Input:
ivil Appeal Nos.
2085 of 1978 and 7 8 of 1979.
Appeals by special leave from the Judgment and Order dated 18.5.1977 of the Allahabad High Court in C.M.W. Nos.
5061/73, 5063/73 and 5080/73.
G.C. Lal, D.B. Vohra and O.P. Tewari for the Appellants in all the Appeals.
Probir Mitra for R.1 in CAs.
2085/78, 8/79 and RR 1 2 in CA 7/79.
G.N. Dixit, and Sobha Dikshit for RR.
2 to 4 in CA 2085/78 RR 2 4 in CA 8/79 and RR 3&5 in CA 7/79.
E.C. Aggarwala for R.4 in CA 7/79 and R. 3 in CA 8/79.
The Judgment of the Court was delivered by BAHARUL ISLAM, J.
The above appeals arise out of land acquisition proceedings and involve similar questions of fact and the same 48 question of law.
This common judgment, therefore, will dispose of all the three appeals.
It will be sufficient if we refer to the material facts of Civil Appeal No. 2085 of 1978 only. 2.
The land involved, belonged to one Imam Khan as an occupancy tenant.
Before the partition of India, he migrated to Pakistan, whereafter his rights in the lands were declared evacuee property.
Subsequently, in pursuance of a notification issued under Section 12 of the , the Central Government acquired the lessee rights.
As a result of the notification, these rights vested in the Central Government free from all encumbrances.
The Central Government thereafter sold these rights by auctions in August/September 1962.
The first Respondent purchased a plot of land for a sum of Rs. 21,700.
He deposited the entire amount with the Managing Officer, Evacuee Property, Agra.
A sale certificate was issued to him on September 12, 1962.
It appears that one Ramlal Lamba was in the possessi on of the land in question.
He was asked by the Managing Officer, Evacuee Property, to vacate the land, and deliver possession to the first respondent.
Instead of delivering possession of the land to the first respondent Lamba, filed a Writ Petition under Article 226 of the Constitution in the Punjab High Court at Delhi.
The Writ Petition was dismissed on 4.12.69.
He then filed an appeal which was also dismissed on 2.2.70.
He then filed a suit in the Court of the Munsiff Agra, for restraining the Managing Officer, Evacuee Property, from interfering in his possession.
Thus the first respondent could not get possession of the land.
After the auction sale, the State of U. P. (Respondent No. 2 herein) filed a suit under Section 171 of U. P. Tenancy Act, 1939 (hereinafter 'the Tenancy Act ') against the Custodian of the Evacuee Property, and the four auction purchasers including the first respondent, for possession.
This suit was dismissed by the Assistant Collector, Ist Class, on 24.3.69 on the ground that it was not maintainable.
An appeal was filed.
This was also dismissed on 24.10.70.
Thus before the petitioner could obtain possession of the land, the Collector of Agra (Respondent No.3 herein) issued a notification under Section 4 of the Land Acquisition Act (hereinafter 'the Act ') on March 1, 1970, notifying that the plots in dispute (and several other plots) were intended to be acquired by the State Government for construction of residential houses for the members of the General Servants Co operative Housing Society Ltd., Agra, the appellant 49 before us.
The first respondent did not have any knowledge or information of the said notification under Section 4 of the Act and so he did not, as he could not, file any objection under section 5A of the Act.
The notification under section 4 was followed by a notification under section 6 of the Act on May 4, 1973.
After the said notifications, proceedings relating to determination of compensation for the lands were started.
In that connection the first Respondent was served with a notice under section 9(3) of the Act, calling upon him to prefer his claim for compensation.
Thereupon the first Respondent filed objections, but before the objections were disposed of he filed a writ petition before the High Court of Allahabad.
The High Court allowed the writ petition and struck down the notification dated 5th May 1973, under Section 6 of the Act.
The High Court held that as the acquisition was made by the State Government for the benefit of a Co operative Society, it could do so only after complying with the provisions of Chapter VII of the Act, and the Land Acquisition (Companies) Rules, 1963 (hereinafter called 'the rules '), but as the State Government did not do so, there was a breach of the principle of natural justice.
Repelling the argument of the appellant to the contrary, the High Court also held that the first respondent was a 'person interested ' within the meaning of section 3 (b) of the Act.
Respondents No. 2, 3 and 4 who are co respondents appearing through Mr. Dikshit before us have supported the case of the appellant.
The first question for determination is whether the first respondent is not a 'person interested ' within the meaning of section 3(b) of the L.A. Act and as such he had no locus standi to file the writ petition before the High Court, as contended by the appellant.
Section 3 (b) of the Act is in the following terms (material portions only): "3.
In this Act, unless there is something repugnant in the subject or context: (a). . . (b) the expression "person interested" includes all persons claiming an interest in compensation to be made on account of the acquisition of land under this Act; and a person shall be deemed to be interested in land if he is interested in an easement affecting the land." 50 In support of the argument the appellant refers to section 45 (f) and section 180 of the Tenancy Act, 1939.
Clause (f) of section 45 provides that the interest of the tenant shall be extinguished where the tenant has been deprived of possession and his right to recover possession is barred by limitation.
The limitation provided is for a period of twelve years, for a suit for ejectment of a person occupying the land without title and for damages if the land is contiguous to any other land lawfully occupied by such other person (a) if such person has, at the commencement of the Tenancy Act, occupied the land for more than six years, the period runs from the time the land holders first knew of the unauthorised occupation.
In any other case the period of limitation is six years.
This point which has been urged for the first time before us is a mixed question of fact and law.
It does not appear to have been taken before the High Court.
A mixed question of law and fact needing investigation into facts cannot be allowed to be urged for the first time in an appeal by special leave under article 136 of the Constitution.
It is true that admittedly the first respondent was out of possession at the relevant time but there is no evidence before us to show whether or not the land in question was contiguous to any other land occupied by the person who is in possession and that his possession had been lawful.
We are therefore not in a position to accept the submission of the appellant that the first respondent 's claim was barred by limitation.
On the contrary there is ample evidence before us to show that the first respondent had interest in the land in question.
We come to this conclusion from the following circumstances: (I) A sale certificate had been issued to the first respondent after the purchase of the land in auction sale held in 1962; (2) the Collector, Agra, knew that the first respondent had purchased the land in auction, for he had himself filed a suit for ejectment from the land in question under section 171 of the Tenancy Act against the first respondent, and that the suit was dismissed by the Assistant Collector Ist Class, on 24th March, 1969; the appeal preferred against the said order had also been dismissed by the Commissioner on the 27th of October, 1970; (3) the Collector issued notice under section 9 (3) of the Act calling upon the first respondent to prefer his claim, if any for compensation of the land acquired.
(This amounts to an admission of the first respondent 's interest in the land by the Collector) and (4) that in the counter affidavit filed by the Collector, in reply to the affidavit filed by the first respondent before the High Court 51 the claim of the petitioner to get compensation for the rights acquired by the Government was not denied by the appellant.
We therefore agree with the High Court that the first respondent was a 'person interested ' within the meaning of clause (b) of section 3 of the Act.
The next point urged before us by the appellants is that the first respondent in fact filed objection which was inquired into and he was given an opportunity of being heard.
The High Court, therefore, it is contended, was not right in holding that there was a breach of the principle of natural justice.
In our opinion, the real question, as urged by the first respondent, is not whether there has been any violation of any principle of natural justice but whether Rule 4 of the Rules has been complied with by the Collector.
Sub section (1) of Section 4 of the Act provides that whenever it appears to the appropriate Government that land in any locality is needed or is likely to be needed for any public purpose a notification to that effect shall be published in the official gazette and that he shall also cause a public notice of the substance of the notification to be given at convenient places in the said locality.
Section 5A of the Act provides that any person interested in any land which has been notified under sub section (1) of section 4, as being needed or likely to be needed for a public purpose or for a Company may, within thirty days (twenty one days according to the U.P. amendment) after the issue of the notification object to the acquisition of the land or of any land in the locality as the case may be.
Under section 3 (e), the expression 'Company ', inter alia, includes a society registered under the and a registered society within the meaning of the or any other law relating to co operative society for the time being in force in any State.
The appellant The General Govt.
Servants Co operative Housing Society Ltd., Agra, is a Company.
The appellant has not contended to the contrary.
It is also not disputed that when land is acquired for the purpose of a company, of the Act is attracted and the provisions of that chapter have to be followed.
Rule 4 of the Rules which is material and falls for our interpretation runs thus: "4.
Appropriate Government to be satisfied with regard to certain matters before initiating acquisition proceedings. (1) Whenever a Company makes an application to the appro 52 priate Government for acquisition of any land, that Government shall direct the Collector to submit a report to it on the following matters, namely: (i) that the Company has made its best endeavour to find out lands in the locality suitable for the purpose of the acquisition; (ii) that the Company has made all reasonable efforts to get such lands by negotiation with the persons interested therein on payment of reasonable price and such efforts have failed; (iii) that the land proposed to be acquired is suitable for the purpose; (iv) that the area of land proposed to be acquired is not excessive; (v) that the Company is in a position to utilise land expeditiously; and (vi) where the land proposed to be acquired is good agricultural land, that no alternative suitable site can be found so as to avoid acquisition of that land.
(2) The Collector shall, after giving the Company a reasonable opportunity to make any representation in this behalf, hold an enquiry into the matters referred to in sub rule (1) and while holding such enquiry he shall, (i) in any case where the land proposed to be acquired is agricultural land, consult the Senior Agricultural Officer of the district whether or not such land is good agricultural land ; (ii) determine, having regard to the provisions of sections 23 and 24 of the Act, the approximate amount of compensation likely to be payable in respect of the land which in the opinion of the Collector, should be acquired for the Company ; and (iii) ascertain whether the Company offered a reasonable price (not being less than the compensation so determined), to the persons interested in the land proposed to be acquired.
Explanation : For the purpose of this rule "good agricultural land" means any land which, considering the level of agricultural production and the crop pattern of the area in which 53 it is situated, is of average or above average productivity and includes a garden or grove land.
(3) As soon as may be after holding the enquiry under sub rule (2), the Collector shall submit a report to the appropriate Government and a copy of the same shall be forwarded by that Government to the Committee.
(4) No declaration shall be made by the appropriate Government under section 6 of the Act unless (i) the appropriate Government has consulted the Committee and has considered the report submitted under this rule and the report, if any submitted under section 5A of the Act; and (ii) the agreement under section 41 of the Act has been executed by the Company. ' Sub rule (1) requires the Government to direct the Collector to submit a report to it on the matters enumerated in clauses (i) to (vi) of the sub rule (1) which is for the benefit of the Company.
The purpose is to avoid acquisition of land not suitable for a Company.
Clause (ii) of sub rule (1) requires that the Company has to make all reasonable efforts to get such lands by negotiation with the person interested therein on payment of reasonable prices and that such efforts have failed.
The purpose of clause (ii) seems to be to avoid unnecessary land acquisition proceedings and payment of exorbitant prices.
The purpose of clauses (iii), (iv) and (v) is obvious.
The purpose of clause (vi) is to avoid acquisition of good agricultural land, when other alternative land is available for the purpose.
Subrule 2 of rule 4 requires the Collector to give reasonable opportunity to the Company so that the Collector may hold an inquiry into the matters referred in sub rule (1).
The Collector has to comply with Clauses (i), (ii) and (iii) of sub rule 2 during the course of the inquiry under sub rule (1).
The Collector under sub rule 3 then has to send a copy of his report of the inquiry to the appropriate Government and a copy of the report has to be forwarded by the Government to the Land Acquisition Committee constituted under Rule 3 for the purpose of advising the Government in relation to acquisition of land under Part VII of the Act, the duty of the Committee being to advise the Government on all matters relating to or arising out of acquisition of land under Part VII of the Act (Sub rule (5) of Rule 3).
No declaration shall be made by the 54 appropriate Government under section 6 of the Act unless the Committee has been consulted by the Government and has considered the report submitted by the Collector under section 5A of the Act.
In addition, under clause (ii) of sub rule (4) of rule 4, the Company has to execute an agreement under section 41 of the Act.
The above consideration shows that rule 4 is mandatory; its compliance is no idle formality, unless the directions enjoined by rule 4 are complied with, the notification under section 6 will be invalid.
A consideration of rule 4 also shows that its compliance precedes the notification under section 4 as well as compliance of section 6 of the Act.
In the instant case, as stated earlier, the first respondent on receipt of the notice under section 9(3) of the Act submitted a representation.
After the representation, a brief written note of the arguments was also supplied (Annexure 6).
The first respondent 's objections, inter alia against the acquisition of the land were: (1) that the land being that of the Government cannot be legally acquired ; (2) that the land or lessee rights having been once acquired by the Central Government under the provisions of the , it cannot be acquired by the State Government ; and (3) that the proceedings for the acquisition of the land for the appellant were illegal as the mandatory procedure for acquisition of land for private companies has not been followed.
It was also stated in the representation that no efforts to purchase the rights of the first respondent by negotiation were made.
The inquiry report submitted by Collector does not show that he applied his mind to the provisions of rule 4 as stated above, or to the objections of the first respondent.
In fact there was no report under rule 4.
The report that was submitted was one under section 5A of the Act.
We have examined this aspect of the matter to see that although the enquiry was belated and not in accordance with law, there has been no failure of justice.
In our opinion there has been failure of justice.
Agreeing with the finding of the High Court, although for different reasons, we hold that the notification under section 6 is invalid for non compliance of rule 4 of the Rules.
As a result we dismiss the appeals with costs.
P.B.R. Appeals dismissed.

Output:
The land in dispute originally belonged to a person who had migrated to Pakistan.
After acquiring the lessee rights in the land under section 12 of the the Central Government sold these rights by auction.
The first respondent purchased a plot of land and a sale certificate was issued to him.
The respondent, however could not get possession of the land as a result of litigation resorted to by the person in possession of the land.
In the meantime the State Government filed a suit against the Custodian of Evacuee Property and the auction purchasers for possession; but the suit and later appeal were dismissed.
Before the respondent obtained possession of the land a notification under section 4 of the Land Acquisition Act was issued seeking to acquire the land for construction of residential houses for the members of the appellant society.
Having had no knowledge of the notification the respondent did not file any objection under section 5A. After the issue of notification under section 6 of the Act proceedings relating to determination of compensation for the lands were started.
A notice was served on the respondent under section 9(3) of the Act calling upon him to prefer his claim for compensation.
Allowing the respondent 's petition impugning the action of the Government the High Court held that the State Government could acquire the land only after complying with the provisions of Chapter VII of the Act and the Land Acquisition (Companies) Rules, 1963 and this not having been done there was a breach of the principle of natural justice and that secondly the respondent was a "person interested" within the meaning of section 3(b) of the Act.
On the question whether the respondent was a 'person interested ' and whether the notification issued under section 6 was valid.
^ HELD: The expression "person interested" is defined in section 3(b) as including all persons claiming an interest in compensation to be made on account of acquisition of land under the Act.
That the first respondent had interest in the land in question is warranted by the following circumstances: (i) a sale certificate had been issued to him after he purchased the land in auction sale; (ii) the Collector knew that he had purchased the land for he had himself filed a suit for ejectment against him from the land and that the suit was dismissed and the appeal against that order was also dismissed; (iii) the Collector called upon the respondent to prefer his claim under section 9(3) of the Act which showed that 47 the Collector had admitted the first respondent 's interest in the land; and (iv) before the High Court the Collector had not denied the respondent 's right to compensation.
Therefore, the first respondent was a "person interested" within the meaning of section 3(b).
[50 F H] 2.
The notification under section 6 is invalid for non compliance with rule 4 of the Rules.
[54 G] The appellant society is a "company" within the meaning of section 3(e) of the Act.
When the land was acquired for the purpose of a company, Part VII of the Act is attracted and the provisions of that Chapter have to be followed.
Rule 4 is mandatory and unless the directions enjoined by this rule are complied with the notification under section 6 would be invalid.
Its compliance precedes the notification under section 4 as well as compliance of section 6 of the Act.
[51 F G] In the instant case on receipt of the notice under section 9(3) the respondent objected to the acquisition on the grounds that the land or lessee rights having been acquired by the Central Government under the provisions of the could not be acquired by the State Government, and that the mandatory procedure for acquisition of land for private companies had not been followed.
No inquiry report had been submitted by the Collector.
The report submitted was under section 5A and not under rule 4.
There had therefore been a failure of justice.
[54 C F] 3.
The appellant 's contention that the first respondent 's claim was barred by limitation under sections 45(f) and 180 of the Tenancy Act, has no force because there is no evidence to show that the requirements of the section have been satisfied.
That apart, this is a mixed question of fact and law requiring investigation into facts.
Since it had not been taken before the High Court but sought to be urged for the first time in this Court, it cannot be allowed to be urged in an appeal by special leave under Article 136 of the Constitution.
[50 C D]


Input:
Civil Appeal Nos.
1992 1997 and 2219 of 1969.
Appeals by Special Leave from order dated 16 1 69 and 19 3 69 of the Govt.
of India, Min. of Finance Dept. of Revenue in Orders Nos. 8637 8642/68 and 1408/69.
Y. section Chitale, J. B. Dadachanji and D. N. Misra for the Appellant in all appeals.
section Markandeya and Girish Chandra for the Respondents in all the appeals.
The Judgment of the Court was delivered by SHINGHAL J.
These appeals by special leave arise out of an order of the Central Government dated January 16, 1969 by which six revisional applications of the appellants were dismissed, and a similar order dated March 19, 1969, in the remaining case.
As the basic facts and the law governing them are quite similar, it will be sufficient to deal with the common point in controversy before us on the basis of the admitted facts, and to dispose of the appeals together.
The appellants obtainted licences for the import of 102 cases of 3,000 Kgs.
of nylon yarn.
The yarn was shipped to Bombay on the basis of a letter of credit in favour of the foreign suppliers.
When the shipment arrived, the appellants received the bill of lading and other documents of title from the bankers on or about August 23, 1965, and paid for the same.
They lodged the bill of entry the same day, and it has been claimed that the goods were assessed for duty by the customs authorities at a certain figure.
The appellants stored the goods in the warehouse on December 22, 1965.
They cleared 32 cases for "home" consumption on May 10, 1966, and there is no controversy in regard to it.
The currency was devalued on June 6, 1966, and the Customs (Amendment) Ordinance, 1966, was promulgated on July 7, 1966, by which sections 14 and 15 of the , hereinafter referred to as the Act, were amended.
The Ordinance was replaced by the Customs (Amendment) Act, 1966.
The appellants cleared 12 cases of the aforesaid consignment on or about September 1, 1966.
Another 12 cases were cleared on October 10, 1966, and 46 cases were cleared in two lots on or about December 30, 1966 and February 20, 1967.
Their grievance was that the cases were allowed to be cleared on payment of "enchanced" duty 1144 according to the amended provisions of the Act.
They paid the duty under protest and applied for refund of the excess payment on the ground that the amended law was not applicable as the consignments had been received, stored and assessed to duty before the promulgation of the Ordinance.
The applications of the appellants for refund were rejected by the customs authorities, and their appeals were dismissed by the Appellate Collector of Customs on the ground that the amended sections 14 and 15 of the Act were applicable to the consignments in question.
The appellants filed revision applications before the Central Government, but they were dismissed by the aforesaid common impugned order dated January 16, 1969.
They have therefore approached this Court for a redress of their grievance.
The facts relating to Civil Appeal No. 2219 of 1969, are quite similar, except that the consignment in that case was of 63 cases of nylon yarn, which were stored in the warehouse on December 14, 1965, and were cleared on May 25, 1967.
In that case also the appellants paid the duty under the provisions of the amended sections under protest, and unsuccessfully applied for refund of the socalled excess duty.
They failed in their appeals to the Appellate Collector of Customs and their application for revision was rejected by the Central Government on March 19, 1969.
It will thus appear that the controversy in these two sets of cases relates to the short question whether the customs authorities were justified in applying the rate of duty (to the imported goods in question) according to the rate prevalent on the date of their actual removal from the warehouse.
It will be recalled that the Customs (Amendment) Ordinance, 1966, was promulgated and came into force on July 7, 1966, and was replaced by the Customs (Amendment) Act, 1966.
The amendments in question were by way of substitution of sections 14 and 15 of the Act by the new sections.
It has been argued by Mr. Chitale for the appellants that the material change was that made in subsection (1) of section 15 of the Act by substituting the words "The rate of duty, rate of exchange" for the words "The rate of duty".
He has therefore argued that the customs authorities were not entitled to take the new "rate of exchange", at the depreciated value of the currency, into consideration in respect of the consignments in question as they had been shipped to Bombay and stored in the warehouse before the amended section 15 came into force.
The learned counsel tried to argue that the orders of assessment of the customs duty were also made before the amendment Ordinance 1145 was promulgated on July 7, 1966, but he did not pursue that line of argument because he was not in a position to produce the so called assessment orders.
But, as we shall show, even if it were assumed that any such order or orders had been made before July 7, 1966, that could not possibly affect the correct rate of duty applicable to the imported goods.
A reference to sections 14 and 15 of the Act will show that while section 14 deals with the valuation of goods for purposes of assessment, it is section 15 which specifies the date for determination of the rate of duty and tariff valuation of imported goods.
The amended section reads as follows, "15(1) The rate of duty, rate of exchange and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force, (a) in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section; (b) in the case of goods cleared from a warehouse under section 68, on the date on which the goods are actually removed from the warehouse; (c) in the case of any other goods, on the date of payment of duty: Provided that if a bill of entry has been presented before the date of entry inwards of the vessel by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards.
(2) The provisions of this section shall not apply to baggage and goods imported by post.
(3) For the purposes of section 14 and this section (a) "rate of exchange" means the rate of exchange determined by the Central Government for the conversion of Indian currency into foreign currency or foreign currency into Indian currency; (b) "foreign currency" and "Indian currency" have the meanings respectively assigned to them in the Foreign Exchange Regulation Act, 1947.
" It is thus the clear requirement of clause (b) of sub section (1) of section 15 of the Act that the rate of duty, rate of exchange and tariff 1146 valuation applicable to any imported goods shall be the rate and valuation in force on the date on which the warehoused goods are actually removed from the warehouse.
A cross reference to section 49 of the Act shows that an importer may apply to the Assistant Collector of Customs for permission to store the imported goods in a warehouse pending their clearance, and he may be permitted to do so.
The other relevant provision is that contained in section 68 of the Act which provides that the importer of any warehoused goods may clear them for "home consumption" if, inter alia, the import duty leviable on them has been paid.
That is why clause (b) of sub section (1) of section 15 of the Act makes a reference to section 68.
It is therefore quite clear that the rate of duty, rate of exchange and tariff valuation shall be those in force on the date of actual removal of the warehoused goods from the warehouse.
As it is not in dispute before us that the goods, which are the subject matter of the appeals before us, were removed from the warehouse after the amending Ordinance had come into force on July 7, 1966, the customs authorities and the Central Government were quite right in taking the view that the rate of duty applicable to the imported goods had to be determined according to the law which was prevalent on the date they were actually removed from the warehouse, namely, the amended sections 14 and 15 of the Act.
There is therefore no force in the argument that the requirement of the amended section 15 should have been ignored simply because the goods were imported before it came into force, or that their bills of lading or bills of entry were lodged before that date.
As we find no force in these appeals, they are dismissed with costs.
N.V.K. Appeals dismissed.

Output:
As a result of devaluation of Indian Currency in June, 1966, Ss. 14 & 15 of the were amended by the Customs (Amendment) Ordinance, 1966 which was later replaced by an Act with effect from July 7, 1966.
Section 15(1) provides that the rate of duty, rate of exchange and tariff valuation applicable to any imported goods shall be the rate and valuation in force. . (b) in the case of goods cleared from a warehouse under section 68, on the date on which the goods were actually removed from the warehouse.
The appellant stored on December 22, 1965 in the Customs warehouse, goods imported by him under a licence, and cleared them on various dates between September 1, 1966 and February 20, 1967.
Under protest, they paid customs duty at the enhanced rates in accordance with the amended provisions.
Later, they claimed rebate alleging that since the consignments had been received, stored and assessed to duty much before the promulgation of the Ordinance, they were liable to pay duty at the rate prevailing on the date of ware housing.
Their appeals and revision were unsuccessful.
In appeal to this Court it was contended that the material change in section 15 being only the substitution of the words "the rate of duty, rate of exchange" for the words "the rate of duty" the customs authorities were not entitled to take into account the new rate of exchange at the appreciated value of currency in respect of the consignments stored in the warehouse prior to the coming into force of the Ordinance.
Dismissing the appeal, ^ HELD: The customs authorities were right in taking the view that the rate of duty applicable to the imported goods should be determined according to the law prevalent on the date they were actually removed from the warehouse.
Section 15(1)(b) clearly requires that the rate of duty, rate of exchange and tariff valuation applicable to any imported goods shall be the rate and valuation in force on the date on which goods are actually removed from the warehouse.
Under section 49 an importer may apply to the Assistant Collector of Customs for permission to store the imported goods in a warehouse pending their clearance and he may be permitted to do so; and section 68 provides that an importer of any warehoused goods may clear them if the import duty leviable on them has been paid.
That is why clause (b) of sub section (1) of section 15 makes a reference to section 68.
[1146D, 1145H 1146C] 1143 In the instant case the goods were removed from the warehouse after the Ordinance came into force on July 7, 1966.
[1146D]


Input:
Civil Appeal No. 1386 of 1976.
From the Judgment and Order dated 21 9 76 of the Karna taka High Court in W.A. No. 150 of 1976.
H.B. Datar, Sanjeev Aggarwal and R.B. Datar for the Appel lant.
S.T. Desat, S.K. Mehta, K.R. Nagara]a and P.N. Puri for Respondent.
661 The Judgment of the Court was delivered by JASWANT SINGH, J.
This appeal by certificate which is directed against the judgment and order dated September 21, 1976, of the High Court of Karnataka at Bangalore reversing the judgment and order dated March 3, 1976 of a Single Judge of that Court dismissing writ petition No.6945 of 1975 filed by the respondent involves a substantial question of law of general public importance relating to the validity of the levy of what is styled as 'supervision fee ' under section 124 of the Karnataka Municipalities Act, 1964 (hereinafter referred to as 'the Act ') read with rule 26 of the Karnataka Municipalities Taxation Rules, 1965 (herinafter referred to as 'the Rules ').
The facts of the case lie in a short compass and may be stated as follows: Iron ore which is extracted from its mine heads in Hospet Taluka is brought over and stocked in Hubli Railyard by the Mysore Minerals Limited which is a Government undertaking.
Having taken up the contract of transhipment of the iron ore from Hubli Railyard to Karwar and Belekeri harbours, the Mysore Minerals Limited has sublet the same to the West End Minerals and Exports Private Limited.
The latter has in turn entrusted the execution of the contract to.
the re spondent which is engaged in transport business.
The iron ore is accordingly lifted by the respondent in its trucks from Hubli Railyard and carried to Karwar and Belekeri harbours.
The trucks of the respondent carrying the iron ore 'have (en route) to pass.
in the course of transit through the limits of various town municipalities situate on the highway of which the appellant happens to be one, but they do not unload and reload the iron ore at any intermedi ary point or stop.
The appellant, on the basis of a resolution passed by it on January 25, 1975, and approved by the State Government levies the aforesaid fee of Re. 1/ per truck under section 124 of the Act read with rule 26 of the Rules.
The trucks of the respondent using the State highway within the munici pal limits of Kalghatgi, District Dharwar are accordingly made to pay the fee for each of their trips.
Feeling that the fee realised by the appellant was invalid, the respondent filed a writ petition, being writ petition No. 6945 of 1975 in the High Court of Karnataka challenging the levy of the fee and seeking the issuance of a writ of mandamus restraining the appellant from realising the said fee.
A Single Judge of the High Court upheld the fee in question and dismissed the writ petition holding that the expression 'importer ', 'place of import ' and 'place of export ' as used in section 124 (1 ) of the Act are compre hensive enough to describe a person who merely brings the goods within the municipal limits for immediate exportation and the respondent who answered that description was bound to pay the fee.
Aggrieved by this judgment and order, the respondent took the matter in appeal to a Division Bench of the High Court which allowed the appeal and issued the writ prayed for by the respondent by its 662 judgment and order dated September 21, 1976.
It is against this; judgment and order that the present appeal is direct ed.
At the hearing of the appeal, counsel have reiterated the contentions urged on behalf of the parties in the High Court.
The sole question that arises for determination in this appeal relates to the validity of the aforesaid levy.
For a proper detemination of this question, it is necessary to advert to section 124 of the Act and rule 26 of the Rules.
"Section 124: Non liability for octroi and refund of octroi ongoods in transit. (1) Any article or animal brought into the municipal limits for the purpose of immediate exportation may at the option of the importer not to be subjected to levy of octroi if such article or animal be conveyed direct from the place of import to the place of export by such routes, within such time, and under such supervision as the municipal council may by resolution determine.
For purposes of this subsection the municipal council shall on payment of the prescribed fees issue promptly the necessary transport permits.
(2) When any article in respect of which octroi has been paid is exported from the municipal limitS, in the same condition in which it was brought into or received from beyond the municipal limits, the amount of octroi paid Shall, subject to such rules as may be prescribed, be refunded.
" "Rule 26: .
In case the person bringing the goods wishes to transport the goods at once beyond the limits of the municipality he shall do so only after obtaining a transport permit in Form IV, on payment of a fee of rupees two for each lorry and rupee one in other cases in the case of a city municipal council and rupee one for each lorry and fifty paise in other cases in the case of a town municipal council.
" The opening words of section 124 of the Act viz. "any article or animal brought into the municipal limits for the purpose of immediate exportation" on the construction of which the up shot of the case, depends are very important.
They imply processes of 'importing into ' and 'exporting from ' the municipal limits of goods or animals and are indicative of an element of repose and rest of the goods within the municipal limits.
As rightly held by the Divi sion Bench of the High Court, the expressions 'brought into ' and 'immediate exportation ' do not comprehend within their sweep the continuous process of transit of goods, by vehi cles which merely use the State highways passing through the areas which lie within the municipal limits.
In the.
instant case, the iron ore is carried in the trucks of the respondent which merely pass through the areas which lie within the municipal limits and is not unloaded and reload ed at any place within the municipal 663 area.
As such, the important element of repose and rest which the words 'brought into the municipal limits for the purpose of immediate exportation ' imply is absent in the instant case.
In The Central India Spinning and Weaving and Manufac turing Company Limited, The Empire Mills, Nagpur vs The Municipal Committee, Nagpur(1), this Court while discussing the meaning of the expression 'a terminal tax on goods or animals imported into or exported from the limits of the municipality ' occurring in section 66(1)(0) of the C.P. and Berar Municipalities Act, 1922, held that the goods which were in transit and were merely carried across the limits of the municipality were not liable to terminal tax.
The following observations made therein which have an impor tant bearing on the decision.
of the present appeal are worth quoting : "The efficacy of the relative contentions of the parties requires the determination of the construction to be placed on the really important words of which are "terminal tax", "imported into or exported from" and "the limits of the Municipality".
In construing these words of the statute if there are two possible interpretations then effect is to be given to the one that favours the citizen and not the one that imposes a burden on him.
. .Lexico logically they (the words 'import ' and "export;) do not have any refer ence to goods in 'transit ' a word derived from transit bearing a meaning similar to trans port, i.e. to.
go across.
The dictionary meaning of the words 'import ' and 'export ' is not restricted to their derivative meaning but bear other connotations also . .
The word "transit", in the Oxford Dictionary means the action or fact of passing across or through; passage or journey from one place or point to another; the passage or carriage of persons or goods from one place to another; it also means to pass across or through (some thing) to traverse, to cross.
Even according to the ordinary meaning of the words which is relied upon by the respondent, goods which are in transit or are being transported can hardly be called goods "imported into or exported from" because they are neither being exported nor imported but are merely goods carried across a particular stretch of terri tory or across a particular area with the object of being transported to their ulti mate ' destination which in the instant case was Nagpur . .
By giving to the words "imported into or exported from" their deriva tive meaning without any reference to the ordinary connotation of these.
words as .used in the commercial sense, the decided cases in India have ascribed too general a meaning to these words which it appears from the setting, context and history of the clause was not intended.
The effect of the construction of "import" .
or "export" in the manner in sisted upon by the respondent would make rail borne goods passing through a railway station within the limits of a Municipality liable to the imposition of the tax .on their arrival at the railway station or ; 1958 S.C. 352: 664 departure therefrom or both which would not only result in inordinate delays and unbearable burden on trade both inter State and intra State.
It is hardly likely that that was, the intention of the Legislature.
Such an interpretation would lead to absurdity which has according to the rules of interpretation, to be avoided.
" The enunciation of law in the above case fully covers the present case.
In the present case also, the iron ore which is in transit from Railyard at Hubli to Karwar and Belekeri harbours can hardly be characterised as goods brought into or exported from the municipal limits of Kalghatgi because they are neither imported into nor export ed from any point within the municipal limits but are merely carried across a particular stretch of territory or across a particular area with the object of being transported to its ultimate destination.
In Brown vs State of Maryland(1), Chief Justice Marshall dealing with the word! 'importation ' said as follows : "The practice of most commercial nations conforms to this idea.
Duties, according to that practice, are charged on those articles only which are intended for sale or consump tion in the country.
Thus sea stores, goods imported and re exported in the same vessel, goods landed and carried over land for the purpose of being re exported from some other port, goods forced in by stress of weather, and landed, but not for sale are exempted from the payment of duties.
The whole course of legislation on the subject shows that in the opinion of the legislature the right to.
sell is connected with the payment of the duties.
" In Wilson vs Robertson(2) where section 33 of The 48 Geo. 3, c. civ. imposed a duty on all goods "imported into or exported from Berwick Harbour", and the harbour extend ed from Berwick Bridge down the Tweed to the sea, but not above the bridge and goods were brought up the river in a seagoing vessel which, having first used the Harbour Commis sioners ' rings and posts in order to moor the vessel while lowering the masts, passed through Berwick Bridge and un loaded her cargo about 200 yards above the bridge and beyond the limits of the harbour; it was held that these goods were not "imported into" ' the harbour and as such liable to duty.
Bearing in mind the above authoritative enunciation of law, we are ' of opinion that as the continuity or continuous process of the carriage of iron ore is not in any way in fact broken within the municipal limits of Kalghatgi, the respondent cannot be said either to bring in or export the iron ore as contemplated by section 124 of the Act read with rule 26 of the Rules and as such is not liable to pay the octroi or what is styled as 'supervision fee '.
A contrary interpretation would make rail borne goods passing through the Railway Stations within the (1) ; L. Ed. 678, 686.
(2) 665 limits of the municipality liable to the imposition of the fee on their arrival at these Railway Stations and depar ture therefrom which could not be the intention of the Legislature.
The High Court was, therefore, perfectly justified in allowing the appeal and issuing the writ sought for.
In the result, the appeal fails and is hereby dismissed but in the circumstances of the case without any order as to costs.
P.H.P. Appeal dismissed.

Output:
The respondent is a transporter.
The respondent lifts the iron ore in his trucks from Hubli Railway yard and carries it to Karwar and Belekeri harbours.
The trucks of the respondent have to pass in the course of transit through :he limits of various Town Municipalities situate on the highway of which the appellant happens to be one.
The respondent does not unload or re load the iron ore at any intermediary point or stop.
The appellant passed a resolu tion in purported exercise of section 124 of the Karnataka Munic ipalities Act, 1964 read with rule 26 of the.
Karnataka Municipalities Taxation Rules, 1965, imposing a fee of Re. 1/ per trip of each truck.
The respondent filed a writ petition challenging the levy of the fee.
The learned single Judge of the High Court dismissed the writ petition.
The Division Bench, however, allowed the appeal.
Dismissing the appeal by certificate, HELD: The present case is not covered by "any article or animal brought into the municipal limits for the purpose of immediate exportation" mentioned in section 124.
"Brought into" and "immediate exportation" do not comprehend within their sweep the continuous process of transit of goods by vehicles which merely use the State High Way passing through the areas which lie within the municipal limits.
In the instant case, the iron ore is carried in the trucks of the respond ent which merely pass through the areas which lie within the municipal limits and is not unloaded and reloaded at any place within the municipal areas.
The continuity or contin uous process of the carriage of iron ore is not in any way, in fact, broken within the municipal limits.
The respondent cannot be said either to bring in or export the iron ore as contemplated by section 124 of the Act read with Rule 26 of the Rules and, as such, is not liable to pay octroi or what is styled as supervision fee.
A contrary interpretation would make rail borne goods passing through the Railway Station within the limits of the municipality liable to the imposi tion of the fee on their arrival at the Railway Station and departure therefrom which could not be the intention of the Legislature.
[662 G H, 664 B, G H, 665 A B] The Central India Spinning and Weaving and Manufactur ing Company Limited, the Empire Mills, Nagpur vs The Munic ipal Committee, Nagpur ; 1958 SC 352, fol lowed.
Brown vs State of Maryland ; , 442; ; , 686 and Wilson vs Robertson , quoted with approval.