Ramaswami, J. - (1.) This appeal is brought, by certificate, from the judgment of the Allahabad High Court dated November 23, 1961 in First Appeal No. 315 of 1958 by which the appeal of the respondents was allowed and the suit was decreed with costs throughout.
(2.) On March 26, 1956, the plaintiff respondents who are rickshaw owners and rickshaw drivers filed a representative suit in the court of Civil Judge, Varanasi praying for a decree against the appellant to restrain it by means of a permanent injunction from charging any licence fee or preventing the respondents from plying rickshaws for hire without paying license fee within the municipal limits of Varanasi. Purporting to act under S. 289 (2) , List I - H of the U. P. Municipalities Act, 1916 (Act No. II of 1916) , hereinafter referred to as the 'Act', the Municipal Board of Varanasi framed certain bye-laws relating to the plying of rickshaws. The bye-laws were first published by Government order No. 3471/XXIII-9994 dated March 10, 1941 and were subsequently amended by two notifications No. 4022/XXIII-445 dated February 2, 1950 and No. 5834-XXIII-745 dated September 6, 1951. Under these bye-laws, as they stood amended, the owner of each rickshaw had to pay an annual licence fee of Rs. 30/- and each driver of a rickshaw had to pay an annual fee of Rs. 5/-. The respondents challenged the validity of these bye-laws mainly on the ground that considering the amount that was being levied what should have been only a fee was really a tax which the Municipa1 Board had no authority to levy. It was contended on their behalf that a licence fee could be levied only for services rendered or advantages provided and the imposition must be commensurate with the services and advantages so rendered or provided, it was urged that so far as the rickshaws that were being plied within the municipal limits of Varanasi were concerned no advantages or services were provided which could justify the levy of a. fee at such a rate. The suit was contested by the appellant Municipal Board on the ground that services and advantages were, in fact, provided and their cost was much more than the total amount that was being realised from the rickshaw owners and drivers. By his judgment dated March 26, 1958 the 1st Additional Civil Judge, Varanasi dismissed the suit of the respondents, holding that the bye-laws in question were not invalid. The respondents took the matter in appeal to the Allahabad High Court, being First Appeal No. 315 of 1958. The appeal was first placed before Gurtu and Srivastava, JJ. who referred it for consideration by a larger Bench. The appeal was finally heard by the Chief Justice, Jagdish Sahai and Bishambhar Dayal, JJ. By a majority judgment dated November 23,,1961, the appeal of the respondents was allowed, the judgment of the trial court was set aside and the suit of the respondents decreed. It was held by Sahai and Dayal, JJ, who delivered the majority judgment that the imposition of the license fee at the rate of Rs. 30/- on each of the rickshaw owners and Rs. 5/- on each of the rickshaw drivers was ultra vires and a permanent injunction was accordingly granted restraining the appellant from realising the license fees at this rate for the period in question. It was, however, made clear that it was open to the Municipal Board to reduce the fee to a reasonable figure and co-relate it to the services rendered by the Municipal Board.
(3.) Chapter V of the Act deals with Municipal Taxation. Section 128 falls within that Chapter and reads as follows: "(1) Subject to any general rules or special orders of the State Government in this behalf, the taxes which a board may impose in the whole or any part of a municipality are - ********** (iii) a tax on trades, callings and vocations including all employments remunerated by salary or fees; (iv) a tax on vehicles and other conveyances plying for hire or kept within the municipality or on boats moored therein ********** Section 131 deals with framing of preliminary proposals and reads as follows: "131. (1) When a board desires to impose a tax, it shall by special resolution frame proposals specifying- (a) the tax, being one of the taxes described in sub-section (1) of Section 128, which it desires to impose; (b) the persons or class of persons to be made liable, and the description of property or other taxable things or circumstances in respect of which they are to be made liable, except where and in so far as any such class or description is already sufficiently defined under clause (a) or by this Act; (c) the amount or rate leviable from each such person or class of persons, (d) any other matter referred to in Section 153, which the State Government requires by rule to be specified. (2) The board shall also prepare a draft of the rules which it desires the State Government to make in respect of the matters referred to in Section 153. (3) The board shall, thereupon, publish in the manner prescribed in Section 94 the proposals framed under sub-section (1) and the draft rules framed under sub-section (2) along with a notice in the form set forth in schedule III." Section 132 provides for filing objections by inhabitants of the municipality and the procedure for dealing with such objections. It reads: "132. (1) Any inhabitant of the municipality may, within a fortnight from the publication of the said notice, submit to the board an objection in writing to all or any of the proposals framed under the preceding section, and the board shall take any objection so submitted into consideration and pass orders thereon by special resolution (2) If the board decides to modify its proposals or any of them, it shall publish modified proposals and (if necessary) revised draft rules along with a notice indicating that the proposals and rules (if any) are in modification of proposals and rules previously published for objections. (3) Any objections which may be received to the modified proposals shall be dealt with in the manner prescribed in subsection (1) . (4) When the board has finally settled its proposals, it shall submit them along with the objections (if any) made in connection therewith to the (Prescribed Authority) ." Section 133 relates to the power of State Government to reject sanction or modify the proposals of the Municipal Board. Section 134 states: "(1) When the proposals have been sanctioned by the Prescribed Authority or the State Government, the State Government, after taking into consideration the draft rules submitted by the board, shall proceed forthwith to make under section 296, such rules in respect of the tax as for the time being it considers necessary. (2) When the rules have been made the order of sanction and a copy of the rules shal1 be sent to the board, and thereupon the board shall by special resolution direct the imposition of the tax with effect from a date to be specified in the resolution."" Section 135 (1) and (2) provides as follows: "(1) A copy of the resolution passed under S. 134 shall be submitted to the State Government, if the tax has been sanctioned by the State Government and to the Prescribed Authority, in any other case. (2) Upon receipt of the copy of the resolution the State Government or Prescribed Authority as the case may be, shall notify in the Official Gazette, the imposition of the tax from the appointed date, and the imposition of a tax shall in all cases be subject to the condition that it has been so notified." Chapter VII deals with powers of the Municipal Board in respect of buildings, public drains, streets, extinction of fires, scavenging and water supply. Chapter VIII deals with other powers in respect of markets, slaughter-houses, sale of food, public safety, sanitation and prevention of disease, inspection, entry, search, rent and charges etc. Sections 293 and 294 fall within Chap. VIII. Section 293 of the Act reads as follows: "(1) The board may charge fees to be fixed by bye-law or by public auction or by agreement, for the use or occupation (otherwise than under a lease) of any immovable property vested in, or entrusted to the management of the board, including any public street or place of which it allows the use or occupation whether by allowing a projection thereon or otherwise. (2) Such fees may either be levied along with the fee charged under Sec. 294 for the sanction, licence or permission or may be recovered in the manner provided by Chapter VI." Section-293-A of the Act is to the following effect: "A board may with the previous sanction of the State Government impose and levy fees for use of any place to which the public is allowed access and at which the Board may provide sanitary and other facilities to the public." Section 294 of the Act enacts as follows: "The board may, charge a fee to be fixed by bye-law for any licence, sanction or permission which it is entitled or required to grant by or under this Act." ;