Raza Buland Sugar Co. Ltd vs Municlpal Board, Rampur

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 23 of 1964

Decision Date: 30 October 1964

Coram: K.N. Wanchoo, P.B. Gajendragadkar, M. Hidayatullah, Raghubar Dayal, J.R. Mudholkar

In this matter, the Supreme Court heard an appeal titled Raza Buland Sugar Co. Ltd versus Municipal Board, Rampur, decided on the thirtieth of October, 1964. The judgment was authored by Justice K.N. Wanchoo and the bench comprised Justices P.B. Gajendragadkar, M. Hidayatullah, Raghubar Dayal and J.R. Mudholkar. The petitioner was Raza Buland Sugar Co. Ltd and the respondent was the Municipal Board of Rampur. The case is reported in the 1965 All India Reporter at page 895 and also in the 1965 Supreme Court Reports (Second Series) at page 970, with several subsequent citations in later law reports. The dispute arose under Article 226 of the Constitution of India, where the petitioner challenged the imposition of a municipal water tax by the Rampur Board. The petitioner asserted that the tax had not been imposed according to the statutory requirements of the Uttar Pradesh Municipalities Act of 1916, specifically sections 131(3), 94(3) and 135(3). The contention was that the Board had published the proposals and draft rules in an Urdu newspaper, whereas the mandatory provisions required publication in a Hindi newspaper. The High Court dismissed the petition but issued a certificate of fitness for appeal under Article 133(1)(c). The Supreme Court was therefore asked to determine whether the entire provision of section 131(3) was mandatory or whether the requirement of publication in a Hindi newspaper under section 94(3) was merely directory, and also whether a notification in the Government Gazette, as prescribed by section 135(3), constituted conclusive proof that the statutory procedure had been observed.

The Court held, speaking through Justice Gajendragadkar, Chief Justice, and Justices Wanchoo and Raghubar Dayal, that section 131(3) could be separated into two distinct components. The first component obliges the Board to publish the tax proposal and draft rules so that the public may raise objections, and this requirement is mandatory because it furthers the purpose of allowing public participation in the tax‑making process. The second component, which refers to the manner of publication prescribed in section 94(3), is considered directory rather than mandatory. The essential requirement of the second component is that the publication be made in Hindi in a local newspaper; compliance with this condition satisfies the statutory intent. Applying this interpretation to the facts, the Court observed that the Board had published the notice in Hindi in a local paper that, according to the evidence, enjoyed wide circulation in Rampur, even though there was no regularly published local Hindi newspaper. Consequently, the Board achieved substantial compliance with section 94(3). Regarding section 135(3), the Court affirmed that a notification of tax imposition in the Government Gazette serves as conclusive proof that the tax has been levied in accordance with the Act. Although the question of whether such a notification could rescue a tax that ignored a mandatory statutory requirement did not arise directly, the Court noted that in the present case the mandatory part of section 131(3) had been complied with and the directory part had been substantially complied with. Therefore, section 135(3) applied, and the objection that the tax was invalidly imposed could not succeed.

In the case before the Court, the notice required under section 94(3) was published in Hindi in a local newspaper that, according to the evidence, enjoyed good circulation in Rampur. Although there was no regularly published local Hindi newspaper, the publication in the newspaper that was available was considered, under the circumstances, to be a substantial compliance with the requirements of section 94(3). The Court noted the relevant portions of the record, referring to pages 977 E‑F, 978 D‑F, 980 C and 981 A‑B, to support its finding of substantial compliance.

Section 135(3) states that a notification of tax imposition in the Government Gazette constitutes conclusive proof that the tax has been imposed in accordance with the Act. The Court observed that the question of whether such a Gazette notification could validate a tax that had been imposed without observing a mandatory provision of the relevant law did not arise directly in the present dispute. In the present case, the mandatory portion of section 131(3) had been complied with, and the second, non‑mandatory portion had been substantially complied with. Consequently, the provision of section 135(3) applied, and the objection that the tax had not been validly imposed could not succeed. The Court referred to the authorities cited at pages 983 B‑D and 983 D‑E, including K. Kamaraja Nadar v. Kunju Thevar [1959] S.C.R. 583, which was relied upon, as well as State of U.P. v. Manbodhan Lai Srivastva [1958] S.C.R. 533 and Berar Swadeshi Vanaspati v. Municipal Committee, Shegaon [1962] 1 S.C.R. 596, which were distinguished. Additional references were made to Montreal Street Railway Company v. Normandin (1917) L.R., A.C. 170, Azimulla v. Suraj Kumar Singh A.I.R. (1957) All. 307, and Municipal Board, Hapur v. Raghuvendra Kripal 1960 A.L.I. 185.

Justice Hidayatullah explained that a municipal committee possesses taxation powers not as a sovereign legislature but as a delegate of the legislature, and therefore the taxes it levies are effectively levied by the Government. The exercise of this delegated power becomes effective only when the conditions attached to the grant of power are complied with and the Government finally approves the tax. Once the Government, after giving its approval, notifies the tax in the Gazette, the tax is deemed to be conclusively imposed in accordance with the prescribed procedure, as noted on pages 985 H to 986 D. He further distinguished between conditions intended to protect taxpayers, which are fundamental and cannot be ignored, and conditions designed for ministerial efficiency, which are directory and may be satisfied by substantial compliance. Accordingly, the direction to publish the notice in a Hindi newspaper was regarded as sufficient compliance, as indicated on page 987 C‑D, and the earlier case of Berar Swadeshi Vanaspati v. Municipal Committee, Shegaon [1962] 1 S.C.R. 596 was relied upon.

Justice Mudholkar observed that when a verb in a provision governs two distinct matters, it cannot be given one meaning for one matter and a different meaning for the other. Since section 94(3) is clearly directory, the Court held that it was unnecessary to consider whether section 131(3) is directory or mandatory, or to read it as partly one and partly the other, thereby adhering to the normal rule of construction that discourages such dual interpretations.

The Court observed that a single word in a statutory provision could be given two different meanings when it governed distinct matters, and therefore it could not be interpreted in a single sense for both contexts. The Court held that the essential requirement of section 94(3) was the publication of the notice in a local newspaper. Once this requirement was satisfied, the failure to obtain a formal direction from the State Government allowing publication in a newspaper other than one printed in the Hindi language was considered a minor lapse that did not affect the validity of the notice. Consequently, the Court deemed that it was unnecessary to examine whether section 131(3) imposed a mandatory duty, or whether section 135(3) became void by reason of Article 13(1) of the Constitution, or whether the provision cured any defect that might have arisen from non‑compliance with a mandatory requirement. The Court therefore declined to consider those questions, finding them irrelevant to the matter before it.

The judgment concerned Civil Appeal No. 23 of 1964, an appeal filed on a certificate issued by the Allahabad High Court. The appellant was a public limited company that owned two sugar factories located in the city of Rampur; the factory premises included several buildings, some of which were used for residential purposes. The respondent was the Municipal Board of Rampur, which had resolved to impose a water tax in accordance with Section 128(1)(x) of the Uttar Pradesh Municipalities Act, No 11 of 1916. The Act prescribed the procedure for imposing a tax in sections 131 to 135. Section 131 required the Board, when it intended to levy a tax, to pass a special resolution framing proposals that specified the tax, the persons or classes of persons liable, the description of the taxable property or circumstance, the amount or rate applicable, and any other matters mandated by rules framed by the State Government. The Board also had to prepare a draft of the rules it sought the State Government to make concerning assessment, collection, exemption and related matters, as set out in subsection (2). Section 131(3) mandated that the Board publish, in the manner prescribed by section 94, the proposals framed under subsection (1) together with the draft rules framed under subsection (2), accompanied by a notice in the form prescribed in Schedule III. Section 132 then provided for the subsequent procedure, allowing any inhabitant of the municipality to file written objections within a fortnight of the notice’s publication. The judgment was delivered by Chief Justice P. B. Gajendragadkar, together with Justices K. N. Wanchoo and Raghubar Dayal, while Justices Wanchoo, M. Hidayatullah and J. R. Mudholkar each authored separate opinions.

Any inhabitant of the municipality may submit a written objection to any of the proposals that have been published. Upon receipt of such objections, the Board is required to consider them and to pass an order addressing each objection by means of a special resolution. If the Board considers it necessary, it may amend the original proposals. Whenever the proposals, and any accompanying rules, are amended, the Board must publish the amended proposals and rules again. After this republishing, the Board again opens the opportunity for any inhabitant to object to the amended proposals, and any objections to the amended proposals are dealt with in exactly the same manner as objections to the original proposals. When the Board has finally settled the proposals, it must forward the settled proposals together with the record of all objections to the authority prescribed by law or to the State Government, as appropriate, under section 133 of the Act. The prescribed authority or the State Government may then either sanction the proposals, return them to the Board for further consideration, or sanction them with or without modifications, provided that any modification does not increase the amount of tax to be imposed. Section 134 provides that after the proposals have been sanctioned, the State Government must consider the draft rules submitted by the Board and, under section 296 of the Act, make such rules as it deems fit. Once the State Government has made the rules, it must send the order of sanction and a copy of the rules to the Board. The Board, by a special resolution, then directs that the tax be imposed from a date specified in that resolution. Section 135 requires that a copy of the resolution be submitted to the State Government or the prescribed authority. Upon receipt of this copy, the State Government or the prescribed authority must publish a notification of the tax imposition in the official gazette, indicating the effective date. The imposition of the tax is valid only if such notification has been issued in accordance with section 135(2). Section 135(3) states that the gazette notification constitutes conclusive proof that the tax has been imposed in accordance with the provisions of the Act. Section 94(3) prescribes the manner of publishing any resolution passed by a Board: the resolution must be published, as soon as possible, in a local newspaper published in Hindi, and if no such newspaper exists, it must be published in the manner directed by the State Government by general or special order.

The respondent asserted that it had fully complied with the procedure laid down in the Act for the imposition of the tax. Accordingly, the tax was imposed effective 1 April 1957 at a rate of ten per centum of the annual value of lands and buildings. After the tax had been imposed, the respondent issued notices of demand to the appellant, requiring payment of the water tax as determined by the newly imposed rate. These notices were sent following the procedural steps described above and were intended to enforce the collection of the tax that had been lawfully sanctioned and published.

The Board issued a notice of demand to the appellant requiring payment of water tax for the financial years 1957‑58 and 1958‑59, and the notice was dated 7 October 1958. Section 129 of the Act imposes certain restrictions on the levy of water tax. One restriction provides that when the unit of assessment is a plot of land or a building, the tax shall not be imposed if no part of that plot or building lies within a radius fixed by rule for each municipality from the nearest standing or other waterwork where water is made available to the public by the Board. The applicable rule fixed that radius at six hundred feet. The appellant contested the demand and argued that it was exempt under subsection 129(a) because there was no standpipe or other waterwork supplying water to the public within six hundred feet of the factory buildings, the Central Office or the Govan Colony. The appellant acknowledged that a few structures situated outside the main Raza Sugar Factory lay within six hundred feet, but maintained that the principal premises were beyond the prescribed distance. The respondent rejected the appellant’s objections and warned that it would recover the amount by coercive measures.

Consequently, the appellant filed a writ petition before the High Court in December 1958, raising a large number of grounds supporting its claim that it was not liable to pay the water tax. Among the grounds were several constitutional objections challenging the validity of the Act itself. The High Court dismissed the appellant’s petition on every ground, and the appellant subsequently obtained a certificate of appeal and brought the matter before this Court. In the present appeal only two points were urged on behalf of the appellant, and the Court therefore limited its consideration to those points. The first point contended that there had been no publication as required by section 131(3) read with section 94(3) of the Act; it was alleged that because section 131(3) imposes a mandatory requirement, the failure to comply rendered all subsequent actions for imposing the tax invalid, and that the tax therefore could not be realized. The second point argued that the tax could not be imposed on the majority of the appellant’s premises because no standpipe or other waterwork supplying water to the public existed within six hundred feet of all of the appellant’s buildings.

The Court first examined the ground concerning publication. Three questions were identified for resolution. The first question was whether the publication requirement in section 131(3) was mandatory or merely directory, a position the respondent asserted was the latter. The second question concerned whether the publication in this case had been made strictly in accordance with the procedure prescribed in section 94(3). The third question asked, if the publication had not complied strictly with the method laid down in section 94(3), whether the defect could be cured under section 135(3). The Court proceeded to address these questions in turn.

In the present dispute the Court was asked to answer three questions: first, whether the requirement of publication laid down in section 131(3) of the Act is a mandatory condition or merely a directory one; second, whether the publication that allegedly took place in the present case was carried out exactly in the manner prescribed by section 94(3); and third, if the publication was not strictly compliant with the procedure of section 94(3), whether the defect could be remedied under section 135(3). The Court observed that the determination of whether a statutory provision that on its face appears mandatory—because it uses the word “shall”—is in fact directory cannot be made by applying a universal rule. Rather, the answer depends on the factual circumstances of each case and, most importantly, on the purpose for which the legislature enacted the provision. Accordingly, the Court said that the object of the provision, its nature, the legislative intent, the degree of inconvenience or injustice that would result from interpreting the provision one way or the other, the relationship of the provision to other statutes dealing with the same subject, the actual language used, and any other considerations that arise from the facts must all be examined before concluding whether the provision is mandatory or directory. The respondent relied heavily on the decision in State of U P v. Manbodhan Lal Srivastava, where Article 320(3)(c) of the Constitution was held to be directory and not mandatory, and argued that the reasoning in that case should be applied fully to the present facts. The Court therefore found it necessary to review that precedent before analysing the present matter in the light of the factors previously identified. The Court noted that Article 320(3)(c) contains mandatory‑sounding language, requiring that the Public Service Commission be consulted on all disciplinary matters affecting a civil servant of the Union or a State. To illustrate the approach, the Court referred to the observations of the Judicial Committee of the Privy Council in Montreal Street Railway Company v. Normandin, which stated that “the question whether provisions in a statute are directory or imperative has very frequently arisen in this country, but it has been said that no general rule can be laid down, and that in every case the object of the statute must be looked at… When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, it has…”. The Court indicated that this principle would guide its analysis of whether the publication requirement in section 131(3) is mandatory or merely directory, and consequently whether any defect in the publication could be cured under section 135(3).

In that earlier case, the courts had treated similar statutory provisions as merely directory, so that neglect of those provisions, although punishable, did not invalidate the acts that had been performed. The matter concerned a situation where jury lists had not been revised as required by law. Applying the principle from that case, the Court examined Article 320(3)(c) of the Constitution and identified three considerations. First, the proviso to Article 320 itself permitted the making of regulations that could specify situations—whether generally, for a particular class of cases, or in particular circumstances—where consultation with the Public Service Commission would not be necessary. Second, the advice of the Public Service Commission was not binding on the Government; consequently, non‑compliance with Article 320(3)(c) could not, in the Court’s view, automatically render the Government’s final order void. Third, Article 311 was not controlled by Article 320, and the Constitution contained no provision, express or implied, that failure to comply with Article 320(3)(c) would invalidate the proceedings culminating in the Government’s final order.

The Court also observed that an analysis of Article 320 revealed the word “shall” in almost every paragraph, clause and sub‑clause. If the provisions of Article 320(3)(c) were held to be mandatory, the same mandatory character would have to be attributed to all other clauses of the article. Such a holding would mean that any appointment to the public services made without strict compliance with those sub‑clauses would prejudice the appointed individual, who had no fault and no opportunity to influence the process, an outcome that could not have been intended by the Constitution’s framers. Accordingly, the Court likened Article 320(3)(c) to the statutory provision examined in the Montreal Street Railway Company case and concluded that construing the article as mandatory would create serious general inconvenience and injustice to persons who had no control over those performing the duty.

The Court noted that the earlier decision was based on the specific facts involving appointments and dismissals of public servants and the Government’s duty to consult the Public Service Commission. It therefore could not be extended to situations with different factual matrices. The Court reiterated the observation of the Judicial Committee that whether a statutory provision is directory or mandatory cannot be settled by a general rule; each case must be examined in light of the statute’s object. Consequently, in the present circumstances, that precedent offered little assistance to the respondent, except to the limited extent that it addressed the general principle.

The Court reiterated the principle that no universal rule can be established for deciding whether a statutory provision is directory or mandatory, and that each case must be decided by examining the purpose of the statute that contains the provision. Applying that principle, the Court proceeded to examine the facts and circumstances surrounding the present statute, focusing on the criteria for distinguishing a mandatory requirement from a merely directory one. The specific provision under consideration is Section 131(3), which the Court divided into two distinct parts. The first part mandates that the Board publish proposals and draft rules together with a notice inviting objections to those proposals or draft rules, and that such notice must be issued within fourteen days of the publication of the notice, as indicated in Schedule III. The second part prescribes the manner of publication, directing that it be carried out in accordance with Section 94(3). The Court stated that it would first address what it termed the first part of Section 131(3), noting that this portion pertains to taxation.

The Court explained that the purpose of requiring publication of proposals and draft rules is to invite objections from the municipality’s inhabitants who are the taxpayers. The underlying aim of such publication is to promote democratic participation and to give those who are likely to be affected by a tax a reasonable opportunity to be heard before the tax is imposed. Although the Board ultimately decides on the taxation proposals and forwards them to the Government or the appropriate authority for approval, the Court affirmed that the object of the publication requirement is to gauge the general reaction of taxpayers to the proposed taxes. The Court observed that, in a particular case, the Board might abandon the proposals altogether if the overall response of taxpayers is one of disapproval. The legislature, according to the Court, intended that compliance with this part of Section 131(3) would fulfill the purpose of inviting taxpayer objections. The Court warned that if this part were treated as merely directory, the elaborate procedure set out in Sections 131 to 135 for imposing a tax would be rendered meaningless, because the core of that procedure is the consideration of taxpayer objections. Treating the publication requirement as directory would allow the Board to levy a tax without following the prescribed steps, thereby nullifying the entire procedural framework established by the Act. Consequently, the Court expressed the opinion that this part of Section 131(3) is mandatory, and concluded with the statement, “We are therefore of opinion that this part of s.”

The Court observed that subsection 131(3) is mandatory and must be complied with strictly before any tax may be imposed. Although the interpretation of subsection 135(3) would be considered later, the Court was convinced that, notwithstanding subsection 135(3), the legislature intended that the publication required by the first part of subsection 131(3) must occur. Accordingly, the Court held that the first part of subsection 131(3) is mandatory, basing the conclusion on the language of the provision, the purpose for which it was enacted, the context in which it appears, and the clear legislative intention that no tax should be levied without giving taxpayers an opportunity to be heard. The Court further noted that declaring this part mandatory would not cause any serious general inconvenience or injustice to anyone, whereas treating it as merely directory would be unjust to taxpayers because it would deprive them of the chance to object to the proposals and the draft rules. Hence, the Court affirmed the mandatory character of that part of subsection 131(3). Turning to the second part of the subsection, which prescribes the manner of publication, the Court identified the relevant procedure in subsection 94(3) as already set out. The Court reasoned that when the legislature specified the manner of publication, it did not intend that the manner itself be mandatory. The Court explained that as long as the publication is carried out in substantial compliance with the procedure laid down in subsection 94(3), the purpose of the mandatory publication requirement in subsection 131(3) would be fulfilled. Consequently, the Court concluded that the manner of publication prescribed in subsection 94(3) is directory, and substantial compliance with it satisfies the mandatory requirement of subsection 131(3). In support of this approach, the Court referred to the earlier decision in K. Kamaraja Nadar v. Kunju Thevar, where the Court examined whether a provision of the Representation of the People Act, namely subsection 117, was mandatory or directory. That provision required a petitioner to attach a Government Treasury receipt showing that a deposit of one thousand rupees had been made either in a Government Treasury or in the Reserve Bank of India, in favour of the Secretary to the Election Commission, as security for the petition’s costs. The Court dissected the provision into three elements: (i) proof that the deposit was actually made in a Government Treasury or the Reserve Bank of India; (ii) proof that the deposit was made in favour of the Secretary to the Election Commission; and (iii) proof that the deposit was made as security for the costs of the petition.

The Court examined whether the wording “in favour of the Secretary to the Election Commission” in section 117 of the Representation of the People Act was mandatory. It considered that if a deposit were made in a Government Treasury or in the Reserve Bank of India, but not expressly in favour of the Secretary as stipulated, the deposit might be deemed invalid and of no effect. After analysis, the Court held that the phrase was directory rather than mandatory. The essential requirement of section 117, according to the Court, was that the petitioner must provide security for the petition costs and must attach a Government Treasury receipt showing that a deposit of one thousand rupees had been made either in a Government Treasury or in the Reserve Bank of India. The receipt had to indicate that the money was at the disposal of the Election Commission, could be used by the Commission in accordance with law, remained under the Commission’s control, and would be payable on a proper application made on behalf of the petitioner to the Election Commission or to any person duly authorised by the Commission, whether that person was the Secretary or another authorised officer. The Court concluded that once this core condition was satisfied, literal compliance with the specific words “in favour of the Secretary to the Election Commission” was not required. Accordingly, the act of making the deposit and presenting the receipt together with the petition was held to be mandatory, whereas the particular form in which the deposit was to be made was merely directory. The Court then applied the same principle to the method of publication required by section 94(3) in the present matter. It reiterated that the essence of section 131(3) demanded publication of proposals and draft rules so that taxpayers could be given an opportunity to object, a requirement that formed the first part of section 131(3) and was mandatory. By contrast, the manner of publication prescribed by section 94(3), identified as the second part of section 131(3), was deemed directory; substantial compliance with it would suffice to give taxpayers a reasonable chance to raise objections. Consequently, the Court expressed the opinion that the manner of publication under section 131(3) was directory. Turning to the specific requirements of section 94(3), the Court noted that the provision required publication in a local newspaper that must be published in Hindi. The provision also allowed, where no such Hindi newspaper existed, for the State Government to direct an alternative method of publication by a general or special order. In the case before it, the Court observed that the publication had indeed been made in a local newspaper, but that the newspaper was not published in Hindi.

In the matter before the Court, the paper used for publishing the resolution was not a Hindi‑language newspaper but an Urdu‑language one, although the text of the resolution itself was printed in Hindi. The appellant contended that this situation did not satisfy the requirement of section 94(3). Evidence showed that a Hindi‑language newspaper does exist in Rampur, but its publication is irregular and therefore unreliable. The appellant further argued that, in the absence of a regularly published Hindi newspaper, the State Government should have been approached for an order directing an alternative method of publication. The Court observed that strict compliance with the literal wording of section 94(3) would demand that the chosen newspaper be a local paper published in Hindi, irrespective of the language used in the actual resolution. However, the Court held that this literal construction does not reflect the true purpose of the provision. What the provision substantially requires is that the notice be published in Hindi in a local newspaper; if that condition is fulfilled, the requirement of section 94(3) is met. In the present case, the notice was placed in a local newspaper that, according to the evidence, enjoys wide circulation in Rampur, and the resolution itself appeared in Hindi, even though the newspaper’s regular language is Urdu. Consequently, the Court found that there was substantial compliance with section 94(3), despite the technical defect that the newspaper was not a Hindi‑language publication. Since the Court previously determined that the requirement of section 94(3) is directory, it concluded that the obligations of section 131(3) had also been satisfied. Turning to the effect of section 135(3), the Court noted that this sub‑section declares a notification made under section 135(2) to be conclusive proof that the tax has been imposed according to the Act. The respondent argued that the publication in the official gazette fulfilled the condition of section 135(2), thereby raising an irrebuttable presumption that every provision of the Act had been complied with, and that the appellant could not question any alleged non‑compliance with sections 131(3) and 94(3) in the present case.

In the matter before the Court, the question arose whether the provisions of section 131(3) read together with section 94(3) were satisfied at all in the present case. The Court noted that counsel had relied upon the decision in Berar Swadeshi Vanaspati v. Municipal Committee, Shegaon. In that earlier case, the issue concerned section 67(8) of the C.P. & Berar Municipalities Act, 1922, a provision that was worded in a manner similar to the language of section 135(3) of the present statute. The Court in that earlier case held that because the requirement of section 67(7)—which corresponds to section 135(2) in the present context—had been complied with, the compliance served as conclusive proof that the tax had been imposed in accordance with the provisions of the Act, and consequently the tax could not be contested on the ground that any necessary procedural steps had been omitted.

The Court then explained the factual background of the earlier case. The statutory authority had made the required publication as mandated by law and had invited objections to the proposed tax. Only a single objection was filed, and the municipal Board examined that objection and ultimately rejected it. All other procedural requirements were fulfilled, and the tax was imposed followed by the issuance of a final notification under section 67(7) of that Act, as recorded in the citation [1962] 1 S.C.R. 596. The imposition of the tax was challenged on the basis that the Board had failed to consider the objection. The evidence showed that the Board had, in fact, considered the objection and dismissed it for reasons that the appellant of that case deemed improper. Under those circumstances, the Court affirmed that subsection (8) of section 67 was conclusive.

Turning to the present case, the Court observed that it was, in the Court’s opinion, analogous to the earlier decision. Here too, a publication had been effected, which the Court had already identified as complying with the first part of section 131(3). Moreover, the manner of that publication was found to be in substantial compliance with section 94(3). Consequently, because there was substantial compliance with the requirements of section 94(3), the Court held that section 135(3) should be applied in favour of the respondent, leading to the conclusion that all necessary procedural steps had been taken.

The respondent, however, contended that section 135(3) goes further than the Court’s interpretation and should be read to mean that once it applies, the tax is deemed to have been imposed in accordance with the Act even when none of the procedural provisions have been complied with at all. The Court remarked that this broader proposition did not arise for determination in the present proceedings because the Court had already found that the publication satisfied the requirements of section 131(3), albeit not in a strictly exact manner under section 94(3). The Court therefore indicated that it was unnecessary to decide the hypothetical scenario in which a Board imposes a tax without any compliance with the procedural provisions, including section 131(3), and where the only evidence of the tax’s existence is a notification under section 135(2). The Court also referred to the holding of the Allahabad High Court on related matters, but noted that further discussion on that point was not required in the circumstances of the present case.

The Court noted that several earlier decisions have held that when none of the procedural requirements set out in sections 131 to 134 are complied with, a mere notification made under section 135(2) does not suffice to create a tax liability, and that section 135(3) cannot be invoked to validate such a tax. The Court referred to the judgments in Azimulla v. Suraj Kumar Singh (1) and Municipal Board, Hapur v. Raghuvendra Kripal (2), where the high courts had observed that the failure to observe any of the prescribed procedural steps meant that section 135(3) could not rescue the imposition of the tax. The Court stated that it was unnecessary to pronounce an opinion on that point because the issue did not arise in the present matter.

Nonetheless, the Court observed that the decision in the Berar Swadeshi Vanaspathi’s case (1) should not be taken as authority for a proposition that a tax may be upheld despite complete non‑compliance with mandatory procedural provisions. In that case, the objections raised by the appellant had been considered by the municipal board, although the board ultimately rejected them on grounds the appellant deemed insufficient. The Court therefore concluded that there had, in fact, been compliance with the statutory requirements of the Act, and that the case could not support the view that a provision such as section 135(3) of the Act, or section 67(8) of the C.P. & Berar Municipal Act, would automatically validate a tax when no procedural safeguards had been observed.

The Court further explained that if section 135(3) is interpreted to mean that substantial compliance with the Act’s procedures provides conclusive proof of compliance, then no valid objection could be entertained on that basis. Conversely, if the provision were to be read, as argued by the respondent, to allow a tax to stand even when no mandatory procedural requirement has been fulfilled and the only evidence is a notification under section 135(2), the Court suggested that the validity of section 135(3) itself might be called into question. However, the Court held that it was unnecessary to decide that broader constitutional issue in the present case.

Applying the statutory framework to the facts before it, the Court found that the mandatory component of section 131(3) had been observed, and that the directory component had been substantially complied with. Consequently, section 135(3) was applicable, and the appellant’s contention that the tax had not been validly imposed was rejected. Turning to the second matter raised, the Court indicated that the remaining question was essentially factual: whether any of the appellant’s buildings were situated within six hundred feet of a standpipe. The restriction in clause (a) of section 129 provides that a water‑tax may be levied on a building if any part of it lies within a radius fixed by the rules, which in the present case is six hundred feet from the nearest standpipe or water‑work from which water is made available to the public.

In this case the Court examined the meaning of the words in section 129 (a) which state that a water‑tax may be levied on a building only when any part of the building lies within a distance fixed by rules from a standpipe or other water‑work from which water is made available to the public. The appellant argued that the phrase requires the presence of a standpipe or water‑work that actually supplies water to the public, and that the mere passage of underground water‑carrying pipes within six hundred feet does not satisfy the requirement. The Court agreed with that contention. It clarified that the restriction in section 129 (a) prevents the levy of a water‑tax on a building that is situated more than the prescribed distance from a standpipe or water‑work that furnishes water to the public. The requirement is not satisfied by underground pipelines alone; there must be a visible, above‑ground facility from which the public can draw water. Nevertheless, the determination of whether the appellant’s buildings are within six hundred feet of such a standpipe is a question of fact. The High Court had observed that there was a genuine dispute on this factual issue and that the material before it was insufficient to reach a definitive conclusion as to whether any of the appellant’s buildings lay beyond the six hundred foot radius. Consequently, the Court left the factual question open and indicated that the appellant could pursue any appropriate remedies. On the basis of the foregoing, the appeal was dismissed.

The Court further noted, while concurring with the dismissal, that it wished to comment on the failure to publish the notice in strict compliance with section 94(3) of the Uttar Pradesh Municipalities Act. The procedure for imposing a municipal tax had been succinctly analysed by a learned colleague. While generally agreeing with that analysis, the Court expressed a different view on the construction of sections 131(3), 94(3) and 135(3) of the Act. It outlined the general taxation scheme: once the Municipal Committee or Board decides to levy a tax, it must formulate proposals by a special resolution under section 131(1) and draft rules that it wishes the State Government to make under section 131(2). Section 131(3) then obliges the Board to publish, in the manner prescribed by section 94, the proposal made under subsection (1) and the draft rules made under subsection (2), together with a notice in the form set out in Schedule III. This publication enables any inhabitant affected by the proposal to lodge objections. The Municipal Committee or Board subsequently considers the objections, passes orders, and, if it modifies the proposals or rules, must republish them and repeat the procedure. When the proposals and rules are finally settled, they are forwarded to the Government, which may accept them or return them for further consideration. Once sanctioned by the Government, the proposals and rules are returned to the municipality, which imposes the tax by passing a fresh resolution effective from a specified date. The resolution must be submitted to the Government and, when notified in the official Gazette, the tax becomes operative. Section 153(3) then provides that a notification of the imposition of a tax under subsection (2) constitutes conclusive proof that the tax has been imposed in accordance with the Act. The Court observed that the tax in the present matter had been imposed accordingly.

After the Board receives the published notice, it examines each objection that has been raised and issues orders addressing those objections. If, in the course of that examination, the Board decides to alter either the original proposal or the draft rules, it must publish the amended proposal and the revised draft rules a second time, and the entire procedural sequence set out in the Act must be repeated from the beginning. Conversely, where the Board makes no further changes and the proposals and draft rules become final, the Board is required to forward the original proposals and any accompanying rules to the State Government for consideration. Upon receipt, the Government has the discretion either to accept the proposals and the rules as they stand or to return them to the Municipality for additional deliberation. When the Government ultimately sanctions the proposals and the rules, it sends them back to the Municipality. The Municipality then enacts the tax by adopting a fresh resolution that specifies the date from which the tax will take effect. That resolution, however, does not by itself give the tax immediate operative force. The resolution must be placed before the Government, and only after the Government has issued a notification in the official Gazette does the tax become effective from the date specified in the resolution. Section 153(3) of the Act provides that a Gazette notification of the imposition of a tax, made under subsection (2), constitutes conclusive proof that the tax has been imposed in compliance with the statutory provisions. In the present case, the tax was imposed by the Rampur Municipality and the required notices were published in an Urdu‑language newspaper called “Aghaz,” although the text of the notices themselves was rendered in Hindi. Section 94(3) of the Uttar Pradesh Municipalities Act stipulates that every resolution passed by a Board shall, as soon as practicable, be published in a local newspaper that is printed in Hindi, and where no such newspaper exists, the State Government may, by a general or special order, direct an alternative means of publication. In Rampur there existed another newspaper that was printed in Hindi, but its circulation was acknowledged to be very limited. The newspaper that was actually used for publication, while printed in Urdu, enjoyed a wide readership, and the notice it carried was prepared in Hindi. Consequently, there was a locally circulated paper with broad reach and the notice itself complied with the language requirement, the only defect being that the newspaper itself was not printed in Hindi. This circumstance represented a failure to comply literally with the requirement of section 94(3). Two questions therefore arise: first, whether the requirement of section 94(3) is mandatory; and second, if the requirement is not strictly complied with, whether section 135(3) renders the notification conclusive notwithstanding the defect.

The Court explained that the grant of power to the Municipality required strict adherence to the prescribed procedures, after which the Government gave its final approval of the tax. The Government’s approval involved both the manner of imposition and the manner of collection. Once the Government approved the resolution and published it in the Gazette, the tax was deemed to be conclusively imposed in conformity with the procedure outlined in the law. At that point, the legislative scheme on the subject was considered complete, and the tax derived its legislative legitimacy from the will of the legislature. The Court noted that sections 131 to 135 set out the detailed procedure, and every condition appeared to be expressed in mandatory language, giving the impression that all were equally obligatory. The principal issue before the Court was whether every condition should be treated as mandatory, whether all should be considered directory, or whether some conditions were mandatory while others were directory. The Court sought to determine the appropriate test for making such a distinction and, if a distinction was necessary, the principle on which it should be based. In the Court’s view, a tax could be valid only if it was imposed in accordance with the Municipalities Act. That Act prescribed certain conditions intended to protect taxpayers and other conditions designed for ministerial functions related to the method or system of imposing the tax, as well as to promote promptness, efficiency and publicity. The Court held that the conditions intended to protect taxpayers were necessarily mandatory because they formed the core of the power’s exercise. Accordingly, steps such as preparation of assessment rolls, hearing objections, and framing assessment rules were mandatory. Likewise, conditions that required the passage of resolutions by the necessary majority at specially convened meetings, after proper notice to members, were fundamental and could not be ignored. The Court observed that a fundamental defect would remain unremedied even if the Government later gave its sanction, unless a curative provision existed, citing Scadding v. Lorant (1) and Joshi Kalidas v. Dakor Town Municipality (2) (3). By contrast, conditions that merely facilitated efficiency or ministerial operations were usually directory; compliance with such conditions was still required, but substantial compliance was sufficient. The Court further stated that a provision mandating notice to taxpayers about the proposal to impose a particular tax and the accompanying rules was fundamental. Ignoring such a provision would defeat the policy that no tax should be imposed without an opportunity to object, and such ignorance would ordinarily be fatal to the tax’s validity. Similarly, the direction that the notice must be published in a local newspaper formed an integral part of the scheme. The Court emphasized that the purpose could not be fulfilled by alternative means such as drum‑beats, hand‑bills, or publication in a newspaper that did not circulate locally, and that there was no option to substitute another method unless the provision itself allowed for alternatives.

The judgment explained that the provision allowing alternative modes of publication to be determined by the Government was supplemented by a requirement that the newspaper used for publication be printed in Hindi. The Court regarded this additional requirement as a non‑essential direction rather than a fundamental one. It observed that selecting a newspaper widely read in the locality, even if it were not in Hindi, while publishing the notice in Hindi would more effectively advance the purpose of the law than choosing a Hindi‑language newspaper with very limited circulation. Although such a choice departs from the literal wording of the statute, the departure serves the object and purpose of the provision. Consequently, the Court classified the Hindi‑language requirement as a directory provision, intended merely to guide the Municipality and not indispensable to the validity of the tax imposition.

The Court further stated that it was unnecessary to delve into the detailed distinction between mandatory and directory provisions in general or specifically with respect to the Uttar Pradesh Municipalities Act. It noted that the legislature itself addressed the issue by enacting section 135(3), which sets out the consequences of an omission. That section establishes a rule of evidence that prevents courts from examining minute procedural details for the purpose of declaring the tax invalid. The legislature deliberately provided that the Government should review the proposals, rules and procedure before accepting the resolution imposing the tax, and that once a notification is issued, all questions concerning the procedural aspects of the imposition must cease. At that point, legislative intent governs, and the tax is treated as validly imposed as if the legislature itself had enacted it.

Whether section 135(3) is read as an absolute rule of evidence—an interpretation the Court favored, citing The Berar Swadeshi Vanaspati v. Municipal Committee, Shegaon—or as a rule applicable only to minor defects, the provision must at least protect the water‑tax imposed in Rampur from being invalidated on the basis of a procedural flaw. Accordingly, the provision serves to cure any breach of a direction that was intended merely as guidance for municipalities and bars courts from probing such breaches. The Court held that it was for the Government to consider alternative modes of publication before granting its approval, and that the Government’s approval of an alternative mode should be deemed valid under the latter part of section 94(3). On these grounds, the Court concluded that the tax was valid, dismissed the appeal, and ordered costs. Justice Mudholkar concurred with the dismissal of the appeal, albeit on the specific point of law raised.

The judge began by stating that the reasons for the decision would be set out separately. He explained that he found it difficult to interpret subsection (3) of section 131 as being partly mandatory and partly directory; in other words, he was reluctant to hold that the requirement to publish was mandatory while the requirement concerning the manner of publication was only directory. He observed that interpreting the provision in that way would assign two different meanings to the word “shall,” which appears in the same provision and governs both the act of publishing and the manner in which the publishing must be carried out. He noted that authorities allow the word “shall” to be read literally, meaning obligatorily, or more loosely, meaning merely as a guideline, depending on the purpose of the provision, the surrounding provisions, and comparable situations. Nevertheless, on principle, he said, when a single verb in a provision regulates two distinct matters, it cannot be given one meaning for one matter and a different meaning for the other.

He turned to the provisions of section 94(3) and described them as clearly directory because they envisage the possibility of deviating from the prescribed mode of publication, which is the publication of proposals in a local newspaper in the Hindi language. He further pointed out that subsection (3) of section 131 requires publication in the manner laid down in section 94, and that the manner prescribed in section 94 is itself set out in subsection (3) of that section. Since section 94(3) is a directory provision, he argued that it is unnecessary to decide whether subsection (3) of section 131 is directory or mandatory, nor is it appropriate to read it as partly one and partly the other, because doing so would conflict with the normal rule of construction that discourages giving a single word two different senses within the same provision.

He explained that while a mandatory provision demands strict compliance, a directory provision is satisfied by substantial compliance. He observed that substantial compliance with section 94(3) had in fact occurred because the proposals had been published in a local newspaper in the Hindi language. The only departure from the literal requirement was the failure to obtain permission from the State Government to publish the proposals in an Urdu newspaper. In his view, the essential requirement of section 94(3) is merely the publication in a local newspaper, and once that requirement is met, the omission of a State Government direction permitting publication in a newspaper other than a Hindi‑language one is of little consequence.

Consequently, the judge concluded that the questions whether subsection (3) of section 131 is mandatory, whether subsection (3) of section 135 becomes void under Article 13(1) of the Constitution, or whether a defect arising from non‑compliance with a mandatory provision could be cured, do not arise for consideration. On that basis, the appeal was dismissed.