JATINDER KUMAR BHAG Vs. STATE OF PUNJAB

JUDGEMENT

(1.) Petitioner No. 2 is engaged in the business of manufacturing cigaretes and has a wide market all over India, Petitioner No. 1 is a dealer of petitioner No. 2 and makes purchases of cigarettes which are despatched through a transport company against bills. The goods are delivered by the transport at the go-downs of the dealer who before taking the goods within Municipal limits for sale, consumption or use is required to pay the requisite octroi wherever payable. It is alleged that cigerattes worth Rs. 5,2,503/- which were loaded in truck No. PB-10-AD-9645 were brought within Municipal limits of Nagar Council, Samrala (for short the Council) on 28-9-1998 at about 5 PM without payment of octroi. The tempo was seized by the officers of the Council and a seizure notice was issued to petitioner No. 1 calling upon him to deposit a usm of Rs. 15,675/- as octori on the aforesaid goods at the rate of 3% of their value together with composition fee which was levied at the rate of twenty times the octori payable. Petitioner No. 1 was thus required to pay a total sum of Rs. 3,29,177/- which included the octroi and also the composition fee. Since this amount was not paid, petitioner No. 1 received another notice dated 2-11-1998 requiring it to deposit the said amount within seven days of the receipt of the notice, failing which, the goods would be sold by public auction to recover the aforesaid amount. It is against these notices that the resent writ petition has been filed under Art. 226 of the Constitution.

(2.) Shri M.L.Sarin, learned Senior Advocate appearing on behalf of the petitioners has contended that the Council has in fact imposed of fine under Section 78 of the Punjab Municipal Act, 1911 (hereinafter called the Act) at the rate of twenty times the value of the octroi payable on the sized goods which power the Council did not possess and that criminal Court alone could impose such a fine. In support of his contention, the learned counsel has placed reliance on a judgment of the Apex Court in Municipal Corporation, Ludhiana v. Commissioner of Patiala Division, Patiala (1995) 1 SCC 304 : (1994 AIR SCW 5136) Ms. Nirmaljit Kaur learned counsel appearing for the Council has, on the other hand, submitted that the Council has not imposed any fine but has levied a composition fee under Section 229 of the Act which power it had under the Act. Her argument indeed is that the act of the petitioner in taking the seized goods inside the Municipal limits without payment of octroi is an offence under Section 78 of the Act which is compoundable in terms of Section 229 of the Act and, therefore, the petitioners are liable to pay the composition fee as determined by the Council. Before we deal with the rival contentions of the parties, it is necessary to refer to the provisions of Sections 78 and 229 of the Act which read as under at pages 5136-5137; of AIR SCW :-

(3.) A perusal of the aforesaid provisions makes it clear that any person who takes within the Muncipal limtis without payment of octroi any goods on which octroi is chargeable is liable to be punished with fine whcih may extend to twenty time the value of such octroi or Rs. 50/- whichever is greater. If the Council wants to prosecute the petitioners for having taken within the Municipal limits the goods without payment of octroi which was payable thereon, it is open to it to lodge a complaint with a criminal Court which alone will have the power to punish the petitioners, if they are found guilty of the offence and impose fine. The power to impose fine thus vests only in a criminal Court and cannot be assumed by a Council or by any of its officers. However, it is open to the parties to settle the dispute at any stage because the offence under Section 78 of the Act is a compoundable offence. Section 229 is an enabling provision which permits the parties i.e. Council and the person supsected of having committed the offence under the Act to compromise the dispute and agree to a certain sum on the payment of which the offence could be compounded. A composition fee under this provision can be levied only if both the parties have agreed the same cannot be levied by the Council unilaterally. In other words, an offer to compound the offence has to be made by the person suspected of having committed the offence which may be accepted by the Council and when an amount to be paid as composition fee has been agreed upon, the Council gets a right to enforce the compromise and recover the composition fee. In the case before us, the petitioners did not agree to compound the offence nor did they agree to pay any composition fee and on the other hand, their case is that no octroi is chargeable on the goods as they were not meant for sale consumption or use within the Municipal limits of the Council. The expressions 'compound' and 'composition' according to their ordinary dictionary meaning imploy a settlement or an agreement whereas fine is a pecuniary punishment for some violation and a compulsory exaction of money. In such a situation, the amount sought to be recovered by the Council as a result of its unilateral decision is in the nature of a fine and cannot be described as a composition fee. The action of the Council in demanding the amount as composition fee is, therefore, clearly impermissible and not warranted by the provisions of Section 229 of the Act. We, have, therefore, no hesitation in holding that the demand made by the Council for the payment of the alleged composition fee at the rate of twenty times the octroi payable is without jurisdiction and the petitioners are not liable to pay the same.