The State Of Uttar Pradesh And Others vs Raja Syed Mohammad Saadat Ali Khan

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 306 of 1957

Decision Date: 28 July, 1960

Coram: J.C. Shah, S.K. Das, M. Hidayatullah

In the matter titled The State of Uttar Pradesh and Others versus Raja Syed Mohammad Saadat Ali Khan, a judgment was delivered on 28 July 1960 by a bench of the Supreme Court of India consisting of Justices J. C. Shah, S. K. Das and M. Hidayatullah. The case was reported in the 1960 All India Reporter at page 1283 and concerned the Agricultural Income‑Tax Act of 1949, the United Provinces Land Revenue Act of 1901, and a subsequent amendment enacted by the State Legislature in 1956. The headnote recorded that the 1949 Act authorised the levy of tax on agricultural income within the State, that the tax and a super‑tax were calculated on the total agricultural income of the preceding year, and that, for purposes of the Act, the Collector and the Assistant Collector were designated as the assessing authorities within their respective revenue jurisdictions, with the term “Collector” being given the same meaning as in the 1901 Land Revenue Act. Under rules framed under section 44 of the 1949 Act, an assessee whose agricultural income fell within the jurisdiction of more than one assessing authority was required to be assessed by the Collector of the district where the assessee permanently resided.

By virtue of subsection 1 of section 14(A) of the 1901 Land Revenue Act, the State Government appointed Mr. K. C. Chaudhry as the Additional Collector for the district of Bahraich and authorised him to exercise all the powers and perform all the duties of a Collector in every class of cases. Acting on the authority conferred by section 14 of the 1949 Agricultural Income‑Tax Act, the Additional Collector assessed the net agricultural income of the respondent, who owned land in the districts of Bahraich and Kheri, at the amount of twelve lakh eighty‑one thousand one‑hundred ten rupees and ten annas, and ordered the respondent to pay one lakh thirty‑six thousand three‑hundred ninety rupees and two annas as agricultural income‑tax and super‑tax. The respondent challenged the validity of this order before the High Court by filing an application under article 226 of the Constitution. The High Court set aside the order, holding that the Additional Collector lacked extra‑territorial jurisdiction, a jurisdiction that the regular Collector possessed when the assessee’s property lay in several districts, and therefore the assessment proceedings were unauthorised. After this judgment, the State Legislature amended the 1949 Act by passing Act XIV of 1956, which gave retrospective effect to the amended provisions. The amendment expressly provided that assessment proceedings conducted by an Additional Collector who was invested with the powers of a Collector under the 1901 Act should be deemed to have been properly taken.

In the present matter, the Court noted that a Collector who possessed the powers of a Collector under the United Provinces Land Revenue Act of 1901 was to be regarded as having acted properly at all times. The State Government, after the High Court’s decision, filed an application for review of that judgment under section 11 of the amending statute. The High Court dismissed the review application. Unsatisfied with that outcome, the State Government obtained special leave to appeal the decision. On that appeal, the Court held that the Additional Collector who had issued the assessment was in fact competent to determine the assessee’s liability for agricultural income‑tax and the accompanying super‑tax under the United Provinces Agricultural Income‑Tax Act, 1949. The Court explained that the appellate jurisdiction extended to considering the competence of the assessing authority, and that the assessment made by the Additional Collector fell within the scope of the amended statutory scheme.

The Court further clarified the principle that an appellate court must apply the law as it existed at the time the appeal was heard, even if the law had been amended earlier with retrospective effect. Specifically, if a statute was amended before the hearing to confer jurisdiction on an authority or tribunal that previously lacked such power, the appellate court must give effect to that amendment. The Court emphasized that the power of the appellate court to decide the appeal according to the amended law was not curtailed by the existence of a review provision in section 11 of the amending Act. In other words, the statutory provision allowing for a review of the High Court’s judgment did not impede the appellate court’s ability to apply the retrospectively amended law to the facts of the case.

The judgment was delivered in the civil appellate jurisdiction of the Supreme Court in Civil Appeal No. 306 of 1957. The appeal arose from the judgment and order dated 28 April 1955 of the Allahabad High Court, Lucknow Bench, in Civil Miscellaneous Application No. 59 of 1954. Counsel for the appellants were C. B. Agarwala, C. P. Lal and G. N. Dikshit, while counsel for the respondent were S. P. Sinha and B. R. L. Iyengar. The judgment was pronounced on 28 July 1960 by Justice Shah, who referred to the respondent as “the assessee.” The assessee, Raja Syed Mohammad Saadat Ali Khan, owned Taluqa Nanpura in the district of Bahraich and Taluqa Mohammadi in the district of Kheri, both situated in the State of Uttar Pradesh. The United Provinces legislature had enacted the United Provinces Agricultural Income‑Tax Act, Act III of 1949, which authorized the levy of a tax on agricultural income within the State. Section 3 of that Act imposed liability to pay agricultural income‑tax and super‑tax, at rates specified in the schedule, on the total agricultural income of the preceding year earned by each person. Section 14 designated the Collector and the Assistant Collector, within their respective revenue jurisdictions, as the assessing authorities for purposes of the Act. Under the original enactment, section 2(4) defined the term “Collector” to have the same meaning as in the United Provinces Land Revenue Act, 1901. Section 44 empowered the Provincial Government to make rules to give effect to the Act, including provisions to specify which authority and at which place an assessment should be made when an assessee’s agricultural income fell within the jurisdictions of more than one assessing authority. Accordingly, Rule 18, element 1(a), framed under the authority of section 44, provided, insofar as it was material, that subject to sub‑section 2 of section 14, an assessee shall …

In the ordinary course, a person who earned agricultural income was to be assessed by the Collector of the district in which that person permanently lived. The State Government of Uttar Pradesh, which was earlier the United Provinces, issued a notification on 8 June 1953 that appointed K C Chaudhry, under sub‑section 1 of section 14(A) of the United Provinces Land Revenue Act III of 1901, as the Additional Collector for the district of Bahraich. The notification expressly authorised the Additional Collector to exercise all the powers and to perform all the duties of a Collector in every class of cases. Relying on that authority, the Additional Collector issued an order dated 25 February 1954 in which he assessed the appellant’s net agricultural income at Rs 2,81,110‑10‑3 and directed the appellant to pay Rs 1,36,390‑2‑0 as agricultural income‑tax and super‑tax under section 14 of the Uttar Pradesh Agricultural Income‑Tax Act III of 1949. The appellant contested the validity of that assessment by filing an application under article 226 of the Constitution in the High Court of Judicature at Allahabad. The appellant argued that the Additional Collector of Bahraich was not a lawfully competent authority to assess agricultural income‑tax under the 1949 Act. The High Court accepted that contention, granted a writ of certiorari and set aside the Additional Collector’s order. The Court reasoned that where an assessee’s property extended over several districts, the Collector as the assessing authority under the 1949 Act possessed an “extra‑territorial” jurisdiction, a jurisdiction that the Additional Collector K C Chaudhry did not possess, rendering the assessment unauthorized. The State of Uttar Pradesh obtained leave from the High Court to appeal the judgment that annulled the assessment. On behalf of the State, counsel argued that, by virtue of section 14(A) of the United Provinces Land Revenue Act III of 1901, an Additional Collector was competent to exercise all powers and perform all duties of a Collector in any class of cases as directed by the State Government, and that the State Government had expressly vested Mr Chaudhry with such authority. Consequently, the State contended that the Additional Collector could lawfully exercise the Collector’s “extra‑territorial” powers under the 1949 Act. The Court indicated that it would not need to express an opinion on this argument because of subsequent legislative developments.

The legislature of Uttar Pradesh, after the High Court’s decision, enacted Act XIV of 1956 to amend the United Provinces Agricultural Income‑Tax Act (U P Act III of 1949) and gave the amendment retrospective operation. The amendment replaced clause 4 of section 2 of the original Act with two new clauses, labelled clause 4 and clause 4‑a. Clause 4‑a provides that the expression “Collector” shall always be deemed to have the meaning prescribed in the Uttar Pradesh Land Revenue Act of 1901, and that meaning includes an Additional Collector appointed under that Act. By this provision, the amended statute expressly incorporates an Additional Collector within the definition of “Collector,” thereby authorising such an officer to exercise the same powers, including any extra‑territorial jurisdiction, that were previously attributed solely to a Collector. Consequently, the legislative amendment retrospectively validates the authority of the Additional Collector to make assessments that were earlier challenged, and it renders the High Court’s basis for quashing the assessment untenable under the current statutory construction.

The judgment explained that the Land Revenue Act of 1901, as amended, expressly includes an Additional Collector appointed under that Act. Section ten, paragraph one, sub‑paragraph (b) of the amending legislation mandates that all orders, actions, proceedings, directions, or jurisdictions that were exercised under the principal Act or any rule made thereunder before the amendment shall be deemed to have always possessed full legal validity as though the amendment had been in force at every relevant date. Furthermore, subsection one, clause (a) of section ten provides that Rule IS of the Uttar Pradesh Agricultural Income Tax Rules, 1949, shall regard the term “Collector” as also encompassing an Additional Collector. Sub‑section two of the same section adds that any question concerning the validity or legality of an assessment made by an Additional Collector, in purported exercise of powers under section fourteen or the rules framed under clause (o) of subsection two of section forty‑four of Act III of 1949, shall be determined as if the amending Act had been operative at all material times. By these provisions, the legislature has plainly and unequivocally stated that assessment proceedings conducted by an Additional Collector who is vested with the powers of a Collector under Act III of 1901 shall always be regarded as properly taken. The Court was therefore confronted with an appeal against the High Court’s order that set aside the assessment on the ground that the Additional Collector lacked extra‑territorial authority to assess agricultural income‑tax. Although Act III of 1949 was amended after the High Court rendered its judgment, the Court held that it must apply the law as it stands today, treating the amendment as having retroactive effect, and must give effect to the legislature’s clear intention. Accordingly, the Court concluded that the Additional Collector was competent to assess the liability of the assessee for agricultural income‑tax and the related super‑tax under the United Provinces Agricultural Income‑Tax Act III of 1949. The assessee further argued that, prior to the High Court’s decision, the State Government had filed an application for review of judgment under section eleven of the amending Act, which the High Court rejected, and that no further proceeding challenging that decision had been initiated. Consequently, the Court found that it could not set aside the judgment under appeal. In support of this submission, it was contended that an application for review of judgment constitutes the sole remedy available to a person aggrieved by a court or authority’s decision that is inconsistent with the provisions of the amending Act, and that if, for any reason, such an application is not filed or is rejected, an appellate court or authority cannot re‑examine the dispute in light of the amended legislation.

It was observed that when an application for review under section 11 either has not been filed or has been filed and subsequently rejected, a court or authority that possesses appellate jurisdiction over the decision is not barred from adjudicating the dispute in accordance with the amended Act. Section 11, insofar as it is relevant, reads as follows: “Where before the commencement of this Act, any court or authority has, in any proceedings under the Principal Act, set aside any assessment made by an Additional Collector merely on the ground that the assessing authority had no jurisdiction to make the assessment, any party to the proceedings may, at any time, within ninety days from the commencement of the Act apply to the court or authority for a review of the proceedings in the light of the provisions of this Act, and the court or authority to which the application is made, shall review the proceedings accordingly.” Relying on this provision, the State of Uttar Pradesh submitted an application for review of the High Court’s judgment. The High Court dismissed the application, holding that “That section (s. 11) applies however only to cases in which the assessment has been set aside in any proceedings under the Principal Act. In the cases before us, the assessment has not been set aside in any proceedings under the Principal Act but in exercise of the jurisdiction vested in this court under Art. 226 of the Constitution. These three petitions are therefore not maintainable…”. The present Court expressed no opinion on the correctness of the High Court’s view. It held that the assessee’s contention—that a review under section 11 is the sole remedy for setting aside an adverse order inconsistent with the 1956 amending Act—lacked force. The Court explained that an appellate court, when hearing a proper appeal, must give effect to the law as it stands, even if that law was retrospectively amended prior to the hearing with the purpose of conferring jurisdiction on the original authority or tribunal that previously lacked it. Moreover, the review provision contained in section 11 does not curtail the appellate court’s power to consider the appeal in light of the amended legislation. Accordingly, the Court concluded that the appeal must be allowed. Because the appellant succeeded by relying on a statute enacted after the High Court’s judgment, the Court directed that no order as to costs should be made and that the appeal be allowed.