The Western India Theatres Ltd. Vs.
Municipal Corporation of The City of Poona  INSC 2 (16 January 1958)
Municipality, Power of--Imposition of tax on
cinema show- Constitutional validity of enactment-Enhancement of such tax
Validity-Bombay District Municipal Act, 1901 (Bom.of 111 1901), s. 59(1)
(XI)--Bombay Municipal Boroughs Act, 1925 (Bom. XVIII of 1925), s. 60.
The appellant, a public limited company, was
a lessee of four cinema houses situated within the municipal limits of Poona
City where it used to exhibit cinematograph films.
The respondent, the Municipal Corporation of
Poona, in exercise of its power under s. 59(1) (XI) of the Bombay District
Municipal Act, 1901, levied with effect from October 1, 1920 a tax of Rs. 2 per
day as license fee on the owners and lessees of cinema houses. That Act
governed the Municipality till 1926 and thereafter it was governed by the
Bombay Municipal Boroughs Act, 1925. The tax was enhanced to Re. 1 per show on
June 3, 1941, and to Rs. 5 per show on June 9, 1948. By the suit, out of which
the present appeal arose, the appellant sought for a declaration that the levy
of the said tax, the rules framed in connection therewith and the enhancement
of the tax as aforesaid were illegal and ultra vires. The trial court decreed
the suit in part but the High Court in appeal reversed the decision of the
trial court 72 and dismissed the suit. It was contended on behalf of the
appellant that (1) the tax was not one covered by Entry 50 in List 11 of
Seventh Schedule to the Government of India Act, 1935, but was one on trade or
calling covered by Entry 46 thereof, and, was as such governed by S. 142A of
the said Act and that (2) s. 59(1)(XI) Of the Bombay District Municipal Act,
1901, was unconstitutional in that the legislature had thereby delegated
essential legislative power to the Municipality to determine the nature of the
tax to be imposed on the rate-payers and completely abdicated its function,
leaving such power wholly unguided.
Held, that both the contentions must fail.
The first point was covered by the decision
given in the appellant's other appeal, Civil Appeal No. 145 Of 1955 which must
also govern this case.
It was not correct to contend that the power
delegated to the Municipality under S. 59(1)(XI) Of the Bombay District
Municipal Act, 1901, was unguided. That section authorised the imposition of
such taxes alone as were necessary for the purposes of the Act. The obligations
and functions cast upon the Municipalities by ch. VII of the Act showed that
taxes could be -levied only for implementing those purposes and none others.
Nor could it be said that the Provincial
Legislature had abdicated its function in favour of the Municipality. The
taxing power of the Municipality was made subject to the approval of the
Governor-in-Council by the section itself.
The marginal note to a section could not
affect the construction of the section if its language was otherwise clear and
unambiguous and the word 'modify' connoted not merely reduction but also other
kinds of alteration including enlargement. The substitution of the word I
reduce' by the word I modify' in the body of s. 6o of the Bombay Municipal
Boroughs Act, 1925, notwithstanding the omission to do so in the marginal note,
therefore, clearly indicated the intention of the Legislature to widen the
scope of that section and, consequently, it could not be said that the
enhancement of the tax was not sustainable there under.
Commissioner of Income Tax, Bombay v.
Ahmedbhai Umarbhai & Co., Bombay,  S.C.R. 335 and Stevens v. The
General Steam Navigation Company, Ltd., L.R. (1903) 1 K.B. 890, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 146 of 1955.
Appeal from the judgment and decree dated
February 10, 1953, of the Bombay High Court in Appeal No. 953 of 1951, arising
out of the judgment and decree dated November 36,1951, of the Court of 73 Joint
Civil Judge, Senior Division, Poona, in Special Suit No. 76 of 1950.
H. D. Banaji, R. A. Gagrat and G.
Gopalakrishnan, for the appellant.
M. C. Setalvad, Attorney-General for India,
S. N. Andley and J. B. Dadachanji, for the respondent.
1959. January 16. The Judgment of the Court
was delivered by DAS, C. J.-The appellant is a public limited company
registered under the Indian Companies Act, 1913. It is a lessee of four cinema
houses situate within the municipal limits of Poona City known respectively as
" Minerva ", " The Globe ", " Sri Krishna " and
" The Nishat ". It exhibits cinematograph films, both foreign and
Indian, in the said four houses. The respondent, a body corporate, was governed
by the Bombay District Municipal Act, 1901 (Bom. III of 1901) up to June 8,
1926, and from then by the Bombay Municipal Boroughs Act, 1925 (Bom. XVIII of
1925) up to December 29, 1949, and, thereafter, by the Bombay Provincial
Municipal Corporation Act, 1949 (Bom. LIX of 1949). With effect from October 1,
1920, the respondent, with the sanction of the Government of Bombay levied on
the owners and lessees of cinema houses within the limits of the erstwhile
province of Bombay a tax of Rs. 2 per day as license fee. Rules for the levy
and collection of the said tax were framed by the respondent. Those rules were
amended on or about June 3, 1941, enhancing the tax from Rs. 2 per day to Re. I
per show. The rules were again revised on or about June 9,1948, under which the
tax was enhanced from Re. I per show to Rs. 5 per show. At all material times
the tax was being collected at the last mentioned rate.
Section 59 of the Bombay District Municipal
Act 1901 provided that subject to any general or special orders which the State
Government might make in that behalf any municipality (a) after observing the
preliminary procedure required by s. 60, and (b) with the sanction of the
authority therein mentioned, might 10 74 impose for the purposes of that Act
any of the taxes mentioned in that section. After enumerating ten specific
heads of taxes, which a municipality could levy a residuary category was set
forth in cl. (xi) in the words following:- "Any other tax to the nature
and object of which he approval of the Governor in, Council shall have been
obtained prior to the selection contemplated in sub-clause (1) of clause (a) of
section 60 ".
Ever since the appellant became a lessee of
the said cinema houses, the appellant has been making payments of the said tax
After giving the necessary statutory notice
to the respondent, the appellant, on or about March 31,1950, filed a suit in
the Court of the Civil Judge, Senior Division, Poona, being Suit No. 76 of
1950, against the respondent for a declaration that the levy and imposition of
the said tax with effect from October 1, 1920, were invalid and illegal;
that the enhancement in the rates of the tax
with effect first from June 3, 1941, and then June 9, 1948, was invalid and
illegal and that the resolutions passed and rules framed in connection with the
levy, imposition, enhancement and collection of the said impugned tax were
invalid, illegal and ultra vires, for a permanent injunction restraining the
defendants from levying or recovering and or increasing and enhancing the said
tax and for refund to the appellant of the amounts of the tax collected from it
and for costs of the suit and interest. By its judgment dated November 30,
1951, the trial court held that the said tax was validly levied and imposed,
but that the increase and enhancement thereof in 1941 and 1948 were illegal and
ultra vires. and that the suit was not barred under the Acts governing the
respondent. The trial court decreed the suit in part by issuing an injunction
restraining the respondent from levying, recovering or collecting the tax at
the enhanced rate and passing a decree against the respondent for refund of a
sum of Rs. 27,072 with interest and costs. The respondent preferred an appeal
and the appellant filed cross objections. But the High Court by its judgment
and decree dated February 10, 1953, 75 reversed the judgment of the trial court
and dismissed the suit of the appellant with costs throughout. The appellant's
cross objections were also dismissed. On December 10, 1953, the High Court
granted leave to the appellant to appeal to this Court from the said judgment.
Hence this final appeal questioning the
validity of the impugned tax.
The first point urged in this appeal is that
the law imposing this tax is not covered by entry 50 in List II of the Seventh
Schedule to the Government of India Act, 1935, but is really a tax on the
appellant's trade or calling referred to in entry 46 and that, therefore, the
amount of tax cannot under s. 142-A of the Government of India Act, 1935 exceed
Rs. 100 per annum. This point need not detain us long, for it is covered by us
in the appellant's other appeal No. 145 of 1955.
The second point urged before us in support
of this appeal is that s. 59(1) (xi) is unconstitutional in that the
legislature had completely abdicated its functions and had delegated essential
legislative power to the Municipality to determine the nature of the tax to be
imposed on the rate payers. Learned counsel for the appellant urges that the
power thus delegated to the municipality is unguided, uncanalised and vagrant,
for there is nothing in the Act to prevent the municipality from imposing any
tax it likes, even, say, income tax. Such omnibus delegation, he contends,
cannot on the authorities be supported as constitutional. We find ourselves in
agreement with the High Court in rejecting this contention.
In the first place, the power of the
municipality -cannot exceed the power of the provincial legislature itself and
the municipality cannot impose any tax, e.g., income tax which the provincial
legislature could not itself impose.
In the next place, s. 59 authorises the
municipality to impose the taxes therein mentioned " for the purposes of
this Act ". The obligations and functions cast upon the municipalities are
set forth in ch. VII of the Act. Taxes, therefore, can be levied by the
municipality only for implementing those purposes and for no other purpose. In
other words it will be open to the municipality to levy a tax for giving any of
the amenities therein mentioned.
76 The matter may be illustrated by reference
to s. 54 which enumerates the duties of municipalities. The first duty
mentioned in that section is that the Municipality should make provision for lighting
public streets and nobody can object if it imposes alighting tax, which,
indeed, is item (ix) in s. 59(1). Take another example: It is the duty of the
Municipality to arrange for supply of drinking water and it may legitimately
charge a water rate which, again, is item (viii) in s. 59(1). We do not for a
moment suggest that the municipalities may only impose a tax directly in
connection with the heads of duties cast upon it. What we say is that the tax
to be imposed must have some reasonable relation to the duties cast on it by
the Act. In the third place, although the rule of construction based on the
principle of ejusdem generis cannot be invoked in this case, for items (i) to
(x) do not, strictly speaking, belong to the same genus, but they do indicate,
to our mind the kind and nature of tax which the municipalities are authorised
to impose. Finally, the provincial legislature had certainly not abdicated in
favour of the municipality, for the taxing power of the municipality was quite
definitely made subject to the approval of the Governor-in-Council. Under the
Indian Council Act, 1861 (24 & 25 Vic. c. 67) the Governor- in-Council
might mean the Governor in Executive Council or the Governor in Legislative
Council. If the reference in s. 59(1)(xi) is to the Governor's Legislative
Council, then there was no improper delegation at all, for it was subject to
the legislative control of the Governor in Legislative Council. The Governor's
Legislative Council was composed of all the members of the Governor's Executive
Council besides a few other persons. Therefore if the reference was to the
Governor in his Executive Council even then, from a practical point of view,
the ultimate control was left with the Governor's Legislative Council. We need
not labour this point any further, for on the first three grounds the
delegation of legislative authority, if any, is not excessive so as to make the
exercise of it unconstitutional.
In our opinion the impugned section did lay
down a principle and fix a standard 77 which the municipalities had to follow
in imposing a tax and the legislature cannot, in the circumstances, be said to
have had abdicated itself and, therefore, the delegation of power to impose any
other tax cannot be struck down as being in excess of the permissible limits of
delegation of legislative functions.
The last point urged by learned counsel for
the appellant is that, under el. (xi) of s. 59(1), the enhancements of the
rates of the tax in 1941 and again in 1948 were illegal in that the municipality
had no power to do so under the Bombay Municipal Boroughs Act, 1925. According
to learned counsel for the appellant the judgment under appeal upholding the
validity of such enhancements cannot be supported under s.60 of that Act. That
section runs as follows:- " Power to suspend 60(1)Subject to the
requirements of cl- reduce or abolish ause (a)of the proviso to section any
existing tax 58 municipality may except as otherwise provide in clause provided
in clause (b) of the proviso to section 103 at any time for any sufficient
reason, suspend, modify or abolish any existing tax by suspending, altering or
rescinding any rule prescribing such tax." (2) The provisions of Chapter
VII relating to, the imposition of taxes shall apply so far as may be to the
suspension, modification or abolition of any tax and to the suspension,
alteration or rescission of any rule prescribing a tax." Reference is made
to the marginal note where the words used are " power to suspend, reduce
or abolish any existing tax ". It is suggested that the word it modify
" in the body of the section in between the words " suspend "
and " abolish " should be construed in the sense of reduction. The
marginal note, according to him, shows that the several words were used in the
section to indicate a progressive diminution in the quantum of tax until it was
completely gone. Reference is made to the root meaning of the word "
modify " which is to reduce or make less but does not cover the idea of
enhancement. In the first place, the marginal note cannot affect the
construction of the language used in the body of the section if it is otherwise
clear and unambiguous (see Commissioner of 78 Income Tax, Bombay v. Ahmedbhai
Umarbhai & Co., Bombay) (1).
In the next place, it should be borne in mind
that s. 67 of the Bombay District Municipal Act (Bom. III of 1901) which was
formerly applicable to municipalities used the word " reduce " in
between the words " suspend " and " abolish " and that that
section had been reproduced is s. 60 of the Bombay Municipal Boroughs Act,
1925, but that in the process of such reproduction the word "reduce"
was dropped ,and the word "modify" was introduced. In the marginal
note, however, the word " reduce " was not substituted by the word "
modify ", apparently through inadvertence. If the word " modify
" is to be read as "reduce", then there could be no point in the
provincial legislature substituting the word " reduce " by the word
"modify". This change must have been made with some purpose and the
purpose could only have been to use an expression of wider connotation so as to
include not only reduction but also other kinds of alteration.
Section 76 of this very Act also refers to
" modification not involving an increase in, the amount to be imposed
which makes the sense in which the word " modify has been used in this Act
perfectly clear, namely, that there may be a modification involving an
increase. Reference may also be made to the decision of the Court of Appeal in
England in the case of Stevens v. The General Steam Navigation Company, Ltd.
(2). " Modification ", according to Collins M. R. in his judgment at
p. 893, implied an alteration and the word was equally applicable whether the
effect of the alteration was to narrow or to enlarge the provisions. In our opinion
the dropping of the word " reduce " and the introduction of the word
'modify" in the body of s. 60, of the Act under consideration clearly
indicate an intention on the part of legislature to widen the scope of this
section and the High Court was right in so construing the same.
No other point was urged in this appeal and
for reasons stated above this appeal must be dismissed with costs.
(1)  S.C.R. 335 at P. 353. (2) L.R.
(1903) 1 K.B.