JUDGMENT <NAME>, J.

1. This is a simple case where the landlord seeks to recover from the tenant possession of certain premises taken on lease on 1st January, 1943, for one year on a monthly rent of Rs. 300 for the first three months and Rs. 320 for the remaining period. The plaintiff states that the defendants are in arrears of rent for the months of October, November, and December, 1943, amounting to Rs. 662-6-7. He also seeks to recover mesne profits at Rs. 320 a month from the date of the termination of the tenancy, viz., is January, 1944, upto the date of delivery of possession.

2. The defences raised are that even after 1st January, 1944, the defendants continued in possession of the ground floor of the premises on a monthly rent of Rs. 100 and that they are liable to pay rent only at this rate and further they that are entitled under the Madras Rent Control Order, 1941, to, continue in occupation till 1st March, 1945. Two subsidiary questions have also been raised, namely, that the plaintiff is liable to make good a sum of Rs. 191-7-0 which was collected from the defendants by <ORG> as charges for the supply of electric current from 1st April, 1942, to 31st December, 1942, and that the plaintiff should return the advance of Rs. 1,000 admittedly in his hands.

3. Whether on the termination of the suit tenancy a fresh tenancy arrangement came into existence with effect from 1st January, 1944, as regards the ground floor portion of the premises, is one of the questipns that arises for decision in this case, and the answer depends mainly on the documents that have been filed on both sides. The other important question is whether, even if it be held that there was no such fresh tenancy, the defendants could be treated as tenants holding over and thus entitled to the benefits of the House Rent Control Order; and this is a question of law.

4. The liability for the payment of the electric charges can be disposed of very shortly.

5. [His Lordship dealt with the evidence and after holding the defendants liable for the charges dealt with the plea as to the defendants' claim for return of the advance and concluded]

6. The refundable balance will be Rs. 819-4-0 and not Rs. 826-12-0 as stated in the reply.

7. Even from the plaint, it will be seen that the premises in question bear three different municipal door numbers--121, 121-A and 121-B, Armenian Street, Madras. They represent the ground floor, the first floor and the top floor. The three floors were let to three different people in 1941 on rents of Rs. 125, Rs. 115 and Rs. 40 per mensem respectively. All the three together were taken on lease by the defendants during the year 1943 on a rent of Rs. 300 per mensem for the first three months and Rs. 320 per mensem for the remaining nine months, as stated already. <ORG> and one <ORG> were the sub-tenants under the defendants of the first floor and the top floor. When the year of tenancy was drawing to a close, fresh arrangements came to be considered and as early as 22nd October, 1943, the defendants informed the plaintiff that they wished to terminate the tenancy and asked him to adjust the rents for October, November and December, 1943, out of the advance of Rs. 1,000 in the plaintiff's hands. They, however, expressed a wish to continue the tenancy of the ground floor provided it was let out to them on a monthly rent of Rs. 75 with one month's advance and one month's notice on either side. The plaintiff wanted a rent of Rs. 100 for the ground floor and the assistance of the defendants to enter into separate and independent tenancies with the sub-tenants as regards the first floor and the top floor. Certain other conditions were also mentioned, but with these we are not now concerned. In his letter of the 10th December, 1943, the plaintiff wrote:

As regards the tenancy of the other two floors formerly in your possession, I write this to inform you that I am arranging their tenancy terms directly. I shall let you know in case they choose to vacate the same. Now as regards your tenancy I write this to inform you that I am agreeable to renting you the ground floor portion on a monthly tenancy basis at a monthly rent of Rs. 100 payable in advance each month.

Instead of accepting this, the defendants went back on their offer of Rs. 100 and started correspondence to the effect that they were willing to pay only Rs. 75 a month. This was met by the plaintiff with a demand for rent at Rs. 150 a month. Ultimately the defendants realised their folly and agreed to Rs. 100 but the plaintiff would not. The consent to Rs. 100 is in Exhibit D-9 dated 28th December, 1943. Exhibit D-10 is a letter of the next date, in which the defendants wrote to the plaintiff:

We would also like you to enter into a fresh lease for the ground floor aloneofrom 1st January, 1943, on a rental of Rs. 100 per mensem as agreed by you to our Mr. <NAME>.

The plaintiff took the cheque that was sent for Rs. 297-9-5 under protest but as regards the tenancy he said:

I will go over to Madras on Tuesday when all further matters will be settled in person.

See Exhibit D-II. It is clear on this correspondence that no fresh tenancy agreement was ever reached as regards the ground floor portion of the premises to take effect from 1st January, 1944. There were proposals and counter-proposals and, if there was no final acceptance of rent at Rs. 100 per mensem, the defendants were mostly to blame for the situation. Anyhow, it is not necessary to pursue this subject further.

8. It is reasonably clear that, as indicated by the plaintiff himself in Exhibit D-4, he entered into separate tenancy agreements with the sub-tenants as regards the first floor and the top floor. After some higgling on both sides the offers of <ORG> and <ORG> to pay rent at Rs. 60 per mensem and Rs. 30 per mensem were accepted by the plaintiff, as would be seen from Exhibits D-23 and D-41. There was no question of taking over possession from <ORG> and handing possession to the new tenants except in a technical sense, for <ORG> and <ORG> were already tenants occupying the floors they wanted to take. The ultimate refusal of the plaintiff to treat them as tenants under him because he could not get possession of the property from <ORG> as desired by him and his statement in the letters that this was a condition precedent to the fresh tenancy as regards the first floor and the top floor taking effect, appear to be afterthoughts. Even if they are to be treated as good reasons so far as he was concerned, it does not affect the legal position that the correspondence discloses the formation of contracts of tenancy with them. We are not concerned with the question whether the plaintiff was able to give them satisfactory possession or not. Even if he was not, it does not matter. It is a question as between him on the one hand and those tenants on the other.

9. The position therefore at the end of the year 1943 and the beginning of 1944 was this. The old lease had come to an end by efflux of time. There were fresh tenancies in respect of the first floor and the top floor. There was no cenancy arrangement as regards the ground floor which continued in the possession and occupation of the defendants. On these facts, it is difficult to hold that the plaintiff is entitled to an ejectment decree against the defendants in respect of the entire premises including Nos. 121-A and 121-B on the basis of the termination of the original tenancy with 31st December, 1943. Ordinarily and if there were no other complications, the plaintiff would certainly be entitled to a decree for possession and for mesne profits as regards door No. 121 the portion remaining under the occupation of the defendants. But here comes up the Madras House Rent Control Order, 1941, for consideration.

10. By the letter of their lawyer sent on 10th January, 1944, Ex. D-13, the defendants informed the plaintiff that they were exercising the option under Section 7-A of the Madras House Rent Control Order, 1941, and intended to occupy the premises in their possession for a period of 12 months from 1st March, 1944, paying a monthly rental of Rs. 100 in respect of the same and they denied the plaintiff's right to recover possession before 1st March, 1945. As the original lease had terminated by then, the defendant company was in the position of a tenant holding over as regards the portion in their occupation, the other portions having been let by the plaintiff under separate tenancy arrangements to <ORG> and <ORG>. It is quite clear--and this has been the subject-matter of decisions both here and under the analogous English order--that a tenant holding over is entitled to the benefits of the Rent Control Order. The notice given by the defendants was a valid one, as the tenancy was a monthly one and would terminate only on 31st January, 1944- See Section 7-B of the Rent Control Order, where it is provided that 15 days' notice should be given before the expiry, of the tenancy in the case of monthly tenancies. Even this period has been subsequently cut down to 7 days under a later G.O. No. 3941. dated 3rd December, 1943.

11. The contention for the plaintiff raised by Mr. <NAME>, his learned advocate, is that the Rent Control Order as it stood before its amendment in June and July, 1944, did not apply to premises let for business purposes and that on the date he filed this suit the tenant could not avail himself of the benefits of the Order though now after the amendments it may be that the remedy to secure eviction can be sought only from the Controller under the Act. Whether the premises can be described as a house within the meaning of the Rent Control Order depends as much on the purposes for which it was let as on the use to which it was actually put. There is no proof at all in this case that the suit premises were let for business purposes only and not for occupation as residence. It is quite obvious that, apart from the definition of a " tenant " added in the Rent Control Order by an amendment in July, 1944, the word as it originally stood must be taken to mean an extcnant just as the word " landlord " must be taken to mean an ex-laudlord; otherwise the very object of the order will be frustrated and nullified. Sub-clause 7-A, as it now stands after the July amendment, provides that the landlord wishing to evict a tenant in possession shall apply to the Controller for a direction in that behalf and it is for the Controller to make up his mind after satisfying himself on certain matters whether the landlord shall be put in possession or not. This amendment, though it came into force after the suit was filed, must be held to govern us because what we have to see is the true position on the date when the order of eviction is sought and not on the date when the suit was filed, as was held by <NAME>, J., in <NAME> v. <NAME> 35 <ORG>. But even apart from this amendment, the landlord had no right to evict once the tenant exercised his option under the unamended House Rent Control Order, Section 7-B.

12. Mr. <NAME> ingeniously contended that there could be no objection to a decree being passed in this suit though after the decree it might be that he might have to go before the Controller to get possession. This argument fails to take note of two answers. One is that when a special tribunal is indicated for obtaining a particular relief, it is that tribunal that has got exclusive jurisdiction to grant that relief and to that extent the jurisdiction of civil Courts is ousted. Secondly, even if it is held that the Court has jurisdiction to grant a decree for eviction it cannot be called upon to indulge in a mere pastime and pass orders which would be brutum fulmen and which cannot be carried into effect without resort being had to other persons or tribunals in whom a discretion is vested to decide if eviction is to be ordered or not. The remedy of the plaintiff is to go before the Controller.

13. For these reasons, I think the suit fails and must be dismissed with costs. Ordered accordingly.


CASE NO.: Appeal (civil) 6970-6971 of 2000 PETITIONER: M.G. BADAPPANAVAR AND ANR. ETC. RESPONDENT: STATE OF KARNATAKA AND ORS. DATE OF JUDGMENT: 01/12/2000 BENCH: M. JAGANNADHA RAO & M.B. SHAH & R.P. SETHI, JJ JUDGMENT:

JUDGMENT 2000 Supp(5) SCR 302 The Judgment of the Court was delivered by M. JAGANNADHA RAO, J. <NAME> granted These appeals arising out of SLP (C) Nos. 24115-24116 of 1996 (hereinafter called the main batch) are directed against the judgment of <ORG> dated 20.11.1996 in Application No. 3756 of 1996 and 4849 of 1996. The Civil Appeal arising out of SLP (C) No. 11218 of 2000 is directed against an interlocutory order dated 11.4.2000 in RP 240/ 2000 filed by the State of Karnataka staying an earlier order passed by <ORG> in W.P. 45205 to 45210 of 1999 on 11.1.2000, directing disposal of a representation to be filed by the general candidates seeking implementation of the recent judgment of this Court in <NAME> 11 v. State of Punjab, [1999] 7 SCC 2091. That is now these cases have come before us.

The facts in the main batch of Civil appeals are as follows :

In a group of OAs filed before the <ORG>, the basic contention raised by the applicants (appellants in this Court) who were general candidates was that when they and the reserved candidates were appointed at level 1 and the Junior reserved candidates got promoted earlier at roster points to level 2 and again by way of roster points to level 3, and when the senior general candidate got promoted in due course to level 3, then the general candidate would become senior to the reserved candidate at level 3. At level 3, the reserved candidate had therefore to be considered along with the senior general candidate for promotion to level 4. This was precisely what was decided by the constitution Bench of this Court recently in <NAME> v. State of Punjab, [1999] 7 SCC 209, which was followed in <CITATION> ,  7 SCC 251, <NAME> v. State of Punjab,  7 SCC 257 and <CITATION> ,  8 SCC 213, all decided on the same day.

The above contention raised by the appellants before us was rejected by <ORG> in its judgment under appeal. It held on a consideration of Rule 2(c), 4 and 4A and Article 16(1)  & (4) of the Karnataka Government Servants (Seniority) Rules, 1957 that the reserved candidates promoted on the basis of roster at Levels 1 and 2 would become seniors from the date of the roster point-promotions and even if a senior general candidate reached Level 3 later, he would not be able to claim seniority over the reserved candidate at Level 3 because the reserved candidate had reached Level 3 earlier. In other words, reserved candidates; could count their seniority at Level 3 from the date of promotion to Level

3. The Tribunal relied upon the words "it is open" to the Government occurring in <CITATION> ,  6 SCC 684 (at 701, para

24) and distinguished <CITATION> ,  5 SCC 684, <CITATION> ,  Suppl. 3 SCC 217, <CITATION> .  2 SCC 745 and other cases. The <ORG> further observed that the parties would be governed by the law as it prevailed prior to the date of the decision in Sabharwal. The Applications of the general candidates were dismissed.

The general candidates have, therefore, filed these main batch of appeals.

So far as the other appeal arising out of the SLP(C) No. 11218 of 2000 is concerned, the appellants are again the general candidates. After the judgment of this Court in <NAME>, the general candidates filed WPs 45205 to 45210 of 1999 seeking directions to the Government to follow A/it Singh II. <ORG> passed an order on 11.1.2000 directing <ORG> to consider the representation of the appellants to be filed by the general candidates raising the above point. The appellants preferred representation to <ORG>, but the <ORG> filed RP 240/2000 for recalling the order dated 11.1.2000 on the ground that the present batch of appeals were pending in this Court. <ORG> then passed orders on 11.4.200 slaying it earlier orders dated 11.1.2000. Against the said order dated 11.4.2000, the present appeal has been preferred by the general candidates.

On 9.1.98, the main batch was directed to be listed after disposal of the appeals in <ORG>. After the judgment in A/it Singh II was rendered on 16.9.1999, an order was passed on 21.7.2000, to list the main batch on a non-miscellaneous day. Thereafter the batch along with the other matter was listed before this Bench on 23.11.2000.

In the meantime, the respondent 7 in the main appeal filed IAs 7-8/2000, contending that one <NAME>, a direct-recruit Executive Engineer, Karnataka had filed an application on 6.8.2000, seeking modification/clarification of paragraph 83 of <NAME>'s judgment by deleting the said para on the ground that <NAME> was unworkable, and that till the said IA filed in <NAME> was decided, the hearing of this batch should be postponed.

After hearing learned senior counsel, Sri <NAME> for the applicant in IA7-8 and Dr. <NAME> for the respondents, we have come to the conclusion that the hearing of the present batch need not be postponed because of the pendency of the said IA filed in <NAME>. Firstly, the present respondents before us are not direct recruits but are all promotees. The said IA was filed by a direct recruit and, in our view., it has no bearing on the dispute between the promotee general candidates and promotee reserved candidates. Secondly, it has to be noticed that the said IA was filed by a single direct recruit from Karnataka for clarification of <NAME> (when no other direct recruit from any <ORG> or <ORG> or public sector in the whole country had filed any similar clarification petition and when neither the <ORG> nor <ORG> Government nor Public Sector undertakings found any difficulty in implementing <NAME> to review the seniority lists)-cannot come in the way of disposal of these appeals before us. We, therefore, dismiss IAs 7-8 of 2000.

We shall now deal with the points in the main batch of appeals preferred by the general candidates. As already stated, the <ORG> applied the seniority Rules in favour of the reserved candidates from the dates of their promotions under the roster at Level I and Level 2. Further, promotions were made from Level 3 to Level 4 treating them as seniors even to those general candidates (who were seniors at level I) who reached Level 3 before the reserved candidates moved to level 4.

We shall first refer to the rules relating to seniority. The said Rules of 1957 read as follows :

"Rule 2 (c) : Seniority inter se persons appointed on temporary basis will be determined by the dates of their continuous officiation in that grade and where the period of officiation is the same, the seniority inter se in the lower grade shall prevail.

Rule 4 : When promotion to a class of post or cadre ere made on the basis of seniority-cum-merit at the same time, the relative seniority shall be determined-

(i) if promotions are made from any one cadre of class of post, by their seniority-inter-se in the lower cadre or class of post;

(ii) if promotions are made from several cadres or classes of posts of the same grade, by the period of service in those grades;

(iii) if promotions are made from several cadres or classes of posts, the grades of which are not the same, by the order in which the candidates are arranged by the authority making the promotion, in consultation with <ORG> where such consultation is necessary, taking into consideration the order in which promotions are to be made from those several cadres or classes of posts.

Rule 4A: When promotion to a class of post or cadre are made by selection at the same time either from several cadres or classes of posts or from same cadre or class of post by the order in which the candidates are arranged in order of merit by the appointing authority making the selection, in consultation with <ORG> where such consultation is necessary Explanation-For purposes of this rule, 'several cadres or classes of posts' shall be deemed to include cadres or classes of posts of different grades from which recruitment is made in any specified order of priority in accordance with any special rules of recruitment."

There is no specific rule here permitting seniority to be counted in respect of a roster promotion. In Ajit Singh I. [1995] 6 SCC 684, a circular which gave seniority to the roster point promotees was held to be violative of Articles 14 and 16. In Virpal. which was later decided, this Court used the words "it is open to the <ORG>" and it gave an impression that the <ORG> could give seniority to roster point promotees. But in <NAME>, this aspect has since been clarified. It was held that seniority Rules like Rules 2(c), 4 and 4A permitting seniority to be counted from date of initial promotion, govern normal promotions made according to rules

- by seniority at basic level, by seniority-cum-fitness or by seniority- cum-merit or by selection - but not to promotions made by way of roster. The roster promotions were, it was held, meant only for the limited purpose of due representation of backward classes at various levels of service. If the rules are to be interpreted in a manner conferring seniority to the roster point promotees, - who have not gone through the normal channel where basic seniority or selection process is involved, - then the rules, it was held will be ultra-vires of Article 14 and Article 16 of the Constitution of India. Article 16(4A) cannot also help. Such seniority, if given, would amount to treating unequals equally, rather, more than equals.

In fact, while dealing with the fundamental right under Article 14 and Article 16 , this Court held in <CITATION> , (known as the Kerala Creamy layer case).  1 SCC 168 at 202 while holding that if creamy layer among backward classes were given same benefits as Backward classes, it will amount to treating equals unequally. Equality is a basic feature of the constitution of India and any treatment of equals unequally or unequals as equals will be violation of basic structure of the Constitution of India. That is one more reason why, according to us, the roster point promotees cannot be given seniority. Therefore, if seniority is given, it will violate the equality principle which is part of the basic structure of the Constitution. Even Article 16(4A) cannot, therefore, be of any help to the reserved candidates. That is the legal position under the Constitution of India.

It is clear on facts of this batch of cases that the initial recruitment of these general candidates and the reserved candidates was as Junior Engineers (now called Assistant Engineers) and then the next promotion was to the post of Assistant Executive Engineer and then to the post of Executive Engineer. At both these levels admittedly, there has been a roster operating. Beyond Executive Engineer's post, there is no roster. The appellants and respondents (reserved candidates) were recruited as Junior Engineers and the appellant-general candidate were senior to one or other of the reserved candidates at level 1. The reserved candidates thereafter got promotion as per roster points from Level 1 to Level 2 (Assistant Executive Engineer). From Level 2 the roster promotees were promoted again to Level 3 as Executive Engineers by way of a further roster. The senior general candidates got promoted as per rules -either by seniority at basic level or by selection - and reached the Level 3. By that time the reserved candidates were still at Level 3. But they were promoted to Level 4 treating them as senior to the general candidates. This was done taking into account the fact that the reserved candidates reached the category of Executive Engineers earlier than the general candidates. According to <NAME>, if by the date when the reserved candidates were promoted as Superintending Engineers, the general candidates had already reached the said level by normal promotion system, then the general candidates must be treated as seniors as Executive Engineers to the reserved candidates. The general candidates had a right under Articles 14 and 16 to be considered for promotion as Superintending Engineers as seniors to the reserved candidates. This was unfortunately not done. After <NAME>, this had to be rectified.

It is, therefore, obvious that, in accordance with <NAME>, the seniority lists in the category of Executive Engineers has to be first reviewed, treating the general candidates as seniors to such of the reserved candidates provided the senior general candidates reached Level 3 (Executive Engineer) before the concerned reserved candidate was promoted as Superintending Engineer. After reviewing the seniority and re-fixing the same at the level of Executive Engineer, the promotions to the category of Superintending Engineer have to be next reviewed. While considering the promotions of the reserved candidates at Level 1 (Junior Engineer called later as Assistant Engineer) and at Level 2 (Assistant Executive Engineer), the principles laid down in <NAME> case have also to be kept in mind, as explained in <NAME>. Once the promotions at the level of Superintending Engineers are reviewed, the further promotions to the post of Chief Engineer or equivalent posts or posts higher up have also to be reviewed.

However, in <NAME>, reversions were directed not to be made in respect of reserved candidates promoted on basis of roster-point seniority before 1.3.96 In other words, notwithstanding the review of seniority at various levels starting from the level of Executive Engineer and the consequent downgradation of seniority. if any, at that level, any promotion of a reserved candidate to the post of Superintending Engineer which took place before 1.3.96, - contrary to principles now laid down in <NAME> - should not be disturbed. In <NAME>, this Court also explained what was meant by the prospectivity of <NAME> w.e.f. 10.2.95. That has also to be borne in mind.

In view of the above general directions, we are therefore not going into individual facts and seniority etc. details of which were placed before us by way of various charts. In our view, the general directions given in this judgment will be sufficient for the purposes of disposal of these appeals.

It was stated before us that the 1st appellant had retired but the 2nd appellant is in service. It was stated that several respondents had also retired. It was also stated that one Sri R.A. Audi, a reserved candidate is now posted as Secretary, in the <ORG> and that therefore, there is no need to pass any orders. We do not agree.

In fact, some general candidates who have since retired, were indeed entitled to higher promotions, while in service if <NAME> is to apply, they would, get substantial benefits which were unjustly denied to them. The decision in <NAME> is binding on us. Following the same, we set aside the judgment of the <ORG> and direct that the seniority lists and promotions be reviewed as per the directions given above, subject of course to the restriction that those who were promoted before 1.3.96 on principles contrary to <NAME> need not be reverted and those who were promoted contrary to Sabharwal before 10.2.95 need not be reverted This limited protection against reversion was given to those reserved candidates who were promoted contrary to the law laid down in the above cases, to avoid hardship.

We are here adding one more protection to the retired reserved candidates in these cases. Though their seniority is revised at the level of Executive Engineer or above and though they might not have been promoted if the law laid down by this <ORG> in <NAME> and <NAME> (as explained in <NAME>) were applicable to them at the relevant time, still for purposes of their retiral benefits, the said benefits shall be computed on the basis of the posts factually held by them at the time of retirement and on the emoluments actually drawn by them and not on the basis of the result of any review that is now directed.

So far as the general candidates are concerned, their seniority will be restored in accordance with <NAME> and <NAME> (as explained in <NAME>) and they will get their promotions accordingly from the effective dates. They will get notional promotions but will not be entitled to any arrears of salary on the promotional posts. However, for purpose of retiral benefits, their position in the promoted posts from the notional dates - as per this judgment - will be taken into account and retiral benefits will be computed as if they were promoted to the posts and drawn the salary and emoluments of those posts, from the notional dates.

The main batch of appeals arising out of SLP(C) Nos. 24115-24116 of 1996 is allowed but without costs and the judgment of the <ORG> is set aside and the directions set out above will be implemented expeditiously from stage to stage. The exercise may be completed, as far as possible, within six month from today.

In view of the directions given in the main batch, the same shall apply in the Civil appeal arising out of SLP 11218 of 2000.

All the appeals stand disposed of accordingly.


JUDGMENT

1. The appellant claimed either that the attachment should be set aside in its entirety, as the decree was fraudu-lently obtained or in the alternative, that the sale under the attachment should be subject to the mortgage. In either case we think that the claim is covered by Order XXI Rule 58 of the Civil Procedure Code. Rule 62 provides for the recognition of the mortgage. Rule 61 provides for the rejection of the claim. We are unable to accept Mr. <NAME>'s contention that the Code does not contemplate the rejection of a claim of a mortgagee as such; the decision in <NAME> v. <NAME> (1897) I.L.R 22 B. 640 shows, that claims founded on mortgages are as much within the rule as any other claim. The learned Counsel for the appellant has quoted no cases to the contrary : the decision <NAME> v. <NAME> (1901) I.L.R. 29 C. 25 refers to the question of possession being disturbed after sale : that has no bearing on the present question. Moreover the language of Article 11 of the Limitation Act shows that orders refusing to recognise mortgages are within the article.

2. Mr. <NAME>'s contention that as there was no investigation, the one year rule does not apply comes too late in the day. The language of Article 11 in the new Act is more comprehen-sive than that of the previous Act and that has been construed in this Court as covering orders after full investigation as well as orders passed on default. We entirely agree with these decisions. <CITATION> (1897) I.L.R 22 B. 640 and <CITATION> (1915) 31 I.C. 205.

3. The second appeal must be dismissed with costs.


PETITIONER: <ORG> AND ANOTHER Vs. RESPONDENT: THE JANAPADA SABHA, CHHINDWARA (And connected appeals) DATE OF JUDGMENT: 10/02/1961 BENCH: <NAME>, P.B. BENCH: <NAME>, P.B. SINHA, <NAME> P.(CJ) WANCHOO, K.N. GUPTA, K.C. DAS SHAH, J.C. CITATION: 1964 AIR 1013 1963 SCR Supl. (1) 172 CITATOR INFO : D 1965 SC1150 (9) R 1965 SC1153 (51,56) E 1970 SC 898 (14) RF 1971 SC 57 (4,11) RF 1977 SC1680 (7) ACT: Coal Tax--Levy--Validity--Writ Petition, if barred by res judicata--Enhanced levy after first imposition--Absence of Previous sanction by Local Government--Legality of such levy--Constitution of India, Arts. 19 (1) (f), 32, 141, 226--Central Provinces Local Self Government Act, 1920 (C. P. IV of 1920), s. 51(2). HEADNOTE: The 1st appellant in the first batch of appeals had filed a writ petition in this <ORG> challenging the notices calling upon him to pay the tax of 9 pies per ton on coal including coal despatched outside the State of Madhya Pradesh on two grounds, namely, that the levy of the tax by <ORG> was invalid at the date of its initial imposition and, 173 therefore, the respondent <ORG> which was the successor of <ORG> could not continue the levy and also that on a proper construction of s. 51 of the Act, the levy could not be made. Another point namely, the increase in the rate of tax from the original 3 pies to the 9 pies per ton at which the tax was demanded was illegal was sought to be canvassed but was not allowed to be argued by the <ORG> as it had not been raised in the petition. The writ petition was rejected. The appellant challenged the levy of the tax for the further periods byway of a writ petition before the High <ORG> of Madhya Pradesh on grounds distinct and separate from those which had been rejected by this <ORG>. The High <ORG> dis- missed the writ petition on the ground that it was barred by res-judicata by reason of the earlier judgment by this <ORG>. In the case of the other appellants the High <ORG> held that the matter was also concluded on the authority of the decision of this <ORG>. The appellants in the first batch of appeals came by special leave and also filed writ petitions challenging the validity of the levy. Held, that while the general principle of res-judicata applies to writ petitions under Art. 32 and Art. 226 of the Constitution, in its application to Art. 32 of the Constitution, the doctrine only regulates the manner in which the fundamental rights could be successfully asserted and does not in any way impair or affect the content of the fundamental rights. <CITATION> ,  1 S. 0. R. 96, <CITATION> ,  S. C. R. 154 and <NAME> v. State of U.P.,  1 S.C.R. 574, referred to. Constructive res-judicata was a creature of statute and its application could not be extended to other proceedings particularly those questioning tax liability for different years. Held, further, that the law declared by the Supreme <ORG> which is binding under Art. 141 of the Constitution of India is that which has been expressly declared and any implied declaration though binding was subject to revision by this <ORG> when the point was subsequently directly and expressly raised before this <ORG>. Held, further, that the procedure of assessment of tax authorised by the relevant statutory provisions and the Rules could not be said to be a capricious administrative or executive affair so as to violate Art. 19(1) (f) of the Constitution. 174 <CITATION> ,  3 S. C. R. 77, distinguished. As the Rule which prescribed the maximum rate had itself been deleted it could not be said that there had been a levy in excess of the maximum prescribed. As neither the Act nor the Rules prescribed a ceiling on the levy, the expression "first impositions occurring in s. 51(2) would include every increase of the levy after its initial imposition and the increased levy would require the previous sanction of <ORG> and such sanction not being there, the levy at the rate of 9 pies per ton was illegal. Considering the nature of the tax and the periods for which it was assessed and in the absence of any provision, the assessment once made by r. 10 was final and there could be no re-assessment. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 469, 470,506, 507 and 529 to 534 of 1962.

Appeals by special leave from the judgment and order dated December 18, 1961, of <ORG> in Misc. Petition Nos. 24, 29, 42, to 45, 58, 70, 95 and 213 of 1960. WITH Petitions Nos. 70 and 71 of 1962.

Petition under Art. 32 of the Constitution of India for enforcement of Fundamental rights.

<NAME>, <NAME>, <NAME>, <NAME> and <NAME>, for the appellants (in C. As. Nos. 469 and 470/62) and the Petitioners (in Petitions. Nos. 70 and 71 of 62).

<NAME>, <NAME> and <NAME>, for the respondent (in C. As. Nos. 469 470, 506 and 507 of 62), Respondents Nos. 1 and 3 (in C. As. Nos. 529 to 534/62) and Respondent No. 1 (in Petn. Nos. 70 and 71/62).

<NAME> and <NAME>, for the appellants (in C. As. Nos. 506 and 507/62).

<NAME>, <NAME> and <NAME>, for the appellants (in C. As. Nos. 529 to 534 of 62). <NAME>, for the respondents Nos. 2 and 4 (in C. As. 529 to 534 of 62).

1962. September 24. The judgment of the Court was delivered by GAJENDRAGADKAR, J.-These ten appeals and two writ petitions have been placed for hearing together in a group, because they raise common questions of law. The appellants in these matters are all colliers holding mining leases under <ORG> for the extraction of coal from collieries situated in the Chhindwara District. The respondent, <ORG>, Chhindwara, has issued notices against them calling upon them to pay coal tax "'for coal manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the jurisdiction of the original <ORG> for the said area It appears that the mining area in question was within the territorial limits of <ORG> which had the status and powers of <ORG> under the Central Provinces Local-Self Government Act, 1920 (hereinafter called the Act). The respondent <ORG> is the successor of the said <ORG> and, therefore, claims to be entitled to continue the levy and recover the tax in question.

On March 12, 1935, <ORG> exercising its powers under section 51 of the Act, resolved to levy coal tax, and accordingly, the first imposition made by it received the sanction of the local Government on December 16, 1935, as per Notification No. 8700-2253-D-VIII. This notification came 'into force from January 1, 1936. On December 16, 1935, the local Government notified the rules for the assessment and collection of the tax which it had framed in exercise of the powers conferred on it by section 79 (1), clauses (xv), (xix) and (xxx). Rule 2 of these Rules provided that the tax shall be payable by every person, firm or company holding a mining lease for coal within the limits of <ORG> jurisdiction. Rule 3 provided that the tax shall be levied @ three pies per ton on coal, coal dust or coke manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the territorial jurisdiction of <ORG>. In 1943, the words "'coke manufactured at the mines" were deleted from Rule 3 and the tax was confined to coal and coal dust. The rate thus prescribed was increased from time to time. On December 22, 1943, the rate was made 4 pies per ton; on July 29, 1946, it was made 7 Pies, per ton; and on July 1. 9, 1947, it was made 9 pies. <ORG> continued to recover the tax at the said rates until the Act was repealed in 1948 and in its place was enacted the Central Provinces and Berar Local Self- Government Act, 1948 (No. 38 of 1948). The respondent <ORG> has now taken the place of the said <ORG> and has issued the notices against the several appellants, calling upon them to pay the coal tax for the different periods mentioned in the said notices.

The appellants in Civil Appeals Nos. 469 and 470 of 1962 are : <ORG> and <ORG> They are companies in operated under the Indian Companies Act , 1913, andor both have <ORG>, as their Managing Agents. On August 23, 1958, notices were served on the two appellants calling upon them to pay Rs. 21,898/ 64 np and Rs. 11,838/9 np respectively as tax assessed @ 9 pies per ton from ,,January 1, 1958, to June 30, 1958: This tax was claimed in respect of coal which included coal despatched by the appellants outside the State of Madhya Pradesh. The validity of these notices was challenged by the appellants in this Court by their Writ Petition 'No. 31 of 1959. On February 10, 1961, the said writ petition was dismissed by this Court and it was held that the notices served on them were valid (Vide <ORG> v. <ORG>, Chhindwara(1).

On September 13, 1960 and March 2, 1961, two notices of demand were served on the appellants calling upon them to pay Rs. 1,16,776/25 nP. and Rs. 65,261/19 nP. respectively in regard to the tax assessed @ nine pies per ton on all coal despatched by the appellants from their collieries for the half years ending June 30, 1958. December 31, 1958, June 30), 1959, December 31 1959, June 30, 1960 and December 31, 1960. The appellants challenged the validity of these notices by a Writ Petition filed by them in <ORG> on April 1.2, 1961 (No. 95 of 1961).

Whilst the said writ petition was pending before <ORG>, the appellants filed another writ Petition in the same <ORG> (No. 213 of 1961). By this writ petition, the appellants challenged the validity of notices issued against them on June 9, 1959, by which coal tax was demanded from them for a period between April 1, 1951 to December 31, 1957. This tax was levied in respect of coal despatched by the appellants outside the State of Madhya Pradesh. The amounts demanded were Rs. 1,92,144/66 nP. and Rs. 68,319/36 nP. respectively.

These two petitions along with eight others were heard together by <ORG>. So far as the appellants' petitions were concerned, <ORG> has held that the appellants' claims were barred by res judicata by reason of the earlier decision of this Court in the case of <ORG> (1). The appellants then applied for and obtained special leave from (1) [1962] 1. S. C. R. 1.

this <ORG> on April 23, 1962 and it is by special leave thus granted to them that they have come to this <ORG> in Civil Appeals 469 & 470 of 1962.

The appellants have also filed two Writ Petitions Nos. 70 & 71/1962 under Art. 32 of the Constitution. By these writ petitions, the two appellants challenged the validity of the notices served on them on Julie 9, 1959 as well as on September 13, 1960. The appellants' case is that these notices are illegal and without jurisdiction and so, they want them to be quashed by an appropriate writ or order issued against the respondent in that behalf. Thus, the two appellants, <ORG>, and <ORG>,, arc concerned with the two appeals Nos 469 & 470/1962) and Writ Petitions 70 & 71/1962. The other appeals arise from the writ petitions filed in <ORG> by the respective appellants which were tried along with the writ petitions filed by <ORG> & <ORG>. In dealing with these writ petitions, <ORG> has held that the decision of this Court is the case of <ORG>) concludes the points raised by them in challenging the validity of the notices, and so, following the said decision, the <ORG> has dismissed all the said petitions. The appellants applied for and obtained special leave to come to this Court against the said decisions and it is with the special leave thus granted to them that these appellants have come before us.

Civil Appeal No. 506 arises from the decision of <ORG> dismissing the writ petition filed before it by the appellant, <ORG> By its writ petition the appellant had challenged the validity of the notice served by the respondent calling upon it to pay arrears of the tax amounting to Rs. 20,776/88 nP. being arrears from April 1, 1951 to June 30, 1959. (1) [1962] 1 S.C.R. 1.

It appears that for the said period, the appellant had been taxed by the respondent, but the said tax was not imposed on coal which had been transported by the appellant outside the limits of the State of Madhya Pradesh. The respondent now sought to reopen the assessment levied against the appellant for that period by including a claim for tax in respect of coal sold by the appellant outside the limits of the State. <ORG> has rejected the Writ Petition and that decision 'has given rise to Civil Appeal No. 506 of 1962. Civil Appeal No. 507 of 1962 arises from a writ petition filed by the appellants M/s. Kanhan Valley Coal Co. (Private) Ltd., in <ORG> in which the validity of the notice issued by the respondent calling upon the appellants to pay the coal tax amounting to Rs. 10,970/- as arrears from April 1, 1951 to June 30, 1959 has been challenged. <ORG> has dismissed the writ petition, and so, the appellants have come to this Court by their Appeal No. 507/1962.

Civil Appeals Nos. 529 to 534 of 1962 similarly arise out of six writ petitions filed by the appellants <ORG> & five others in <ORG> challenging the validity of the notices of demand served on them to recover by way of arrears coal tax for the periods mentioned in the notices in regard to coal sent by them outside the State of Madhya Pradesh for export. These writ petitions were dismissed by <ORG>, and the appellants have, therefore, come to this <ORG> by appeals Nos. 529-534/1962. That, in brief, is the genesis of the ten appeals and two writ petitions which have been grouped together for hearing in this <ORG>. It will thus be seen that Civil Appeals Nos. 469 & 470/1962 and Writ Petitions Nos. 70 & 71/1962 raise a preliminary question about the applicability of the doctrine of res judicata to writ- petitions filed under Art. 226 or to petitions under Art. 32 , whereas the said appeals and writ petitions as well as the other appeals raise an additional question about the validity of the notices issued against the respective appellants. We would, therefore, deal with civil appeals Nos. 469 and 4 70/1962 and Writ Petitions Nos. 70 and 71/1962. Our decision in these matters will govern the other appeals in this group. The first point which falls for our decision, in these appeals is one of res judicata. The High <ORG> has held that the challenge made by the appellants against the validity of the demand notices issued against them by the respondent is barred by res judicata by virtue of the decision of this <ORG> in the earlier case brought by the appellants themselves before this <ORG>. <ORG>) Before dealing with this point it is necessary to refer to the said decision. In that case, the validity of the impugned notices was challenged on two grounds ; it was urged that the levy of the tax by <ORG> was invalid at the date of its initial imposition in 1935 and so, the respondent <ORG> which was the successor of the said Mining Board could claim no authority to continue the said tax. This contention was based on the assumption that before the power conferred by s. 51 of the Act could be exercised,, the previous sanction of the Governor-General had to be obtained, or that there should be fresh legislation in that behalf. This <ORG> held that the Act having received the assent of the Governor- General, its validity cannot be challenged in view of the saving clauses in the proviso to section 80A (3) and s. 84(2) of the Government of India Act, 1915. That being so, it was not open to any party to suggest that any subsequent amendments of the Government of India Act could affect the continued validity and operation of the Act. The second contention raised was one of construction. It was urged (1)  1 S.C.R. 1.

that on a fair construction of s. 51 , the coal tax was excluded from the purview of the local authority. The This argument was based on the opening clause of s. 51 which provided that its provisions would operate subject to the provision of any law or enactment for the time being in force. It was suggested that this clause took in the provisions of s. 80A(3) of the Government of India Act read with the Scheduled Taxes Rules framed under that section, but this argument was also rejected. It appears that at the hearing of the petition, the appellants also attempted to take an additional point against the validity of the. impugned notices on the ground that the rate of tax which had been increased from 3 pies to 9 pies per ton was invalid. The appellants' case was that this increase was effected after the commencement of the Government of India Act, and so, it was invalid. This argument was not considered by the <ORG>, because it was not even hinted in the petition filed by the appellants and the <ORG> thought that it would not be proper to permit the appellants to raise that point at that stage. That is how the appellants' challenge to the validity of the impugned notices served on them on August 23, 1958 was repelled and the writ petition filed by them in that behalf was dismissed. It appears that the authority of <ORG> to levy the impost under s.51 of the Act was challenged on another ground in the case of <NAME> v, <ORG> (1). This time the attack against the competence of <ORG> proceeded on the ground that in repealing the Act of 1920, the subsequent Act of 1948 had not provided for the continuance of the said power in <ORG>s which were the successors of <ORG>. Section 192(c) purported to provide that all rates, taxes and cesses due to <ORG>, <ORG> or Independent <ORG> shall be deemed to be due to the <ORG> to (1)  Supp. 3 S.C.R. 70.

whose area they pertain. But it was obvious that this clause could apply to, and save, only rates, taxes and cesses already due; it did not authorise the imposition of fresh cesses, taxes or rates in future. Having realised that the relevant provision did not save future imposts, an amending Act was passed in 1949 by which the said saving was extended to include the right of <ORG>s to continue the levy of the impugned tax and this amendment was made retrospective f from June 11, 1948, when the parent Act had come into force. In the case of <NAME> (1) the validity and effectiveness of this amendment of 1949 was challenged. It was thus a basic challenge to the power of <ORG>s to levy any impost on the ground that the subsequent amendment was invalid. This Court repelled the said challenge and held that the retrospective operation of the amendment was valid. According to this decision, <ORG> was competent to legislate for the continuance of the tax, provided the relevant conditions of s.143(2) of the Government of India Act 1935 were satisfied. These conditions required that the tax should be one which was lawfully levied by a local authority for the purposes of a local area at the commencement of Part III of the Government of India Act; that the identity of the body that collects the tax, the area for whose benefit the tax is to be utilised and the purposes for which it is to be utilised continue to be the same, and that the rate of the tax is not enhanced nor is its incidence materially altered, so that, in substance, it continues to be the same tax. Since these tests were satisfied by the impost levied by <ORG>, it was held that the impost was valid and that the retrospective amendment of s.192 was effective. The present proceedings constitute a third challenge to the validity of the notices issued by <ORG>, and as we have already seen, the (1) [1962] Supp. 3 S.C.R. 70.

challenge made by the appellants by their writ petitions before <ORG> has been repelled on the preliminary ground that it is barred by res judicata. In that connection, the first question to consider is whether the general principle of res judicata applies to writ petitions filed under Art. 32 of the Constitution.

This question has been considered by a special Bench of this <ORG> in the case of <CITATION> (1). Chief justice <NAME>, who delivered the unanimous opinion of the <ORG>, has answered this question in the affirmative. In that connection, the learned Chief justice has referred to an earlier decision of this court in <CITATION> , (2) where it has been laid down that the principle underlying res judicata is applicable in respect of a question which has been raised and decided after full' contest, even though the first <ORG> which decided the matter may have no jurisdiction to try the subsequent suit and even though the subject matter of the dispute was not exactly the same in the two proceedings. It ought to be added that the <ORG> which had tried the first dispute in that case was a <ORG> of exclusive jurisdiction. Then the points raised on behalf of the petitioner <NAME> were considered and it was noticed that, in substance, they were the same points which had been agitated before this <ORG> on an earlier occasion and had been rejected. "In our opinion", said the judgment, "the questions determined by the previous decision of this <ORG> cannot be reopened in the present case and must govern the rights and obligations of the parties which as indicated above, are substantially the same." Thus, this decision shows that even petitions filed under Art. 32 are subject to the general principle of res judicata.

The question about the applicability of the doctrine of res judicata to the petitions filed under (1) [1961] 1. S.C.R. 96.

(2) [1953] S.C.R. 154.

Art. 32 came before this Court in another form in <NAME> v. The State of U. P. (1), and in that case it has been held that where the petition under Art. 226 is considered on the merits as a contested matter and dismissed by <ORG>, the decision pronounced is binding on the parties, unless modified or reversed by appeal or other appropriate proceedings under the Constitution, and so, if the said decision was not challenged by an appropriate remedy provided by the Constitution, a writ petition filed in respect of the same matter would be deemed to be barred by res judicata. Therefore, there can be no doubt that the general principle of res judicata applies to writ petitions filed under Art. 32 or Art. 226. It is necessary to emphasise that the application of the doctrine of res judicata to the petitions filed under Art. 32 does not in any way impair or affect the content of the fundamental rights guaranteed to the citizens of India. It only seeks to regulate the manner in which the said rights could be successfully asserted and vindicated in courts of law. The question in the present appeals, however, is somewhat different. The notices which are challenged by the appellants in the present proceedings are in respect of the tax levied for a period different from the period covered by the notices issued on August 23, 1958 which were the subject-matter of the earlier writ proceedings (<ORG> ( 2 ) ) . Where the liability of a tax for a particular year is considered and decided, does the decision for that particular year operate as res judicata in respect of the liability for a subsequent year ? In a sense, the liability to pay tax from year to year is a separate and distinct liability; it is based on a different cause of action from year to year, and if any points of fact or law are considered in determining the liability for a given year, they can generally be deemed to have been considered and decided in a collateral and incidental way. The (1)  1 S. C. R. 574.

(21 (1962) 1 S. C. R. 1.

trend 'of the recent English decisions on the whole appears to be, in the words of Lord <NAME>, ',,that if is more in the public interest that tax and rate assessments should not be artificially encumbered with estoppels (I am not speaking, of course, of the effect of legal decisions establishing the law, which is quite a different matter), even though in the result,' some expectations may be frustrated and some time wasted." (vide Society of Medical Officers of Health v. Hope Valuation Officer (1)). The basis for this view is that generally, questions of liability to pay tax are determined by Tribunals with limited jurisdiction and so, it would not be inappropriate to assume that if they decide any other questions incidental to the determination of the liability for the specific period, the decisions of those incidental questions need not create a bar of res judicata while similar questions of liability for subsequent years are being examined. In that connection, it would be interesting to refer to four English decisions. In the case of <ORG> and <ORG>, (2) the question which fell for decision was how the average annual value of a mine for rating purposes had to be determined, and it was held by <ORG> that the said value was to be ascertained by dividing the value of the output during the three years by three, not by multiplying it by 205 and dividing it by 365. One of the points which <ORG> had to consider was whether a contrary decision reached by <ORG> between the parties as to the valuation for a previous year, operated as res judicata. In rejecting the plea that the principle of res judicata applied, Lord <NAME>. observed that ""the decision of <ORG> related to a valuation and a liability to a tax in a previous year, and no doubt as regards that year, the decision could not be disputed. The present case relates to a new question, viz., the valuation for a different year and the liability for that year. It is not (1) [1960] A. C. 551, 563, (2) [1926] A. C. 94.

eadem questio, and therefore, the principle of res judicata cannot apply." (p. 100).

It, however, appears that in the same year, <ORG> came to a somewhat contrary decision in the case of <NAME> v. Commissioner of Taxation.(1) In that case, the question which arose for decision was about the deduction claimable under ther elevant provision of the Land Tax Assessment Act, 1916 (Aust.) Upon the assessment for 1919- 20, the Commissioner allowed only one deduction of 5,000 lbs. contending that the beneficiaries were not joint owners within the meaning of the Act. The case was then stated to the full Bench which upheld the Commissioner's view and rejected the argument that the Commissioner was estopped from coming to that conclusion in view of his decision in a previous year. When the matter went before <ORG>, it reversed the decision of <ORG>, because it held that the Commissioner was estopped, even though in the previous litigation no express decision had been given whether the beneficiaries were joint owners, it being assumed and admitted that they were, and <ORG> thought that the matter so admitted was fundamental to the decision then given. It would thus be seen that this decision applied the principle of res judicata even where there was no express decision on the point, but the point had been conceded in the earlier proceedings. In 1960, <ORG> had occasion to consider this question in the case of <ORG> (2). We have already quoted one statement of 'the law from the speech of Lord <NAME> in that case. In that case, the main reason given for repelling the application of the principle of res judicata in rating cases, was that the jurisdiction of the <ORG> which deals with those cases is limited, in that its function begins with and ends with deciding the assessment or liability of a person for a terminable period. Besides, it was (1) [1926] A. C. 155.

(2) [1960] A. C. 551, 563.

held that the position of a valuation officer is that of a neutral official charged with the recurring duty of bringing into existence a valuation list, and he cannot properly be described as a party so as to make the proceedings a lis inter partes. In coming to the conclusion that the doctrine of res judicata would not apply in such cases, Lord <NAME> was influenced by the consideration that if decisions in rating cases are to be treated as conclusive for all time that Would be to impose a needlessly heavy burden upon the administration of rating (p.566). This decision purported to approve of the view taken in the case of <ORG>) and to distinguish the view taken in the <NAME> case. (2) Lord <NAME> had occasion to return to the same subject again in <NAME> v. Income-tax Commissioner. (3) Speaking for <ORG>, Lord <NAME> considered the problem of the application of res judicata to taxation cases, examined it in detail and came to the conclusion that the said doctrine did not apply to tax cases in the sense that the decision for the levy of a tax for one year does not operate as res judicata in dealing with the question of a tax for the subsequent year. On this occasion, emphasis was not placed so much on the limited nature of the jurisdiction of the <ORG> that deals with tax cases, but it was held that even if the matter goes to <ORG> on a statement of the case, the decision of <ORG> would also not create a bar of res judicata in dealing with the tax claim for a subsequent year. "'The critical thing," said Lord <NAME>, "'is that the dispute which alone can be determined by any decision given in the course of these proceedings is limited to one subject only, the amount of the assessable income for the year in which the assessment is challenged." He, no doubt, recognised that in the process of arriving at the necessary decision, it was likely that the consideration of questions of law turning upon the construction of the ordinance or of other statutes or (1) [1926] A.C. 94.

(2) [1926] A.C. 155, (3) [1961] 2 W.L.R.794.

upon the general law, may be involved, but he thought that the decision of those questions should be treated as collateral or incidental to what is the only issue that is truly submitted to determination (pp. 800-801). This decision would, therefore, support the appellants' contention that <ORG> was in error in dismissing their writ petitions on the preliminary ground that they were barred by res judicata.

In considering this question, it may be necessary to distinguish between decision on questions of law which directly and substantially arise in any dispute about the liability for a particular year, and questions of law which arise incidentally or in a collateral manner, as Lord <NAME> himself has observed in the case of <ORG>, (1) that the effect of legal decisions establishing the law would be a different matter. If, for instance, the validity of a taxing statute is impeached by an assessee who is called upon to pay a tax for a particular year and the matter is taken to <ORG> or brought before this <ORG> and it is held that the taxing statute is valid, it may not be easy to hold that the decision on this basic and material issue would not operate as res judicata against the assessee for a subsequent year. That, however, is a matter on which it is unnecessary for us to pronounce a definite opinion in the present case. In this connection, it would be relevant to add that even if a direct decision of this <ORG> on a point of law does not operate as res judicata in a dispute for a subsequent year, such a decision would, under Art. 141 , have a binding effect not only on the parties to it, but also on all courts in India as a precedent in which the law is declared by this <ORG>. The question about the applicability of res judicata to such a decision would thus be a matter of merely academic significance.

In the present appeals, the question which arises directly for our decision is : does the principle (1) [1960] A.C. 551, 563.

of constructive res judicata apply to petitions under Art. 32 or Art. 226 where the dispute raised is in respect of a year different from the year involved in a prior dispute decided by this <ORG> ? We have already noticed the points actually decided by this <ORG> against the appellants on the earlier occasion (vide <ORG>)). One of the points sought to be raised was in regard to the validity of the increase in the rate of tax from 3 pies to 9 pies per ton; and since this point had not been taken in the petition and relevant material was not available on record, this <ORG> refrained from expressing any opinion on it. The appellants contend that the order passed by this <ORG> refusing permission to the appellants to raise this point on the earlier occasion does not mean that this <ORG> has decided the point on the merits against the appellants; it may mean that the appellants were given liberty to raise this point later: but even otherwise, the point has not been considered and should not be held to be barred by constructive res judicata . It is significant that the attack against the validity of the notices in the present proceedings is based on grounds different and distinct from the grounds raised on the earlier occasion. It is not as if the same ground which was urged on the earlier occasion is placed before the <ORG> in another form. The grounds now urged are entirely distinct, and so, the decision of the High <ORG> can be upheld only if the principle of constructive res judicata can be said to apply to writ petitions filed under Art. 32 or Art. 226. In our opinion, constructive res judicata which is a special and artificial form of res judicata enacted by section 11 of the Civil Procedure Code should not generally be applied to writ petitions filed under Art. 32 or Art. 226. We would be reluctant to apply this principle to the present appeals all the more because we are dealing with cases where the impugned tax liability is for different years. In dismissing the appellants' petitions on the ground of res judicata, the High <ORG> has no doubt referred to (1)  1. S. C. R. 1.

Art. 141 under which the law declared by this Court is binding on all Courts within the territory of India. But when we are considering the question as to whether any law has been declared by this Court by implication, such implied declaration, though binding must be held to be subject to revision by this Court on a proper occasion where the point in question is directly and expressly raised by any party before this Court. Therefore, we are inclined to hold that the appellants cannot be precluded from raising the new contentions on which their challenge against the validity of the notices is based.

The first. ground urged by the appellants on the merits is that the levy authorised to be imposed by the Act and the Rules framed thereunder violates the fundamental rights guaranteed to the citizens under Art. 19 (1) (f) of the Constitution, and in support of this Arguments reliance is placed on the decision of this <ORG> in <CITATION> (1). In that case, the impugned Act was struck down because it suffered from several serious infirmities; it was confiscatory in character and its provisions in regard to the levy of the impost were so arbitrary and unreasonable that the <ORG> took the view that the <ORG> had completely ignored the legal position that the assessment of a tax on person or property was at least of a quasi-judicial character. This conclusion was based on the examination of the relevant statutory provisions. in the present case, we are not satisfied that this decision can assist the appellants at all, because the nature of the statutory provisions and the Rules framed under the Act in the present appeals is entirely different.

At this stage, it is necessary to refer to the relevant statutory provisions and the Rules. Section 51 of the Act (which, in substance, corresponds to section 90 of the Act of 1948) reads thus (1)  3 S. C. R. 77.

"51. (1) Subject to the provisions of any law or enactment for the time being in force, <ORG> may, by a resolution passed by a majority of not less than two-thirds of the members present at a special meeting convened for the purpose, impose any tax, toll or rate other than those specified in sections 24 , 48 , 49 and 50 .

(2) The first imposition of any tax, toll or rate under sub-section (1) shall be subject to the previous sanction of <ORG>.

Sub-section (3) and the proviso are not relevant for our purpose.

Then we go to section 79 which confers power on <ORG> to make Rules. Section 79 (1)(xv) is relevant for our purpose. It provides that :

"<ORG> may make rules consistant with this Act and with reference, if necessary, to the varying circumstances of different local areas, as to the assessment and collection of the cases and rates specified in sections 48 , 49 & 50 and of any tax, toll or rate imposed under section 51 , as to the maximum amounts or rates at which any of them may be imposed, as to the prevention of evasion of assessment or payment thereof, as to the agency by which they shall be assessed and collected, and as to the manner in which account thereof shall be rendered by District Councils."

In pursuance of the powers conferred on the local Government by s. 79 , rules have been framed on December 16, 1935. Rules 3 to 10 deal with the question of the impost of tax and provide how decisions made in that behalf by appropriate authorities become final. Rule 3 prescribed the rate at 3 pies per ton, Rule 4 provides that the figures reported by the concessionaires and the <ORG> companies half yearly to the <ORG>. Commissioner, shall be the basis for the assessment of the tax. Under Rule 5, every mining lessee has to submit a statement half yearly. On receipt of the statement, the assessment has to be made by the Chairman of <ORG> under Rule 6. A notice of demand follows under rule 7. Fifteen days' period is given for filing objections under Rule 8. Rule 9 provides for the Consideration and disposal of the objections, and Rule 10 lays down that if no objection is filed, the Chairman's assessment shall be final, if any objection is received, <ORG>'s decision shall be final and shall be communicated to the assessee as soon as possible. It would thus be seen that the scheme of these Rules provides ample opportunity to the assessees to object to the notice of demand served on them and in fact, the demand notices are substantially based on the figures supplied by the railway companies and the concessionaires and the statements submitted by the assessees themselves. Therefore, it would be idle to suggest that the impost of the tax authorised by the relevant statutory provisions and the Rules is a capricious administrative or executive affair and so, should be held to violate Art. 19(1)(f) of the Constitution.

Then it is urged that the demand of the tax @ 9 'es per ton is invalid, because it is inconsistent with Rule 3 which has prescribed the maximum rate permissible to be levied against the assessees.

We have already noticed that s. 79(1)(XV) authorised the making of a rule as to the maximum amounts or rates at which any of the articles can be taxed. This was introduced by an amendment made in 1933 by C.P. Act VII of 1933, and so, the argument is that Rule 3 which provides that the tax shall be levied @ 3 pies per ton must be deemed to pro-

vide for the maximum rate which can be levied and that is 3 pies per ton and no more. This argument is no doubt well- founded., because Rule 3 will have to be read in the light of the power conferred on the local Government by s. 79(XV) and that would mean that the rate of 3 pies per ton has been prescribed by the Rule of the maximum rate permissible. But this argument ignores the fact that this Rule has been subsequently deleted by a notification on September 6, 1943 published in <ORG> on September 10, 1943. When this notification was cited before us, the appellants conceded that the argument based on the construction of Rule 3 was not available to them. Therefore, the contention that Rule 3 prohibits the levy at a rate higher than 3 pies cannot succeed since the Rule itself has been subsequently deleted and was not a part of the Rules at the relevant time when the impugned notices were issued.

It is then argued that the impost of the tax at the rate of 9 pies per ton is not valid, because it does not comply with the requirements of s. 51(2) of the Act, and that raises the question of the construction of the said section. Section 51(1) authorises the imposition of the tax, provided, of course, the procedure prescribed by it and the requirements laid down by it are satisfied. Sub-Section (2) then lays down that the first imposition of any tax shall be subject to the previous sanction of <ORG>. The appellants contend that in the context, the "first im- position" means not only the first imposition in the sense- of an initial imposition, but it includes every fresh imposition levied at an increased rate. On the other hand, the respondent <ORG> contends that the first imposition means only the initial levy or impost and cannot take in subsequent imposts or levies. 'In this connection, it is relevant to remember that sub-section (2) was added by the same Amending Act by which s. 79(XV) was amended, and so, it would not be unreasonable to assume that when the legislature gave power to the local <ORG> to prescribe by rules the maximum rates permissible to be levied, it introduced sub-section (2) in s. 51 because it was thought necessary that whenever the rates were changed, the imposition of the tax at the increased rates should receive the previous sanction of the <ORG>. If the respondent's construction is accepted, it would mean that the respondent should obtain the previous sanction of the <ORG> at the initial levy and thereafter may go on increasing the rate of the levy to any extent without securing the sanction of the <ORG> in that behalf. Now that Rule 3 has been deleted and no maximum has been or can be prescribed by the Rules, it would be unreasonable to hold that the respondent is given an unfettered and unguided authority to levy the impost in question at any rate it likes. Since no ceiling has been placed by the Rules in that behalf, it would, we think be fair to hold that if the rates are increased and levy is sought to be imposed on the altered rates, the imposition of the levy at these altered rates should be deemed to be included in the express on "first imposition" under s. 51(2) . We are, therefore, inclined to accept the appellants' construction of s. 51(2) . That being so, it is necessary to enquire whether the imposition of the tax @ 9 pies has received the previous sanction of the local <ORG>.

During the course of his arguments, Mr. <NAME> for the respondent attempted to suggest that sanction had been obtained for the increase in the rates from time to time and a typed summary of the notifications issued in that behalf was supplied to us at the time of arguments. This summary refers to the three increments made in 1943, 1946 and 1947 respectively to which we have already referred. The summary read as if the increments had been sanctioned by <ORG>. But Mr. <NAME> for the appellants contended that the summary supplied by the respondent was incomplete and inaccurate and that the examination of the <ORG> in which the notifications were published, would show that the amendments in the rates had been made not with the previous sanction of the <ORG>, but by <ORG> itself. Two of these notifications were then produced before us by the respondent, and they supported the conten- tion made by Mr. <NAME>. Therefore, the argument that the imposition @ 9 pies per ton has received the sanction of the <ORG> must fail, and so, the impugned notices which seek to recover the tax from the appellants @ 9 pies per ton must be held to be invalid The respondent is entitled to levy tax only @ 3 pies per ton because that levy has received the sanction of the <ORG>, but if the respondent intends to increase the rate of the said tax, it must follow the procedure prescribed by s.51(2), provided of course, it is open to the respondent to increase the said tax.

There is yet another point on which the appellants are entitled to succeed, and that has reference to the fact that the respondent is seeking to reopen some of the assessments made by it against the appellants. The argument is that once an assessment is made for a specific period, it becomes final and it is not open to the respondent to demand additional amount by way of tax in respect of the said period. The genesis of the tax is somewhat interesting. It appears that roads were constructed by <ORG> at enormous cost at the request of the Mining interests and even debt had to be incurred by the <ORG> for completing the work of the construction of roads. Since the mining companies received substantial benefit from these roads, the <ORG> thought of levying a tax on coal, and that is the origin of the tax. When the first notification was issued on December 16, 1935 it authorised and sanctioned the imposition by <ORG> at Chhindwara in the Chhindwara District "of a tax at 3 pies per ton on coal, coal dust or coke, manufactured at the mines, sold for export by rail or sold otherwise than for export by rail, within the jurisdiction of <ORG>." This tax was recovered by the <ORG> and thereafter by the respondent in respect of coal whether sold inside the district of Chhindwara or sold outside the district of Chhindwara or even outside the State of Madhya Pradesh. In other words, the total coal produced by each mining lease-holder substantially came to be taxed. But after the Constitution came into force, doubts arose as to whether Art. 286 of the Constitution did not preclude the respondent from recovering tax in respect of coal exported out of the State of Madhya Pradesh, and in view of the advice given to the respondent by <ORG>, the respondent did not collect the tax in respect of coal which was exported by rail outside the State of Madhya Pradesh from about 1952. The respondent wanted to consult legal opinion on this point, but the State Government refused permission to the respondent to incur expenditure in that behalf. Subsequently however, this question came to be decided by <ORG> of Madhya Pradesh in a writ petition filed by <ORG> (No. 265 of 1957). <ORG> held that the tax levied by the janapada Sabhas under s.51 of the Act did not amount to a sales tax nor to an excise duty and so, the respondent thought that it could levy tax even on coal exported by rail outside the State of Madhya Pradesh. In fact after this judgment was pronounced by <ORG> on August 6, 1958, <ORG> withdrew its instructions to the respondent not to levy tax on exported coal. That is how the respondent has issued notices against the appellants in respect of coal exported by rail out of the State of Madhya Pradesh in regard to the years for which assessment has already been levied against the appellants for the coal not so exported, and the contention of the appellants is that this reopening of the assessment is not permissible under the Rules.

This contention appears to be well-founded. We have already seen the scheme of the Rules and we have noticed that Rule 10 provides that if no objection is filed, the Chairman's assessment shall be final and if an objection is received, the decision of <ORG> would be final. In other words, the scheme clearly provides that at the end of each six monthly period, the tax has to be assessed, notices to be issued to the assessee, his objections to be considered and the tax to be ultimately determined in the light of the decision on the said objections; and under Rule 10, the two decisions specified therein become final. It may be that the Rules do not prescribe any limitation within which these steps have to be taken by the respondent for each period, but that is another matter. In view of the provisions of Rule 10, it is difficult to hold that the respondent is entitled to reopen assessments already made and rendered final under the said Rule. There is no other provision for reopening assessment as we have under sections 34 & 35 of the Indian Income Tax Act, and so,. the respondent is not justified in issuing notices for the years which arc covered by assessment orders already passed. The finality provided for by Rule 10 will work as much against the respondent as against the assessees.

In support of the appeals, another argument was sought to be raised against the increase of the rates. It was urged that the tax is in the nature of an excise duty or a sales-tax and, therefore, any increase in the said tax beyond the limit of 3 pies--the continuance of which has been saved by the provisions of Art. 143 of the Government of India Act, 1935 and Art. 277 of the Constitution-will be invalid. This argument is based on the terms used in the notification of December 16, 1935. Since coal is described as manufactured at the mines, the argument is that it is in the nature of an excise duty and since the notification also refers to coal sold for export by rail or sold otherwise than for export by rail, it is' argued that it is a sales-tax. On the other hand, the respondent contends that it is neither a sales-tax nor an excise duty and as such, the rate can be increased subject, of course, to the requirements of s. 51 (2) of the Act. It appears that by notification issued on September 6, 1943, the preamble of the Rules was modified by substituting for the words "'coal, coal dust or coke" by "coal and dust coal" and by deleting the words "'manufactured at the mines". Curiously enough, these amendments have not been made in the original notification itself. We have already noticed that this latter notification deleted Rule 3. Some arguments were urged before us by learned counsel on both sides as to the effect of this notification which modified the preamble to the Rules. We do not, however, think it necessary to consider these arguments in the present appeals because of our conclusion that the impugned notices levying the tax @ 9 pies per ton are invalid for two reasons: the increase in the rates has not been sanctioned by <ORG> under s. 51 (2) and an attempt to recover at the increased rate the tax for the years already covered by assessment orders passed in that behalf, is barred by Rule 10. The result is, the appeals and the writ petitions are allowed and an appropriate direction or order is issued restraining the respondent from recovering the tax at a rate higher than 3 pies per ton and also restraining the respondent from recovering any additional tax in respect of the years for which tax has already been assessed against the appellants. The same will be the order in the other companion appeals. The appellants will be entitled to their costs, but one set of bearing fees will be taxed.

Appeals and writ petitions allowed.