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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7460 OF 2009

NAGAR NIGAM, ALLAHABAD THROUGH ITS MUNICIPAL  COMMISSIONER    Appellant(s)                                 VERSUS LIFE INSURANCE CORPORATION OF INDIA & ORS. Respondent(s)

J U D G M E N T R.F. NARIMAN, J. 1) Mr. T.N. Singh, learned counsel appearing on behalf of the appellant-Nagar Nigam has assailed the judgment of the Allahabad High Court in which the respondent-Life Insurance  Corporation  of  India  was  held  not  to  be covered by the expression “insurance company” under a notification dated 30.01.1999 issued by the appellant. 2) The judgment under appeal has held:

“We  also  notice  that  in  Item  No.  25  of  the Schedule annexed with the Nagar Nigam, Allahabad Notification  dated  13.01.99/Annexure-2  to  the writ  petition  without  an  exception  various establishments,  undertakings  etc.  are  all  in essence pure and simple business or commercial units.  In category Ga, Serial No.1 of the list refers  to  Finance  Company/Chit  Fund.   It  is

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followed  by  Item  No.2  referring  to  Insurance Company '(each Branch)'.  It goes to show that respondents provided license fee with respect to business of a Company in the nature of 'Financial Companies'  'Chit  Fund  Companies'  and  the  like Insurance Companies dealing in general insurance (i.e.  other  than  Life  Insurance-exclusively carried on by LIC of India).  

Aforesaid conclusion is further discernible from the fact that the list does not embarrass in itself  any  charitable  hospital  or  government hospital or other likewise establishments.  

In  that  view  of  the  matter  we  do  find  a clear  distinction  between  Insurance  Company (carrying on business under Insurance Act 1958) vis-a-vis the Life Insurance Corporation carrying business of life insurance under Life Insurance Corporation of India Act, 1956.  Otherwise also Principle of Interpretation.  It is an accepted principle of Statutory Interpretation that in a case  where  two  interpretations  of  a  provision imposing tax/fee is possible, Court should accept the interpretation which leans in favour of the assessee  i.e.  the  person  who  is  sought  to  be burdened.”

3) Mr. B.B. Sawhney, learned Senior Counsel appearing on behalf  of  the  respondents  has  sought  to  support  the judgment  under  appeal  by  advancing  slightly  different arguments, which we have permitted him to advance.  He has referred to the statutory authority to levy licence fee and read to us Section 438 of the Uttar Pradesh

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Municipal  Corporations  Act,  1959,  which  reads  as follows:-

“438. Certain things not to be kept, and certain trades and operations not to be carried  on  without  licence.-  (1)  Except under  and  in  conformity  with  the  terms  and conditions of a licence granted by the Municipal Commissioner, no person shall- (a)  keep  in  or  upon  any  premises  any  article specified in the bye-laws in any quantity or in excess of the quantity specified in the bye-laws as the maximum quantity of such article which may at one time be kept in or upon the same premises without a licence; and  (b) keep in or upon any building intended for or used as a dwelling or within fifteen feet of such building cotton, in pressed bales or boras or loose, in quantity exceeding four hundred-weight; (c) keep, or allow to be kept, in or upon any premises  horses,  cattle  or  other  four-footed animals- (i) for sale, (ii) for letting out on hire, (iii) for any purposes for which any charge is made or any remuneration is received, or (iv) for sale of any produce thereof; (d) carry on or allow to be carried on, in or upon any premises- (i) any trade or operations connected with any trade specified in the bye-laws, (ii) any trade or operation which is dangerous to

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life or health or property, or likely to create a nuisance either from its nature or by reason of the  manner  in  which  or  the  conditions  under which, the same, is or is proposed to be carried on; (e)  carry  on  within  the  City,  or  use  any premises,  for  the  trade  or  operation  of  a farrier.”

He has referred to and relied upon sub-clause (d) of Section  438  which  states  that  a  licence  fee  can  be levied only if any trade or operations connected with any trade specified in the bye-laws is there.  According to him, the expression “trade” would not, by any stretch of imagination, include the business of insurance since what is referred to in Section 438 is keeping for sale or  otherwise  goods  or  animals  or  the  manufacture  of goods in premises.  To buttress his submission, he has referred to Section 2 sub-sections (78), (79) and (80) which reads as follows:-

“(78) “trade effluent” means any liquid either with or without particles of matter in suspension therein, which is so wholly or in part produced in the course of any trade or industry carried on at trade premises and in relation to any trade premises,  means  any  such  liquid  as  aforesaid which is so produced in the course of any trade or industry carried on at those premises, but does not include domestic sewage;

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(79) “trade premises” means any premises used or intended to be used for carrying on any trade or industry; (80) “trade refuse” means and includes the refuse of any trade, manufacture or business;”

4) When  the  Court  questioned  learned  counsel  for  the appellant as to this interpretation, the answer it got was that bye-laws can be framed, in any event, under Section 541 and, in particular, sub-clause (41) which reads as follows:-

“(41) fixing of fees for any licence, sanction or permission to be granted by or under this Act;”

5) We were also referred to Section 452 which reads as follows:-

“452.  Licence  fees,  etc.- The  Municipal Commissioner  may  charge  a  fee  to  be  fixed  by bye-law for any licence, sanction or permission which he is entitled or required to grant by or under this Act.”

6) It  will  be  noticed  that  both  the  aforesaid provisions, namely, Section 541 as well as Section 452 only  refer  back  to  a  provision  in  the  Act  which specifies that a levy may be made for licence fees.  We were not referred to any provision other than Section 438 for the purpose of locating such levy.

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7) In our opinion, learned counsel for the respondents appears to be correct in his submission, inasmuch as Section 438 deals with licence fee which is chargeable for  activities  related  to  functions  of  Municipal Corporations,  which  activities  refer  to  premises  in which goods or animals are kept for sale or for any other purpose, and to premises in which manufacture of goods takes place.  This becomes further clear when we refer  to  Section  438(8)  of  the  Act  which  reads  as under:-

“(8) Nothing in sub-sections (6) ad (7) shall be deemed to apply to mills for spinning or weaving cotton, jute, wool or silk to any other large mill or factory which the Municipal Commissioner may from time to time with the approval of the Executive  Committee,  specially  exempt  from  the operation thereof.”  

8) Mr.  B.B.  Sawhney,  learned  Senior  Counsel,  also referred to Section 541(20) which reads as under:-

“20. the control and supervision of all premises used for any of the purposes mentioned in Section 438 and of all trades and manufactures carried thereon and the prescribing and regulating of the construction, dimensions, ventilation, lighting, cleansing, drainage and water-supply of any such premises;”

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This provision also has direct reference to Section 438 and supports the interpretation that he has suggested.  

9) In the premises, we dismiss the appeal, but for the reasons stated by us.

.......................... J.       (ROHINTON FALI NARIMAN)

.......................... J.           (SANJAY KISHAN KAUL)

New Delhi; August 03, 2017.