Holding

The Supreme Court held that demarcation under the Town Planning Act does not meet the definition of "industrial estate or area" in rule 5(8), that rule 62‑B was impliedly repealed, and that the corporation's discretion was lawful, leading to dismissal of the appeals.

Summary

Swastik Rubber Products Ltd. and others sought exemption from octroi duty on raw materials under the Municipal Corporation of Poona's rule 5(8) of the 1962 Octroi Rules, which required that the industrial concern be situated in an area demarcated as an "industrial estate or area" by the corporation. The corporation refused, stating the area had not been demarcated under its resolution. While the petition was pending, rule 5(8) was repealed; the petitioners argued the repeal was ultra vires and that the earlier rule 62‑B (1957) still applied. The Bombay High Court held both rules repealed but dismissed the writs, finding no demarcation as required. On appeal, the Supreme Court held that demarcation under the Bombay Town Planning Act does not satisfy the definition in rule 5(8), that rule 62‑B was impliedly repealed by the new Octroi Rules, and that the corporation's considerations were within its discretion. Consequently, the appeals were dismissed.

Issues considered

The meaning of "industrial estate or area" under rule 5(8) of the Octroi Rules and whether demarcation under the Bombay Town Planning Act satisfies it
Whether rule 62‑B of 1957 was repealed, expressly or by implication, by the 1962 Octroi Rules
Whether the repeal of rule 5(8) was illegal or ultra vires and its effect on the petitioners' claim
Whether the corporation's refusal to grant exemption was based on extraneous or irrelevant considerations violating Article 14
Whether the petitioners were entitled to a writ of mandamus directing demarcation and exemption

Legislation cited

Bombay Provincial Municipal Corporations Act, 1949s. 127(2), s. 149
Bombay Town Planning Act, 1954
Octroi Rules, 1962s. 5(8)

Subjects

octroiindustrial estatedemarcationrule 5(8)rule 62-Bimplied repealmunicipal corporationexemptionArticle 14Article 226town planning act

Judgment

729 A

SWASTIK RUBBER PROQUCTS LTD. ETC. ETC.
v.

MUNICIPAL CORPORATION OF THE CITY OF B
POONA & ANR.

September 16, 1981

- [D.A. DESAI, A.D. KOSHAL AND R.B. MISRA, JJ.J
Bombay Provincial Manicipal Corporation Act 1949, Ss. 127 (2), 149 and
Rule 62B and Octroi Rules 1962, Rule 5(8)-Scope and ejftct of.
c

The Bombay Provincial Municipal Corporations Act, 1949 came into opera·
lion in the city of Poona on 15th of February, 1950. Section 127(2) thereof
authorised the Corporation to impose octroi and other taxes, while section 149
prescribed the procedure to be followed in levying taxes. D
In the year 1957, the Corporation in order to boost industrial development
and to encourage the industrialists to establish industries in the city, decided to
give certain concession in the nature of ex~mption from octroi duty. Pursuant
to this objective the Corporation made rule 62-B in Chapter VIII to the Schedule

--
of the saici Act in 1957, which envisaged the creation of an "Industrial Estate or
Area", by which was meant the area which the Corporation may from time to
demarcate as the area in which industries can be suitably located in the interest
E
of industrialisation of the city. Under this rule no levy of octroi was to be made
for a period of twelve years. Later on, the Corporation framed extensive new-
octroi Rules under their resolution dated 7th of August, 1962. Rule 5(8) of the
new Rules provided for exemption in respect of levy of octroi.

The Corporation had been levying octroi on the materials received by the F
appellants. The appellants sought exemption under rule 5(8). The Corporation
rejected their claim for exemption of octroi on the ground that exemption can
only be granted if the area within which the concern was situated was _declared
as industrial area and demarcated for the purpose.

Being aggrieved, the appellants filed petitions under Article 226 of the
Constitution in the High Court for the issue of a writ of MandamllS requiring G
the respondent Corporation to define and demarcate the area where their facto·
ries were situated as industrial area, within the meaning of rule 5(8), and to
exempt them from payment of octroi. During the pendency of these petitions
rule 5(8) was repealed. The appellants amended the writ petitions and further
contended that (!) that 1he repeal of rule 5(8) was illegal and/or ultra vires and,
therefore, rule 5(8) still continues to be effective and (2) that in any event they H
were entitled to get the benefit of rule 62-B which had not been repealed. The High
Court repelled both the contentions and held that old rule 62-B)nd the new rule
730 SUPREME COURT REPORTS [1982] I S.C.R.

A 5(8) were repealed and that there was no legal flaw. It however took the view that
despite the repeal of Ru JC 5(8) the appellant could stiJI get the relief under rule
5(8) because if the proviso attached to the repealing rule the area in question
was not demarcated as industrial estate or area for the purpose of rule 5(8) and
that it was solely in the discretion of the Corporation to demarcate an area as
industrial estate. It consequently dismissed the writ petitions.

B In the appeals to this Court it was contended on behalf of the appellants
(1) that the disputed area had been included in the development plan under the
Bombay Town Planning Act, 1954 before the promulgation of rule 5(8) and had
thus autornaticalJy become an industrial estate or area for the purposes of that
rule. (2) The Corporation had refused to grant exemption to the appellants on
the arbitrary ground that the concern of the appellants was not a new one. (3)
There had been vio1ation of Article 14 of the Constitution in as much as some
c industries in similar situations have been granted exemption while the appellants
have been deprived of the benefit of rule 5(8) and (4) While denying the benefit
of rule 5(8) the Corporation had taken into consideration extraneous or irrelevant
considerations.
-
Dismissing the appeals

D HELD : 1 (i) No area had been declared as industrial area under the
Development plan before 1957 and in fact it was only after the enforcement of
the development plan on 15th of August, 1966 that the disputed area became
an industrial area under the Bombay Town Planning Act. [735 C-D]

(ii) A bare perusal of rule 5(8) makes it apparent that for the purpose of
the exemption from octroi, an industrial estate or area means the area which the
E Corporation may from time to time demarcate for the purpose of the rule as the
area in which industries can be suitably located for the interest of industrialisa-
tion of the City, Therefore, the deruarcation made under the Town Planning
Act will not be a demarcation for the purpose of rule 5(8) and unless there is
a demarcation as contemplated by rule 5(8) tµe appellants cannot claim exemp-
tion from octroi. The view taken by the High Court is fully warranted by rule
5(8) of the Octroi Rules. [735 E·G]
F
2. The purpose of the Town Planning Act is to plan the town and to keep
industrial areas away from the residential or commercial areas and that no
industries could be set up in an area other than the industrial area declared in
pursuance of the Act. The purpose of demarcation as industrial estate or area
under rule 5(8) is for the giving of incentive and impetus to industries in a parti-
cular area. [736 B-CJ
G
3. An analysis of the preamable to the new Octroi Rules makes it clear
that rule 62-B relating ta actroi was repealed by implication. It is noteworthy
that chapter VIII does not contain any rule relating to octroi, except rule 62-B
which did not find a place io die preamable. All rules relating to octroi and
enacted under the 1901 and the 1925 Acts were also repealed without exemption.
H Another pointer is available in the fact that octroi was made the subject-matter
of a new and comprehensive set of rules which not only dealt with the matters
SWASTIK RUBBER v. MUNICIPAL CORPN. (Misra, J.) 731

covered by the rules contained in chapter VIII and specifically mentioned in the A
preamble but also the one covered by rule 62-B, namely the matter of exemption
of goods from octroi in areas considered suitable for industrialisation. The pro-
mulgation of rule 5(8) as a part of an exhaustive set of new rules, has the effect
of a repeal of rule 62-B by necessary implication, although not in express
terms. [737 D-G]

4. The considerations which have weighed with the Corporation for deny· B
ing the benefit of exemption from octroi to the appellants cannot be said to be
either irrelevant or extraneous. These are within the ambit of rule 5(8) of tho
Octroi Rules. [739 Bl

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1600,
1568 and 1416 of 1970.
c
From the judgment and order dated the 13th/14th February,
1969 of the Bombay High Court in Special Civil Application
Nos. 295 of 1962, 1397/66 and 1086 of 1966 respectively.

R.B. Datar, La/it Bhardwaj and Miss Madhu Moo/chandani for
the appellant in C.A. No. 1600/70. D
Dr. L.M. Singhvi, R.H. Dhebar, S.K. Dholakia, 11.C. Bhatia,
Mrs. Ranjana Anand and L.K. Pandey for the appellants in C.A.
No. 1568/70.

V.S. Desai and Dr. Y.S. Chitaley Mrs. J. Wad for the respon· E
dent in C.A. No. 1600 and 1568.

Mrs. J. Wad for respondent in C.A. No. 1416 of 1970.

The Judgment of the Court was delivered by

MISRA, J. The present appeals by certificate are directed against
F
a common judgment of the Bombay High Court dated 13th of
February, 1969. By the impugned order the High Court dismissed
the petitions filed by the appellants under Article 226 of the Consti·
tution challenging the demand of octroi duty by the Municipal
Corporation of Poona.
G
The Bombay Provincial Municipal Corporation Act, 1949 (for
short 'the Act') came into operation in the City of Poona on 15th
of February, 1950. Section 127 (2) thereof authorises the Corpora-
tion to impose octroi and other taxes. Section 149 prescribes the
procedure to be followed in levying taxes. Insofar as it is material
H
. d
1treas: '
732 SUPREME COURT REPORTS [1982] 1 S.C.R.

A ''149 (I) In event of the Corporation deciding to levy
any of the taxes specified in sub-section (2) of section 127,
it shall make detailed provision, in so far as such provision
is not made by this Act, in the from of rules, amplifying or
adding to the rules at the time in force ...

8 (2) The rules shall be submitted by the Corporation
Government and the provincial Government may either
;
refuse to sanction them ot refer them back to the Corpora- I <
tion for further consideration or sanction them either as
they stand or with such modification as it thinks fit, not,
however, involving an increase in the rate or rates of the
c levy or the extent thereof."

It appears that sometime in the year 1957 the Corporation in
order to boost industrial development and to encourage the indus·
trialists to establish industries in the city, had decided to give certain \-
concession in the naure of exemption from octroi duty on certain
D products under certain conditions. Pursuant to this objective the
Corporation made rule 62-B in' 0 apter VIII to the Schedule of the
said Act in 1957. It reads:

"62-B. Industrial Estate or Area" means the area
which Corporation may from time to time demarcate for
E the purposes of the rule as the area in which industries can
he suitably located in the interest of industrialisation of the
city of Poona.

In respect of any raw materials or machinery imported
by any industrial manufacturing concern established or to
F be established in the industrial estate solely for the purpose
of manufacturing finished articles in the said industrial
estate, the Commissioner shall not, for a period of twelve
years only, from the date on which this rule comes into
force. levy octroi. .. "

G Under this rule no levy of octroi was to be made for a period
of twelve years from the date on which the rule came into
force.

Later on the Corporation framed extensive new Octroi Rules
H. under their resolution dated 7th of August, 1962, which received
the sanction of the Government of Maharashtra on 28th of January,
SWASTIK RUBBER v. MUNICIPAL CORPN. (Misra, J.) 733

1963. As the entire argument on behalf of the appellants is based
on rule 5 (8) of the said rules, it will be appropriate to quote the
rule :

"5(8). In respect of any raw materials or machinery
belonging to and imported by the industrial, manufactu-
8
ring, processing or assembling concern established or to
be established in the industrial estate or area for the
purpose of manufacturing, processing, or assembling
finished articles in the said industrial estate or area, the
Commissioner shall not levy octroi for a period of 10 years
from the date of demarcation of such areas as an industrial
estate or area. Provided that this exemption not be given
c
in respect of any raw materials imported for the purpose
of refilling, packing or repacking only.

Provided that no exemption from octroi shall be given
or claimable unless the importer produces at the time of D
import but not afterwards a certificate in the form pres-
cribed in Schedule P signed by the proprietor or ·the
manager of the said industrial concern certifying that the
raw materials 0r machinery that are being imported are
the property of the ownership of the said industrial con-
cern and that the said materials or machinery are to be E
used or are intended to be used by the said industrial con·
cern for the purpose of manufacturing, processing or
assembling finished articles in the said industrial estate
or area.

, For the purpose of this exemption 'Industrial Estate' F
or Area shall mean the area which the Corporation may
from time to time demarcate for the purposes of this rule
as the area in which industries can be suitably located in
the interest of industrialisation of the City of Poona."
G
The Corporation had been levying octroi on the materials
received by the appellants. They, however, sought to get exemp·
tion under rule 5 (8) from octroi. As the pattern of facts in each
of the appeals is similar, we shall deal with the application made
by the appellant in appeal No. 1568of1970. The appellant in this H
case applied on 17th of November, 1964 for exemption from pay-
ment of octroi duty under rule 5 (8) of the Octroi Rules. The
734 SUPREME COURT REPORTS [1982] I S.C.R.

A Superintendent of Octroi, Poona Municipal Corporation wrote back
on 5th of December, 1964 as follows:

" ... exemption from payment of octroi duty can only
be granted if the area within which the concern is situated
is declared as industrial area anj is demarcated for the
B purpose under the Resolution of the Corporation. As the
area in question has not been demarcated as an industrial
area, under the resolution of the Municipal Corporation, ,l
the question of granting exemption from the payment of , •
octroi duty does not arise. It is, therefore, regretted that
the exemption asked for cannot be granted."
c
Similar was the position of the appellants in the other two
appeals.

In the circumstances the appellants filed petitions under
D Article 226 of the Constitution for a mandamus requiring the Muni- \-
cipal Corporation to define and demarcate the area where their
factories were situate as industrial area within the meaning of
sub-ru1e (8) of rule 5 and to exempt them from payment of
octroi.

E lt appears that during the pendency of the writ petitions ruie
5 (8) of the Octroi Rules was repealed by a notification with effect
from !st of September, 1968. The appellants, therefore, applied for
amendment of the petitions. By these amendments, the appellants
sought to take up two more pleas: (!)that the repeal of sub-rule
(8) of rule 5 was illegal aud/or ultra vires and, therefore, rule 5 (8)
F still continues to be effective, and (2) that in any event the appel-
lents can get the benefit of rule 62-B which has not been repealed.

The High Court repelled both the eontentions and held that
old rule 62-B and the new rule 5 (8) were repealed and there was
no legal flaw. It, however. took the view that despite the repeal of
rule 5 (8) the appellants could still get the relief under rule 5 (8) if
G other conditions were satisfied, because of the proviso attached to
the repealing rule. On merits, however, the High Court did not
accept the case of the appellants. In its opinion the area in ques-
was not demarcated as industrial estate or area for the purpose of
rule 5 (8). The High Court further held that in view of rule 5 (8)
H of the Octroi Rules it was solely in the discrection of the Corpora-
tion to demarcate an area as industrial estate. The appellants have
SWASTIK RUBBER v. MUNICIPAL CORPN. (Misra, J.) 735

now come to challenge the order of the High Court by these A
appeals.

Dr. Singh vi appearing for the appellant in one of the appeals,
Civil Appeal No. 1568 of 1970, has contended that if certain area
has been demarcated as an industrial area under the Bombay Town
B
Planning Act, 1954 the same shall be taken to be an industrial area
within the meaning of rule 5 (8) of the Octroi Rules. The argu ·
ment proceeded in the first instance on the assumption that the dis·
puted area had already been included in the development plan under
Bombay Town Planning Act, 1954 before the promulgation of rule
5 (8) and had thus automatically become an industrial estate or area
for the purposes of that rule. But the development plan was pre-
c
pared by the Corporation on 20th of November, 1958 which was
sanctioned by the Government on 7th of July, 1966 and it came into
fore on 15th of August, 1966. Therefore, no area had been declared
as industrial area under the development plan before 1957 and in fact
it was only after the enforcement of the development plan on 15th 0
of August, 1967 that the disputed area became an industrial area
under the Bombay Town Planning Act. Dr. Singhvi's assumption
cl early lacks any factual basis.

Now the question is whether demarcation of a particular area
as an industrial estate or area in pursuance of the Bombay Town E
-,- Planning Act could be taken to be a demarcation within the meaning
of rule 5 (8). On a bare perusal of rule 5 (8) it will be apparent that
for the purpose of the exemption from octroi an industrial estate or
area means the area which the Corporation may from time to time

- demarcate/or the purpose of this rule as the area in which industries
can be suitably located for the interest of industrialisation of the
City of Poona. Obviously, therefore, the .demarcation made under
the Town Planning Act will not be a demarcation for the purpose
F

of rule 5 (8) and unless there is a demarcation as contemplated by
rule 5 (8) the appellants cannot claim exemption from octroi. The
view taken by the High Court is fully warranted by rule 5 (8) of the
Octroi Rules. G

It is next contended for the appellant that the Corporation has
refused to grant exemption to the appellant on the arbitrary ground
that the concern of the appellant was not a new one. The learned
H
counsel seeks to support his argument by the following expression
used in subcrule (8) of rule 5 :
736 SUPREME COURT REPORTS (1982] I S.C.R.

A " concern established or to be established in the
industrial estate or area."

The expression obviously includes not only a concern to be establi-
shed but also one already established. But even then the appellant
cannot get exemption unless he proves that there has been demar-
B cation'.within the meaning of sub-rule (8) of rule 5 of the Octroi
Rules. While demarcating an area for the purpose of rule 5(8) the
Corporation may have to take into consideration various factors
and circumstances different from those which might weigh with it
for making out an area as industrial under the Town Planning Act.
Theipurpose:ofthat Act is to plan the town and thus to keep indus-
c trial{areas away from the residential or commercial areas and no
industries could be set up in an area other than the industrial area
declared[ in pursuance of that Act, while the purpose of demarcation
as industrial estate or area under rule 5(8) is the giving of incentive
andi,.impetus to industries in a particular area. In so doing the
D Corporation has got to see whether a particular area is or is not
suitably located in the interest of industrialisation irrespective of
any consideration as to how the town is to be planned.

rt;was next:contended that there has been violation of Article
14 of the Constitution in as much as some industries in similar
situation have been granted exemption while the appellants have
E
been deprived of the benefit of rule 5(8). There is no foundation
for this ground. It has not been alleged, much Jess proved, that
any~otI-.er:unitlhasltecn granted exemption even without a demarca-
tion by the Corporation under rule 5(8). There is absolutely no
force in this contention.
F
For the respondent it was contended that rule 5(8) of the
Octroi Rules having been deleted the appellent cannot seek exemp-
tion under rule 5(8). Dr. Singhvi for the appellant in reply has
contended that, for one thing, the appellant can fall back on the old
rule 62-B:as the same has not been repealed. The preamble to the
G new Octroi Rules reads :

"Whereas it is found necessary to rescind Rules 26, 28
29, 33,' 62 and Rules 35 and 49 (in so far as they relate to
octroi) contained in Chapter VIII of the Schedule of the
H Bombay:Provincial!Municipal Corporations Act, 1949, and
all ·other existing rules and bye-laws relating to octroi
enacted under the Bombay District Municipal Act, 1901,
SWASTIK RUBBER v. MUNICIPAL CORPN. (Misra, J.) 737

and the Bombay Municipal Boroughs Act, 1925, and A
whereas it is found necessary to make new rules relating to
octroi under sub-section (I) of section 149 of the Bombay
Provincial Municipal Corporations Act, 1949, the Munici-
pal Corporation of the City of Poona under its Resolution
No. 78, dated 7·8-1962 in pursuance of the power vesting
in it under clause (7) and clause (17) of section 457 read B
with section 454 of the said Act is pleased to rescind the
rules and bye-laws aforementioned and to make the new
rules as follows."

It is true that seven rules covering the subject of octroi and c
contained in chapter VIII of the Schedule to the Bombay Provincial
Municipal Corporation Act 1949 have been specifically mentioned
in the preamble as being rescinded and rule 62B is conspicuous by
-; its absence therefrom, which fact apparently supports Dr. Singhvi's
contention. A closer analysis of the preamble under which new
rules were framed, however, makes it clear that rule 62B relating to D
octroi was repealed by implication. It is noteworthy that chapter
VIII abovementioned does not contain any rule relating to octroi,
except rule 62B, whfoh did not find a place in the preamble. All
rules relating to octroi and enacted under the 1901 and the 1925
Acts were also repealed without exception. Another pointer (which
is perheps the most important in this connection) is available in the E
fact that octroi was made the subject-matter of a new and compre-
hensive set of rules which not only deal with the matters covered by
the rules contained in chapter VIII and specifically mentioned in the
preamble but also the one covered by rule 62B, namely, the matter
of exemption of goods from octroi in areas considered suitable for
industralisation. It does not stand to reason that the rule-making
F
authority framed new rules, of which rule 5(8) covers the entire
field of the earlier rule 62B, and yet left the latter intact. It could
possibly not have been the intention of that authority to have two
rules on the same subject and thus create confusion. The promul-
gation of rule 5(8) as a part of an exhaustive set of new rules, in
our opinion, has the effect of a repeal of rule 62B by necessary
G
implication, although not in express terms.

Dr. Singhvi, however, as a second string to the bow banks H
upon the proviso to the resolution of the Corporation seeking to
repeal rule 5(8) which is in these words :
738 SUPREME COURT REPORTS [ 1982] 1 s.c.R.

A "Octroi Rule 5(8) is hereby repealed. Provided that
notwithstandiug such repeal the exemption already granted
shall continue until the expiry of the respective periods of
their grants."

The resolution so passed was sent to the Government and, as held
B
in Municipal Corporation for the City of Poona etc. v. Bijlee Pro-
duct (India) Ltd etc.,(') the Government accepted it in full and sanc-
tioned the repeal of rule 5(8), as also the proposed proviso. But
then the appellants would not be entitled to any benefit by reason
of the proviso because they were never granted any exemption under
c rule 5(8).

The other contention raised by Dr. Singhvi is that the Corpo-
ration while denying the benefit of exemption from octroi has taken
into consideration extraneous or irrelevant considerations. In
support of his contention he referred to paragraph 7 of the counter
D affidavit fifed by the Corporation in the writ petition, which is as
follows :

"7. The respondents grant exemptions to concerns
on certain policies. The purpose of extending exemption
from octroi duty is to attract new industries in the Corpo-
E ration limits. This policy is also carried out with a view
to develop the city and also to secure employment to citi-
zens and thus to have progress in the economic conditions,
commerce and trade for the welfare of the people in gene-
ral. Moreover the aim of giving exemptions to new indus-
tries is to secure permanent sources of income for the
F respondents after a certain period, i.e , ten years. This is
the main object in granting exemption in the cases of new
industries to be started that help the development of the
City and secure permanent sources of income for the
respondents after a definite period. Side by side, there are
certain other objects also which are kept in view while
G determining the question of granting exemptions. These
are whether Defence needs are satisfied, whether in the
interest of public health and sanitation the grant of exemp·
tions is beneficial, whether foreign exchange is saved,
whether the problem of housing accommodation is solved,
H to some extent and the like. The respondents will suffer

(1) (1979] 1 SCR 765.
SWASTIK RUBBER v. MUNICIPAL CORPN. (Misra, J.) 739

huge loss in revenue if exemptions are granted to each and A
every industry falling within the industrial areas under the
Town Planning Scheme. All these considerations are
within the full discretion of the respondents wbile deter-
mining the question of grant of exemptions ...... ·•

In our opinion the considerations which have weighed with the B
Corporation cannot be said to be either irrelevant or extraneous.
These considerations are within the ambit of rule 5(8) of the
Octroi Rules.

A lot of argument was advanced on behalf of the appellant by
Dr. Singhvi on the nature of relief to be granted to the appellant. c
His contention was that a writ of certiorari may not be of much avail
unless the Court grants a writ of mandamus directing the Corpora-
iion to demarcate the area in question under rule 5(8) of the Octroi
Rules and grant him. the exemption from octroi duty. A number of
authorities were cited that the Court can issue a writ of mandamus
in suitable cases even in respect of administrative orders. We do D
not think it is necessary to decide this point as in our opinion the
appellants have not been able to make out a case for any relief.
In Civil Appeal No. 1600 of 1970 Shri R.B. Datar adopted
the arguments advanced by Dr. Singhvi. In the third appeal,
No. 1416 of 1970. also the same questions of fact and law are E
involved and, therefore, this judgment will govern the other two
appeals.
I
For the reasons given above these appeals must fail. They

~
I
are accordingly dismissed. The parties, however, shall bear their
own costs. F

N.K.A. Appeals dismissed.