September 3 v. State of Uttar Praduh

Mr. Goyal, learned counsel for the petitioner, raised before us six contentions, but they may be broadly classi fied under the following four heads: ( 1) Section 128 ( 1) of the Act, insofar as it authorizes the Municipal Board to impose the taxes mentioned therein in any part. of the municipality, offends Art. 14 of the Constitution (2) Even if the section does not and, therefore, is void. violate the said article, the notification Municipal Board imposing the said two taxes, namely, house tax and scavenging tax, confining them only to the Civil Lines area was void inasmuch as the taxes could not issued by - 1963 Gopal Nflf'ain v. State of U ttar Pradesk and Anr. Subba Rao, /- 4 S.C.R. SUPREME COURT REPORTS 873 be justified on the basis of the doctrine of classifica tion. (3) The said taxes were imposed in violation of the statutory provisions of the Act and, therefore, the said imposition on him in respect of his building infringes his fundamental right under Art. 19 ( 1) ( f) of the Constitution. And (4) section 131(1)(b) of the Act also .violates Art. 14 of the Constitution in as much as it confers an arbitrary power on the Municipal Board to impose taxes of any amount on any person or class of persons without laying down any clear policy for classification. Mr. Pathak, learned counsel for the Municipal Board, controverts the said arguments of the petitioner. We shall deal with his contentions in appropriate places. To appreciate the first contention it would be conve nient to read at the outset the relevant part of s. 128 of the Act. It reads : Section 128. (!) Subject to any general rules or special orders of the State Government in this behalf, the taxes which a board may impose in the whole or any part of a municipality are- (i) a tax on the annual value of buildings or lands - • .. or both; * * (xi) a scavenging tax ; * * * It * * * is argued * No general rules were made or special orders issued by the State Government in the matter of imposition of a tax in any part of a municipality. power conferred on the Municipal Board to impose a tax on any part of the municipality is a naked and arbitrary power, that the Act does not disclose any policy or give any guidance for making a valid classification and that, therefore, the section, to the said extent, violates the pro visions of Art. 14 of the Constitution. The law on the subject is well settled. Das C.J., in Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar('), after a consideration of the earlier decisions, pointed out that a statute which may come up for consideration on a question of validity under Art. 14 of the Constitution might be placed in one of the five classes mentioned therein. Classes (iii) and (iv), which are relevant to the present enquiry, reads: • ( 1 ) [1959] S.C.R. 279 . 56-2 S. C. India/64 . Gopal Narain y. State of Uttar Pradesh and Anr. Subba Rao,/. 87'1 SUPREME COURT REPORTS [1964] to apply. its provisions are "(iii) A statute may not make any classification of the persons or things for the purpose of applying iu provisions but may leave it to the discretion of the Government to select and classify persons or things to whom In deter mining the question of the validity or otherwise of such a statute the court will not strike down the law out of· hand only because no classification appears on its face or because a discretion is given to the Govern ment to make the selection or classific~tion but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion by the Government the matter of selection or classification, on the ground that the statute provides for the delegation of arbi trary and uncontrolled power to the Government so to enable it to discriminate between persons or things similar! y situate and that, therefore, the discrimi In such a case nation is inherent in the statute itself. the court will strike down both the law as well as the execUtive action taken under such law, as ir did in State of West Bengal v. Anwar Ali Sarkar(')., Dwarka Prasad Laxmi N¥train v. The State of Uttar Pradesh(') and Dhirendra Krishna Manda/, v. The Superintendent and Remembrancer of Legal Af fairs(')." "(iv) A statute may not make a classification of the persons or things for the purpose of applying its provi~ions and may leave it to the discretion of the Government to select and classify the persons or things to whom its provisions are to apply but may at the same time lay down a policy or principle for the guidance of the exercise of discretion by the Gov ernment in the matter of such selection or classi fication, the court will uphold the law as constitu tional as it did in Kathi Raning Rawat v. The State of Saurashtra(')." The question, therefore, to be considered is whether Act has laid down a policy for the guidance of the Muni .. cipal Board in the matter of selection of any part of (2) [1954] S.C.R. 803. (') [1952] S.C.R. 435. ( 1 ) [1952] S.C.R. 284. ( 3 ) [1955] 1 S.C.R. 224. - 196'3 Gopal Narain v. Swe of U tt.r Pradesh and Anr. Subba Rao/. "I S.C.R. SUPREME COURT REPORTS 875 municipality for the purpose of imposition of any of the taxes mentioned in s. 128 of the Act. implication, indicate clearly, by necessary In this context, because of a Legislature's reluctance or inadvertence to express itself clearly of its policy, a heavy and difficult burden is often placed on courts to dis cover it, if possible, on a fair reading of the provi sions of the Act. Some Acts expressly lay down the po licy to guide the exercise of discretion of an authority on whom a power to classify is conferred. Some Acts, though they do not expressly say so, through their provisions policy affording a real guidance for the exercise of dis cretion conferred on an authority thereunder. While a court should be on its guard not to enter into the domain of speculation with a view to cover up an obvious difi ciency in a legislation, it may legitimately discover such a policy, if it is clearly discernible on a fair reading of the relevant provisions of the Act. This Court, in Kathi Raning Rawat v. The State of Saurashtra('), found the clear policy of the Legislature on the basis of the prema ble of the Act taken along with the surrounding circums tances; in P. Balakotaish v .. Union of India('), on an examination of the Act read as a whole ; and in M / !. Pannalal Binjraj v. Union of India('), from the pream itself. This view was accepted in later decisions. But it is neither possible nor advisable to lay down precise ! y how a court should cull out such a policy from an Act in the absence of an express statutory declaration of. policy. It would depend upon the provisions of each Act, includ ing the preamble. But what can be posited is that the policy must appear clearly either expressly or by necessary implication from the provisions of the statute itself. - - Now, does the Act provide any real guide to the Mu nicipal Board to exercise its discretion under s. 128(1) of the Act? The Act is a consolidating and amending Act relating to muncipalities in the State of Uttar Pradesh. Section 7 of the Act narrates the duties of a municipal It directs the municipal hoard to discharge duties hoard. connected inter alia with sanitation, drainage, laying of roads, schools, health, water supply, hospitals, maternity (2 ) [1958] S.C.R. 1052. (1) [1952] S.C.R. 435. (3) [1957] S.C.R. 233. 1963 Gopal Narain v. State of Uttar Pradesh and Anr. Subba Rao, f. 876 'SUPREME COURT REPORTS [1964] centres and similar others. Section 8 enables a municipal board to provide, in its discretion, special amenities and undertake other duties mentioned therein, which involve heavy expenditure. It The duties cannot be discharged and the discretionary functions cannot be performed unless the municipality has power to collect money by way of taxes. Section 128 of the Act confers such a power on the Municipal Board. It says that the Municipal Board may impose in the whole or any part of the municipality the taxes mention ed therein. A fair reading of these three provisions makes it clear _that the amounts cqllected by the Municipal Board by way of taxes are mainly intended to enable the Board to discharge its duties in the municipal area or a part of the municipal area, as the case may be. contended that while no doubt a combined reading of the said provisions may indicate the purpose of taxation, it does not disclose any policy how and under what ·circumstances the Municipal Board can select a part of the municipal area for the imposition of a tax or taxes. We do not agree. Sections 7 and 8 enumerate the obli gatory duties and discretionary functions of a municipa lity. These duties and functions need not necessarily be discharged or performed in the entire area of municipality at once. ·They may have to be introduced gradually, starting from one part of the area in the mu nicipality with a view to cover the entire area in due It may also be that the amenities required in course. one part of the municipal area may be different those required in another part of the municipality. It ·may also be that a part of the area, because of the na ture of the soil, distance from the well-developed part of the city or for historical reasons, calls for a larger in vestment for development compared to other parts of If so much is conceded, that is, differ the municipality. ent parts of a municipality may require special treatment in the matter of provisions of amenities, it would be rea sonable to collate the power of taxation in a part of a municipality with such separate treatment. While the 'former two sections, by necessary implication, enable a municipality to provide special amenities in a part of the municipality, the latter. section empowers it to impose tax- - - 1963 Go pal Narain v. State of U ttar Pradesh and Anr. Subba Rao /. 4 S.C.R. SUPREME COURT REPORTS 877 If so understood es in that part. legislative gui dance is apparent from the said three 11rovisions ; that is to say, a municipality can impose a tax in a part of a city, if that part, because of its peculiar situation or other wise, has to be provided with special amenities throwing a heavy financial burden on the municipality. The next question is, whether the said policy offends Art. 14 of the Constitution. It is said that all the citizens of a city would directly or indirectly partake in the ameni ties provided in any part of the city and, therefore, the classification underlying the policy has no reasonable nexus with the object sought to be achieved. It is argu- ed that amenities, such as good roads, extensive parks, electrification, water supply etc., provided in one part of the city could equally be taken advantage of by residents of other parts of the city and, therefore, the expenditure on such amenities should be met from the general reve nues. It may be so ; but the indirect benefit cannot be equated with the direct benefit conferred upon a part of the city treated as a separate unit for the purpose of taxation. This Court, in K handige Sham Bhat v. Agri cultural Income-tax Officer, Kasaragod ('), in dealing with a law of taxation in the context of the doctrine of classi fication observed : ). But "Taxation law is not an exception to this doc trine : vidc Purslzottam Govindji v. B. M. Desai(') and K. T. Moopol Nair v. State of Kerala(' 0 the application of the principles, the courts, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to Legislature in the matter of classification, it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature classify is of "wide range and flexibility" so that can adjust its system of taxation in all proper and reasonable ways." Looking at the policy disclosed by ss. 7 and 8 and s. 128 of the Act an<l applying the liberal view a of taxation receives in the application of the doctrine of (') f1963] 3 S.C.R. 809. (3) [ 1961] 3 S.C.R. 77. 2 ( ) [1955] 2 S.C.R. 887. • - - 1963 Gopal Narain v. State of Uttar Pradesh and Anr. Subba Rao·./. 878 SUPREME COURT REPORTS [1964] In that case, this Court also accepted classification, it is not possible to say that the policy so disclosed infringes-the rule of equality. This Court more than one decision held that equality clause does not forbid geographical classification, provided the difference between the geographical units has a reasonable relation to the object sought to be achieved. This principle has been applied to a taxation law in Khandige Sham Bhat's Case('). principle that the legislative power to classify is of wide flexibility so that it can adjust its system of range and It is indica taxation in all proper and reasonable ways. that a ted in "Willis, Constitutional Lau/', at p. 590, State can make a territory within a city a unit for purpose of taxation. So, the impugned section in permit ting in the matter of taxation geographical classification, which has reasonable relation to the object of the sta tute, namely, for providing special amenities for a parti cular unit the peculiar circumstances whereof demand them, does not in any way impinge upon the equality clause. The very question that we are now called upon decide received the attention of a Full Bench of the Al lahabad High Court in Bareilly Municipality v. Kundan Lal (2)_. The Full Bench, by a majority, held on a cons truction of the provisions of the Act that the power vest ed in the Board to select part of the municipality within which to levy a tax was not an arbitrary power but one which is controlled by the purpose which was intend e? to be achieved by the Act itself. We agree with view. The next question is whether the notification issued by the Municipal Board imposing the said taxes in the area of the Civil Lines offends Art. 14 of the Constitution. It is clear from the affidavit filed on behalf of the Muni the area cipal Board and the map annexed thereto that covered by the Civil Lines has been treated as a separate unit in . the matter of development from the year 1870. The Municipal Board acquired the land in that area, laid out roads, carved out good sized building plots, and pro vided special amenities for the residents by way of broad roads, open and bigger plots for construction of --. (1) [1963] 3 S.C.R. 809. ( 2 ) -A.LR. 1959 All. 562. - - 1963 Copa/ Narain v. State of Utt<r Pradesh and Anr. Subba Rao /. 4 S.C.R. SUPREME COURT REPORTS 879 the impugned tax houses, parks and gardens, special lighting arrangementi, foot-path with cement benches, water booths with water man for giving water to the public and special sanitary arrangements ; whereas the old city area of Bareilly con sisted of small plots of land with small houses there on situated in congested localities with narrow lanes. The imposed house tax in the Civil Lines Municipal Board area from as early as January 31, 1870 and, after the Act in ac came into force, reimposed cordance with the provisions of the Act. In the case of scavenging tax, there appears to be different methods adopted in the two areas. In the Civil Lines area night soil and rubbish are collected by the Municipal Board from each bungalow, while in the City area they are col lected from one common place in each ward. The for mer certainly involves higher expenditure than the latter. l t will, therefore be seen that for about 90 years the Civil Lines area has bc-&n treated as a separate geographi cal unit for the purpose of taxation, having regard to his torical reasons and the extra amenities provided for the residents of that locality and the heavy expenditure curred by the Municipal Board in doing so. The differ ences between the old city and the Civil Lines area are so pronounced in the matter of amenities that there is a reasonable relation between the taxes imposed and geographical classification made for the purpose of taxa impming tion. We, therefore, hold that the notification the said tues does not infringe Art. 14 of the Constitu tion. The next question is whether s. 131 ilf the Act viola tes Art. H of the Constitution. Section 131 of the Act reads : " ( i) When a board desires to impose a tax, it shall by special resolution frame proposals specifying- ( a) the tax, being one of the taxec, described in sub ~ection ( 1) of section 128, which it desires impose; (b) the persons or class of persons to be made liable, taxable and the description of property or other thing or circumstances in respect of which are to be made liable, except where and in so far as any such class or description is already sufli- - - 880 SUPREME COURT REPORTS [1964] Glfllli maroin w. :iiraite. of lllaa- J.IlmiJeih amiJ .Anr. ciently defined under clause (a) or by this Act ; (c) the amount or rate leviable from each such per son or class of persons ; · \ d) any other matter referred to in section 153, which the State Government requires by rule to be spe cified." in regard The argument is that this section enables the Board impose a tax of any amount and against any persons or class of persons without giving any guide the fixation of rate of tax or the persons or class of per It is said that the said tax. sons liable to pay power conferred upon the Municipal Board is an unguid ed and naked power. Section 131 does not confer any power on the Board to impose a tax. Section 128 confers such a power and that section with meticulous care enu merates the subjects of taxation. Section 131 provides a machinery for imposing the said taxes. The said cannot be imposed in vacuum. There, should be some ma taxation and chinery for acsertaining the rate of If persons or the class of persons liable to pay the same. s. 131 stood alone, there may be some justification for the co ment, but if it is read along with s. 128, it posits a reasonable nexus between the tax in respect of a subject and the rate payable and the person or class of persons liable to pay the same. To illustrate : s. 128 empowers the Muni cipal Board to. levy a tax on the annual value of a build ing and to make a person, who should obviously be a person connected with the building, liable to pay the same. For deciding those questions a quasi-judicial procedure is prescribed under s. 131 and the succeeding sections of the Act. Under s. 131 the Municipal Board makes the proposals specifying the tax, the rate and the persons or the class of persons liable to pay the tax and such other details prescribed thereunder. The Board thereupon publishes ih the manner ·prescribed the said details. Under s. 132 any inhabitant of the municipality may within a fort night from the publication of the said notification, submit his objections thereto. Thereupon the Board shall take any objection so submitted into consideration and pass If the Board deci orders thereon by special resolution. des to modify its proposals, it shall publish the modified proposals and the modified proposals may also be objected - - 1%3 Go pal Na rain v. State of I/! ttar Pradesh and Anr. iubba Rao/. -- > 4 S.C.R. SUPREME COURT REPORTS 881 s. 133 the Board by special resolution to. After the final orders are made by the Board, it shall submit the proposals along with the objections, if any, to the the prescribed Under prescribed authority. authority shall then submit the proposals and the object tions to the State Government, which will make the final orders. When the proposals are sanctioned by the prescri bed authority, or the State Government, the State Govern ment shall make rules having regard to the draft ru les submitted by the Board ; when the rules are sanction ed by the State Government, they will be sent to the Board and thereupon direct the imposition of the tax with effect from a date specified in the resolution. Thereafter the said resolu tion will he notified by the State Government in the Gazette. It will be seen from the aforesaid provisions that the rate of tax to be levied and the persons or the class of persons liable to pay the same have a reasonable rela tion to the subjects taxable under the Act. The said rate to be imposed and the persons or the class of persons liable to pay the same are ascertained by a quasi-judicial proce dure after giving opportunity to the parties affected, subject the State Government. We cannot therefore, say that the power conferred upon the Muni cipal Board is an arbitrary power offending Art. 14 of the Constitution. revision by The next question of learned counsel is that the said taxes were imposed in violation of the procedure prescri bed by the Act. At the outset it may be noticed the house tax was imposed with effect from January 31, 1870 and the latrine tax was imposed with effect May 23, 1918 and the latter tax was replaced by scaveng ing tax with effect from April 1, 1939. Though decades have passed by, no one has questioned till now the vali dity of those taxes on the ground that the procedure was not strictly followed. There is a presumption, when a statutory authority makes an order, that it has followed the prescribed procedure. The said presumption is not in any way weakened by the long acquiescence in the im position by the residents of the Civil Lines. Nonetheless no tax shall be levied or collected except in accordance with law. If it is not imposed in accordance with law, it would infringe the fundamental rights guaranteed un- 882 SUPREME COURT REPORTS [1964} 1963 Gop•I Narain v. State of Uttar Pradesh Nnd Anr. der Art. 19(1)(£) of the Constitution. While the long period of time that lapses between the imposition of tax and the attack on it may permit raising of certain presumptions where the evidence is lost by affiux of time, it cannot exonerate the statutory authority if it imposes a tax in derogation of the statutory provisions. We will, therefore, proceed with the specific objections raised by the petitioner. Sections 131 to 136 give the procedural steps to be followed for imposing a tax. We have already given a gist of those sections in a different context. Learned coun sel for the petitioner contends that the Municipal Board violated the provisions of s. 131(1) of the Act inasmuch as, ( i) it did not give all the necessary details in the proposals made under s. 131(1) of the Act, and (ii) Government did not make the ruks after the Act came into force in accordance with the procedure prescribed under s. 131 and the succeeding sections of the Act. In regard to the first objection, there is an allegation in affidavit filed by the petitioner, but there is none in respect this, we are not prepared to permit the petitioner to question the validity of the tax on the second ground in the absence of any specific allegation in regard to the same in affidavit. There is a specific allegation in regard to the first ground, but it is denied in the counter-affidavit filed by the Municipal Board. On April 5, 1917, the Munici pal Board passed the following special resolutious : the second objection. In a matter like "Draft proposals under Section 128(1) (i) for re vising the Government Notification No. 135 dated 13-1-1870 levying tax on the buildings and lands in the Civil Lines Station of the -Bareilly Municipality. Resolution : Resolved that Draft Proposals be noti fied." Ex faci~ this resolution shows that there were draft pro posals ; those draft proposals are not before us and taey must have contained all the details required by the sec therefore, hold tion. We reject this contention. We, impugned is has not been established in violation of any of the taxes have been imposed provmons of s. 131 and other relevant sections of Act. that the 1 - - 4 S.C.R. SUPREME COURT REPORTS 883 to the scavenging The last argument relates tax. Section 128(1)(xi) empowers the Municipal Board to im pose a scavenging tax. Clause (xii) of that section may . It reads : "a tax for also be noticed. the cleaning of latrines and privies". The relevant notification imposing the tax reads : "It is hereby notified under sub-section (2) of Section 135 read with section 136 of the United Pro vinces Municipalities Act, 1916 (II of 1916) that the Municipal Board of Bareilly, in exercise of the powers conferred by section 128 ( 1) (xii) of the said Act, has imposed the following scavenging tax in the Bareil ly Municipality published with notification No. 3298/XI-18 H, dated the 20th September 1933, in super ~ession of notification No. 628/XI-18H, dated 24th January, 1923, with effect from lst April 1939. Description of the tax. - 1963 Gopol_..., w. StMe ·ti Uttin' ft I I anti Anr. Subba RMI, f. A tax for the removal of nightsoil and rubbi~h at the rate mentioned below to be realized from the oc cupier or the owner of the buildings (bungalows) situated within the Civil Lines ward of the munici pality." * * * * * * In accordarice with the said notification, nightsoil and rubbish are collected by the Municipal Board from each bungalow in the Ci vii Lines area. The contention is that the Municipal Board had no power to impose a scaveng ing tax under cl. (xii) of s. 128 ( 1) of the Act and, there fore, the imposition of the tax is illegal. The Municipal Board says in iti, counter-affidavit that cl. (xii) mentioned in the notification is a mistake for cl. (xi). The question is whether the Municipal Board has power impose scavenging tax. There must be some distinction between scavenging tax and a tax for cleaning of latrines and privies. Presumably cl. (xi) is more comprehensive than cl. (xii). In the counter-affidavit it is stated that night soil and rubbish are collected by the Municipal Board from the bungalows in the Civil Lines. Though a part of that function is covered by cl. (xii), the combined function is covered by cl. (xi) of s. 128 of the Act. The question of the validity of the tax depends upon the respect of a subject. The existence of power to tax in 1963 . Gopal Narain v. State of Uttar Pradesh aftd Anr. Subba Rao, l· 1963 September, 4 884 SUPREME COURT REPORTS [l%4] Municipal Board had certainly power to impose the sca venging tax. The mention of cl. (xii) in the notification appears to be a mistake for cl. (xi) and that does not effect the power of the Municipal Board to impose tax. There are no merits in this contention either. In the result, the petition is dismissed with costs. Petition dismissed. SMT. KAUSHALYA DEVI ti, SHRI MOOL RAJ AND OTHERS (P. B. GAJENDRAGADKAR, K. SuBBA RAo, K. N. WANCHoo, N. RAJAGOPALA AYYANGAR AND ). R. MunHOLKAR, Jj.) Practice-Application by accused transfer-.-'! ffidavit by trying 1'fagistrate opposing application-Propriety. Criminal proceedings \Vere started against the petitioner and three others on an complaint made by the first respondent alleging that the four accused persons had committed offences under s. 420 read with s. 120B of the lodian Penal Code. Originally the Magis trate had dispensed with the personal appearance of the petitioner in court, but on application made by the complainant, the Magistrate n1ade an order directing the petitioner to be present in court in order to give an opportunity to the co1nplainant's witness to identi fy her. Apprehending that this order would lead to her, prejudice, she made an application in the Supreme Court for transfer of the case to some other couft, on the grounds, inter alia, that the facts alleged by the complainant nlight perhaps constitute a civil dispute but the said facts had been deliberately twisted and a criminal complaint had been made to harass the petitioner. After the peti tition was ad1nitted and interim stay granted to the petitioner pen ding the hearing and final disposal of the main petition, an affidavit \Vas- filed on behalf of the Delhi Administration, by Magistrate hi1n!:elf, opposipg the application and stating, inter alia, that the clause inde1nnifying the purchaser contained in the sale deed on which the petitioner relied on \Vould not absolve the peti tioner from criminal liability. Thus it was clear that the depon ent Magistrate had adopted the argument which might probably be urged by the complainant at the trial. - ..