D.A. Desai, J.
1. This appeal by judge's summons is preferred by the Petlad Nagraplika against the decision of the official liquidator of Rajratna Naranbhawi mills company Ltd. (in liquidation) (hereinafter referred to as ' the company'), dated 14th August, 1972, rejecting the claim for priority in payment, claimed by the petitioner in repsect of an amount of Rs. 4,141.69. Petitioner claimed the aforementioned amount form the comapny. The liquidator admitted the claim against the comapny, but declined to given priority in payment as claimed by the petitioner under section 530(10(a) of the Companies Act. Aggrieved by the lAtter part of the order refusing priority in payment, the petitioner has taken out this judge's summons under rule 164 of the Companies (Court) Rules, challenging the order of the liquidator. Property in payment was claimed on the allegation that the petitioner is a local authority and the amount represents the revenue payable by the company tot he local authority. Petitioner is also all licensee for th supply of the electricity and the company was the consumer. Petitioner presented the bill for the energy consumed by the company for the months of April, May and June, 1967, in the aggregate amount of Rs. 4,141.69 and this amount was outstanding at the relevant date. The company had two independent connections, namely, ordinary consumer connection and connection for motive power. The break-up of the amount was as under:
Motive power .... Rs. 2,278.74 Rs. 178.93 Electricity duty.
Light and fans .... Rs. 1,862.95 Rs. 450.90 Electricity duty.
2. The amount of electricity duty thus payable by the licensee to the Government and to be collected form the consumer was Rs. 629.83. One Ramachandra Genesh Padhya, Electrical Engineer, Petlad Nagar Palika, filed his affidavit-in- proof of the claim and claimed priority in payment. The liquidator accepted the claim but rejected the claim for priority in payment for the while or any part of the amount therein./ However, at the hearing of this summons, it was conceded and very rightly that out of the total claim, the amount of Rs. 629.83 being the amount of electricity duty payable to the State Government under section 4 of the Bombay Electricity Duty Act, 1858, would be a tax payable by the consumer through the licensee to the State Government and as that amount was outstanding and had become due and payable within 12 months next before the relevant date, therefore, it would be entitled to priority in payment. The liquidator also conceded, again in my opinion rightly, that notice charges in the amount of Rs. 4 payable to the state Government would be entitled to priority in payment. Therefore, it was conceded that out of the total claim, an amount of Rs. 633.83 would be entitled to priority in payment. The liquidator contested the priority for the balance of the amount.
3. The company was ordered to be wound up by an order made on 26th June, 1967. The liquidator after obtaining directions of the court invited the creditors of the company to prove their debts or claims and simultaneously to establish and title they may have to priority under section 530.
4. Mr. M.I.Patelo, learned Advocate who appeared for the petitioner, urged that Petlad Nagar Palika is a local authority and the amount payable tot the local authority would be revenue of the local authority and as the amount was outstanding on the relevant date and had become due and payable within 12 moths next before the relevant date, therefore, it would be entitled to priority in payment. section 530(10(a) reads as under:
'530(1). Preferential payments.-In a winding up, thee shall be paid in priority to all other debts-
(a) all revenues, taxes, Ceases and rates due from the company to the Central or a state Government or to a local authority at the relevant date as defined in clause (c) of sub-section (8), and having become due and payable within the twelve months next before that date.'
5. Clause (c) of sub-section (8) of section 530 defines 'the relevant date' to mean in the case of a company ordered to be wound up compulsorily, the date of the appointment (or first appointment) of a provisional liquidator, or if no such appointment was made, the date of the winding-up order, unless in either case the company had commenced to be wound up voluntarily before that date. therefore, the relevant date for the purpose of the present inquiry would be the date on which the winding-up order was made, bnakely, 26th June, 1967. In order to claim priority by invoking clause (a) of sub-section (1) o9f section 530, it must be shown that revenues, taxes, ceases and rates due form the company to the local authority were due form the company at the relevant date and had become due and payable within 12 months next before that date. Now, there is no dispute in this case that the amount claimed by the petitioner was due at the relevant date and there is equally no dispute in this case that it had become due and payable within 12 months next the relevant date.
6. Controversy Centre round the contention whether the amount claimed by the petitioner would be 'revenue' payable by the company to the local authority. It is conceded that except the amount of electricity duty included in the claim the balance of the amount was not the amount of any tax, cess or rate. But, it was contended that the amount represented the revenue of the local authority and it was payable by the company to the local authority as revenue.
7. Petlad Nagar Palika undoubtedly is a local authority. at one stage, Mr. Ashok L. Shah, learned advocate for the liquidator, attempted to urge that the electricity department of the Nagar Palika would not be a local authority. In other words, it was contended that even if Petlad Nagar Palika is a local authority, its electricity department is wholly independent of its constitution as local authority and any claim in electricity department would not be a claim by way of revenue of a local authority. It is undoubtedly true that the character of each department of local authority can be safely examined as was done by the Supreme Court in Corporation of the City of Nagpur v. Its Employees (1) [1960] 2 S.C.R. 942 (s.C.). Question arose whether the Nagpur Corporation was an industry within the meaning of the C.P. & Berar Industrial Disputes Settlement Act, 1947. It was in terms held that looking to the service rendered by the Corporation, if it complies with the condition implicit in the definition, it will be an industry within the meaning of the definition in the Act. After having observed thus, the Supreme Court examined the services rendered by the Corporation in its various departments including stage department and health department and held that health department looks after scavenging, sanitation, control of epidemics, control of food Adulteratioj, etc., and, therefore, the department satisfies the other tests laid down by the Supreme Court and is an industry within the meaning of the word 'industry'. Therefore, in a given case it may become necessary to examine the services rendered by different departments,. But in order to find out whether nay department of a local authority is itself a local authority or not, it would not be proper to examine the functions and duties of different departments and to conclude that while one department would be a local authority, the other would not be a local authority. Expression 'local authority' had been define din section 3(26) of the Bombay General Clauses Act, 1904, to mean a municipal corporation, municipality, local board, body of port trustees or commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund. Section 3(31) of the General Clauses act, 1897, defines 'local authority' to mean a municipal committee, district board, body of port commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of municipal or local fund. A municipality set up under the Gujarat Municipalities act or deemed to have been set up under the Gujarat MUnicipalities Act would be a local authority and Petlkad Nagar Palika is a municipality deemed to have been set up under the Gujarat Municipalities act and, therefore, it is a local authority. It has obtained a licence for distribution and supply of electricity. Its electricity department is a part of the local authority and, therefore, it is not correct to say that electricity department of the Petlad Nagar Palika is not included in the comprehensive expression 'local authority'. Same conclusion can be reached by approaching the matter form a slightly different angle. The income of the electricity department could not be said to be an income of the department alone. It would be the income of the municipality. Income of one department of a municipality is the income of the municipality as a whole because one can envisage that one department may be a wholly spending department and another department may be a wholly earning department and it would not be correct top examine the income and expenditure department-wise. (Vide Baroda Borough Municipality v. Its Workmen (1) [1957] S.C.R. 33 (S.C.)]. Therefore, even though for the purpose of finding out whether one or the other department of a local authority may or may not fall within the definition of the word 'industry' as used in the Industrial Disputes act or such other analogous statute, when it comes to finding out whether each department of the municipality is varied by the expression 'local authority' or not proper approach would be to treat all the departments of the municipality as the departments of a local authority, because municipality itself is a local authority.
8. Question then is whether the claim preferred by the petitioner constitutes 'revenue' of the local authority If the claim constitutes 'revenue' of the local authority, and if it was dune at the relevant date and had become due and payable within 12 months next before the relevant date, it would be entitled to priority in payment. Other two conditions for attracting sub- clause (a) of section 530(1) are already satisfied and, therefore, the limited question is whether the amount could be said to be 'revenue' of the local authority?
9. Word 'revenue' has ordinarily been understood to mean something payable to the Government of the case and occupation of and, as all lands belong to the State. Anyone who uses the land on agreeing or undertaking to pay something for the use of the land, the amount so paid becomes or is Styled as revenue of the State. Word 'revenue' as also referred to include every sum annually paid to the Government by the proprietor of any estate or tenure in respect thereof. (Vide Haji Buksh Elahi v. Durlav Chandra Kar (2) [1912] I.L.R. 39 Cal. 981 (P.C.)]. Commencing form this general import of the word 'revenue' it has often been said that income of the State form any source is revenue of the State. This approach commended itself and was unquestionable till the state was conceived as police State. Till then land revenue was the major if not only source of revenue. When the State was conceived as police State its normal functions were maintenance of law and order, enforcing orderly and regulatory behavior in the society. But once the State ceased to be merely a po9lice State with the advent of the concept of a welfare State, activities of the sTate increased many-fold. Maintenance of law and order became secondary function of the state activity, primary activity being socio- economic justice to the citizens and just distribution of the national wealth and control of material resources of the community to be so distributed as to best subserve the common good and to prevent concentration of wealth and means of production in the hands of a few to the common detriment. attempt was to set up an egalitarian society as conceived in the Directive Principles of state Policy enunciated in Part IV of our Constitution. To achieve this goal, the State had to under4take a number of industrial and commercial activities. Large amounts were spent on the planned industrial growth and the State itself became the biggest industrial magnate. State started earning income form its investment in industrial enterprises. Now, should the concept of revenue remain constant in this ever changing concept of activity of the state It the old and time-honored concept of revenue was to be adhered to, obviously one would always refer back to the notion where revenue represented the income of the State for permitting use of land. Indisputably, concept and content of revenue must also change. What should be the meaning that should be assigned to the word 'revenue' in sub-clause (a) of section 530(1) Should it be construed so wide as to include all income derived by a State or a local authority from any source Should it be construed so narrow as to confine its meaning to the time-honored practice of relating it to the income derived by the State for permitting use of land Both approaches appear to be wide off the mark in the present context because th hold concept of police State is consigned to the limbo of oblivion and the concept of welfare State has become all embracing. The State gas entered into industrial and commercial activity on a very large scale and if income form such activities derived by the State was to be treated as revenue and was, therefore, to be granted priority in payment, it would be highly discriminatory and inconsistent with the doctrine of pair pass distribution of assets of an insolvent company statutorily reecognised in section 511of the Companies Act.
10. A few illustrative cases can be examined here. In re Dehra Dun Mussoorie Tramway Co. Ltd. (1) [1931] 1 Comp. cas. 145 (All.)., priority in payment was claimed in respect of the claim by the telegraph department which included the cost of moving telephone lines, rent of telephone lines, telephone bills, etc. Referring to the definition of the word 'revenue' in Worton's Law Lexicon, edition 13, meaning income, annual profit received form land or other funds; also the profits of fiscal prerogatives of the Crown; and the meaning of the word 'revenue' given in Murray's Dictionary to mean return, yield or profit of any lands, property or other important source of income, it was held that 'revenue' must not necessarily be taken to be ejusdem generis with the words that come after it and it consequently means 'income'. However, having said this, priority was not granted for the whole amount but for a small amount which constituted rent of the telephone lines and charge of the trunk-calls. Now, if 'revenue' was to mean income of the Government form any source, priority should have been granted for the entire claim. It has not been done and it would give some idea about connotation of the expression 'revenue'. In Secretary of STate for India v. Punjab Industrial Banik Ltd. (1) [1931] 1 Comp. Cas. 303 (Lah.)., the fee4s payable to the Registrar of JOint Stock Comapnies-a Central Government Officer-for the action taken by him in discharge of his official duty under section 138 by appointing Shaikh Din Mohammad to investigate the affairs of the Punjab Industrial bank Ltd. was held not to be entitled to priority in payment. Thus, certain payment to CEntral Government may not be included in the expression 'revenue'. In Northern Bengal Co. Ltd., In re (2) [1962] 32 Comp. Cas. 168 (Mys.)., claim for priority was rejected observing that debt in respect of which priority is claimed is a trade4 Debt and not entitled to priority. Thus, trade did not form part of the revenue of the Government. In K. Chandy v. Mysore state Electricity Board (3) [1962] 32 Comp. Cas. 168 (Mys.)., calim of the state Electricity Board and the State Housing Board for priority in payment was rejected. On the facts, the case is very much similar to the one befor me. Debt in that case was due to the Director of Sericulture for supply of silk worm eggs to a silk manufacturing company. Priority was claimed on the allegation that debt was due to the department of the Government and it would constitute revenue of the Government. claim for priority was rejected on the ground that the state cannot claim priority for supplying goods and receiving price thereof, it being a commercial activity of the state and which income of the state would not constitute revenue of the state. In State v. Pure milk Supply Co. Ltd. (4) [1963] 33 Comp. Cas. 116 (Punj.). the Government's claim consisted of the loan advanced by it to the company under the state Aid to Industries act, 1935. Claim for priority was negatived on the observation that such a claim would not constitute revenue of the State and no priority can be granted Except in respect of those dues recognised under section 530. LAstly, I would refer to Union of India v. Ladulal Jain : [1964]3SCR624 ., wherein running of railway was treated as a commercial activity of the State. Supply of electricity cannot stand on a footing higher than that. The test laid down by the court was that it is immaterial and irrelevant who runs the activity, it is the nature of the activity which is decisive of the matter. If supply of electricity by a private licensee would render the claim of such licensee for consumption of electricity an unsecured debt, so would it be, even if the electrical energy is supplied by a licensee which is a municipality and hence a local authority. Activity which is commercial in the hands of an individual does not cease to be commercial merely because a local authority carries on the same.
11. Word 'revenue' has been used in conjunction with the words tax. cess and rate. Priority in payment is sought to be given to all revenues, taxes, ceases and rates payable to the Central or State Government or to a local authority. Should the word 'revenue' used in clause (a) take its color form the words just following, namely, taxes,ceases and Rates? Now, it is quite well-known that tax, cess or rate is a compulsory exaction by the Government or a local authority and doesn't depend upon the violation of the party.Should the word 'revenue' take its its colour from each other, that is, the more general is restricted to a sense analogous to a less general. The maxim ejusdem generis is only an illustration of the maxim noscitur a sociis (vide Dr. Devendra M. Surti v. State of Gujarat (20 [1969] 1 S.C.R. 235 (S.C.). Where the intention of the legislature in associating wider words with the words of narrower significance is doubtful, or otherwise not clear, then the present rule of construction of nosciture a sociis can be usefully applied. It can only be applied where the meaning of the words of wider import is doubtful; but where the object of the legislature in using wider words is clear and free of ambiguity, the rule of construction in question cannot be pressed into service (vide State of Bombay v. Hospital Maxdoor Sabha : (1960)ILLJ251SC . According to a well established rule used in the construction of statutes, general terms following particular ones apply only to such persons or those as are ejusdem generis with those comprehended in the language of the legislature (vide R. v. Cleworth (4) [1864] 4 B. & S. 927., per Cockhburn C. J at page 932). In other words, it would mean that the general expression is to bread as comprehending only things of the same kind as that designated by the preceding particular expression, unless there is something to show that a wider sense was intended. Principle of ejusdem generis is applied where general term follows the expression of narrower connotation preceding it. On the other hand, where two or more words which are susceptible of analogous meaning are coupled together, nosciture a sociis, they are understood to be used in their cognate sense. In other words, it would mean that the connotation of the general expression preceding more specific would be cut down to the connotation of the expression following general expression unless, of course, the legislature intended and expressed itself by defining the words in wider amplitude for the purpose of covering a wider field. Meaning so given by the legislature for certain purposes cannot be cut down by referring to other words in conjunction with which the expression is used. if the legislature intended to give a wider meaning for certain defined purposes it would be unwise to cut down the meaning merely by invoking th doctrine of nosciture a sociis (vide Khatija Abdulla v. National Tobacco co. (1) [1972] 13 G.L.R. 205 (Guj.).
12. In order to correctly gauge the connotation in which the word 'revenue' is used in sub-clause (a) of section 530(1), it is necessary to find out the legislative intendment in giving priority to the claims of the Central and state Government and a local authority and the extent to which priority can be granted. It has its genesis in the common law doctrine giving priority to Crown debts in payments of debt of an individual. This doctrine of common law received judicial recognition in the territory of India at the relevant time within the meaning of article 372(1) of the Constitution. The basic justification for the claim for priority of State debts rests on the well recognised principle that the state is entitled to raise money by taxation because unless adequate revenue is received by the State, it would not be able to function as a sovereign Government at all. it is essential that as a sovereign, the State should be able to discharge its primary governmental functions and in order to be able to discharge such function efficiently, it must be in possession of necessary funds and this consideration emphasizes the necessity and the wisdom of conceding to the State the right to claim priority in respect of its tax dues (vide Builders Supply Corporation v. Union of India : [1965]56ITR91(SC) . In Bank of india v. John Bowman : AIR1955Bom305 . (as he then was ) observed that the priority given to the Crown is not on the basis of its debt being a judgment-debut or a debt arising out of statute, but the principle is that if the debts are of equal degree and the Crown and the subject are equal, the Crown right will prevail owner the of the subject. The obiter observation of the Madras High Court in Manickam Chettiar v. Income-tax Officer : [1938]6ITR180(Mad) was disapproved by observing that the weight of authority in support of the applicability fo the common law doctrine in regard to tax dues in this country is os strong that no significance can be attached to these obiter observations. In Collector of Aurangabader v. Central Bank of India : [1967]3SCR855 , observation of Chagla C.J. hereinabove quoted was approved, observing that the English common law doctrine of the priority fo Crwon debts has been given recognition in theterritory known as British India prior to 1950 in regard to the recovery of tax dues in priority to other private debts of the taxpayer. However, this common law doctrine of priority of Crwon debts need not be enforced in thgis petition because the case governed by sepcific statutory provision granting priority enacted in sectiuon 530(10(a) and effeft woudld have to be given to it.
13. When a private creditor recovers his dues form the company, the amount undoubtedly comes into his pocket for his own benefit. When certain taxes, cesses or rates payable to the Central or state Governments or local authority are collected, the amount comes into the public coffers and is used for the benefit of the public at large. In giving priority, the intention of the legislature appears to be to put common goods on a slightly higher pedestal to the private good in the distribution o fassets of an insolvent company. If a private creditor is not able to recover his dues, it would be a loss of an individual and he may alone suffer. If the Government or local authority is unabel to recover its dues, such as a tax, cess or rate which are compulsorily payable, it woudl b be common godd that woudl suffer and damage, if any, woudl be to the socieyt as a whole. after alkl, if the State foir setting up a welfare State is to carry on its activities, committed to render economic and social justice, it must have funds; and, therefore, some preference is given to the Goivernment in collection of its dudes. Viewing it form this angle the special procedure prescribed in Revenue Recovery act as well as section 117 of the Bombay Land Revenue Code was held valid and not offending the vice of discrimination under article 14 of the Constitution of India. (vide Special Civil Applications Nos. 266 of 1970, 788 of 1969 and 1374 of 1970 decided on 7/9th Decekber, 1970, by the High Court of Gujarat in Ramkrishna Durgprasad v. State of Gujarat). Question, however, is whether such a priority shoudl be given to Government in respect of its claim emanating from any source. Once the state has entered the field of industry and commerce, it may have incoem form its industry and commerce, and it may have income form its industrial undertakings or commercial activity. If the expression 'revenue' was to be understood in the sense of income form any source, income of the state Government form its industrial and commercial activity would also constitute its revenue, and may be entitled to priority in payment. That would be complete antithesis of the old concept of revenue which meant payment to the Government for these of the land on the footing that all lands belong to the State. Legislature had, however, manifested its intention in not leaving the word 'revenue' standing by itself but the same has been followed by more specific words such as taxes, ceases and rates. General expression has been followed by words of specific contantion and there is nothing in the language of usb-clause (a) which woudlmean that the legislatur eused the word 'revenue' in its widest amplitude and did not want its meaning to be cut down. Even collection of tax when it goes to the coffers of the State, it woul dconstitute 'revenue' of the State, so also collection of the cess and rates. If by usineg the expression 'revenue' Parliament wanted too rpovide for priority for incoem derived by the State from whatever source, it was absolutely not necessary to use to words 'taxes, cesses and rates' folowing the word 'revenue'. But it appears that the legislature wanted to complketely manifest its intention by providing that the word 'revenue' shall be understood in the narrower sense though not in the narrowest sense. Tax, generally speaking, is a compulsory exaction, not depending upon the volition o fthe parties, liabile to pay and so is the case with the cess and rate. Now, if all these words which are susceptible of analogous meaning are coupled together, on the principle of nosciture a sociis, they are understood to be used in their cognate sense. Viewed froim this angle, 'revenue' can only mean complusory exaction which may include even fee for service rendered such as water ragfe or sanitary cess. It may include rate on building. It may include everything which may be a compulsory exaction not depending upon the volition o free will of the partya from whom it is ought to be allocated. But expression 'revenue' cannot be so expanded as to provide all income of the State coming form whatever source. If Government were to advance a loan, if Government were to stand as guarantor, if Government were to derive its income from the commercial and industrial activates, such money coming into the hands of the Government may loosely be called 'revenue'. But it does not constitute revenue within the meaning of the expression in sub-section (1)(a) of section 530. The word 'revenue' must take its colour form the other words used in the clause each one of which is susceptible of analogous meaning and each one of them should be understood to have been used in its cognate sense. Each takes its colour from the other with the result that the meaning of the more general being restricted to the sense analogous to that of the less general. Interpreting the meaning of the word 'revenue' in this manner, it would be quite clear that expression 'revenue' must be understood in the sense of compulsory exaction or in contradistinction to the income coming in the coffers of the Central or State Government or local authority form its commercial or industrial activities.
14. Now, Petlad Nagrapalika-petitioner in this case- was a licensee under the Indian Electricity act. It was supplying electricity within the area of the license. It was entitled to charge for the energy consumed by the customer. Under section 4 of the Bombay Electricity Duty Act, it was bound to levy and collect duty for and on behalf of the state Government and payable to the state Government form the Consumers at the rate prescribed under the act. Any private individual if he had carried on the activity of supplying energy as a licensee it would have been, if it was not generating electricity, a commercial activity in the hands of such individual. So would be the case of the municipality as licensee under the india Electricity act. When a bill is presented for electrical energy c9onsumed, in normal grammatical parlance, it means payment for the goods supplies. Goods in its generic sense include electrical energy. if goods are supplied and payment is insisted upon, failure to pay would render the vendor of the goods an unsecured creditor of the company. Such would be the position of the municipality when the consumer, namely, company in liquidation, failed to pay the bill when presented to it. It would be a payment to the municipality for the goods supplied and the amount received or receivable would not be 'revenue' payable to the local authority within the meaning of the expression in section 530(1)(a).
15. It is thus crystal clear that the claim of the petitioner which is undoubtedly a local authority and which was due on the relevant date and which became payable within 12 months next before the relevant date, yet, it being not revenue payable to local authority,. the whole of it which constitutes electricity duty payable by the licensee to the State Government would be entitled to priority.
16. Accordingly, this appeal is partly allowed and the liquidator is directed to admit the claim in there amount of Rs. 633.83 payable by the company to the petitioner as entitled to be paid in priority and balance of the claim is not entitled to priority and rejection for priority of the balance of the claim by the liquidator is correct and is hereby confirmed. In the facts and circumstances of the case, there would be no order as to costs.