Holding

The Validating Act is bad in law and is struck down because it fails to cure the mandatory procedural defects under the Rajasthan Town Municipalities Act, 1959.

Summary

Delhi Cloth & General Mills Ltd. and another established a fertiliser unit in the villages of Raipura and Ummedganj, which were treated as part of Kota municipality and were levied octroi. The State of Rajasthan later issued a Kota Municipal Limits (Continued Existence) Validating Act, 1975 that deemed the villages to have always been within the municipal limits, notwithstanding the mandatory procedural requirements of Sections 4‑7 of the Rajasthan Town Municipalities Act, 1959 which had not been complied with. The appellants challenged the validity of the Validating Act, arguing that a validating statute must cure the defect it seeks to validate. The Supreme Court held that the Act did not cure the procedural defect and therefore could not validly deem the villages to be within the limits; consequently the Act was struck down as bad in law. The Court also ordered the Kota municipality to refund octroi collected after 1974‑75 with interest. The appeals were allowed and the Division Bench judgment set aside.

Issues considered

The validity of the Kota Municipal Limits (Continued Existence) Validating Act, 1975 in view of non‑compliance with mandatory procedural provisions of the Rajasthan Town Municipalities Act, 1959.
Whether a validating statute can deem a legal consequence without first curing the procedural defect that gave rise to the illegality.
Whether octroi collected after the enactment of the Validating Act is refundable to the appellants.

Subjects

validating legislationstatutory fictionmunicipal limitsoctroiprocedural complianceretrospective validationmunicipal tax

Judgment

A DELHI CLOTH AND GENERAL MILLS CO. LTD. AND ANR.
v.
STATE OF RAJASTHAN AND ORS.

JANUARY 16, 1996

B [J.S. VERMA, S.P. BHARUCHA AND K. VENKATASWAMI, JJ.]

Rajasthan Town Municipalities Act, 1959/Kota Municipal Limits (Contin-
ued Existence) Validating Act, 1975 :

C Sections 4,5,6,713, 6, 7-Kota Town Municipality--Extension of
limits--lnclusion of villages Raipura and Ummedganj--Preliminary notifica-
tion issued in respect of Raipura-No final notification-Without preliminary
not~fication, final not~fication issued in respect of Ummedganj--Pending writ
proceedings before High Court, Government excluded Ummedganjfrom Kota
D Municipal limits-Subsequently Full Bench held it was not validly .,
included-Validating Act passed by Government-Challenge thereto upheld by
Single Judge--But set aside by the Division Bench of the High Court-On
appeal held legal consequence cannot be deemed nor the events that should
have preceded it-Facts may be deemed and therefrom the legal consequence
that.follow-Provisions of ss. 4 to 7 o_f the 1959 Act mandatory-Not.following
E the provisions not cured by the Validating Act-Therefore the Validating Act
bad in law-Hence struck down.

The Respondent-State issued a preliminary notification calling for
objections to the extension of the limits of Kota Municipality by including
F village Raipura. However, this was not followed by a final notification. The
State Government issued a notification extending the limits of Kota
Municipality to include village Ummedganj, but it was not preceded by a
public notification inviting objections thereto. This was challenged in a
writ petition before the High Court. Pending the decision thereof the State
G Government excluded Village Ummedganj from Kota Municipal limits.
Subsequently, a Full Bench of the High Court held that Ummedganj was
not validly included within the limits of Kota Municipality since the
mandatory provisions in that behalf had not been followed. Therefore, the
respondent Government passed the Kota Municipal limits (Continued
H Existence) Validating Act, 1975. It was challenged in a writ petition, which
518
DELHI CLOTH & GENL. MILLS LTD. v. STATE 519
was allowed by Single Judge. The respondent-State and Kota Municipality A
filed appeals which were allowed by the Division Bench.

The appellant-Mills established a fertiliser unit in the villages
Raipura and Ummedganj of district Kota in the year 1969. The villages
of Raipura and Ummedganj were treated as falling within the municipal
B
limits of Kota and Octroi was collected from the appellants. In 1974,
realising that the levy and realisation of octroi by the Kota Municipality
was illegal the appellants filed a suit seeking permanent injunction
restraining the Kota Municipality from levying or collecting octroi from
the appellants. An injunction was granted, and was upheld in appeal. The
appellants also filed a suit for refund of the amount of octroi erroneously c
paid by them to the Kota Municipality prior to the filing of the suit. The
appellant-Mills preferred the present appeal against the judgment of the
Division Bench of the High Court setting aside the judgment of the Single
Judge who has upheld the challenge against the validity of the Validating
~ D
On behalf of the appellants it was contended that the Validating Act
was bad in law since the defects pointed out by the Full Bench of the High
Court had not been rectified.
On behalf of the Kota Municipality it was contended that Section 3 E
of the Validating Act required the Court to deem the villages of Raipura
and Ummedganj always to have been within the Kota Municipal Limits
and that all corollaries for such assumption have therefore to follow. It was
also contended that the procedural requirements of Section 4 to 7 of the
• Rajasthan Municipalities Act have been satisfied and that the use of the
F
non obstante clause in section 3 of the Validating Act fortified this
contention.

Allowing the appeals, this Court
HELD : 1.1. The Validating Act provides that notwithstanding
anything contained in Section 4 to 7 of the Rajasthan Town Municipalities G
Act 1959 or in any judgment, decree, order or direction of any Court, the
villages of Raipura and Ummedganj should be deemed always to have
continued to exist and they continue to exist within the limits of the Kota
municipality, to all intents and for all purposes. This provision requires the
deeming of the legal position that the villages of Raipura and Ummedganj H
520 SUPREME COURT REPORTS [1996] 1 S.C.R.
A fall within the limits of the Kota municipality, not the deeming of facts
from which this legal consequence would flow. A legal consequence cannot
be deemed nor, therefrom, can the events that should have preceded it.
Facts may be deemed and, therefrom, the legal consequences that follow.
[530-A-B]
B 1.2. Sections 4 to 7 of the 1959 Act remained on the statute book
unamended when the Validating Act was passed. Their provisions were
mandatory. They had admittedly not been followed. The defect of not
following these mandatory provisions in the case of villages of Raipura and
Ummedganj was not cured by the Validating Act. The curing of the defect
C was an essential requirement for the passing of a valid validating statute.
Therefore, the Validating Act is bad in law and is struck down. [530-C-D]

Shri Prithvi Cotton Mills Ltd. and Anr. v. Broach Borough Municipality
and Ors., [1970] 1 S.C.R. 338, followed.

D Udai Ram Sharma & Ors. Etc. v. Union of India & Ors., [1968] 3 SCR
and State of Madhya Pradesh v. V.P. Sharma, [1966] 3 SCR 557, distin-
guished.

The State of Bombay v. l'andurang Vinayak Chaphalkar & Ors., [1953]
E SCR 773; M. Venugopal v. Division Manager, Life Insurance Corporation of
India, Machilipatna, A.P. & Anr., [1994] 2 SCC 323; J.K. Cotton Spinning and
Weaving Mills Ltd. & Anr. v. Union of India & Ors., [1988] l SCR 700; R.L.
Arora v. State of Uttar Pradesh & Ors., [1964] 6 SCR 784 and R.L. Arora
v. State of U.P., [1962] Supp. 2 SCR 149, referred to.
F East End Dwellings Co. Ltd. v. Finsbury Borough Council, (1952) A.C.
109, referred to.

2. The Kola Municipality is directed to refund to the appellants the
amounts of octroi duty paid by the appellants to it subsequent to the year
G 1974-75 with interfst at the rate of 8 % per. annum from the dates of
payment till refund or realisation. Such refund shall be made on or before
iSth inly, 1996. However, in the suit tiled by the appellants for refund of
the amount of octroi paid by them to the Kota Municipality in respect of
the earlier years, it shall be open to the defendants to take every defence
H available to them other than that concluded by this judgment. [530-F-G]
DELHI CLOTH & GENL. MILLS LTD. v. STATE [BHARUCHA, J.] 521

- 1980.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3067-68 of

From the Judgment and Order dated 21.7.80 of the Rajasthan High
Court in D.B.C.S.A. No. 136 of 1979 & 19 of 1980.
A

Shanti Bhushan and Prashant Bhushan for the appellants. B

Soli J. Sorabjee, S.M. Jain, Ms. Nisha Bagchi, A.P. Dhamija and Sushi!
Kr. Jain for the Respondents.

The Judgment of the Court was delivered by
c
BHARUCHA , J. These are appeals by special leave against the
Judgment and order of a Division Bench of the High Court of Rajasthan. The
Division Bench reversed the judgment and order of a learned single Judge,
which, upon a writ petition filed by the present appellants, had struck down
the Kola Municipal Limits (Continued Existence) Validating Act, 1975.
D
The appellants established a fertilizer unit in villages called Raipura and
Ummedganj of District Ko ta in the State of Rajasthan in 1969.

On !st March, 1958 , the State of Rajasthan (the !st respondent) issued
a notification under Section 7(1) of the Rajasthan Town Municipalities Act, E
1951, informing the public that, in exercise of powers under Section 5(1) of
that Act, it proposed to extend the limits of the Kota municipality so as to
include therein the village ofRaipura and it invited objections thereto. On 16th
October, 1958, in exercise of powers conferred by Section 5(1) of the 1951
Act, the State Government extended the limits of the Kota municipality to
F
include therein the village of Ummedganj. This inclusion was challenged in
a writ petition filed before the Rajasthan High Court. Pending the decision
thereof, on 2nd May, 1960, the State Government excluded the village of
Ummedganj from the said municipal limits. On 17th August, 1960, a Full
Bench of the Rajasthan High Court held that Ummedganj was not validly
included within the limits of the Kota town municipality inasmuch 'as the G
mandatory provisions in that behalf had not been followed.

It appears that the villages of Raipura and Ummedganj were treated as
falling within the municipal limits of Kota and octroi was collected from the
appellants. Realising, in April 1974, that the levy and realisation of octroi by H
522 SUPREME COURT REPORTS [1996] l S.C.R.

A the Kola Municipality (the 2nd respondent) was illegal, the appellants filed a
suit in the court of the Munsiff, Kata, seeking a permanent injunction
restraining the Kola Municipality from levying or collecting octroi from it. An
injunction was granted and was upheld in appeal. The appellants also filed
a suit in the court of the District Judge, Kota, for refund of the amount of Rs.
10,85,365.32, being the amount of octroi erroneously paid by the appellants
B to the Kota Municipality during the period to three years prior to the filing of
the suit.

On 7th January 1975, the State Government issued the Kota Municipal
Limits (Continued Existence) Validating Ordinance, 1975. It was replaced by
C the Kola Municipal Limits (Continued Existence) Validating Act, 1975, (now
called the "V:ilidating Act"). Upon the promulgation of the Ordinance, the
appellants filed a writ petition challenging its validity. When the Validating
Act was passed, the writ petition was amended to challenge the same. The writ
petition was allowed by a learned single Judge. Both the State Government
and the Kota Municipality filed appeals. By the judgment and order under )
D appeal, the Division Bench allowed the appeals and set aside the judgment of
the learned single Judge.

The 1951 Act was replaced by the Rajasthan Municipalities Act, 1959.
The provisions in regard to the de-limitation of municipalities and the
procedure in that behalf was substantially similar to that contained in the 1951
E Act. It is convenient to set out the relevant provisions, which are contained
in Sections 4 and 6.

"4. Delimitation of Municipalities - (!) Subject to the provisions of
sections 5 and 6, the State Government may, from time to time, by
notification in the official Gazette -
F
(c) include or exclude any area in or from any municipality ;

6. Procedure preliminary to notification under section 4 - (!)Not Jess
than two months before the issue of any notification under section 4
the State Government shall cause to be published in the Official
G Gazette, and to be posted in conspicuous spots or.proclaimed by beat
of dru1n in the area concerned, a proclamation announcing that it is )

proposed to constitute such local area to be a municipality, or to
include or exclude it in or from any municipality, or to alter the limits
of any municipality in a specified manner or to declare that such local
H area shall cease to be a municipality, as the case may be, and requiring
DELHI CLOTH & GENL. MILLS LTD. v. STATE [BHARUCHA, J.] 523
all persons who entertain any objection to the said proposal to submit A
the same, with reasons therefor in writing, to the State Government
within two months from the date of the said proclamation.

(2) No notification under Section 4 shall be issued by the State
Government, unless the objections, if any, so submitted are, in its
opinion sufficient or invalid."
B

The relevant portion of the Statement of Objects and Reasons of the
' Validating Act reads thus :

"1. According to the provisions of the Rajasthan Municipalities Act,
1959, the village of Raipura was never included in the limits of the
c
Kora Municipality "and though the village of Ummedganj was in-
cluded therein but it was thereafter excluded from these limits.
However, the Kota Municipality to all intents and for all purposes
treated them as existing within its limits. During the period from 1958
to 1974 elections were held and taxes were levied in relation to these D
villages as existing within the limits of the K!ota Municipality. These
actions were challenged in law courts. Doubts have, therefore, arisen
as to the validity of the continued existence of these villages within
these limits and as to the legality of the action taken or things done,
including the levy and collection of taxes within these limits. E
2. It was, therefore, expedient to remove these doubts and to validate
the continued existence of these villages within the limits of the Kota
I Municipality and the things done, action taken, taxes levied and
collected and other matters connected therewith."
F
(Emphasis supplied.)

Section 3 of the Validating Act is its most relevant provision and it reads
thus :

"3. Validation of the continued existence of certain limits of the Kota G
Municipality and of other matters connected therewith - Notwith-
standing anything contained in sections 4 to 7 both inclusive, or any
other section of the Municipal Act or in any provisions of the
Panchayat Act or in any judgment, decree, order or direction of any
court - H
524 SUPREME COURT REPORTS [1996] l S.C.R.
A (a) the villages of Raipura and Ununedganj in Kota tehsil in the Kota
district shall be deemed always to have continued to exist and shall
hereafter continue to exist within the limits of the Municipality at
Kota to all intents and for all purposes; and

(b) all persons who but for the inclusion of the villages of Raipura
B
and Ununedganj within the limits of the municipality at Kota were
not liable to pay any tax due under the Municipal Act shall, upon the
inclusion of these villages within the said limits or upon the validation
of the continued existence of these villages within the said limits, •
according to the provisions of this Act, be liable and shall be deemed
c always to have been liable to pay the taxes due under the Municipal
Act and such taxes shall be levied on and collected from them
according to the provisions of the Municipal Act;

(c) the areas constituting the aforesaid villages shall be deemed never
D to have been included in any Panchayat Circle under the Panchayat
Act, and accordingly -

(i) all actions taken, things done, appointments and transfers made and
powers exercised by the State Government or by any officers ·of
authorities subordinate to it or by or on behalf of the Municipality at
E Kota, in relation to the aforesaid villages of Raipura and Ununedganj
treating them as existing within the limits of the Municipality at Kota
shall be deemed to have been lawfully taken, done, made or exercised;

(ii) all taxes levied and collected in exercise of th~ statutory powers
F or purported exercise of such powers under the Municipal Act or under
any law for the time being in force, by treating these villages as existing
within the limits of the Municipality at Kata, shall be deemed always
to have been lawfully levied and collected and no claim for their refund
shall arise or shall be deemed ever to have arisen;

G as if the said villages had legally existed within the limits of the
Municipality at Kota."

By reason of Section 4, no court is permitted to question the validity of
anything done or power exercised on the ground that the villages of Raipura
H and Ununedganj were not within the municipal limits of Kota. Sections 6 and
DELHI CLOTH & GENL. MILLS LTD. v. STATE [BHARUCHA, J.] 525
7 read thus : A

"6. Cancellation of notifications with retrospective effect. - As from
the connnencement of this Act, all notifications from time to ·time
issued under the Municipal Act or the Panchayat Act, providing for
the exclusion of the villages of Raipura and Ummedganj from the
limits of the Municipality at Kata or for their inclusion in any
B
Panchayat Circle, shall be deemed to have ceased to have effect and
be cancelled as if they never came into force.

7. Act to have over-riding effect. - The provisions of this Act shall
have effect notwithstanding anything contained in any Jaw for the C
time being in force."

Mr. Shanti Bhushan, learned counsel for the appellants, submitted that
the Validating Act was bad in law inasmuch as the defects which had been
pointed out in the judgment of Full Bench of the Rajasthan High Court had
not been removed by it. Reliance was placed upon the judgment of this Court D
in Shri Prithvi Cotton Mills Ltd. and Anr. v. Broach Borough Municipality and
Ors., [1970] 1 SCR 338. The case of Prithvi Cotton Mills Ltd. is undoubtedly
the leading case on the subject of validating statutes. Hidayatullah, CJ.,
speaking for a Constitution Bench, said :
E
"Before we examine s. 3 to find out whether it is effective in its
purpose or not we may say a few words about validating statutes in
general. When a legislature sets out to validate a tax declared by a
; court to be illegally collected under an ineffective or an invalid law,
the cause for ineffectiveness or invalidity must be removed before
F
validation can be said to take place effectively. The most important
condition, of course, is that the legislature must possess the power to
impose the tax, for, if it does not, the action must ever remain
ineffective and illegal. Granted legislative competence, it is not
sufficient to declare merely that the decision of the Court shall not
bind for that is tantamount to reversing the decision in exercise of G
judicial power which the legislature does not possess or exercise. A
court's decision must always bind unless the conditions on which it
is based are so .fundamentally altered that the decision could not have
been given in the altered circumstances. Ordinarily, a court holds a
tax to be invalidly imposed because the power to tax is wanting or H
526 SUPREME COURT REPORTS (1996] 1 S.C.R.

A the statute or the rules or both are invalid or do not sufficiently create
the jurisdiction. Validation of a tax so declared illegal may be done
only if the grounds of illegality or invalidity are capable of being
removed and are in fact removed and the tax thus made legal.
Sometimes this is done by providing for jurisdiction where jurisdic-
B tion had not been properly invested before. Sometimes this is done
by re-enacting retrospectively a valid and legal taxing provision and
then by fiction making the tax already collected to stand under the
re-enacted law. Sometimes and legislature gives its own meaning and
interpretation of the law under which the tax was collected and by ...
legislative fiat makes the new meaning binding upon courts. The
c legislature may follow any one method or all of them and while it
does so it may neutralise the effect of the earlier decision of the court
which becomes ineffective after the change of the law. Whichever
method is adopted it must be within the competence of the legislature
and legal and adequate to attain the object of validation. If the
D legislature has the pov1er over the subject matter and competence to
make a valid Jaw, it can at any time make such a valid law and make
it retrospectively so as to bind even past transactions. The validity qf
a Validating law, therefore, depends upon whether the legislature
possesses the competence which it clai1ns over the subject matter and
E whether in making the validation it removes the d~fect which the
courts had found in the existing law and makes adequate provisions
in the Validating law for a valid imposition of the tax." (Emphasis
supplied.)

Mr. S.J. Sorabjee, learned counsel for the Kata Municipality, submitted
F that Section 3 of the Validating Act required the court to deem the villages of
Raipura and Ummedganj always to have been within the Kola municipal limits
to all intents and for all purposes. All corollaries for such assumption had,
therefore, necessarily to follow. Accordingly, the court had to assume that the
procedural requirements of Section 4 to 7 of the 1959 Act had been satisfied.
G The use of the non-obstante clause in Section 3 of the Validating Act fortified
the submission.

Mr. Sorabjee cited the following passage in the judgment in the State
qf Bbmbay v. Pandurang Vinayak Chaphalkar & Ors., (1953] SCR 773 :

H "When a statute enacts that something shall be deemed to have been
DELHI CLOTH & GENL. MILLS LTD. v. STATE [BHARUCHA, J.] 527
done, which in fact and truth was not done, the court is entitled and bound A
- to ascertain for what purposes and between what persons the statutory fiction
is to be resorted to and full effect must be given to the statutory fiction and
it should be carried to its logical conclusion. (Vide Lord Justice James in Ex
parte Walton : In re Levy (17 Ch. D. 746 at p. 756). "
B
He brought to our attention the oft-quoted observations of Lord Asquith in
East End Dwellings Co. Ltd. v. Finsbury Borough Cpuncil, 1952 A.C. 109,
, cited therein :
~
"If you are bidden to treat an imaginary state of affairs as real, you
must surely, unless prohibited from doing so, also imagine as real the C
consequences and incidents which, if the putative state of affairs had
in fact existed, must inevitably have flowed from or accompanied it
.............................. The statute says that you must imagine a certain
state of affairs; it does not say that having done so, you must cause
or permit your imagination to boggle when it comes to the inevitable D
corollaries of that state of affairs."

The judgment in M. Venugopal v. Divisional Manager, Life Insurance
Corporation of India, Machilipatnam, A.P. & Anr., [1994] 2 SCC 323, also
cites lord Asquith and says that the legislature can introduce a statutory fiction
and the courts have to proceed upon the assumption that that state of affairs E
existed on the relevant date. Reliance was placed by Mr. Sorabjee upon J.K.
Cotton Spinning and Weaving Mills ltd. & Anr. v. Union of India & Ors.,
[1988] l S.C.R. 700. The Explanations to Rules 9 and 49 of the Central Excise
Rules, 1944, had provided that excisable goods produ.ced or manufactured in
any place or premises at an intermediate stage and consumed or utilised for F
the manufacture of another commodity in a continuous process would be
deemed to have been removed from such place or premises immediately
before such consumption or utilisation. This court said that it was well settled
that a deeming provision was an admission of the non-existence of the fact
deemed. Therefore, in view of the deeming provision under the Explanations, G
although the goods which were produced or manufactured at an intermediate
stage and, thereafter, consumed or utilised in the integrated process for the
manufacture of another commodity were not actually removed, they had to be
regarded as having been removed.

It is to be noted that what is to be deemed is a matter of fact; there is H
528 SUPREME COURT REPORTS [1996] 1 S.C.R.
,
A a "deeming fiction''. It is also to be noted that when a fact is to deemed, its
consequences and incidents are also to be deemed; that is to say, what follows
from the deemed fact is also to be deemed.

Mr. Sorabjee relied upon the judgment in R.L. Arora v. State qf Uttar
Pradesh ad Ors., [1964] 6 S.C.R. 784. This court in R.L. Arora v. State qf U.P.,
B [1962] Supp. 2 S.C.R. 149 had considered the provisions of Section 40(1 )(b)
of the Land.Acquisition Act, 1894, read with clause (5) of Section 41 thereof.
and had held that valid acquisitions thereunder could only be for .work that
would be directly useful to the public and the relevant agreement should
contain a term setting out that the public would have a right to use the work
C directly. Acq~isitions that failed to comply with this requirement fell through.
Parliament thereupon enacted the Land Acquisition (Amendment) Ordinance,
1962 which was replaced by the Land Acquisition (Amendment) Act, 1962.
Thereby, amendments to Sections 40 and 41 of the principal Act were made
and acquisitions invalidated by reason of the earlier judgment were validated.
D Section 40 was amended to include the acquisition for a company which was
engaged or was taking steps for engaging in any industry or work which was
for a public purpose. Section 41 was amended to include clause 4(A) to cover
agree1nents which provided for such acquisitions. Section 7 of the Amendment
Act, 1962, validated the acquisitions invalidated by reason of the earlier
E judgment by stating that such acquisitions should be deemed to have been
made for the purpose and in accordance with sections 40 and 41 of the
principal Act, as amended, as if these amended provisions were in force at all
material times. This Court held that the deeming provision in Section 7 laid
down that where the acquisition did not fall within the provisions as they
existed before the Amendment Act, 1962, came into force, it should be
F
deemed to come within the amendment made thereby, provided, of course, that
it was of a kind that could so come. Reliance was placed by Mr. Sorabjee also
upon Udai Ram Sharma & Ors. Et~. v. Unio11 of India & Ors., [ 1968] 3 S.C.R.
In the case of State of Madhya Pradesh v. V.P. Shanna, [1966] 3 S.C.R. 557,
this Court had held that once a declaration under Section 6 of the Land
G Acquisition Act, 1894, had been made, the notification under Section 4(1) of
the Act was exhausted and there could be no successive notification under
Section 6 with respect to land specified in one notification under Section 4(1).
A validating ordinance was promulgated, to be succeeded by the Land
Acquisition (Amendment and Validation) Act, 1967. The Amendment and
H Validation Act, 1967, amended Section 5-A of the principal Act to allow for
DELHI CLOTH & GENL. MILLS LTD. v. STATE [BHARUCHA, J] 529
the making of more than one report in respect of land which had been notified A
'.... under Section 4( I). It also amended Section 6 so that different declarations
made from time to time in respect of different parcels of land covered by the
same notification under Section 4(1) were permissible. The Amendment and
Validation Act, I967, also validated all acquisitions which had been rendered
invalid by reason of the judgment in V.P. Sharma's case. The Amendment and B
Validation Act, I 967, was challenged. This Court rejected the challenge. It
observed :
' "All these decisions lay down that the power to legislate for validating
' actions taken under statute which were not sufficiently comprehen-
sive for the purpose is only ancillary or subsidiary to legislate on any C
subject within the competence of the legislature and such Validating
Acts cannot be struck down merely because courts of law have
declared actions taken earlier to be invalid for want of jurisdiction.
Nor is there any reason to hold that in order to validate action without
legislative support the Validating Act must enact provisions to cure D
the defect for the future and also provid~ that all actions taken or
notifications issued inust be deemed to have been taken or issued
under the new provisions ~o as to given them fu11 retrospective effect.

It is to be noted that in each of these two cases under the Land
Acquisition Act, that Act was amended with retrospective effect. Under the E
amended Act, the acquisitions that had been rendered invalid by earlier
judgments became valid and the validation was effected on the strength of
such amendment.

In the case of the village of Raipura there was a preliminary notification
F
calling for objections to the extension of the limits of the Kota municipality
to include it, but it was not followed by a final notification. In the case of the
village of Ummedganj there was a notification extending the limits of the Kota
municipality to include it, but it had not been preceded by a notification
inviting the objections of the public thereto. Later, another notification was
published whereby the village of Ummedganj was excluded from the limits of G
the Kota municipality. The provisions of Sections 4 to 7 of the 1959 Act and
the earlier provisions of the 1951 Act in the same behalf were, therefore, not
met in the case of either the village of Raipura or the village of Ummedganj.
The Full Bench of the Rajasthan High Court has held that these provisions
were mandatory and that judgment has become final. H
530 SUPREME COURT REPORTS [1996] I S.C.R.
A The Validating Act provides that, notwithstanding anything contained in
Sections 4 to 7 of the 1959 Act or in any judgment, decree, order or direction
of any court, the villages of Raipura and Ummedganj should be deemed
always to have continued to exist and they continue to exist within the limits
of the Kota municipality, to all intents and for all purchases. This provision
B requires the deeming of the legal position that the villages of Raipura and
Ummedganj fall within the limits of the Kota municipality, not the deeming
of facts from which this legal consequence would flow. A legal consequence
cannot be deemed nor, therefrom, can the events that should have preceded
it. Facts may be deemed and, therefrom, the legal consequences that follow. •

C Sections 4 to 7 remained on the statute book unamended when the
Validating Act was passed. Their provisions were mandatory. They had
admittedly not been followed. The defect of not following these mandatory
provisions in the case of the villages of Raipura and Ummedganj was not
cured by the Validating Act. The curing of. the defect was an essential
D requirement for the passing of a valid validating statute, as held by the
Constitution Bench in the case of Prithvi Cotton Mills Ltd. It must, therefore,
be held that the Validating Act is bad in law and it must be struck down.

It must be made clear that in the suit that the appellants have filed in
the court of the District Judge, Kota, for refund of the amount of octroi paid
E by them to the Kota municipality, which is stated to be pending, it shall be
open to the defendants to take every defence available to them other than that
concluded by this judgment.

At the stage when special leave to appeal was granted, no stay was
F ordered except for the year 1974-75. Consee on behalf of the Kota munici-
pality agreed that if the appeals were allowed and the Kota municipality was
required to refund the amount paid by the appellants by way of octroi duty,
it would refund the same with interest at the rate of 8 per cent per annum. The
time within which the refund would have to be made was left to be determined
G when the court heard and disposed of the appeals. The Kota municipality is
now directed to refund to the appellants the amounts of octroi duty paid by
the appellants to it subsequent to the year 1974-75 with interest at the rate of
8 per cent per annum from the dates of payment till refund or realisation. Such
refund shall be made on or before 15th July, 1996.

H The appeals are allowed. The judgment and order under appeal is set
DELHI CLOTH & GENL. MILLS LTD. v. STATE [BHARUCHA, !.] 531
aside. The Kota Municipal Limits (Continued Existence) Validating Act, 1975, A
is declared to be invalid. Refund of octroi duty by the Kota municipality to
the appellants shall be made as aforestated.

The Kota Municipality shall pay to the appellants the costs of its appeal,
quantified in the sum of Rs.15,000.
B
G.N . Appeals allowed.
.
•