1959 (10) TMI 43 - HC - Companies Law

Court rules tax by Municipal Board not a toll under U.P. Municipalities Act; writ of mandamus issued.

Hindustan Vanaspati Manufacturing Co., Ltd. Versus Municipal Board and Ors.

The court held that the tax imposed by the Municipal Board was not a toll under the U.P. Municipalities Act or the Constitution due to the lack of ... - Issues Involved:1. Whether the tax imposed by the Municipal Board on the appellant was a toll within the meaning of Clause (vii) of Section 128(1) of the U.P. Municipalities Act, 1916.2. Whether the Municipal Board provided sufficient consideration to justify the imposition of the toll.3. Whether the toll imposed on laden railway wagons entering the appellant's premises was valid under the Constitution and the U.P. Municipalities Act.4. Whether the imposition of the toll contravened Section 135 of the Indian Railways Act.Detailed Analysis:Issue 1: Whether the tax imposed by the Municipal Board on the appellant was a toll within the meaning of Clause (vii) of Section 128(1) of the U.P. Municipalities Act, 1916.The appellant, a limited company, disputed the Municipal Board's claim to levy a toll on railway wagons bringing supplies to its factory under Section 128(1)(vii) of the U.P. Municipalities Act, 1916. This section empowers a municipal board to impose a toll on vehicles and other conveyances, animals, and laden coolies entering the municipality. The appellant argued that the tax imposed was not a toll within the meaning of this section or Item No. 59 of List II of the Seventh Schedule to the Constitution, which also refers to 'tolls.'Issue 2: Whether the Municipal Board provided sufficient consideration to justify the imposition of the toll.The appellant contended that a toll requires some consideration moving to the public, such as the maintenance of roads or other services, which was wholly absent in this case. The Municipal Board argued that such consideration was not necessary. The common law recognizes two kinds of tolls: toll traverse and toll thorough. Toll traverse is a toll granted in consideration of the public passing over private land, while toll thorough is granted in consideration of maintaining a public road. The court examined various precedents, including Lord Pelham v. Pickersgill and Brett v. Beales, to determine that some consideration moving to the public is essential for a toll.Issue 3: Whether the toll imposed on laden railway wagons entering the appellant's premises was valid under the Constitution and the U.P. Municipalities Act.The court noted that the railway wagons entered the municipal limits via a branch line over land belonging to the Railway administration. The Municipal Board did not construct or maintain this branch line, and thus no consideration was provided by the Board. The court concluded that the tax imposed was not supported by any consideration and was therefore not a toll.Issue 4: Whether the imposition of the toll contravened Section 135 of the Indian Railways Act.The appellant argued that the toll was not a toll but a tax, and under Section 135 of the Indian Railways Act, the levy of taxes in respect of railways and from railway administrations in aid of local authority funds is regulated by specific rules. The court found that the toll was not charged from the railway administration but from the appellant, who brought the laden railway wagons into the municipality. The Assisted Railway Siding was for the firm's use and not for public carriage, thus not falling under the definition of 'railway' in the Indian Railways Act. Therefore, Section 135 did not bar the imposition of the toll on laden railway wagons entering the municipality.Judgment:The court concluded that the tax imposed by the Municipal Board was not a toll within the meaning of Clause (vii) of Section 128(1) of the U.P. Municipalities Act, 1916, or Item No. 59 of List II of the Seventh Schedule to the Constitution, as it lacked the necessary consideration moving to the public. The appeal was allowed, and the order refusing to grant the writ of mandamus was set aside. A writ in the nature of mandamus was issued, commanding the Municipal Board not to levy a toll upon the appellant company in respect of the entry of laden railway wagons by the Assisted Railway Siding into the appellant's premises.Separate Opinions:Raghubar Dayal, J.: Dissented, holding that the toll charged under Rule 1 of the Rules for the assessment and collection of tolls fell within the description of the word 'toll' in Clause (vii) of Section 128(1) of the Municipalities Act and Item No. 59, List II of Schedule VII of the Constitution. He argued that the general amenities provided by the Municipal Board could be considered sufficient consideration for the toll.Srivastava, J.: Agreed with Raghubar Dayal, J., stating that the toll was validly imposed under the statute and that general amenities provided by the Municipal Board constituted sufficient consideration. The appeal was dismissed with costs assessed at Rs. 500.