Municipal Council, Khurai & ANR Vs.
Kamal Kumar & ANR  INSC 299 (18 December 1964)
18/12/1964 MUDHOLKAR, J.R.
CITATION: 1965 AIR 1321 1965 SCR (2) 653
R 1973 SC1041 (13) RF 1992 SC2279 (34)
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.
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]
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
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
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
(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
Sub Committee 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
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
(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