UNION OF INDIA & Ors. v. R. C. JAIN & Ors.

and characteristics, all or many of which a Municipal Committee, District Board or Body of Port Commissioners shares with any other local authority? First, the authorities must have separate legal exis tence as Corporate bodies. They must not be mere Governmental agencies but must be legally independent entities. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. Next, they musl enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of the dependence may vary considerably but, an &])preciablc measure of autonomy there must be. Next, they must be entrusted by Statute with such Governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services etc. etc. Broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be Governmental duties and func- funds for the they must have the power to raise tions. Finally, furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. This may be moneys provided by Government or obtained by yorrowing or other wise. What is essential is that control or management of the fund must vest in the authority. in addition In Municipal Corporation of Delhi v. Bir/a Cotton, Spinning & Weaving Mills Delhi & Anr.,(1) Hidayatullah, J., described some of the attributes of local bodies in this manner : "Local bodies are subordinate branches of governmental activity. They are democratic institutions managed by the function for public representatives of the people. They purposes and take away a part of the government affairs in local areas. They are political sub divisions and agencie~ !unctions. As they are self-government the power ot intended to carry on local taxation is a necessary adjunct to their other powers. They function under the supervision of the Government''. exerdse a part of State In Valjibhai Muljibhai Soneji and A nr. (Now Gujarat) & Ors.(') one of The State of v. the questions was H whether the State Trading Corporation was a local Authority as Bombay (1) [1968j 3 S.C.R. 251@ 288. (2) [19641 3 S.C.R. 686 • • ' UNION v. R. c. JAIN (Chinnappa Reddy,!.) 859 It was held defined by Sec. 3(31) of the General Clauses Act, 1897. that it was not, because it was not an authority legally entitled to or entrusted by the Government with, control or management of a local Jt was observed that though the Corporation was furnished fund. for commencing its business that with funds by the Government would not make the funds of the Corporation 'local funds'. themselves and Keeping in mind what we have said above, we may now take a close look at the provisions of the Delhi Development Act. The Delhi Development Act, 1957, is 'an Act to provide for the develop ment of Delhi according to plan and for matters ancillary thereto'. The act extends to the whole of the Union Territory of Delhi. Sec. 2(d) defines "development" as meaning, with its grammatical vari ations "the carrying out of building, engineering, mining or other operations in, on, over or under land or the making of any material change in any building or land and includes redevelopment'.' Sec. 3 empowers the Central Government to constitute an authority !o be called the Delhi Development Authority. The Authority is to be a body corporate having perpetual succession and a common seal, with the usual corporate attributes. The authority is to consist of a chair man, a Vice Chairman and a certain number of official and non official members. The non-official members are to include two representatives of the Municipal Corporation of Delhi to be elected ·by the Councillors and aldermen of the Municipal Corporation from the Metropolitan Council for the Union Territory of Delhi to be elected by the members of the Metropolitan Council from among themselves. The objects of the authority as set out in Sec. 6 are "to promote and secure the development of Delhi according to plan" and for that purpose to "have the power to acquire, hold and dispose of land and other property", and "to carry out building, engineering, mining and other operations, to execute works in connection with supply of water and electricity, disposal of sewage and other services and amenities and generally to do anything necessary or expedient for purposes of such development and for purposes incidental thereto". Sec.7 requires the Authority to carry out a civic survey of, and prepare a master plan for, Delhi. The master plan is to define various zones into which Delhi may be divided for the purposes of development and indicate the manner in which the land in each zone is proposed to be used (whether by the carrying out thereon of development or otherwise) and the stages by which any such development shall be carried out. The master plan may also provide for any at.her matter which is necessary for the proper development of Delhi. Scc.8 provides for the preparation of zonal development plans and Sec.8(2) prescribes what a zonal deve- three representatives of A B c D E F G H • t • • ' A B c D E F G 860 SUPREME COURT REPORTS [1981] 2 S.C.R. for the sub Iopment plan may contain or specify. Sec.9 provides mission of all plans to the Central Government by the Authority for approval. Sec. 12 empowers the Central Government to declare any area in Delhi to be a 'development area' for the purposes of the Act. It further provides that after the commencement of the Act no deve lopment of land shall be undertaken or carried out, without the per mission of the Authority, if the area is a development area, and without the approval or sanction of the local authority concerned if the area is an area other than a development area. Sec.13 prescribes the procedure to be followed. ft provides for a fee (to be prescribed by the Rules) to accompany every application to 9btain permission under Sec. 12. Sec. 15 empowers the Central Government to acquire any land which is required for the purpose of development or for any other purpose under the Act. After acquiring the land the Central Gowrnment may tra'nsfer the land to the Authority or any local authority on payment by the Authority or the local authority of the compensation awarded under the Land Acquisition Act and all the incurred by the Government. Thereafter, subject to any charges directions given by the Central Government the Authority or, as the case may be, the local authority concerned may dispose of the land, after or without undertaking or carrying out any development thereon, to such persons, in such manner and subject to sucbi terms and condi tions as it considers expedient for securing the development of Delhi according to plan. Sec. 22 authorises the Central Government to place at the disposal of the Authority all or any developed and un developed lands in Delhi vested in the Union for the purpose of deve lopment in accordance with the provisions of the Act. Sec. 23 obliges the Authority to have and maintain its own fund to which are to be credited- " (a) all moneys received by the Authority from the Central advances or Government by way of grants, Joans, otherwise; ( aa) all moneys received by the Authority from sources other than the Central Government by way of loans or deben tures; (b) all fees and charges received by the Authority under this Act; ( c) all moneys received by the Authority from the disposal of lands, buildings and other properties, movable and immovable; and ( d) all moneys received by the Authority by way of rents and profits or in any other manner or from ~ny other source." • • ' • UNION v. R. c. JAIN (Chinnappa Reddy, J.) 861 The fund is required by S.23(2) to be applied towards meeting A B the expenses incurred by the Authority in the administration of the · Act and for no other purposes. Sec. 24 enjoins a duty on the autho- rity to prepare a budget in respect of the financial year next ensuing showing the estimated receipts and expenditure. Copies of the Sec. 25 budget are to be forwarded to the Central Government. requires the accounts of the Authority to be audited annually by the Comptroller and Auditor General of India. Sec. 26 requires the Authority to prepare a report of its activities and submit the same to the Central Government. Sec. 27 provides for the constitution of pension and Provident Funds. Sec. 28 empowers the authority to authorise any person to enter into or upon any land or building with or without assistance of workmen for the purposes specified in the C Section. Sec. 29 provides for penalties for persons undertaking or carrying out development in contravention of the master plan or zol\al development plan or without permission, approval or sanction required by Sec. 12. Sec. 30 provides for the making of an order of demolition of a building where development has been commenced D or completed in contravention of the master plan, zonal plans or the permission, approval or sanction referred to in Sec. 12. Sec. 31 enables the Authority to make an order requiring development to be discontinued where development has been commenced in contraven- tion of the master plan or zonal development plan or without obtaining permission, approval or sanction as required by Sec. 12. E Sec. 33 provides that all fines realised in connection with prosecutions under the Act shall be paid to the Authority or, as the case may be, the local authority concerned. Sec. 36 empowers the Authority lo require the local authority within whose local limits an area has responsibility for the maintenance of been developed to assume amenities which have been provided in the area by the Authority and F for the provision of the amenities which have not been provided by fhe Authority. Sec. 37 empowers the Authority to levy upon the owner of a property or any person having an interest therein a betterment charge in respect of the increase in value of the property as a consequence of any development having been executed by the Authority in any development area or as a consequence of any area G other than a development area having been benefi~d by the deve lopment. Sec. 38 provides for the assessment of betterment charge by the Authority and Sec. 39 provides for the settlement of better ment charges by Arbitrators to be appointed by the Central Govern ment. Sec. 40(2) authorises the recovery of any arrear of better ment charge as an arrear of land revenue. Sec. 40A further pro- H vides that any money due to the Authority on account of fees or charges, or from the disposal of lands, buildings or other properties ' • • • • 862 SUPREME COURT REPORTS [1981] 2 S.C.R.. A B c D E F G B time by it from time to be recovered by the Authority as arrears of land revenue. Sec. 41 obliges the Authority to carry out such directions as may be issued the Central Government. Sec. 42 requires the Authority to furnish reports, returns and other informa required from time to tion to the Central Government as may be time. Sec. 46 provides for the authentication of permissions, orders, decisions, notices and other documents by the Secretary or any other officer authorised by the Authority in that behalf. Sec. 4 7 declares every rn~mber and every officer a'nd other employee of the Authority to be a public servant within the meaning of Sec. 21 of the Indian Penal Code. Sec. 52 enables the Authority to delegate any power exercisable by it under the Act except the power to make regulations to such officer or local Authority as may be ment:oned in the noti fication. Sec. 56 empowers the Central Government to make rules and Sec. 57 enables the Authority, with the previous approval of the Central Government to make regulations consistent with the Act and the rules made thereunder to carry out the purposes of the Act. Every rule and every regulation made under the Act is rcqu:red to be laid before each House of Parliament by Sec. 58. Sec. 59 em powers the Central Government to dissolve satisfied that the purposes for which the authority was established have been substantially achieved so as to render unnecessary its continued existence. the authority if it We see that the Delhi Dcveloprn.;nt Authority is constituted the specific purpose of 'the development of Delhi according to plan'. Planned development of towns is a Governmental function which is traditionally en\rusted by the various Municipal Acts in different States to municipal bodies. With growing specialisation, along with the growth of titanic metropolitan complexes, legi, latures have felt the need for the creation of separate town-planning or development authorities for individual cities. The Delhi Development Authority It is thus an authority, to which is entrusted by Statute is one such. a Governmental function ordinarily entrusted to municipal bodies. An important feature of the entrustment of Governmental function is the pcwer given to the Authority to make regu!jltions (which are required to be laid before Parliament). The power to make regu lation is analogous to the power usually given to municipalities to [rame bye-laws. The activities of the Authority are limited to the local area of the Union Territory of Delhi. The High Court appears to have assumed that the Delhi Development Authority has extra-territorial powers extending to peripheral areas in the adjoining States. There is no basis in the Statute for the assumption made by the High Court. • • • • UNION v. R. C •• JAIN (Chinnappa Reddy, J.) 86:J There is then an element of popular representation in the consti- tution of the Authority. Representatives of the inhabitants of the locality, three elected from among the members of the Delhi Munici- pal Corporation and two elected from among the members of the Delhi Metropolitan Council, figure among its members. A B What of autonomy? The Master Plan and the Zonal plans prepared by the Authority have to be approved by the Central Gov ernment, the budget has to be forwarded to the Central Government, annual returns have to be submitted to the Government and the directions that the Central Government may give have to be carried out. But within these bounds, the Authority enjoys a considerable degree of autonomy, as is seen from the summary of the provisions C of the Act which has been set out by us. The powers of the Central Government over the Delhi Development Authority are the usual supervisory powers which every State Government exercises over supervision do municipalities, district boards etc. Such powers of not make the municipalities disautonomous and mere satellites. We finally come to the important question whether the legislature has vested any power of taxation in the Authority. One of the submissions of the learned counsel for the respondent was that the fund of the Authority, required to be maintained by ~.cc. 23 of the Delhi Development Act, was not a local fund as no part of it flowed directly from any taxing power vested in the Delhi Development Authority. The submission of the learned counsel was that the fees collected under Sec. 12 of the Act and the charges levied under Sec. 37 of the Act did not part-take the character of tax but were mere fees which were the quid pro quo for the services which were required to be performed by the Delhi Development Authority under the Act. We were referred to Hingir-Rampur Coal Co. Ltd. & Ors. v. The State of Orissa & Ors.(I) We are unable to agree with the submission made on behalf of the respon dents. In the first place when it is said that one of the attributes of a local authority is the power to raise funds by the method of taxa tion, taxation is to be understood not in any fine and narrow sense as to include only those compulsory exactions of money imposed for public purpose and requiring no consideration to sustain it, but in a broad generic sense as to also include fees levied essentially for services It is now well recognised that there is no generic difference rendered. between a tax and a fee; both are compulsory exactions of money by In deciding the qnestion whether an authority is a public authority. local authority, our concern is only to find out whether the public D E F G R (!) [196lj 2 S.C.R. 537 • ' • ' • A B c D E F G 864 SUPREME COURT REPORTS (1981] 2 S.C.R. authority is authorised by Statute to make a compulsory exaction of money and not with the further question whether the money so exacted is to be utilised for specific or general purposes. In the second place the Delhi Development Authority is constituted for the sole purpose of the planned development of Delhi and no other purpose and there is a merger, as it were, of specific and general purposes. The statu tory situation is such that the distinction between tax and fee has withered away. In the third place we see no reason to hold that the charge contemplated by Sec. 37 is a fee and not a tax. The case cited: The Hingir-Rampur Coal Co. Ltd. & Ors. v. The State of Orissa & Ors.,(1) hl!s no application. That was a case .where the Govern ment was empowered to levy a cess for the purpose of the develop ment of the mining areas in the State. The cess levied was not to become a part of the consolidated fund and was not subject to an appropriation in that behalf; it went into the special fund earmarked for carrying out the purpose of the Act. There was a definite co relation between the proposed services and the im11ost levied and it could e legitimately claimed that the rate-payer in substance was compensating the State for the services rendered by it to him. In the present case there is no consolidated fund and no separate development fuad. There is only one fund, the Fund of the Delhi Development Authority. What is more important, nor is there any question of any co-relation between the betterment charge and the expenditure incurred by the Authority in carrying out the purposes of the Act. The charge It is levied is not levied on the basis of the expenditure incurred. on the basis of the increase in the value of the 11roperty consequent on the development of the area; one may say the charge is on the accrued capital gain; it may bear no proportion whatsoever cost of development. A submission of the learned counsel was that the Delhi Develop ment Act itself referred in several places to local authorities as dis It is true that in tinguished from Delhi Development Authority. Sections 12, 15, 30, 31, 34, 36, 42 and some other provisions we find a reference to 'local authority concerned' meaning thereby the ordinary local authority functioning in the area discharging a multiplicity of civic functions. The Delhi Municipal Corporation for example is one such local authority. The Delhi Development Authority is constituted for performing one of the several functions which a local authority may perform. That the local authorities performing other functions are referred to as 'local authorities' in the Act by which the Delhi is created, while the Delhi Development Authority is referred to as the Authority, is no ground for holding H Development Authority (1) [1961] ~ S.C.R. 537 • • • • • ... UNION v. R. c. JAIN (Chinnappa Reddy, !.) 865 that the Delhi Development Authority is not a 'local authority' as defined by Sec. 3(31) of the General Clauses Act. The Delhi Deve lopment Authority is endowed with all the usual characteristics of a 'local authority' and there is no reason to hold that it is not a 'local authority'. attributes • r Another submission of the learned counsel which was pressed upon us was that every statute dealing with municipalities and pro viding for their supersession .and/or dis~olution invariably provided for reconstitution of the municipality after a stipulated period wherea1 dissolution in the case of the Delhi Development Authority meant a complete extinction of the authority since the Act did not provide for its reconstitution. Our attention was drawn to the municipalities Acts of various States. We are unable to see the force of the sub mission. The very nature of the work entrnsted by the legislature to the development authority is such that its life can be but transient. When the work is accomplished and there is nu need for its continued It is by what it existence it is dissolved and its life becomes extinct. is during its life and not by the consideration whether there is life after death and whether it can have many lives, that we determine whether the Delhi Development Authority is a local authority as defined in S.3(31) of the General Clauses Act. A B c D E On a consideration of all the aspects of the matter placed before us we are of the opinion that the Delhi Development Auhority is a therefore, the provision of the Payme"nt of Local Authority and Bonus Act are not attracted. The result, therefore, is that the appeal is allowed and the Writ Petition filed in the High Court is dismissed. However, we do wish to observe that the Delhi Development Authority may not only be a model for development activities but may strive to be a model employer too. Bonus was paid to the employees for over ten years and we were not told of any reason for withdrawing this J_,.-- benefit from the employees. Merely because the Law Department advised that they were not bound to pay bonus, they were not obliged to withd.raw the benefit. The question which ought to have been considered was not whether they were legally bound to pay bonus but whether in the context of sound management-labour relations, bonus It is a matter which we earnestly desire should continue to be paid. the Delhi Development Authority may reconsider. There is no order as to costs. • F G • P.B.R. 8-2!4SCI/81 Appeal allowed . "