter Ordinance, which was repealed by the former Ordinance. The former Ordinance had been passed because in an earlier case the Federal Court had held the Courts constituted under the latter Ordinance, not to be invested with jurisdiction to try the cases, in view of the provisions contained in sections 5, 10 and 16 of the latter Ordinance, which was repealed by the former Ordinance. Spens, C.J., held the former Ordinance to be promulgated in exercise of powers of validation, which he found to be ancillary to the power to deal with the subjects specified in the legislative list. In Basantha Chandra v. Emperor Spens, CJ., again observed as follows:- “The distinction between a 'legislative' act and a ‘judicial’ act is well known, though in particular instances it might not be easy to say whether an act should be held to fall in one category or in the other. The Legislature is only authorised to enact laws. Some of the pending proceedings hit at by clause 2 of section 10, may raise questions of fact and their determination may wholly depend upon questions of fact and not upon any rule of law, as for instance, when it is alleged that an order of detention was not really the act of the authority by whom it purports to have been made or that it was a mala fide, order or one made by a person who had not been authorised to make it. A direction that such a proceeding is discharged is clearly a judicial act and not the enactment of a law." 8. Sir John Beaumont in Kumar Singh v. Emperor A.I.R. 1946 P.C. 169 had remarked that the Governor-General intended to do no more than to render valid the punishment, imposed by the Special Courts, by creating the sentences as having been imposed under the Code of Criminal Procedure, and leaving the validity of the convictions rest on judicial decisions subject to a right of appeal and revision in the ordinary way. In Ram Jawaya v. Stale of Punjab missing (5) Mukherjea, C.J., has observed as follows :— "The Indian Constitution has not indeed recognised the doctrine of separation of powers in its absolute rigidity but the functions of the different parts or branches of the Government have been sufficiently differentiated and consequently it can very well be said that our Constitution does not contemplate assumption, by one organ or part of the State, of functions that essentially belong to another. The executive indeed can exercise the powers of departmental or subordinate legislation when such powers are delegated to it by the legislature.” 9. Lastly, in K.K. Kochunny v. The States of Kerala and Madras A.I.R. 1960 S.C. 1080, the Madras Marumakkathayam (Removal of Doubts) Act, 1955, was challenged, and Subba Rao, J., delivering the majority judgment, held the impugned enactment to be bad, as it had violated Article 31, by having deprived the petitioners of the rights without compensation. Two of the learned Judges, however, have made observations concerning what constitutes legislative exercise of powers, and those are relevant for purposes of our decision. These learned Judges have declined to follow the American practice stated by Cooley, that the legislature was not competent, by retrospective legislation, to make valid any proceedings, which had been by courts held to be void, for want of jurisdiction over the parties. The learned Judges have held the American practice to rest upon due process of law, which has not been adopted by the Indian Constitution, and have further observed as follows:— “There have been many Acts passed since the Constitution came into force, which contained similar provisions, in no case has it ever been contended that such an Act amounted to an exercise of the judicial function by the legislature. The Act before us lays down a law to be applied by Courts in future in the adjudication of disputes between parties. It also says that the courts shall apply the law notwithstanding that there is an earlier decision on the rights of the parties which are being litigated upon in a subsequent proceeding. The Act does not itself annul any decision of any Court. All that it says is that the law laid down is to be applied by Courts irrespective of any previous decision. It does not in any sense adjudicate between parties. The Act does not itself annul any decision of any Court. All that it says is that the law laid down is to be applied by Courts irrespective of any previous decision. It does not in any sense adjudicate between parties. Its therefore, seems to us that the contention that the impugned Act is really an exercise of judicial power, is ill-founded." 10. We would now refer to some decisions by High Courts laying down what would constitute exercise of enacting power, and what would be judicial. The question arising for decision in Jamandas v. I. T. Commissioner A.I.R. 1951 Bom. 438 was how far the amendment of the Indian Income-tax Act by Parliament, following certain decisions by the Supreme Court, amounted to exercise of judicial function; and Chagla, C.J., upheld the enactment as valid exercise of the enacting power. In this connection, the learned Chief Justice has observed as follows: “Therefore, legislative competence is conferred upon Parliament in the widest possible terms. Then the following Articles lay down what are the various subjects on which the Parliament and the State Legislatures can legislate. There is no dispute that as far as the subject-matter is concerned, this particular law is within the sphere of the Indian Parliament. Article 372 (1) does not lay down any limitation upon the power of the Parliament to amend a pre-existing law. Its power of amendment is wide and untrammelled, and in the exercise of that power if the Parliament has chosen to amend the Indian Income Tax Act and to declare that the law was always what it has declared it to be, in our opinion, that is perfectly within the scope and ambit of the powers conferred upon the Indian Parliament by the Indian Constitution." 11. The position has been again clarified in Gulabrao v. Pandurang A.I.R. 1957 Bom. 266 where, after a review of earlier decisions, it has been held that the distinction between legislative and judicial functions is well established. It was further held in the aforesaid case that the judicial function consists in the court's deciding the rights of the parties according to law, submitting to the mandates issued by the legislature, interpreting what the mandates are, and deciding the rights of the parties. It was further held in the aforesaid case that the judicial function consists in the court's deciding the rights of the parties according to law, submitting to the mandates issued by the legislature, interpreting what the mandates are, and deciding the rights of the parties. The learned Judges have also pointed the legislative functions to be of laying down the law, which would govern the parties, and of directing the Courts to give effect to the law. Also the Madras High Court in Sundararajan & Co. v. State A.I.R. 1956 Mad. 298 has held that the power to validate illegal assessment made by the executive authorities, is incidental to the power to levy the tax. One of us, in Sarvaiah v. Narsing Rao A.I.R. 1955 Hyd. 257, has distinguished between the legislative and judicial functions. It was therein held that if any enactment disposes of a case by the vigour of the enactment itself, without leaving to the judiciary the power to pass the appropriate orders with reference to the law in force at the date of the order, it would be open to the objection of judicial functions being usurped by the legislature; but where, however, the legislature enacts a rule of law applicable to certain facts, which are to be ascertained by Courts, it would be essentially an exercise of enacting power, though the new law may vary or reiterate the earlier law. In that case, the essential characteristic of a judicial function was held to be one of ascertaining disputed facts and applying the law to such facts. That decision has been followed in Gopinathan Nair v. Palode Panchayat 1958 KLT 550 at p 554. 12. It would be useful in this connection to refer to two cases from Australia wherein the words ‘judicial power' in the Australian Constitution been interpreted. Griffith, C.J., in Huddart, Parker & Co. Proprietary, Ltd. v. Moorehead (1908-9) 8 Com- W.L.R. 330 at p. 357, has defined these words to mean as follows:- "I am of opinion that the words ‘judicial power' as used in section 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal, which has power to give a binding and authoritative decision (whether subject to appeal or not), is called upon to take action." 13. In Rola Co. (Australia) Proprietary, Ltd v. Commonwealth 69 Com-W.L.R. 183, p. 211 Starke, J., has stated as follows:— “The true function of judicial power is, as already indicated, to investigate, declare and enforce rights and obligations on present or past facts, by whatever authority such facts are ascertained or determined, and under laws supposed already to exist.” 14. To our mind, judicial function consists in applying rules of law already existing, to facts disputed or ascertained in claims brought before Courts by parties, who invite adjudication on controversies, that have arisen between them. It, therefore, differs from laying down something binding, either prospectively or retrospectively, or declaring what is the law before the power be exercised. It further follows that the enacting power is not properly used where some pending case is decided by the enactment itself, or something decided is overruled without Courts being allowed to interpret and apply the new law to facts of given cases. We would, therefore, ascertain how far the impugned section is within the aforesaid legitimate exercise of the legislative power, or whether it transgresses the limits. 15. Clearly, the first part of the section is within the legislative power, for that part legalises the taxes, that have been collected or to be collected, notwithstanding the failure to frame rules under section 12. The latter part of the section, however, renders ineffective judgments of Courts; and this part reads thus: "and any judgment, order or decree pronounced or passed by any Court, insofar as such judgment, order or decree, is based on the ground only that a local authority has not made bye-laws under section 12 of the Travancore-Cochin Local Authorities Entertainments Tax Act, 1951, shall be void and of no effect." 16. We feel that this part of the enactment, by itself making the judgments void, has overstepped the enacting power, and has erred in assuming the judicial power of revising the earlier judgments. Therefore, the arguments by the learned advocates of the tax-payers have force that this part of the section is void, as it has discharged judicial function of having annulled particular decisions. Therefore, the arguments by the learned advocates of the tax-payers have force that this part of the section is void, as it has discharged judicial function of having annulled particular decisions. We also think that the learned Advocate-General's argument should not be accepted when, relying on Sundararajan & Co. v. State A.I.R. 1956 Mad. 298, he has urged that aforesaid declaring the decisions to be void, is but exercise of the power, incidental to enact taxation law. We feel the correct position to be that the legislature can lay down new rules, which may be contrary to earlier judicial pronouncements, and such law can be made to operate prospectively or retrospectively. The liabilities settled under the earlier judgments, are not thereby revived. On the other hand, new rules are made to operate, and the application of such rules to facts of particular cases, should they be disputed, is left to Courts. Such exercise is legislative; for, the Courts still decide how far the fresh liability can be, notwithstanding old Judgment, that had adjudicated the old liability, enforced against particular persons with such judgment in their favour. The position becomes fundamentally different when rules established by judgments are changed by vacating the judgments, which, after all, can be only by superior Courts. Shortly put, framing new rules is legislative function; whereas restoring earlier rules by reversing judgments is judicial. Viewed in this light, we do think the latter part of section 3 is bad. But this part is severable from the rest, and its being ineffective would not affect the constitutionality of the earlier part. Shortly put, framing new rules is legislative function; whereas restoring earlier rules by reversing judgments is judicial. Viewed in this light, we do think the latter part of section 3 is bad. But this part is severable from the rest, and its being ineffective would not affect the constitutionality of the earlier part. The legal severable part now reads as follows:- “Notwithstanding that Bye-laws under section 12 of the Travancore-Cochin Local Authorities Entertainments Tax Act, 1951, have not been made by a local authority, all entertainments tax levied and collected by it on and from the 10th day of December, 1951, and all orders passed and all action taken by it on and from the said date in connection with the levy or collection of entertainments tax in the exercise or purported exercise of jurisdiction or powers conferred by or under any law authorising the levy and collection of entertainments tax by local authorities, are hereby declared to have been validly made, passed or taken, as the case may be, and shall not be called in question on the ground only that the said bye-laws have not been made by it." 17. Mr. Abraham, in this connection, has argued that even the aforesaid part, which we held to be in exercise of the legislative function reverses what the plaintiffs were held not liable for under the High Court judgment in Bhaskara Reddiar v. Alleppey Municipality 1955 KLT 912 , would amount to overruling the decisions, and would be, therefore, void. We do not feel impressed with this argument. It must be conceded that fresh law can authorise the entertainment tax's collection under the earlier rules, and this can be with retrospective operation. It follows that the legislature can validate retrospectively the levy of the entertainments tax without what had been held earlier to be the sine qua non to its levy. We do not see how such enactment can be called exercise of judicial power, for it imposes a new liability on those as well, who had judicial pronouncements in their favour on their earlier liabilities. The Courts have the jurisdiction to adjudicate on the liability, should it be disputed, and the adjudication on it would not be barred by any decision on the older liability. The Courts have the jurisdiction to adjudicate on the liability, should it be disputed, and the adjudication on it would not be barred by any decision on the older liability. The complaint of the legislature having assumed judicial functions, is, therefore, justified only in part, and we have already held which part is thus vitiated. 18. We also see no force in the other ground for invalidating the section. The complaint of the Act being financial bill, and, therefore, covered by Article 207 (1), also fails. It is clear that Article 199 (2) excludes bills concerning rates for local purposes from the definition of "money" bill, and it follows that the Act being concerned with entertainments tax for such purposes, would not be a money bill. Therefore the Governor's recommendation was not necessary for its being introduced in the legislature under Article 207 (1). That apart, Article 212 excludes legislative procedure from being questioned in Courts. For these reasons, this ground also fails. Nor do we feel impressed with the complaint of the Act having interfered with High Courts jurisdiction. The pith and substance of the Act is to validate levy of tax for local purposes, and that is covered by the State List. 19. The records of the cases be, therefore, sent to the lower court with the direction that section 3 of the Act is valid, except the portion stated above, and the suits be proceeded with in the light of what has been held by us. Costs will abide the final result, and this judgment will cover O.S. Nos. 1, 2 and 3 of 1957.