Maghan Packers (P) Ltd. vs The State of Punjab

N.K. Aggarwal, J.—This is a petition by 11 persons/parties filed under Articles 226/227 of the Constitution against (i) State of Punjab, (ii) Municipal Officer, Municipal Committee, Sangrur. The petitioners have challenged the validity of the notification dated 3.1.1995 fixing the octroi limits of Sangrur. The business units of some of the petitioners were located outside the municipal limits of Sangrur. The municipal limits were enlarged, vide notification dated 22.3.1993 and thereby the petitioners units fall within the municipal limits of Sangrur. One of the petitioners, namely, M/s Punjab Maize Products Ltd. Sangrur filed a civil suit in the Court of Senior Sub Judge, Sangrur, challenging the charging of octroi by the Municipal Committee. The plea of the plaintiff in that case was that, unless the octroi limits of the Municipal Committee were fixed, no octroi could be charged and collected. The fixing of the municipal limits was said to be different from the fixing of the octroi limits. During the pendency of the said civil suit, the Municipal Committee chose to issue a notification on 3.1.1995 octroi limits were fixed and thereupon the Municipal Committee assumed the powers and jurisdiction to charge and collect octroi.

The petitioners have challenged the impugned notification on two grounds; firstly, that the said notification, containing bye-laws regarding the fixing of the octroi limits, has been issued without previous publication, as required u/s 200 of the Punjab Municipal Act, 1911 (for short, the Act) and, secondly, that neither a copy of the bye-laws made under the said notification has been kept at the committee''s office for inspection by inhabitants, nor a copy has been made available for sale, as required u/s 202 of the Act.

The civil suit filed by one of the petitioners, as mentioned above, was decreed in favour of the plaintiff, vide judgment and decree dated 5.4.1995. The learned Senior Civil Judge, Sangrur, decreed the plaintiffs suit in part, directing the Municipal Committee, Sangrur, to refund the amount of octroi tax already charged from the plaintiff-company from 11.3.1993 to the date of notification, i.e., 3.1.1995. Since the Municipal Committee had claimed to have fixed the octroi limits by notification dated 3.1.1995, the petitioners'' suit came to the decided in its favour, assuming that the notification fixing the octroi limits empowered the Municipal Committee for collecting octroi thereafter.

Section 188 of the Act empowers a Municipal Committee to fix limits for the purpose of collecting octroi or terminal tax and to prescribe the routes by which animals or the articles may be imported into the municipality or exported therefrom. Clause (g) of Section 188 of the Act, which so empowers the Municipal Committee, reads as under:-

"188. General bye-laws:- A committee may, and shall, if so required by the State Government, by bye-law-

(a) to (f) *****

(g) where the collection of an octroi or terminal tax has been sanctioned, fix limits for the purpose of collecting the same, and may prescribe routes by which animals or articles or both, which are subject to octroi or terminal tax, may be imported into the municipality or exported therefrom."

Section 200 of the Act lays down that all the bye-laws made under the Act shall be subject to their previous publication. The bye-laws shall come into force after they are confirmed by the State Government and published in the prescribed manner u/s 201. The State Government has powers to cancel its confirmation. A copy of the bye-laws shall be kept at the office of the Municipal Committee and shall be open for inspection. Copies are also to be made available for sale, as laid down in section 202.

Sections 200, 201 and 202 of the Act arc relevant and, therefore, it would be necessary to examine the provisions contained in these sections in detail. These sections read as under:-

"Section 200. - Procedure for making bye-laws :- All bye-laws made under this Act shall be subject to previous publication.

Section 201.- Confirmation of bye-laws:

(1) No bye-law made under any section of this chapter shall come into force until it has been confirmed by the State Government and, published for such time and in such manner as the State Government may prescribe in this behalf.

(2) The State Government may cancel its confirmation of any such bye-laws and thereupon the bye-law shall cease to have effect.

Section 202. - Bye laws to be available for purchase and inspection:-

(1) A copy of all bye-laws made under this Act for any municipality shall be kept at the committee''s office, and shall be open during office hours without charge to the inspection of any inhabitant.

(2) Copies of all such bye-laws shall be kept at the committee''s office for sale to the public at a price not exceeding one rupee."

A Municipal Committee has been empowered to make bye-laws for different purposes, as enumerated in clauses (a) to (v) of Section 188 of the Act. Clause (g) specifically relates to an octroi or terminal tax. It also empowers the committee to prescribe the routes by which the articles, which are subject to octroi or terminal tax, shall be imported or exported. So far, the Municipal Committee, Sangrur, can claim to have acted under the law. The procedure as to how the bye-laws shall be framed for fixing the octroi limits is to be seen in the subsequent provisions contained in sections 200, 201 and 202 of the Act. As regards the requirement of previous publication contained in section 200, there is nothing on record to indicate that the Municipal Committee had, before enforcing the bye-laws, made any previous publication thereof.

The procedure for previous publication has been given in Rule 13 of the Punjab Municipal General Rules, 1979 (for short the Rules), which reads as under

"13.- Publication of proposals to impose taxes or to make rules or bye-laws:-

(1) In every case in which a committee proposes to --

(i) impose any tax u/s 61, or

(ii) make any bye-law under the Act, it shall give notice of its intention in the manner prescribed in rule 12 for the publication of public notices,

(2) When any such proposal is submitted for sanction or confirmation to the appropriate authority, it shall be accompanied by a statement that the provisions of the sub-rule (1) have been complied with."

On a perusal of the aforesaid rule, it is clear that a Municipal Committee can make bye-laws after giving notice of its intention by issuing a public notice in the prescribed manner. The manner, in which notice shall be given, has been laid down in rule 12 of the Rules. It would be useful to read rule 12, because it lays down various steps which are required to be taken for the publication of public notices. Rule 12 reads as under:

"12. Publication of notices- (1) in every case in which a notice is to be given by the committee in exercise of the powers conferred or in discharge of an obligation imposed by the Act or by any rule or bye-law made thereunder, such notice shall be published in Form 2, duly filled in, in the following manner for the purpose of inviting objections and suggestions from the public, namely: -

(a) Such notice shall be published by proclamation.

(b) A copy of such notice together with the copy of the matter to be published shall be affixed at some conspicuous place accessible to the public at the place of meeting of the committee for a period of not less than thirty days.

(c) The notice shall be displayed on the notice boards set up for this purpose within the limits of the municipality.

(d) A copy of such notice along with a copy of the matter to be published shall be sent to the editors of the newspapers having wide circulation in the locality, to be selected by the committee for the purpose. The editors of the newspapers so selected shall be addressed as in Form 3. Provided that, in case of a town planning scheme, the said notice shall be published weekly in two consecutive weeks in two daily newspapers with a statement of the period within which objection may be received.

(e) Every notice shall specify a date which shall not be less than thirty days from the date of its publication by which objection or suggestion by the persons interested should be submitted to the Secretary or executive officer, as the case may be, of the committee."

The respondents have not filed reply to the present petition. The learned counsel for the respondents has argued that a copy of the notification dated 3.1.1995 had been filed in the civil suit proceedings by the defendant and, therefore, that may be treated to be sufficient for the purpose of notice to the plaintiff. This argument has no legs to stand and is, therefore, to be rejected at once. The requirement of previous publication has a distinct purpose and object. When the Legislature intended that there must be prior publication, it was intended to enact a device for the protection of the tax payers. Such a provision was directly related to the method or system of imposing a tax and, therefore, the condition of previous publication forms the very root of the exercise of power. Such a provision, if ignored, could frustrate the very policy of the law that there should be no tax without an opportunity to object.

The Supreme Court has, in Raza Buland Sugar Co. Ltd. Vs. Municipal Board, Rampur, , considered a similar question about the publication of notification, whereby water tax was imposed by the Municipal Committee of Rampur under the U.P. Municipalities Act. It was held, while examining section 131(3) of the said Act, that the Municipal Board was required to publish the proposals and draft rules along with the notice inviting objections. The object of providing for publication of proposals and draft rules was to invite objections from the inhabitant of the municipality, who had to pay the tax. The purpose of such publication obviously was to further the democratic process and to provide a reasonable opportunity of being heard to those who were likely to be affected by the tax before imposing it on them.

Similar view has been reiterated by the Supreme Court in Baldev Singh and Others Vs. State of Himachal Pradesh and Others, . That was a case where certain villages, which were parts of a Gram Panchayat were brought within a notified area under the Himachal Pradesh Municipal Act. A notification was issued by the State Government, constituting the notified area. That notification was challenged by the petitioners with the plea that no opportunity of hearing was given to the residents before the notified area was constituted. The villages were earlier under the Gram Panchayats and, by bringing those villages within the notified area, certain rights, including the electoral rights, of the villagers had been affected. It was held that, where the exercise of a power results in civil consequences to citizens, the rule of natural justice could apply unless the statute specifically ruled out its application. It was held that, before the notified area was constituted, the people of the locality should have been afforded an opportunity of being heard and the administrative decision by the State Government should have been taken after considering the views of the residents. Denial of such opportunity is not in consonance with the scheme of the rule of law governing our society.

The petitioners'' contention that there was no previous publication of the draft bye-laws, stands uncontroverted inasmuch as no reply has been filed by the respondents. Certain documents have been brought on record by the petitioners, which go to establish that the requirements of section 202 regarding inspection and furnishing of copies were also not fulfilled. One Sri Yogesh Gupta, Advocate, is said to have made an application to the Tehsildar, Sangrur, so as to verify if any notification had been published. This application was made by Shri Gupta on 17.4.1995, whereupon the Patwari gave a report to the effect that there was no publication of any notice extending octroi limits. The reports of the Patwari, dated 18.4.1995, was endorsed by the Kanoongo and also by the Tehsildar, Sangrur. Shri Yogesh Gupta, Advocate, thereafter filed an application dated 18.4.1995 before the Executive Officer, Municipal Committee, Sangrur, requesting him that the inspection of the bye-laws may be allowed. He also made a separate application for the supply of a copy of the bye-laws. The submission of these applications has not keen controverted by the respondents. It is, therefore, evident that neither inspection of the bye-laws was allowed to Shri Yogesh Gupta, Advocate, as required by sub-section (1) of Section 202 nor a copy of the bye-laws was made available to Shri Gupta, as laid down in sub-section (2) of the said section.

Since the requirement of sections 200 and 202 of the Act were not fulfilled, the validity of the notification dated 3.1.1995 is unsustainable. As has been laid down by the Supreme Court in Raza Buland Sugar Company''s case (supra) and Baldev Singh''s Case (Supra) the requirement of previous publication is in the nature of a mandatory provision. Its violation shall definitely vitiate the notification whereby the octroi limits were fixed by the Municipal Committee, Sangrur. The impugned notification dated 3.1.1995 has, therefore, no force in law and it deserves to be quashed, being violative of the mandatory provisions of sections 200 and 202 of the Act. Charging and Collection of the octroi are held to be illegal and without authority of law.

The impugned notification dated 3.1.1995 is, therefore, quashed and charging of octroi is declared as illegal.

The writ petition stands allowed in the above terms. No order as to costs.