Does the jurisdiction of Civil Court u/s 9 of the Code of Civil Procedure, 1908 exten to entertaining, hearing and deciding any suit challenging vires of a statute or statutory provision, is the question which has arisen for decision in this appeal. If the answer be ''yes'', then how the Court, seized with such a suit has to act and proceed, is yet another question clinging with the tale of the earlier one.
The defendant/State has come up in second appeal aggrieved by the judgments and decrees of the two Courts below issuing an injunction in favour of the plaintiif/respondent restraining recovery of certain dues on account of sales tax assessed on the plaintiff.
It is not disputed that the plaintiff/respondent was a licensed dealer under Madhya Bharat Sales Tax Act, 1950 (hereinafter referred to as the "M. B. Act"). He dealt in cycles and cycle-parts. An amount of Rs. 151,85 for the assessment year 1955-56 and an amount of Rs. 954.51 for the year 1956-57 were outstanding against him, sought to be recovered by the Sales Tax authorities.
The case of the plaintiif/respondent was that he imported cycles and cycle-parts from places outside the State of Madhya Bharat which were liable to sales tax while similar articles manufactured within the State of Madhya Bharat and sold therein were not subject to sales tax. Such levy was discriminatory, also contravening the provisions of Articles 301 and not saved by Art. 304 of the Constitution of India. Such tax being ultra vires the Constitution, the Sales Tax authorities had no jurisdiction to assess and realise it.
The suit was contested by the State taking a plea that the impugned recovery was legal, not liable to be restrained, the sales tax assessed on the plaintiff being intravires the Constitution. It was also submitted that the suit was barred by the provisions contained in Section 17 of the M. B. Act and Section 37 of the M. P. General Sales Tax, Act, 1958 (hereinafter referred to as the" M. P. Act)".
At the stage of final arguments before the trial Court, implicit reliance was placed by the plaintiff on the law laid down by the Apex Court in State of Madhya Pradesh and another v, Bhailal Bhai AIR 1964 SC 1056. There, levy of sales tax on tobacco imported in Madhya Bharat was challenged on the ground that similar tax was not imposed on tobacco produced within the State of Madhya Bharat. It was complained that such a levy was discriminatory, also violative of Article 301 of the Constitution and was not saved under Article 304 (a) thereof. Their Lordships held :-
There can therefore be no escape from the con- elusion that similar goods manufactured or produced in the State of Madhya Bharat have not been subjected to the tax which tobacco leaves, manufactured tobacco and tobacco used for Bidi manufacturing, imported from other States have to pay on sale by the importer. This tax is therefore not within the saving provisions of Art. 304 (a). As already pointed out it contravenes the provisions of Art. 301 of the Constitution. The tax has therefore been rightly held, by the High Court to be invalid. It is clear that the assessment of tax under these notifications was thus invalid in law.
The plaintiff submitted that Bhailal Bhai''s case applied squarely to his case and that the sales tax imposed on the plaintiff being under similar set of notifications which has imposed sales tax on tobacco leaves, the recovery from the plaintiff should have been adjudged to be illegal and ultra vires the Constitution. The contention has prevailed with the trial Court: also with the lower appellate Court.
Two questions have arisen for decision in the appeal-
(i) Whether the suit as framed could have been entertained by the Civil Court in view of the provisions contained in Section 17 of M. B. Act and Section 37 of M. P. Act'' ?
(ii) Whether the Civil Court is competent to examine the vires of the sales tax imposed by notifications issued in exercise of the powers conferred by a legislative enactment ? Question No. 1
Section 17 of the M. B. Act reads as under :
17. Bar to certain proceedings. Save as in provided in Section 13, no assessment made and no order passed under this Act or the rules made thereunder by the assessing authority, appellate authority of the Commissioner shall be called into question in any Court, and save as is provided in Sections 11 and 12 no appeal or application for revision shall lie against any such assessment or order." Sections 11 and 12 provide for appeal and revision before the hierarchy of the sales tax authorities. Section 13 provides for statement of case by the Commissioner of Sales Tax to the High Court for opinion on any question of taw arising out of the order.
Section 37 of M. P. Act reads as under: -
37. Bar to certain proceedings. Save as provided in Section 44, no assessment order or the determination of liability to ray any tax or penalty or the recovery of any tax or penalty made under this Act or the rules made thereunder by the Commissioner or any person appointed under. Section 3 to assist him shall he called into question in any Civil Court and save as provided in Section 38 and 39, no appeal or application for revision shall lie against any such assessment or order.
A number of authorities have been cited laying down the principles as to when and when not a civil suit would lie in such matters. The authorities will be noticed and discussed at appropriate places.
All the suits of civil natures are triable by Civil Courts. Here law has to be seen with reference to the suits challenging recovery of sales tax. Admittedly the tax is imposed by some enactment in force for the time being. Such enactments mostly provide machinery and procedure for settlement of dispute touching the liability to levy and the recovery of tax levied. Thus the special acts provide for special tribunals for enforcement of rights and obligations arising thereunder. The broad proposition of law is well settled that ordinarily the person aggrieved must have recourse to the authorities and avail the remedy under the special act; however, where a special tribunal acts ultravires, or refuses to exercise its jurisdiction or acts malafides or arbitrarily or in violation of fundamental principles of natural justice or with perversity in exercise of the jurisdiction, the Civil Court has power to step in and grant relief. The real problem arises while applying the principle to the facts of an individual case.
The authorities galore from the Apex Court lay down the law and provide guidelines with clarity and procession. In
Whatever may have been the controversy earlier, their Lordships of the Supreme Court in the leading authority of
The following principles regarding exclusion of jurisdiction of Civil Court may be laid down :
(1) Where the statute gives a finality to the orders of the special tribunals the Civil Courts'' jurisdiction must be held to be excluded if there is adequate remedy to do what the Civil Court would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with of the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.
(2) Where there is an express bar of the jurisdiction of the Court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the Civil Court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the light or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in Civil Courts are prescribed by the said statute or not.
(3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals.
(4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit.
(5) Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected, a suit lies.
(6) Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry.
(7) An exclusion of jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set down apply.
Practically all the authorities available on the point were dealt with by their Lordships in Dhulabhai''s case (supra). Their Lordships applying the law to the facts of that case held that a suit seeking declaration that the provisions of law relating to assessment under M.B. Sales Tax Act, 1950 were ultra vires and for refund of the amount of the tax illegally collected was not barred by Section 17 of the M. B. Act.
The law laid down in Dhulabhai''s case (supra) has been reiterated in
To sum up, a mere challenge to the correctness of the assessment or a suit requiring adjudication upon the nature or character of the transaction-whether it would be taxable or not-is beyond the competence of the Civil Court, but a suit raising a question of constitutionality of any provision in or under the enactment would lie in a Civil Court.
The learned Government Advocate has relied on two Single Bench decisions of this Court, but they are besides the point. In Krishi Upaj Mandi Samiti Shivpuri v. Govind Oil Mills 1981 JLJ 313, as the facts stated in para 8 of the report show, the challenge was that the transaction of the nature entered in by the plaintiff was not liable to market-fee. In the State of M. P. v. Swastik Timber Suppliers 1981 11 MPWN 204 DB, also the dispute was as to the character of sale transaction and it Was held that wrong adjudication, in the order of sales tax authorities could not be said to be one without jurisdiction so as to be open to challenge in a Civil Court.
1. There is yet another approach to the problem. Their Lordships of the Supreme Court have held in
an authority created by a statute cannot question the vires of that statute or any of the provisions thereof whereunder it functions. It must act under the Act and not outside it. If it acts on the basis of a provision of the statute which is ultra vires, to that extent it would be acting outside the Act. In that event a suit to question the validity of such an order made outside the Act would certainly lie in a Civil Court.
The view are reiterated in
2 A full Bench of the High Court of Allahabad in J. k. Manufacturers I. S. T. O. Sector II, Kanpur and Others AIR 1670 All 362 held :
The authority created by a statute cannot question the validity of even a rule purporting to be made under the statute............... statutory authorities cannot be expected to decide whether a rule purporting to be made under a statutory provision declaring rules made thereunder to have the same effect as if enacted by the legislature, is valid.
3 That being the position and the sales tax authorities being incapacitated from examining vires of a notification issued under the Act and having force of law, a suit raising such a question would be beyond the ambit of Section 17 of the M. B. Act or Section 37 of the M. P. Act. Section 9 C. P. C, would permit such a suit being filed in a Civil Court.
Hence it follows that the suit as brought by the plaintiff challenging the constitutionality of the notification under which recovery was sought to be made by making assessment of sales tax was maintainable before the Civil Court.
The problem does not end here. Though the suit has been held to be maintainable yet the question surviving for consideration is whether the Civil Court would have the competence of entering into and deciding the question raised.
Question No. 2
Courts subordinate to the High Court are not supposed to enter into and adjudicate upon questions involving validity of any Act. Ordinance or Regulation, or any provision contained therein or as to the interpretation of the constitutional provisions, is an injunction which finds constitutionality mandated in Art, 228 of the Constitution of India and statutorily enacted in Section 113 of the Code of Civil Procedure.
Section 228 of the Constitution of India provides as under :.....
If the High Court is satisfied that a case pending in a Court subordinate to it involves a substantial question of law as to the interpretation of this Constitution the determination of which is necessary for the disposal of the case, it shall withdraw the case and may ;
(a) either dispose of the case itself, or
(b) determine the said question of law and return the case to the Court from which the case has been so withdrawn together with a copy of its judgment on such question, and the said Court shall on receipt thereof proceed to dispose of the case in conformity with such judgment.
(Emphasis supplied)
The purpose or Art. 228 is to deny the power of interpretation a provision of the Constitution to the subordinate Courts and to leave that jurisdiction to the High Court.
Section 113 of the CPC 1908 reads as under. -
"113. Reference to High Court-Subject to such conditions and limitations as may be prescribed, any Court may state a case and refer the same for the opinion of the High Court, and the High Court may make such order thereon as it thinks fit:
Provided that where the Court is satisfied that a case pending before it involves a question as to the validity of any Act, Ordinance or Regulation, or any provision contained in an Act, Ordinance or Regulation, the determination of which is necessary for the disposal of the case, and is of opinion that such Act, Ordinance, Regulation or provision is invalid or inoperative, but has not been so declared by the High Court to which that Court is subordinate or by the Supreme Court, the Court shall state a case setting out its opinion and the reasons thereof, and refer the same for the opinion of the High Court.
Explanation-In this Section. "Regulation" means any Regulation of the Bengal, Bombay or Madras Code or Regulation as defined in the General Clauses Act, 1997, or in the General Clauses Act of a State" (Emphasis Supplied)
Here itself it would be advantageous to notice the provisions contained in Order 46 Rule 1 C. P. C-
"1. Reference of question to High Court-Where, before or on the hearing of a suit or an appeal in which the decree is not subject to appeal, or where, in the execution of any such decree, any question of law or usage having the force of law arises, on which the Court trying the suit or appeal, or executing the decree entertains reasonable doubt, the Court may, either of its own motion or on the application of any of the parties draw up as statement of the facts and the case and the point on which doubt is entertained, and refer such statement with its own opinion on the point for the decision of the High Court."
The proviso to Section 113 and Rule 4-A in Order 46 (which will be noticed hereinafter) were not there originally but were introduced by they Code of Civil and Criminal Procedure (Amendment) Act, 1951 (Act No. 24 of 1951) w. e. f. 1-5-1951.
The basic distinction between Section 113 C. P. C. and Art 228 of the Constitution is that if the question is confined to the validity of any Act, Ordinance or Regulation or any provision contained therein without involving the question as to the interpretation of the Constitution, the matter would lie within the compass of Section 113. Where a substantial question of law arises before a subordinate Court which requires a Constitutional provision to be interpreted the matter would lie within the scope of Art. 228 though in most of the cases, the situation may be overlapping. See Gangapratap Singh v. Allahabad Bank Ltd AIR 1958 SC 2930.
The comparative scope of Section 113, C P. C and Art. 228 of the Constitution came up for consideration before a Division Bench of the Calcutta High Court in Ranadeby.
"But for all practical purposes, in majority of cases, an interpretation or the Constitution and interpretation or the statute in deciding the vires or the constitutionality of the statute are inseparably linked together and any attempt to theoretically dissociate the two might mean indulging in legal nicety which will not be appropriate to the principles of interpretation of the Constitution of a country. Where exactly the interpretation of the statute also involves an interpretation of the Constitution and where it does not naturally depend on the controversy in each case and where each case will have to be independently judged and decided. There cannot be any rigid formula in this respect. We, therefore, express the opinion on this point in the following broad proposition. Not every cases of an interpretation of a statute involves interpretation of any law as to the interpretation of the Constitution. In many cases, both interpretation of the statute and of the Constitution are often inseparably connected and in which case the interpretation of the statute will involve interpretation of the Constitution in some form or other. Lastly, there may be interpretation of the Constitution quite apart from and independent of any interpretation of any statute, as for instance in interpreting the different Articles of the Constitution by themselves and their mutual inter-reaction in the Constitution. It will be unwise in our view, to draw the line more narrowly and closely than what we have done."
A learned single Judge of the High Court of Andhra Pradesh in
"Where the validity of an enactment or regulation is contended to be invalid as being ultra vires of the powers of the legislature passing it or questioned on other grounds and not on the ground of its offending any of the provisions of the Constitution it will be a case falling u/s 113 of the C. P. C, but "if its validity is attacked on the ground of its offending the provisions of the Constitution, as in this case, it must necessarily fall under Article 228 of the Constitution and has to be withdrawn and decided by the High Court."
In both the abovesaid decisions, the law laid down by their Lordships in
The learned counsel for the plaintiff/respondent has resisted the necessity of requiring the trial Court to have made a reference to the High Court u/s 113 C. P. C. on two counts. He submits that Section 113 C. P. C. has to be read with Order 46, Rule 1 C. P. C. and the two read together dispense with the necessity of making a reference to the High Court in a case where the decree passed by the trial Court is appealable. To put in other words, reference of questions to High Court is required to be made only in a case where the decree to be passed on hearing a suit or appeal is not subject to appeal to High Court. Secondly, it is submitted that Section 113 is confined in its applicability to the questions arising as to the validity of an Act, Ordinance or Regulation and not to Notification, while the case at hand involves a question as to the validity of notification''s merely. The duel contention needs an in-set scrutiny.
Section 113 consists of two pans : (1) the main part, and (ii) the proviso- The proviso came to be enacted w. e. f. 1-5-195! by virtue of Codes of Civil and Criminal Procedure (Amendment) Act, 1951. The main part opens with "Subject to such condition and limitation as may be prescribed" "Prescribed" means prescribed by the Rules. The main part shall, therefore have to be read with the provisions contained in Order 46, Rule 1 which prescribe for a reference of questions being made to High Court only in such cases where the decree to be passed is non-appealable. However, the Proviso to S. 113 has an overriding effected on the main part of Section 113. The proviso is not to be read with Order 46, Rule 1. Once the ingredients of the proviso are satisfied, a reference to High Court is mandatory and it is the only course left open to the subordinate Court heating a suit or an appeal without regard to the fact that the decree to be passed therein was appealable or not. This interpretation finds support from Rule 4-A of Order 46, which speaks of reference to High Court under proviso to Section 113. To quote Rule 4-A :
"4-A. Reference to High Court under proviso to Section 113 : The provision of Rules 2, 3 and 4 shall apply to any reference by the Court under the proviso to Section 113 as they apply to a reference under rule. 1"
The Rule clearly lays down a line of demarcation between a reference u/s 113, maind pun, and a reference under proviso to Section 113. While the provisions of Rules 2, 3 and 4 shall apply to a reference made under the main provision, also to one made under the proviso to Section 113, Rule 1 of Order 46 would not apply to a reference under proviso to Section 113. This view finds support from a Division flench decision of Gujarat High Court in
A notification is certainly not an Act, Ordinance or Regulation. While a Regulation may partake the character of a ''Rule'', an ''Act'' and an ''Ordinance'' are the primary legislations. Notifications may be issued in exercise of delegated powers of the Legislature. The second limb of the contention must, therefore, prevail. The learned counsel is right in submitting that if the question arising before the Court is one as to the validity of a notification merely, proviso to Section 113 of C. P. C. is not attracted. See also State of Mysore v. S. Basavalinguppa AIR 1971 Mys 355 ;
In State Trading Corporation of India v. Satehidanand 1982 M PW N 306 a learned single Judge of this Court spoke as under :
"No doubt, in view of the provisions placed in Section 113 of the Code of Civil Procedure, the Courts below have no jurisdiction to pronounce upon validity of any Act,. Ordinance or Regulation or of any provision contained therein. However, no prohibition is enacted by Section 113 of the CPC against going into the question of such vires by the lower Courts. According to the proviso to Section 113 CPC the lower Courts shall go into the question of vires of an Act, Ordinance or Regulation and if they are of opinion that such Act, Ordinance or Regulation or provision is invalid or inoperative, but has not been declared by the High Court or by the Supreme Court, the Court shall state a case setting out its opinion and reasons therefor and refer the same for the opinion of the High Court. Needless to say if the Court below is of the opinion that the challenge on the ground of vires is without any merit, it will be free to reject the same. In case the Court is of opinion that the impugned Act or provision therein is invalid or inoperative, it has to follow the procedure mentioned above. Accordingly, the learned Judge of the Court below does not appear to have acted rightly in observing that ''this Court has no jurisdiction to enter upon the question or ultravires or the Constitution". This expression of the view apart from being inapt, does not appear to be correct. The Court, of course, has no jurisdiction to pronounce upon the vires of the impugned Order, Act or provision thereof but in case it is of opinion that it is invalid or inoperative, it has to follow the procedure indicated in the proviso to enacting portion of Section 113 CPC."
It is to be noted that in Bhailal Bhai''s case (supra) constitutionality or any provisions of M. B. Sales Tax Act, 1950 was not under challenge. Their lordships adjudicated upon the vires of the notifications and struck of the impugned liability of taxes on tobacco. It cannot be said that the notification levying the sales tax on cycle and cycle-parts was held to be invalid or inoperative by the Supreme Court; though it may that the levy under challenge in this suit may be adjudge to be illegal, because of the question as to interpretation of the relevant constitutional provisions having already been answered by the Supreme Court.
To sum up, the suit as framed by the plaintiff raising challenge to the constitutionality of assessments made and the recovery sought to be made thereunder is not barred by the provisions contained in Section 17 of the M. B. Act or Section 37 of the M. P. Act. The suit is maintainable before the Civil Court. The suit does not involve any question as to validity of any provisions contained in the Act. Section 113, Proviso is not attracted to the suit. The decree passed by the trial Court being appealable, the main part of Section 113 read with Order 46 Rule 1 C.P.C. is also not applicable. The learned Civil Judge and the lower appellate Court were not, therefore, obliged to make a reference to the High Court.
Still, the case does raise a constitutional question as to the interpretation of Articles 14,301 and 304 of the Constitution. Its determination was necessary for disposal of the case. No sooner the suit was tiled and the defendant had made appearance, the plaintiff should have moved the High Court under Article 228 of the Constitution for withdrawal of the case, whereafter, this Court could have either disposed of the case itself, or would have determined said question of law and returned the case to the Court from where it was withdrawn. The plaintiff having failed to do so, the defendant could also have invoked the jurisdiction of this Court under Article 228 of the Constitution. Both the parties have thus contributed to the error of a jurisdiction being assumed by the Courts below which they did not have. The direction in terms of Article 228 of the Constitution is preeminently warranted even at this stage of the case so as to set right the gross illegality committed so far.
It may be pointed out that the parties have not yet made the record complete so as to enable and effective exercise of jurisdiction under Article 228 of the Constitution by this Court. Several notifications under which the tax has been levied on the plaintiff, with reference to which the constitutional provisions would be required to be interpreted have not been placed on record. The fault lie primarily with the plaintiff. It can only be regretted that in this appeal pending since 1977 and when the case was heard at length on several dates. I hen also the plaintiff did not assist the court by bringing on record those notifications. No doubt, the Gazette notifications are judicially noticeable u/s 57 of the Evidence Act, yet the Court may refuse to take a judicial notice unless they are brought before it. The plaintiff is directed to bring on record of the trial court all those notifications as would be necessary for the decision of the suit and the question of law arising therein. For that purpose, the plaintiff is granted one month''s time. If he fails in complying with the direction, the suit shall stand dismissed for it is he who has raised the question and whose suit cannot be decided unless the questions are answered.
In view of what has been said hereinabove, the judgments and decrees of the Courts below are set aside. The case would be deemed to be pending in the trial Court. At the same time in exercise of the powers conferred by Article 228 of the Constitution, the suit is withdrawn from the trial Court to this Court. Let the record of the trial Court be sent back to it, who shall secure compliance with the directions made to the plaintiff in para 36 above. On compliance being made the record shall be certified to this Court for proceeding under Article 228 of the Constitution.
The State shall be entitled to refund of the Court-fee paid by it on the memo, of appeal in this Court as well as before the lower appellate Court The rest of the costs incurred in appeals shall be borne by the parties as incurred. Counsel fee as per Schedule, if certified.
Parties through their respective counsels are directed to appear before the trial Court on 6-5-91.
Appreciation is placed on record of the valuable assistance rendered by Shri J. P. Gupta, Senior Advocate, S/shri R. D. Jain and K. N. Gupta, Advocates, who addressed the Court on being requested to do so and brought out and placed before the Court most of the legal aspects in the light of the case-law referred to hereinabove.
