Civil Appeal No. 56 of 1987.

From the Judgment and Order dated 6.11.85 of the Allahabad .RM60

PG NO 290 PG NO 291 High Court in W.P. (C) No. 4211 of 1983.

Gopal Subramanium and Mrs. section Dikshit for the Appellants.

Vijay Hansaria and Sunil K. Jain for the Respondents.

The Judgment of the Court was delivered by JAGANNATHA SHETTY, J.

This appeal by special leave is from a judgment of the High Court of Allahabad dated November 6, 1985 passed in Civil Misc.

Writ Petition No. 4211 of 1983.

The appeal raises a question of considerable importance.

The question is whether it is permissible to have two pay scales in the same cadre for persons having same duties and having same responsibilities.

The High Court has answered the question in the negative.

It is said that it would be violative of the Constitutional right of "equal pay for equal work".

The facts are not in dispute.

They will be found correctly stated in the judgment under appeal and may briefly be stated thus: Prior to 1965, in the High Court of Allahabad, Bench Secretaries were on a higher pay scale than that of Section Officers.

They were in the pay scale of Rs. 160 320 as against the pay scale of Rs. 120 300 to Section Officers.

In 1965 the State Government appointed a Pay Rationalisation Committee with wide ranging reference.

The Committee was asked to consider the duties and responsibilities of different categories of posts.

It was required to consider and recommend changes to reduce the number of then existing pay scales.

It was also asked to recommend as far as possible equal emoluments for identical duties and responsibilities.

The Committee submitted a detailed report, in which Bench Secretaries became casualties.

The Committee recommended for them a pay scale slightly lower than that of Section Officers.

Rs. 150 350 was recommended for Bench Secretaries as against Rs.200 400 for Section Officers.

The State Government accepted the recommendations.

Subsequently, these pay scales were raised to Rs. 200 450 and Rs.5 15 715 respectively.

Being dissatisfied with the down grading, the Bench Secretaries made representation to the Government.

They demanded that they should at least be put at par with Section Officers if not on higher scale.

The High Court supported their case but half heartedly.

The High Court suggested "that in view of financial exigencies the Government may grant for the time being pay scale to 10 PG NO 292 Bench Secretaries as admissible to Section Officers.

" When this matter was pending consideration, the Government appointed the Pay Commission (1971 72) headed by Shri Ali Zahir.

On February 1, 1973, the Pay Commission submitted its report.

The report did not accept the claim of Bench Secretaries for giving them pay scale equal to Section Officers or Private Secretaries.

The report was in fact very much against them.

The following remarks of the Pay Commission would be pertinent: "9 Bench Secretaries (Sakna Suchiv) A memorandum from the Bench Secretaries given to us states that the post which are at present in the scale of Rs. 100 450 are of a great responsibility for which experience and special qualifications are required.

They have claimed that their duties are equivalent to Private Secretaries of Hon 'ble Judges and have demanded the same pay scale which is given to Private Secretaries and the Section Officers.

The Registrar of the High Court while forwarding the memorandum has suggested that they should also be given the same pay scale which is given to Superintendents i.e. Rs.515 40 715 or to the Section Officers i.e. Rs.350 750.

It is not necessary to emphasise that in comparison to Bench Secretaries, the Section Officers of the secretariat has to bear more responsibilities in their Section and have to control over its subordinates.

Section Officers have to prepare a lengthy and original notes in complicated and important matters.

Therefore, the responsibilities of the two posts cannot be said to be equal.

Keeping in view the present scale of pay.

the pay scale recommended by the Pay Rationalisation Committee, the nature of duties and responsibilities and the fact that every Hon 'ble Judge will have one Private Secretary in the scale of Rs.500 1,000 we feel that the Bench Secretaries cannot be given the same scale of pay which is being given to Superintendents or the Section Officers.

Since the Bench Secretaries are promoted from Upper Division Assistants, they should feel satisfied if they are placed in a scale of pay a little above the Upper Division Assistants.

Therefore, we have recommended for them a pay scale of Rs.400 15 475 20 575 25 750.

" It will be seen that the Pay Commission refused to equate Bench Secretaries with Section Officers in view of their differential duties.

It was found that the nature PG NO 293 of work of Section Officers was quite different and more onerous than that of Bench Secretaries.

Section Officers have to bear more responsibilities in their Sections.

They have to exercise control over their subordinate.

They have to prepare lengthy original notes in complicated matters.

The Commission, therefore, recommended Rs.400 750 for Bench Secretaries and Rs.500 1,000 to Section Officers.

The Bench Secretaries again moved the Government reiterating their demand.

The Government appears to have received several such representations against the report of Ali Zahir Commission.

To consider all such grievances.

a Committee called the "Anomalies Committee was constituted.

As the name itself suggests, the Committee was required to examine and remove anomalies in the recommendations of Pay Commission.

The Committee appears to have made some patch work.

So far as Bench Secretaries are concerned, the Committee suggested: "(1) For this post the recommendations made by the Pay Commission need not have any amendments.

(2) It should be appropriate for the Bench Secre taries to accept 10 promotional posts in the pay scale of Rs.500 1,000 as recommended by the Pay Commission.

" The Anomalies Committee also thus rejected the claim of Bench Secretaries for placing them at par with Section Officers.

It however, suggested that ten posts of Bench Secretaries should be upgraded and placed in the pay scale of Rs.500 1,000 The Government accepted that recommendation and issued an order dated July 2,1976 The order inter alia states: Judicial (High Court) Section, Lucknow dated 2nd July, 1976.

Sub: Implementation of decision and proposals of Sub Committee of the Cabinet constituted to consider the anomalies pointed out in the pay scales recommended by the U.P. Pay Commission ( 1971 73) and its way of removal and other connected matters PG NO 294 Sir, In continuation of office memorandum No.

P.C. 395 x 89(M)/74 dated 18th March, 1976 of the Finance (Pay Commission) Section on the above subject, I have been directed to say that the Governor has been pleased to sanc tion the pay scales mentioned in Column 3 to 10 post holders under you mentioned in column 2 in the table given below w.e.f. 1st October, 1975 with this condition that as a result of sanction of this scale, the number of total posts in the concerned cadre will not increase: Sl.

Name Pay No. of No. of No. of Pay No.

Of Scale Permanent Temporary Posts Scale Post Post Posts in higher scale 1. 2. 3.

Bench Rs.400 15 48 3 10 Rs.500 25 Secre 475 EB 20 700 EB 40 tary 575 EB 25 900 EB 50 750 1000 2.

The basic pay in the pay scale mentioned in aforesaid column 7 of the concerned employee will be fixed according to the guiding principles of para 4 under fundamental rule 22 of the Financial Handbook Part II Volume 2 4 and the appointments in the pay scale of Rs.500 1000 will be made according to seniority subject to unfit.

In this connection, I have also been directed to say that the nomenclature of posts of 10 Bench Secretaries appearing in column 5 of the said table shall be Bench Secretaries Grade I and the nomenclature of rest Bench Secretaries of equal pay scale will be Bench Secretaries Grade II and the posts of Bench Secretaries Grade I and Grade II will be of the same duties and responsibilities.

Sd/ (Ramesh Chandra Deo Sharma) PG NO 295 Joint Secretary" It was then the turn of Bench Secretaries Grade II, They complained that there was no valid reason to give higher pay scale only to ten Bench Secretaries and step motherly treatment to the rest of their colleagues.

The High Court as usual supported their claim, but the Government did not.

In order to give effect to the said Government order the Chief Justice framed rules called the Allahabad High Court Officers and Staff (Conditions of Service and Conduct) Rules, 1976 ("The Rules ).

The Rules were framed in exercise of the powers conferred by Article 229(2) of the Constitution and brought into force from July 13,1976.

Thereunder Bench Secretaries Grade I and Grade II were classified as Class II and Class III posts respectively.

Rule 8(E) provides procedure for appointment of Bench Secretaries Grade II.

It is by selection through competitive examination to be conducted by appointing authority.

Permanent Upper Division Assistants and permanent Lower Division Assistants having not less than ten years service are made eligible for selection.

Preference shall however, be given to candidates possession a Law Degree.

Rule 16 provides that the posts of Bench Secretaries Grade I shall be filled up by promotion from amongst permanent Bench Secretaries Grade II.

Rule 18 deals with method of selection for all promotional posts.

It shall be made by selection committee appointed by the Chief Justice.

The criterion of selection shall be merit with due regard to seniority.

The entitlement to higher pay scale of Grade I Bench Secretary was therefore, not on the basis of seniority alone, but on the basis of selection by merit cum seniority.

In 1979, the State Government appointed another Pay Commission.

That Pay Commission also did not disturb the categorisation of Bench Secretaries into Grade I and Grade II.It however, gave marginal benefits by increasing the number of posts of Grade I from 10 per cent to 30 per cent of the total cadre strength.

The reason given by the Pay Commission is as follows: "Bench Secretary 26.38 Fifty two posts of Bench Secretaries are in the pay scale of Rs.400 750 and ten posts in the scale of Rs.500 1,000.

For appointment on these posts a limited competitive examination is held from amongst Upper Division Assistants, PG NO 296 Lower Division Assistants with ten years of service preferably Law Graduates.

We have received a representation stating that the Bench Secretaries play a very important role in smooth running of the proceedings of the Court.

The minimum pay scales of the Bench Secretaries is comparatively higher than the pay scale of Upper Division Assistants though they are appointed through a competitive examination.

It is limited to only Upper Division Lower Division Assistants of the High Court.

Keeping in view the fact that vacancies in Upper Division/Lower Division Assistants are filled up by promotion from Routine Grade Assistants, it is clear that this is a second promotion for those who come directly from Lower Division Assistants and a third promotion for those who are promoted first to Upper Division Assistant and then a Bench Secretary.

Even then we give importance to the fact that only best from Upper Division/Lower Division Assistants are preferred for the post.

The work of the Bench Secretary is of a great importance.

We, therefore, recommend: "(1) 30% of the total posts of Bench Secretaries in the pay scale of Rs.770 1000;and (2) Two posts in the scale of Rs.1420 1900 as is admissible to Assistant Secretaries of the Secretariat." Finally the Bench Secretaries Grade I moved the High Court on judicial side with an application under Article 226 of the Constitution.

They challenged the validity of bifurcation of one cadre into Grade I and Grade II.

The sheet anchor of their case was that in the same category of posts with similar duties and responsibilities there cannot be two grades with different pay scales.

It would be violative of principles of equal pay for equal work.

It was also contended that Bench Secretaries was a well recognised class that existed over the years and indeed superior to Section Officers.

Rejection of their demand for equating at least with Section Officers would be ignoring that historical fact.

The High Court accepted all these contentions and granted the relief prayed for.

As to the Pay Commission recommendations the High observed: "Rejection of petitioner 's demand for equating them PG NO 297 at least with Section Officers by comparing them with absence of administrative control exercised by Section Officer in the Secretariat was ignoring history of Bench Secretaries being a different class both before and after independence and the nature of duties performed by them .

" As to the decision of the Anomalies Committee the High Court remarked: "Curiously enough when Anomaly Committee redressed the wrong by granting pay scale equivalent to Section Officers, it created an artificial division by drawing a line between first ten and others.

A Bench Secretary or for that matter any officer who puts in longer years of service gets more salary than his juniors but if a senior performing the same duty as his juniors is put in different higher scale then it results in invidious classification in the same group.

And that violates the concept of equality which visualises that whatever condition are guaranteed and secured by law to one shall be guaranteed to owners who are of the same group or class.

It only denies enactment of a rule or law which attempts to deal differently with persons situated similarly.

The Government order by which the classification was done itself provided that duty and responsibility of Bench Secretary of Grade II be the same as of Grade I shall be seniority.

No other basic or qualification or test or be it was laid down.

The effect of the order was that those who were senior entered into an altogether different Grade.

That is senior Bench Secretary although doing the same work as his junior became entitled to higher grade.

And that clearly violated the principle of equal pay for equal work.

" In support of these conclusions the High Court relied upon two decisions of this Court: [i] Randhir Singh vs Union of India; , and [ii] P. Savita vs Union of India, [1985] Suppl. 1 SCR 101.

With regard to rule framed by the Chief Justice for the purpose of promotion to Bench Secretary Grade I, thee High Court said: "Rules were made not because the Court agreed with the classification of Bench Secretaries in Group I and Group II PG NO 298 but because of the Government order dated July 2, 1976.

The vice is not in the method of selection but in creation of two different groups without any intelligible differentia.

If Bench Secretaries of Group I would have been required to do any work different than Bench Secretaries Grade II, it could be described as promotional avenue.

Promotion from one post to another is associated with advancing to a higher office, climbing one more ladder in service career.

But the different grade for persons of same even on seniority cum merit with same work and responsibility cannot amount to promotion.

" With these conclusions, the High Court quashed a part of the notification dated July 4, 1976 which created Bench Secretaries Grade I.

The High Court did not quash the Rules relating to promotion to that cadre.

The High Court directed that all Bench Secretaries irrespective of their grades should be given the pay scale admissible to Bench Secretaries Grade I with effect from October 1, 1975.

The State of U.P. being aggrieved by the decision has appealed to this Court.

On the submissions made by counsel on both sides, two questions arise for our consideration: (i) Whether Bench Secretaries in the High Court of Allahabad are entitled to pay scale admissible to Section Officers?; and (ii) Whether the creation of two Grades with different pay scales in the cadre of Bench Secretaries who are doing the same or similar work is violative of the right to have "equal pay for equal work"? The first question regarding entitlement to the pay scale admissible to Section Officers should not detain us longer.

The answer to the question depends upon several factors.

It does not just depend upon either the nature of work or volume of work done by Bench Secre taries.

Primarily it requires among others.

evaluation of duties and responsibilities of the respective posts.

More often functions of two posts may appear to be the same or similar, but there may be difference in degrees in the performance.

The quantity of work may be the same, but quality may be different that cannot be determined by PG NO 299 relying upon averments in affidavits of interested parties.

The equation of posts or equation of pay must be left to the Executive Government.

It must be determined by expert bodies like Pay Commission.

They would be the best judge to evaluate the nature of duties and responsibilities of posts.

If there is any such determination by a Commission or Committee, the court should normally accept it.

The court should not try to tinker with such equivalence unless it is shown that it was made with extraneous consideration.

In the present case, it is true that at one time, Bench Secretaries were paid more emoluments than Section Officers.

But it is not known on what basis they were paid in the higher pay scale and treated as a superior class to Section Officers.

The Successive Pay Commissions and even Pay Rationalisation Committee, however, found no support to their superior claim.

The Commissions and Committee have evaluated the respective duties and responsibilities of the two posts.

It was found that the Section Officers perform onerous duties and bear greater responsibilities than Bench Secretaries.

We cannot go against that opinion and indeed, we must accept that opinion.

The Bench Secretaries, therefore, cannot claim as of right the pay scale admissible to Section Officers.

The second question formulated earlier needs careful examination.

The question is not particular to the present case.

It is pertinent to all such cases.

It is a matter affecting the civil services in general.

The question is whether there could be two scales of pay in the same cadre of persons performing the same or similar work or duties.

All Bench Secretaries in the High Court of Allahabad are undisputedly having same duties.

But they have been bifurcated into two grades with different pay scale.

The Bench Secretaries Grade 1 are in a higher pay scale than Bench Secretaries Grade II.

The entitlement to higher pay scale depends upon selection based on merit cum seniority.

Can it be said that it would be violative of the right to equality guaranteed under the Connstitution? It was argued for the respondents that it offends the constitutional principle of "equal pay for equal work".

Several decisions of this Court were relied upon in support of the proposition. "Equal pay for equal work for both men and women" has been accepted as a "constitutional goal" capable of being achieved through constitutional remedies.

In Randhir Singh vs Union of India & Others [I982] 3 SCR 298 Chinnappa Reddy, J. said (at 304): PG NO 300 "It is true that the principle of `equal pay for equal work ' is not expressly declared by our Constitution to be a fundamental right.

But it certainly is a constitutional goal.

Art.39(d) of the Constitution proclaims `equal pay for equal work for both men and women ' as a Directive Principle of State Policy.

`Equal pay for equal work for both men and women ' means equal pay for equal work for every one and as beween the sexes.

Directive Principles,as has been pointed out in some of the judgments of this Court have to be read into the fundamental rights as a matter of interpretation.

article 14 of the Constitution enjoins the State not to deny any person equality before the law or the equal protection of the laws and article 16 declares that there shall be equality of opportunity for all citizens in matters relating to employment or appointments to any office under the State.

These equality clauses of the Constitution must mean something to every one.

To the vast majority of the people the equality clauses of the Constitution would mean nothing if they are unconcerned with the work they do and the pay they get.

To them the equality clauses will have some substance if equal work means equal pay." The learned Judge however, observed that a differential treatment in appropriate cases can be justified when there are two grades based on reasonable grounds: "It is well known that there can be and there are different grades in a service, with varying qualification for entry into a particular grade, the higher grade often being a promotional avenue for officers of the lower grade.

The higher qualifications for the higher grade, which may be either academic qualifications or experience based on length of service reasonably sustain the classification of the officers into two grades with different scales of pay.

The principle of equal pay for equal work would be an abstract doctrine not attracting article 14 if sought to be applied to them.

" In Randhir Singh, the petitioner was a driver constable in the Delhi Police Force under the Delhi Administration.

It was found that the petitioner and the other drivers in the Delhi Police Force per formed the same functions and duties as other drivers in the service of the Delhi Administration and the Central Government.

Indeed, by reason of their investiture with the 'powers, functions and privileges of PG NO 301 a police officer ', their duties and responsibilities were found to be more arduous.

It was also admitted by the Delhi Administration in that case that the duties of driver constable of the Delhi Police Force were onerous.

Therefore, learned Judge said that there was no reason for giving them lower scale of pay than other drivers.

It was directed that the driver constables of Delhi Police Force should be given the scale of pay at least on par with that of drivers of the Railway Protection Force.

The principle enunciated in Randhir Singh was followed in Ramachandra vs Union of India, ; and P. Savita vs Union of India, [ 1985] Supp.

I SCR 10l.

In the former, the arbitrary differential treatment in the pay scale accorded to some professors was struck down.

The petitioners therein were holding the posts of Professors in the Indian Veterinary Research Institute under the Indian Council of Medical Research.

The pay scale of professors underwent revision.

The new recruits got the benefit of revision of scales, but not the petitioner.

He was allowed to continue in the old scale.

He challenged that discrimination in this Court as being violative of the right to have equal pay for equal work.

This Court accepted the contention and observed (page 163): "The case in hand is a glaring example of discriminat tory treatment accorded to old, experienced and highly qualified hands with an evil eye and unequal hand and the guarantee of equality in all its pervasive character must enable this Court to remove discrimination and to restore fair play in action.

No attempt was made to sustain the scales of pay for the post of Professor on the doctrine of classification because the classification of existing incum bents as being distinct and separate from newly recruited hand with flimsy change in essential qualification would be wholly irrational and arbitrary.

The case of the petitioners for being put in the revised scale of Rs. 1100 1600 from the date on which newly created posts of Professors in sister disciplines in IVRI and other institutes were created and filled up in revised scale is unanswerable and must be cunceded " In P. Savita vs Union of lndia, the artificial division of senior draftsmen in the Ministry of Defence Production with unequal scales of pay for the same work was struck down.

In Dhirendra Chamoli and Anr.

vs State of U.P., , this Court found fault with the Central Government for not giving the casual workers engaged in Nehru Yuvak the same salary and conditions of service as enjoyed by class IV employees regularly appointed against sanctioned posts.

It was observed (at 628): PG NO 302 "It must be remembered that in this country where there is so much unemployment,the choice for the majority of people is to starve or to take employment on whatever exploitative terms are offered by the employer.

The fact that these employees accepted employment with full knowledge that they will be paid only daily wages and they will not get the same salary and conditions of service as other class IV employees, cannot provide an escape to the Central Government to avoid the mandate of equality enshrined in article 14 of the Constitution.

This article declares that there shall be equality before law and equal protection of the law and implicit in it is the further principle that there must be equal pay for work of equal value.

These employees who are in the service of the different Nehru Yuvak Kendras in the country and who are admittedly performing the same duties as Class IV employees, must therefore get the same salary and conditions of service as Class IV employees.

It makes no difference whether they are appointed in sanctioned posts or not.

So long as they are performing the same duties, they must receive the same salary and conditions of service as class IV employees.

" In Surinder Singh vs Engineer in Chief, CPWD, , the case of poor daily wage workers employed for serveral years by the Central Public Works Department CPWD came up for consideration before this Court.

They demanded parity in their wages, and allowances with those of regular and permanent employees of the Department on the basis of performing similar work.

This Court while granting relief to the workmen observed (at 642) : "The Central Government, the State Government and likewise, all public sector undertakings are expected to function like model and enlightened employers and arguments such as those which were advanced before us that the principle of equal pay for equal work is an abstract doctrine which cannot be enforced in a court of law should ill come from the mouths of the State and State Undertakings.

" PG NO 303 The right to have equal pay for equal work was also accepted by this Court in R. D. Gupta and Others vs Lt. Governor of Delhi, ; Bhagwan Dass and Others vs State of Haryana, [1987] 4 SCC 634; National Museum Non Gazetted Employees Association and Anr.

vs UOI, WP No. 1230 of 1987 disposed of dt. 10.2.1988; Jaipal and Ors.

vs State of Haryana, WP No. 455 and connected petitions of 1987 of DD 2.6.1988 and Y.K. Mehta vs UOI, WP No. 1239 of 1979 and connected petitions DD 26.8.1988.

Article 39(d) of the Constitution proclaims "equal pay for equal work" .

This article and other like provisions in the Directive Principles are "conscience of our Constitution.

" They are rooted in social justice.

They were intended to bring about a socio economic transformation in our society.

As observed by Hegde and Mukherjee, JJ.

in Keshavananda Bharati vs State of Kerala, [1973] 4 SCC 225 at para 712: "The Constitution seeks to fulfil the basic needs of the common man and to change the structure of society.

" In the words of Shelat and Grover, JJ (at para 596): "The dominent objective in view was to ameliorate and improve the lot of the common man and to bring about a socio economic justice." In matters of employment the Government of a socialist State must protect the weaker sections.

It must be ensured that there is no exploitation of poor and ignorant.

It is the duty of the State to see that the under privileged or weaker sections get their dues.

Even if they have voluntarily accepted the employment on unequal terms, the State should not deny their basic rights of equal treatment.

It is against this background that the principle of "equal pay for equal work has to be construed in the first place.

Second, this principle has no mechanical application in every case of similar work.

It has to be read into article l4 of the Constitution.

article l4 permits reasonable classification founded on different basis.

It is now well established that the classification can be based on some qualities or characteristics of persons grouped together and not in others who are left out.

Those qualities or charcteristics must, of course, have a reasonable relation to the object sought to be achieved.

In service matters, merit or experience could be the proper basis for classification to promote efficiency in administration.

He or she learns also by experience as much as by other means.

It cannot be denied that the quality of work performed by persons of longer experience is superior than the work of newcomers.

Even in Randhir Singh 's case, this principle has been recognised.

O. Chinnappa Reddy, J. observed that the classification of officers into two grades with different scales of pay based either on academic qualification or experience on length of service is sustainable.

Apart from that, higher pay scale to avoid stag PG NO 304 nation or resultant frustration for lack of promotional avenues is very common in career service.

There is selection grade for District Judges.

There is senior time scale in Indian Administrative Service.

There is super time scale in other like services.

The entitlement to these higher pay scales depends upon seniority cum merit or merit cum seniority.

The differentiation so made in the same cadre will not amount to discrimination.

The classification based on experience is a reasonable classification.

It has a rational nexus with the object thereof.

To hold otherwise, it would be detrimental to the interest of the service itself.

In All lndia Customs and Central Excise Stenographers Recognised) and Others vs Union of India and Others, [1988] 2 Judgments Today SC p. 5 19, Sabyasachi Mukherjee, J. said: "There may be qualitative difference as regards relia bility and responsibility.

Functions may be the same but the responsibilities make a difference.

One cannot deny that often the difference is a matter of degree and that there is an element of value judgment by those who are charged with the administration in fixing the scales of pay and other conditions of service.

So long as such value judgment emphasise that equal pay for equal work is a concomitant of Article 14 of the Constitution.

But it follows naturally that equal pay for unequal work will be a negation of that right." And said: "The same amount of physical work may entail different quality of work, some more sensitive.

some requiring more tact, some less it varies from nature and culture of employment.

The problem about equal pay cannot always be translated into a mathematical formula.

If it has a rational nexus with the object to be sought for, as reiterated before a certain amount of value judgment of the administrative authorities who are charged with fixing the pay scales has to be left with them and it cannot be interfered with by the Court unless it is demonstrated that either it is irrational or based on no basis or arrived mala fide either in law or in fact.

" PG NO 305 In the present case, all Bench Secretaries may do the same work, but their quality of work may differ.

Under the rules framed by the Chief Justice of the High Court, Bench Secretaries Grade I are selected by a Selection Committee.

The selection is based on merit with due regard to seniority.

They are selected among the lot of Bench Secretaries Grade II.

When Bench Secretaries Grade II acquire experience and also display more merit, they are appointed as Bench Secretaries Grade I.

The rules thus make a proper classification for the purpose of entitlement to higher pay scale.

The High Court has completely overlooked the criterion provided under the Rules The merit governs the grant of higher pay scale and that merit will be evaluated by a competent authority.

The classification made under the Rules, therefore, cannot be said to be violative of the right to have equal pay for equal work.

After the argument was concluded in this appeal, counsel on both sides brought to our attention that the State Government has granted uniform pay scale of Rs.1600 2950 to both the grades of Bench Secretaries with effect from January 1, 1986.

We may make it clear that this decision of ours shall not affect the Bench Secretaries to get that pay scale accordingly with effect from January 1, 1986.

In the result, we allow the appeal and set aside the judgment of the High Court.

S.L. Appeal allowed.

Summary: Prior to 1955, the Bench Secretaries in the Allahabad High Court were on a higher pay scale than that of the Section Officers.

Summary: In 1965, the State Government appointed a Pay Rationalisation Committee to consider the duties and responsibilities of different categories of posts and recommend changes.

Summary: The Committee recommended for the Bench Secretaries a pay scale lower than that of the Section Officers.

Summary: The Bench Secretaries made a representation to the Government that they be put at par with the Section Officers if not on a higher scale.

Summary: The Government appointed Pay Commission (l971 72).

Summary: The Pay Commission did not accept the claim of the Bench Secretaries.

Summary: The Bench Secretaries again moved the Government reiterating their demand, whereupon an "Anomalies Committee" was constituted.

Summary: The Committee rejected the claim of the Bench Secretaries for placing them at par with the Section Officers, but suggested that ten posts of Bench Secretaries be upgraded.

Summary: The Government accepted the recommendation and issued orders upgrading ten posts of Bench Secretaries to be called Bench Secretaries grade I, giving the nomenclature of Bench Secretaries grade Il to the rest of Secretaries.

Summary: The Bench Secretaries grade II moved the High Court under Article 226 of the Constitution, challenging the bifurcation of their cadre into grade I & grade 11.

Summary: The High Court quashed the notification which created Bench Secretaries grade 1.

Summary: The State of l, '.P., aggrieved by the decision of the High Court, appealed to this Court.

Summary: PG NO 288 PG NO 289 Two questions arose for consideration (i) whether the Bench Secretaries were entitled to pay scales admissible to Section officers, and (11) whether the creation of two grades with different pay scales in the cadre of Bench Secretaries doing the same or similar work was violative of the "equal pay for equal work".

Summary: Allowing the appeal, the Court, HELD:(I) It requires of duties and responsibilities of the respective posts.

Summary: Functions of two posts may appear to be the same or similar, but there may be a difference in the performance.

Summary: Quantity of work may be the same but quality may be different.

Summary: The equation of posts of equation of pay must be determined by expert bodies, like pay commissions.

Summary: If there is any determination by a Commission or Committee, the Court should normally accept it and not tinker with it unless it is shown to be made with extraneous consideration.

Summary: [298G H;299A B] The Bench Secretaries were paid more emoluments than the section Officers, but it was not known on what basis and how they were treated superior to Section Officers.

Summary: The Successive Pay Commission and the Pay Rationalisation Committee found no support to their superior claim.

Summary: The Court could not go against that opinion.

Summary: The Bench Secretaries could as of right the pay scale admissible to the Section Officers.

Summary: [299C D] (2) The second question formulated affected the civil services in general.

Summary: All the Bench Secretaries concerned were indisputably having the same duties.

Summary: They had been bifurcated into two grades with different pay scales grade I with higher pay scale and grade II which was said to offend the constitutional principle of "equal pay for equal work".

Summary: [299E G] Article 39(d) of the Constitution, which proclaims "equal pay for equal work" and other like provisions in the Directive Principles, are rooted in Social Justice, intended to bring about a socio economic trans formation in society.

Summary: In matters of employment, it must be ensured that there is no exploitation of the poor and ignorant.

Summary: It is the duty of the State to see that the under privileged or weaker section get their dues.

Summary: Against this background the principle of "equal pay for equal work" has to be construed.

Summary: This principle has no mechanical application in every ca8e of similar work.

Summary: It has to be read into Article 14 of the Constitution, which permits reasonable classification founded on different basis.

Summary: [303C E] PG NO 290 The classification can be based on some qualities or characteristics of persons grouped together and not in others left out.

Summary: Those qualities or characteristics must have a reasonable relation to the object to be achieved.

Summary: In service matters, merit or experience could be the proper basis for classification to promote efficiency.

Summary: It cannot be denied that the quality of work performed by persons of longer experience is Superior to the work of new comers.

Summary: Higher pay scale to avoid stagnation or resultant frustration for lack of promotional evenues is common in career service.

Summary: Entitlement to higher pay scales depends upon seniority cum merit or merit cum seniority.

Summary: The differentiation so made in the same cadre will not amount to discrimination.

Summary: Classification based on experience is a reasonable classification having a rational nexus with the object thereof.

Summary: To hold otherwise, would be detrimental to the interest of the Service itself.

Summary: [303F H; 304A B] The Bench Secretaries might do the same work, but their quality of work might differ.

Summary: The Rule framed by the Chief Justice of the High Court make a proper classification for the purpose of entitlement to higher pay scale.

Summary: The High Court overlooked the criterion provided under the Rules.

Summary: Merit governs the grant of higher pay scale.

Summary: Classification made under the Rules could not be said to be violative of the right to have equal pay for equal work.

Summary: [305A C] Randhir Singh vs Union of India & Ors.

Summary: , ; ;Ram Chandra vs Union of lndia; , ; P. Savita vs Union of India, [1985] Suppl.

Summary: (1) SCR 101; Dhirendra Chamoli & Anr.

Summary: vs State of U.P., ; Surinder Singh vs Engineer in Chief, CPWD, ; R.D. Gupta & Ors.

Summary: vs Lt. Governor of Delhi, ; ; Bhagwan Das & Ors.

Summary: vs State of Haryana, [1987] 4 SCC 634; National Museum Non Gazetted Employees Association & Anr.

Summary: vs Union of India, (WP No. 1230 of 1987 disposed of by the Supreme Court on 10.2.1988); Jaipal & Ors.

Summary: vs State of Haryana, (WP No. 455 and connected petitions of 1987 disposed of by the Supreme Court on 2.6.1988); Y.K. Mehta vs Union of India, (W P No. 1239 of 1979 and connected petitions disposed of bay supreme Court on 26.8.1988); Keshavananda Bharati vs State of Kerala, [1973] 4 SCC 225 at para 712; All India Customs and Central Excise Stenographers (Recognised) and Others vs Union of India & Ors., [1988] (2) Judgments Today SC p. 519, referred to.


ivil Appeal Nos.

1025 26 of 1978.

Appeals by special leave from the judgment order dated the 15th April, 1978 of the Madhya Pradesh High Court in Misc.

Petition Nos. 61 and 62/78 respectively.

With Civil Appeal No. 213 of 1979 6 Appeal by special leave from the judgment and order dated the 15th April, 1978 of the Madhya Pradesh High Court in Misc.

Petition o.555 of 1977.

L.N. Sinha, Attorney General, R. B. Datar and Miss A. Subhashini for the Appellants.

Y.S. Dharamadhikari, N. M. Ghatate and section V. Deshpande for the Respondent.

Y.S. Chitale, Suresh Sethi and section K. Bhattacharya for the applicant intervener Municipal Corpn.

of Delhi.

Altaf Ahmed for the applicant intervener J & K State Agro.

Industrial Corpn.

Ltd. section K. Gambhir for the applicant intervener State of M.P.

The Judgment of the Court was delivered by CHANDRACHUD, C.J.

These appeals by special leave involve the question of the legality of the demand for Property tax made by respondent 1 on the appellant Companies.

Civil Appeal No. 213 of 1979 filed by the Bharat Aluminium Company Ltd. arises out of Misc.

Petition No. 555 of 1977 filed by it in the High Court of Madhya Pradesh under Article 226 of the Constitution.

Respondent 1 is the Special Area Development Authority, Korba, District Bilaspur, M.P., respondent 2 is its Chairman and respondent 3 is the State of Madhya Pradesh.

Since the three appeals raise similar questions, we will refer to the facts of Civil Appeal No. 213 of 1979 only.

Civil Appeals Nos. 1025 and 1026 of 1978 are by Western Coalfields Ltd. The appellant, Bharat Aluminium Company Ltd., is a Government Company incorporated under the , the entire share capital being owned by the Government of India.

Respondent 1, the Special Area Development Authority for the Korba Special Area, is constituted under section 65 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam (23 of 1973), referred to hereinafter as 'the Act of 1973 '.

That Act was passed by the Madhya Pradesh Legislature in order "to make provision for planning and development and use of land; to make better provision for the preparation of development plans and zoning plans with a view to ensuring that town planning schemes are made in a proper manner and their execution is made effective; to constitute Town 7 and Country Planning Authority for proper implementation of town and country development plan; to provide for the development and administration of special areas through Special Area Development Authority; to make provision for the compulsory acquisition of land required for the purpose of the development plans and for purposes connected with the matters aforesaid".

Chapter VIII of the Act, consisting of sections 64 to 71, is entitled "Special Areas".

Section 64 empowers the State Government to declare any area as a special area by issuing a notification.

Section 55 provides that for every Special Area there shall be a Special Area Development Authority consisting of a Chairman and such other members as the Government may determine from time to time.

The Chairman and the members of the Development Authority are appointed by the Government.

Section 68, which prescribes the functions of the Development Authority, lays down by clauses (v) and (vi) that the Development Authority shall make provision for the municipal services and municipal management of the Special Area.

Section 69, by clauses (c) and (d), confers upon the Development Authority powers for the purpose of municipal administration and for the purpose of taxation.

These two clauses of section 69 and clauses (v) and (vi) of section 68 were inserted in their present shape by Ordinance 26 of 1975 which came into force on February 27, 1976.

The Ordinance was replaced by the Madhya Pradesh Nagar Tatha Gram Nivesh (Sanshodhan) Adhiniyam, 1976 (6 of 1976).

Section 69(d) of the Act of 1973 reads thus: "69.

Powers: The Special Area Development Authority shall (d) for the purpose of taxation have the powers which is municipal corporation or a municipal council has, as the case may be, under the Madhya Pradesh Municipal Corporation Act, 1956 (No. 23 of 1956) or the Madhya Pradesh Municipalities Act, 1961 (No. 37 of 1961), (a) where the municipal corporation of municipal council existed in such area prior to its designation as special area under section 64, according to the municipal law by which such special area was governed, and (b) where no municipal corporation or municipal council existed in such area prior to its designation as special area under section 64, according to such of the aforesaid Acts as the State Government may direct." 8 Clauses (a) and (b) above are sub clauses of clause (d).

(They should better have not been so numbered alphabetically since the main clauses themselves are similarly numbered).

Since there was no Municipal Corporation or Municipal Council in the Korba Special Area prior to the constitution of the Development Authority, the Government was required under sub clause (b) above to direct whether the Madhya Pradesh Municipal Corporation Act, 1956, or the Madhya Pradesh Municipalities Act, 1961, shall apply to the Korba Special Area for the purposes of clauses (v) and (vi) of section 68 and clauses (c) and (d) of section 69.

Such a direction was first issued by Notification dated January 28, 1976 published in the Government Gazette, dated February 27, 1976 by which the Development Authority, Korba, was directed to exercise the powers and perform the functions of a Class I Municipality constituted under the Madhya Pradesh Municipality Act, 1961.

This Notification became effective from February 27,1976 from which date Ordinance No. 26 of 1975 was made effective.

By another Notification, dated March 15, 1977, published in Government Gazette, dated July 15, 1977, the Development Authority, Korba, was directed under the aforesaid clauses of sections 68 and 69 to exercise the powers and perform the functions under the Madhya Pradesh Municipal Corporation Act, 1956.

Section 127(1)(i) of the Madhya Pradesh Municipalities Act, 1961 empowers a municipal council to impose, in the whole or any part of the municipality, "a tax payable by the owners of houses, buildings or lands situated within the limits of Municipality with reference to annual letting value of the house, building or land called property tax".

The corresponding provision in the Madhya Pradesh Municipal Corporation Act, 1956 is section 132 (1)(a).

It says that "the Corporation shall impose a tax payable by the owners of buildings or lands situated within the city with reference to the gross annual letting value of the building or land called the property tax".

The procedure for imposition of taxes is contained in section 129 of the Municipalities Act and section 133 of the Municipal Corporation Act.

In 1964, the Madhya Pradesh State Legislature had enacted the Madhya Pradesh Nagariya Sthawar Sampatti Kar Adhiniyam, which was made applicable to the whole State, including the urban areas.

By section 36 of the aforesaid Adhiniyam, local authorities were prohibited from recovering the property tax from November 24, 1970.

9 Towards the beginning of 1976, the Government decided to abolish octroi tax and to impose in its place a 'tax on the entry of goods '.

To compensate the municipal councils and the municipal corporations for the loss arising from the abolition of the octroi tax, the Government decided to confer powers on these bodies for levying property tax.

For conferring powers to levy tax on the entry of goods in place of octroi tax, the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhyadesh, 1976 (6 of 1976) was promulgated.

For conferring powers to levy property tax, Ordinance No. 4 of 1976 was promulgated.

Both of these Ordinances were published in the Madhya Pradesh Gazette, dated April 30, 1976 from which date they came into force.

Ordinance No. 4 of 1976 inserted certain provisions in the Municipalities Act and the Municipal Corporation Act.

This ordinance was replaced by Act No. 50 of 1976.

By section 1(2) of that Act, the provisions inserted in the Municipalities Act and the Municipal Corporation Act, with which we are concerned, were deemed to have come into force with effect from April 1, 1976.

Section 127A which was inserted in the Municipalities Act for imposition of property tax reads as follows, in so far as relevant: "127A. (1) Notwithstanding anything contained in this chapter, as and from the financial year 1976 77, there shall be charged, levied and paid for each financial year a tax on the lands or buildings or both situate in a municipality other than class IV municipality at the rate specified in the table below: (i) where the annual letting 6 per centum value exceeds Rs. 1,800 of the annual but does not exceed letting value.

Rs. 6,000.

(ii) X X X X X X (iii)X X X X X X (iv) X X X X X X (v) where the annual letting 20 per centum value exceeds of the annual Rs. 24,000 letting value (2) The property tax levied under sub section (1) shall not be leviable in respect of the following properties, namely: 10 (a) building and lands owned by or vesting in (i) the Union Government; (ii) the State Government; (iii)the Council.

" Similar provisions were inserted in sections 135 and 136 of the Municipal Corporation Act.

On June 24, 1976, respondent 1 (the Special Area Development Authority, Korba) entered into an agreement with the appellant Company under which the Company agreed to contribute a sum of Rupees three lakhs annually to the "seed capital" of the Authority in consideration of the Authority agreeing not to exercise its power of taxation or of levying any other charges on the assets and activities of the Company under the Act of 1973 as amended from time to time or under any other Act or notification.

The agreement was to remain in force for a period of ten years beginning from the calendar year 1976 and the annual payments due from 1977 were to be made in January every year.

The appellant Company paid the contribution for the year 1976 as agreed.

In the same year, the Company was called upon by the Sales Tax authorities to pay the tax on entry of goods which was introduced in substitution of the octroi tax.

While the Company was pursuing that matter with the State Government, contending that it was not liable to pay the entry tax by reason of the aforesaid agreement, on January 4, 1977 respondent 1 made a further demand of Rs. 3 lakhs on the Company for contribution for the year 1977.

That amount not having been paid as provided in the agreement, respondent 1 terminated the agreement by its letter dated February 4, 1977.

The Company sent a cheque for Rs. 3 lakhs to respondent 1 on April, 28, 1977.

By a notice issued under section 65 of the Act of 1973 on February 21,1977 and by another notice issued under section 164(3) of the Madhya Pradesh Municipalities Act 1961 on April 15, 1977, the Chief Executive Officer of respondent 1 called upon the Company to pay a sum of Rs. 13,22,160 by way of property tax for the year 1976 77.

By a letter dated May 21, 1977 respondent 1 reduced the demand by Rs. 3 lakhs being the amount paid by the Company by way of contribution for the year 1977, under the agreement of 1976.

On July 16, 1977 the Company was called upon to pay a further sum of Rs. 13,65,673.50 as property tax for the year 1977 78.

11 The appellant Company disputed its liability to pay the aforesaid amounts on the grounds, principally, that no tax was leviable on its property since the Company was owned wholly by the Government of India and that respondent 1 was estopped from levying the property tax by reason of the agreement of 1976.

Having failed to persuade respondent 1 to accept its point of view, the Company filed o Writ Petition in the Madhya Pradesh High Court asking that the demands be quashed.

Civil Appeal No. 213 of 1979 by special leave is directed against the dismissal of the Writ Petition.

In the other two appeals (Nos. 1025 and 1026 of 1978), the appellant, Western Coalfields Ltd., is also a hundred per cent undertaking of the Government of India.

That Company has been called upon by respondent 1 to pay property tax for the years 1976 77 and 1977 78 in the sum of Rs. 3,71,461 for each year.

The Writ Petitions (61 and 62 of 1978) filed by it were dismissed by the High Court, following the judgment delivered in the Writ Petition filed by the Bharat Aluminium Company Ltd. Civil Misc.

Petitions Nos.

13211 of 1979 and 3767 of 1980 are for intervention by the Jammu and Kashmir State Agro Industries Corporation Ltd. and the Delhi Municipal Corporation respectively.

The Delhi High Court has held in L.P.A. 105 of 1979 that the Delhi Municipal Corporation has the power to levy property tax on the property of the Jammu and Kashmir State Agro Industries Corporation Ltd., whose share capital is owned by the State of Jammu and Kashmir and the Union of India in the proportion of 51% and 49% respectively.

In Special Leave Petition No. 10688 of 1979 filed against the judgment, the question raised is whether the property of a public corporation owned wholly by the State Government and the Union Government is exempt from taxes by reason of articles 285 and 289 of the Constitution.

We have allowed both the parties to intervene in these appeals.

The learned Attorney General, who appears on behalf of the appellants, has raised four or five principal points, any one of which, if accepted, will result in the success of these appeals.

However, we are unable to accept any of these.

The first contention of the learned Attorney General is that respondent I can exercise only such powers to levy property tax as the Municipal Corporation or the Municipal Council had under the Madhya Pradesh Municipalities Corporation Act, 1956, or the Madhya Pradesh Municipalities Act, 1961, as these Acts stood on 12 February 27, 1976, when clause (d) was inserted in its present form in section 69 of the Act of 1973.

It is urged that the provisions conferring powers of taxation under the aforesaid two Acts must be taken to have been incorporated in section 69(d) of the Act of 1973 and any subsequent change in those provisions by amendment of the two Acts cannot be availed of by respondent 1.

Section 127A and section 135 which, by their own force, create and levy the charge of property tax were inserted in the Municipalities Act and the Municipal Corporation Act respectively with effect from April 1, 1976, that is, subsequent to the insertion of clause (d) in section 69 of the Act of 1973.

Relying on this, it is argued that respondent 1 was incompetent to exercise the powers of the Municipality or the Municipal Corporation under section 127A of the Municipalities Act or section 135 of the Municipal Corporation Act.

The answer to this contention will depend mainly upon whether the provisions of the Municipalities Act and the Municipal Corporation Act were incorporated into the Act of 1973 by its section 69(d).

It is well settled that if an earlier legislation is incorporated into a later legislation, the provisions of earlier law which are incorporated into the later law become a part and parcel of the later law.

Therefore, amendments made in the earlier law after the date of incorporation cannot, by their own force, be read into the later law.

That is because the legislature, which adopts by incorporation the existing provisions of another law, cannot be assumed to intend to bind itself to all future amendments or modifications which may be made in the earlier law.

In other words, the incorporating Act does nothing more than borrow certain provisions of an existing Act and instead of setting out, verbatim, those provisions in its own creation, refers to them as a matter of convenience in the mode of drafting.

(See Secretary of State for India in Council vs Hindustan Co operative Insurance Society Limited; Craies on Statute Law, 7th Edition, pages 360 361.) The principle, broadly, is that where a statute is incorporated by reference into a second statute, the repeal of the first statute by a third does not affect the second (see Clarke vs Bradlaugh).

Likewise, logically, where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, 13 can be deemed to be incorporated in it.

(see Secretary of State for India in Council vs Hindusthan Cooperative Insurance Society Ltd).

(supra) But these rules are not absolute and inflexible.

In the case last cited, the Privy Council qualified its statement of the law by saying that the principle, that an amendment of the first law which is not expressly made applicable to the subsequent incorporating Act cannot be deemed to be incorporated into the second Act, applies "if it is possible for the subsequent Act to function effectually without the addition" (page 267).

Besides, as held by a Constitution Bench of this Court in the Collector of Customs, Madras vs Nathella Samathu Chetty & Anr.

the decision of the Privy Council could not be extended too far so as to cover every case in which the provisions of another statute are adopted by absorption (see page 837).

Finally, in State of Madhya Pradesh vs M. V. Narasimhan this Court held, after an examination of the relevant decisions, that the broad principle that where a subsequent Act incorporates provisions of a previous Act then the borrowed provisions become an integral and independent part of the subsequent Act and are totally unaffected by any repeal or amendment in the previous Act, is subject to four exceptions, one of which is that the principle will not apply to cases "where the subsequent Act and the previous Act are supplemental to each other".

Applying these principles, we are of the opinion that in the instant case, subsequent amendments made to the Municipal Corporation Act and the Municipalities Act will also apply to the power of taxation provided for in section 69(d) of the Act of 1973.

The Act of 1973 did not, by section 69(d), incorporate in its true signification any particular provision of the two earlier Acts.

It provides that, for the purpose of taxation, the Special Area Development Authority shall have the powers which a Municipal Corporation or a Municipal Council has under the Madhya Pradesh Municipal Corporation Act, 1956 or the Madhya Pradesh Municipalities Act, 1961.

The case therefore is not one of incorporation but of mere reference to the powers conferred by the earlier Acts.

As observed in Nathella Sampathu Chetty, there is a distinction between a mere reference to or a citation of one statute in another and an incorporation which in effect means the bodily lifting of the provisions of one enactment and making them part of another, so much so that the repeal of the former leaves the latter wholly untouched.

14 Section 69(d) of the Act of 1973 must accordingly be read to mean that respondent 1 shall have all the powers of taxation which a Municipal Corporation or a Municipal Council has for the time being, that is to say, at the time when respondent 1 seeks to exercise those powers.

The Act of 1973 does not provide for any independent power of taxation or any machinery of its own for exercising the power of taxation.

It rests content by pointing its finger to the provisions contained in the two Municipal Acts.

The three Acts are therefore supplemental, from which it must follow that amendments made to the earlier Acts after the enactment of section 69(d) shall have to be read into that section.

Without recourse to such a construction, the power of taxation conferred by that section will become ineffectual.

A reading of the reference to the two earlier Municipal Acts as a reference to those Acts as they stand at the time when the power of taxation is sought to be exercised by respondent 1, will not, possibly, cause repugnancy between the two earlier Acts on one hand and the Act of 1973 on the other, nor indeed will it cause any confusion in the practical application of the earlier Acts, because the Act of 1973 does not contain any independent provision or machinery for exercising the power of taxation.

The first contention of the Attorney General must therefore fail.

The second contention is that assuming that section 127A of the Municipalities Act or section 135 of the Municipal Corporation Act, which were introduced by an amendment made after the enactment of section 69(d), can be invoked for levying the property tax, respondent 1 cannot impose that tax without following the procedure prescribed by sections 129 and 133 of the aforesaid Acts, respectively.

This contention is devoid of substance.

Sections 127A and 135 create, by their own force, the liability to be brought to property tax and the right to levy that tax.

They provide: Notwithstanding anything contained in this chapter, as and from the financial year 1976 77, there shall be charged, levied and paid for each financial year a tax on the lands or buildings or both. .at the rate specified in the table below:" Nothing further is required to be done by the Municipality or the Municipal Corporation in order to impose the property tax and therefore the procedure preliminary to the imposition of other taxes which is prescribed by sections 129 and 133 of the two Acts, can 15 have no application to the imposition of the property tax.

Apart from this the position is put beyond doubt by the language of sections 129 and 133 of two Acts.

Section 129 of the Madhya Pradesh Municipalities Act prescribes the procedure for "the imposition of any tax under section 127".

Similarly section 133 of the Madhya Pradesh Municipal Corporation Act prescribes the procedure for "the imposition of any tax under section 132".

The property tax is imposed by respondent 1 under section 127A of the Municipalities Act and section 135 of the Municipal Corporation Act.

It is not imposed under section 127 of the former Act or section 132 of the latter Act.

It is therefore not necessary to follow the procedure prescribed by sections 129 and 133 of the respective Acts.

This position is made clear, out of abundant caution, by clause (4) of section 133 of the Municipal Corporation Act, which provides that nothing contained in section 133 shall apply to the tax mentioned in clause (a) of sub section (1) of section 132, which shall be charged and levied in accordance with section 135.

Section 132(1)(a) refers to property tax.

The learned Attorney General contends that the taxing authority must all the same apply its mind to the question whether it wants to bring to tax the land or the building or both.

It is not possible to accept this submission because sections 127A and 135 of the two Acts in question leave no such choice open to the taxing authority.

The obligation which the statute places upon it is to impose tax on lands where there are lands only and they can be taxed, on buildings where buildings alone can be brought to tax and on both lands and buildings where lands are built upon and both can be brought to tax.

This is not, as said by the Attorney General rationalising the taxing power.

What we have said is the plain meaning of the taxing provision.

The third contention of the Attorney General flows from the provisions of article 285(1) of the Constitution which says that the property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State.

Section 127A(2) of the Madhya Pradesh Municipalities Act and section 136 of the Madhya Pradesh Municipal Corporation Act also provide that the property tax shall not be leviable, inter alia, on "buildings and lands owned by or vesting in the Union Government".

Relying on these provisions, it is contended by the Attorney General that since the appellant companies are wholly owned by the Government of India, the lands 16 and buildings owned by the companies cannot be subjected to property tax.

The short answer to this contention is that even though the entire share capital of the appellant companies has been subscribed by the Government of India, it cannot be predicated that the companies themselves are owned by the Government of India.

The companies, which are incorporated under the , have a corporate personality of their own, distinct from that of the Government of India.

The lands and buildings are vested in and owned by the companies: the Government of India only owns the share capital.

In Rustom Cavasjee Cooper vs Union of India (The Banks Nationalisation case) it was held: "A company registered under the is a legal person, separate and distinct from its individual members.

Property of the Company is not the property of the shareholders.

A shareholder has merely an interest in the Company arising under its Articles of Association, measured by a sum of money for the purpose of liability, and by a share in the profit.

" In Heavy Engineering Mazdoor Union vs The State of Bihar & Ors., the Heavy Engineering Corporation Limited was incorporated under the and its entire share capital was contributed by the Central Government.

It was therefore a Government Company under section 617 of the .

On the question as to whether the Corporation carried on an industry under the authority of the Central Government within the meaning of section 2(a) of the , it was held by this Court that an incorporated company has a separate existence and the law recognises it as a juristic person, separate and distinct from its members.

The mere fact that the entire share capital of the respondent company was contributed by the Central Government and the fact that all its shares were held by the President and certain officers of the Central Government did not make any difference to that position.

The decision of this Court in the Andhra Pradesh State Road Transport Corporation vs The Income tax Officer & Anr.

puts the matter beyond all doubt.

In that case, the Andhra Pradesh Road 17 Transport Corporation claimed exemption from taxation under article 289 of the Constitution by which, the property and income of a State is exempt from union taxation.

This Court, while rejecting the Corporation 's claim, held that though it was wholly controlled by the State Government it had a separate entity and its income was not the income of the State Government.

Gajendragadkar, C. J., while speaking for the Court, referred to the judgment of Lord Denning in Tamlin vs Hansaford in which the learned Judge observed: "In the eye of the law, the corporation is its own master and is answerable as fully as any other person or corporation.

It is not the Crown and has none of the immunities or privileges of the Crown.

Its servants are not civil servants, and its property is not Crown property.

It is as much bound by Acts of Parliament as any other subject of the King.

It is, of course, a public authority and its purposes, no doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government".

In Pennington 's Company Law, 4th Edition, pages 50 51, it is stated that there are only two decided cases where the court has disregarded the separate legal entity of a company and that was done because the company was formed or used to facilitate the evasion of legal obligations.

The learned author, after referring to English and American decisions, has summed up the position in the words of an American Judge, Sanborn, J. to the effect that as a general rule, a corporation will be looked upon as a legal entity and an exception can be made "when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime", in which case, "the law will regard the corporation as an association of persons".

In cases such as those before us, there is no scope for applying the doctrine of lifting the veil in order to have regard to the realities of the situation.

The appellant companies were incorporated under the for a lawful purpose.

Their property is their own and it vests in them.

Under section 5(1) of the Coal Mines (Nationalisation) Act, 26 of 1973, which applies in the instant case, the right title and interest of a nationalised coal mine vest, by direction of the Central Government, in the Government company.

If the lands and building on which respondent 1 has imposed the 18 property tax cannot be regarded as the property of the Central Government for several other purposes like attachment and sale, there is no reason why, for taxing purposes, the property can be treated as belonging to that Government as distinct from the company which has a juristic personality.

The learned Attorney General resisted the taxation on the lands by contending that they belong to the Madhya Pradesh State Government and were taken on lease for a period of 30 years by the appellant companies.

It is urged that if at all the lands can be subjected to property tax, it is the State Government and not the appellant companies who can be called upon to pay that tax.

This contention does not appear to have been taken before the assessing authority.

No documents seem to have been filed before it to bear out facts which are sought to be placed before us nor indeed have we evidence before us to show that the lands belong to the State Government.

The appellants may, if so advised, raise this particular point in future assessments.

We would, however, like to draw attention to the Explanation to section 147 of the Madhya Pradesh Municipalities Act which says that though the property tax has to be paid by the owner of the land or building, as the case may be, for the purposes of that section a tenant of land or building or both, who holds the same under a lease for an agreed period with a convenant for its renewal thereafter, shall be deemed to be the owner thereof.

Section 141(1) of the Madhya Pradesh Municipal Corporation Act provides that the property tax shall be paid primarily by the owner.

By sub section (2) of section 141, the property tax levied on the owner can also be recovered from the occupier of the land or the building.

These provisions shall have to be borne in mind by the appellants before any attempt is made before the assessing authority to transfer or avoid the impost of the property tax.

Finally, the learned Attorney General raised a contention of fundamental importance which was not raised in the High Court.

The lands and buildings on which respondent 1 has imposed the property tax are used for the purposes of and are covered by coal mines.

Basing himself on that consideration the Attorney General argues: (1) By virtue of the declaration contained in section 2 of Mines and Minerals (Development and Regulation) Act, 1957, the legislative field covered by Entry 23, 19 List II passed on the Parliament by virtue of Entry 54, List I. (2) The Parliament enacted the Coal Mines Nationalisation Act, 1973 for acquisition of coal mines with a view to reorganising and reconstructing such coal mines so as to ensure the rational, coordinated and scientific development and utilisation of coal resources as best to subserve the common good.

(3) Under section 5 of the Nationalisation Act, the acquired properties were vested in a Government Company in order to carry out more conveniently the object of that Act, and for that purpose, the properties were freed from all encumbrances by section 6 of the Act.

(4) The taxing power of the State legislature must be construed as limited in its scope so as not to come in conflict with the power and function of the Union to regulate and develop the mines as envisaged by the Nationalisation Act.

(5) The impugned tax is manifestly an impediment in the discharge of the aforesaid function since it substantially increases the cost of the developmental activities.

The tax is not in the nature of a fee.

Apart from the fact that there is no data before us showing that the property tax constitutes an impediment in the achievement of the goals of the Coal Mines Nationalisation Act, the provisions of the M.P. Act of 1973, under which Special Areas and Special Area Development Authorities are constituted afford an effective answer to the Attorney General 's contention.

Entry 23 of List II relates to "Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union".

Entry 54 of List I relates to "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest".

It is true that on account of the declaration contained in section 2 of the Mines and Minerals (Development and Regulation) Act, 1957, the legislative field covered by Entry 23 of List II will pass on to Parliament by virtue of Entry 54, List I.

But in order to 20 judge whether, on that account, the State legislature loses its competence to pass the Act of 1973, it is necessary to have regard to the object and purpose of that Act and to the relevant provisions thereof, under which Special Area Development Authorities are given the power to tax lands and buildings within their jurisdiction.

We have set out the objects of the Act at the commencement of this judgment.

one of which is to provide for the development and administration of Special Areas through Special Area Development Authorities, Section 64 of the Act of 1973, which provides for the constitution of the special areas, lays down by sub section (4) that: Notwithstanding anything contained in the Madhya Pradesh Municipal Corporation Act, 1956, the Madhya Pradesh Municipalities Act, 1961, or the Madhya Pradesh Panchayats Act, 1962, the Municipal Corporation, Municipal Council, Notified Area Committee or a Panchayat, as the case may be, shall, in relation to the special area and as from the date the Special Area Development Authority undertakes the functions under clause (v) or clause (vi) of section 68 cease to exercise the powers and perform the function and duties which the Special Area Development Authority is competent to exercise and perform under the Act of 1973.

Section 68 defines the functions of the Special Area Development Authority, one of which, as prescribed by clause (v), is to provide the municipal services as specified in sections 123 and 124 of the Madhya Pradesh Municipalities Act, 1961.

Section 69, which defines the powers of the Authority, shows that those powers are conferred, inter alia, for the purpose of municipal administration.

Surely, the functions, powers and duties of Municipalities do not become an occupied field by reason of the declaration contained in section 2 of the Mines and Minerals (Development and Regulation) Act, 1957.

Though, therefore, on account of that declaration, the legislative field covered by Entry 23, List II may pass on to the Parliament by virtue of Entry 54, List I, the competence of the State Government to enact laws for municipal administration will remain unaffected by that declaration.

Entry 5 of List II relates to "Local Government, that is to say, the constitution and powers of municipal corporations and other local authorities for the purpose of local self Government".

It is in pursuance of this power that the State Legislature enacted the Act of 1973.

The power to impose tax on lands and buildings is derived by the State Legislature from Entry 49 of List II: "Taxes on lands and buildings".

The power of the municipalities to levy tax on lands and buildings has been conferred by the State Legis 21 lature on the Special Area Development Authorities.

Those authorities have the power to levy that tax in order effectively to discharge the municipal functions which are passed on to them.

Entry 54 of List I does not contemplate the taking over of municipal functions.

Shri Dharmadhikari, who appears on behalf of the respondents, has drawn our attention to the judgment of a Constitution Bench of this Court in H.R.S. Murthy vs Collector of Chittoor and Another, which provides a complete answer to the Attorney General 's contention.

In that case, under the terms of a mining lease, the lessee worked the mines and bound himself to pay a dead rent if he used the leased land for the extraction of iron ore and to pay surface rent in respect of the surface area occupied or used by him.

Demands were made upon the lessee for successive years for the payment of land cess under sections 78 and 79 of the Madras District Boards Act, 1920.

Those demands were challenged by the lessee on the ground, inter alia, that the provision imposing the land cess quoad royalty under the mining leases must be held to have been repealed by the Central Act viz. the Mines and Minerals (Regulation and Development) Act, 1958, and the .

This contention was repelled by this Court by holding that sections 78 and 79 of the Madras District Boards Act had nothing to do with the development of mines and minerals or their regulation.

The proceeds of the land cess were required to be credited to the District fund which had to be used for everything necessary for or conducive to the safety, health, convenience or education of the inhabitants or the amenities of local area concerned.

It was further held by the Court that the land cess was not a tax on mineral rights but was in truth and substance a "tax on lands" within the meaning of Entry 49 of the State List.

The reasoning adopted in this decision shows that it is not correct to say that the property tax provided for in the Act of 1973 is beyond the legislative competence of the State Legislature; that tax has nothing to do with the development of mines.

The power conferred by the State Legislature on Special Area Development Authorities to impose the property tax on lands and buildings is therefore not in conflict with the power conferred by the Coal Mines Nationalisation Act on the Union Government to regulate and develop the Coal mines so as to ensure rational and scientific utilisation of coal resources.

The paramount purpose behind the declaration contained in section 2 of the Mines and Minerals (Regulation and Develop 22 ment) Act, 1957 is not in any manner defeated by the legitimate exercise of taxing power under section 69(d) of the Act of 1973.

The decision of this Court in Baijnath Kedia vs State of Bihar & Ors., on which the learned Attorney General relies, is distinguishable.

In that case, the Bihar Government demanded dead rent, royalty and surface rent from the appellant contrary to the terms of his lease on the strength of the amended section 10(2) of the Bihar Land Reforms Act, 1950, and the amended Rule 20 of the Bihar Rules.

This Court held that the pith and substance of the amended section 10(2) fell within Entry 23 although it incidentally touched land and that, therefore, the amendment was subject to the overriding power of Parliament as declared in section 15 of the .

By the aforesaid declaration and the enactment of section 15, the whole of the field relating to minor minerals had come within the jurisdiction of Parliament and no scope was left for the enactment of the second proviso to section 10 of the Bihar Land Reforms Act.

The second sub rule added to Rule 20 was held to be without jurisdiction for the same reason.

That the declaration in section 2 of the does not result in invalidation of every State legislation relating to mines and minerals is demonstrated effectively by the decision in State of Haryana & Anr.

vs Chanan Mal.

The Haryana State Legislature passed the Haryana Minerals (Vesting of Rights) Act, 1973, under which two notifications were issued for acquisition of right to saltpeter, a minor mineral, and for auctioning certain saltpeter bearing areas.

It was held by this Court that the Haryana Act was not in any way repugnant to the provisions of the Act of 1957 made by Parliament and that the ownership rights could be validly acquired by the State Government under the State Act.

The decision of a Constitution Bench of this Court in The Ishwari Khetan Sugar Mills (P) Ltd. vs The State of Uttar Pradesh & Ors., is even more to the point.

In that case, 12 sugar undertakings stood transferred to and were vested in a Government undertaking under the U.P. Sugar Undertakings (Acquisition) Ordinance, 1971, which later became an Act.

It was contended on behalf of 23 the sugar undertakings that since sugar is a declared industry under the Industries (Development and Regulation) Act, 1951, Parliament alone was competent to pass a law on the subject and the State Legislature had no competence to pass the impugned Act by reason of Entry 52, List I read with Entry 24, List II.

The majority, speaking through one of us, Desai J., held that the legislative power of the State under Entry 24, List II, was eroded only to the extent to which control was assumed by the Union Government pursuant to the declaration made by the Parliament in respect of a declared industry and that the field occupied by such enactment was the measure of the erosion of the legislative competence of the State legislature.

Since the Central Act was primarily concerned with the development and regulation of declared industries and not with the ownership of industrial undertakings, it was held that the State legislature had the competence to enact the impugned law.

Justice Pathak and Justice Koshal, who gave a separate judgment concurring with the conclusion of the majority, preferred to rest their decision on the circumstance that the impugned legislation fell within Entry 42, List III 'Acquisition and requisition of property ' and was therefore within the competence of the State Legislature.

These are the main points argued by the learned Attorney General on behalf of the appellant Companies.

In the High Court, an additional point was taken, based upon the agreement dated June 24, 1976, which was entered into between the appellant Companies and respondent 1.

It was contended in the High Court that respondent 1 had waived its power of taxation by that agreement and, therefore, the imposition of property tax was invalid.

The High Court has given weighty reasons for rejecting that argument and we endorse those reasons.

We adopt, particularly, the reasoning of the High Court that in the meeting of January 29, 1976, respondent 1 had decided to give up its right to impose the Octroi tax only.

The Chairman of respondent 1, therefore, acted beyond the scope of his authority in entering into the agreement with the appellant Companies, under which respondent 1 bound itself not to impose any tax whatsoever.

For these reasons the appeals fail and are dismissed with costs.

N.V.K. Appeals dismissed.

Summary: The Madhya Pradesh Municipalities Act, 1961 by section 127 (1) (i) empowered a municipal council to impose, in the whole or any part of the municipality, "a tax payable by the owners of houses, buildings or lands situated within the limits of Municipality with reference to annual letting value of the house, building or land called property tax".

Summary: The corresponding provision in the Madhya Pradesh Municipal Corporation Act, 1956 was section 132(1)(a), and it provided that "the Corporation shall impose a tax payable by the owners of buildings or lands situated within the city with reference to the gross annual letting value of the building or land called the property tax".

Summary: The procedure for imposition of taxes was spelt out in section 129 of the Municipalities Act and section 133 of the Municipal Corporation Act.

Summary: Section 127A was inserted in the Municipalities Act for imposition of property tax and provided by sub clause (1) that as and from the financial year 1976 77 there shall be charged, levied and paid for each financial year a tax on the lands or buildings or both situated in a municipality at specified rates.

Summary: Sub clause (2) exempted properties owned by or vesting in the Union Government, State Government or the Council from the levy.

Summary: Similar 2 provisions were inserted in sections 135 and 136 of the Municipal Corporation Act.

Summary: Respondent No. 1 was constituted the Special Area Development Authority under section 65 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam (23 of 1973).

Summary: Clauses (c) and (d) of section 69 of the Act conferred upon the Development Authority powers for the purpose of municipal administration and for the purpose of taxation.

Summary: These clauses were inserted by Ordinance 26 of 1975 which came into force on February 27, 1976.

Summary: The Ordinance was replaced by the Madhya Pradesh Nagar Tatha Gram Nivesh (Sanshodhan) Adhiniyam 1976 (6 of 1976).

Summary: On June 24, 1976 respondent 1 entered into an agreement with the appellant company under which the company agreed to contribute a sum of rupees 3 lakhs annually to the "seed capital" of the Authority in consideration of the Authority agreeing not to exercise its power of taxation or of levying any other charges on the assets and activities of the company.

Summary: The agreement was to remain in force for a period of ten years beginning from the calendar year 1976 and the annual payments due from 1977 were to be made in January every year.

Summary: The appellant company paid the contribution for the year 1976.

Summary: In the same year the company was called upon by the Sales Tax authorities to pay "the tax on the entry of goods" which was introduced by the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhyadesh 1976 in substitution of octroi tax.

Summary: While the company was pursuing that matter with the State Government, contending that it was not liable to pay the entry tax by reason of the agreement, on January 4, 1977 respondent 1 made a further demand of Rs. 3 lakhs on the company for contribution for the year 1977.

Summary: That amount not having been paid as provided in the agreement, respondent 1 terminated the agreement by its letter dated February 4, 1977.

Summary: By a notice issued under section 65 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam 'Act of 1973 ' on February 21, 1977 and by another notice issued under section 164(3) of the Madhya Pradesh Municipalities Act 1961 on April 15, 1977, the Chief Executive Officer of respondent 1 called upon the company to pay a sum of about Rs. 13 lakhs by way of property tax for the year 1976 77.

Summary: On July 16, 1977 the company was called upon to pay a further sum of about Rs. 13 lakhs as property tax for the year 1977 78.

Summary: The company disputed its liability to pay on the ground that no tax was leviable on its property since the company was owned wholly by the Government of India and that respondent 1 was estopped from levying the property tax by reason of the agreement of 1976.

Summary: Having failed to pursuade respondent 1 to accept its point of view, and also having failed in the High Court the appellant company came to this Court in appeal.

Summary: In the appeals to this Court it was contended: (1) that respondent 1 can exercise only such powers to levy property tax as the Municipal Corporation or the Municipal Council had under the Madhya Pradesh Municipal Corporation Act, 1956 or the Madhya Pradesh Municipalities Act, 1961 as these Acts stood on February 27, 1976, when clause (d) was inserted in section 69 of the Act of 1973.

Summary: Section 127A and section 135 which create and levy the charge of property 3 tax having been inserted in the Municipalities Act and the Municipal Corporation Act respectively with effect from April 1, 1976 i.e. subsequent to the insertion of clause (d) in section 69 of the Act of 1973, Respondent 1 was incompetent to exercise the powers of the Municipality or the Municipal Corporation under section 127A of the Municipal Corporation Act or section 136 of the Municipal Corporation Act; (2) that respondent 1 cannot impose the property tax without following the procedure prescribed by section 129 of the Municipalities Act and section 133 of the Municipal Corporation Act; (3) that Article 285(1) of the Constitution envisages that the property of the Union shall save in so far as Parliament may by law otherwise provide be exempt from all taxes imposed by a State or by any authority within a State.

Summary: Section 127A(2) of the Madhya Pradesh Municipalities Act and section 136 of the Madhya Pradesh Municipal Corporation Act also provide that the property tax shall not be leviable, on "buildings and lands owned by or vesting in the Union Government".

Summary: The appellant companies being wholly owned by the Government of India, the lands and buildings owned by the companies cannot be subjected to property tax; (4) that the lands having been taken on lease for a period of 30 years by the appellant companies, it is the State Government and not the appellant companies who can be called upon to pay the tax; and (5) that Parliament enacted the Coal Mines Nationalisation Act, 1973 for acquisition of coal mines and utilisation of coal resources to subserve the common good.

Summary: The lands and buildings on which respondent 1 had imposed the property tax are used for the purposes of and are covered by coal mines.

Summary: The taxing power of the State legislature comes in conflict with the power and function of the Union to regulate and develop the mines as envisaged by the Nationalisation Act, and is an impediment since it substantially increased the cost of the developmental activities.

Summary: Dismissing the appeals, ^ HELD: (i) Section 69(d) of the Act of 1973 must be read to mean that respondent 1 shall have all the powers of taxation which a Municipal Corporation or a Municipal Council has at the time when respondent 1 seeks to exercise those powers.

Summary: [14 A] (ii) The Act of 1973 does not provide for any independent power of taxation or any machinery of its own for exercising the power of taxation.

Summary: It rests content by referring to the provisions contained in the two Municipal Acts.

Summary: The three Acts are supplemental, from which it must follow that amendments made to the earlier Acts after the enactment of section 69(d) shall have to be read into that section.

Summary: Without recourse to such a construction the power of taxation conferred by that section will become ineffectual.

Summary: [14 B C] (iii) A reading of the reference to the two earlier Municipal Acts as a reference to those Acts as they stand at the time when the power of taxation is sought to be exercised by respondent 1 will not cause repugnancy between the two earlier Acts on one hand and the Act of 1973 on the other, nor will it cause any confusion in the practical application of the earlier Acts, because the Act of 1973 does not contain any independent provision or machinery for exercising the power of taxation.

Summary: [14 D] 4 (iv) If an earlier legislation is incorporated into a later legislation, the provisions of earlier law which are incorporated into the later law become a part and parcel of the later law.

Summary: Therefore, amendments made in the earlier law after the date of incorporation cannot by their own force, be read into the later law.

Summary: That is because the legislature, cannot be assumed to intend to bind itself to all future amendments or modifications which may be made in the earlier law.

Summary: [12 D E] (v) Where a statute is incorporated by reference into a second statute, the repeal of the first statute by a third does not affect the second.

Summary: Likewise, where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, can be deemed to be incorporated in it.

Summary: [12G 13A] (vi) The broad principle that where a subsequent Act incorporates provisions of a previous Act then the borrowed provisions become an integral and independent part of the subsequent Act and are totally unaffected by any repeal or amendment in the previous Act, is subject to four exceptions, one of which is that the principle will not apply to cases "where the subsequent Act and the previous Act are supplemental to each other".

Summary: [13 D] Secretary of State for India in Council vs Hindustan Co operative Insurance Society, Limited, 58 Indian Appeals, 259, Clarke vs Bradlaugh, 69; Collector of Customs, Madras vs Nathella Samathu Chetty & Anr., ; and State of Madhya Pradesh vs M.V. Narasimhan, ; , referred to.

Summary: In the instant case, subsequent amendments made to the Municipal Corporation Act and the Municipalities Act will also apply to the power of taxation provided for in section 69(d) of the Act of 1973.

Summary: The Act of 1973 did not by section 69(d), incorporate in its true signification any particular provision of the two earlier Acts.

Summary: It provided that, for the purpose of taxation, the Special Area Development Authority shall have the powers which a Municipal Corporation or a Municipal Council has under the Madhya Pradesh Municipal Corporation Act, 1956 or the Madhya Pradesh Municipalities Act, 1961.

Summary: The case, therefore, is not one of incorporation but of mere reference to the powers conferred by the earlier Acts.

Summary: [13 E F] 2(i) Section 127A of the Municipalities Act and section 135 of the Municipal Corporation Act create by their own force, the liability to be brought to property tax and the right to levy that tax.

Summary: Nothing further is required to be done by the Municipality or the Municipal Corporation in order to impose the property tax.

Summary: The procedure preliminary to the imposition of other taxes which is prescribed by sections 129 and 133 of the two Acts, can have no application to the imposition of the property tax.

Summary: [14 F 15 A] (ii) The property tax is imposed by respondent 1 under section 127A of the Municipalities Act and section 135 of the Municipal Corporation Act.

Summary: It is not imposed under section 127 of the former Act or section 132 of the latter Act.

Summary: It is, therefore, not necessary to follow the procedure prescribed by sections 129 and 133 of the respective Acts.

Summary: [15 B C] 5 3.

Summary: Even though the entire share capital of the appellant companies has been subscribed by the Government of India, it cannot be predicated that the companies themselves are owned by the Government of India.

Summary: The companies, which are incorporated under the Companies Act, have a corporate personality of their own, distinct from that of the Government of India.

Summary: The lands and buildings, are vested in and owned by the companies; the Government of India only owns the share capital.

Summary: [16 A B] Rustom Cavasjee Cooper vs Union of India, ; , 555, Heavy Engineering Mazdoor Union vs The State of Bihar, , Andhra Pradesh State Road Transport Corporation vs The Income tax Officer & Anr. ; & Tamlin vs Hansaford referred to. 4.

Summary: The Explanation to section 147 of the Municipalities Act says that the property tax has to be paid by the owner of the land or building and that a tenant of land or building or both, who holds the same under a lease for an agreed period, shall be deemed to be the owner thereof.

Summary: Section 141(1) of the Municipal Corporation Act provides that the property tax shall be paid primarily by the owner.

Summary: By sub section (2) of section 141, the property tax levied on the owner can also be recovered from the occupier of the land or the building.[18D E] 5(i) The power conferred by the State Legislature on Special Area Development Authorities to impose the property tax on lands and buildings is not in conflict with the power conferred by the Coal Mines Nationalisation Act on the Union Government to regulate and develop coal mines so as to ensure rational and scientific utilisation of coal resources.

Summary: [21 G] (ii) The paramount purpose behind the declaration contained in section 2 of the is not in any manner defeated by the legitimate exercise of taxing power under section 69(d) of the Act of 1973.

Summary: [21 H 22A] H.R.S. Murthy vs Collector of Chitoor and Another, ; , State of Haryana & Anr.

Summary: vs Chanan Mal ; and The Ishwari Khetan Sugar Mills (P) Ltd. vs The State of Uttar Pradesh & Ors. ; referred to.

Summary: Baijnath Kedia vs State of Bihar & Ors.

Summary: [1970] 2 S.C.R. 100, distinguished.