PETITIONER:
MUNICIPAL COUNCIL, KHURAI AND ANOTHER
Vs.
RESPONDENT:
KAMAL KUMAR & ANOTHER
DATE OF JUDGMENT:
18/12/1964
BENCH:
MUDHOLKAR, J.R.
BENCH:
MUDHOLKAR, J.R.
SARKAR, A.K.
HIDAYATULLAH, M.
CITATION:
1965 AIR 1321 1965 SCR (2) 653
CITATOR INFO :
R 1973 SC1041 (13)
RF 1992 SC2279 (34)
ACT:
Madhya Pradesh Municipalities Act, 1961, ss. 78, 137 and 141
Delegation of powers to sub-committee-Validity-Revision of
assessment list-Opportunity to assessee-Necessity for.
HEADNOTE:
An assessment list of house and conservancy taxes was
prepared on the basis that a slab system of taxation would
apply, and was published by the appellant under s. 136 of
the M.P. Municipalities Act, 1961. The assessees filed
objections to it under s. 138(2). The appellant later re-
voked the slab system and reverted to the old rate of
assessment. A sub-committee appointed by the appellant,
considered the objections filed to the list and completed
its revision. The final list was published after
authentication. when some complaints of partiality in its
preparation were made, the list was suspended. The
appellant then decided to amend the list under s. 141 and,
after issuing notices to some assessees and after hearing
their objections a new list was authenticated and published.
The respondents having preferred an appeal against the new
assessment list under the Act, also challenged it in writ
petition to the High Court. The High Court allowed the
petition.
On appeal to the Supreme Court.
HELD : The assessment list authenticated by the Chief
Municipal Officer was not prepared according to law and
therefore, the provisions of s.141 were not available to the
appellant. [660 E]
(i) Article 265 of the Constitution, implies that the
procedure for imposing the liability to pay a tax has to be
strictly complied with. Since in the instant case, the
objections which the assessees had filed were in respect of
the list compiled on the basis that the slab system would
apply and not in pursuance of what the liability would be
upon the reversion to the old rate of tax, it could not be
said that the opportunity as contemplated by the Act was
given to the assessees for lodging their objections as
required by s. 137 of the Act. [659 E-G]
(ii) Assuming that under s. 78, the appellant council could
delegate the power to hear objections against a proposed
list under s. 138(2) to its vice-president or certain other
officers, this power could not be delegated to a sub-
committee. [660 B-C]
(iii) Though an alternate remedy is open to an aggrieved
party the High Court has jurisdiction under Art. 226 to give
relief to such a party in appropriate cases. [657 FF]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 974 of 1964.
Appeal by special leave from the judgment and order dated
September 10, 1964, of the High Court in Madhya Pradesh in
Misc. Petition No. 113 of 1964. up.165-8
654
M. C. Setalvad, S. L. Jain and M. S. Gupta, for the
appellants.
A. V. Viswanatha Sastri, B. R. L. Iyengar, S. K. Mehta and
K. L. Mehta, for respondent No. 1.
The Judgment of the Court was delivered by
Mudholkar, J.-In this appeal from the judgment of the Madhya
Pradesh High Court the question which arises for decision is
whether the assessment list of house tax and conservancy tax
confirmed by the Municipal Council, Khurai, at a special
meeting on February 24, 1964 is effective or is liable to be
quashed on the ground that it was not made in accordance
with the provisions of the Madhya Pradesh Municipalities
Act, 1961 (hereafter referred to as the Act).
The material facts are not in dispute. On December 28, 1962
the Municipal Council by a resolution, appointed a Sub-
Committee consisting of the Vice-President and two Members
for hearing objections under S. 138(2) of the Act against
the new assessment which the Chief Municipal Officer would
propose to make. On the 30th of that month the Chief
Municipal Officer was directed to prepare the assessment
lists for all the 11 words into which the municipal area
has been divided. Up till then taxes were levied at the
rate of Rs. 7-12-0 per cent. on the annual letting value of
the house properties and building sites liable to be taxed.
On March 3, 1963 the Council considered a proposal for
introducing a slab system for assessing these proper-ties.
Upon that one of the members, Smt. Poonabai suggested a
modification of the office proposal and her suggestion was
accepted by the majority of the members of the Council. On
March 6, 1963 the assessment list prepared by the Chief
Municipal Officer in pursuance of the resolution was
authenticated by him. It was then duly published that day
under s. 136 of the Act. Objections were also invited from
the assessees. About 2,200 objections were lodged which
were considered by the Sub-Committee between April 7, 1963
and April 14, 1963. In the meanwhile it would appear that a
suit had been instituted by some of the assessees in which
the validity of the resolution of March 3, 1963 varying the
rate of tax and seeking a permanent injunction against the
Committee restraining it from giving effect to the new basis
of assessment. The Committee, it would appear, realised
that it could not vary the old rates without obtaining the
sanction of the State Government and, therefore, in the
written statement filed on its behalf, made it clear that an
early meeting would be held for deciding whether the
resolution of March 3, 1963 should not be given effect to.
That
655
meeting was held on April 28, 1963 and there the resolution
of March 3, 1963 was revoked and the old rate of assessment
was reverted to.
Numerous complaints were made by assessees to the effect
that the Sub-Committee had shown partiality in dealing with
objections to assessments and had in fact shown favour to
rich persons. The President of the Council enquired into
the complaints and was satisfied that there was substance in
them. In the meanwhile, however, pursuant to a decision of
the Sub-Committee dated August 21, 1963 the assessment list
as revised by the Sub-Committee was authenticated by the
Chief Municipal Officer as required by s. 140 of the Act and
was published on August 30, 1963. It would appear that
notices of demand were also issued against the assessees on
the basis of the revised list. The President had, in the
meantime, intimated to the Collector that the Sub-Committee
had shown partiality, particularly to rich assessees and in-
vited him to suspend the revised list in exercise of his
supervisory powers. On October 9, 1963 the Collector made
the following order
“In exercise of the powers delegated to me
under section 323 of the M.P. Municipalities
Act, 1961 I hereby suspend the execution of
the decision of the Sub-Committee appointed by
the Municipal Council Khurai under section
71(v) of the said Act for assessment of the
House Tax and Latrine Tax vide its resolution
No. 2 dated 28-12-1962, as the decision taken
by the said Committee is not in conformity
with the law, is detrimental to the interest
of the Council and is causing annoyance to the
public. The decision shall remain suspended
until the assessment is properly revised
afresh.”
He forwarded a copy of the order to the Government of Madhya
Pradesh and requested that his Order may be confirmed under
s. 323 (2) of the Act. He made the following endorsement on
the copy of the Order forwarded to the President of the
Municipal Committee :
“Copy forwarded to the President, Municipal
Council, Khurai, for information and immediate
necessary action in respect of the demand
notices issued for recovery of the taxes.
Apparently the assessment has not been
properly made. No reasons for not accepting
the overseer’s valuation have been given and
rich persons have been shown favour thereby.
The Council
656
has thus defaulted in performing the duty
imposed on it under the said Act. The Council
is, therefore, called upon to show cause for
its’ failure as required under section 327(1)
of the said Act and to furnish its explanation
within a period of 15 days to my office.”
After receiving this communication the President caused a
proclamation to be made bringing it to the notice of the
assessees that the assessment list had been suspended and
intimating to them that taxes on the basis of the revised
list should not be paid. The Government, acting upon the
communication received from the Collector issued notice to
the Council on December 2, 1963 under s. 323(2) to show
cause why the order passed by the Collector should not be
confirmed. Eventually the Government confirmed the
Collector’s Order.
On December 29, 1963 the Council, at a special meeting,
resolved that the assessment lists should be revised under
s. 141 ,of the Act. On January 7, 1964 the Council issued
individual notices to 300 persons to show cause why the
annual letting value of their properties should not be
enhanced. The Council heard the objections between February
16, 1964 and February 20, 1964 and revised the assessments
of some or all the persons to whom notices had been issued.
On February 24, 1964 the Council, at a special meeting,
confirmed the revised assessment as from April 1, 1963. Its
resolution was authenticated on March 4, 1964 under s.
140(1) by the Chief Municipal Officer and according to the
Council the assessment list then became final.
It is after this that the writ petition out of which the
present appeal arises was presented before the High Court by
some of the assessees. It was supported before it on four
grounds which have been summarised thus by the High Court in
its judgment
“(1) The Municipal Council, Khurai, was not
competent to appoint a Sub-Committee for the
purpose of hearing and deciding the objections
made against the assessment list.
(2) The notice given for lodging objections
against the assessment list was not in
accordance with the provisions of the Act.
(3) The Municipal Council acted illegally
and without jurisdiction in adopting a slab
system with different and varying rates in
disregard of the rate of Rs. 7/13/-
657
per cent at which the house tax had been
initially imposed.
(4) When the execution of the decision of
the SubCommittee dated 21st August, 1963 was
suspended (and subsequently revoked), it was
not open to the Municipal Council to have
recourse to section 141 of the Act for making
limited amendments in the assessment list.
The Municipal Council had to prepare an
assessment list de novo in accordance with the
provisions of the Act including those made by
sections 137, 138 and 140 of the Act.”
The High Court thought it unnecessary to consider the first
three of these grounds because in its opinion the fourth
ground was sufficient for granting relief to the assessees.
According to the High Court the assessment list which had
been confirmed by the Council on February 24, 1964 and
sought to be given effect to was not a valid assessment list
because the Municipal Council gave notice only to 300
assessees and heard their objections and not the remaining
1900 assessees.
Before us it is contended by Mr. Setalvad on behalf of the
Council that an appeal had already been preferred by the
respondents against the assessment list and, therefore, they
were not entitled to any relief under Art. 226 of the
Constitution. It is true that the High Court would not
ordinarily entertain a petition under Art. 226 of the
Constitution where an alternative remedy is open to the
aggrieved party. Though that is so the High Court has
jurisdiction to grant relief to such a party if it thinks
proper to do so in the circumstances of the case. In the
present case the High Court has chosen to exercise
discretion in favour of the respondents and it would not be
right for us to interfere with the exercise of that
discretion unless we are satisfied that the action of the
High Court was arbitrary or unreasonable. Nothing has been
brought to our notice from which it could be inferred that
the High Court acted arbitrarily in granting the writ prayed
for to the respondents.
Coming to the merits, Mr. Setalvad contends that the list
having been authenticated by the Chief Municipal Officer
under s. 140 it became final and, therefore, under s. 141 of
the Act it was open to the Municipal Council to amend the
assessment list. Sub-section (1) of that section, without
the proviso, is the only part which is relevant for our
purpose and it reads thus
658
“The Council may at any time, amend the assessment list by
the inclusion, omission or substitution of any matter.”
Mr. B. R. L. lyengar for the respondents, however, contends
that s. 141(1) can be availed of only for correcting
arithmetical errors or other similar errors and not for
revising the taxes. Further, according to him, this
provision is available only with respect to the amendment of
a current list and that since the assessment list had not
become final under s. 142 it could not be amended under s.
141. Then, according to him, the appropriate provision to
which resort could be had was s. 146 of the Act. Mr.
Iyengar also raised a third argument, which is to the effect
that since the assessment list had been suspended by the
Collector under his Order made under s. 323 of the Act the
Council had no power to amend it under s. 141. The final
argument advanced by him was that the power of hearing
objections or of revising the list could not be delegated to
the Sub-Committee and that, therefore, the revised list was
bad in law.
It is not disputed before us that the procedure laid down in
ss. 134, 135 and 136 of the Act for the assessment of
buildings and lands to pay the tax was duly followed. It is
also not disputed that 2,200 objections were lodged with
the, Municipal Council which were investigated and dealt
with by the Sub-Committee appointed by the Municipal
Council. Mr. Setalvad, therefore, contends that having
followed this procedure the next step was the authentication
of assessment lists by the Chief Municipal Officer as
required by s. 140(1). This procedure was also followed
and, therefore, the assessment list became final and the
Municipal Council had the power to amend it under s. 141 (1)
of the Act. Mr. lyengar, however, contends that the
provisional assessment list which was prepared under S.
134(1) of the Act and published under s. 136 was upon the
basis of the new rates of taxes which had been imposed by
the Municipal Council on March 3, 1963. According to him,
as the Resolution of March 3, 1963 was revoked on April 28,
1963 and the old rate of Rs. 7/13/- per cent. was reverted
to it was necessary to publish a fresh assessment list on
its basis. His further objection which we have already
indicated is that the objections could be dealt with not by
the Sub-Committee but by the Municipal Council as a whole.
In view of these defects the assessment list did not become
final by reason of its authentication by the Chief Municipal
Officer under S. 140. According to Mr. Setalvad these
objections were not urged before the High Court.. But that
is not quite accurate. We
659
have already quoted from the judgment of the High Court the
summary of the grounds urged before it and the objections of
Mr. lyengar are to be found in the first two grounds. It is
true that the High Court did not think it necessary to deal
with these grounds upon the view which it took on the fourth
ground which was urged before it. But that does not
preclude us from considering those grounds. In our opinion,
both the grounds are substantial and strike at the very root
of the finality of the assessment list which was purported
to be authenticated by the Chief Municipal Officer under s.
140. The assessment list which has to be published under s.
136 of the Act must contain full and accurate particulars
specified in s. 134(1) of the Act. Amongst those
particulars are the following :
(1) Valuation of the property based on
capital or annual letting value, as the case
may be, on which the property is assessed;
(2) the rate, of tax applicable;
(3) the amount of tax assessed thereon.
In view of the fact that the resolution of March 3, 1963 on
the basis of which the list was published had been revoked,
the particulars mentioned in the second and the third of the
above items would necessarily be different from those which
would be arrived at after taking into account the resolution
of April 28, 1963. Under Art. 265 of the Constitution no
tax shall be levied or collected except by authority of law.
This clearly implies that the procedure for imposing the
liability to pay a tax has to be strictly complied with.
Where it is not so complied with the liability to pay the
tax cannot be said to be according to law. The objections
which the assessees had filed in pursuance of the
notification actually published by the Chief Municipal
Officer were based upon the list published under s. 136 and
not in pursuance of what the liability would be under the
Resolution of the Municipal Council, dated April 28, 1963.
Therefore, it cannot he said that the opportunity as
contemplated by the Act was at all given to the assessees
for lodging their objections as required by s. 137 of the
Act. Moreover, Mr. Setalvad was not able to point out to us
any provision of the Act or of the rules, except s. 78,
whereunder the Council could delegate its function of
hearing and deciding objections to a Sub-Committee.
Section 78 reads thus:
“Any powers or duties or executive functions
which may be exercised or performed by or on
behalf of the
660
Council may, in accordance with the rules made
under this Act, be delegated by the Council to
the President or Vice-President or to the
Chairman of the Standing or other Committees,
or to one or more stipendiary or honorary
officers, but without prejudice to any powers
that may have been conferred on the Chief
Municipal Officer by or under section 92.”
Even assuming that under this provision the power of the
Council of hearing objections could be delegated, the
delegation can presumably be only in favour of the persons
mentioned in S. 78 quoted above. It cannot be in favour of
a Sub-Committee or a Committee. It is true that the
Convenor of the Sub-Committee appointed by the Council was
the Vice-President but the delegation was not to him alone
but to the Sub-Committee. The two arc not the same thing
because while in one case the right to decide an objection
would be solely exercisable by the Vice-President in the
other it will be exercisable by the Sub-Committee as a
whole. If there is unanimity amongst the members of the
Sub-Committee no prejudice may be caused. But if the Vice-
President is of one opinion and the other two members are of
a different opinion the decision of the Sub-Committee cannot
be said to be that of the Vice-President at all. But to the
contrary.
For these reasons we are of opinion that the assessment list
authenticated by the Chief Municipal Officer was not
prepared according to law and, therefore, the provisions of
s. 141 were not available to the Council. Upon the view we
take we do not find it necessary to consider whether the
reason given by the High Court is right or not.
The appeal is, therefore, dismissed with costs.
Appeal dismissed.
660