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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 598(N) of 1972.

From the Judgment and Order dated 18.5.1970 of the Punjab and Haryana High Court in Civil Writ No. 2743 of 1968.

V.C. Mahajan and Mrs. Urmila Sirur for the Appellant. Harbans Lal, R.N.Poddar (not present) and Serv Mitter for the Respondents.

The Judgment of the Court was delivered by VENKATRAMIAH , J. The appellant in this appeal by certificate is a limited company having its registered office at Calcutta. It is carrying on the business of processing guar at its factory situated Bhiwani, formerly within the State of Punjab and now in the State of Haryana, and exporting the outer shell to the United States of America. The inner part of guar is used as fodder for cattle in India. For the purpose of processing, the appellant, has to bring into its factory premises guar from outside mandis.

Prior to August 10, 1965, the appellant's factory was situated outside the local limits of the Municipal Committee of Bhiwani, but with effect from that date by reason of the extension of the local limits of the said Municipal Committee by the Notification No. MCII (XIII)-II 61/31330 dated August 10, 1965 issued under section 5(3) of the Punjab Municipal Act, 1911 (Punjab Act No. III of 1911) (hereinafter referred to as 'the Act') by the then Punjab Government, the factory premises came within the municipal limits of Bhiwani. The said Notification was published in the Punjab Government Gazette dated August 13, 196 and with effect from that date the Municipal Committee of Bhiwani commenced to impose and collect octroi from the appellant in respect of the guar imported by the appellant into its factory within the extended municipal limits of Bhiwani from outside. The appellant resisted the levy of octroi. When its attempts to get exemption from payment of octroi failed, it filed a writ petition under Article 226 of the Constitution before the High Court of PunJab and Haryana in Civil Writ No. 2743 of 1968 questioning the imposition of octroi on several grounds one of them being that without complying with the legal formalities necessary for the imposition of octroi in the extended area o the municipality, it was not open to the Municipal Committee to levy octroi on guar brought by the appellant into its factory from outside. The petition was contested by the State Government and the Municipal Committee of Bhiwani. That petition was dismissed by the High Court of PunJab and Haryana by its judgment dated May 18, 1979. Aggrieved by the judgment cf the High Court, the appellant has filed the above appeal after obtaining the necessary certificate under Article 133 (1)(a) of the Constitution from & the high court.

(4) When any local area has been included in a municipality under sub-section (3) of this section, this Act, and, except as the State Government may otherwise by notification direct, all rules, bye laws, orders, directions and powers made, issued, or conferred under this Act and in force throughout the whole municipality at the time, shall apply to such area.

Before the High Court the appellant relied upon the decision of this Court in Bagalkot City Municipality v. Bagalkot Cement Co. [1963] Suppl. 1 S.C.R. 710, in support of its contention that when an area of any municipality was extended there could be no automatic imposition of octroi which was in force within the limits of municipal area before such extension in the extended area unless the procedure prescribed by section 62 of the Act was complied with. The High Court distinguished the above decision from the present case by relying upon sub-section (4) of section 5 of the Act which prescribed that when any local area was included in a municipality under sub-section (3) of section 5 of the Act, and, expect as the State Government may otherwise by notification direct all rules, bye laws, orders, directions and powers made, or conferred under the Act and in force throughout the whole municipality at the time, would apply to such area. The High Court noticed that in the Bombay District Municipal Act, 1901 which governed the Bagalkot City Municipality's case (supra) there was no provision corresponding to sub Section (4) of section 5 of the Act and it took the view that by virtue of section 5(4) of the Act all taxes, octroi etc. which were being levied within the municipal limits of Bhiwani before the extension of the municipal limits came to be applicable automatically to the extended area of the municipality. On the above basis the Writ Petition was dismissed on May 18, 1970. Along with the said writ petition the High Court also dismissed some other writ petitions which had been filed by some other petitioners carrying on business at Sonepat town against the State of Haryana and the municipal committee of Sonepat In which a similar contention had been raised. One of those writ petitions was Civil Writ No. 2014 of 1967 on the file of the High Court of Punjab and Haryana filed by the Atlas Cycle Industries Limited, Sonepat. The Atlas Cycle Industries Limited preferred an appeal against the said common judgment but that appeal came to be disposed of by the decision of this Court on August 11, 1971 in Atlas Cycle Industries Ltd. v. State of Haryana & Anr. [1972] 1 S.C.R.

section 5(4) of the Act.

Following the above decision of this Court which was delivered on August 11, 1971 we should have allowed this appeal and issued directions similar to those issued in the above decision to the respondents in this case also. But after the above decision of this Court, the State Legislature of Haryana proceeded to amend the Act by passing the Punjab Municipal (Haryana Amendment and Validation) Act, 1971 (hereinafter referred to as 'the Amending Act'). The Amending Act was published in the Haryana Government Gazette on November 16, 1971. Section 2 and section 4 of the Amending Act are material for purposes of this appeal. By section 2 of the Amending Act the Legislature substituted the word rules" in sub-section (4) of section 5 of the Act by the words and sign rules, notification and further providing that those words and sign should be deemed always to have been substituted. By reason of this amendment the expression 'notification' should be deemed always to have been present in section 5(4) of the Act including the date on which the municipal limits of Bhiwani were extended bringing within them the factory of the appellant also. By section 4 of the Amending Act, the levy of octroi against and collection from the appellant and others within the extended limits of all the municipalities in Haryana were validated. Section 4 of the Amending Act read thus:-