Patna High Court
Hind Constructions Ltd. And Anr. vs Cess Deputy Collector And Ors. on 17 October, 1955
Equivalent citations: AIR1956PAT100, AIR 1956 PATNA 100
JUDGMENT Ramaswami, J.
1. The petitioners are two limited companies, namely, Hind Constructions Limited and Patel Engineering Company Limited, incorporated, under the Indian Companies Act, and jointly executing the work of construction of Konar Dam No. 1 in the district of Hazaribagh. The Damo-dar Valley Corporation (hereinafter called "the Corporation") is a statutory body incorporated under Central Act 14 of 1948.
For the purpose of construction of Konar Dam No. 1, the Government of Bihar acquired lands after issuing declarations under Section 6 of Act 1 Of 1394 and Section 3, Clause 1, of Act 18 of 1885. According to the form of declaration title was acquired not only to the surface right but also such part of the mines and minerals like coal, iron-stone, slate etc. which it might be necessary to dig, or carry away, or use in the construction of the Dam. The condition is expressed in negative form in the declaration (Annexure A) :
"Mines of Coal, iron-stone, slate or other minerals lying under the land or any particular portion of the land, except only such parts of the mines and minerals as it may be necessary to dig, or carry away, or use in the construction of the work for the purpose of which the land is being acquired are not needed."
Section 28 of the Damodar Valley Corporation Act provides that title to all properties acquired and works constructed for the purpose of the Damodar Valley scheme shall vest in the Corporation. The Corporation entered into agreement with the petitioners by two contracts, dated 24-5-1950 and 10-3-1951 for the construction of Konar Dam No. 1 exclusive of the hydro-electric power plant.
In pursuance of these agreements the petitioners executed the work of construction of the Dam and utilised for the work of construction such materials as sand, ballast, stones, stone-chips etc. which were recovered by excavation of the neighbouring lands with the permission of the Corporation. On 26-5-1954 the Cess Deputy Collector of Hazaribagh wrote to the petitioners asking them to send a statement regarding the supply of stone-chips, ballasts and boulders excavated for the years 1649-50 to 1953-54.
On 12-6-1954, the petitioners represented to the Cess Deputy Collector that they were not liable for payment of cess and that stone-chips, ballasts and boulders used for the purpose of construction of Konar Dam No. 1 all belonged to the Corporation. In spite of this representation, the Cess Deputy Collector started a proceeding under Section 72 of the Cess Act (Bengal Act 9 of 1880) requiring the petitioners to submit a return of the net annual profits.
The Cess Deputy Collector added that if the return was not submitted within the period of two months from the service of notice, the petitioners would be liable to pay penalty of a fine, of Rs. 50/- for every day after expiry of the period.
2. In these circumstances, the petitioners have moved the High Court for grant of a writ in the nature of certiorari under Article 226 of the Constitution for , the purpose of calling up and quashing the proceedings started by the Cess Deputy Collector of Hazaribagh under Section 72 of the Cess Act (Bengal Act 9 of 1880).
The contention of the petitioners is that they are not owners or managers or occupiers of any mine or quarry within the meaning of Section 72 of the Cess Act, and the Cess Deputy Collector had no jurisdiction to start a proceeding against the petitioners requiring them to submit a return of the net annual profits of the quarry.
The case of the petitioners is that they were mere contractors and the notice issued under Section 72 of the Cess Act was illegal and beyond the jurisdiction of the Cess Deputy Collector.
3. Cause has been shown in this case by the learned Government Advocate on behalf of respondents 1 to 3 including the State of Eihar and Mr. Baldeva Sahay on behalf of respondent 4, the Damodar Valley Corporation.
4. The main question presented for determination in this case is whether the petitioners are "occupiers" of the mine or quarry within the meaning of Section 72 of the Cess Act (Bengal Act 9 of JS80) and whether the notice issued by the Cess Deputy Collector against the petitioners is legally valid.
It was submitted by Mr. Dutt that the petitioners were only licensees and under the terms of the two contracts the petitioners were paid only labour charges for the work of removing ballasts, boulders and stone-chips from the quarry to the site of construction of the Konar Dam. It was submitted by learned Counsel that this was a labour contract and the petitioners had no title to the quarry or to the minerals which were removed from the quarry.
In support of this submission, Counsel re-
ferred to paragraph 8 at page 31 of the first agreement dated 24-5-1950 between the Corporation and the petitioners. This paragraph states that all materials required for the construction of the Dam embankment and for rockfill, which were not available from required excavations, should be taken from borrow pits "and/or quarries." Counsel for the petitioners also referred to paragraph 19 which states:
"The rockfill portion of the dam embankment shall be constructed to the lines and grades shown on the drawings. The rockfill shall consist of a suitable free draining mixture or rock fragments, boulders and cobbles from a quarry or from required excavation. The largest rock in the rockfill shall be not more than 1 cubic yard in volume.
The inclusion of gravel or rock spalls in the mass in an amount not in excess of that required to fill the voids in the coarser material will be permissible. Successive loads of materials shall be so dumped as to secure the best practicable distribution of the materials. In general the larger boulders and rock fragments shall be placed on the outer slope and the smaller cobbles and fragments next to the earth fill, The rockfill shall be placed in approximately horizontal layers not exceeding 3 feet in thickness. The materials need not be hand placed or especially compacted but shall be dumped and roughly levelled so as to maintain a reasonably uniform surface and ensure that the completed rockfill will be stable and that there will be no large unfilled spaces within the rockfill."
Counsel further referred to the rates mentioned at page 51 as regards items 11 and 14 and item 17 at page 52. The items are as follows :
Items Unit Quantity Unit rate Amount in Rs. Per item.
11.
14b. Excavation in borrow pit rock materials and backfill up to 2 miles.
Cu. Yd. 541,140
7-4-0
39,23,256
* *
*
*
*
14a. Hauling of rock material to disposal up to half mile.
Cu. Yd. 263,860
0-12-0
1,97,895
b. Hauling of rock material to backfill up to 2 miles.
Cu. Yd. 541,140
2-4-0
see item 11.
* *
*
*
*
17. Placing rip rap protection in dam and downstream drain.
Cu. Yd. 805.000
1-13-0
14,59,062
Reference was also made to the schedule rates in the supplementary contract dated 10-3-1951, at p. 43 with regard to items 11 (a) and 17 (c) which are as follows:
11a. Excavating, sorting and disposal of unsuitable quarry materials within one mile.
Cu. Yd. 20,000
8-0-0
* *
*
*
*
17c. placing rip 'rap protection by hand to dam and drains.
Cu. Yd. 10,000
17-12-2
Mr. Dutt, therefore, argued on the basis of these submissions that the petitioners had no title to the quarries or to the boulders, ballasts and stone-chips excavated from the land and the petitioners were only paid the actual cost of excavation and removal of the boulders etc. from the quarry to the site of construction of Konar Dam. Learned Counsel contended that the petitioners were not liable to submit any return of the net annual profits under Section 72 of the Cess Act.
It was not seriously disputed by learned Government Advocate appearing on Behalf of the State of Bihar that the petitioners had no title to the quarry or to the mineral excavated therefrom. It was, however, submitted that even if the petitioners were licensees, the Cess Deputy Collector had jurisdiction to start proceedings under Section 72 of the Cess Act.
The argument of the learned Government Advocate was that the expression "occupier" in Section 72 included any person actually working the quarry and digging out minerals like boulders, ballasts and stone-chips. It was contended that the expression "occupier" in Section 72 would include even a licensee who is excavating the quarry and digging out minerals.
On behalf of the petitioners the opposite viewpoint was put forward and it was urged that a licensee was not included in the expression "occupier" occurring in Section 72. The question at issue, therefore, turns upon the correct interpretation of the word "occupier" occurring in Section 72 of the Cess Act. As much of the argument in the case ranged round Section 72, it is necessary to quote it in full.
"72(1). On the commencement of this Act in any district, and thereafter before the close of each year, the Collector of the district shall cause a notice to be served upon the owner, chief agent, manager or occupier of every mine or quarry other than a notified' mine and of every tramway, railway, and other immovable property not included within the provisions of Chapter II, and not being a tramway or railway on which local cess is not leviable; such notice shall be in the form in Schedule (E) contained, and shall require such owner, chief agent, manager or occupier to lodge in the office of such Collector within two months a return of the net annual profits of such property, calculated on the average of the annual net profits thereof for the last three years for which ac-' counts have been made up."
It was submitted by the Government Advocate that the object of enacting Section 72 was to enable the Collector to obtain information from the person who was actually working the mine or quarry and therefore, the person most competent to supply the requisite information. It was conceded by the learned Government Advocate that the tax was really imposed upon the land or other immovable property and that the ultimate incidence of the tax would hot be on the occupier but upon the owner.
But the contention was that the person actually working the quarry or the mine was required to make the return of the net annual profits so that the Collector may be in a position to make the proper valuation and assessment of cess. It was, therefore, submitted that even a licensee or a contractor who was working the quarry or the mine was liable to submit a return under Section 72 of the Cess Act.
The argument of learned Government Advocate is attractive, but I think that the argument cannot be accepted in view of more important considerations. It is necessary to notice in the first place the terms of Section 5 :
"5. All immovable property to be liable to local cess. Prom and after the commencement of this Act in any district or part of a district all immovable property situate therein, except as otherwise in Section 2 provided shall be liable to the payment of local cess."
Section 6 deals with the manner in which the amount of cess is to be assessed. Section 6 states :
"6. Cess how to be assessed : The local cess shall be assessed on the annual value of lands and until provision to the contrary is made by the Central Legislature on the annual net profits from mines and quarries, other than notified mines and from tramways, railways and other immovable property, ascertained respectively as in this Act prescribed."
Section 41 is also an important section. Section 41 makes provision as to the mode of payment of local cess. According to this section, cess is payable by (1) holder of estate, (2) holder of tenure, (3) cultivating raiyab, and (4) holders of chaukidari chakaran lands. It is then necessary to consider the terms of Section 81 which is very important. Section 81 enacts:
"81. Recovery by occupier or owner who has paid in excess : In any case in which the occupier of such property is a different person from the owner, and has paid in excess of half of the sum due as local cess on account of any instalment, such occupier shall be entitled to deduct the amount of such excess from the next and subsequent instalments of rent payable in respect of such property, and every owner who has paid in excess of half of such sum due shall be entitled to recover the amount of such excess from the occupier, provided that in no case shall an occupier deduct from his annual rent more than half of the rate of the local cess on every rupee thereof."
It is manifest that the expression "occupier" is used in Section 81 to mean a lessee who pays annual 'rent' to the proprietor. I see no reason why the word "occupier" in Section 72 should not be construed in the same sense as in Section 81. It is also clear from the terms of Sections 5, 6 and 41 that the cess is an incident of ownership of property and that cess is imposed only on persons who are either proprietors or have some measure of interest in the land.
In my opinion, the expression "occupier" in Section 72 must take its colour and meaning from the context of the various sections and the subject matter of the whole statute. Construed in this context it is clear that the expression "occupier" in Section 72 means a lessee who is in possession of the quarry or mine and who is liable to pay rent to the proprietor.
The petitioners are mere licensees and are not legally in possession of the quarries. It is also the admitted position that the petitioners do not pay any rent to the Corporation for the minerals excavated. My concluded opinion is that the petitioners are not "occupier" within the meaning of Section 72 of the Cess Act (Bengal Act 9 of 1880) and the proceedings started by the Cess Deputy Collector are illegal and beyond his jurisdiction.
5. The view that I have expressed as to the meaning of the word "occupier" in Section 72 of the Cess Act is borne out by authorities. In --'Philip Charles Sheppard v. Church Wardens and Overseers of Parish of Bradford', (1864) 143 ER 1170 (A) it was held by the Court of Common Pleas that the Reformatory Committee at Ltm-pley-Stoke were not beneficial occupiers of the premises for which poor rate was assessed, though Byles J. observed that "they were occupiers here in the strict legal sense of the term occupier, 'as one who is qualified to maintain an action for a trespass'."
In -- 'The King v. Trent and Marsey Navigation Co.', (1825) 107 ER 980 (B) the question arose whether a Canal Company had exclusive occupation of the quarry so as to make them liable for payment of poor rate. In that case the proprietors of limestone quarries agreed to deliver to the Canal Company yearly Such quantities of good limestone as they should direct at the rate of 7d per ton, and if they should at any time neglect to deliver the quantities required, it should be lawful to the Company to enter into or upon the lands or limestone quarries of any of the proprietors, and to take such quantities of limestone as they should think proper paying 2d per ton.
It appears that the proprietors of the limestone quarries failed to supply the limestone required and the Company entered into the quarries and continued for more than twenty years to work the quarries and take the limestone. It was held by the King's Bench in these circumstances that the Company had not any exclusive occupation but a mere privilege and consequently they were not liable to be rated to the poor rate.
The principle has been clearly expressed by Lush J., in a later case -- 'The Queen v. St. Panc-ras Assessment Committee', (1877) 2 QBD 581 (C). The question for decision was whether the appellant had been rightly assessed for poor rate in respect of certain advertising stations. It was held by the Queen's Bench Division that the appelant had merely a licence or permissive easement and there was no occupation of a permanent character and, therefore, the appellant was not liable to be rated as an occupier. At p. 588, Lush J. states :
"It is not easy to give an accurate and exhaustive definition of the word "occupier". Occupation includes possession as its primary element, but it also includes something more. Legal possession does not of itself constitute an occupation.
The owner of a vacant house is in possession, and may maintain trespass against any one who invades it, but as long as he leaves it vacant he is not rateable for it as an occupier. If, however, he furnishes it, and keeps it ready for habitation whenever he pleases to go to it, he is an occupier, though he may not reside in it one day in a year."
It is true that these authorities deal with the interpretation of the word "occupier" in English statutes. But the authorities are valuable for the purpose of analogy. I have already furnished reasons for holding that the word "occupier" in Section 72 of the Cess Act (Bengal Act 9 of 1880) should be Interpreted to include only persons who are in possession of the mine or quarry and who pay rent to the proprietor.
I have further held that the word "occupier" in Section 72 cannot be construed so as to include licensees who are not in possession of the mine or quarry and who do not pay rent to the proprietor. I have reached this conclusion in view of the context in which Section 72 is placed and in the light of the other sections of the Act, In my opinion, the submission of the learned Government Advocate on this point fails and the petitioners cannot be held to be "occupiers" within the meaning of Section 72 of the Cess Act.
6. It was submitted by Mr. Baldeva Sahay on behalf of the Corporation that the petitioners were not licensees but they were the owners of the mine or quarry. Learned Counsel, however, was unable to substantiate his argument that the petitioners have any title to the quarry or to the boulders, ballasts and stone-chips which are excavated and used in the work of construction of Konar Dam No. 1.
In support of his argument learned Counsel referred to paragraph 16 at page 25 of the first contract according to which the contractor should furnish "all materials required for the completion of the contract other than those specified in Schedule Nos. 4A and 4B in Clause 13 thereof." Paragraph 16 also states :
"The materials will be furnished by the contractor at his own cost, as their cost has been covered by the Unit prices of the items as given in the schedule of Unit rates in part IV of the contract."
But paragraph 16 must be read along with the other clauses of the contract of 24-5-1950 and of the supplementary contract of 10-3-1951. Paragraph 8 of the supplementary contract at page 31 states that "All materials required for the construction of the dam embankment and for backfill, which are not available from required excavations, shall be taken from borrow pits and/or quarries."
It is clear, therefore, from the terms of the contract that the petitioners were permitted by the Corporation to excavate the boulders, stone-chips and other materials from its quarries and take them for the purpose of construction of the Dam.
I have already pointed out with reference to the schedule rates incorporated in the contracts that the petitioners were granted only labour charges for the purpose of excavating and removing the materials from the quarry to the site of construction. In paragraph 25 of the application the petitioners definitely state that the quarry and the materials necessary for the construction of the Konar Dam were acquired by the Corporation under Section 6 of Act 1 of 1894 and Section 3(1) Of Act 18 Of 1885.
The petitioners also asserted that the quarry and the materials belonged to the Corporation and the petitioners worked as contractors and, therefore, they were not liable to submit any return under Section 72. The Corporation has not filed any counter-affidavit and the statements of the petitioners in paragraphs 25 and 27 of the application remain unchallenged.
I am unable, therefore, to accept the argument of Mr. Baldeva Sahay that the petitioners have acquired title to the quarry and to the materials excavated therefrom and were owners within the meaning of Section 72 of the Cess Act.
7. I must next deal with the alternative contention put forward by the Government Advocate that even if the petitioners are not occupiers within the meaning of Section 72, they should be held to be "managers" of the mine or quarry. I do not think there is any justification for this argument. I have already referred to the relevant clauses of the two contracts entered into between the petitioners and the Corporation on 24-5-1950 and 10-3-1951 and also the schedule of rates.
I have also said that the petitioners were paid only labour charges for excavation of the materials and the transportation of the materials from the quarry to the site of the construction of the Dam. According to the lexicographic sense, the word "manager" means one who has the conduct or direction and control in any business or undertaking. According to Webster Dictionary, the word "manage" means "to direct and control, to govern, administer or oversee". There is also a provision under Section 15 of the Indian Mines Act (Act 4 of 1923) that "every mine shall be under one manager who shall have the prescribed qualifications and shall be responsible for the control, management and direction of the mine, and the owner or agent of every mine shall appoint himself or some other persons, having such qualifications, to be such manager."
It cannot, therefore, be said that the petitioners are "managers" of the quarry in question unless there is material to show that they had control and direction of its working. There is, however, nothing in the clauses of any of the two contracts dated 24-5-1950 and 10-3-1951 by which the Corporation conferred any authority on the petitioners to direct and control the working operation of the mines or quarries.
I consider, therefore, that the Government Advocate has failed to make good his submission that the petitioners are managers within the meaning of Section 72 of the Cess Act. In paragraph 27 of the application also, the petitioners said that they never acted as managers of the Corporation but they remained throughout as contractors.
There is no counter-affidavit on behalf of the respondents to controvert the assertion of the petitioners. I am, therefore, unable to accept the submission of the learned Government Advocate that the petitioners are managers of quarry within the meaning of Section 72 of the Cess Act.
8. I next turn to the argument of the learned Government Advocate that the petitioners are not entitled to be granted a writ of certiorari because the Cess Deputy Collector has not actually decided that the petitioners are liable to make a return of the annual net profits. It was submitted by the Government Advocate that the jurisdiction of the Cess Deputy Collector depended upon his finding whether the petitioners were owners, occupiers or managers within the meaning of Section 72.
It was argued that the Cess Deputy Collector must decide in the first instance as to the existence of the collateral fact and the petitioners had the right to come to the High Court and ask for a writ under Article 226 of the Constitution only if the Cess Deputy Collector reached a wrong finding as to the existence of the collateral fact.
The Government Advocate referred in this connection to the statement of law in paragraph 1485 of Halsbury's Laws of England, Vol. 9, Hail-sham edition, I am, however, unable to accept the argument of the Government Advocate as correct. In paragraph 25 of the application the petitioners have stated that they wrote to the Cess Deputy Collector explaining that the mines and the quarries belonged to the Corporation and the petitioners were only contractors, and, therefore, not liable to submit a return of the annual net profits under Section 72.
In spite of this letter, the Cess Deputy Collector served a notice under Section 72 upon the petitioners on 15-10-1954. The petitioners have complained that the Cess Deputy Collector held out a threat that if the petitioners did not supply the return within the time given, they would ba liable to a penalty of Rs. 50/- for every day after the expiry of the time until the return was furnished.
In view of the facts stated in paragraphs 25, 27 and 28 of the affidavit, it is clear that there has been a virtual determination by the Cess Deputy Collector as to the existence of the collateral fact. I think the argument of Government Advocate fails and the petitioners are entitled to the grant of a writ of certiorari.
9. For the reasons I have already expressed, I hold that the proceedings taken against the petitioners on 15-10-1954, by the Cess Deputy Collector of Hazaribagh under Section 72 of the Cess Act (Bengal Act 9 of 1880) are ultra vires and without jurisdiction.
In my opinion, a writ in the nature of certiorari should be issued under Article 226 of the Constitution for, quashing the notice under Section 72 of the Cess Act (Bengal Act 9 of 1880) issued by the Cess Deputy Collector of Hazaribagn against the petitioners and all proceedings consequent thereto. I would accordingly allow this application with costs. Hearing fee Rs. 200/- to be divided equally between the State of Bihar. respondent 3, and the Damodar Valley Corporation, respondent 4.
Imam, J.
10. I agree.