TMI Blog1996 (1) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... and it invited objections thereto. On 16th October, 1958, in exercise of powers conferred by Section 5(1) of the 1951 Act, the State Government extended the limits of the Kota municipality to include therein the village of Ummedganj. This inclusion was challenged in a writ petition filed before the Rajasthan High Court. Pending the decision thereof, on 2nd May, 1960, the State Government excluded the village of Ummedganj from the said municipal limits. On 17th August, 1960, a Full Bench of the Rajasthan High Court held that Ummedganj was not validly included within the limits of the Kota town municipality inasmuch as the mandatory provisions in that behalf had not been followed. It appears that the villages of Raipura and Ummedganj were treated as falling within the municipal limits of Kota and octroi was collected from the appellants. Realizing, in April 1974, that the levy and realization of octroi by the Kota Municipality (the 2nd respondent) was illegal, the appellants filed a suit in the court of the Munsiff, Kota, seeking a permanent injunction restraining the Kota Municipality from levying or collecting octroi from it. An injunction was granted and was upheld in appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) No notification under section 4 shall be issued by the State Government, unless the objections, if any, so submitted are, in its opinion sufficient or invalid. The relevant portion of the Statement of Objects and Reasons of the Validating Act reads thus : 1. According to the provisions of the Rajasthan Municipalities Act, 1959, the village of Raipura was never included in the limits of the Kota Municipality and though the village of Ummedganj was included therein but it was thereafter excluded from these limits. However, the Kota Municipality to all intents and for all purposes treated them as existing within its limits. During the period from 1958 to 1974 elections were held and taxes were levied in relation to these villages as existing within the limits of the Kota Municipality. These actions were challenged in law courts. Doubts have, therefore, arisen as to the validity of the continued existence of these villages within these limits and as to the legality of the action taken or things done, including the levy and collection of taxes within these limits. 2. It was, therefore, expedient to remove these doubts and to validate the continued existence of these villag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o claim for their refund shall arise or shall be deemed ever to have arisen; as if the said villages had legally existed within the limits of the Municipality at Kota. By reason of Section 4, no court is permitted to question the validity of anything done or power exercised on the ground that the villages of Raipura and Ummedganj were not within the municipal limits of Kota. Sections 6 and 7 read thus : 6. Cancellation of notifications with retrospective effect. - As from the commencement of this Act, all notifications from time to time issued under the Municipal Act or the Panchayat Act, providing for the exclusion of the villages of Raipura and Ummedganj from the limits of the Municipality at Kota or for their inclusion in any Panchayat Circle, shall be deemed to have ceased to have effect and be cancelled as if they never came into force. 7. Act to have over-riding effect. - The provisions of this Act shall have effect notwithstanding anything contained in any law for the time being in force. Mr. Shanti Bhushan, learned counsel for the appellants, submitted that the Validating Act was bad in law inasmuch as the defects which had been pointed out in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a Validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in the Validating law for a valid imposition of the tax. (Emphasis supplied.) Mr. S.J. Sorabjee, learned counsel for the Kota Municipality, submitted that Section 3 of the Validating Act required the court to deem the villages of Raipura and Ummedganj always to have been within the Kota municipal limits to all intents and for all purposes. All corollaries for such assumption had, therefore, necessarily to follow. Accordingly, the court had to assume that the procedural requirements of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the fact deemed. Therefore, in view of the deeming provision under the Explanations, although the goods which were produced or manufactured at an intermediate stage and, thereafter, consumed or utilised in the integrated process for the manufacture of another commodity were not actually removed, they had to be regarded as having been removed. It is to be noted that what is to be deemed is a matter of fact; there is a deeming fiction . It is also to be noted that when a fact is to be deemed, its consequences and incidents are also to be deemed; that is to say, what follows from the deemed fact is also to be deemed. Mr. Sorabjee relied upon the judgment in R.L. Arora vs. State of Uttar Pradesh and Ors., (1964) 6 S.C.R. 784. This Court in R.L. Arora vs. State of U.P., (1962) Supp. 2 S.C.R. 149, had considered the provisions of Section 40(1)(b) of the Land Acquisition Act, 1894, read with clause (5) of Section 41 thereof and had held that valid acquisitions thereunder could only be for work that would be directly useful to the public and the relevant agreement should contain a term setting out that the public would have a right to use the work directly. Acquisitions that failed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in V.P. Sharma s case. The Amendment and Validation Act, 1967, was challenged. This Court rejected the challenge. It observed : All these decisions lay down that the power to legislate for validating actions taken under statute which were not sufficiently comprehensive for the purpose is only ancillary or subsidiary to legislate on any subject within the competence of the legislature and such Validating Acts cannot be struck down merely because courts of law have declared actions taken earlier to be invalid for want of jurisdiction. Nor is there any reason to hold that in order to validate action without legislative support the Validating Act must enact provisions to cure the defect for the future and also provide that all actions taken or notifications issued must be deemed to have been taken or issued under the new provisions so as to given them full retrospective effect. It is to be noted that in each of these two cases under the Land Acquisition Act, that Act was amended with retrospective effect. Under the amended Act, the acquisitions that had been rendered invalid by earlier judgments became valid and the validation was effected on the strength of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roi paid by them to the Kota municipality, which is stated to be pending, it shall be open to the defendants to take every defence available to them other than that concluded by this judgment. At the stage when special leave to appeal was granted, no stay was ordered except for the year 1974-75. Counsel on behalf of the Kota municipality agreed that if the appeals were allowed and the Kota municipality was required to refund the amount paid by the appellants by way of octroi duty, it would refund the same with interest at the rate of 8 per cent per annum. The time within which the refund would have to be made was left to be determined when the court heard and disposed of the appeals. The Kota municipality is now directed to refund to the appellants the amounts of octroi duty paid by the appellants to it subsequent to the year 1974-75 with interest at the rate of 8 per cent per annum from the dates of payment till refund or realisation. Such refund shall be made on or before 15th July, 1996. The appeals are allowed. The judgment and order under appeal is set aside. The Kota Municipal Limits (Continued Existence) Validating Act, 1975, is declared to be invalid. Refund of octroi duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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