(1.) These two petitions raise common questions of law and some common questions of fact. Each of the petitions has a common petitioner and a set of common respondents. Therefore, both the petitions were heard together and a common argument was addressed by learned counsel on both sides. With their consent, we are writing this common judgment which would dispose of both the petitions.
(2.) The two petitions challenge the validity of a house tax imposed by the Broach Borough Municipality and embody prayers for issuance of a writ of mandamus, a direction or an order for restraining respondents, their agents and servants from enforcing the tax, and the provisions of law under which the tax is sough to be levied from petitioner.
(3.) The facts which are required to be stated to dispose of the two petitions are as follows: In both the petitions the common petitioner is Prathvi Cotton Mills Ltd., a company registered under the Indian Companies Act VII of 1913 hereinafter called petitioner simpliciter.. In Special Civil Application No. 846 of 1963, it is the sole petitioner. The second petitioner in Special Civil Application No. 765 of 1964 is one Laxminivas B. Rungta, a director and share holder of the above mills. In both the petitions, respondents are the Broach Borough Municipality, a body constituted under and governed by the provisions of the Bombay Municipal Boroughs Act, 1925 hereafter called the Boroughs Act., and one V. M. Bhatt, its Chief Officer, who are respectively respondents Nos. 1 and 2. In the second petition, the State of Gujarat is the third respondent. The first respondent will be called Municipality simpliciter in the rest of this judgment. The municipality was governed by the Borough Act till 31st December 1964. The Boroughs Act was repealed by the Gujarat Municipalities Act, 1963 hereafter called the Municipalities Act. which came into force on 1st January 1965. As and from that date, the municipality became governed by the Municipalities Act. The impugned house tax, though levied much earlier and continued from time to time, came to be permanently imposed by the Municipality under section 73 of the Borough Act. The tax was permanently imposed as and from 1st April 1959. For that purpose, the Municipality framed rules called the House Tax Rules hereafter called the rules. under section 58, clause i. of the Boroughs Act. Petitioner owns lands and buildings situated within the limits of the Municipality. The house tax is paid on 1st April of every year. For the years 1961-62 and 1962-63, bills were presented to petitioner by the Municipality, claiming payments of the amounts mentioned in the respective bills, for the years also mentioned therein, by way of house tax. Out of the bills so presented, the Municipality recovered a sum of Rs. 4,602-89 nP. However, after the presentation of the above hills, the Supreme Court decided, on 26th March 1963, the case of Gordhandas Hargovindas v. Municipal Commissioner, Ahmedabad, 1963 AIR(SC) 1742. In that case, a tax designated as rate imposed by the former Municipal Borough of Ahmedabad under the same section 73 of the Boroughs Act, was challenged on two grounds, one of the grounds being that, the Ahmedabad Municipality had levied a rate and that therefore, the impost could be levied only on the annual letting value of the open land and not on its capital value. The latter contention was upheld by the Supreme Court by a majority judgment. The respondent municipality also had levied the house tax on the basis of the capital value of the lands and buildings situated within its limits. After petitioner came to know about the above judicial pronouncement. It started correspondence with the Municipality, contending, that the house tax was illegal and that, petitioner was under no obligation to pay the amount of the house tax claimed from it. The Municipality refused to stay its hands and threatened to employ its coercive machinery for the recovery of the house tax. Therefore, petitioner filed Special Civil Application No. 846 of 1963. Thereafter, the Municipality presented two sets of bills, one dated 11th September 1963, and another dated 1st August 1964, in respect of the self-same properties of petitioner and certain other properties which had since been constructed by petitioner. The total amount claimed in the two sets of bills was Rs. 23.159 including the arrears of Rs. 8,105 in respect of the previous year 1962-63. Petitioner resisted this claim also on the same ground as it did in respect of the previous demand and met with the same answer and threat. Therefore, petitioner filed the second petition bearing No. 765 of 1964. However, before the second petition was filed, the State Legislature had passed the Gujarat Imposition of Taxes by Municipalities Validation. Act, 1963 hereinafter called the Validation Act. which came into force on 26th January 1964. By this latter Act, the Legislature purported to validate the imposition, collection and recovery of taxes or rates assesse, inter alia, under the Boroughs Act and sough to confer authority on municipalities to collect and recover such taxes. After the two petitions were filed, the same Legislature also passed the Municipalities Act, which came into force on 1st January 1965. Section 99 of the latter Act was suitably amended to enable the Municipality to impose a tax on the capital value of lands and buildings, thereby enabling municipalities to get over the decision of the Supreme Court recorded in Gordhandas , 1964 2 SCR 608 . As already stated, the latter Act repealed the Boroughs Act. But, the saving clause in section 279 of the Municipalities Act saved the House Tax Rules and the tax imposed thereby. Therefore, both the petitions were suitably got amended by petitioner. By the amendment, petitioner challenged the validity of the Validation Act and the relative position under the Municipalities Act, which either purported to save the house tax of to confer power on the Municipality to collect and recover such tax to get over the law pronounced by the Supreme Court in Gordhandas, 1964 2 SCR 608 .;