Trustees for the Improvement of
Calcutta Vs. Chandra Sekhar Mallick & Ors [1977] INSC 143 (6 May 1977)
BHAGWATI, P.N.
BHAGWATI, P.N.
BEG, M. HAMEEDULLAH (CJ) CHANDRACHUD, Y.V. KRISHNAIYER,
V.R. UNTWALIA, N.L.
FAZALALI, SYED MURTAZA KAILASAM, P.S.
CITATION: 1977 AIR 2034 1978 SCR (1) 136 1977
SCC (3) 448
ACT:
Calcutta Improvement Act, 1911-Sec. 78A to
78G-Whether unconstitutional-If suffers from the vice of excessive
delegation-Rules 11 to 21, it ultra vires the Act.
HEADNOTE:
The respondents were the owners of buildings
situated in a street known as Fire Lane in the city of Calcutta. The Board of
Trustees for the Improvement of Calcutta in exercise of the power conferred
under s. 39(c) passed the necessary resolution and proceeded to frame a street
scheme for the area which included Fire Lane as also the buildings belonging to
the respondents. The notice containing the requisite particulars was published
by the Board. The respondents submitted their objections but the Board after
hearing the respondents rejected the objections and applied to the State
Government for sanction under s. 47.
Ultimately, the State Government granted
sanction under s. 48. The Board was of the opinion that as a result of the
making of the street scheme, lands of the respondents which were comprised in
the street scheme would increase in value.
The scheme, therefore, contained a
declaration that a betterment fee shall be payable by the respondents in
respect of the increases in the value of their respective lands. The Board gave
a notice of the proposed assessment of the betterment fee under s. 78B(1) and
then proceeded under s. (2) of that section to assess the betterment fee
payable by the respondent. The respondents dissented from the assessment made
on them and the matter was thereupon referred for determination by arbitrators
as contemplated under section 78(B)(4), and an award was made. The respondents
filed writ petitions challenging the validity of the award made by the
arbitrators. Section 39 provides that whenever the Board is of the opinion that
for the purpose, inter alia, of creating new or improving existing means of
communication and facilities for traffic, it is expedient to lay out new
streets or to alter existing street, the Board may pass a resolution to that
effect and then proceed to frame a street scheme for such area as it may think
fit.
Section 43 requires the Board to give a
notice mentioning where the map of the area and a statement of the land which
is proposed to be acquired may be inspected. The said notice is to be published
for general public under s. 45.
Individual notice is to be served on every
person whose name appears in Municipal Assessment Book as being primarily
liable to pay the owner's share of the consolidated rate.
Under s. 45(2), a person dissenting from the
recovery of betterment fee has to state his reasons. Under s. 47 the Board
after hearing all persons making dissent may either abandon the scheme or
accept it with such modifications and thereafter submit it to the State Government
containing reasons given for the dissent. The Board is required to publish
notice of the fact that a particular scheme has been submitted to the
Government for its sanction. The State Government may then refuse to sanction
the scheme or sanction it with or without any modifications. The principal
ground on which the validity of the Award of the Arbitrators was impugned in
the writ petitioners was that section 78A to section 78G of the Act were ultra
vires and void and that Rules 11 to 21 of the Rules were also invalid.
The High Court upheld the challenge and
struck down section 78B to s. 786 and Rules 11 to 21, as invalid.
Allowing the appeal,
HELD (1) The view taken by the High Court on
the validity of section 78A to 78G is clearly erroneous. The High Court thought
that the sections suffer from the vice of excessive delegation of legislative
power because for determining what land should bear the burden of betterment
fee, arbitrary and ,uncontrolled power has been given to the Trust and its
Engineers either 137 include or not to include within the scheme lands which
are required for the execution thereof. The reasoning of the High Court is
clearly based on an erroneous premise.
Section 39 lays down the factors which would
guide the Board in deciding which area should be included in the scheme. It is
only when the Board finds that for carrying out any of the four purposes set
out in section 39, it is expedient to lay out new street or to alter existing
street that the Board can proceed to frame a Scheme. Again the decision of the
Board is not final. It is subject to the sanction of the State Government. Even
after the scheme is sanctioned by the State Government it is open to the owner
of the land to show that in fact the land would not increase in value by reason
of the making of the scheme. The Board has to decide objectively whether there
is any increase in the value of the land at all and if there is, assess the
betterment fee on that basis. If the assessee does not agree with the
betterment fees assessed, he is entitled to dissent and to have a hearing. Even
thereafter if the owner is not satisfied by the decision of the Board he can
have this question determined by a body of two independent arbitrators who
would objectively decide the question. Therefore, there is no voice of
excessive delegation. [142 C-H, 143 A-D] (2)Rule 11 provides the machinery for
appointment of arbitrators in a case where the objectors fail to elect an
arbitrator. Rules 12 to 21 lay down the procedure regulating the proceedings of
arbitrator. These Rules are clearly covered by clause 3(a) of s. 137. The High
Court completely erred in observing that the Rules are ultra vires the Act.
[141 C, 142 B]
CIVIL APPELLATE JURISDICTION : Civil Appear
Nos. 579-580 of 1976.
(From the judgment and order dated 1-12-1972
of the Calcutta High Court in Civil Rule Nos. 41 1 0 and 4111 /64) P.K.
Chatterjee, G. S. Chatterjee and D. P. Mukherjee, for the appellant.
P.K. Mukherjee, for respondents in CA No.
579/76 and RR 1 (a) to 1 (1), 3 and 4 in CA No. 580/76.
The Judgment of the Court was delivered by
BHAGWANTI, J., These appeals by certificate are directed against a judgment of
a Division Bench of the Calcutta High Court striking down section 78-B to
section 78-G of the Calcutta Improvement Act, 1911 as invalid on the ground of
excessive delegation of legislative power as also contravention of Article 14
of the Constitution and declaring rules 11 to 21 of the Rules framed by the
Government under sub-section (3a) of section 137 as ultra vires the provisions
of the Act. The facts giving rise to the appeals lie in a very narrow compass
and may be briefly stated as follows.
The respondents in Civil Appeal No,. 579 of
1976 are the owners of a building bearing No. 35 situate at Lower Circular
Road, Calcutta while the respondents in Civil Appeal No. 580 of 1976 are owners
of a building bearing No.
1 /A situate in Mcleod Street, Calcutta.
There was a street knows as Fire Lane connecting the Lower Circular Road on the
cast to Mcleod Street on the West. In or about November 1954. the Board of
Trustees for the Improvement of Calcutta (hereinafter referred to as the Board)
acting in exercise of the power conferred under section 39, clause (c), passed
the necessary resolution and proceeded to frame a Street Scheme for the area
which included Fire Lane as also the buildings belonging to 'the respondents.
The notice containing the requisite particulars was published by the Board on
24th November, 138 1954 as required by section 43. The respondents submitted their
objections against the Street Scheme on 7th December, 1954 but tile Board,
after nearing the respondents, rejected the objections and applied to the State
Government for sanction under section 47 and the Street Scheme was ultimately
sanctioned by the State Government under section 48 on 17th December, 1956. The
board was of the opinion that as a result of the making of the Street Scheme,
lands of the respondents which were comprised in the Street Scheme would
increase in value, and the Street Scheme, therefore, contained a declaration
that a betterment fee shall be payable by the respondents in respect of the
increase in the value of their respective lands resulting from the execution of
the Street Scheme. The Board gave notice of the proposed assessment of the
betterment fee to the respondents under sub-section (1) of section 7 8-B and
then proceeded under subsection (2) of that section to assess the betterment
fee payable by the respondents. The betterment fee was assessed at Rs.
2,15,441/in the case of the Lower Circular Road property and at Rs. 4,241/in
the case of Mcleod Street property and notice of this assessment was given to
the respondents. The respondents in each case dissented from the assessment
made on them and the matter was thereupon referred for determination by
arbitrators as contemplated under sub-section (4) of section 78-B. The
arbitrators were appointed according to the procedure set out in section 78C
and after hearing the parties, the arbitrators made their award on 23rd
September, 1964 determining the betterment fee payable in the case of Lower
Circular Road property at Rs. 1,25,000/and in the case of Mcleod Street
property at Rs. 4,241/-. The respondents thereupon filed a writ petition in
each case challenging the validity of the award made by the arbitrators.
The principal ground on which the validity of
the award of the arbitrators was impugned in the writ petitions was that
section 78A to section 78G of the Act were ultra vires and void and rules 1 1
to 21 of the Rules were also invalid.
There were also certain other subsidiary
grounds taken in the writ petitions but they have not formed the subject matter
of debate before us and hence we need not refer to them. Though the writ
petitions were filed as far back as 1964 immediately after making of the Award
by the Arbitrators, they unfortunately could not reach hearing before the High
Court until July 1971 and then also, the hearing took considerable time and it
concluded only on 17th August,, 1971.. It appears that during the bearing of
the writ petitions, it was brought to the notice of the High Court that the
question as to the constitutional validity of section 78A of the Act was also
raised in another case, namely, Civil Rules No. 2156 of 1969 and that case bad
already been heard by another Division Bench of the High Court and was pending
for judgment. The High Court, therefore, decided to hold back the preparation
of the judgment in the writ petitions and to await the judgment of the other
Division Bench in Civil Rule No. 2156 of 1969. We. do not know when the
judgment was delivered in Civil Rule No. 2156 of 1969 but it appears that the
Division Bench which beard that case did not pronounce upon the constitutional
validity of section 78A and disposed of that case on other grounds. The result
was that the High Court 139 had to decide the question of constitutional
validity of section 78A to section 78G in the present writ petitions and it
proceeded to deliver its judgment in 1st December, 1972 striking down section
78-B to section 78G and rules 11 to 21 as invalid. We are constrained to
observe that the judgment to the High Court visibly bears marks of
superficiality and lack of proper consideration which are inevitable When a
judgment is delivered. fifteen months after the conclusion of the arguments.
The correctness of this judgment is impugned in the present appeals preferred
by the trustees for the Improvement of Calcutta after obtaining certificate
from the High Court.
We have gone through the judgment of the High
Court with the due care and attention which every judgment of a High Court
demands of us but despite our utmost anxiety and effort we have not been able
to appreciate the reasoning which led the High Court to strike down section
78-B to section 786 and rules 1 1 to 21 as invalid. Section 78A to section 78G
were not in the Act as originally enacted but they were introduced in the Act
by the Calcutta Improvement (Amendment) Act, 1931. These sections contain a
fasciculus of provisions relating to betterment fee, where, by the making of
any improvement scheme, any land in the area comprised in the scheme which is
not required for the execution thereof, is increased in value. Chapter In of
the Act deals with improvement schemes and section 35-D provides that an improvement
scheme may be of one of four types, namely, a general improvement scheme, a
street scheme, a housing accommodation scheme and a re-housing scheme. We are
concerned in these appeals with a Street Scheme and hence we shall refer only
to those provisions which relate to a street scheme. Section 39 provides that
whenever the Board is of opinion that for the purpose inter alia of creating
new or un proving existing, means of communication and facilities for traffic,
it is expedient to lay out new streets or to alter, existing streets, the Board
may pass a resolution to that effect and shall then proceed to frame a street
scheme for such area as may think fit. When any street scheme has been framed,
section 43, subsection (1) requires that the Board shall prepare a notice
stating the fact that the scheme has been framed, the boundaries of the area
comprised in the scheme and the place at which the particulars of the scheme, a
map of the area comprised in the scheme and a statement of the land which is proposed
to be acquired and the land in regard to which it is proposed to recover a
betterment fee may be seen at reasonable hours.
Sub-section (2) of section 43 provide-, for
publication of this notice with a statement of the period within which
objections may be received. The Board is also required by section 45,
subsection (1) to serve a notice on every person whose name appears in the
Municipal assessment book as being primarily liable to pay the owners share of
the consolidated rate or the rate on the annual value of holdings, in respect
of any land in regard to which the Board pro poses to recover a betterment fee.
Sub-section (2) of section 45 provides that such notice shall require such
person if he dissents from the recovery of betterment fee, to state his reasons
in writing within a period of sixty days. Section 47, sub-section (1) then
provides that the Bonrd shall consider any statement of dissent received under
section 45, sub-section (2) and after hearing all persons making suc dissent
who may desire to be heard, the Board may either abandon the scheme or apply to
the State Government for sanction to the scheme with such modification, if any,
as the Board may consider necessary. When the Board applies for sanction of the
scheme to the State Government, the Board is required under sub-section (2) of
section 47 to send inter alia a list of the names of all persons who have
dissented under section 45 from the proposed recovery of the betterment fee and
a statement of the reasons given for such dissent. Sub-section (3) of section
47 provides that when any application has been submitted to the State
Government for sanction, the Board shall cause notice of the fact to be
published for two consecutive weeks in the official Gazette and in the local
newspapers. The State Government may then under section 48 either sanction the
scheme with or without modification or refuse to sanction the same.
It will be seen from these provisions that a
detailed and elaborate machinery is provided by the Legislature for the purpose
of framing a street scheme. When a street scheme is framed, the area comprised
in the street scheme would include lands of two categories, one category, being
of lands which. Are necessary to be acquired for the purpose of execution of
the street scheme and the other being category of lands which are not required
for the execution of the street scheme but which would increase in value as a
result of the making of the street scheme. Since the latter category of land
would increase in value and the owners of such lands would be benefited by the
making of the street scheme, section 78A empowers the Board, in framing the
street scheme, to declare that a betterment fee shall be payable by the owners
of such lands "in respect of the increase in the value of the land
resulting from the execution of the schemes". What shall be the quantum of
the betterment fee is laid down in sub-section (2) of section 78A which says
that it shall be "an amount equal to one-half of the increase in the value
of the land resulting from the execution of the scheme' to be calculated in the
manner there provided. Section 78-B provides for assessment of betterment fee
by the Board after giving an opportunity to the person concerned to be beard
and if such person dissent,; from the assessment made by the Board, the matter
is required to be determined by the arbitrators in the manner provided by
section 78C. That section lays down in meticulous detail the machinery for
selection and appointment of arbitrators and the making of an award by them
determining the amount of betterment fee. The fees to be paid to the
arbitrators arc provided in section 78-D and section 78E declares that the
proceedings of the arbitrators shall be governed by rules to be made in this
behalf under section 137, provided that every party to such proceedings shall
be entitled to appear before the arbitrators either in person or by his
authorised agent. Section 78F provider, for giving of notice by the Board to
persons liable to pay the betterment fee determined by the Board or the
arbitrators, as the case may be, and section 78G Takes provision in regard to
payment of betterment fee. The question is whether sections 78A to 78G are
ultra vires and void as suffering from the vice of excessive delegation of.
legislative power, or contravention of
Article 14 of the Constitution.
141 We will first examine the validity of
rules 11 to 21. These rules form part of the Rules made by the State Government
claiming to act in exercise of the power conferred under clause (3a) of section
137. This clause was added in section 137 by the Amending Act of 1931 at the
same time when section 78A to section 78G were enacted and it empowered the
State Government to make rules inter alia for determining the qualifications
and disqualifications of, the conditions and mode of election, selection or
appointment of, an arbitrator and for regulating the proceedings of arbitrators
under section 78C. This power was conferred on the State Government in addition
to that given to it under section 86. Now, Rule 1 contains definitions, while 2
to 11 provide for the qualifications and disqualifications of an($ the
conditions and mode of election, selection and appointment, of arbitrators. It
is indeed difficult to see how Rule 11 could be struck down by the High Court
as invalid. It provides the machinary for appointment of arbitrators in a case
where the objectors fail to elect an arbitrator. That would fall fairly and
squarely within the terms of clause (3a)of section 137. Rules 12 to 21 lay down
the procedure regulating the proceedings of arbitrators and they are clearly
covered by the latter part of clause (3a) of section 137, which speaks of Rules
"far regulating the proceedings of arbitrators under section 78C".
With the great respect to the learned judges of the High Court, we think
impossible to contend that Rules 11 to 21 are outside the rule making power of
the State Government under clause (3a) of section 137. The High Court to have
relied on a passage from the Calcutta Improvement Trust Manual published under
the authority of the State Government which states that "the rules were
framed by the Government under section 137 of the Calcutta Improvement Act,
1911 regarding the nominations of arbitrators for settlement of betterment fee
in the Local Self Government Department Notification-dated 5th May, 1934. That
indicates that the rules for regulating the proceeding of an arbitrator under
section 78C are not within the purview of these rules, Yet Rules 11 to 23 in
the Rules framed under section 137 cover a field which is much beyond the
subject of nomination of arbitrators for settlement of betterment fee" and
on the basis of this statement, held that "Rules 11 to 21 are outside the
region of the purpose for which the State Government has exercised its power
under section 137". This is indeed strange logic for striking down Rules
11 to 21 as ultra vires clause (3a) of section 137. The validity of these rules
has to be judged by reference to the question as to whether they fall within,
the scope of the rule making power conferred under clause (3a) of section 137
and not on the basis of some opinion expressed by the author of the Calcutta
Improvement Trust Manual. When it is clear beyond doubt that clause (3a) of
section 137 empowers the State Government to make rules for regulating the
proceedings of arbitrators under section 78C and Rules 11 to 21 are plainly
rules falling within this category, we fail to see how they can possibly be
condemned as outside the rule making power conferred on the State Government.
The State Government has deliberately and avowedly exercised its rule making
power under clause (3a) of section 137 and made Rules 11 to 21 for regulating
the proceedings of arbitrators. The High Court has 142 also made reference to
Section 86 and struck down Rules 11 to 21 as invalid on the ground that they do
not purport to have been made under section 86 under which alone, according to
the High Court, rules could be made for carrying out the purposes of section
78A to Section 78G. But the reference, to section 86 seems to be clearly
misconceived, since that section confers power on the State Government to make
rules for carrying out "the purposes of this Chapter" and section 86
being in Chapter V, the words "this Chapter" can have reference only
to Chapter V and not to Chapter IV which contains sections 78A to 78G.
Obviously, therefore, no rules could be made under section 86 for carrying out
the purposes of section 78A to section 78G. The High Court was, in the
circumstances, clearly in error in taking the view that Rules 1 1 to 21 were
ultra vires the Act. This was a wholly indefensible view and even the learned
counsel appearing on behalf of the respondents found it difficult to support
it.
That takes us to the question of the constitutional
validity of section 78A to section 78G. The view taken by the High Court on
this point also is difficult to understand. The High Court appears to have
though that these sections suffer from the voice of excessive delegation of
legislative power because "for determining what land shall bear the burden
of that fee?' (That is betterment fee) "arbitrary and uncontrolled power
has been given to the Trust or its engineers either to include or not to
include within the scheme lands which are not required for the execution
thereof" and "it leaves to the Trust and/ or its employees to
determine arbitrarily what shall be the extent of the area comprised in the':
Scheme by enabling them to include in the scheme lands which are not required
for execution of the scheme." This reasoning is clearly based on an
erroneous premise. It is not correct to say that it is left to the unfettered
and unregulated discretion of the Board and/or its employees to decide what
lands to include in the scheme, apart from those required for the execution of
the scheme.
Section 39, to which we have already
referred, lays down the factors which would guide the Board in deciding what
area should be included in the scheme. It is only when the Board finds that for
carrying out any of the four purposes set out in section 39, it is expedient to
lay out new street or to alter existing street, that the Board can proceed to
frame a scheme for such area as it thinks fit and the selection of the area by
the Board would, therefore, be guided by the purpose for which the scheme is to
be framed. Then again, the decision of the Board in regard to the lands to be
included in the scheme is not final. Where, by reason of the making of the
scheme, the value of any land included in the scheme has, in the opinion of the
Board, increased in value and a betterment fee is, therefore, payable by the
owner of the land, an opportunity is given to 'him to dissent from the recovery
of such betterment fee and to state his reasons why be so dissents and the Board
is then required to give him a hearing and ultimately, if proper case is made
out, the Board may modify the scheme by excluding such land and even if the
Board is not inclined to make any such modification, the State Government,
while giving its sanction, may still take into account the dissent made by the
owner of the land and consider the reasons given by him, and if satisfied,
exclude such land from the scheme at the time of giving sanction. It will, 143
therefore, be seen that not only is guidance given to the Board in selecting
the lands to be included in the scheme, but there are also safeguards provided
with a view to ensuring that lands are not arbitrarily or capriciously included
in the scheme. Even after the scheme is sanctioned by the State Government, it
is, open to the owner of the land to show that in fact the land would not
increase in value by reason of the making of the scheme. The betterment fee
being co-related to the increase in the value of the land, the, Board assessing
the amount of betterment fee under section 78-B would have to determine
objectively whether there is any increase in the value of the land and if so,
assess the amount of betterment fee on that basis.
If the owner of the land dissents from the
assessment made by the Board, he can have the matter referred to arbitrators
and the arbitrators would then determine the amount of betterment fee and while
doing so, they would naturally have to find out whether there is any increase
in the value of the land at all and if there is, then what is the quantum of
such increase. The owner of the land is given an opportunity under the scheme
of section 78A to section 78G to have this question determined by a body of two
independent arbitrators who would objectively determine whether there is any
increase in the value of the land on account of the making of the scheme. These
being the relevant provisions, it is difficult to see how section 78-B to
section 78-G could be regarded as suffering from the vice of excessive
delegation of legislative power. The attack against the validity of these
sections on the basis of infraction of Article 14 of the Constitution must also
fail since the challenge under Article 14 is only another facet of the
challenge on the ground of excessive delegation of legislative power. We are,
therefore, of the view that section 78-B to section 78G are valid and the High
Court was wrong in striking them down as ultra vires and void.
We cannot part with this case without making
one final observation. The unarguably small dimension of the constitutional
question raised here is apparent from what we have said. This Court has dual
responsibility to the country. It has to decide the cases brought before it
justly and satisfactorily and at the same time, liquidate arrears of pending
cases. Both bear upon the credibility of the judicial system. But because of
article 144A brought in by the Forty Second Amendment Act, seven judges of this
Court have to sit and hear every case where the constitutionality of an Act,
rule, bye-law or even a small notification is challenged. Procession pragmatism
in the light of actual experience of the working of this Court, will easily
convince anyone that, in the context of the current docket explosion and long
pendency of cases, the insistence on this inconvenient plurality which requires
more than half the full strength of the Court to sit to hear such cases,, is a
decisive step in the negative direction.
Many questions of constitutional importance
have already been covered by the rulings of this Court so that he who runs and
reads may resolve them. To require seven judges to perform such jobs is surely
supererogatory. The present appeal itself is a striking illustration. Where
really important issues arise for consideration, any bench of this Court would
certainly refer, where necessary, such matters for consideration or
reconsideration by a large bench-less or more than seven, according to the
requirement 144 of the situation. To prescribe arithmetically is to petrify
unimaginatively. We do not say anything about the validity of Article 144A one
way or the other but merely highlight the paralysing impact on the highest
court and the long-term cause of justice, flowing from the numerical rigidity
newly inserted by the Forty Second Constitution Amendment Act. We hope and
trust that this matter will receive urgent attention of Parliament.
We accordingly allow the appeals and dismiss
the writ petitions of the respondents. The respondents will pay the costs of
the appellant throughout.
P.H.P. Appeals allowed.
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