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TMI Blog1976 (8) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, the limits of the first respondent Municipality were altered with effect on and from February 1, 1976 by adding thereto the block of land named Rayon factory Area , that is to say, the land on which the factory of the petitioner is situate. By an order of even date made by the second respondent (Annexure 'F'), in exercise of the powers conferred by Section 266 of the Act, certain consequential provisions were made. In so far as it is material for the purposes of this petition, the said order reads as under: (1) All appointments, notifications, notices, taxes, orders, schemes, licences, permissions, rules, bye-laws, or forms made, issued, imposed or granted or deemed' to have been made, issued, imposed or granted by or under the said Act in respect of Veraval-Patan Joint Municipality and in force within its areas immediately before the said date shall extend to and commence in the-said areas in supersession of corresponding appointments, notifications, notices, taxes, orders, schemes, licences, permissions, rules, bye-laws or forms in force in the said areas immediately before the said date until the matters so extended and brought into force are further supe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petition and their case, briefly stated, is that by virtue of the provisions contained in Section 266(1)(x) of the Act, the second respondent was empowered by an order to provide for the extension and commencement of all taxes imposed under the Act by the first respondent-Municipality and in force within its area immediately before the date of the notification, Annexure 'E', to the factory area of the petitioner which was newly included within the municipal limits and that accordingly, it had made necessary orders, Annexure 'E', and that the first respondent-Municipality was therefore, entitled to levy and collect taxes from the petitioner. As regards the petitioner's claim for exemption founded on the notification, Annexure 'A', the case of the respondents is that on a true and correct interpretation of the said notification, the petitioner was not entitled to such exemption. 6. The controversy between the parties thus lies in a very narrow compass and at the hearing of the petition, only the following points were pollinated and canvassed on behalf of the petitioner: (1)The petitioner is entitled to exemption from payment of taxes for a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact are required to be investigated into. We have, therefore, allowed the petitioner to urge the said point and have also heard the respondents thereon. 8. It would be convenient at this stage to refer to the relevant provisions of the Act. Section 2 is the definition section. Clause 13 thereof defines Municipal Borough to mean a local area declared as or deemed to be a municipal borough under Section 4 of the Act. Clause 14 defines Municipality to mean a municipality constituted or deemed to be constituted for a municipal borough. Section 4, which occurs in Chapter 11 entitled Municipal Boroughs and constitution of Municipalities , reads as under: (1) Subject to the provisions of Sub-section (2)- (a) the State Government may, by notification in the Official Gazette, with effect from a date to be specified therein, declare any local area to be a municipal borough. (b) in the case of an existing municipal borough, the State Government may, after consulting the municipality (if already constituted), by notification in the Official Gazette, with effect from the date specified therein alter the extent and limits of any municipal borough. (2) (a) Not less tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides that upon the issue of such notification, the Municipality shall be deemed to be duly constituted notwithstanding any vacancy due to failure to elect the full number of councillors which under that section might be elected. Chapter XVII enacts special provisions applicable when municipal borough limits are altered or municipal boroughs are amalgamated with other local authorities or split up into different local authorities. Section 265 is the interpretation section for the purposes of the said Chapter. Clause (a) thereof defines the term appointed day to mean the day from which a change referred to in any of the clauses; (a) to (d) of Sub-section (1) of Section 266 takes effect. Clauses (b) and (c) hereof define the expression existing local authority and Successor local authority to mean, in relation to any local area, the municipality or the panchayat. Section 266 is material and its relevant portion may be set out verbatim. It reads as under: (1)When- (a) any local area is added to a municipal borough. (b) any local area is excluded from a municipal borough. (c) two or more municipal boroughs ore amalgamated into one municipal borough; or (d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in questioner to the amount or rate proposed or to the classes of persons or property to be made liable thereto or to any exemptions proposed, within the preserved time, limit. The municipality has to take all such objections into consideration, or it may authorise a committee to consider the same and report thereof. Unless it decides to abandon the proposed tax, it is required to submit such objections with its opinion thereon and any modifications proposed in accordingly therewith, together with the notice and rules aforesaid to the State Government. Under Section 102 the State Government may refuse to sanction the rules submitted under Section 101, or may return them to the municipality for further consideration. If no objection or no objection which is in its opinion sufficient, was made to the proposed tax within the period prescribed under Section 101, it may sanction the said rules without modification or subject to such modifications not involving an increase in the amount to be imposed, as it deems fit. It would thus appear that the power to impose a tax under Section 99 is subject to the municipality following the preliminary procedure and obtaining sanction of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e when municipal borough limits are altered or municipal borough are amalgamated with other local authorities or split up into different local authorities. The provisions contained in this chapter are essentially of a transitional nature and they are intended to apply during the poverty of transition following upon alteration of municipal limits or amalgamation or splitting up of local authorities. There would inevitably be some time-lag before a municipality can act under such situations and, therefore, provision has to be made to ensure that appointments, notifications, notices, taxes, orders, schemes, licences, permissions, rules, bye-laws or forms etc. which might be in force in the concerned areas are kept alive or they are extended to the newly-added areas, as the case may be, so that the administration in such areas does not come to a standstill during the interregnum. It is for this purpose that Section 266 has been enacted and it is against that background that its various clauses will require interpretation and its applicability, in the facts and circumstances of the instant case, will require examination. 13. Now, in the present case, the second respondent, in exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l borough is split up into two or more municipal boroughs. Upon the happening of any one or more of the aforesaid events, the said section empowers the State Government to provide for all or any of the matters referred to therein by an order published in the Official Gazette. The power thus conferred upon the State Government is overriding in nature because of the non-obstante clause which virtually operates to set aside as no longer valid anything contained in the Act or any other law for the time being in force, which is inconsistent with the provisions of sue. 266. It has to be borne m mind, however, that the various's clauses of Sub-section (1) of Section 266 are not universally applicable to all the four situations envisaged in the opening part of Sub-section (1). By the express words used in the said clauses, or having regard to the subject-matter with which they deal, it becomes apparent that some of the clauses are relatable only to some of the eventualities contemplated by the opening part of Sub-section (1). For example, Clauses (i), (ii), (iii) and (iv) of Sub-section (1) are in terms relatable to the events specified in Clauses (a), (b), (c) and (d) respectively of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill remain operative until they are further superseded or modified under the Act. It is thus clear that before Clause (x) could be attracted, there must have been an existing municipality and within its area there must have been in force immediately before the appointed day, that is to say, before any of the four eventualities contemplated by Clauses (a), (b), (c) and (d) of Sub-section (1) takes place, any appointments made, etc. under the Act by, or in respect of, such municipality. It is such appointments, etc. which would be extended to and brought into force in all or any of the other areas of the successor borough municipality in supersession of corresponding appointments, etc. if any, in force in such other areas immediately before the appointed day. Two conditions must, therefore, be satisfied before Clause (x) can operate. First, there must be an existing municipality and the successor borough municipality and, secondly, there must be appointments made etc. by, or in respect of, the existing municipality and in force within its area immediately before the appointed day, which will, upon their extension and commencement, in all or any of the other areas of the successor bor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 2661). In Black's Law Dictionary, Fourth Edition, page 1600, the word successor is defined to mean one that succeeds or follows; one who takes the place that another has left, and sustains the like part or character; one who takes the place of another by succession and, in the context of corporations, it generally means another corporation which, through amalgamation, consolidation, or other legal succession, becomes invested with rights and assumes burdens of first corporation . It would thus appear that an existing municipality of a municipal borough in which a new area is added cannot, by virtue of such alteration of its limits, be treated as a successor borough municipality. No new municipal borough, as defined in the Act, thereby comes into existence and no new municipality thereupon is incorporated. It remains the same municipal borough with altered limits and continues to be the same incorporated municipality with a larger area within His jurisdiction. The word successor as understood in legal parlance, cannot be properly applied in such a situation. Clause (x) might, therefore, more appropriately be attracted in a situation contemplated by Clauses (c) and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituted under this Act in Clause (i) of Sub-section (1) of Section 266 would be properly appreciated. Having regard to the subject-matter and the context and collocation in Clause (x) which, as earlier stated, uses a slightly different expression, namely, the successor borough municipality , the succession referred to therein is to a pre-existing incorporated institution or body, unlike succession in Clause (i), which is confined to a body of individuals for the time being constituting the municipality. There is, therefore, no parallel between Clauses (i) and (x) which use different expressions and deal with different situations. No guidance can be derived from the provision of Clause (i) for the purpose of interpreting the provision of Clause (x) since the two clauses operate in two entirely different situations and fields and deal with different subject-matters. 18. Even assuming, however, that there is a succession when any local area is added to a municipal borough and that, therefore, Clause (x) would in the first instance be attracted, it is clear on a plain reading of the said clause that the extension and commencement of the various matters dealt with by the said cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... municipality and in force within its area immediately before January 15, 1976 to the factory area of the petitioner in supersession of the corresponding taxes in the said area immediately before the said date. The petitioner must, therefore, succeed in its challenge to the impugned notification to the extent indicated above. 20. We must mention that on behalf of the respondents reliance was placed upon an unreported decision of a Division Bench of this Court in Special Civil Applications Nos. 944 and 945 of 1968 which were decided on January 16, 1969. In that case, an area known as the Dock Estate area was added to the Municipal Borough of Bhavnagar. Thereafter, in exercise of the powers conferred by Section 266, Sub-section (1), Clause (x) the State Government made an order whereby all taxes, etc. imposed under the Bombay Municipal Boroughs Act, 1925 as adapted and applied to the State of Saurashtra and by or in respect of Bhavnagar Municipal Borough were extended to the Dock Estate area. On the strength of the said order, the Bhavnagar Municipality started levying and collecting terminal tax within the Dock Estate area. Thereupon, the petitioners filed those above-mentioned t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not have been issued under Clause (x) on its proper construction, it could still have been made under Clause (ix) and that, therefore, it should not be held to be ultra vires. We are unable to uphold this contention. In the first place, the direction contained in Clause (1) of the impugned order is in terms made in the language relatable to Clause (x). The State Government has, therefore, applied its mind in exercising its delegated powers to Clause (x) and not to Clause (ix) and it is on its satisfaction that conditions exist for an exercise of power under the said clause that it has given the impugned direction. It would not be possible, therefore, to sustain the said directions on the basis of some other clause In the next place, even assuming that it is permissible to do so, we are of the opinion that Clause (ix) has no application in the facts and circumstances of the present case. Clause (ix) has been set out earlier its terminology makes it clear that it provides for the continuance within the area of an existing local authority of all or any appointments, etc. made etc. by, or in respect of, such existing local authority and in force within its area immediately before t ..... 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