judgement:
Appeal No.371 of 1956.
Appeal from the Judgment and decree dated August 28, 1953, of the Madras High Court in A.S. No. 262 of 1949.
A. V. Viswanatha Sastri, R. Sundaralingam and B. K. B. Naidu, for the appellant.
Ganapathy Iyer, V. A. Seyid Muhamad and T. M. Sen, for the respondent No. 1. 1961.
February 15.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This appeal has been brought with a certificate issued by the Madras High Court and it arises out of a suit filed by the Managing Trustee of the appellant Sri Vedaraneeswararswamy Devasthanam against respondents 1 and 2 the Dominion of India and the Province of Madras respectively.
In this suit the appellant claimed a declaration that the properties in suit belong to the appellant and asked for a direction against respondent 1 to put the appellant in possession of the same.
A further direction was claimed against the said respondent calling upon it to account for and pay to the appellant mesne profits past and future and an alternative plea was also made by which the court was requested to determine the proper rent payable by the said respondent to the appellant.
This claim has been rejected by the learned Subordinate Judge of Mayuram who tried the case and an appeal preferred by the appellant against the 89 trial court 's decision has likewise failed.
That is why the appellant has come to this Court.
According to the appellant the suit properties which admeasure about 2,400 acres are situated in the village of Agastiyampalli and the said village was granted in inam absolutely to the appellant by the Tanjore Rajas several centuries ago.
From the time of the said grant the appellant was in exclusive possession and enjoyment of the said properties, and its trustees and managers used to look after them and collect their profits for the use and benefit of the appellant.
In 1806 an agreement was reached between the East India Company and the appellant, under which the Company took possession of the appellant 's properties in suit and in return promised to pay a sum of 1848 Pagodas annually.
Out of this amount 1200 Pagodas represented the rent of the property.
Pursuant to this agreement the Company took possession of the said property and was paying the agreed rent until 1858.
In that year respondent 2 which succeeded the Company entered into possession of the property on the same terms and was making the annual payment of the said sum until 1937.
Thereafter respondent 1 took over the salt revenue administration and as such the properties came into its possession.
Respondent 1 has been paying the appellant the agreed amount from year to year.
The appellant 's case was that the true legal relationship between the parties was that of a lessor and lessee and that the lease itself was not of a permanent character but was one in the nature of annual or yearly lease which was continued from year to year.
It is on this basis that the appellant made the two alternative claims specified above.
Respondent 1 disputed this claim.
, It denied that it held the properties under an annual or yearly lease.
Its case was that when the suit lands, were taken over by the Company compensation was fixed once for all, the average income of the appellant from the manufacture of salt carried on by the appellant during the previous ten years having been taken as the basis for the purpose of calculating the said compensation.
90 The properties came under the possession and control of the Company as a result of the proceedings taken under Regulation 1 of 1805 and the amount of Rs. 4,200/ corresponding to 1848 Pagodas represents the compensation annually payable to the appellant.
Respondent 1 made certain other pleas on the merits Of and urged a bar of limitation.
On these pleadings the trial court framed ten issues.
On the principal point of dispute between the parties it held that a reading of the relevant documents clearly showed that "at the time when the Company took possession whatever the idea may then have been it must have been only to take over the properties permanently from the plaintiff Devasthanam and not to place themselves at the mercy of the trustees who might evict them at any time".
According to the trial court the arrangement evidenced by the said documents was a permanent arrangement and that being so, the appellant was not entitled to claim possession.
The trial court also held that even if the relationship between the parties could be said to be that of a lessor and lessee the lease in question was a permanent lease subject only to the payment of a fixed rent of Rs. 4,200/ per annum.
On these findings the trial court dismissed the appellant 's suit.
The appellant then took its case before the Madras High Court.
The High Court in substance agreed with the conclusions of the trial court.
It considered the whole of the documentary evidence and came to the conclusion that the trial judge was right in holding that the documentary evidence showed that the arrangement by which the Company took possession of the appellant 's properties was a permanent arrangement and that if it was held to be a lease it must be regarded as a permanent lease.
According to the High Court the appellant 's claim was also barred by limitation under article 134(B) of the Limitation Act.
The High Court therefore confirmed the trial court 's decree and dismissed the appeal preferred by the appellant.
In the present appeal the principal question which has been raised before us by Mr. Viswanatha Sastri 91 for the appellant is about the true nature of the relationship between the parties in respect of the properties in suit.
He contends that the principal document exhibit A. 1 on which reliance is placed by respondent 1 should be construed not as a permanent but as an annual lease; and according to him the contrary view taken by the High Court is not supported by the tenor of the document, and he also argues that in construing the said document the High Court has( not borne in mind relevant principles of law governing the powers of the manager of a Hindu religious institution.
Let us then briefly consider the relevant documents bearing on the point.
The principal document is exhibit A. 1.
It purports to be a copy of the order passed by Mr. Wallace on December 31, 1806.
It is addressed to the manager of the temple and it reads thus: "As the Government have taken charge of the pagoda salt pans and Sea Customs of Thopputhurai, belonging to the above temple, the sum of 1848 Pagodas shall be given to the temple annually in cash from the treasury being calculated on the average amount of 10 years ' revenue besides which every possible assistance will be given to the temple.
" It would be noticed that there is no duration specified in the document, and prima facie it reads as if the Government had taken charge of the salt pans and Sea Customs permanently promising in return to pay to the temple the amount specified annually from year to year.
In construing this document reference may be made to the previous correspondence that passed between the Collector and the Members of the Board of Revenue.
It is not disputed that this correspondence can be considered for the purpose of construing the effect of the terms of exhibit A. 1.
On July 17, 1806, a letter was addressed to the President and Members of the Board of Revenue in which the idea of acquiring this property was fully explained.
In this letter in was stated that "it would be better to grant to the temple commutation in land because that would be more certain and permanent than ready money payment".
In computing the compensation which may be paid to 92 the temple the accounts of the pagoda were examined.
,It was found that the pagoda enjoyed revenue from the duties levied at ports at Thopputhurai and Kodikarai.
Ten years ' account showed that the average annual income in that behalf was.
283 Pagodas.
To this amount was added the amount of magama or charitable and litigious fees and the total worked out at an average of 532 Pagodas.
From this was deducted 46 Pagodas which was the average of charges and expenses incurred in collecting the port duties.
Thus the net annual average revenue was 486 Pagodas.
Then an account was made of the income received by the temple from salt manufacture in the salt pans and it was ascertained that an average income in that behalf would be Star Pagodas 1362.
That is how the whole annual income was found to be 1848 Pagodas.
It would thus be seen that elaborate calculations were made to determine the amount of compensation which should be legitimately paid to the temple for depriving the temple of the possession of its properties in question.
It was then considered whether the commutation for the amount :.should be in land or in money, and, as we have already pointed out, a recommendation was made that payment of commutation in the form of land would be more certain and permanent.
Thus the perusal of this document leaves no doubt that the property was intended to be acquired permanently for the purpose of manufacturing salt.
It is on that basis that calculations were made and the amount of compensation determined.
It appears that this proposal made by the Collector was not approved by the Government at Fort St. George.
In the letter written by the Secretary to the Government on October 28, 1806, it was recommended that a payment should be made from the public treasury of a compensation for the loss which the pagoda had sustained by the introduction of salt monopoly in the Province of Tanjore not exceeding Star Pagodas 1848 per annum.
The proposal thus made by the Government was accepted by the Board and its decision was communicated by the letter of November 17, 1806.
It is in the background of this correspondence 93 that we have to decide the effect of the terms contained in exhibit A. 1.
Thus considered there can be little doubt that though 'the property was not purchased outright it was taken charge of on a permanent basis for the purpose of manufacturing salt and compensation was determined on the same basis but made payable annually at the rate of 1848 Pagodas.
There are, however, some other documents on which Mr. Sastri relies.
An extract from the inam register prepared on November 27, 1862 (exhibit A. 18) has been pressed into service by the appellant.
The main argument is that the relevant columns 16 to 20 which give particulars regarding the owners do not refer to the Company 's right under this permanent arrangement.
If the transaction was a permanent lease, it is urged, the lessee 's rights would have been specified in the relevant columns.
We are satisfied that this argument is not well founded.
The main column deals with particulars regarding the owners.
It also provides that if the inam was sub divided the name etc.
of each sharer shall be entered in its columns.
We are, therefore, not satisfied that the name of the permanent lessee was expected to be shown in this column.
It is true that in determining the additional assessment on excess area payable by the temple the whole of the property is assumed to belong to the temple; but that is not inconsistent with the temple continuing to be the lessor of the suit property at all.
There is no doubt that if the Company had become the lessee of the said suit property by a document duly executed in that behalf entries made in the inam register cannot change or affect the character of the said right.
Therefore, in our opinion, there is nothing in exhibit A. 18 which militates against the case set up by respondent 1.
Then Mr. Sastri has relied on exhibit A. 2 which is a title deed issued by the Inam Commissioner is favour of the temple.
In this document the temple 's title to the Devadayam or pagoda inam village of Agastiyampalli is recognised and specific mention has been made of the porambokes in the said village.
It is stated that the whole of the property is held for the support 94 of the pagoda in the village of Vedaranyam.
What we have said about the extract from the Inam Register applies with equal force to this document.
It appears that from 1806 when the Company took possession of the property until 1941 the appellant has allowed the Company and its successors to be in quiet enjoyment of the property on receipt of an annual compensation paid from year to year.
In 1941 the factory officer wrote to the trustee of the appellant to let him know the name or the names of the revenue villages to which the area covered by the.
salt factory was originally attached prior to the acquisition, and he enquired whether any compensation amount had been paid to the temple for the said acquisition.
It is this letter which presumably started the appellant 's present claim.
Soon after receiving this letter the appellant wrote to the factory officer on April 8, 1941 alleging that the property had been leased out to Government for the manufacture of salt for a monthly lease of Rs ' 350 or annually Rs. 4,200.
The appellant thus set up a relationship of lessor and lessee between itself and respondent 1.
Then the appellant moved the relevant authorities for appropriate relief on one ground or another.
All its efforts to obtain possession of the property or even to have the amount of compensation enhanced failed and that led to the present dispute.
The main argument which has been urged before us by Mr. Sastri is that in construing exhibit A. 1 we ought to bear in mind the limitations on the powers of the manager of the temple at the relevant time.
Mr. Sastri has relied on the fact that the manager of a temple could not have entered into a transaction of permanent lease unless there was a compelling necessity so to do.
A permanent lease amounts to an alienation of the property and would have to be justified as such.
An annual lease, on the order hand, can be executed by the manager in his capacity as the manager and the same is treated as an act of prudent management.
That, however, is not true about a permanent lease, and so in construing the document we should attribute to the manager the desire and intention to act within 95 his powers and not without them.
In support of this argument Mr. Sastri has referred us to the decisions of the Privy Council in Maharanee Shibessouree Debia vs Mothooranath Acharjo (1), Nainapillai Marakayar vs Ramanathan Chettiar (2), and Palaniappa Chetty vs Deivasikamony Pandara (3).
The argument is that a fair and reasonable rule of construction would be to treat the document as executed in pursuance of the legitimate authority available to the manager of the temple and not as one which is executed in breach of the said authority.
This position cannot be and is not disputed.
In the application of this rule to the present case, however, two relevant facts cannot be ignored.
The first important fact is that after the execution of the document more than a century has elapsed; and so, as observed by the Privy Council in Bawa Magniram Sitaram vs Kasturbai Manibhai (4), "where the validity of a permanent lease granted by a shebait comes in question a long time (in the present case nearly 100 years) after the grant, so that it is not possible to ascertain what were the circumstances in which it was made, the Court should assume that the grant was made for necessity so as to be valid beyond the life of the grantor".
In the present case more than a century has elapsed after the grant A as made, and so the principle laid down by the Privy Council in that case can well be invoked by respondent 1.
Besides, it is common ground that under the relevant provisions of Regulation 1 of 1805 the manufacture and sale of salt was made subject to the immediate direction and control of the general agent appointed by the Government, and the said manufacture and sale as well as transit, export and import of salt, whether by Bear or by land, in the territory subject to the Presidency of Fort 'St. George was prohibited except on account of Government or with their express sanction.
It was also provided that all salt manufactured, sold, conveyed, exported or imported, directly (1) (1869) 13 Moo.
I.A. 270, 273, 275 (2) (1923) L. R. 51 I.A. 83, 97, 98.
(3) (1917) L.R. 44 I.A. 147,155, 156.
(4) (1921) L.R. 49 I.A. 54.
96 or indirectly, otherwise than is provided for in the said Regulation, shall be liable to seizure and confiscation.
In other words, part of this property belonging to the temple on which salt was being manufactured became absolutely useless for that purpose as the temple could no longer manufacture, or permit the manufacture of, salt.
Faced with this situation it is not at all unlikely that the manager of the temple was compelled to enter into an arrangement with the Company and secure for the benefit of the temple a sub stantial permanent income accruing from year to year.
It is common ground that the whole of the property was marshy and the only use to which it could be profitably put was for the manufacture of salt, and that could no longer be done after Regulation 1 of 1805 was passed.
That is why we think that even the test of the rule of construction on which Mr. Sastri relies can be said to be satisfied in the present case.
Circumstanced as he was the then manager or trustee had no option but to enter into an agreement like the one which was evidenced by exhibit A. 1; thereby the manager provided for a recurring income to the temple and thus arranged for the upkeep of the temple, the worship of the idol and discharge his duties as trustee.
We have already seen how the previous correspondence which preceded the execution of the document unambiguously shows that the intention of the Company was to take possession of the property on a permanent footing, and realising the limitations imposed by the Regulation the manager of the temple would also have wanted to give the property to the Company permanently and thereby create a permanent source of income for the temple.
The subsequent conduct of the temple for over a century is consistent with the view that the temple knew that the property has been permanently given to the Company and is inconsistent with the present case that the lease is an annual lease.
The payment and acceptance of the same uniform rent for over a century when so many political and other changes took place also support the same conclusion.
The pleas set up by the appellant from stage 97 to stage in respect of its relationship with respondent in regard to the possession of this land have changed from time to time and that shows that the appellant was at paying to put forward a basis on which it could claim either possession or enhanced rent.
The fact that respondent 1 is making large profits out of this property may explain the appellant 's desire to get some more share in the said income but that cannot assist the appellant if it has parted with the property permanently as early as 1805 oil the terms and conditions specified in exhibit A. 1.
In our opinion, the High Court was right in coming to the conclusion that the transaction evidenced by exhibit A. 1 is a permanent lease and that respondent 1 is entitled to retain possession of the whole of the property on the terms and conditions specified in the said document.
We must accordingly hold that the appellant 's claim either for possession or for enhancement of rent has been properly rejected by the courts below.
In the result the appeal fails but there will be no order as to costs.
Appeal dismissed.

summary/full:
The appellant Devasthanam had certain properties, granted to it in inam by the Rajas of Tanjore centuries ago, which com prised salt pans.
After the passing of Regulation 1 of 1805 which prohibited manufacture of salt except on account of the Government or with their express sanction, the East India Company in 1806 took over possession of those properties and the agreement between the parties as recorded in the order passed on behalf of the Board of Revenue, was as follows, "As the Government have taken charge of the pagoda salt pans and Sea Customs of Thopputhurai, belonging to the above temple, the sum of 1848 Pagodas shall be given to the temple annually in cash from the treasury being calculated on the average amount of 10 years ' revenue besides which every possible assistance will be given to the temple." The previous correspondence between the Collector and the Board of Revenue showed that the properties were intended to be acquired permanently for the purpose of manufacturing salt and compensation was determined on that basis.
From 1886 till 1941 the appellant allowed the company and its successors, the respondents 1 and 2, to be in quiet possession of the properties in dispute on receipt of the said annual compensation.
Its case, negatived both by the trial Court as well as the High Court in appeal, was that the agreement represented a lease from year to year and it was contended on its behalf in this Court that in construing the document regard must be had to the limited powers of a manager of a Hindu Temple to alienate trust property and he must be held to have intended to act within his powers and not beyond them.
Held, that the transaction in question was a permanent lease and the appeal must fail.
Although it is indisputable that in construing a document executed by the manager of a Hindu temple the fair and reasonable rule would be to treat it as executed in pursuance of his legitimate authority and not in breach of it, that rule could have no application in the instant case, for the facts that more than a century had admittedly elapsed since the document in question had been executed and, further, that the then manager, 88 faced by the prohibition of the manufacture of salt by Regulation 1 of 1805, had no option, in the interest of the Devasthanam itself, but to enter into the agreement in order that he could provide for a recurring income to the temple, could not be ignored.
Bawa Magniram Sitaram vs Kasturbai Manibhai, (1921) L.R.49 I.A. 54, applied.
Maharanee Shibessouree Debta vs Mothoranath Acharjo, (1809) L.R. 13 Moo.
I.A. 270, Nainapillai Marakayar vs Ramanathan Chettiar, (1923) L.R. 51.
I.A. 83 and Palaniappa Chetty vs Deivasikamony Pandara, (1917) L.R. 44 I.A. 147, referred to.


judgement:
il Appeals Nos.
469, 470,506, 507 and 529 to 534 of 1962.
Appeals by special leave from the judgment and order dated December 18, 1961, of the Madhya Pradesh High Court in Misc.
Petition Nos. 24, 29, 42, to 45, 58, 70, 95 and 213 of 1960.
WITH Petitions Nos. 70 and 71 of 1962.
Petition under article 32 of the Constitution of India for enforcement of Fundamental rights.
Sachin Chaudhri, B. Sen, J. B. Dada chanji, O. C. Mathur and Ravinder Narain, for the appellants (in C. As.
469 and 470/62) and the Petitioners (in Petitions.
Nos. 70 and 71 of 62).
A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the respondent (in C. As.
469 470, 506 and 507 of 62), Respondents Nos. 1 and 3 (in C. As.
529 to 534/62) and Respondent No. 1 (in Petn.
Nos. 70 and 71/62).
B. Sen and I. N. Shroff, for the appellants (in C. As.
506 and 507/62).
175 N. C. Chatterjee, Y. section Dharmadhikaree and M. section Gupta, for the appellants (in C. As.
529 to 534 of 62).
I. N. Shroff, for the respondents Nos. 2 and 4 (in C. As.
529 to 534 of 62).
September 24.
The judgment of the Court was delivered by GAJENDRAGADKAR, J.
These ten appeals and two writ petitions have been placed for hearing together in a group, because they raise common questions of law.
The appellants in these matters are all colliers holding mining leases under the Government of Madhya Pradesh for the extraction of coal from collieries situated in the Chhindwara District.
The respondent, Janapada Sabha, Chhindwara, has issued notices against them calling upon them to pay coal tax " 'for coal manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the jurisdiction of the original Independent Mining Board for the said area It appears that the mining area in question was within the territorial limits of the Independent Mining Local Board which had the status and powers of a District Council under the Central Provinces Local Self Government Act, 1920 (hereinafter called the Act).
The respondent Sabha is the successor of the said Mining Board and, therefore, claims to be entitled to continue the levy and recover the tax in question.
On March 12, 1935, the Mining Board exercising its powers under section 51 of the Act, resolved to levy coal tax, and accordingly, the first imposition made by it received the sanction of the local Government on December 16, 1935, as per Notification No. 8700 2253 D VIII.
This notification came 'into force from January 1, 1936.
On December 16, 1935, the local Government notified the rules for the assessment and 176 collection of the tax which it had framed in exercise of the powers conferred on it by section 79 (1), clauses (xv), (xix) and (xxx).
Rule 2 of these Rules provided that the tax shall be payable by every person, firm or company holding a mining lease for coal within the limits of the Independent Mining Local Board 's jurisdiction.
Rule 3 provided that the tax shall be levied @ three pies per ton on coal, coal dust or coke manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the territorial jurisdiction of the Independent Mining Local Board.
In 1943, the words " 'coke manufactured at the mines" were deleted from Rule 3 and the tax was confined to coal and coal dust.
The rate thus prescribed was increased from time to time.
On December 22, 1943, the rate was made 4 pies per ton; on July 29, 1946, it was made 7 Pies, per ton; and on July 1. 9, 1947, it was made 9 pies.
The Mining Board continued to recover the tax at the said rates until the Act was repealed in 1948 and in its place was enacted the Central Provinces and Berar Local Self Government Act, 1948 (No. 38 of 1948).
The respondent Sabha has now taken the place of the said Mining Board and has issued the notices against the several appellants, calling upon them to pay the coal tax for the different periods mentioned in the said notices.
The appellants in Civil Appeals Nos.
469 and 470 of 1962 are : The Amalgamated Coalfields Ltd. and The Pench Valley Coal Co. Ltd. They are companies in operated under the Indian Companies Act, 1913, andor both have Shaw Wallace & Co., Ltd., as their Managing Agents.
On August 23, 1958, notices were served on the two appellants calling upon them to pay Rs. 21,898/ 64 np and Rs. 11,838/9 np respectively as tax assessed @ 9 pies per ton from ,,January 1, 1958, to June 30, 1958: This tax was claimed in respect of coal which included coal despatched by the appellants outside the State of 177 Madhya Pradesh.
The validity of these notices was challenged by the appellants in this Court by their Writ Petition 'No. 31 of 1959.
On February 10, 1961, the said writ petition was dismissed by this Court and it was held that the notices served on them were valid (Vide The Amalgamated Coalfields Ltd. vs The Janapada Sabha, Chhindwara(1).
On September 13, 1960 and March 2, 1961, two notices of demand were served on the appellants calling upon them to pay Rs. 1,16,776/25 nP. and Rs. 65,261/19 nP. respectively in regard to the tax assessed @ nine pies per ton on all coal despatched by the appellants from their collieries for the half years ending June 30, 1958.
December 31, 1958, June 30), 1959, December 31 1959, June 30, 1960 and December 31, 1960.
The appellants challenged the validity of these notices by a Writ Petition filed by them in the High Court of Madhya Pradesh on April 1.2, 1961 (No. 95 of 1961).
Whilst the said writ petition was pending before the High Court, the appellants filed another writ Petition in the same High Court (No. 213 of 1961).
By this writ petition, the appellants challenged the validity of notices issued against them on June 9, 1959, by which coal tax was demanded from them for a period between April 1, 1951 to December 31, 1957.
This tax was levied in respect of coal despatched by the appellants outside the State of Madhya Pradesh.
The amounts demanded were Rs. 1,92,144/66 nP. and Rs. 68,319/36 nP. respectively.
These two petitions along with eight others were heard together by the High Court.
So far as the appellants ' petitions were concerned, the High Court has held that the appellants ' claims were barred by res judicata by reason of the earlier decision of this Court in the case of the Amalgamated Coalfields Ltd. (1).
The appellants then applied for and obtained special leave from (1) ; 178 this Court on April 23, 1962 and it is by special leave thus granted to them that they have come to this Court in Civil Appeals 469 & 470 of 1962.
The appellants have also filed two Writ Petitions Nos. 70 & 71/1962 under article 32 of the Constitution.
By these writ petitions, the two appellants challenged the validity of the notices served on them on Julie 9, 1959 as well as on September 13, 1960.
The appellants ' case is that these notices are illegal and without jurisdiction and so, they want them to be quashed by an appropriate writ or order issued against the respondent in that behalf.
Thus, the two appellants, the Amalgamated Coalfields Ltd., and the Pench Valley Coal Co. Ltd.,, arc concerned with the two appeals Nos 469 & 470/1962) and Writ Petitions 70 & 71/1962.
The other appeals arise from the writ petitions filed in the High Court of Madhya Pradesh by the respective appellants which were tried along with the writ petitions filed by the Amalgamated Coalfields Ltd. & Anr.
In dealing with these writ petitions, High Court has held that the decision of this Court is the case of Amalgamated Coalfields Ltd.(1) concludes the points raised by them in challenging the validity of the notices, and so, following the said decision, the High Court has dismissed all the said petitions.
The appellants applied for and obtained special leave to come to this Court against the said decisions and it is with the special leave thus granted to them that these appellants have come before us.
Civil Appeal No. 506 arises from the decision of the High Court of 'Madhya Pradesh dismissing the writ petition filed before it by the appellant, the Central Provinces Syndicate (P) Ltd.
By its writ petition the appellant had challenged the validity of the notice served by the respondent calling upon it to pay arrears of the tax amounting to Rs. 20,776/88 nP. being arrears from April 1, 1951 to June 30, 1959.
(1) ; 179 It appears that for the said period, the appellant had been taxed by the respondent, but the said tax was not imposed on coal which had been transported by the appellant outside the limits of the State of Madhya Pradesh.
The respondent now sought to reopen the assessment levied against the appellant for that period by including a claim for tax in respect of coal sold by the appellant outside the limits of the State.
The High Court has rejected the Writ Petition and that decision 'has given rise to Civil Appeal No. 506 of 1962.
Civil Appeal No. 507 of 1962 arises from a writ petition filed by the appellants M/s. Kanhan Valley Coal Co. (Private) Ltd., in the High Court of Madhya Pradesh in which the validity of the notice issued by the respondent calling upon the appellants to pay the coal tax amounting to Rs. 10,970/ as arrears from April 1, 1951 to June 30, 1959 has been challenged.
The High Court has dismissed the writ petition, and so, the appellants have come to this Court by their Appeal No. 507/1962.
Civil Appeals Nos.
529 to 534 of 1962 similarly arise out of six writ petitions filed by the appellants M/s. Newton Chickli Collieries (P) Ltd. & five others in the High Court of Madhya Pradesh challenging the validity of the notices of demand served on them to recover by way of arrears coal tax for the periods mentioned in the notices in regard to coal sent by them outside the State of Madhya Pradesh for export.
These writ petitions were dismissed by the High Court, and the appellants have, therefore, come to this Court by appeals Nos.
529 534/1962.
That, in brief, is the genesis of the ten appeals and two writ petitions which have been grouped together for hearing in this Court.
It will thus be seen that Civil Appeals Nos.
469 & 470/1962 and Writ Petitions Nos.
70 & 71/1962 raise a preliminary question about the applicability 180 of the doctrine of res judicata to writ petitions filed under article 226 or to petitions under article 32, whereas the said appeals and writ petitions as well as the other appeals raise an additional question about the validity of the notices issued against the respective appellants.
We would, therefore, deal with civil appeals Nos.
469 and 4 70/1962 and Writ Petitions Nos. 70 and 71/1962.
Our decision in these matters will govern the other appeals in this group.
The first point which falls for our decision, in these appeals is one of res judicata.
The High Court has held that the challenge made by the appellants against the validity of the demand notices issued against them by the respondent is barred by res judicata by virtue of the decision of this Court in the earlier case brought by the appellants themselves before this Court.
The Amalgamated Coalfields Ltd.(1) Before dealing with this point it is necessary to refer to the said decision.
In that case, the validity of the impugned notices was challenged on two grounds ; it was urged that the levy of the tax by the Independent Mining Board was invalid at the date of its initial imposition in 1935 and so, the respondent Sabha which was the successor of the said Mining Board could claim no authority to continue the said tax.
This contention was based on the assumption that before the power conferred by section 51 of the Act could be exercised,, the previous sanction of the Governor General had to be obtained, or that there should be fresh legislation in that behalf.
This Court held that the Act having received the assent of the Governor General, its validity cannot be challenged in view of the saving clauses in the proviso to section 80A (3) and section 84(2) of the Government of India Act, 1915.
That being so, it was not open to any party to suggest that any subsequent amendments of the Government of India Act could affect the continued validity and operation of the Act.
The second contention raised was one of construction.
It was urged (1) ; 181 that on a fair construction of section 51, the coal tax was excluded from the purview of the local authority.
The This argument was based on the opening clause of section 51 which provided that its provisions would operate subject to the provision of any law or enactment for the time being in force.
It was suggested that this clause took in the provisions of section 80A(3) of the Government of India Act read with the Scheduled Taxes Rules framed under that section, but this argument was also rejected.
It appears that at the hearing of the petition, the appellants also attempted to take an additional point against the validity of the.
impugned notices on the ground that the rate of tax which had been increased from 3 pies to 9 pies per ton was invalid.
The appellants ' case was that this increase was effected after the commencement of the Government of India Act, and so, it was invalid.
This argument was not considered by the Court, because it was not even hinted in the petition filed by the appellants and the Court thought that it would not be proper to permit the appellants to raise that point at that stage.
That is how the appellants ' challenge to the validity of the impugned notices served on them on August 23, 1958 was repelled and the writ petition filed by them in that behalf was dismissed.
It appears that the authority of the Janapada Sabha to levy the impost under s.51 of the Act was challenged on another ground in the case of Ram Krishna Ram Nath v, Janapad Sabha (1).
This time the attack against the competence of the janapad Sabha proceeded on the ground that in repealing the Act of 1920, the subsequent Act of 1948 had not provided for the continuance of the said power in the janapad Sabhas which were the successors of the Independent Mining Boards.
Section 192(c) purported to provide that all rates, taxes and cesses due to the District Council, Local Board or Independent Local Board shall be deemed to be due to the Sabha to (1) [1962] Supp. 3 S.C.R. 70. 182 whose area they pertain.
But it was obvious that this clause could apply to, and save, only rates, taxes and cesses already due; it did not authorise the imposition of fresh cesses, taxes or rates in future.
Having realised that the relevant provision did not save future imposts, an amending Act was passed in 1949 by which the said saving was extended to include the right of the janapad Sabhas to continue the levy of the impugned tax and this amendment was made retrospective f from June 11, 1948, when the parent Act had come into force.
In the case of Ram Krishna (1) the validity and effectiveness of this amendment of 1949 was challenged.
It was thus a basic challenge to the power of the janapad Sabhas to levy any impost on the ground that the subsequent amendment was invalid.
This Court repelled the said challenge and held that the retrospective operation of the amendment was valid.
According to this decision, the Provincial Legislature was competent to legislate for the continuance of the tax, provided the relevant conditions of s.143(2) of the Government of India Act 1935 were satisfied.
These conditions required that the tax should be one which was lawfully levied by a local authority for the purposes of a local area at the commencement of Part III of the Government of India Act; that the identity of the body that collects the tax, the area for whose benefit the tax is to be utilised and the purposes for which it is to be utilised continue to be the same, and that the rate of the tax is not enhanced nor is its incidence materially altered, so that, in substance, it continues to be the same tax.
Since these tests were satisfied by the impost levied by the janapad Sabha, it was held that the impost was valid and that the retrospective amendment of s.192 was effective.
The present proceedings constitute a third challenge to the validity of the notices issued by the janapad Sabha, and as we have already seen, the (1) [1962] Supp. 3 S.C.R. 70.
183 challenge made by the appellants by their writ petitions before the High Court has been repelled on the preliminary ground that it is barred by res judicata.
In that connection, the first question to consider is whether the general principle of res judicata applies to writ petitions filed under article 32 of the Constitution.
This question has been considered by a special Bench of this Court in the case of Pandit M. section M. Sharms vs Dr. Shree Krishna Sinha (1).
Chief justice Sinha, who delivered the unanimous opinion of the Court, has answered this question in the affirmative.
In that connection, the learned Chief justice has referred to an earlier decision of this court in Raj Lakshmi Dasi vs Banamali Sen, (2) where it has been laid down that the principle underlying res judicata is applicable in respect of a question which has been raised and decided after full ' contest, even though the first Tribunal which decided the matter may have no jurisdiction to try the subsequent suit and even though the subject matter of the dispute was not exactly the same in the two proceedings.
It ought to be added that the Tribunal which had tried the first dispute in that case was a Tribunal of exclusive jurisdiction.
Then the points raised on behalf of the petitioner Sharma were considered and it was noticed that, in substance, they were the same points which had been agitated before this Court on an earlier occasion and had been rejected.
"In our opinion", said the judgment, "the questions determined by the previous decision of this Court cannot be reopened in the present case and must govern the rights and obligations of the parties which as indicated above, are substantially the same.
" Thus, this decision shows that even petitions filed under article 32 are subject to the general principle of res judicata.
The question about the applicability of the doctrine of res judicata to the petitions filed under (1) (2) ; 184 article 32 came before this Court in another form in Daryao vs The State of U. P. (1), and in that case it has been held that where the petition under article 226 is considered on the merits as a contested matter and dismissed by the High Court, the decision pronounced is binding on the parties, unless modified or reversed by appeal or other appropriate proceedings under the Constitution, and so, if the said decision was not challenged by an appropriate remedy provided by the Constitution, a writ petition filed in respect of the same matter would be deemed to be barred by res judicata.
Therefore, there can be no doubt that the general principle of res judicata applies to writ petitions filed under article 32 or article 226.
It is necessary to emphasise that the application of the doctrine of res judicata to the petitions filed under article 32 does not in any way impair or affect the content of the fundamental rights guaranteed to the citizens of India.
It only seeks to regulate the manner in which the said rights could be successfully asserted and vindicated in courts of law.
The question in the present appeals, however, is somewhat different.
The notices which are challenged by the appellants in the present proceedings are in respect of the tax levied for a period different from the period covered by the notices issued on August 23, 1958 which were the subject matter of the earlier writ proceedings (The Amalgamated Coalfields Ltd. ( 2 ) ) .
Where the liability of a tax for a particular year is considered and decided, does the decision for that particular year operate as res judicata in respect of the liability for a subsequent year ? In a sense, the liability to pay tax from year to year is a separate and distinct liability; it is based on a different cause of action from year to year, and if any points of fact or law are considered in determining the liability for a given year, they can generally be deemed to have been considered and decided in a collateral and incidental way.
The (1) ; (21 ; 185 trend 'of the recent English decisions on the whole appears to be, in the words of Lord Radcliffe, ',,that if is more in the public interest that tax and rate assessments should not be artificially encumbered with estoppels (I am not speaking, of course, of the effect of legal decisions establishing the law, which is quite a different matter), even though in the result, ' some expectations may be frustrated and some time wasted." (vide Society of Medical Officers of Health vs Hope Valuation Officer (1)).
The basis for this view is that generally, questions of liability to pay tax are determined by Tribunals with limited jurisdiction and so, it would not be inappropriate to assume that if they decide any other questions incidental to the determination of the liability for the specific period, the decisions of those incidental questions need not create a bar of res judicata while similar questions of liability for subsequent years are being examined.
In that connection, it would be interesting to refer to four English decisions.
In the case of Broken Hill Proprietary Co. Ltd. and Municipal Council of Broken Hill, (2) the question which fell for decision was how the average annual value of a mine for rating purposes had to be determined, and it was held by the Privy Council that the said value was to be ascertained by dividing the value of the output during the three years by three, not by multiplying it by 205 and dividing it by 365.
One of the points which the Privy Council had to consider was whether a contrary decision reached by the High Court of Australia between the parties as to the valuation for a previous year, operated as res judicata.
In rejecting the plea that the principle of res judicata applied, Lord Carson.
observed that ""the decision of the High Court related to a valuation and a liability to a tax in a previous year, and no doubt as regards that year, the decision could not be disputed.
The present case relates to a new question, viz., the valuation for a different year and the liability for that year.
It is not (1) , 563, (2) 186 eadem questio, and therefore, the principle of res judicata cannot apply." (p. 100).
It, however, appears that in the same year, the Privy Council came to a somewhat contrary decision in the case of Hoystead vs Commissioner of Taxation.(1) In that case, the question which arose for decision was about the deduction claimable under ther elevant provision of the Land Tax Assessment Act, 1916 (Aust.) Upon the assessment for 1919 20, the Commissioner allowed only one deduction of 5,000 lbs.
contending that the beneficiaries were not joint owners within the meaning of the Act.
The case was then stated to the full Bench which upheld the Commissioner 's view and rejected the argument that the Commissioner was estopped from coming to that conclusion in view of his decision in a previous year.
When the matter went before the Privy Council, it reversed the decision of the Full Court, because it held that the Commissioner was estopped, even though in the previous litigation no express decision had been given whether the beneficiaries were joint owners, it being assumed and admitted that they were, and the Privy Council thought that the matter so admitted was fundamental to the decision then given.
It would thus be seen that this decision applied the principle of res judicata even where there was no express decision on the point, but the point had been conceded in the earlier proceedings.
In 1960, the House of Lords had occasion to consider this question in the case of Society of Medical Officer of Health (2).
We have already quoted one statement of 'the law from the speech of Lord Radcliffe in that case.
In that case, the main reason given for repelling the application of the principle of res judicata in rating cases, was that the jurisdiction of the Tribunal which deals with those cases is limited, in that its function begins with and ends with deciding the assessment or liability of a person for a terminable period.
Besides, it was (1) (2) , 563.
187 held that the position of a valuation officer is that of a neutral official charged with the recurring duty of bringing into existence a valuation list, and he cannot properly be described as a party so as to make the proceedings a lis inter partes.
In coming to the conclusion that the doctrine of res judicata would not apply in such cases, Lord Radcliffe was influenced by the consideration that if decisions in rating cases are to be treated as conclusive for all time that Would be to impose a needlessly heavy burden upon the administration of rating (p.566).
This decision purported to approve of the view taken in the case of the Broken Hill Proprietary Co. Ltd.(1) and to distinguish the view taken in the Hoystead case.
(2) Lord Radcliffe had occasion to return to the same subject again in Gaffoor vs Income tax Commissioner.
(3) Speaking for the Privy Council, Lord Radcliffe considered the problem of the application of res judicata to taxation cases, examined it in detail and came to the conclusion that the said doctrine did not apply to tax cases in the sense that the decision for the levy of a tax for one year does not operate as res judicata in dealing with the question of a tax for the subsequent year.
On this occasion, emphasis was not placed so much on the limited nature of the jurisdiction of the Tribunal that deals with tax cases, but it was held that even if the matter goes to a High Court on a statement of the case, the decision of the High Court would also not create a bar of res judicata in dealing with the tax claim for a subsequent year. " 'The critical thing," said Lord Radcliffe, " 'is that the dispute which alone can be determined by any decision given in the course of these proceedings is limited to one subject only, the amount of the assessable income for the year in which the assessment is challenged.
" He, no doubt, recognised that in the process of arriving at the necessary decision, it was likely that the consideration of questions of law turning upon the construction of the ordinance or of other statutes or (1) (2) , (3) [1961] 2 W.L.R.794.
188 upon the general law, may be involved, but he thought that the decision of those questions should be treated as collateral or incidental to what is the only issue that is truly submitted to determination (pp. 800 801).
This decision would, therefore, support the appellants ' contention that the High Court was in error in dismissing their writ petitions on the preliminary ground that they were barred by res judicata.
In considering this question, it may be necessary to distinguish between decision on questions of law which directly and substantially arise in any dispute about the liability for a particular year, and questions of law which arise incidentally or in a collateral manner, as Lord Radcliffe himself has observed in the case of the Society of Medical Officers of Health, (1) that the effect of legal decisions establishing the law would be a different matter.
If, for instance, the validity of a taxing statute is impeached by an assessee who is called upon to pay a tax for a particular year and the matter is taken to the High Court or brought before this Court and it is held that the taxing statute is valid, it may not be easy to hold that the decision on this basic and material issue would not operate as res judicata against the assessee for a subsequent year.
That, however, is a matter on which it is unnecessary for us to pronounce a definite opinion in the present case.
In this connection, it would be relevant to add that even if a direct decision of this Court on a point of law does not operate as res judicata in a dispute for a subsequent year, such a decision would, under article 141, have a binding effect not only on the parties to it, but also on all courts in India as a precedent in which the law is declared by this Court.
The question about the applicability of res judicata to such a decision would thus be a matter of merely academic significance.
In the present appeals, the question which arises directly for our decision is : does the principle (1) , 563.
189 of constructive res judicata apply to petitions under article 32 or article 226 where the dispute raised is in respect of a year different from the year involved in a prior dispute decided by this Court ? We have already noticed the points actually decided by this Court against the appellants on the earlier occasion (vide The Amalgamated Coalfields Ltd.(1)).
One of the points sought to be raised was in regard to the validity of the increase in the rate of tax from 3 pies to 9 pies per ton; and since this point had not been taken in the petition and relevant material was not available on record, this Court refrained from expressing any opinion on it.
The appellants contend that the order passed by this Court refusing permission to the appellants to raise this point on the earlier occasion does not mean that this Court has decided the point on the merits against the appellants; it may mean that the appellants were given liberty to raise this point later: but even otherwise, the point has not been considered and should not be held to be barred by constructive res judicata .
It is significant that the attack against the validity of the notices in the present proceedings is based on grounds different and distinct from the grounds raised on the earlier occasion.
It is not as if the same ground which was urged on the earlier occasion is placed before the Court in another form.
The grounds now urged are entirely distinct, and so, the decision of the High Court can be upheld only if the principle of constructive res judicata can be said to apply to writ petitions filed under article 32 or article 226.
In our opinion, constructive res judicata which is a special and artificial form of res judicata enacted by section 11 of the Civil Procedure Code should not generally be applied to writ petitions filed under article 32 or article 226.
We would be reluctant to apply this principle to the present appeals all the more because we are dealing with cases where the impugned tax liability is for different years.
In dismissing the appellants ' petitions on the ground of res judicata, the High Court has no doubt referred to (1) ; 190 article 141 under which the law declared by this Court is binding on all Courts within the territory of India.
But when we are considering the question as to whether any law has been declared by this Court by implication, such implied declaration, though binding must be held to be subject to revision by this Court on a proper occasion where the point in question is directly and expressly raised by any party before this Court.
Therefore, we are inclined to hold that the appellants cannot be precluded from raising the new contentions on which their challenge against the validity of the notices is based.
The first.
ground urged by the appellants on the merits is that the levy authorised to be imposed by the Act and the Rules framed thereunder violates the fundamental rights guaranteed to the citizens under article 19 (1) (f) of the Constitution, and in support of this Arguments reliance is placed on the decision of this Court in Kunnathat Thathunni Moopil Nair vs The State of Kerala (1).
In that case, the impugned Act was struck down because it suffered from several serious infirmities; it was confiscatory in character and its provisions in regard to the levy of the impost were so arbitrary and unreasonable that the Court took the view that the Legislature had completely ignored the legal position that the assessment of a tax on person or property was at least of a quasi judicial character.
This conclusion was based on the examination of the relevant statutory provisions.
in the present case, we are not satisfied that this decision can assist the appellants at all, because the nature of the statutory provisions and the Rules framed under the Act in the present appeals is entirely different.
At this stage, it is necessary to refer to the relevant statutory provisions and the Rules.
Section 51 of the Act (which, in substance, corresponds to section 90 of the Act of 1948) reads thus (1) ; 191 "51.
(1) Subject to the provisions of any law or enactment for the time being in force, a District Council may, by a resolution passed by a majority of not less than two thirds of the members present at a special meeting convened for the purpose, impose any tax, toll or rate other than those specified in sections 24, 48, 49 and 50.
(2) The first imposition of any tax, toll or rate under sub section (1) shall be subject to the previous sanction of the Provincial Government.
x x x X" Sub section (3) and the proviso are not relevant for our purpose.
Then we go to section 79 which confers power on the Provincial Government to make Rules.
Section 79 (1)(xv) is relevant for our purpose.
It provides that : "The Provincial Government may make rules consistant with this Act and with reference, if necessary, to the varying circumstances of different local areas, as to the assessment and collection of the cases and rates specified in sections 48, 49 & 50 and of any tax, toll or rate imposed under section 51, as to the maximum amounts or rates at which any of them may be imposed, as to the prevention of evasion of assessment or payment thereof, as to the agency by which they shall be assessed and collected, and as to the manner in which account thereof shall be rendered by District Councils.
" In pursuance of the powers conferred on the local Government by section 79, rules have been framed on December 16, 1935.
Rules 3 to 10 deal with the question of the impost of tax and provide how decisions made in that behalf by appropriate authorities 192 become final.
Rule 3 prescribed the rate at 3 pies per ton, Rule 4 provides that the figures reported by the concessionaires and the Railway companies half yearly to the Dy.
Commissioner, shall be the basis for the assessment of the tax.
Under Rule 5, every mining lessee has to submit a statement half yearly.
On receipt of the statement, the assessment has to be made by the Chairman of the Independent Mining Local Board under Rule 6.
A notice of demand follows under rule 7.
Fifteen days ' period is given for filing objections under Rule 8.
Rule 9 provides for the Consideration and disposal of the objections, and Rule 10 lays down that if no objection is filed, the Chairman 's assessment shall be final, if any objection is received, the Independent Mining Local Board 's decision shall be final and shall be communicated to the assessee as soon as possible.
It would thus be seen that the scheme of these Rules provides ample opportunity to the assessees to object to the notice of demand served on them and in fact, the demand notices are substantially based on the figures supplied by the railway companies and the concessionaires and the statements submitted by the assessees themselves.
Therefore, it would be idle to suggest that the impost of the tax authorised by the relevant statutory provisions and the Rules is a capricious administrative or executive affair and so, should be held to violate article 19(1)(f) of the Constitution.
Then it is urged that the demand of the tax @ 9 'es per ton is invalid, because it is inconsistent with Rule 3 which has prescribed the maximum rate permissible to be levied against the assessees.
We have already noticed that section 79(1)(XV) authorised the making of a rule as to the maximum amounts or rates at which any of the articles can be taxed.
This was introduced by an amendment made in 1933 by C.P. Act VII of 1933, and so, the argument is that Rule 3 which provides that the tax shall be levied @ 3 pies per ton must be deemed to pro 193 vide for the maximum rate which can be levied and that is 3 pies per ton and no more.
This argument is no doubt well founded., because Rule 3 will have to be read in the light of the power conferred on the local Government by section 79(XV) and that would mean that the rate of 3 pies per ton has been prescribed by the Rule of the maximum rate permissible.
But this argument ignores the fact that this Rule has been subsequently deleted by a notification on September 6, 1943 published in the Government Gazette on September 10, 1943.
When this notification was cited before us, the appellants conceded that the argument based on the construction of Rule 3 was not available to them.
Therefore, the contention that Rule 3 prohibits the levy at a rate higher than 3 pies cannot succeed since the Rule itself has been subsequently deleted and was not a part of the Rules at the relevant time when the impugned notices were issued.
It is then argued that the impost of the tax at the rate of 9 pies per ton is not valid, because it does not comply with the requirements of section 51(2) of the Act, and that raises the question of the construction of the said section.
Section 51(1) authorises the imposition of the tax, provided, of course, the procedure prescribed by it and the requirements laid down by it are satisfied.
Sub Section (2) then lays down that the first imposition of any tax shall be subject to the previous sanction of the Provincial Government.
The appellants contend that in the context, the "first im position" means not only the first imposition in the sense of an initial imposition, but it includes every fresh imposition levied at an increased rate.
On the other hand, the respondent Sabha contends that the first imposition means only the initial levy or impost and cannot take in subsequent imposts or levies. 'In this connection, it is relevant to remember that sub section (2) was added by the same Amending Act by which section 79(XV) was amended, and 194 so, it would not be unreasonable to assume that when the legislature gave power to the local Government to prescribe by rules the maximum rates permissible to be levied, it introduced sub section (2) in section 51 because it was thought necessary that whenever the rates were changed, the imposition of the tax at the increased rates should receive the previous sanction of the Government.
If the respondent 's construction is accepted, it would mean that the respondent should obtain the previous sanction of the Government at the initial levy and thereafter may go on increasing the rate of the levy to any extent without securing the sanction of the Government in that behalf.
Now that Rule 3 has been deleted and no maximum has been or can be prescribed by the Rules, it would be unreasonable to hold that the respondent is given an unfettered and unguided authority to levy the impost in question at any rate it likes.
Since no ceiling has been placed by the Rules in that behalf, it would, we think be fair to hold that if the rates are increased and levy is sought to be imposed on the altered rates, the imposition of the levy at these altered rates should be deemed to be included in the express on "first imposition" under section 51(2).
We are, therefore, inclined to accept the appellants ' construction of section 51(2).
That being so, it is necessary to enquire whether the imposition of the tax @ 9 pies has received the previous sanction of the local Government.
During the course of his arguments, Mr. Sastri for the respondent attempted to suggest that sanction had been obtained for the increase in the rates from time to time and a typed summary of the notifications issued in that behalf was supplied to us at the time of arguments.
This summary refers to the three increments made in 1943, 1946 and 1947 respectively to which we have already referred.
The summary read as if the increments had been sanctioned by the State Government.
But Mr. Sachin Choudhury for the appellants contended that the 195 summary supplied by the respondent was incomplete and inaccurate and that the examination of the Gazette in which the notifications were published, would show that the amendments in the rates had been made not with the previous sanction of the Government, but by the Mining Local Board itself.
Two of these notifications were then produced before us by the respondent, and they supported the conten tion made by Mr. Choudhury.
Therefore, the argument that the imposition @ 9 pies per ton has received the sanction of the Government must fail, and so, the impugned notices which seek to recover the tax from the appellants @ 9 pies per ton must be held to be invalid The respondent is entitled to levy tax only @ 3 pies per ton because that levy has received the sanction of the Government, but if the respondent intends to increase the rate of the said tax, it must follow the procedure prescribed by s.51(2), provided of course, it is open to the respondent to increase the said tax.
There is yet another point on which the appellants are entitled to succeed, and that has reference to the fact that the respondent is seeking to reopen some of the assessments made by it against the appellants.
The argument is that once an assessment is made for a specific period, it becomes final and it is not open to the respondent to demand additional amount by way of tax in respect of the said period.
The genesis of the tax is somewhat interesting.
It appears that roads were constructed by the Independent Mining Local Board at enormous cost at the request of the Mining interests and even debt had to be incurred by the Board for completing the work of the construction of roads.
Since the mining companies received substantial benefit from these roads, the Legislature thought of levying a tax on coal, and that is the origin of the tax.
When the first notification was issued on December 16, 1935 it authorised and sanctioned the imposition by the Independent 196 Mining Local Board at Chhindwara in the Chhindwara District "of a tax at 3 pies per ton on coal, coal dust or coke, manufactured at the mines, sold for export by rail or sold otherwise than for export by rail, within the jurisdiction of the Independent Mining Local Board.
" This tax was recovered by the Board and thereafter by the respondent in respect of coal whether sold inside the district of Chhindwara or sold outside the district of Chhindwara or even outside the State of Madhya Pradesh.
In other words, the total coal produced by each mining lease holder substantially came to be taxed.
But after the Constitution came into force, doubts arose as to whether article 286 of the Constitution did not preclude the respondent from recovering tax in respect of coal exported out of the State of Madhya Pradesh, and in view of the advice given to the respondent by the Government of Madhya Pradesh, the respondent did not collect the tax in respect of coal which was exported by rail outside the State of Madhya Pradesh from about 1952.
The respondent wanted to consult legal opinion on this point, but the State Government refused permission to the respondent to incur expenditure in that behalf.
Subsequently however, this question came to be decided by the High Court of Madhya Pradesh in a writ petition filed by M/s. Newton Chickli Collieries (Pvt.
) Ltd. (No. 265 of 1957).
The High Court held that the tax levied by the janapada Sabhas under s.51 of the Act did not amount to a sales tax nor to an excise duty and so, the respondent thought that it could levy tax even on coal exported by rail outside the State of Madhya Pradesh.
In fact after this judgment was pronounced by the High Court on August 6, 1958, the Provincial Government withdrew its instructions to the respondent not to levy tax on exported coal.
That is how the respondent has issued notices against the appellants in respect of coal exported by rail out of the State of Madhya Pradesh in regard to the years for which assessment has already been levied against the 197 appellants for the coal not so exported, and the contention of the appellants is that this reopening of the assessment is not permissible under the Rules.
This contention appears to be well founded.
We have already seen the scheme of the Rules and we have noticed that Rule 10 provides that if no objection is filed, the Chairman 's assessment shall be final and if an objection is received, the decision of the Mining Board would be final.
In other words, the scheme clearly provides that at the end of each six monthly period, the tax has to be assessed, notices to be issued to the assessee, his objections to be considered and the tax to be ultimately determined in the light of the decision on the said objections; and under Rule 10, the two decisions specified therein become final.
It may be that the Rules do not prescribe any limitation within which these steps have to be taken by the respondent for each period, but that is another matter.
In view of the provisions of Rule 10, it is difficult to hold that the respondent is entitled to reopen assessments already made and rendered final under the said Rule.
There is no other provision for reopening assessment as we have under sections 34 & 35 of the Indian Income Tax Act, and so,.
the respondent is not justified in issuing notices for the years which arc covered by assessment orders already passed.
The finality provided for by Rule 10 will work as much against the respondent as against the assessees.
In support of the appeals, another argument was sought to be raised against the increase of the rates.
It was urged that the tax is in the nature of an excise duty or a sales tax and, therefore, any increase in the said tax beyond the limit of 3 pies the continuance of which has been saved by the provisions of article 143 of the Government of India Act, 1935 and article 277 of the Constitution will be invalid.
This argument is based on the terms used 198 in the notification of December 16, 1935.
Since coal is described as manufactured at the mines, the argument is that it is in the nature of an excise duty and since the notification also refers to coal sold for export by rail or sold otherwise than for export by rail, it is ' argued that it is a sales tax.
On the other hand, the respondent contends that it is neither a sales tax nor an excise duty and as such, the rate can be increased subject, of course, to the requirements of section 51 (2) of the Act.
It appears that by notification issued on September 6, 1943, the preamble of the Rules was modified by substituting for the words " 'coal, coal dust or coke" by "coal and dust coal" and by deleting the words " 'manufactured at the mines".
Curiously enough, these amendments have not been made in the original notification itself.
We have already noticed that this latter notification deleted Rule 3.
Some arguments were urged before us by learned counsel on both sides as to the effect of this notification which modified the preamble to the Rules.
We do not, however, think it necessary to consider these arguments in the present appeals because of our conclusion that the impugned notices levying the tax @ 9 pies per ton are invalid for two reasons: the increase in the rates has not been sanctioned by the State Government under section 51 (2) and an attempt to recover at the increased rate the tax for the years already covered by assessment orders passed in that behalf, is barred by Rule 10.
The result is, the appeals and the writ petitions are allowed and an appropriate direction or order is issued restraining the respondent from recovering the tax at a rate higher than 3 pies per ton and also restraining the respondent from recovering any additional tax in respect of the years for which tax has already been assessed against the appellants.
The same will be the order in the other companion appeals.
The 199 appellants will be entitled to their costs, but one set of bearing fees will be taxed.
Appeals and writ petitions allowed.

dataset_name: IN-Abs

summary/full:
The 1st appellant in the first batch of appeals had filed a writ petition in this Court challenging the notices calling upon him to pay the tax of 9 pies per ton on coal including coal despatched outside the State of Madhya Pradesh on two grounds, namely, that the levy of the tax by the Independent Mining Board was invalid at the date of its initial imposition and, 173 therefore, the respondent Sabha which was the successor of the Mining Board could not continue the levy and also that on a proper construction of section 51 of the Act, the levy could not be made.
Another point namely, the increase in the rate of tax from the original 3 pies to the 9 pies per ton at which the tax was demanded was illegal was sought to be canvassed but was not allowed to be argued by the Court as it had not been raised in the petition.
The writ petition was rejected.
The appellant challenged the levy of the tax for the further periods byway of a writ petition before the High Court of Madhya Pradesh on grounds distinct and separate from those which had been rejected by this Court.
The High Court dis missed the writ petition on the ground that it was barred by res judicata by reason of the earlier judgment by this Court.
In the case of the other appellants the High Court held that the matter was also concluded on the authority of the decision of this Court.
The appellants in the first batch of appeals came by special leave and also filed writ petitions challenging the validity of the levy.
Held, that while the general principle of res judicata applies to writ petitions under article 32 and article 226 of the Constitution, in its application to article 32 of the Constitution, the doctrine only regulates the manner in which the fundamental rights could be successfully asserted and does not in any way impair or affect the content of the fundamental rights.
Pandit M.S.M. Sharma vs Dr. Shree Krishna Sinha, [1961] 1 section 0.
R. 96, Raj Lakshmi Dasi vs Banamali Sen, [1953] section C. R. 154 and Daryao vs State of U.P., ; , referred to.
Constructive res judicata was a creature of statute and its application could not be extended to other proceedings particularly those questioning tax liability for different years.
Held, further, that the law declared by the Supreme Court which is binding under article 141 of the Constitution of India is that which has been expressly declared and any implied declaration though binding was subject to revision by this Court when the point was subsequently directly and expressly raised before this Court.
Held, further, that the procedure of assessment of tax authorised by the relevant statutory provisions and the Rules could not be said to be a capricious administrative or executive affair so as to violate article 19(1) (f) of the Constitution.
174 Kunnathat Thathunni Moopil Nair vs State of Kerala, ; , distinguished.
As the Rule which prescribed the maximum rate had itself been deleted it could not be said that there had been a levy in excess of the maximum prescribed.
As neither the Act nor the Rules prescribed a ceiling on the levy, the expression "first impositions occurring in section 51(2) would include every increase of the levy after its initial imposition and the increased levy would require the previous sanction of the Local Government and such sanction not being there, the levy at the rate of 9 pies per ton was illegal.
Considering the nature of the tax and the periods for which it was assessed and in the absence of any provision, the assessment once made by r. 10 was final and there could be no re assessment.


judgement:
Appeal No. 82 of 1957.
Appeal from the judgment and decree dated April 4, 1955, of the Calcutta High Court in Appeal from Appellate Decree No. 1224 of 1953.
G. section Pathak and D. N. Mukherjee, for the appellant.
H. N. Sanyal, Additional Solicitor General of India and P. K. Chatterjee, for the respondents.
February 10.
The Judgment of the Court was delivered by SHAH, J.
Of the premises relating to which this dispute arises No. 5, Raja Rajkissen Street, Calcutta the respondents are the owners and the appellant was a contractual tenant from June 15, 1917, till June 15, 1947, under three successive tenancies for 10 years each.
Under the first tenancy, the appellant paid rent at the rate of Rs. 84,15,0,per month, under the second tenancy at the rate of Rs. 180 per month 815 and under the third tenancy at the rate of Rs. 225 per month.
The tenancy was in respect of buildings used for manufacturing " tin canisters " and open land.
On September 30, 1946, the Governor of Bengal issued the Calcutta Rent Ordinance, V of 1946, making certain provisions for control of rent of premises in the town of Calcutta.
By section 12 of the Ordinance, it was provided in so far as it is material that notwithstanding, anything contained in the Transfer of Property Act, the Presidency Small Cause Courts Act or the Indian Contract Act, no order or decree for the recovery of possession of any premises shall be made as long as the tenant pays rent to the full extent allowable by the Ordinance and performs the conditions of the tenancy.
By the proviso, the landlord was, notwithstanding the protection granted entitled, if the conditions specified therein were fulfilled, to obtain possession of the premises.
This Ordinance was replaced by Act I of 1947 which contained substantially the same provisions.
By the West Bengal Act V of 1948, the provisions of Ordinance V of 1946 and Act I of 1948, were continued.
Thereafter on December 1, 1948 the West Bengal Premises Rent Control (Temporary Provisions) Act XXXVIII of 1948 was brought into operation and by this Act, the West Bengal Act V of 1948 was repealed, but the protection granted to the tenants was con tinued.
This Act was repealed by the West Bengal Premises Rent Control Act, 1950, and by section 12 of the latter Act protection to tenants, including tenants whose tenancies had expired, against eviction was granted by prohibiting courts from passing decrees or orders for recovery of possession of any premises in favour of landlords.
It was provided by that Act that the landlord shall be entitled to obtain a decree in ejectment, inter alia, where the premises are reasonably required by, him either 1 for the purpose of building or rebuilding or for his own occupation.
By letter dated May 15, 1957, the respondents called upon the appellant.
to vacate and deliver possession on the expiry of the period of tenancy.
Possession was however not delivered by the appellant 816 and he continued to pay the stipulated amount and the same was accepted by the respondents.
In an application under section 9 of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1948, the Controller fixed the standard rent of the premises at Rs. 455 per month.
After the enactment of the West Bengal Premises Rent Control Act, 1950, another application was submitted by the appellant and the standard rent was reduced to Rs. 247,8,0.
On October 10, 1950, the respondents served a notice upon the appellant requiring him " to quit, vacate and deliver possession of the premises occupied ", which the appellant was described as holding as " monthly tenant ", on the expiry of the 31st of Chaitra, 1357 B. section, i.e., April 14, 1951.
The ground for eviction, it was claimed, was that the premises were reasonably required by the landlords for putting up now buildings thereon.
The appellant having failed to vacate the premises, the respondents sued in the Court of Small Causes, Calcutta, for a decree in ejectment.
The Court of Small Causes decreed the suit filed by the respondents.
In appeal to the Special Bench, Court of Small Causes, the decree passed by the court of first instance was reversed.
The appellate court held that by acceptance of rent after determination of the tenancy in June, 1947, the appellant continued to be " a tenant holding over " and as the purpose of the tenancy was manufacturing, it could be determined only by a notice of six months, expiring with the year of tenancy and as no such notice was served, the tenancy was not determined and the suit was liable to fail.
In appeal to the High Court of Judicature at Calcutta, the decree passed by the Special Bench was reversed and the decree passed by the court of first instance was restored.
With certificate of fitness under article 133(1)(c) of the Constitution this appeal is preferred by the appellant against the order of the High Court.
The contractual tenancy in favour of the appellant was determined by efflux of time on June 15, 1947, and since that date there has been between the parties no fresh contractual tenancy.
The respondents were, 817 it appears, anxious to obtain possession of the premises let out to the appellant, but they were unable to obtain assistance of the court in view of the protection afforded to the appellant by the successive rent control Acts.
In the meanwhile, the appellant continued to pay every month amounts equal to the contractual rent, and later the rent declared to be the statutory rent.
Does the acceptance of the amounts paid by the appellant confer upon him the right of a tenant holding over within the meaning of section 116 of the Transfer of Property Act? Section 116 of the Transfer of Property Act in so far as it is material provides that if a lessee of property remains in possession thereof after the determination of the lease granted to him and the lessor accepts rent from the lessee or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year or from month to month according to the purpose for which the property is leased as specified in section 106.
It is, however, well settled that where a con tractual tenancy to which the rent control legislation applies has expired by efflux of time or by determination by notice to quit and the tenant continues in possession of the premises, acceptance of rent from the tenant by the landlord after the expiration or determination of the contractual tenancy will not afford ground for holding that the landlord has assented to a new contractual tenancy.
It was observed by B. K. Mukherjee, J. (as he then was), in Kai Khushroo vs Bai Jerbai (1): " On the determination of a lease, it is the duty of the lessee to deliver up possession of the demised premises to the lessor.
If the lessee or a sub lessee under him continues in possession even after the determination of the lease, the landlord undoubtedly has the right to eject him forthwith; but if he does not, and there is neither assent or dissent on his part to the continuance of occupation of such person, the latter becomes in the language of English law a tenant on sufferance who has no lawful title to (1) , 270,273.
818 the land but holds it merely through the laches of the landlord.
If now the landlord accepts rent from such person or otherwise expresses assent to the continuance of his possession, a new tenancy comes into existence as is contemplated by section 116, Transfer of Property Act, and unless there is an agreement to the contrary, such tenancy would be regarded as one from year to year or from month to month in accordance with the provisions of section 106 of the Act.
" It was further observed ". . . in cases of tenancies relating to dwelling houses to which the Rent Restriction Acts apply, the tenant may enjoy a statutory immunity from eviction even after the lease has expired.
The landlord cannot eject him except on specified grounds mentioned in the Acts themselves.
In such circumstances, acceptance of rent by the landlord from a statutory tenant whose lease has already expired could not be regarded as evidence of a new agreement of tenancy, and it would not be open to such a tenant to urge, by way of defence, in a suit for ejectment brought against him, under the provisions of Rent Restriction Act that by acceptance of rent a fresh tenancy was created which had to be determined by a fresh notice to quit.
" Under the Calcutta Rent Ordinance, 1946, and the subsequent legislation which culminated in the West Bengal Premises Rent Control Act, 1950, in the expression "tenant" was included any person who continued in possession after termination of his tenancy.
Section 12 of the West Bengal Premises Rent Control Act, 1950, expressly protects a tenant whose lease has expired.
By the Rent Restriction Statutes ' at the material time, statutory immunity was granted to the appellant against eviction, and acceptance of the amounts from him which were equivalent to rent after the contractual tenancy had expired or which were fixed as standard rent did not amount to acceptance of rent from a lessee within the meaning of section 116, Transfer of Property Act.
Failure to take action which was consequent upon a statutory prohibition 819 imposed upon the courts and not the result of any voluntary conduct on the part of the appellant did not also amount to " otherwise assenting to the lessee continuing in possession.
" Of course, there is no prohibition against a landlord entering into a fresh contract of tenancy with a tenant whose right of occupation is determined and who remains in occupation by virtue of the statutory immunity.
Apart from art express contract, conduct of the parties may undoubtedly justify an inference that after determination of the contractual tenancy, the landlord had entered into a fresh contract with the tenant, but whether the conduct justifies such an inference must always depend upon the facts of each case.
Occupation of premises by a tenant whose tenancy is determined is by virtue of the protection granted by the statute and not because of any right arising from the contract which is determined.
The statute protects his possession so long as the conditions which justify a lessor in obtaining an order of eviction against him do not exist.
Once the prohibition against the exercise of jurisdiction by the court is removed, the right to obtain possession by the lessor under the ordinary law springs into action and the exercise of.
the lessor 's right to evict the tenant will not unless the statute provides otherwise, be conditioned.
The High Court was in our judgment right in holding that by merely accepting rent from the appellant and by failing to take action against him, the appellant did not acquire the rights of a tenant holding over.
It is true that in the notice dated October 10, 1950, the appellant is described as a " monthly tenant ", but that is not indicative of conduct justifying an inference that a fresh contractual tenancy had come into existence.
Within the meaning of the West Bengal Premises Rent Control Act, 1950, the appellant was a " tenant " and by calling the appellant a tenant the respondents did not evince an intention to treat him as a contractual tenant.
The use of the adjective monthly " also was not indicative of a contractual relation.
The tenancy of the appellant was determined by efflux of time an subsequent occupation by him 820 was not in pursuance of any contract express or implied, but was by virtue of the protection given by the successive statutes.
This occupation did not confer any rights upon the appellant and was not required to be determined by a notice prescribed by is.
106 of the Transfer of Property Act.
In that view of the case, this appeal fails and is dismissed with costs.
Appeal dismissed.

summary/full:
The appellant was a contractual tenant of certain premises in the town of Calcutta of which the respondents were the owners.
The respondents called upon the appellant to vacate and deliver possession of the premises on the expiration of the period of tenancy but possession was not delivered and the respondents were unable to obtain possession in view of the protection afforded to the tenants by the successive rent control Acts passed by the State.
In the meantime the 814 appellant continued to pay every month amounts equal to the contractual rent, and later the rent declared to be the statutory rent and the respondent accepted the same.
The question arising for decision was whether the acceptance of the amounts by the respondents conferred upon the appellant the right of a tenant holding over within the meaning of section 116 of the Transfer of Property Act.
Held, that where a contractual tenancy to which the rent control legislation applied, had expired by efflux of time or by determination by notice to quit and the tenant continued in possession of the premises, acceptance of rent from the tenant by the landlord after the expiration or determination of the contractual tenancy will not afford ground for holding that the landlord had assented to a new contractual tenancy.
Kai Khushroo vs Bai Jerbai , followed.
Acceptance by the landlord from the tenant of amounts equivalent to rent after the contractual tenancy had expired or amounts which were fixed as standard rent did not amount to acceptance of rent from a lessee within the meaning of section 116 of the Transfer of Property Act.
Occupation of the appellant after the determination of tenancy was not in pursuance of any contract express or implied but was by virtue of protection granted by the successive statutes and such occupation was not required to be determined in the manner prescribed by section 106 of the Transfer of Property Act.