DHRANGADHRA MUNICIPALITY Vs. DHRANGADHRA CHEMICAL WORKS LIMITED

JUDGEMENT

(1.) IN order to appreciate the contours of controversy between the parties, relevant introductory facts are required to be noted at the outset. The appellant in First Appeal No. 48 of 1974 is Dhrangadhra Municipality Which is at present functioning under the Gujarat Municipalities Act, but which was earlier a district municipality under the Bombay District Municipal Act, 1901. The respondent in the first appeal is Dhrangadhra Chemical Works. Dhrangadhra Municipality was the original defendant while Dhrangadhra Chemical Works was the original plaintiff in Civil Jurisdiction Suit No. 76 of 1963 which was filed in the Court of the Civil Judge (S. D.), Surendranagar, to recover Rs. 6,29,066.97 on the ground that the said amount was illegally collected and retained by the defendant municipality from the plaintiff towards octroi. Special Civil Application No. 1729 of 1977 has been moved by the plaintiff directly in this Court against the State of Gujarat and the defendant municipality challenging the vires of the Gujarat Act No. 6 of 1978, viz., Dhrangadhra Municipality (Imposition of Tax) Validation Act, 1977. For the sake of convenience, we shall refer to Dhrangadhra Municipality as the defendant and Dhrangadhra Chemical Works as the plaintiff in the latter part of this judgment.

(2.) THE plaintiff alleged in its aforesaid suit that the defendant had no authority to levy or recover octroi from the plaintiff and that the action of the defendant in recovering and retaining octroi from the plaintiff was illegal and ultra vires. The plaintiff's case was that it is a company registered under the Indian Companies Act and is carrying on the business of manufacturing soda ash and other chemicals. For that purpose, it is having its factory within the municipal limits of the defendant municipality at Dhrangadhra town in Surendranagar district. The Bombay District Municipal Act, 1901, was applied to the merged territories of Saurashtra from 1st July, 1949, and the defendant municipality has been constituted as a district municipality under the said Act from 1949. It is the case of the plaintiff that by Ordinance dt. 27th Aug., 1949, published in the Saurashtra Government Gazette, Part I, S. I, the then Raj Pramukh had issued the Saurashtra Terminal Tax and Octroi Ordinance. Under the said Ordinance, it was only the Government which can impose octroi in the cities and towns specified in Schedule I of the Ordinance. Dhrangadhra town was one of the towns listed. Octroi on the goods entering the limits of Dhrangadhra town can be levied by the State and not by the municipality. The plaintiff raised various other contentions in the plaint for supporting its case, viz., that the defendant municipality had no power to levy octroi on the goods brought by the plaintiff within the municipal limit s and, therefore, the said levy and collection of octroi were ultra vires the provisions of the Ordinance as well as the Bombay District Municipal Act, 1901.For the purpose of the present proceedings, it is not necessary to refer in detail to diverse contentions centering round the levy of octroi by the defendant municipality from the plaintiff. As will be seen hereafter, these proceedings can be disposed of on a short point which will become obvious from the discussion in the later part of this judgment. It appears that earlier, the plaintiff had filed a writ petition, being Special Civil Application No. 769 of 1962, in this Court against the defendant municipality challenging the right of the defendant to recover octroi and that petition was dismissed by this Court. However, the plaintiff preferred an appeal, viz., Appeal No. 1103 of 1967 in the Supreme Court. That appeal came to be allowed by the Supreme Court, the decision whereof is reported in AIR 1973 SC 1041 (Dhrangadhra Chemical Works Ltd. vs. State of Gularat).

(3.) ON the other hand, the learned advocate for the plaintiff submitted that such contention was not raised by the defendant in its written statement nor was it canvassed before the trial Court. No issue was sought on this point and hence this contention should not be permitted to be raised for the first time in appeal. It was next contended that in any case, this is a suit for refund of deposited amount and, therefore, it will not fall within the four corners of S. 72 of the Contract Act. That, if at all, it fell under S. 148 of the Indian Contract Act or S. 70 of the Act and if that is so, the legal requirements of pleading and proof, so far as the suit under S. 72 of the said Act are concerned, would not apply to the facts of the present case. It was next contended that the agreement, exhibit 126, entered into between the parties pending the first litigation up to the Supreme Court, cannot be of any avail to the defendant as the said agreement was contrary to law and in any case, the plaintiff can always show that despite this agreement, entitling the municipality to appropriate the deposited amounts over the years, towards its octroi dues, as the defendant was not entitled to recover octroi, such appropriation was bad in law and, therefore, the deposited amount was required to be refunded to the depositor, viz., the plaintiff. It was ultimately contended that the decisions of the three Division Benches of this Court in the cases of Bharat Vijay Mills Co. (supra), New India Industries Ltd. (supra) and Tata Chemicals Ltd. (supra) were required to be reconsidered in view of the fact that they were contrary to the decisions of the other High Courts to which our attention was invited and to which we will make a detailed reference hereafter. Reliance was also placed on two decisions of the Supreme Court in the cases of CST vs. Auraiya Chamber of Commerce (1987) 167 ITR 458 (SC) and State of Kerala vs. Aluminium Industries Ltd. (1965) 16 STC 689. It was submitted that the Division Bench judgments of this Court require reconsideration at least in the light of the aforesaid Supreme Court decisions.