Curgenven, J.
1. The appellant is the Municipal Council of Kumbakonam represented by its Chairman, and the appeal is against a decree granted by our learned brother Waller, J., to the respondents, Messrs. Ralli Brothers. This firm is engaged in the export of groundnut and possesses godowns within the Kumbakonam Municipality where after purchase and before shipment groundnut is stored. The plaint recites that for a period of 22 years godowns within the Municipality have been used for this purpose without any interference, but that in or about July, 1926, a demand was made for a sum of Rs. 100 as licence fee in respect of the premises for the year 1926-27. The plaintiffs paid the fee under protest and similarly paid the fee for the ensuing year, 1927-28, upon a demand made on the 12th April, 1927. The suit was brought for a declaration that the plaintiff firm was not liable to pay such a charge because it was unreasonable and excessive and fixed in an arbitrary manner, and for a refund of the sums paid. The contention thus is that the levy was ultra vires, a contention accepted by the learned Judge in granting the decree appealed against. Since this question of the extent of the powers of a Municipality to levy licence fees under the District Municipalities Act, Madras Act V of 1920, affects both the merits of the claim and the jurisdiction of the Civil Court to entertain it, I propose to reverse the usual order and deal first with the merits.
2. Before discussing the facts, it will be of assistance to consider the circumstances of a closely similar case Corporation of Madras v. Spencer & Co., Ltd., Madras I.L.R.(1929) M. 764 : 57 M.L.J. 71. It arose under the Madras City Municipal Act (IV of 1919) but the same principles were involved as must apply here. Messrs. Spencer & Company had a number of places within the city for storing spirits, and such places were required under the Act to be licensed. The licence fee had been Rs. 25 up to December, 1925, when a resolution was carried raising the licence fee to Rs. 150, and again in March, 1926, this fee was enhanced to Rs. 200 in respect of each and every place in which spirits were stored. Messrs. Spencer & Co. sued to recover the amounts paid by them under protest and obtained a decree. The learned Judges, Phillips and Reilly, JJ., who heard the appeal from that decree, point out in the first place the difference between a tax and a licence fee, which are severally provided for in different parts of the Act. They drew the inference that it was not the intention of the Act that fees for licences should subserve the ordinary purposes of taxation. A corollary to that was that the Council had not the power to fix any arbitrary fee which it chose and accordingly a line must exist between what is a reasonable licence fee and a licence fee which is unreasonable and in substance, although not in form, a tax. Reference was made to Kruse v. Johnson (1898) 2 Q.B. 91, where the question arose as to the validity of a bye-law made by a County Council with regard to the playing of musical instruments. It was objected that the bye-law was ultra vires' on the ground that it was unreasonable and therefore bad. Lord Russel, C.J., asking in what sense the word 'unreasonable' as applied to bye-laws should be understood, replies to his question thus:
If, for instance, they were found to be partial and unequal in their operation as between different classes; if they were manifestly unjust; if they disclosed bad faith; if they involved such oppressive or gratuitous interference with the rights of those subject to them as could find no justification in the minds of reasonable men.
and he adds that in such circumstances the Court might well say, 'Parliament never intended to give authority to make such rules; they were unreasonable and ultra vires-' In the Madras City case the learned Judges go on to consider the circumstanced in which the licence fee was twice enhanced and find that this action originated in a refusal of the Government to allow the Corporation to utilise the abkari revenue arising within the City. The fee was not raised with reference to the expense of collection or regulation, and the result of the enhancement was to impose on persons who stored liquor a very unfair burden as compared with other taxpayers in the City. Some comparison was instituted between the magnitude of this fee and fees charged in respect of licensing such places as stables, dairies and premises for storing skins and explosives, all of which were much lower.
3. Whether a fee is or is not unreasonable must of course be decided upon the special circumstances of each case, but I have dealt at some length with this other case because as will be seen it bears a close resemblance to the present one. Another case upon much the same lines is Municipal Corporation of Rangoon v. Sooratee Bara. Bazaar Co., Ltd. I.L.R. (1927) Rang. 212, where the question related to the reasonableness of a bye-law imposing a licence fee of Rs. 10 for every 100 square feet of the floor area of private markets within the Rangoon Municipality. The question of the Corporation's powers, it was held, had to be decided by what must be deemed the intention of the Legislature and the intention seemed to be merely to give power to charge a fee which would save the Corporation from being out of pocket by reason of the duties and liabilities imposed upon it by the Act in the supervision and regulation of private markets. Since the rate at which the fee was leviable did not conform to this test it was held to be unreasonable.
4. Turning now to the circumstances of the present case, it will be found that whereas taxation is provided for in Part III of the Act and is regulated there by a number of special provisions, licences and fees form the subject of Part IV, entitled 'Public Health--Safety and Convenience'. The power to impose a licence fee is derived from Sub-section (2) of Section 321 which runs as follows:
For every such licence or permission fees may be charged at such rates as may be fixed by the Council.
5. The wording undoubtedly suggests that the fee should be commensurate with the extra cost entailed by granting the licence and exercising such supervision as is necessary to see that its terms are complied with. It may be that in order to promote the health, etc., of the public, with which this part of the Act specially deals, higher fees should be chargeable in the case of dangerous or offensive occupations. But it would, I think, be in conflict with the purpose for which such fees are leviable that they should be so assessed as substantially to contribute to the general revenues of the Municipality. The licence fees now in question were imposed by a notification of the 25th March, 1926, and comprise a scale varying from Rs. 10 for premises of 500 square feet or less, up to Rs. 100 for premises which exceed 5,000 square feet. Schedule V of the Act specifies the premises which may not be used without a licence obtained under Section 249, and a scrutiny of the rate of licence fees imposed under this schedule in respect of other premises will show how disproportionate is the maximum fee, which the plaintiffs had to pay in this case. The next highest fee is Rs. 30 payable in respect of premises for storing manure, offal, blood, bones, rags, hides, fish, horns or skins. It is fairly evident that in fixing this fee the offensive nature of such stores as these was taken into consideration; and yet for the far less offensive storage of groundnut the plaintiffs have to pay more than three times as much. The fee for a place used for making fish oil is Rs. 20; for a dyeing yard is Rs. 3 if the area does not exceed 100 square feet and Rs. 12 for anything in excess of that area; for an oil mill or press the fee is Rs. 4-8-0. There is a graduated fee of Rs. 5, 10 and 15, according to the area, for burning bricks or tiles, certainly a very objectionable process within a town. The fee is more than Rs. 7-8-0 for a place used for storage of explosive or combustible materials or for the manufacture of anything from which offensive or unwholesome smell arises. These examples, I think, are enough to impose on the Municipal Council the duty of explaining why so high a fee as Rs. 100 was fixed in respect of groundnut premises. The only officer examined on the appellant's side was a Sanitary Inspector, and it cannot be said that the Municipal Council has attempted by his evidence to justify the dimensions of the fee by reference to the special expense entailed in granting the licence and inspecting the premise's. Moreover, it is evident that if a fee on this scale were justified by such expenses, all the other licence fees must be inadequate for that purpose. One is compelled, therefore, to enquire whether the fee was not imposed from some other motive. It is asserted in the plaint that up to March, 1925, the Council was collecting profession tax from the respondents and that this levy had to be discontinued in view of certain decisions of this Court. It is no doubt true, as the written statement points out, that the judgment in the particular suit brought by Messrs. Ralli Brothers regarding this claim to profession tax was not delivered until the 1st March, 1927, but it appears that the same question arose and was decided in the same manner in some earlier suits in one of which (C.S. No. 551 of 1924) judgment was delivered on April 20, 1925. It is certainly somewhat difficult not to connect the loss of this profession tax of Rs. 100 with the imposition of a so-called licence fee of precisely the same amount in respect of premises allowed to go unlicensed for so many years, and it is much to be regretted that a body in the position of a Municipal Council should lay itself open to such an imputation. But, however this may be, it is unnecessary to discover what was the precise motive in fixing the rates of fee. I am clearly of opinion that the levy of so disproportionate a fee can only be accounted for as pursuant to some policy of unfair discrimination and that it is not justified either by the letter or by the spirit of Section 321 (2) of the Act. I hold, therefore, that it was ultra vires.
6. Turning now to the question of jurisdiction, Sub-section (2) of Section 354 runs as follows:
No suit shall be brought in any Court to recover any sum of money collected under the authority of this Act or to recover damages on account of any assessment, or collection of money made under the said authority: provided that the provisions of this Act have been, in substance and in effect, complied with.
7. Now having found that the action of the Municipal Council in fixing these rates of licence fees was ultra vires, it necessarily follows that the provisions of the Act have not in substance and in effect been complied with; and it seems to me quite unnecessary to cite authority for so self-evident a proposition. It is no doubt true that a line must be drawn between cases which the section excluded from the Court's jurisdiction and cases which by virtue of the proviso are not so excluded. The difficulty of drawing such a line by the formulation of general principles will, I think, be apparent by a comparison of two Madras cases, Municipal Council, Nellore v. Rangayya I.L.R. (1895) M. 10 and The Municipal Council, Cocanada v. The Standard Life Assurance Company I.L.R. (1900) M. 205 : 10 M.L.J. 401. As has been observed in the latter of these cases, the question whether there has been substantial compliance with the Act is one of fact which has to be determined with reference to the particular circumstances of the case. The particular circumstance's there were that a Company had been wrongly assessed to profession tax, and to assess to profession tax a Company not liable is not to comply with the provisions of the Act in substance and effect. Another case in which the Court interfered was Municipal Council of Mangalore v. The Codial Bail Press I.L.R. (1903) M. 547 : 14 M.L.J. 410, where the Municipal Council had adopted gross instead of net income as the basis of assessment. But, as I have said, once it is found that the action of the Council was ultra vires, all question of the power of the Court to interfere disappears. Had the purpose of Section 354 (2) been to bar any suit so long as the provisions of the Act had been formally complied with, which is virtually the argument of the learned advocate for the appellant, the proviso relating to substance and effect would not have been added.
8. Since my learned brother concurs in these views, the appeal is dismissed with costs.
Bhashyam Aiyangar, J.
9. I concur. It is undisputed that the respondent firm were bound to take out a licence in the years in question for storing groundnut on their premises and the appellant Council were entitled to charge a fee for such licence. If the Council had charged a mere fee, the respondent would have had no right of suit. The respondent's contention is that what they were charged with was really a tax under the guise or cloak of a licence fee. The fee charged is Rs. 100 per year and it is certainly out of proportion to the cost of the work involved in issuing the licence and supervising the premises. The evidence shows that a higher fee than Rs. 30 is not charged for any other licence, although many other cases can be easily pointed out from the schedule relating to licences, in connection with which the work of supervision must be far more strict, and onerous for the Council. The inference, therefore, appears reasonable that although the Council purported to levy the sum of Rs. 100 in this case as licence fee it was really not that but a tax in disguise. In this view, their action was not in substance or effect a compliance with the provisions of the Act but ultra vires and the bar of suit provided for in Section 354 (2) cannot consequently avail them. I agree that the appeal should be dismissed with costs.