G H CHAMPA LAL versus STATE OF RAJASTHAN AND ORS. on 26 April 2018

628

SUPREME COURT REPORTS

[2018] 5 S.C.R.

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CHAMPA LAL

v.

STATE OF RAJASTHAN AND ORS.

(Civil Appeal No. 4554 of 2018)

BAPRIL 26, 2018

[J. CHELAMESWAR AND SANJAY KISHAN KAUL, JJ.]

Constitution of India: Art.243Q – Interpretation of –Notification dated 6.10.2008 envisaging upgradation of GramPanchayat of Napasar Village as Nagar Palika (Municipality) –COn challenge to the validity of said Notification, the State withdrewit by Notification dated 18.09.2009 – Validity of Notification dated18.09.2009 challenged – Fresh Notification issued again forestablishing a Nagarpalika for the Napasar village – Validity of,challenged – Held: Art.243Q contemplates constitution of threeDdifferent categories of bodies known as Nagar Panchayat for atransitional area, Municipal Council for a smaller urban areas andMunicipal Corporation for a larger urban area – It is declaredunder Art.243Q(2) that the expressions “a transitional area”, “asmaller urban area” and “a larger urban area” (‘Areas’) wouldmean such areas as may be specified by the Governor by a publicEnotification for the purpose of Part IX A of the Constitution of India– Art.243Q(2) further obligates the Governor to have due regardto the various factors mentioned therein before specifying the Areasi.e. population of the area, the density of the population, the revenuegenerated in the area for local administration, percentage ofFemployment in non-agricultural activities, the economic importanceor such other factors as he may deem fit – It, therefore, appearsfrom the scheme of Art.243Q(2) that the Governor is not free tonotify ‘Areas’ in his absolute discretion but is required to fix theparameters necessary to determine whether a particular Area is atransitional area or a smaller urban area or a larger urban areaGwith due regard to these factors – Such parameters must be uniformfor the entire State – It is only after the determination of theparameters, various municipal bodies contemplated underArt.243Q(1) could be constituted – In the absence of anynotification which meets the requirements of Art.243Q(2), the entire H

exercise undertaken by the State of Rajasthan in upgrading theNapasar village Gram Panchayat to be a Nagarpalika isunconstitutional – Therefore, the initial notification dated 6.10.2008itself is unsustainable and, thus, the legality of various actions whichfollowed that notification and the judgments of the High Court whichexamined the legality of those actions, need not be examined – Allsuch subsequent action of the State which led to litigation sufferfrom a fundamental constitutional flaw – The impugned judgmentsof the High Court rendered without examining the true scope andscheme of Part IXA of the Constitution and more particularlyArt.243Q(2) are per incuriam – Rajasthan Municipalities Ordinance,2008 – s.3(1)(A) – Municipalities.

Disposing of the appeals, the Court

Conclusion

Disposing of the appeals, the Court

HELD: 1. The establishment of municipalities and theirorganisations is governed by Part IX A (consisting of Articles243P to 243ZG) of the Constitution of India inserted in theConstitution by the Constitution 74[th] (Amendment) Act, 1992with effect from 1.6.1993. Article 243P(e) defines the expression“Municipality” to mean an institution of self-governmentconstituted under Article 243Q. Article 243Q contemplates theconstitution of three different categories of bodies known as (i)Nagar Panchayat for a transitional area, (ii) Municipal Council fora smaller urban areas and (iii) Municipal Corporation for a largerurban area. It is declared under Article 243Q(2) that theexpressions “a transitional area”, “a smaller urban area” and “alarger urban area” (‘Areas’) would mean such areas as may bespecified by the Governor by a public notification for the purposeof Part IX A of the Constitution of India. Article 243Q(2) furtherobligates the Governor to have due regard to the various factorsmentioned therein before specifying the Areas i.e. population ofthe area, the density of the population, the revenue generated inthe area for local administration, percentage of employment innon-agricultural activities, the economic importance or such otherfactors as he may deem fit. It, therefore, appears from the schemeof Article 243Q(2) that the Governor is not free to notify ‘Areas’in his absolute discretion but is required to fix the parametersnecessary to determine whether a particular AREA is atransitional area or a smaller urban area or a larger urban area AB

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Awith due regard to the factors mentioned above. It is implicitthat such parameters must be uniform for the entire State. It isonly after the determination of the parameters, various municipalbodies contemplated under Article 243Q(1) could be constituted.[Paras 6, 7, 8 and 9] [632-F-G; 633-E-H; 634-A-B]

B2. In response to a specific query whether any notificationcontemplated under Article 243(Q)(2) had been issued by theState of Rajasthan, two notifications dated 4.7.1995 and 30.4.2012were produced. A plain reading of both the notifications showsthat these notifications had been issued in exercise of the statutorypowers conferred on the State Government by two differentCenactments known as “The Rajasthan Municipality Act, 1959(since repealed) and the Rajasthan Municipalities Act, 2009.Apart from the declaration regarding the source of power for theissuance of these notifications to be authority conferred by thevarious provisions of these two enactments, it appears from theDtenor and scheme of the notifications that these notificationspurport to classify municipalities only on the basis of population.The various other parameters to which regard is required to behad under Article 243Q(2) were not taken into consideration forthe purpose of classification made under the above mentionedtwo notifications. Therefore, these two notifications cannot beEtreated as notifications contemplated under Article 243(Q)(2).In the absence of any notification which meets the requirementsof Article 243Q(2), the entire exercise undertaken by the Stateof Rajasthan in upgrading the Napasar village Gram Panchayat tobe a Nagarpalika – [that is equivalent to Nagar Panchayat asFmentioned in Article 243Q(1)(a)] is unconstitutional as it isinconsistent with the requirements of the Constitution underArticle 243Q of the Constitution of India. Therefore, the initialnotification dated 6.10.2008 itself is unsustainable. Unfortunately,this aspect was not noticed by the High Court obviously because it was not brought to the notice of the High Court. The fact thatGa litigant before the court does not point out the relevantprinciples and provisions of law does not prevent the court fromexamining the issues involved in the lis, more particularly, whenthe process which is the subject matter of litigation before thecourt is inconsistent with the mandate of the Constitution. It is aH

settled principle of law that courts are bound to take note of theconstitution and the laws. [Paras 10, 11] [634-C-G; 635-A]

3. The initial notification dated 6.10.2008 is unconstitutional.Therefore, the legality of various actions which followed thatnotification and the judgments of the High Court which examinedthe legality of those actions need not be examined. All suchsubsequent action of the State which led to litigation suffer froma fundamental constitutional flaw. The impugned judgments ofthe High Court rendered without examining the true scope andscheme of Part IXA of the Constitution and more particularlyArticle 243Q(2) are per incuriam. [Para 12] [636-A-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4554of 2018.

From the Judgment and Order dated 12.09.2016 of the High Courtof Judicature for Rajasthan at Jodhpur in D. B. Civil Special AppealNo. 667 of 2016.

Ms. Aishwarya Bhati, Amit Verma, Ms. Tanya Patra, Ms. RituApurva, Vishwajeet Singh, Advs. for the Appellant.

Guru Krishna Kumar, Sr. Adv., Shiv Mangal Shrma, Jayant Bhatt,Umang Verma, Ms. Jyoti Sharma, Ms. Shikha Sandhu, Rohit K. Singh,A. Subba Rao, Annam D. N. Rao, A. Venkatesh, Sudipto Sircar, RahulMishra, Ms. Tulika Chikker, Advs. for the Respondents.

The Judgment of the Court was delivered by CHELAMESWAR, J. 1. Leave granted.

2. These two appeals are inter connected tossing up an importantquestion of law regarding the interpretation of Article 243 Q of theConstitution of India.

3. It is not necessary for us to give the complete factual detailsand history of the case for the purpose of this order except the bareminimum. The litigation revolves around the upgradation by a notificationdated 6.10.2008 of Gram Panchayat of Napasar Village as Nagar Palika(Municipality) Class IV[1] category by the State of Rajasthan purportedly 1 State Government while exercising power conferred to it under section 3 (1) (A) ofthe Nagar Palika ordinance 2008, State Government hereby declares Gram PanchayatNapasar as Nagar Palika Fourth category. Existing limit/area of the Gram PanchayatNapasar will be the area of Nagar Palika Napasar.

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Ain exercise of power conferred under Section 3(1)(A) of the RajasthanMunicipalities Ordinance 2008[2]. Legality of the said notification waschallenged before the Rajasthan High Court in a writ petition. It wasdismissed by a learned Single Judge. Aggrieved by the dismissal, thematter was carried in a writ appeal. During the pendency of the writappeal, the impugned notification dated 6.10.2008 was withdrawn byBanother State of Rajasthan by a notification dated 18.9.2009. The writappeal was therefore, rendered infructuous.

4. Challenging the notification dated 18.9.2009, another writ petitioncame to be filed. The said writ petition was allowed by a Division Benchby its judgment dated 13.5.2015 quashing the notification and directingCthe State to take consequential steps.[3] Aggrieved by the same,SLP(C)No.11091/2017 came to be filed. Pursuant to the direction ofthe High Court, a fresh notification dated 2.6.2016 came to be issuedonce again for establishing a Nagarpalika for the Napasar village.Challenging the said notification, another writ petition came to be filedDbefore the Rajasthan High Court. It was dismissed by a judgment dated3.8.2016. On appeal, the same was confirmed by the Division Bench byits judgment dated 12.9.2016. Aggrieved by the same, SLP(C)No.38618of 2016 is filed.

5. The correctness of the two judgments of the High CourtEimpugned in these two appeals, is questioned on various grounds. In ouropinion, it is not necessary to examine the various submissions madebefore us. The impugned actions of the respondent State which culminatedin the two impugned judgments of the High Court suffers from afundamental infirmity which goes to the root of the matter.

F6. The establishment of municipalities and their organisations isgoverned by Part IX A (consisting of Articles 243P to 243ZG) of theConstitution of India inserted in the Constitution by the Constitution 74[th](Amendment) Act, 1992 with effect from 1.6.1993. Article 243P (e)defines the expression “Municipality” to mean an institution of self-government constituted under Article 243 Q. Article 243 Q of theGConstitution of India declares as follows:

2 The ordinance was eventually replaced by Rajasthan Municipalities Act, 2009.

3 The consequent act referred to by the court is that a new notification was directedto be issued.H

“243Q.Constitution of Municipalities:- (1)There shall beconstituted in every State- (a) a Nagar Panchayat (by whatever name called) for atransitional area, that is to say, an area in transition from a ruralarea to an urban area; (b) a Municipal Council for smaller urban area; and

(c) a Municipal Corporation for a larger urban area, in accordance with provisions of this Part:

Provided that a Municipality under this clause may not beconstituted in such urban area or part thereof as the Governormay, having regard to the size of the area and the municipal servicesbeing provided or proposed to be provided by an industrialestablishment in that area and such other factors as he may deemfit by public notification, specify to be an industrial township.

(2) In this article, “a transitional area”, “a smaller urban area”or “ a larger urban area” means such area as the Governor may,having regard to the population of the area, the density of thepopulation therein, the revenue generated for local administration,the percentage of employment in non-agricultural activities, theeconomic importance or such other factors as he may deem fit,specify by public notification for the purposes of this Part.”

7. Article 243Q contemplates the constitution of three differentcategories of bodies known as (i) Nagar Panchayat for a transitionalarea, (ii) Municipal Council for a smaller urban areas and (iii) MunicipalCorporation for a larger urban area.

8. It is declared under Article 243Q(2) that the expressions “atransitional area”, “a smaller urban area” and “a larger urban area”(hereinafter collectively referred to as “AREAS”) would mean suchareas as may be specified by the Governor by a public notification forthe purpose of Part IX A of the Constitution of India. Article 243Q(2)further obligates the Governor to have due regard to the various factorsmentioned therein before specifying the AREAS i.e. population of thearea, the density of the population, the revenue generated in the area forlocal administration, percentage of employment in non-agriculturalactivities, the economic importance or such other factors as he maydeem fit.

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A9. It, therefore, appears from the scheme of Article 243Q(2) thatthe Governor is not free to notify ‘AREAS’ in his absolute discretion butis required to fix the parameters necessary to determine whether aparticular AREA is a transitional area or a smaller urban area or a largerurban area with due regard to the factors mentioned above. It is implicitthat such parameters must be uniform for the entire State. It is onlyBafter the determination of the parameters, various municipal bodiescontemplated under Article 243Q(1) could be constituted.

10. In response to a specific query whether any notificationcontemplated under Article 243(Q)(2) had been issued by the State ofRajasthan, Mr. Guru Krishnakumar learned senior counsel appearingCfor the State of Rajasthan, produced two notifications dated 4.7.1995and 30.4.2012. On a plain reading of both the notifications, it appearsthat these notifications had been issued in exercise of the statutory powersconferred on the State Government by two different enactments knownas “The Rajasthan Municipality Act, 1959 (since repealed) and theDRajasthan Municipalities Act, 2009. Apart from the declaration regardingthe source of power for the issuance of these notifications to be authorityconferred by the various provisions of the above mentioned twoenactments, it appears from the tenor and scheme of the notificationsthat these notifications purport to classify municipalities only on the basisof population. The various other parameters to which regard is requiredEto be had under Article 243Q(2) were not taken into consideration forthe purpose of classification made under the above mentioned twonotifications. Therefore, in our opinion, these two notifications cannotbe treated as notifications contemplated under Article 243(Q)(2).

11. In the absence of any notification which meets the requirementsFof Article 243Q(2), the entire exercise undertaken by the State ofRajasthan in upgrading the Napasar village Gram Panchayat to be aNagarpalika – [that is equivalent to Nagar Panchayat as mentioned inArticle 243Q(1)(a)] is unconstitutional as it is inconsistent with therequirements of the Constitution under Article 243Q of the ConstitutionGof India. Therefore, the initial notification dated 6.10.2008 itself isunsustainable. Unfortunately, this aspect has not been noticed by theHigh Court obviously because it was not brought to the notice of theHigh Court. The fact that a litigant before the court does not point outthe relevant principles and provisions of law does not prevent the court H

from examining the issues involved in the lis, more particularly, whenthe process which is the subject matter of litigation before the court isinconsistent with the mandate of the Constitution. It is a settled principleof law that courts are bound to take note of the constitution and thelaws.[4]

4 S.C. Prashar & Another v. Vasantsen Dwarkadas & Others, AIR 1963 SC 135698. The Department in this case had relied on the amending Act of 1953 before theHigh Court. Though the High Court considered the case from the angle of the secondproviso to sub-section 3 of Section 34 and also struck it down as unconstitutional itdid not take into consideration Section 31. sub-sections (1), (2) and (3) of Section 34of the principal Act (including It was argued before us that we cannot takeSection 31 into account if it was not referred to by the High Court. But a courtis required to take judicial notice of statutes and if Section 31 of the Act 1953said that of course the amendments as made by the 1953 Act) shall apply and shallbe deemed always to have applied to any assessment or re-assessment for any yearending before April 1, 1948, it is the duty of court, and tribunals to read Section34 in that manner and in no other. In our opinion it was not open to the HighCourt to read Section 34 without Section 31 which contained a legislative constructionand made Section 34 retrospective. This omission has vitiated the High Court’sreasoning.

121. The questions as framed refer to the provisions of Section 34(3) of theIncome Tax Act. They also mentioned two sets of dates, namely, the dates of thereturns (7-3-1951 and 14-1-1952) and the date of the assessment (17-11-1953).Now we know that before the first day of April, 1952, there was a four-year limit forassessments or re-assessments under sub-section 3 of Section 34 but thereafter thatlimit was removed by the proviso added by Section 18 of the amending Act of 1953and by Section 31 of the same Act assessments made before or after the commencementof the amending Act of 1953 (1-4-1-952) were declared valid if proceedings commencedafter September 8, 1948. The question as framed cannot be answered withoutreference to Section 31 and even if parties did not bring it to the notice of theHigh Court it was the duty of the High Court to look into the validatingprovisions of Section 31. If the High Court did not, we know of no rule ordecision of this Court which prevents us from looking into a validating provisionwhich existed at the time of the High Court’s decision and was overlooked byit and which by itself furnished the answer to the question propounded for theopinion of the High Court. No decision of this Court lays down that in determiningthe true answer to a question referred under Section 66, this Court is confined onlyto those sections to which the Tribunal or the High Court referred. Indeed, there aremany cases which say the contrary: see Kusumben Mahadevia v. CIT [(1960) 3 SCR417], Zoraster & Co. v. CIT [(1961) 1 SCR 210] and the recent case of Scindia SteamNavigation Co. v. CIT [(1961) 42 ITR 589]. We must, therefore, look into Section 31to determine these appeals.

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A12. We, therefore, have no choice but to hold that the initialnotification dated 6.10.2008 is unconstitutional. Therefore, the legalityof various actions which followed that notification and the judgments ofthe High Court which examined the legality of those actions, in our view,need not be examined. All such subsequent action of the State whichled to litigation suffer from a fundamental constitutional flaw. TheBimpugned judgments of the High Court rendered without examining thetrue scope and scheme of Part IXA of the Constitution and moreparticularly Article 243Q(2) are per incuriam.

13. Mr. A. Subba Rao, learned counsel appearing for the non-State respondents in SLP(C)No.11091/2017 submitted that in view ofCthe findings recorded by the High court that in the interregnum, lot ofdevelopment (such as the establishment of industries, educationalinstitutions and hospitals etc.) took place in the geographical area inquestion, and therefore, this Court may not interfere with the notificationupgrading the area in question to a Nagarpalika as such interference Dwould have the effect of reducing the Nagarpalika into a Gram Panchayatonce again. Confronted with the question as to what would be theprejudice the non-State respondents would suffer by such consequence,Mr. Rao submitted that there is a possibility of the industries being shiftedaway from the area in question. It is only an apprehension. We find nobasis in the pleading for such apprehensions nor do we see any reasonEwhich might lead to such a possibility. Therefore, the submission isrejected.

14. The appeals are disposed of accordingly.

FDevika Gujral

Appeals disposed of.

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