G H Champa Lal v. State of Rajasthan and Ors.

CHELAMESWAR, J. 1. Leave granted. 2. These two appeals are inter connected tossing up an important question of law regarding the interpretation of Article 243 Q of the Constitution of India. 3. It is not necessary for us to give the complete factu al details and history of the case for the purpose of this order exce pt the bare minimum. The litigation revolves around the upgradation by a notification dated 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 t o it under section 3 (1) (A) of the Nagar Palika ordinance 2008, State Government h ereby declares Gram Panchayat Napasar as Nagar Palika Fourth category. Existing limit/area of the Gram Panchayat Napasar will be the area of Nagar Palika Napasar. CHAMPA LAL v. STATE OF RAJASTHAN AND ORS. in exercise of power conferred under Section 3(1)(A) of the Rajas than Municipalities Ordinance 2008 2. Legality of the said notification was challenged before the Rajasthan High Court in a writ petiti on. It was dismissed by a learned Single Judge. Aggrieved by the dismissa l, the matter was carried in a writ appeal. During the pendency of the writ appeal, the impugned notification dated 6.10.2008 was withdrawn by another State of Rajasthan by a notification dated 18.9.2009. The writ appeal was therefore, rendered infructuous. 4. Challenging the notification dated 18.9.2009, another writ petition came to be filed. The said writ petition was allowed by a Division Bench by its judgment dated 13.5.2015 quashing the notification and directing the State to take consequential steps. 3 Aggrieved by the same, SLP(C)No.11091/2017 came to be filed. Pursuant to the directio n of the High Court, a fresh notification dated 2.6.2016 came to be issued once again for establishing a Nagarpalika for the Napa sar village. Challenging the said notification, another writ petition came to be filed before the Rajasthan High Court. It was dismissed by a judgment dated 3.8.2016. On appeal, the same was confirmed by the Division Bench by its judgment dated 12.9.2016. Aggrieved by the same, SLP(C)No.38618 of 2016 is filed. 5. The correctness of the two judgments of the High Co urt impugned in these two appeals, is questioned on various grounds. In our opinion, it is not necessary to examine the various submissi ons made before us. The impugned actions of the respondent State which culminated in the two impugned judgments of the High Court suffer s from a fundamental infirmity which goes to the root of the matter. 6. The establishment of municipalities and their organisations is governed by Part IX A (consisting of Articles 243P to 243ZG) of the Constitution 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 instituti on of self- government constituted under Article 243 Q. Article 243 Q of the Constitution 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 directed to be issued. 633 “243Q. Constitution of Municipalities:- (1)There sha ll be constituted in every State- (a) a Nagar Panchayat (by whatever name called) f or a transitional area, that is to say, an area in transition from a rural area 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 be constituted in such urban area or part thereof as the Gover nor may, having regard to the size of the area and the municipal services being provided or proposed to be provided by an indust rial establishment in that area and such other factors as he may deem fit by public notification, specify to be an industrial township. (2) In this article, “a transitional area”, “a smaller urban ar ea” or “ a larger urban area” means such area as the Governor m ay, having regard to the population of the area, the density of the population therein, the revenue generated for local administration, the percentage of employment in non-agricultural activities, the economic 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 different categories of bodies known as (i) Nagar Panchayat for a transi tional area, (ii) Municipal Council for a smaller urban areas and (iii) Municipal Corporation for a larger urban area. 8. It is declared under Article 243Q(2) that the expressions “a transitional area”, “a smaller urban area” and “a larger urban area” (hereinafter collectively referred to as “AREAS”) would mean such areas as may be specified by the Governor by a public noti fication for the purpose of Part IX A of the Constitution of India. Article 243Q(2) further obligates the Governor to have due regard to the various factors mentioned therein before specifying the AREAS i.e. population of the area, the density of the population, the revenue generated in the area for local administration, percentage of employment in non-agri cultural activities, the economic importance or such other factors as he may deem fit. CHAMPA LAL v. STATE OF RAJASTHAN AND ORS. [CHELAMESWAR, J.] 9. It, therefore, appears from the scheme of Article 243Q(2) that the Governor is not free to notify ‘AREAS’ in his absolute discretion but is required to fix the parameters necessary to determi ne whether a particular AREA is a transitional area or a smaller urban area or a larger urban area with due regard to the factors mentioned above. It is implicit that such parameters must be uniform for the entire Sta te. It is only after the determination of the parameters, various municipal bodies contemplated under Article 243Q(1) could be constituted. 10. In response to a specific query whether any noti fication contemplated under Article 243(Q)(2) had been issued by the Stat e of Rajasthan, Mr. Guru Krishnakumar learned senior counsel appeari ng for the State of Rajasthan, produced two notifications date d 4.7.1995 and 30.4.2012. On a plain reading of both the notifications, it appears that these notifications had been issued in exercise of the statutory powers conferred on the State Government by two different enactments 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 the issuance of these notifications to be authority conferred by the various provisions of the above men tioned two enactments, it appears from the tenor and scheme of the n otifications that these notifications purport to classify municipalities only on the basis of population. The various other parameters to which regard is required to be had under Article 243Q(2) were not taken into consideration f or the purpose of classification made under the above ment ioned two notifications. Therefore, in our opinion, these two notifications cannot be treated as notifications contemplated under Article 243(Q)(2). 11. In the absence of any notification which meets the requirements of Article 243Q(2), the entire exercise undertaken b y the State of Rajasthan in upgrading the Napasar village Gram Panchayat to be a Nagarpalika – [that is equivalent to Nagar Panchayat as m entioned in Article 243Q(1)(a)] is unconstitutional as it is inconsiste nt with the requirements of the Constitution under Article 243Q of the Constitution of India. Therefore, the initial notification dated 6. 10.2008 itself is unsustainable. Unfortunately, this aspect has not been notic ed by the High Court obviously because it was not brought to the notice of the High Court. The fact that a litigant before the court does not point out the relevant principles and provisions of law does not prevent the court 635 from examining the issues involved in the lis, more particularly, when the process which is the subject matter of litigation before the court is inconsistent with the mandate of the Constitution. It is a settled principle of law that courts are bound to take note of the constitution and the laws. 4 4 S.C. Prashar & Another v. Vasantsen Dwarkadas & Others, AIR 1963 SC 1356 98. The Department in this case had relied on the amen ding Act of 1953 before the High Court. Though the High Court considered the case from the angle of the second proviso to sub-section 3 of Section 34 and also str uck it down as unconstitutional it did not take into consideration Section 31. sub-sections (1), (2) and (3) of Section 34 of the principal Act (including It was argued before us that we cannot take Section 31 into account if it was not referred to by the High Court. But a court is required to take judicial notice of statutes and if Section 31 of the Act 1953 said that of course the amendments as made by the 1953 Act) shall apply and shall be deemed always to have applied to any assessment or re-assessment for any year ending before April 1, 1948, it is the duty of court, and tribunals to read Section 34 in that manner and in no other. In our opinion it was not open to the High Court to read Section 34 without Section 31 which contained a legislative construction and made Section 34 retrospective. This omission ha s vitiated the High Court’s reasoning. 121. The questions as framed refer to the provisions of Section 34(3) of the Income Tax Act. They also mentioned two sets of dat es, namely, the dates of the returns (7-3-1951 and 14-1-1952) and the date of th e assessment (17-11-1953). Now we know that before the first day of April, 1952, there was a four-year limit for assessments or re-assessments under sub-section 3 o f Section 34 but thereafter that limit was removed by the proviso added by Section 18 of the amending Act of 1953 and by Section 31 of the same Act assessments made before or after the commencement of the amending Act of 1953 (1-4-1-952) were declared valid if proceedings commenced after September 8, 1948. The question as framed cannot be answered without reference to Section 31 and even if parties did not bring it to the notice of the High Court it was the duty of the High Court to loo k into the validating provisions of Section 31. If the High Court did not , we know of no rule or decision of this Court which prevents us from looking into a validating provision which existed at the time of the High Court’s decis ion and was overlooked by it and which by itself furnished the answer to the question propounded for the opinion of the High Court. No decision of this Court lays down that in determining the true answer to a question referred under Sectio n 66, this Court is confined only to those sections to which the Tribunal or the High Court referred. Indeed, there are many cases which say the contrary: see Kusumben Mahadevia v. CIT [(1960) 3 SCR 417], Zoraster & Co. v. CIT [(1961) 1 SCR 210] and the recent case of Scindia Steam Navigation Co. v. CIT [(1961) 42 ITR 589]. We must, therefore, look into Section 31 to determine these appeals. CHAMPA LAL v. STATE OF RAJASTHAN AND ORS. [CHELAMESWAR, J.] 12. We, therefore, have no choice but to hold that the initia l notification dated 6.10.2008 is unconstitutional. Therefore, the legality of various actions which followed that notification and the judgments of the High Court which examined the legality of those actions, in our view, need not be examined. All such subsequent action of the State which led to litigation suffer from a fundamental constitutional flaw. The impugned judgments of the High Court rendered without examining the true scope and scheme of Part IXA of the Constitutio n and more particularly 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 of the findings recorded by the High court that in the interreg num, lot of development (such as the establishment of industries , educational institutions and hospitals etc.) took place in the geographic al area in question, and therefore, this Court may not interfere with the notification upgrading the area in question to a Nagarpalika as such int erference would have the effect of reducing the Nagarpalika into a Gram Panchayat once again. Confronted with the question as to what would b e the prejudice the non-State respondents would suffer by such consequence, Mr. Rao submitted that there is a possibility of the industries being shifted away from the area in question. It is only an apprehension. We find no basis in the pleading for such apprehensions nor do we see any reason which might lead to such a possibility. Therefore, the submiss ion is rejected. 14. The appeals are disposed of accordingly. Devika Gujral Appeals disposed of.