Court rules 1943 agreement not law, allows octroi levy post-merger. Valid octroi recovery resolution. Appeal dismissed.

The court concluded that the agreement of 1943, which exempted the company from octroi, was not considered a law but a contract. The Municipal Committee had the authority to levy octroi after the merger of Nandgaon State with Madhya Pradesh, as it was no longer controlled by the Ruler or his agreement. The resolution to recover octroi from the appellant-company was deemed valid, and the demand was upheld. The appeal was dismissed with costs.

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Issues Involved:
1. Validity of the agreement of 1943 as a law.
2. Authority of the Municipal Committee to levy octroi.
3. Effect of the merger of Nandgaon State with Madhya Pradesh on the agreement.
4. Limitation period for the order passed by the Board of Revenue.

Detailed Analysis:

1. Validity of the Agreement of 1943 as a Law:
The appellant contended that the agreement of 1943, which exempted the company from octroi, operated as a law before the merger and must continue to govern the Municipal Committee until repealed or abrogated by suitable legislation. The court examined whether the agreement constituted a law or merely a consensual contract. It was argued that orders issued by an absolute monarch must be regarded as law, citing the case of Madhaorao Phalke v. State of Madhya Bharat. However, the court referred to the subsequent case of The Maharaja Shree Umaid Mills Ltd. v. Union of India, which clarified that an agreement cannot rank as a law enacted by the Ruler. The court concluded that the document of 1943 was intended to bind consensually and not by a dictate of the Ruler, and thus, it was not a law but a contract.

2. Authority of the Municipal Committee to Levy Octroi:
The appellant argued that the Municipal Committee had no power to rescind the exemption granted by the Ruler. The court observed that the Municipal Committee had already imposed octroi in the State, but the Ruler ordered the Committee not to collect the dues from the appellant-company because of the agreement. The court noted that the Dewan, who entered into the agreement, acted on behalf of the sovereign and not the Municipality. Therefore, the Municipal Committee's rules and bye-laws remained in suspense due to the Ruler's desire. After the merger, the Committee was no longer controlled by the Ruler or his agreement, and thus, the imposition of octroi began to take effect from the date determined by the Committee.

3. Effect of the Merger of Nandgaon State with Madhya Pradesh on the Agreement:
The court analyzed the effect of the merger of Nandgaon State with Madhya Pradesh on the agreement. It was noted that after the merger, the Municipal Committee was not controlled by the Ruler or his agreement. The Committee resolved to recover octroi from the appellant-company in accordance with the original imposition of the tax in the State. The court held that the resolution was neither a fresh imposition of octroi nor the cancellation of an exemption, as the Municipal Committee had not granted an exemption to the appellant-company. The resolution indicated that the Committee would recover octroi from a particular date, which was no longer affected by the will of the quondam sovereign.

4. Limitation Period for the Order Passed by the Board of Revenue:
The appellant contended that the order passed by the Board of Revenue was barred by time. However, the court noted that this point was properly abandoned by the appellant as it had no substance.

Conclusion:
The court concluded that the agreements culminating in the agreement of 1943 could not be regarded as law but only as agreements binding the sovereign as a contracting party and not the Municipal Committee. The Municipal Committee's resolution to recover octroi from the appellant-company was valid, and the demand was rightly made. The appeal was dismissed with costs.

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