Ram Narain v. State of U. P — 1980 DIGILAW 956 (ALL)

JUDGMENT H.N. Seth, J. -Various petitioners in these four petitions carry on their trade and business at Shahganj, district Jaunpur. They are aggrieved by the action of the Municipal Board Shahganj in levying octroi duty and have approached this Court for relief under Article 226 of the Constitution. 2. Briefly stated, the facts giving rise to these petitions are that to begin with the local area which now forms part of Shahganj Municipality had been declared to be a Notified Area under Section 337 of the U. P. Municipalities Act. On 10th August, 1977 the Government promulgated U. P. Municipalities, Notified Area and Town Areas (Alpakalik Vevastha) Adhyadesh, 1977, U. P. Ordinance No. 16 of 1977, where-under all Notified Areas in the State, including Notified Area Shahganj, were superseded. The Ordinance provided that notwithstanding anything contained in the U. P. Municipalities Act, the Chairman and all members of the Notified Area were to cease to hold their respective offices and all powers, functions and duties of the Notified Area Committee and its Chairman were to be vested in and exercised, performed and discharged by the District Magistrate and that the District Magistrate including the person or authority to whom the District Magistrate delegated his powers, were deemed to be Notified Area Committee or its Chairman as the occasion required. The Ordinance was subsequently replaced by an Act which continues to be operative even now. By an order dated 25th October, 1977 the Administrator/District Magistrate, Jaunpur delegated, with the exception of some of the powers mentioned therein all powers that had been vested in him in connection with the Notified Area Shahganj, to one Sri Karnail Singh, S. D. M. Shahganj. After the transfer of Sri Karnail Singh in November, 1977 Sri Hira Mani Singh Yadava, S. D. M. Shahganj, was appointed as Officer-in-charge and the powers of the Administrator were delegated to him by the District Magistrate on the same terms on which it had been delegated in the case of Sri Karnail Singh. On 5th May, 1978 the State Government established in place of Notified Area Shahganj, a Municipality known as 'Shahganj Municipality and subsequently directed the Municipal Board Shahganj to impose octroi duty with a view to raise funds required for performing the duties imposed upon it by the U. P. Municipalities Act. On 5th May, 1978 the State Government established in place of Notified Area Shahganj, a Municipality known as 'Shahganj Municipality and subsequently directed the Municipal Board Shahganj to impose octroi duty with a view to raise funds required for performing the duties imposed upon it by the U. P. Municipalities Act. Thereupon the Officer-in-charge of the Board namely Sri Hira Mani Singh Yadava, S. D. M. Shahganj purporting to act as the Board, prepared a proposal (under section 131 of the U. P. Municipalities Act) and draft rules for levying tax in the nature of octroi duty and published the same in newspapers 'Prakash and 'Aaj1 dated 7th June, 1978 and 14th June, 1978. Various objections, received against the proposed imposition of octroi duty as also to the draft rules, were heard by Sri Hira Mani Singh S. D. M. Eventually, the District Magistrate passed an order dated 19th August, 1978 rejecting those objections. Imposition of octroi duty was thereafter approved by the Commissioner, vide his order dated 41th April, 1979, and the Administrator of the Board was directed to determine the date with effect from which the tax was to be levied. Accordingly the Administrator passed a special resolution dated 3rd May, 1979 and fixed 1st June, 1979 as the date with effect from which the levy was to be imposed and the resolution as also the rules as approved by the Commissioner were published in the official gazette dated 13th June, 1979. 3. Learned counsel for the petitioner impugned the imposition of octroi duty by the Municipal Board Shahganj on the ground that the same had been levied in contravention of the provisions of Sections 131 to 135 of the U. P. Municipalities Act. According to him the provisions contained in the U. P. Municipalities Act contemplated that the proposal for levying tax in the nature of octroi duty has to be framed by the Municipal Board itself in the form of a special resolution specifying various matters detailed in Section 131 of the Act. This function of the Board cannot, as provided in Section 112 of the Municipalities Act, be delegated to any other person or authority. Accordingly, the very first step of framing a proposal to impose such tax taken by Sri Hira Mani Singh S. D. M. was completely without jurisdiction and that this defect rendered the imposition of the tax illegal. 4. Accordingly, the very first step of framing a proposal to impose such tax taken by Sri Hira Mani Singh S. D. M. was completely without jurisdiction and that this defect rendered the imposition of the tax illegal. 4. Learned counsel appearing for the Municipal Board justifying the action taken by Sri Hira Mani Singh Yadava S. D. M, in framing the proposal for imposition of octroi duty, contended that as a result of promulgation of U. P. Ordinance No. 16 of 1977 with effect from 10th August, 1977 the Notified Area Shahganj stood superseded and as provided in Section 2 (2) (b) thereof all powers, functions and duties of the Notified Area Committee and its Chairman came to be vested in and were to be exercised, performed and discharged by the District Magistrate and that the District Magistrate including the persons or authority to whom the District Magistrate delegated under Section 4 (1) of the Ordinance his powers, functions and duties, have to be treated to be the Notified Area Committee or its Chairman as the occasion require. Sections 2 and 4 of the Ordinance read together clearly stipulated that the functions which came to be vested with the District Magistrate under the Ordinance could, notwithstanding the provisions contained in the U. P. Municipalities Act, be delegated by him to any person or authority. The District Magistrate vide his order dated 25th October, 1977 made under the aforementioned provisions, first of all delegated all his functions excepting those specified by him in the order, to Sri Karnail Singh, S. D. M. After the transfer of Sri Karnail Singh, he delegated all those powers to Sri Hira Mani Singh Yadava, S. D. M. Thus Sri Hira Mani Singh Yadava, S. D. M. and the District Magistrate were to be deemed to be the Notified Area Committee. In view of the provisions contained in Section 333A (viii) of the Municipalities Act, when on 5th May, 1978 Notified Area Shahganj was upgraded into a Municipal Board, delegation of his functions as Notified Area Committee of Sri Hira Mani Singh Yadava, made by the District Magistrate under Section 4 (1) of the Ordinance ensured for the purposes of powers, functions and duties of the Municipal Board, Shahganj, that came to be vested in the District Magistrate under Section 2 (1) (b) of the Ordinance as well. Accordingly Sri Hira Mani Singh Yadava was fully competent to perform the functions of the Municipal Board and to, under Section 131 of the Municipalities Act, frame proposal for imposition of octroi duty. In the alternative, he submitted that under Section 333 of the U. P. Municipalities Act whenever a new municipality is created and before the Board is constituted the District Magistrate is empowered to perform the functions of the Board and also to delegate his powers, duties and functions to some other official. In the circumstances delegation of the power made by the District Magistrate, Jaunpur, in his capacity as Administrator of the Notified Area Shahganj to Sri Hira Mani Singh Yadava ensured by virtue of Section 333A (viii) also in respect of his powers, duties and functions as Administrator of the Shahganj Municipality which came to be vested in him on 5th May, 1978 the date on which the new Municipality of Shahganj was created. He, therefore, contended that there was no defect in the framing of the proposal for imposing the tax and the same was not vitiated for the reason canvassed by the learned counsel for the petitioners. 5. As the preamble of the Uttar Pradesh Municipality Notified Areas and Town Areas (Alpakalik Vevastha) Adhyadesh, 1977 shows, the Ordinance was promulgated with a view to provide for certain temporary arrangements for the administration of the Municipalities, Notified Areas and Town Areas of the State. Sections 2 (1) (a) and 2 (2) (a) of Ordinance stipulated that notwithstanding anything contained in the Municipalities Act all members of the Municipal Board, including the President as also the Chairman and all members of Notified Area Committee were to cease to hold their offices and the consequences mentioned in Sections 2 (1) (b) and 2 (2) (b) of the Ordinance viz that the powers, functions and duties of the Municipal Board and its president and Committee as also the powers, functions and duties of the Notified Area Committee and its Chairman were to be vested and be exercised, performed and discharged by the District Magistrate or the person or authority to whom the District Magistrate delegated his powers, were to follow. Likewise, notwithstanding the provisions of U. P. Town Area Act where any local area is for the first time declared to be a municipality under Section 3 (a) of the Municipalities Act, the Board, its president and its Committee do not come into existence simultaneously with such declaration. The Board is established only when after creation of the Municipality elections are held and its constitution is, as laid down in Section 56 of the Act, notified in the official gazette. Likewise the president of the Board also comes into being after his nomination or election as the case may be, is notified in the gazette. In the circumstances no question of applying the provisions of Section 2 (1) (a) or 2 (2) (a) of the Ordinance to a municipality which comes into existence after enforcement of the Ordinance can possibly arise. Similar consequences would under Section 3, follow in respect of Town Area. The provisions contained in the Adhyadesh, in our opinion, clearly indicate that they were intended to apply to the Municipalities, Notified Areas and Town Areas of the State which were in existence on the date on which the Adhyadesh came into force (10-8-1977) and in connection with whose administration the Ordinance sought to make certain temporary arrangements. The Ordinance did not intend to affect the provisions of the U. P. Municipalities Act and the U. P. Town Areas Act in relation to the Municipalities, Notified Areas and Town Area that were not then in existence and for the administration of which no temporary arrangement was required to be made. Undoubtedly, Municipal Board Shahganj, which came to be established with effect from 5-5-78 was an entity different from the Town Area Committee Shahganj in whose place it had been established and it was not in existence on 10-8-1977 the date on which U. P. Ordinance 16 of 1977 was enforced. In the circumstances the question with regard to the competence of Sri Hira Mani Singh Yadava, S. D. M. to frame the proposal for imposition of the octroi duty in Shahganj Municipality cannot be tested on the touchstone of anything contained in U. P. Municipalities, Notified Areas and Town Areas (Alpakalik Vevastha) Adhyadesh, 1977 or the Act which replaced the Ordinance. The propriety of the action of Sri Hira Mani Singh Yadava will have to be tested only on the basis of the provisions contained in U. P. Municipalities Act. 6. It is not disputed that power to impose octroi duty in the Municipalities Act vests in the Municipal Board and as provided in Section 112 the Board cannot delegate that power to anyone else. However, the legislature took note of the fact that there may be a hiatus in the creation of a new Municipality and the establishment of the Municipal Board and that during this interregnum some arrangement for performance of the duties and functions which the Board is expected to perform under the provisions of the U. P. Municipalities Act, has to be made. It accordingly, under Section 333, made the following provisions: "333. Exercise by District Magistrate of Boards Power Pending Establishment of Board - When a new municipality is created under this Act. The District Magistrate, or other officer, or committee, or authority appointed by him in this behalf, may, until a board is established, exercise the powers and perform the duties and functions of the Board, and, he or it shall, for the purposes aforesaid, be deemed to be the board. Provided always that the District Magistrate or such other officer, or committee, or authority shall, as early as possible, make preliminary arrangements for the holdings of first elections and generally of expediting the assumption by the board of its duties when constituted. Provided further that the provisions of Section 10-AA, shall mutatis mutandis apply to such officer as they apply to an administrator." Thus enabling the District Magistrate or any other officer or Committee or authority appointed by the District Magistrate on that behalf to, until the Board is established, exercise the powers and functions and duties of the Board. Like wise, in Section 333A it made temporary provisions for cases where a municipality is created in place of a Town Area or a Notified Area and laid down the consequences that are to follow from the date of creation of such a municipality. Like wise, in Section 333A it made temporary provisions for cases where a municipality is created in place of a Town Area or a Notified Area and laid down the consequences that are to follow from the date of creation of such a municipality. Relevant portion of Section 333-A runs thus:- "Where a municipality is created in place of a Town Area or Notified Area, the following consequence shall, notwithstanding anything contained in Section 34 of the Town Areas Act, 1914, (U. P. Act II of 1914), or Section 339 of this Act, follow as from the date of the creation of the municipality. (i) ......................... (viii) anything done or any action taken, including any appointment or delegation made, notification, order or direction issued, rule, regulation, form, bye-law or scheme framed permit or licence granted or registration effected under the provisions of the United Provinces Town Areas Act, 1914 (U. P. Act II of 1914), or the provisions of this Act as applied to the Notified Area shall be deemed to have been done or taken under the corresponding provisions of the Act and shall continue in force accordingly unless and until superseded by anything done or any action taken under this Act." 7. Under Section 333 of the Municipalities Act, the District Magistrate has been enabled to delegate the functions of the Board which fie was required to perform after creation of a new municipality. In the instant case it is admitted that the District Magistrate has not, after creation of the Shahganj Municipality, on 5th May, 1978 empowered Sri Hira Mani Singh Yadava or any body else to perform the functions and duties of the Municipal Board. Accordingly, Sri Hira Mani Singh Yadava did not acquire any jurisdiction to frame proposal for imposition of octroi duty from anything contained in Section 333 of the U. P. Municipalities Act. 8. We are unable to accept the submission of the learned counsel for the Municipal Board that the delegation, made by the District Magistrate empowering Sri Hira Mani Singh Yadava to perform the functions of the Town Area Committee Shahganj prior to 5th May, 1973 would, because of the provisions contained in Section 333-A (viii) of the Municipalities Act ensure as delegation of the functions of the District Magistrate under Section 333 of the U. P. Municipalities Act as well. What clause (viii) of Section 333-A lays down is that where a municipality is created in place of a Town Area or Notified Area, then notwithstanding any thing contained in Section 339 of the U. P. Municipalities Act, anything done or any action taken, including any appointment or delegation made, notification, order or direction issued, rule, regulation, form, by-law or scheme framed permit or licences or registration effected under the provisions of the U. P. Town Areas Act, 1914 or the provisions of the Municipalities Act as applied to Notified Areas shall be deemed to have been done or taken under the corresponding provision, of this Act and shall continue in force accordingly unless and until superseded by anything done or any action taken under the Municipalities Act. Under this clause the appointment or delegation etc. made under the U. P. Town Area Act or under the provisions of U. P. Municipalities Act No. II of 1916 are to remain effective after the creation of the Municipality in place of a Town Area. This clause does not, in our opinion, keep an action taken, including appointment or delegation made in respect of a Notified Area under any statutory provisions other than those contained in the U. P. Municipalities .Act as applied to the Notified Area alive. Only such provisions of the U. P. Municipalities Act apply to a Notified Area, as have been made applicable to it by means of a notification issued by the State Government under Section 338 of the U. P. Municipalities Act. The delegation relied upon by the learned counsel for the Municipal Board was made under the U. P. Ordinance No. 16 of 1977 which was subsequently replaced by Uttar Pradesh Municipalities, Notified Areas and Town Areas (Alpkalik Vevastha) Adhyadesh 1977 and it was not a delegation made under any provision of the U. P. Municipalities Act which had been applicable to the Notified Area Shahganj by means of a notification issued by the State Government under Section 338. In the circumstance it can not be said that the clause (viii) of Section 333-A kept the delegation made by the District Magistrate in respect of the functions of the Notified Area Committee Shahganj effective even after existence of the Notified Areas Committee came to an end and the said Committee was replaced by a Municipal Board. In the circumstance it can not be said that the clause (viii) of Section 333-A kept the delegation made by the District Magistrate in respect of the functions of the Notified Area Committee Shahganj effective even after existence of the Notified Areas Committee came to an end and the said Committee was replaced by a Municipal Board. Accordingly, the delegation relied upon by the learned counsel cannot take the place of delegation of functions of the Board which can be made by the District Magistrate under Section 333 of the U. P. Municipalities Act. 9. Moreover, according to Section 338 of the U. P. Municipalities Act, the power to impose any tax in the whole or part of the Notified Area vested not in the Notified Area Committee but in the State Government. The delegation relied upon by the learned counsel for the Municipal Board made by the District Magistrate in favour of Sri Hira Mani Singh Yadava was made in accordance with Section 4 of U. P. Ordinance No. 16 of 1977 in respect of the functions of the Notified Area Committee and not in respect of the functions of the State Government. It thus appears that the power regarding imposition of tax in the Notified Area never came to be delegated to Sri Hira Mani Singh Yadava. Accordingly, even if it be taken that the said delegation was under the provisions of the U. P. Municipalities Act, the same would not ensure to sustain the action taken by Sri Hira Mani Singh Yadava in framing the proposal for imposition of octroi duty. What Cl. (viii) of S. 333-A provides is that action taken under the provisions of the U. P. Municipalities Act as applicable to the Town Areas shall continue to be in force. Under this section what was actually not done when the Notified Area Committee was in existence, cannot be taken to have been done for the purpose of the municipality which replaced the Town Area. Since functions of the State Government with regard to imposition of tax in a Town Area were in fact not delegated to Sri Hira Mani Singh Yadava, S.D.M. at any stage, no question of such delegation being construed as continuing in relation to imposition of fax within the limits of Municipal Board Shahganj arises. Since functions of the State Government with regard to imposition of tax in a Town Area were in fact not delegated to Sri Hira Mani Singh Yadava, S.D.M. at any stage, no question of such delegation being construed as continuing in relation to imposition of fax within the limits of Municipal Board Shahganj arises. We are accordingly of opinion that the claim of the respondents that Sri Hira Mani Singh Yadava was competent to frame proposal for imposition of octroi duty cannot be sustained by anything contained in Sections 333 and 333-A of the U. P. Municipalities Act. 10. Besides what has been stated by us above, if what has been held by this Court in the State of Uttar Pradesh v. Town Area Chhibra Mau (1972 All LJ 484) is correct, then it would mean that Section 333 of the U. P. Municipalities Act has no application what so ever in the case like the one before us where a municipality is created in place of a Notified Area. That provision applies only to cases where a municipality is created in an erstwhile Area which did not fall within the jurisdiction of any Town Area or Notified Area. In order to continue and keep an action taken under the U. P. Town Areas Act, 1914 or the provisions of the Municipalities Act as applied to the Notified Areas alive under clause (viii) of Section 333 A, it has not only to be shown that there was some provision under which such action could be taken or delegation made while the Town Area was in existence but it has also to be shown that there is a corresponding provision in the U. P. Municipalities Act under which such action could be taken or delegation made. By itself Section 333-A does not empower either the District Magistrate to perform the functions of the Municipal Board or to delegate the same to any other authority. Section 333 not being applicable to a Municipality, created in place of a Notified Area, nothing contained in that section can ensure to sustain the delegation of the nature made by the District Magistrate in the instant case. Section 333 not being applicable to a Municipality, created in place of a Notified Area, nothing contained in that section can ensure to sustain the delegation of the nature made by the District Magistrate in the instant case. Learned counsel for the respondents could not point out any other provision in the Municipalities Act under which the District Magistrate could either exercise the functions of the Board with regard to imposition of octroi duty or to delegate the same to any other person. Accordingly there being no corresponding provision contained in the U. P. Municipalities Act which authorises the making such a delegation in the case of municipality created in place of Notified Area no question of treating the delegation made by the District Magistrate in favour of Sri Hira Mani Singh Yadava as delegation made under such corresponding provision of U. P. Municipalities Act arises. 11. In the case of Raza Buland Sugar Co. v. Rampur Municipality ( AIR 1965 SC 895 ) the Supreme Court held that the provisions contained in Section 131 of the U. P. Municipalities Act which lays down that in order to impose a tax the Board has to publish proposal and draft rules along with a notice inviting objections to the proposal and the draft rules so published is mandatory and its non-compliance would vitiate the imposition. In the instant case it has not been shown, that either the Board or any person validly authorised by it had framed the proposal contemplated by Section 131 for imposition of octroi duty by Shahganj Municipality. Accordingly the levy of octroi duty cannot be sustained. 12. Before parting with this case, we may also state that during the course of hearing learned counsel for the Board also urged that the provisions of Uttar Pradesh Municipalities, Notified Areas and Town Areas (Alpkalik Vevastha) Adhyadesh, 1977 were by way of amendment of the U. P. Municipalities Act, 1916 and the provisions contained therein should be considered to be part of U. P. Municipalities Act, 1916. Accordingly delegation made by the District Magistrate in favour of Sri Hira Mani Singh Yadava should be considered to be delegation made under the provisions of the U. P. Municipalities Act as contemplated by clause (viii) of Section 333-A of the U. P. Municipalities Act. Accordingly delegation made by the District Magistrate in favour of Sri Hira Mani Singh Yadava should be considered to be delegation made under the provisions of the U. P. Municipalities Act as contemplated by clause (viii) of Section 333-A of the U. P. Municipalities Act. He made this submission with a view to contend that the said delegation continued to be operative even after the-municipality was created in place of the Notified Area. We are unable to accept the submission that U. P. Municipalities. Notified Areas and Town Areas (Alpakalik Vevastha) Adhyadesh, 1977 can be-said to form part of the U. P. Municipalities Act. It is an enactment which has its existence independently of U. P. Municipalities Act. It does not purport to amend any provision of the U. P. Municipalities Act. It merely enacts certain independent provisions and lays down that during the specified period the provisions of this Act would, notwithstanding anything contained in the U. P. Municipalities Act, entail certain consequences. As already stated, this enactment does not in any way affect the operation of the various provisions of the U. P. Municipalities Act in relation to the Municipalities that came into existence after 10th August, 1977. we, therefore, have no hesitation in rejecting; the respondents argument based on the premise that the Uttar Pradesh Municipalities, Notified Areas and Town Areas (Alpakalik Vevastha) Adhyadesh, 1977 is merely an Act which amends U. P. Municipalities Act and that its provisions get incorporated into the provisions of U. P. Municipalities Act. 13. In the result all these petitions succeed and are allowed with costs. Enforcement of the notification dated 20th May, 1979 (Annexure 13) enforcing the imposition of octroi duty as proposed by Sri Hira Mani Singh Yadava, S. D. M. with effect from 1st June, 1979 is quashed.