M.V. Tamaskar, J.
1. The order passed in this petition shall also govern the disposal of Misc. Petition No. 214/92, M/s Siharchand Ratanchand Singh and Ors. v. State of M. P. and Ors.; Misc. Petition No. 447/92, V K. Tiwari v. State of M. P. and Ors.; Misc. Petition No. 1449/92, V. K. Bajpai v. State of M. P. and Ors.; Misc. Petition No. 1450/92, Dharamvir Sharma v. State of M. P. and Ors.; Misc. Petition No. 1067/92, Santosh Kumar v. State of M. P. and Ors.; Misc. Petition No. 3755/92, Babbu Singh v. State of M. P. and Ors.; Misc. Petition No. 3774/92, The Bharat Co-op. Transport Society Ltd. v. State of M. P. and Ors.; Misc. Petition No. 53/93, Bus Operator Union v. State of M. P. and Ors.; Misc. Petition No. 312/93, M/s R. S. Fouzdar Bus Service v. State of M. P. and Ors.; Misc. Petition No. 859/93, B. P. Singh v. State of M. P. and Ors.; Misc. Petition No. 1469/93, Ushman Khan v. State of M. P. and Ors.; Misc. Petition No. 1549/93, A. N. Sharma v. State of M. P. and Ors.; Misc. Petition No. 1547/93, Mahendra Kumar v. State of M. P. and Ors.; Misc. Petition No. 1575/93, S. S. Chouhan v. State of M. P. and Ors.; Misc. Petition No. 1832/93, R. K. Sinha v. State of M. P. and Ors.; Misc. Petition No. 1940/93, Hemant Kumar v. State of M. P. and Ors.; Misc. Petition No. 4414/93, Laxmi Bus Service v. State of M. P. and Ors.; Misc. Petition No. 2217/94, Jawaharlal Jain v. State of M. P. and Ors. which was heard in motion hearing which raised some additional submissions. Since all the cases relate to the right of the local authorities to collect terminal tax on passengers by auction, the same are being decided by a common order. The main submissions made by the learned counsel for the petitioners are one that the rules framed for realisation of terminal tax are void on the ground that the law does not authorise framing of such rules and as such in excess of authority conferred on the delegate. The second submission made is that the amendment of Section 189-A in the Municipal Corporation Act is violative of the scheme under the Municipal Corporation Act.
2-3. We deal with these submissions as under : Since both the submissions have same shades of argument they are decided together, Shahid Hussain and others, the first batch of cases, arc off-shoot of judgment of this Court reported in Indore Bhed Bakra Vikreta Sangh v. Municipal Corporation, Indore and Ors., 1992 MPLJ 781, and Ibadatali Abbassali v. Municipal Council, Khargone and Ors., 1993 MPLJ 640 all these decisions were held to be not good law in view of the findings recorded in the Full Bench case in Misc. Petition No. 2002 of 1993 decided on 15th April, 1994 (1995 MPLJ 176). However, it is submitted by the petitioners that the only question before the Full Bench was 'whether the terminal tax on passengers could be collected by adopting mode of auction', and validity of byelaws framed for the same and of the rules was not in question.
4. The challenge before the Full Bench was in relation to the provisions of Sections 86, 87, 88, 132, 134 and byelaws making provisions under Sections 427 and 430 of the Municipal Corporation Act, 1956. The provisions of the M. P. Municipalities Act, 1961, considered in Full Bench case were Sections 105, 160 and Rule 12 of the M. P. Municipalities Terminal Tax on Passengers (Regulation of Assessment and Collection) Rules, 1988. Before we come to the arguments submitted by the learned counsel, it would be better to refer some of the findings recorded by the Full Bench. Reference may be made to the order in Full Bench referring to the proposition referred from Corpus Juris Secundum, Vol. 84 (Taxation page 1317):
"Page 1317; It is the policy of the law to favour the collection of all taxes, and whenever it is possible on any theory to do so, the courts will construe the statutes to accomplish that result, and any statute which limits the rights of the State to collect taxes must be strictly construed, in favour of the State. Thus, many of the provisions relating to the collection of delinquent taxes are merely directory, and need not be adhered to meticulously and a tax will not be rendered illegal by mere irregularities, informalities, omissions, and defective acts of officers in the collection of the tax where they do not affect the substantial justice of the tax itself."
The Full Bench in paras 16 and 24 stated below :
16. In the instant case, the Municipal Corporation has framed byelaws which were framed by exercising its powers conferred under Section 430 read with Section 424 of the Municipal Corporation Act. The Law authorises framing of byelaws. It is not an act which can be said to be unauthorised. Byelaws have also not been challenged, even assuming that the byelaws could be challenged, there can be no doubt that it is for the Municipal Corporation to decide in which particular method or mode the tax should be collected.
24. Taxation and collection of tax are no doubt sovereign functions. The sovereign himself or itself cannot collect the tax. The tax has to be collected through appropriate agency. The agency can be permanent cadre of employees. The agency can also be temporary agents on whom is conferred the authority to collect the tax, however, of course subject to the control of the sovereign or the local body. Under the byelaws, what is intended is creation of such an agency. The agent cannot be expected to attend to the job without any remuneration. Where the employees collect the tax, they deposit the entire amount in the municipal fund and. draw their pay. The same method could be followed under the scheme of auction. The successful bidder could be required to deposit the entire collection in the municipal fund and he may be separately paid for his exertion. Under the byelaws, instead of depositing the entire amount and taking back the remuneration, the net amount is required to be deposited. Where the collection agency has to be remunerated, remuneration may be fixed on any reasonable basis including percentage or a lump sum. At the same time, the local body may secure guarantee of minimum collection. All these factors are taken into consideration in devising the mode of collection by auction. The local body is assured of minimum collection which is as a matter of fact the maximum possible amount realisable. The local body is secured from loss likely to cause by inefficiency of the collection agent. At the same time, the same agent is assured of remuneration. We are unable to agree that the scheme propounded by the byelaws is contrary to any of the provisions of the Act. The fact that collection of tax is made through an agency which necessarily has to work under the authority of the local body cannot contravene the provisions of Article 265 of the Constitution. There is no specific provision in the Act requiring collection of tax to be made only through permanent employees of the local body. Arrangement for collection is left to be made by the local body subject to the broad scheme of the Act. The local body has made byelaws providing for collection of tax by auction. We are unable to agree that this mode of collection is contrary to the Act and the intention of the legislature. We are also unable to agree that the contractor and the staff are beyond the restrictions of law. There is no data in support of the contention that the arrangements secured by the contractor would fetch him undue profit. On the other hand, the data provided by the local body shows that the mode of auction is really beneficial to the local body. We, therefore, reject the contention of the petitioners and uphold the mode of collection challenged by the petitioners."
We have purposefully referred to these paragraphs in order to narrow down the controversy and address ourselves to purely legal submissions which arise.
5. The submission made by the learned counsel for the petitioners in the first batch of cases was that no rules could be framed as there was no power conferred to frame the rules under Section 355 of the M. P. Municipalities Act. We may refer to sub-sections (1) and (2) of Section 355 which read as under :
"355. Power to make rules. - (1) In addition to any power specially conferred by this Act, the State Government may prescribe forms and make rules generally for the purpose of carrying into effect the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely - (xxxv) all matters required to be prescribed by rules under this Act."
Now we may refer to the provisions of Section 129 relating to procedure of taxation as also Section 127 of the Act under which taxes may be imposed. We may refer to entry - "Terminal tax under Section 127(1) (xviii)", a terminal tax on passengers carried by road or inland waterways. A reference may also be made to Section 127(2) which reads as under :-
"(2) The State Government may, by the rules made under this Act,
(a) regulate the imposition, assessment and collection of taxes under this Act,
(b) prevent the evasion of taxes imposed under this Act."
A reading of Section 127(1) and (2) makes it clear that the authority has been given to State to frame rules or regulations for imposition, assessment and collection of tax. The procedure for imposition is contemplated under Section 129 and the legislature has specifically left it to the discretion of the State to frame rules to effectuate the purpose of the Act i.e. the collection under the Act. Section 160 clearly authorises the Municipal Council to collect the levy of tolls, market dues and fees which may be imposed under the Act by auction.
6. The State framed rules for the collection of the passenger tax known as M. P. Municipal Terminal Tax on Passengers (Regulation of Assessment and Collection) Rules, 1988, which empower the Municipal Councils subject to the control of the State Government. Rule 12 is reproduced as below :-
"Rule 12 : M. P. Municipal Terminal Tax On Passengers (Regulation of Assessment and Collection) Rules, 1988 - The Council may with the previous sanction of the State Government, by public auction or private contract, lease the assessment and collection of the said tax : provided that the State Government shall have power to determine the conditions of lease."
7. The argument of the petitioners is that the rules could not be framed with reference to Section 355(2)(xxxv) of the Municipalities Act. Section 127(2) and Section 355(2)(xxxv) authorise framing of any rules for the purpose of effectuating the purposes of the Act. The question, therefore, is whether collection of tax can be said to be without any authority of law or in excess of the powers conferred under the Act.
8. The matter is not res Integra. All local authorities are invested with powers of taxation. The taxes have to be recovered. The taxes are required for their own administration and as such it is left to the local authorities to impose and collect the taxes and lay down the policy in the byelaws and the rules. This proposition of law stated in Municipal Corporation of Delhi v. Children Book Trust, AIR 1992 SC 1456 is relied to by the Full Bench in M. P. No. 2002/93 (1995 MPLJ176) and need not be quoted.
9. If the purpose of imposition of tax is to collect revenue, then the further intendment is also to collect the same by easy convenient mode as will be in the interest of local administration. By laying down the right to collect toll or fee by auction the legislature itself intended that the authorities may make rules for imposition and collection of the tax. As such a policy is quite evident by reading the said sections. The Supreme Court had occasion to consider such a contingency and lay down three tests to judge the validity of the rules :- (In AIR 1984 SC 1543),
"The question whether a particular piece of delegated legislation - whether a rule or regulation or other type of statutory instrument is in excess of the power of subordinate legislation conferred on the delegate has to be determined with reference only to the specific provisions contained in the relevant statute conferring the power to make the rule, regulation etc. and also the object and purpose of the Act as can be gathered from the various provisions of the enactment. It is exclusively within the province of the legislature and its delegate to determine, as a matter of policy, how the provisions of the statute can best be implemented and what measures, substantive as well as procedural would have to be incorporated in the rules and regulations for the efficacious achievement of the objects and purposes of the Act. It is not for the Court to examine the merits or demerits of a policy laid down by regulation making body because its scrutiny has to be limited to the question as to whether the impugned regulations fall within the scope of the regulation making power conferred on the delegate by the statute.
Any drawbacks in the policy incorporated in a rule or regulation will not render it ultra vires and the Court cannot strike it down on the ground that, in its opinion, it is not a wise or prudent policy, but is even a foolish one, and that it will not really serve to effectuate the purposes of the Act.
The constitutionality of the regulations has to be adjudged only by a three-fold test, namely, (1) whether the provisions of such regulations fall within the scope and ambit of the power conferred by the statute on the delegate; (2) whether the rules/regulations framed by the delegate are to any extent inconsistent with the provision of the parent enactment and lastly (3) whether they infringe any of the fundamental rights or other restrictions or limitations imposed by the Constitution."
10. A perusal of Rule 12 and other provisions quoted above does not in any way suggest that the same are not within the scope and ambit of the powers conferred by the statute. Secondly, they are not inconsistent with the parent enactment and nor do they infringe any fundamental right or restriction or limitations imposed by the Constitution.
11. Here it may be stated that the procedure for assessment, recovery would not be applicable in the present case as a specific mode of collection has been prescribed. The provisions relating to assessment and recovery have been excluded by adopting the mode of auction. As stated by the Supreme Court the courts have to take into consideration the policy laid down under the rules and have only to see whether the impugned regulations or rules fall within the scope of regulation making power conferred by the statute. Any drawbacks in the policy incorporated in a rule or regulation do not render it ultra vires and the Court cannot strike it down on the ground that in its opinion it is not a wise or prudent policy but even a foolish one and that it will not really serve to effectuate the purpose of the Act.
12. There is yet another aspect of looking at the powers of the State to make rules. The rule making power may enumerate specifically matters on which the rule may be framed but that will not take away the general power conferred on the State to make rules for effectuating the purposes of the Act. The enumeration is not exhaustive but only illustrative as laid down in Sharma and Company, Bilaspur v. State of M. P. and Ors., 1981 MPLJ 422. We may also refer to AIR 1964 SC 264 :
"It is now well settled that the specific provisions are contained in the several clauses of Section 298(2) are merely illustrative and they cannot be read as restrictive of the generality of powers prescribed by Section 298(1). If the powers specified by Section 298(1) are very wide and they take within their scope bye-laws like the one impugned in the instant case, it cannot be said that the powers enumerated under Section 298(2) control the general words used by Section 298(1), so that any cases not falling within the powers specified by Section 298(2) may well be protected by Section 298(1) provided of course, the impugned byelaws can be justified by reference to the requirements of Section 298(1). There can be no doubt that the impugned byelaws in regard to the markets framed by the Tanda Municipality are for the furtherance of municipal administration under the Act, and so would attract the provisions of Section 298(1)."
What is required to be seen is whether the rules made are for the furtherance of the Municipal administration and collection of taxes under the Act. We may refer to Interpretation of Statutes by Hon'ble G. P. Singh, J., Fifth Edition at page 591 :
"When the subordinate legislation has reasonable nexus with the object and purpose of the enabling statute, the court is not to concern itself with the wisdom or efficaciousness of the subordinate legislation or of the policy formulated therein."
The rules have, nexus with the object and purpose and are not violative of the Act.
13. At this stage we would also refer to the arguments of the learned counsel for the petitioner in Jawaharlal Jain v. State of M. P. and Ors., Misc. Petition No. 2217 of 1994, wherein the petitioner has challenged the amendment made to the M. P. Municipal Corporation Act, 1956, incorporating Section 189-A by the Act No. 16 of 1994, quoted below :
"189-A. Notwithstanding anything contained in this Act, the Corporation may, by public auction or private contract lease the recovery of any of the taxes and fees which may be imposed under this Act, subject to the condition and limitation, if any, prescribed by the State Government in this behalf."
The wordings of Section 189-A are very specific and refer to recovery of taxes by public auction or private contract. The section speaks about the recovery of any of the taxes or fees. This section is wider in scope than the one under the Municipalities Act.
14. A perusal of Section 160 of the M. P. Municipalities Act discloses that the said provision only refers to collection of levy of toll and fees and not to the taxes. The learned Judges who decided Ibadatali Abbasali's case (supra) had stated as under :-
"There is absolutely no provision in the Municipalities Act permitting grant of lease of assessment and collection of any tax. As already pointed out Section 160 permits lease of levy of tolls, market dues and fees."
15. Considering the provisions under Section 160 of the M. P. Municipalities Act and the rules framed under it the Full Bench had taken the view that such a rule could be framed as it was consistent with the purposes of the Act and it did effectuate the policy laid down in the Act and the Rules i.e. collection of taxes expeditiously and by cheaper mode. However, the newly added Section 189-A of the M. P. Municipal Corporation Act is much more specific.
16. Learned counsel for the petitioner Shri S. K. Mukerjee further argued that the onward provision is contrary to the provisions of Section 427(2) and (3) of the Municipal Corporation Act. We are unable to agree that it is in any way contrary. On the other hand, the new section enacted is consistent with the provisions of Section 427(2) and (3).
17. The authority is conferred under the provision in Section 132(2)(k) of the M. P. Municipal Corporation Act, 1956, which reads as under :-
"132. Taxes to be imposed under this Act.
(1) ... ... ... ...
(2) In addition to the taxes mentioned in sub-section (1) the Corporations, for the purposes of this Act, impose any of the following taxes, namely :-
(k) a terminal tax on passengers carried by road or in waterways;"
This provision is nothing but an authority conferred by the Constitution under List II, Schedule vii, Entry 56, which is quoted below :
"56. Taxes on goods and passengers carried by road or inland waterways".
The interpretation of Entries in the Constitution, should be so construed to harmonise with the subject of enactment. We may refer to para. 8 of Union of India v. Authority U/M.W. Act, AIR 1969 Bom. 310, reproduced below :-
" It is an ordinary rule of interpretation of statutes that the words of a statute when there is a doubt about their meaning are to be understood in the sense in which they best harmonise with the subject of the enactment and the object which the legislature has in view. When dealing with particular business or transactions words are, therefore, presumed to be used with the particular meaning in which they are understood in the particular business in question. If there is no special meaning given to a word in that business, the words are used in the popular dictionary sense."
The Court also considered the meaning of words "Carried by road" as under:
"Mr. Parikh cited to us Section 3(4) of the Indian Railways Act as defining the word "railway". Our attention has also been drawn to Section 7 of the Indian Railways Act in which the words 'roads and railways' are separately mentioned as two things that a railways administration may maintain. Section 51 of the Indian Railways Act also mentions establishment of railways or roadways for traffic. Mr. Parikh has also drawn our attention to Section 2(f) of the Road Transport Corporation Act, defining a 'vehicle' as not to include railway. He has also cited the Carriers' Act as making a distinction between a carrier and a railway. Now, all these references would not lead one to the conclusion that a railways would not fall within the meaning of the word 'road'. The word 'road' is not defined in any one of these enactments. Any provision for maintenance of roads and railways would not indicate that the word 'railway' would not be included in the word 'road'. It may be that the Legislature has mentioned both the words to remove all doubts. Even if the word 'road' had been defined in the Indian Railways Act, it would not be pari materia with the Minimum Wages Act. The first would deal with the subject of transport and the second would be a part of labour legislation and it may well be that the word 'road' may have different meanings in two different enactments when the very object to be achieved by the Act is different."
Since in the instant case we are only concerned with imposition of tax on passengers carried by road wider question whether carrying by railway would also be covered is left open.
18. The argument of the learned counsel is that what is being realised by auction was not terminal tax on passengers but it was in fact a tax realised from the transporters as the obligation is placed on the conductors of the vehicles to stop the vehicles at the check post and deposit the tax. It is alleged that in fact, this is a tax on the vehicle rather than on the passengers. The submission is totally misconceived. Whichever authority may have right to collect the tax, if the tax is collected by the authorities of the Municipal Corporation it would have been the obligation of the conductor to stop the vehicle at the check post as the tax is imposed on the entry of passengers within the local area and is to be collected at the check post. The mere fact that the right to collect has been leased by auction does not in any way detract from the nature of tax as it is only the right to collect the tax, as agent of the Municipal Corporation and not in their private capacity. In this view of the matter the submission made by the petitioners cannot be accepted. The imposition or the rule does not travel beyond the scope of the Entry. The Entry in fact covers all shades of taxation in the nature of terminal tax on the entry of passengers.
19. We find it unnecessary to elaborate the said contention. We find that Section 189-A does not suffer from any illegality and is not ultra vires the provisions of the Act or the Constitution.
20. The last submission advanced was that no duty can be cast on the employee of the vehicle to pay the tax. Suffice it to say that the payment of tax if validly imposed, it is the duty of each citizen to pay. The said duty can be cast on any person by whom the same can be reasonably collected. In fact, the collection is to be made from the passengers and to be deposited at the check post, which is more convenient for the operators also as otherwise each passenger will have to pay the tax directly to the authority or its agent and that will cause more harassment to the passengers as well as the vehicle owner. A subsidiary argument was raised that stopping the vehicle at the check post offends the permit conditions under the Motor Vehicles Act and the State cannot enact any such law or rule. There is no substance in the said submission.
21. For the reasons given above, all the petitions are dismissed with cost. Counsel fee Rs. 500/- in each case, to be proportionately to each respondents.