judgement:
N: Criminal Appeal No. 158 of 1972.
Appeal by special leave from the Judgment and order dated the 12th November, 1971 of the Gujarat High Court at Ahmedabad in Criminal Appeal No. 219 of 1970.
H.S. Patel, S.S. Khanduja and Lalita Kohli, for the appellant.
section K. Zauri, Amaresh Kumar and M. V. Goswami, for the respondents 1 2.
H. R. Khanna and M. N. Shroff, for respondent No. 3.
The Judgment of the Court was delivered by CHANDRACHUD, J.
This is an appeal by special leave from the judgment of the Gujarat High Court convicting the appellant under section 36 read with section 8 of the Gujarat Agricultural Produce Markets Act, 20 of 1964 (referred to herein as "the Act"), and sentencing him to pay a fine of Rs. 10/ .
The judgment of conviction was recorded by the High Court in an appeal from an order of acquittal passed by the learned Judicial Magistrate, First Class, Godhra.
An Inspector of Godhra Agricultural Produce Market Committee filed a complaint against the appellant charging him with having purchased a certain quantity of ginger in January and February, 1969 without obtaining a licence as required by the Act.
The learned Magistrate accepted the factum of purchase but he acquitted the appellant on the ground that the relevant notification in regard to the inclusion of ginger was not shown to have been promulgated and published as required by the Act.
The case was tried by the learned Magistrate by the application of procedure appointed for summary trials.
That circumstance together with the token sentence of fine imposed by the High Court gives to the case a petty appearance.
But occasionally, matters apparently petty seem on closer thought to contain points of importance though, regretfully, such importance comes to be realized by stages as the matter travels slowly from one court to another.
As before the Magistrate so in the High Court, the matter failed to receive due attention: a fundamental premise on which the judgment of the High Court is based contains an assumption contrary to the record.
Evidently, the attention of the High Court was not drawn either to the error of that assumption or to some of the more important aspects of the case which the parties have now perceived.
It is necessary, in order to understand the controversy, to notice some of the relevant statutory provisions.
In the erstwhile composite State of Bombay there was in operation an Act called the Bombay Agricultural Produce Markets Act, 22 of 1939.
On the bifurcation of that State on May 1, 1960 the new State of Gujarat was formed.
The Bombay Act of 1939 was extended by 454 an appropriate order to the State of Gujarat by the Government of that State.
That Act remained in operation in Gujarat till September 1, 1964 on which date the Gujarat Agricultural Produce Markets Act, 20 of 1964, came into force.
The Act was passed "to consolidate and amend the law relating to the regulation of buying and selling of agricultural produce and the establishment of markets for agricultural produce in the State of Gujarat".
Section 4 of the Act empowers the State Government to appoint an officer to be the Director of Agricultural Marketing and Rural Finance.
Sections 5, 6(1) and 6(5) of the Act read thus: "5.
Declaration of intention of regulating purchase and sale of agricultural produce in specified area. (1) The Director may, by notification in the Official Gazette, declare his intention of regulating the purchase and sale of such agricultural produce and in such area, as may be specified therein.
Such notification shall also be published in Gujarati in a newspaper having circulation in the area and in such other manner as may be prescribed.
(2) Such notification shall state that any objection or suggestion received by the Director within the period specified in the notification which shall not be less than one month from the date of the publication of the notification, shall be considered by the Director.
(3) The Director shall also send a copy of the notification to each of the local authorities functioning in the area specified in the notification with a request to submit its objections and suggestions if any, in writing to the Director within the period specified in the notification.
Declaration of market areas. (1) After the expiry of the period specified in the notification issued under section 5 (hereinafter referred to in this section as 'the said notification '), and after considering the objections and suggestions received before its expiry and holding such inquiry as may be necessary, the Director may, by notification in the Official Gazette, declare the area specified in the said notification or any portion thereof to be a market area for the purposes of this Act in respect of all or any of the kinds of agricultural produce specified in the said notification.
A notification under this section shall also be published in Gujarati in a newspaper having circulation in the said area and in such other manner, as may be prescribed.
(5) After declaring in the manner specified in section 5 his intention of so doing, and following the procedure there in, the Director may, at any time by notification in the Official Gazette.
exclude any area from a market area specified in a notification issued under sub section (1), or include any area therein and exclude from or add to the kinds of agricultural produce so specified any kind of agricultural produce.
" 455 By section 8, no person can operate in the market area or any part thereof except under and in accordance with the conditions of a licence granted under the Act.
Section 36 of the Act provides, to the extent material, that whoever without holding a licence uses any place in a market area for the purchase or sale of any agricultural produce and thereby contravenes section 8 shall on conviction be punished with the sentence mentioned therein.
Rule 3 of the Gujarat Agricultural Produce Markets Rules, 1965 provides that a notification under section 5 (1) or section 6(1) shall also be published by affixing a copy thereof at some conspicuous place in the office of each of the local authorities functioning in the area specified in the notification.
The simple question, though important, is whether the notification issued under section 6(5) of the Act, covering additional varieties of agricultural produce like ginger and onion, must not only be published in the official gazette but must also be published in Gujarati in a newspaper.
The concluding sentence of section 6(1) says that a notification under "this section" "shall also be published in Gujarati in a newspaper" having circulation in the particular area.
The argument of the appellant is twofold: Firstly, that "this section" means this subsection so that the procedure in regard to publication which is laid down in subsection (1) of section 6 must be restricted to notifications issued under that subsection and cannot be extended to those issued under subsection (5) of section 6; and secondly, assuming that the words "this section" are wide enough to cover every sub section of section 6 the word "shall" ought to be read as "may".
First, as to the meaning of the provision contained in section 6 (1) of the Act.
It means what it says.
That is the normal rule of construction of statutes, a rule not certainly absolute and unqualified, but the conditions which bring into play the exceptions to that rule do not exist here.
Far from it; because, the scheme of the Act and the purpose of the particular provision in section 6(1) underline the need to give to the provision its plain, natural meaning.
It is not reasonable to assume in the legislature an ignorance of the distinction between a "section" of the statute and the "subsections" of that section.
Therefore, the requirement laid down by section 6(1) that a notification under "this section" shall also be published in Gujarati in a newspaper would govern any and every notification issued under any part of section 6, that is to say, under any of the sub sections of section 6.
If this requirement was to govern notifications issued under sub section (1) of section 6 only.
the legislature would have said so.
But the little complexity that there is in this matter arises out of a known phenomenon, judicially noticed but otherwise disputed, that sometimes the legislature does not say what it means.
That has given rise to a series of technical rules of interpretation devised or designed to unravel the mind of the law makers.
If the words used in a statute are ambiguous, it is said, consider the object of the statute, have regard to the purpose for which the particular provision is put on the statute book 456 and then decide what interpretation best carries out that object and purpose.
The words of the concluding portion of section 6(1) are plain and unambiguous rendering superfluous the aid of artificial guide lines to interpretation.
But the matter does not rest there.
The appellant has made an alternative argument that the requirement regarding the publication in Gujarati in a newspaper is directory and not mandatory, despite the use of the word "shall".
That word, according to the appellant, really means "may".
Maxwell, Crawford and Craies abound in illustrations where the words "shall" and "may" are treated as interchangeable, "Shall be liable to pay interest" does not mean "must be made liable to pay interest", and "may not drive on the wrong side of the road" must mean "shall not drive on the wrong side of the road".
But the problem which the use of the language of command poses is: Does the legislature intend that its command shall at all events be performed ? Or is it enough to comply with the command in substance ? In other words, the question is : is the provision mandatory or directory ? Plainly, "shall" must normally be construed to mean "shall" and not "may", for the distinction between the two is fundamental.
Granting the application of mind, there is little or no chance that one who intends to leave a lee way will use the language of command in the performance of an act.
But since, even lesser directions are occasionally clothed in words of authority, it becomes necessary to delve deeper and ascertain the true meaning lying behind mere words.
Crawford on 'Statutory Construction ' (Ed. 1940, article 261, p. 516) sets out the following passage from an American case approvingly: "The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed.
The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other.
" Thus, the governing factor is the meaning and intent of the legislature, which should be gathered not merely from the words used by the legislature but from a variety of other circumstances and considerations.
In other words, the use of the word 'shall ' or 'may ' is not conclusive on the question whether the particular requirement of law is mandatory or directory.
But the circumstance that the legislature has used a language of compulsive force is always of great relevance and in the absence of anything contrary in the context indicating that a permissive interpretation is permissible, the statute ought to be construed as pre emptory.
One of the fundamental rules of interpretation is that if the words of a statute are themselves precise and unambiguous, no more is necessary than to expound those words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the legislature(1).
Section 6(1) of the Act provides in terms, plain and precise that a notification issued under the section "shall also" be published in Gujarati in a newspaper.
The word 'also ' provides an 457 important clue to the intention of the legislature because having provided that the notification shall be published in the Official Gazette, section 6(1) goes on to say that the notification shall also be published in Gujarati in a newspaper.
The additional mode of publication prescribed by law must, in the absence of anything to the contrary appearing from the context of the provision or its object, be assumed to have a meaning and a purpose.
In Khub Chand vs State of Rajasthan, it was observed that "the term 'shall ' in its ordinary significance is mandatory and the court shall ordinarily give that interpretation to that term unless such an interpretation leads to some absurd or inconvenient consequence or be at variance with the intent of the Legislature, to be collected from other parts of the Act.
The construction of the said expression depends on the provisions of a particular Act, the setting in which the expression appears, the object for which the direction is given, the consequences that would flow from the infringement of the direction and such other considerations".
The same principle was expressed thus in Haridwar Singh vs Begum Sumbrui.
"Several tests have been propounded in decided cases for determining the question whether a provision in a statute, or a rule is mandatory or directory.
No universal rule can be laid down on this matter.
In each case one must look to the subject matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured.
" Recently in the Presidential Election Case(3), the learned Chief Justice speaking on behalf of a seven Judge Bench observed: "In determining the question whether a provision is mandatory or directory, the subject matter, the importance of the provision, the relation of that provision to the general object intended to be secured by the Act will decide whether the provision is directory or mandatory.
It is the duty of the courts to get at the real intention of the legislature by carefully attending to the whole scope of the provision to be construed. 'The Key to the opening of every law is the reason and spirit of the law, it is the animus imponentis, the intention of the law maker expressed in the law itself, taken as a whole '.
" The scheme of the Act is like this: Under section 5(1) the Director of Marketing and Rural Finance may by a notification in the Official Gazette declare his intention of regulating purchase and sale of agricultural produce in the specified area.
Such notification is also required to be published in Gujarati in a newspaper having circulation in the particular area.
By the notification, the Director under section 5(2) has to invite objections and suggestions and the notification has to be stated that any such objections or suggestions received by the Director within the specified period, which shall not be less than one month from the date of the publication of the notification, shall be considered by the Director.
After the expiry of the aforesaid period the Director, under section 6(1), has the power to declare an area as the market area in respect of the particular kinds of agricultural produce.
This power is not absolute because by the terms of section 6(1) it can only be exercised after considering the objections and suggestions received by the Director within the stipulated period.
The notification under section 6(1) is also required to be published in Gujarati in a newspaper.
The 458 power conferred by section 5(1) or 6(1) is not exhausted by the issuance of the initial notification covering a particular area or relating to a particular agricultural produce.
An area initially included in the market area may later be excluded, a new area may be added and likewise an agricultural produce included in the notification may be excluded or a new variety of agricultural produce may be added.
This is a salutary power because experience gained by working the Act may show the necessity for amending the notification issued under section 6(1).
This power is conferred by section 6(5).
By section 6(5), if the Director intends to add or exclude an area or an agricultural produce, he is to declare his intention of doing so in the manner specified in section 5 and after following the procedure prescribed therein.
Thus, an amendment to the section 6(1) notification in regard to matters described therein is equated with a fresh declaration of intention in regard to those matters, rendering it obligatory to follow afresh the whole of the procedure prescribed by section 5.
That is to say, if the Director intends to add or exclude an area or an agricultural produce, he must declare his intention by notification in the Official Gazette and such notification must also be published in Gujarati in a newspaper.
Secondly, the Director must invite objections or suggestions by such notification and the notification must state that any objections or suggestions received within the stipulated time shall be considered by him.
The Director must also comply with the requirement of sub section (5) of section 3 by sending a copy of the notification to each of the local authorities functioning in the particular area with a request that they may submit their objections and suggestions within the specified period.
After the expiry of the period aforesaid and after considering the objections or suggestions received within that period, the Director may declare that the particular area or agricultural produce be added or excluded to or from the previous notification.
This declaration has to be by a notification in the Official Gazette and the notification has to be published in Gujarati in a newspaper having circulation in the particular area.
The last of these obligations arises out of the mandate contained in the concluding sentence of section 6(1).
The object of these requirements is quite clear.
The fresh notification can be issued only after considering the objections and suggestions which the Director receives within the specified time.
In fact, the initial notification has to state expressly that the Director shall consider the objections and suggestions received by him within the stated period.
Publication of the notification in the Official Gazette was evidently thought by the legislature not an adequate means of communicating the Director 's intention to those who would be vitally affected by the proposed declaration and who would therefore be interested in offering their objections and suggestions.
It is a matter of common knowledge that publication in a newspaper attracts greater public attention than publication in the Official Gazette.
That is why the legislature has taken care to direct that the notification shall also be published in Gujarati in a newspaper.
A violation of this requirement is likely to affect valuable rights of traders and agriculturists because in the absence of proper and adequate publicity, their right of trade and business shall have been hampered without affording to them an opportunity to offer objections and suggestions, an opportunity which the statute clearly deems so 459 desirable.
By section 6(2), once an area is declared to be a market area, no place in the said area can be used for the purchase or sale of any agricultural produce specified in the notification except in accordance with the provisions of the Act.
By section 8 no person can operate in the market area or any part thereof except under and in accordance with the conditions of a licence granted under the Act.
A violation of these provisions attracts penal consequences under section 36 of the Act.
It is therefore vital from the point of view of the citizens ' right to carry on trade or business, no less than for the consideration that violation of the Act leads to penal consequences, that the notification must receive due publicity.
As the statute itself has devised an adequate means of such publicity, there is no reason to permit a departure from that mode.
There is something in the very nature of the duty imposed by sections 5 and 6, something in the very object for which that duty is cast, that the duty must be performed.
"Some Rules", as said in Thakur Pratap Singh vs Sri Krishna, "are vital and go to the root of the matter: they cannot be broken".
The words of the statute here must therefore be followed punctiliously.
The legislative history of the Act reinforces this conclusion.
As stated before, the Bombay Agricultural Produce Markets Act, 1939 was in force in Gujarat till September 1, 1964 on which date the present Act replaced it.
Section 3(1) of the Bombay Act corresponding to section 5(1) of the Act provided that the notification `may ' also be published in the regional languages of the area.
Section 4(1) of the Bombay Act which corresponds to section 6(1) of the Act provided that "A notification under this section may also be published in the regional languages of the area in a newspaper circulated in the said area".
Section 4(4) of the Bombay Act corresponding to section 6(5) of the Act provided that exclusion or inclusion of an area of an agricultural produce may be made by the Commissioner by notification in the Official Gazette, "subject to the provisions of section 3".
Section 4(4) did not provide in terms as section 6(5) does, that the procedure prescribed in regard to the original notification shall be followed if an area or an agricultural produce is to be excluded or included.
The Gujarat legislature, having before it the model of the Bombay Act, made a conscious departure from it by providing for the publication of the notification in a newspaper and by substituting the word `shall ' for the word `may '.
These are significant modifications in the statute which was in force in Gujarat for over 4 years from the date of reorganisation till September 1, 1964.
These modifications bespeak the mind of the legislature that what was optional must be made obligatory.
We are therefore of the opinion that the notification issued under section 6(5) of the Act, like that under section 6(1), must also be published in Gujarati in a newspaper having circulation in the particular area.
This requirement is mandatory and must be fulfilled.
Admittedly the notification (exhibit 10) issued under section 6(5) on February 16, 1968 was not published in a newspaper at all, much less in Gujarati, Accordingly, the inclusion of new varieties of agricultural produce in that notification lacks legal validity and no prosecution can be founded upon its breach.
460 Rule 3 of the Gujarat Agricultural Produce Markets Rules, 1965 relates specifically and exclusively to notifications "issued under subsection (1) of section 5 or under sub section (1) of section 6.
" As we are concerned with a notification issued under sub section (5) of section 6, we need not go into the question whether Rule 3 is complied with.
We may however indicate that the authorities concerned must comply with Rule 3 also in regard to notifications issued under sections 5(1) and 6(1) of the Act.
After all, the rule is calculated to cause no inconvenience to the authorities charged with the duty of administering the Act.
It only requires publication by affixing a copy of the notification at some conspicuous place in the office of each of the local authorities functioning in the area specified in the notification.
The prosecution was conducted before the learned Magistrate in an indifferent manner.
That is not surprising because the beneficent purpose of summary trials is almost always defeated by a summary approach.
Bhailalbhai Chaturbhai Patel, an Inspector in the Godhra Agricultural Produce Market Committee, who was a material witness for proving the offence, said in his evidence that he did not know whether or not the notifications were published in any newspaper or on the notice board of the Godhra Municipality.
The learned Magistrate acquitted the appellant holding that the prosecution had failed to prove beyond a reasonable doubt that the notifications were published and promulgated as required by law.
In appeal, the High Court of Gujarat began the operative part of its judgment with a wrong assumption that exhibit 9 dated April 19, 1962 was a "notification constituting the Godhra Market area." In fact exhibit 9 was issued under section 4 A(3) of the Bombay Act as amended by Gujarat Act XXXI of 1961 declaring certain areas as "market proper" within the Godhra Market area.
The High Court was really concerned with the notification, exhibit 10, dated February 16, 1968 which was issued under section 6(5) of the Act and by which new varieties of agricultural produce like onion, ginger, sunhemp and jowar were added to the old list.
The High Court set aside the acquittal by following the judgment dated February 12, 1971 rendered by A. D. Desai, J. in Cr.
Appeal 695 of 1969.
That judgment has no application because it arose out of the Bombay Act and the question before Desai, J. was whether section 4(1) of the Bombay Act was mandatory or directory.
That section, as noticed earlier, provided that the notification "may" also be published in the regional language of the area in a newspaper circulated in that area.
The High Court, in the instant case, was concerned with section 6(5) of the Act which has made a conscious departure from the Bombay Act in important respect.
The High Court did not even refer to the provisions of the Act and it is doubtful whether those provisions were at all brought to its notice.
Everyone concerned assumed that the matter was concluded by the earlier judgment of Desai, J.
For these reasons we set aside the judgment of the High Court and restore that of the learned Judicial Magistrate, First Class, Godhra.
Fine, if paid, shall be refunded to the appellant.
P.H.P. Appeal allowed.

summary:
The appellant was prosecuted for having purchased a certain quantity of ginger without obtaining a licence as required by the Gujarat Agricultural Produce Markets Act.
The trial court accepted the factum of purchase but it acquitted the appellant on the ground that the relevant notification in regard to the inclusion of ginger was not shown to have been promulgated and published as required by the Act.
On appeal, the High Court reversed the acquittal and sentenced the appellant to a fine of Rs. 10/ .
The High Court proceeded on the assumption that the notifications were property made.
In the erstwhile composite State of Bombay there was in operation The Bombay Agricultural Produce Markets Act of 1939.
On the bifurcation of the State in 1960 the said 1939 Act was extended by an appropriate order to the State of Gujarat.
That Act remained in operation in Gujarat till the year 1964 in which year the present Act came into force.
Section 5 of the Act requires the Director to notify in the Official Gazette his intention to regulate the purchase and sale of agricultural produce.
The section also requires the publication in Gujarati in a newspaper having circulation in the area.
The section further requires that the objections should be invited from the public.
Section 6(1) provides that after the expiry of the period for making objections and after considering the objections and suggestions received and after holding necessary inquiry, the Director may, by notification in the Official Gazette, declare the area specified in the said notification to be a market area in respect of the agricultural produce to be specified in the notification.
Sub section (1) of section 6 further requires that the notification under the said section shall be published in Gujarati in a newspaper having circulation in the said area.
Sub section (5) of section 6 provides that the Director may, at any time by notification in the official gazette, exclude any area from a market area specified in a notification issued under sub section
(1) or include any area therein and exclude from or add to the kinds of agricultural produce so specified.
The sale or purchase of the agricultural produce concerned without a licence is made an offence by section 36 of the Act.
On appeal by special leave, the appellant contended that the notification under section 6(5) of the Act, covering additional varieties of agricultural produce, must not only be published in the Official gazette but must also be published in Gujarati in a newspaper.
The respondent contended that (1) the procedure in regard to the publication which is laid down in sub section
(1) of section 6 must be restricted to notifications issued under that sub section and cannot be extended to those issued under sub section (5) of section 6; (2) Assuming that the words "this section" are wide enough to cover every sub section of section 6.
the word 'shall ' ought to be read as 'may '.
^ HELD: (1) Section 6(1) means what it says.
That is the normal rule of construction of statutes, a rule not certainly absolute and unqualified, but the conditions which bring into play the exceptions to that rule did not exist.
It is not reasonable to assume in the legislature an ignorance of the distinction between a "section" of the statute and the "sub section" of that section.
The requirement 452 laid down by section 6(1) that a notification under "this section" shall also be published in Gujarati in a newspaper would govern any and every notification issued under any par of section 6, that is to say, under any of the sub sections of section 6.
[455E G] (2) Sometimes the legislature does not say what it means.
That has given rise to a series of technical rules of interpretation devised or designed to unraval the mind of the law makers.
The words of the concluding portion of section 6(1) are plain and unambiguous rendering superfluous the aid of artificial guide lines to interpretation.
[455H 456A] (3) "Shall" must normally be construed to mean "shall" and not "may", for the distinction between the two is fundamental.
The use of the word "shall" or "may" is not conclusive on the question whether the particular requirement of law is mandatory or directory.
In each case one must look to the subject matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured.
It is the duty of courts to get at the real intention of the legislature by carefully attending to the whole scope of the provision to be construed.
The amendment to section 6(1) notification in regard to matters described therein is equated with a fresh declaration of intention in regard to those matters, rendering it obligatory to follow afresh the whole of the procedure prescribed by section 5.
The object of these requirements is quite clear.
The fresh notification can be issued only after considering the objections and suggestions which the Director receives within the specified time.
In fact, the initial notification has to state expressly that the Director shall consider the objections and suggestions received by him within the stated period.
The publication of the notification in the Official Gazette was evidently thought by the legislature not an adequate means of communicating the Director 's intention to those who would be vitally affected by the proposed declaration and who would therefore be interested in offering their objections and suggestions.
It is a matter of common knowledge that publication in a newspaper attracts greater public attention than publication in the official gazette.
That is why the legislature has taken care to direct that the notification shall also be published in Gujarati in a newspaper.
A violation of this requirement is likely to affect valuable rights of traders and agriculturists because in the absence of proper and adequate publicity their right of trade and business shall have been hampered without affording to them an opportunity to offer objections and suggestions.
Once an area is declared to be a market area.
no place in the said area can be used for the purchase or sale of any agricultural produce specified in the notification without the necessary licence.
A violation of the said provisions attracts penal consequences under section 36.
It is.
therefore, vital from the point of view of the citizens ' right to carry on trade or business, no less than for the consideration that violation of the Act leads to penal consequences, that the notification must receive due publicity.
There is something in the very nature of the duty imposed by sections 5 and 6.
something in the very object for which the duty is cast.
that the duty must be performed.
[456C, 458B, F H, 459A B] (4) The legislative history of the Act reinforces this conclusion.
In the Bombay Act, which was made applicable to Gujarat till 1964, it was not necessary to publish in the newspaper notifications corresponding to section 6(5) notifications under the new Act.
The Gujarat Legislature, having before it the model of the Bombay Act.
made a conscious departure from it by providing for the publication of the notification in a newspaper and by substituting the word 'shall ' for the word 'may '.
[459D F] (5) A notification under section 6 must be published in Gujarati in a newspaper.
This requirement is mandatory and must be fulfilled.
Admittedly, the notification in question was not published in a newspaper at all, much less in Gujarati.
Accordingly, the inclusion of new varieties of agricultural produce in that notification lacks legal validity and no prosecution can be founded upon its breach.
[459E H] (6) The High Court took into consideration a wrong notification.
Reliance on the earlier judgment of Gujarat High Court on the construction of the Bombay Act was also wrong since the language there was wholly different.
[460E G] 453


judgement:
Civil Appeal No. 1157 of 1974.
Appeal by special leave from the judgment and order dated the 20th June, 1973 of the Andhra Pradesh High Court in Writ Appeal No. 411 of 1973.
F.S. Nariman and P. P. Rao, for the appellant.
A. Subba Rao, for respondents Nos.
1 10, 12 31, 33 and 36.
The Judgment of the Court was delivered by CHANDRACHUD, J.
The Andhra Pradesh Municipalities Act.
VI of 1965, (hereinafter called "the Act") came into force on April 2, 1965.
Section 3(1)(a) of the Act empowers the State Government to constitute a local area as a municipality.
Section 3(1)(b) empowers the Government, by notification in the Gazette "to declare its intention to include within a municipality any local area in the vicinity thereof and defined in such notification".
Section 3(1)(c) confers power on the Government to exclude from a municipality any local area comprised therein and defined in such notification.
Under section 3(2), any resident of a local area or taxpayer of a municipality, in respect of which a notification under section 3(1) is published, may, if he desires to object to anything therein contained, submit his objection in writing to the Government within six weeks from the 546 publication of the notification and the Government is under an obligation to take all such objections into consideration.
Under section 3(3) after the expiry of the aforesaid period o six weeks and on considering the objections, the Government may by notification in the Gazette declare to be a municipality or include in or exclude from a municipality, the local area or any portion thereof.
By section 3(4), the provisions of the Act come into force in or cease to apply to and municipality or part thereof, as the case may be, on the date of publication of notification under sub section (3) if such date is the first day of April, or in any other case, on the first day of April immediately succeeding the 'date of publication of such notification.
Respondents 1 to 36 are residents of two villages called Ramakrishnapuram and Sriharipuram.
Prior to the year 1966, the area comprised in these villages was not included within the municipal limits of the Visakhapatnam Municipality.
Most of these respondents own properties situated within the limits of the two villages but they were not assessed to property tax under the Andhra Pradesh (Andhra Area) District Municipalities Act 1920 which was in force until the introduction of the Act.
They used to pay taxes to the village Panchayat.
In exercise of the powers conferred by the corresponding provision of the District Municipalities Act, 1920, namely section 4(1)(c), the Government of Andhra Pradesh declared its intention to include within the limits of Visakhapatnam Municipality the local area comprised in the villages of Ramakrishnapuram and Sriharipuram.
The district Municipalities Act, 1920 was repealed by section 391(1) of the Act which, as stated earlier, came into force on April 2, 1965.
On March 24, 1966 the Government of Andhra Pradesh acting in the exercise or powers conferred by section 3(3) of the Act issued a notification including within the limits of the Visakhapatnam Municipality the area comprised in the villages of Ramakrishnapuram and Sriharipuram with effect from April 1, 1966.
on March 24, 1970 and June 10, 1970 the Municipal Council declared its intention to levy property tax in the areas newly included within the municipal limits.
After considering the objections, the Council passed a resolution on August 28, 1970 confirming the levy of property tax on buildings and lands situated within the municipal limits, with effect from October 1, 1970.
However, the municipality issued notices to respondents 1 to 36 demanding property tax from them not from October 1, 1970 but from April 1, 1966, that is to say, with effect from the date when the villages of Ramakrishnapuram and Sriharipuram were included within the municipal limits.
These notices would appear to have been issued on the supposition that taxes leviable under the District Municipalities Act, 1920 could be levied under clause 12, Schedule IX of the Act, unless the Government directed otherwise.
On January 24, 1971 respondents 1 to 36 filed writ petition 442 of 1971 in the High Court of Andhra Pradesh against the State of 547 Andhra Pradesh and the Visakhapatnam Municipality asking for a declaration that the levy of property tax on their properties for the period prior to October 1, 1970 was illegal.
The writ petition was dismissed by a learned Single Judge on the view that it was competent to the municipality, under the District Municipalities Act 1920, to levy property tax on properties situated in the newly included areas from April 1, 1966 to October 1, 1970.
Respondents 1 to 36 filed writ appeal 411 of 1972 against the decision on the Single Judge, which was allowed by a Division Bench of the High Court by its judgment dated June 13, 1972.
lt held that the provisions contained in clause 12 of Schedule IX had no application and that it was incompetent to the municipality to impose the property tax on the newly included areas without following the procedure prescribed by sections 81 and 83 of the Act.
The correctness of that view is challenged by the Visakhapatnam Municipality in this appeal by special leave.
The State of Andhra Pradesh is respondent No. 37 to the appeal.
The circumstance that whereas the preliminary notification declaring the intention of the State Government to include new areas within the municipal limits was issued under the District Municipalities Act 1920, the final notification confirming that intention was issued under the Act presents no difficulty.
In so far as relevant, Schedule IX clause 13 of the Act, read with clause 1, provides that any action taken under the District Municipalities Act, 1920 by any authority before the commencement of the Act shall, unless inconsistent with the Act be deemed to have been taken by the authority competent to take such action under the Act.
The preliminary notification, though issued under section 4(1) (c) of the 1920 Act must therefore be deemed to have been issued under section 3(1)(b) of the Act.
The inclusion of the villages of Ramakrishnapuram and Sriharipuram within the limits of the Visakhapatnam Municipality is accordingly in order.
The true question for our consideration is whether the property tax which could lawfully be levied under the District Municipalities Act, 1920 can be levied, after the repeal of that Act, on properties situated in the areas included within the municipal limits after the constitution of the municipality.
Section 391(1) of the Act expressly appeals the District Municipalities Act, 1920 from which it must follow that ordinarily, no action can be taken under the Act of 1920 after April 1,1966 when the repeal became effective on the coming into force of the Act.
But counsel for the appellant municipality contends that clause 12 of Schedule IX of the Act keeps the repealed enactments alive for tax purposes and therefore the municipality has authority to impose the property tax under the Act of 1920, notwithstanding its repeal by the Act.
Schedule IX appears under the title "Transitional Provisions" and clause 12 thereof reads thus: 548 "12.
Continuance of existing taxes, etc.
Any tax, cess or fee which was being lawfully levied by or on behalf of any council at the commencement of this Act and which may be lawfully levied under this Act, shall, notwithstanding any change in the method or manner of assessment or levy of such tax, cess or fee, continue to be levied by or on behalf of the council for the year in which this Act is brought into .
force, and unless the Government by general or special order otherwise direct, for subsequent years also.
" This provision cannot justify the imposition of tax under the repealed Act of 1920 on properties situated in the newly included areas.
In the first place, as the very title of Schedule IX shows, the provisions contained in the Schedule are of a transitional nature.
They are intended to apply during the period of transition following upon the repeal of old municipal laws and the introduction of the new law.
Some time must necessarily elapse before a municipality can act under the new law but taxes have all the same to the imposed and collected during the interregnum.
The object of clause 12 of Schedule IX is to authorise the levy of taxes which, on the commencement of the Act, were levied under the repealed laws.
The material date for this purpose is the date of the commencement of the Act, namely April 1, 1966 and the legality of the exercise of the power conferred by clause 12 is to be judged in reference to that date.
In other words, if any tax, cess or fee was being lawfully levied by or on behalf of any council on April 1, 1966 and if it can be lawfully levied under the Act, it can continue to be levied notwithstanding any change in the method or manner of assessment or levy of such tax, cess or fee.
On April 1, 1966 no tax at all was being levied by or on behalf of any council on properties situated in Ramakrishnapuram and Sriharipuram and therefore the appellant municipality had no occasion or power to direct that the property tax may "continue to be levied" on those properties.
"Continuance of existing taxes", after the commencement of the Act being the theme of clause 12 and since the property tax was not levied by or on behalf of any council at the commencement of the Act on the properties situated in the two villages, clause 12 has no application.
Imposition of certain kinds of taxes is an obligatory function of municipal councils, under the Act.
Section 81(1)(a) provides that every council shall, by resolution, levy a property tax, a profession tax, a tax on carriages and carts and a tax on animals.
under.
section 81(2) a resolution of a council determining to levy tax shall specify the rate at which and the date from which the tax shall be levied.
The first proviso to this sub section requires that "before passing a resolution imposing a tax for the first time" or increasing the rate of an existing tax, the council shall publish a notice in the prescribed manner declaring the requisite intention The council has further to invite objections and it is under an obligation to consider the objections received within the stipulated time.
By section 83, when a council determines, subject to the provisions of section 81, to levy any tax for the first time or at a new rate, the Secretary shall forthwith publish a 549 notification in the prescribed manner specifying the rate at which, the date from which and the period of levy, it any, for which, such tax shall be levied.
Section 83 is thus expressly subject to section 81 and under the latter provision no tax can be imposed "for the first time" unless the procedure prescribed therein is followed.
Since the procedure prescribed by the first proviso to section 81(2) was not followed in regard to the period prior to October 1, 1970 the levy of property tax on the properties of respondents 1 to 36 for that period is without the authority of law and consequently illegal.
It was urged on behalf of The appellant that the first proviso to section 81(2) would apply only when a tax was imposed for the first time ' and since appellant was levying properly tax long before its imposition on the properties of respondents 1 to 36, it was unnecessary to follow the procedure prescribed by the proviso.
It is not possible to accept this submission.
The Municipality might have been levying property tax since long on properties situated within its limits but until April 1, 1966 the villages of Rarmakrishnapuram and Shriharipuram were outside those limits.
Qua the areas newly included within the municipal limits, the tax was being imposed for the first time and therefore it was incumbent on the Municipality to follow the procedure prescribed by the first proviso to section 81(2).
Residents and taxpayers of those areas, like respondents 1 to 36, never had an opportunity to object to the imposition of the tax and that valuable opportunity cannot be denied to them.
It is obligatory upon the Municipality not only to invite objections to the proposed tax but also to consider the objections received by it within the specified period.
Such period has to be reasonable, not being less than one month.
The policy of the law is to afford to those likely to be affected by the imposition of the tax a reasonable opportunity to object to the proposed levy.
According to the appellant, the residents of Ramakrishnapuram and Sriharipuram had an opportunity to object to the imposition of the tax when the State Government issued a notification under section 3(1)(b) of the Act declaring its intention to include the two villages within the limits of the municipality.
It is not possible to accept this submission either.
When the State Government issues a notification under any of the clauses of section 3(1), any resident of the local area concerned or any tax payer of the municipality can "object to anything therein contained" meaning thereby, anything contained in the notification.
A notification issued under section 3 (1) (b) contains only the declaration of the Government 's intention "to include within a municipality any local area in the vicinity thereof and defined in such notification".
The right of objection would therefore be limited to the question whether a particular area should, as proposed, be included within the municipal limits.
It would be premature at that stage to offer objections to the imposition of any tax because it is only after the final Notification is issued under section 3(3) that the question would at all arise as regards the imposition of a tax on the newly included areas.
A notification under section 3(3) has to be followed by a 550 resolution under section 81(1) if the municipality wants to impose a tax, and for the resolution to be effective, the procedure prescribed by the first proviso to section 81(2) has to be followed.
The appellant municipality short circuited this mandatory procedure and thereby deprived respondents 1 to 36 of the valuable right of objecting to the imposition of the tax.
Finally, relying on section 3(4) of the Act, learned counsel for the appellant contended that the inclusion of the two villages within the municipal area attracts of its own force every provision of the Act with effect from the date on which the final notification is published by the Government under section 3(3).
This argument is said to find support in a decision of this Court in Atlas Cycle Industries Ltd. vs State of Haryana & Anr.(1).
Far from supporting the argument, we consider that the decision shows how a provision like the one contained in Section 3(4) cannot have the effect contended for by the "appellant in the Atlas Cycle case, section 5(4) of the Punjab Municipality Act.
1911 provided that when any local area was included in a municipality, "this Act and. . . all rules, bye laws, orders, directions and powers made, issued or conferred under this Act and in force throughout the whole municipality at the time, shall apply to such areas".
The industrial area within which the factory of the Atlas Cycle was situated was by a notification included within the municipality of Sonepat.
The municipality thereafter purported to impose octroi duty on the goods manufactured, by the company without following the procedure corresponding to that prescribed by sections 81 and 83 of the Act.
It was held by this Court that since section 5(4) of the Punjab Act did not, significantly, refer to notifications and since section 62(10) of the Punjab Act spoke of "notification" for the imposition of taxes, it was not competent to the municipality to levy and collect octroi from the company on the strength merely of the provision contained in section 5(4) of the Punjab Act.
Tn the instant case, what section 3(4) provides is that once a notification including any area within a municipality is published under section 3(3), "The provisions of this Act shall come into force into . . any municipality or part thereof. .on the date of publication of the notification under sub section (3), if such date is the first day of April, or in any other case, on the first day of April immediately succeeding the date of publication of such notification".
by section 3(4), once a notification is issued under section 3(3), all the provisions of the Act come into force.
That means that sections 81 and 83, which are a part of the act, would also apply to the entire Municipal area.
It would then be obligatory for the municipality to follow the procedure prescribed in these sections.
Taxes can be imposed under the Act only by passing appropriate resolutions under section 81.
Section 3(4) does not provide that on the inclusion of a new area within a municipality, the resolutions passed by the municipal council before such inclusion will automatically apply to the new area.
Plainly, such could not be the intention of the legislature in (1) ; 551 view of the importance which it has attached to the right of the citizens to object to the imposition of a proposed tax.
Though, therefore, by reason of section 3(4) the provisions of the Act would apply to the new areas included within a municipality, it is not competent to the municipality to take resourse to the resolution passed for imposing tax on the old areas for the purpose of levying taxes on new areas.
The procedure prescribed by section 81 and 83 must be followed if a tax is proposed to be levied on the new areas.
For these reasons we confirm the judgment rendered by the Division Bench of the High Court and dismiss this appeal with costs.
V.P.S. Appeal dismissed.

dataset_name: IN-Abs

summary:
Under section 4(1)(c) of the District Municipalities Act, 1920, the State Government declared its intention to include within the limits of the appellant municipality the local areas comprised in two villages. 'The 1920 Act was repealed by the Andhra Pradesh Municipalities Act, 1965 which came into force on April 2, 1965.
Section 3(1)(b) of the 1965 Act corresponds to section 4(1)(c) of the repealed Act.
Under s.3(3), the Government may include within a municipality a local area after considering any objections submitted by the residents of the local are: Under section 3(4) the provisions of the 1965 Act come into force in that area on the first April, if that is the date of the notification under sub section
(3) and in any other cases the first day of April immediately succeeding.
The State Government, in exercise of its power under section 3(3) of the 1965 Act, issued the notification in March 1966 including within the limits of the appellant municipality the areas comprised in the two villages with effect from April 1, 1966.
In 1971, the Municipal Council after considering objections, passed a resolution for levying property tax on land and buildings in the two villages with effect from October 1, 1970, but, The municipality issued notices to the respondents, who were residents of those two villages, demanding the property tax from them from April 1, 1966 the date of inclusion of the villages.
The respondents thereupon challenged the levy and the High Court upheld the challenge.
In appeal to this Court, it was contended that the appellant municipality was entitled to demand the tax even from April 1, 1966, under cl. 12 of Schedule 9 of the 1965 Act.
This clause provided that any tax which was being lawfully levied by the municipal council at the commencement of the 1965 Act and which may be lawfully levied under that Act shall continue to be levied by the council unless the Government by general or special order directs otherwise.
Dismissing the appeal to this Court, ^ HELD :(1) The inclusion of the two villages within the limits of the appellant municipality is in order, because, under cl. 13 of Schedule 9 of the 1965 Act the notification issued under section 4(1) of the 1920 Act must be deemed to have been issued under section 3 (1) of the 1965 Act.
[547 D F] (2) However, clause 12 of Schedule 9 cannot justify the imposition of the tax under the repealed Act of 1920, from April 1, 1966, on property situate in the newly included areas.
[548 B C] (a) The clause is of a transitional nature and its object is to authorise the levy of taxes which, at the commencement of the 1965 Act were levied under the repealed law.
That is, in the present case, if any tax etc. was being lawfully levied by the appellant on April 1, 1966, (which was the date of commencement of the Act in the two villages) and if it can be lawfully levied under the 1965 Act, it can continue to be levied.
But on April 1, 1966, no tax at all.
was being levied by or on behalf of the appellant on the property situate in the two villages included within the municipality on that date.
Therefore, the appellant had no occasion or power to direct that a property tax may continue to be levied on those properties, and hence cl.
12 has no application.
[548 C E] (b) It cannot be urged that because the appellant was levying property tax on property situate within its limits (other than the 2 villages) the property tax was not being levied for the first time.
Qua the two villages newly 545 included in the municipal limits, the tax was being imposed for the first time, and therefore, it was incumbent upon the municipality to follow the procedure prescribed by the first proviso to section 81(2), because, the residents of these areas had no opportunity to object lo the imposition of tax or for the municipality to invite objections and consider them.
[549 C E] (3) The first proviso to section 81 requires that before passing a resolution imposing a tax for the first time the council shall publish a notice, invite objections and consider the objections received within the stipulated time.
Since the procedure was not followed in regard to the period prior to October 1, 1970 the levy of property tax on the properties of the respondents for that period is without authority of law and consequently illegal.
By section 83 when a council determines to levy any tax for the first time or at a new rate the Secretary shall forthwith publish a notification in the prescribed manner specifying the rate and the date from which the tax shall be levied.
Section 83 is expressly subject to section 81 and under the latter provision no tax can be imposed for the first time unless the procedure prescribed therein is followed [548G 549 B] (4) When the State Government issued the notification declaring its intention to include the two villages within the limits of the municipality the residents had an opportunity to object, not to the imposition of the tax but only to "any thing contained therein", meaning anything contained in the notification, that is to the inclusion within the municipality.
The question of imposition of a tax within the included areas, arises only after the final notification under section 3(3) followed by a resolution under section 81 (1) .
[547F 550 B] (5) It could not also be contended that mere inclusion of two villages with in the municipal area automatically attracts the tax.
On the contrary, what section . (4) provides is that once a notification including any area within a municipality is published under section 3(3), the provisions of the Act, that is, sections 81 and 83, shall come into force in that area from the first day of April, and hence, the procedure prescribed therein will have to be followed.[550 F H] Atlas Cycle Industries Ltd. vs State of Haryana & Anr. ; , explained.