Firm Seth Radha Kishan Vs. The
Administrator, Municipal Committee, Ludhiana  Insc 52 (7 March 1963)
07/03/1963 SUBBARAO, K.
DAYAL, RAGHUBAR MUDHOLKAR, J.R.
CITATION: 1963 AIR 1547 1964 SCR (2) 273
RF 1966 SC1089 (8) E 1968 SC 271 (12) R 1970
SC1002 (5) RF 1975 SC2238 (2) E&D 1977 SC 955 (23) R 1979 SC1250 (11,24A)
of--Remedies by way of appeal provided in the Act-Express or implied exclusion
of Civil courts-Punjab Municipal Act, 1911 (Punj. III of 1911), ss. 61, 78, 84,
86-Punjab Government Notification No. 26443 dated July, 21, 1932-Items 68 69 of
the Schedule-Code of Civil Procedure, 1908 (Act 5 of 1908), s. 90.
The appellant is a firm carrying on business
within the octroi limits of Ludhiana Municipality. On the Sambhar salt imported
by it into the limits of the Municipality terminal tax was imposed and the
appellant made payment of the said tax. Under item 68 of the Schedule to the
relevant Government Notification the Municipality is entitled to impose a
certain rate of tax on common salt and under item 69 it is entitled to impose a
higher rate of tax in respect of salt of all kinds other than common salt. In
the present case the higher rate was imposed. The appellant filed a suit
against the respondent in the civil court, Ludhina, for the refund of the
amount paid by him.
274 The Civil Court held that Sambhar salt
was common salt within the meaning of item 68, that the imposition of tax on it
by the respondent under item 69 was illegal and that therefore the court had
jurisdiction to entertain the suit.
On appeal the High Court proceeded on the
assumption that Sambhar salt was common salt but held that, even so, the Civil
Court had no jurisdiction to entertain the suit as the Act provided a remedy by
way of appeal against the wrong orders of the authorities thereunder. The
present appeal is by way of certificate granted by the High Court.
On behalf of the appellant it was contended
that the respondent had no power to impose terminal tax on common salt under
item 69 of the Schedule and therefore the tax having been imposed contrary to
the provisions of the Act, the Civil Court has jurisdiction to entertain the
suit. The contention on behalf of the respondent was that the respondent has
power to impose terminal tax on common salt under the provisions of the Act,
that the imposition of tax under a wrong entry could be rectified only in the
manner prescribed by the Act and that the Civil Court has no jurisdiction to
entertain the suit for the refund of the tax collected when a specific remedy
is available under the Act.
Held, that a statute can expressly or by
necessary implication bar the jurisdiction of Civil Courts in respect of a
particular matter. The mere conferment of special jurisdiction on a tribunal in
respect of the said matter does not in itself exclude the jurisdiction of civil
The statute may specifically provide for
vesting the jurisdiction of civil Courts, even if there was no such specific
exclusion, if it creates a liability not existing before and gives a special
and particular remedy for the aggrieved party, the remedy provided by it must
The same principle would apply if the statute
had provided for the particular forum in which the same remedy could be had.
Even in such cases the civil Court's jurisdiction is not completely ousted. A
suit in a civil Court will always lie to question the order of a tribunal
created by a statute, even if its order is, expressly or by necessary
implication, made final, if the said tribunal abuses its power or does no act
under the Act but in violation of its provision.
Wolverhamton New Watterworks Co. v.
Hawkesford, (1859) 6 C. B. (N. S.) 336, Secretary of State v. Mast & Co.,
(1940) L. R. 67 1. A. 222, Bhaishankar Nanabhai v. Municipal Corporation of
Bombay. (1907) 1. L. R. 31 Bom. 604, Zamindar of Ettayapuram v. Sankarappa,
1904) 1. L. R. 27 Mad. 483 East Fremantle Corporation V., Annois,  A. C.
"21 275 Gaekwar Sarkar of Baroda v. Gandhi Kachrabhai, (1903) I.L.R. 27
Bom. 344, Municipal Board, Banares v. Krishna & Co., (1935) I. L. R. 57
All. 916, Municipal Committee, Montgomery v. Sant Singh, A. I. R. 1940 Lah. (F.
B.) 377 and Administrator, Lahore v. Abdul Majid, A. I. R. 1945 Lah. 81.
In the present case the liability to pay
terminal tax is created by the Act and a remedy is given to a party aggrieved
in the enforcement of the liability. The party aggrieved can only pursue the
remedy provided by the Act and he cannot file a suit in a civil court in that
Provisions of ss. 84 and 86 of the Act
exclude the jurisdiction of the Civil Court in respect of the tax levied or the
assessment under the Act. In a case where the Municipal Committee has undoubted
power to levy tax under a particular entry in respect of an article but it
levies tax under a wrong entry not applicable to that article the said
committee only commits a mistake or an error in fixing the rate (of tax
payable) in respect of the said article and no question 'of jurisdiction but
only a question of detail is involved. Such a mistake can be corrected only in
the manner prescribed by the Act.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 45 of 1961.
Appeal from the judgment and decree dated
April 16, 1959, of the Punjab High Court at Chandigarh in Regular First Appeal
No. 30 of 1952.
S. P. Verma, for the appellants.
B. P. Maheshwari, for respondent.
1963. March 7. The Judgment of the Court was
delivered by SUBBA RAO J. -This appeal raises the question whether a suit would
lie in a civil Court claiming refund of the terminal tax collected by a
municipality under the provisions of the Punjab Municipal Act, 1911 (Punjab Act
III of 1911), hereinafter called the Act.
The appellant is alleged to be a firm
registered under the Indian Partnership Act. It carries on 276 business within
the limits of the Ludhiana Municipality. It imported Sambhar salt into the
octroi limits of the Ludhiana Municipality. The Municipal Committee, Ludhiana,
imposed terminal tax on the said salt and the appellant paid a sum of Rs.
5,893/7/0 towards the said tax between October 24, 1947 and December 8, 1947.
Under the Punjab Government Notification No. 26463, dated July 21, 1932,
terminal tax was payable under item 68 of the Schedule attached to the said
Notification at the rate of 3 pies per maund in respect of salt common, and
under item 69 at the rate of As./10/-per maund in respect of salt of all kinds
other than common salt. The Municipal Committee, Ludhiana, collected terminal
tax on the Sambhar salt at the higher rate under item 69 of the Schedule on the
ground that it did not fall under item 68 of the Schedule. The appellant filed
a suit against the respondent in the Civil Court, Ludhiana, claiming refund of
the said amount with interest. The respondent, inter alia, contended that
Sambhar salt was not common salt and the Civil Court had no jurisdiction to
entertain the suit. The Senior Subordinate judge, Ludhiana, held that Sambhar
salt was common salt within the meaning of item 68 of the Schedule, that the
imposition of tax on it by the respondent under item 69 of the Schedule was
illegal and that, therefore, the Court had jurisdiction to entertain the suit.
On appeal, the High Court of Punjab proceeded
on the assumption that Sambhar salt was salt common, but held that, even so,
the Civil Court had no jurisdiction to entertain the suit as the Act provided
for a remedy by way of appeal against the wrong orders of the authorities
thereunder. It further held that, in any view, the suit was premature as the
appellant should have pursued his remedies under the Act before coming to the
Civil Court. In the result, the decree of the Subordinate judge was set aside
and the suit was dismissed. The 277 present appeal has been preferred by the
appellant by way of certificate issued by the High Court.
Mr. Varma, learned counsel for the appellant,
contends that the respondent has no power to impose terminal tax on salt common
under item 69 of the Schedule to the said Notification and therefore the tax
having been imposed contrary to the provisions of the Act, the Civil Court has
jurisdiction to entertain the suit.
On the other hand, Mr. Maheshwari, learned
counsel for the respondent, argues that the respondent has power to impose
terminal tax on common salt under the provisions of the Act, that the
imposition of tax under a wrong entry could be rectified only in the manner
prescribed by the Act and that the Civil Court has no jurisdiction to entertain
a suit for the refund of tax collected when a specific remedy is available
under the Act.
It would be convenient at the outset to
notice the relevant provisions of the Act. Under s. 61 (2) the Municipal
Committee has power to impose, with the previous sanction of the State
Government, any tax which the State Legislature has power to impose in the
State, subject to any general or special orders which the State Government may
make in that behalf. The State Government issued the Notification No.
26463 dated July 24, 1932 to come into force
from November 1, 1932 empowering the Municipal Committee to impose terminal tax
at the rates shown in Col. 3 of the Schedule attached thereto upon the articles
mentioned in Col. 2 thereof which are imported into or exported out of the
municipal limits by rail or by road. The relevant items are items 68 and 69.
Item 63 is "salt common" and the rate prescribed is 3 pies per maund;
and item 69 is "salt of all kinds other than common salt" and the
rate fixed is As.
/10/per maund. Section 78 provides for a
penalty if any person brings any article liable to the 278 payment of terminal
tax into the prescribed limits without paying the said tax. Section 84 gives a
right of appeal.
against any levy or refusal to refund any tax
collected under the Act to the Deputy Com missioner or such other officer as
may be empowered by the State Government in that behalf ; under sub-s. (2)
thereof, if on hearing of an appeal under the section., any question as to the
liability to, or the principle of assessment of a tax arises, on which the
officer hearing the appeal entertains reasonable doubt, he may,. either of his
own motion or on the application of any person interested, state the case and
refer the same for the opinion of the High Court; and after the High Court
gives its opinion on the question referred to it, the appellate authority shall
proceed to dispose of the appeal in conformity with the decisions of the High
Court. Under s. 86, the liability of any person to be taxed cannot be
questioned in any manner or by any authority other than that provided in the
Act; under sub-s. (2) thereof, no refund of any tax shall be claimed by any
person otherwise than in accordance with the provisions of the Act and rules
there under. It will be seen from the aforesaid provisions that the power to
impose a terminal tax and the liability to pay the same is conferred or imposed
on the municipal committee and the assessee respectively by the provisions of
the Act. The Act also gives a remedy to an aggrieved party to challenge the
correctness of the leavy or to seek refund of the same. Not only an appeal has
been provided for against the order of municipal committee levying the tax or
refusing to refund the same, but the appellate authority is empowered to get an
authoritative opinion of the High Court on any question as to the liability or
on the principle of assessment; and on receiving such opinion, the said
authority is bound to dispose of the appeal in the light of the said opinion.
It is said that the reference provided to the High Court is in the discretion
of the appellate authority and he can 279 with impunity refuse to do so, even
if any difficult question is involved in the appeal. The question is not
whether a particular officer abuses his power but whether a remedy is available
under the Act or not. It cannot be assumed that an officer, though he
entertains reasonable doubt on the question as to liability or on the principle
of assessment, he will deliberately and maliciously refuse to do his duty : if
he does, other remedies may be available.
The Act also in specific terms debars any
authority other than that prescribed under the Act from deciding the question
of liability of any person to tax or his right to get refund of a tax paid. In
short, the Act contains a self-contained code conferring a right, impossing a
ability and prescribing a remedy for an aggrieved party. In such a situation,
the question arised whether a Civil Court can entertain a suit for a refund of
the tax wrongfully collected from an assessee; and if so, what are the limits
of its jurisdiction ? We shall now proceed to consider the relevant principles
governing the said question. Willes, J., in Wolverhamton New Waterworks Co. v.
Hawkesford (1), describes as follows the three classes of cases in which a
liability may be established founded upon a statute :
"One is, where there was a liability
existing at common law, and that liability is affirmed by a statute which gives
a special and peculiar form of remedy different from the remedy which existed
at common law : there, unless the statute contains words which expressly or by
necessary implication exclude the common law remedy the party suing has his
election to pursue either that or the statutory remedy. The second class of
case is, where the statute gives the right to sue merely, but provides no
particular from of remedy : there, the party (1) (1859) 6. C.B. (N.S.) 336,
280 can only proceed by action at common law.
But there is a third class, viz., where a liability not. existing at common law
is created by a statute which at the same time gives a special and particular
remedy for enforcing it.......... The remedy provided by the statute must be
followed, and it is not competent to the party to pursue the course applicable
to cases of the second class." It is clear from the said passage that in a
case where the liability is created by a statute, a party aggrieved must pursue
the special remedy provided by it and he cannot pursue his remedy in a Civil
Court. This principle was approved by the Judical Committee in Secretary of
Mask and Co. (1). The High Courts in India
also accepted the principle and applied it to different situations : see
Bhaishankar Nanabhai v. The Municipal Corporation of Bombay (2); Zamindar of
Ettayapuram v. Sankarappa (3). But there is also an equally well settled
principle governing the scope of the Civil Court's jurisdiction in a case where
a statute created a liability and provided a remedy. Lord Macnaghten in East
Fremantle Corporation v. Annois (4), states the principles thus :
"The law has been settled for last
hundred years. If persons in the position of the appellants, acting in the
execution of a public trust and for the public benefit, do an act which they
are authorised by law to do, and do it in a proper manner, though the act so
done works a special injury to a particular individual, the individual injured
cannot maintain an action...... In a word, the only question is, 'Has the power
been exceeded?' Abuse is only one form of excess." In Gaekwar Sarkar of
Baroda v. Gandhi Kachrabhai(5) the defendants by the negligent construction of
railway made in exercise of their powers under the (1) (1940) L.R. 67 I.A 222.
(3) (1904) I.L.R. 27 Mad. 483. (5) (1903)
I.L.R, 27 Bom. 344.
(2) (1907) I.L.R. 31 Bom. 604.
(4) (1902) A.C. 213.
281 Railways Act had caused the plaintiff's
land to be flooded in the rainy season and consequently damaged. The Railways
Act provided that a suit shall not lie to recover Compensation for damage
caused by the exercise of the powers thereby conferred, but that the amount of
such compensation shall be determined in accordance with the Land Acquisition
Act, 1870. In spite of this bar the plaintiff brought a suit for damages for
injury alleged to have been caused to his field. It was argued that though the
statutory authority of the Act, of 1890 might have been abused or exceeded, the
of the aggrieved party was only to proceed under the Land Acquisition Act and
not by a civil suit.
Rejecting that plea the judicial Committee
"It would be simply a waste of time to deal
seriously with such contentions as these. It has been determined over and over
again that if a person or a body of persons having statutory authority for the
construction of works...... exceeds or abuses the powers conferred by the
Legislature, the remedy of a person injured in consequence is by action or
suit, and not by a proceedings for compensation under the statute which has
been so transgressed." Indian Courts, in the context of Municipal Acts had
occasion to apply both the principles. In Municipal Board, Benaras v. Krishna
& Co. (1), it was held that no suit for a refund of an octroi charge, which
has been assessed and levied by a municipality, lies in a Civil Court on the
ground that the goods were not in fact assessable to octroi duty or that the
amount of assessment was excessive. There, the assessment was made in
accordance with the provisions laid down in the Municipalities Act and the
rules made thereunder. In Municipal Committee, Montgomery v. Sant Singh (2), a
Full Bench of the Lahore High Court had to consider the question (1) (1935)
I.L.R. 57 All. 916 (2) A.1.R. 1940 Lah. (F.B.)377, 380, 282 whether a suit
would lie in a Civil Court for an injunction restraining a Municipal Committe
from realizing the tax demanded from a person on the ground that he was not the
owner of the lorries the subject matter of tax, and consequently the demand
made on him was illegal and ultra vires of the Municipal Committee. Din
Mohammad J., speaking for the Court, elaborately considered the case law on the
subject and expressed his conclusion in the following words :
"Any special piece of legislation may
provide special remedies arising there from and may debar a subject from having
recourse to any other remedies, but that bar will be confined to matters
covered by the legislation and not to any extraneous matter. A corporation is
the creature of a statute and is as much bound to act according to law as the
constituents thereof, namely, the individuals ruled by the corporation and if
the corporation does an act in disregard of its charter and intends to burden
any individual with the consequences of its illegal act, an appeal by that
individual to the general law of the land can in no circumstances be
denied." This is a case where it may be said that the Municipal Committee
acted not under the Act but outside the Act in as much as the tax on vehicles
was payable by the owners only but not by those who did not own them. Another
Full Bench of the Lahore High Court, in Administrator, Lahore v. Abdul Majid
(1), had to deal with the jurisdiction of a Civil Court to entertain a suit for
an injunction restraining a municipal committee from interfering with the
construction of the plaintiff's proposed building on the ground that its order
refusing sanction under s. 193 (2) of the Punjab Municipal Act was an abuse of
its power. Mahajan J., delivering (1) A. 1. R. 1945 Lah. 81.
283 the judgment on behalf of the Full Bench
observed at p. 84 :
"The provisions of s. 225 which make the
decision of the Commissioner final can only mean this that that decision is
final only so far as the proceedings under the Act are concerned. But when an
order is made which is outside that Act, then the provisions of S.
225 can have no application to such an order
which itself is outside the Act........................................
In short the Bench laid down that in two
kinds of cases s. 225 was no bar to the jurisdiction of a civil court in
examining the order of the municipal committee passed under s. 193 (2), Punjab
Municipal Act. The first case is where a committee acts ultra vires and the
second case is where it acts arbitrarily or capriciously. In other words, where
it abuses its statutory powers." The learned judge concluded thus, at p.
85 "The remedies given to the subject by a statute are for relief against
the exercise of power conferred by a statute but those remedies are not
contemplated for usurpation of power under cover of the provisions of the
statute. The civil Courts are the proper tribunals in those kinds of cases and
their jurisdiction cannot be held barred by reason of statutory remedies
provided for grievances arising in exercise of statutory powers. To cases of
this kind the rule that where a statute creates a right and provides at the
same time a remedy, that remedy and no other is available, has no application.
Further citation is unnecessary. The law on
the subject may be briefly stated thus :
284 Under s. 9 of the Code of Civil Procedure
the Court shall have jurisdiction to try all suits of civil nature excepting suits
of which cognizance is either expressly or impliedly barred. A statute,
therefore, expressly or by necessary implication, can bar the jurisdiction of
civil Courts in respect of a particular matter. The mere conferment of special
jurisdiction on a tribunal in respect of the said matter does not in itself
exclude the jurisdiction of civil courts. The statute may specifically provide
for ousting the jurisdiction of civil Courts ; even if there was no such
specific exclusion, if it creates a liability not existing before and gives a
special and Particular remedy for the aggrieved party, the remedy provided by
it must be followed.
The same principle would apply if the statute
had provided for the particular forum in which the said remedy could be had.
Even in such cases, the Civil Court's jurisdiction is not completely ousted. A
suit in a civil Court will always lie to question the order of a tribunal
created by a statute, even if its order is, expressly or by necessary
implication, made final, if the said tribunal abuses its power or does not act
under the Act but in violation of its provisions.
Let us now apply the said principles to the
facts of the present case. The liability to pay terminal tax is created by the
Act and remedy is given to a party aggrieved in the enforcement of that
liability. As has been already indicated, against the order of the municipal
committee levying terminal tax an appeal lies to the Deputy Commissioner and a
reference to the High Court. Applying one of the principles stated supra, the
party aggrieved can only pursue the remedy provided by the Act and he cannot
file a suit in a civil Court in that regard. Provisions of ss. 84 and 86 of the
Act exclude the jurisdiction of the civil Court in respect of the tax levied or
the assessment made under the Act.
285 But the learned counsel for the
Appellants contends that the impugned levy was not made under the Act but in
derogation of the provisions thereof. There is no force in this contention.
Section 61 (2) of the Act specifically empowers the Municipal Committee to levy
any tax other than those specified therein with the previous sanction of the
State Government. The levy of terminal tax was sanctioned by the Punjab
Government by Notification No. 26463 dated July 21, 1932, at the rates shown in
column 3 of the Schedule to the said Notification. Under the said Notification,
read with s. 61 of the Act, the Municipal Committee is empowered to levy
terminal tax on salt whether it is common salt or not.
The Committee has, therefore, ample power
under the Act and the Notification issued by the State Government to impose the
said tax. The only dispute was as regards the rate of tax payable in respect of
the salt brought by the appellant into the limits of the Municipal Committee.
The rate depended upon the character of the salt. The ascertainment of the said
fact is a necessary step for fixing the rate and it is not possible to say that
in ascertaining the said fact the authorities concerned travelled outside the
provisions of the Act. The learned counsel contends that if a municipal
committee levies terminal tax on an article not liable to tax under the Act, a
suit would lie and, therefore, the same legal position should apply even to a
case where the municipal committee levies the tax in respect of an article
under an entry not applicable to if. We do not see any analogy between these
two illustrations : in the former, the municipal committee does not act under
the Act, but in the latter it only commits a mistake or an error in fixing the
rate of tax payable in respect of a particular commodity ; one is outside the
Act and the other is under the Act ; one raises the question of jurisdiction
and the other raises an objection to a Matter of detail. We, therefore, hold
that in the 286 present case the mistake, if any, committed in imposing the
terminal tax can only be corrected in the manner prescribed by the Act. The
appellants have misconceived their remedy in filing the suit in the civil
Court. The conclusion arrived at by the High Court is correct.
In the result, the appeal fails and is
dismissed with costs.