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CASE NO.: Appeal (civil)  5519-5520 of 2007

PETITIONER: Bidhannagar (Salt Lake) Welfare Asson

RESPONDENT: Central Valuation Board & Ors

DATE OF JUDGMENT: 18/05/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T  

S.B. SINHA, J :          1.      Validity or otherwise of certain provisions of the West Bengal Central  Valuation Board (Amendment) Act, 1994 (for short "the Amendment Act")  is in question in these appeals which arise out of a judgment and order dated  24.12.2003 passed by a Division Bench of the High Court of Calcutta  dismissing the writ petition filed by the appellant herein and, thus, upholding  the impugned provisions thereof.   

2.      Members of the appellant association are occupiers of lands and  buildings situated within the territorial limits of the Bidhannagar  Municipality.  Annual valuation of lands and buildings for the purpose of  assessment of municipal tax indisputably is governed by the provisions of  the West Bengal Municipal Act, 1993 (for short "the Municipal Act").  In  terms of Section 110 thereof, the annual valuation of lands and buildings is  required to be determined by the Central Valuation Board (for short "the  Board").  The Board was established under the provisions of the West  Bengal Central Valuation Board Act, 1978 (for short "the 1978 Act").

3.      Valuation of the holdings used to be governed by Sections 10, 11 and  12 of the 1978 Act.  Before we embark upon a detailed analysis of the  provisions thereof, we may notice that they provided for publication of the  draft valuation list, publication of the final valuation list and amendment of  valuation of the list by the Board respectively.   

4.      Principles of natural justice were to be complied with in terms of Sub- section (3) of Section 10 insofar as upon publication of the draft valuation  list, objections were invited and objections, if filed, were required to be  considered by the Board for determination thereof upon giving an  opportunity of being heard in that behalf.  Section 11 provided for  publication of the final valuation list together with the amount of  consolidated rate payable after determination of the objections filed under  Section 10.  The final valuation list, so arrived, could be subject to further  review in terms of Sections 14 and 15 of the Act.

5.      By reason of the impugned amendment, alterations on three principal  fields were made, i.e., the provisions relating to publication of the draft  valuation list of lands and buildings and finalization thereof, upon hearing  objections thereto were deleted.  The West Bengal Central Valuation Board  (Valuation of Lands and Building) Rules, 1984 (for short "the 1984 Rules")  framed under the 1978 Act were also amended by a notification dated  30.03.1984 wherein provisions pertaining to filing objection petitions  against the draft annual valuation and determination thereof were deleted.   The effect of the said amendment was that the valuation made by the Board  was made final, subject to review as provided for under Sections 14 and 15  of the 1978 Act.

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6.      Contending that the said Amendment Act is violative of Article 14 of  the Constitution of India as it deprived the citizens of being heard which is  the essence of the principles of natural justice as also lead to procedural  unfairness, a writ petition was filed by the appellant.  The said writ petition  was allowed by a learned Single Judge of the High Court.  In arriving at its  conclusion, the learned Judge took notice of the contentions raised by the  respondents in their counter-affidavits as also other factors relevant for  determination thereof at some details.  An intra-court appeal was preferred  thereagainst in terms of Clause 15 of the Letters Patent Appeal of the  Calcutta High Court and by reason of the impugned judgment dated  24.12.2003, the said appeal has been allowed.

7.      The High Court opined:

(i)     The requirements of compliance of principles of natural justice  have not completely been taken away. (ii)    No case of substantive unreasonableness has been made out. (iii)   In the matter of collection of debt for the purpose of arriving at a  general valuation as also for the purpose of determining the  objections by the owners and occupiers of the lands and the  buildings, the restrictions put on the power of the Review  Committee as also the extent to which such power can be exercised  do not lead to procedural unfairness; and  (iv)    Validity of constitution of the Review Committee cannot also be  faulted with.          8.      Mr. Bhaskar P. Gupta, learned senior counsel appearing on behalf of  the appellant would submit that the Division Bench of the High Court  committed a serious error in construing the provisions of the impugned  Amending Act insofar as it failed to take into consideration the following:

(i)     The valuation list prepared by the Board and produced in course of  the hearing before the learned Single Judge clearly showed that no  reason had been assigned in support thereof, and in any event, the  same did not bear any real nexus with the factors to be taken into  account in the matter of determination of annual valuation as  provided under Section 106 of the Municipal Act.   

(ii)    It may be true that the Amending Act did not exclude the rules of  audi alteram partem completely and sought to provide an  opportunity of hearing only at the stage of review.  However, the  provisions thereof would clearly indicate that there is no  procedural or substantive observance of the principles of natural  justice in the process of determination of annual valuation. (iii)   Opportunity of hearing at the stage of review of the assessment  being a post-decisional one, the same does not compensate for the  requirements of a pre-decisional hearing.

9.      Mr. R. Mohan, learned Additional Solicitor General appearing on  behalf of the State of West Bengal and Mr. Altaf Ahmad, learned senior  counsel appearing on behalf of the Central Valuation Board, on the other  hand, would submit that the procedural fairness as also the principles of  natural justice being capable of being read in the provisions of the  Amendment Act, the High Court cannot be said to have committed any error  in passing the impugned judgment.

10.     Assessment of property tax used to be governed by the Bengal  Municipal Act, 1932.  However, the State of West Bengal enacted the 1978  Act inter alia for constitution of a Central Valuation Board and Valuation  Authorities for the purpose of valuation of lands and buildings in West  Bengal.  By reason of the said provision, the exclusive jurisdiction of the  Municipal Committees to make valuation of the lands and buildings which  were exigible to levy of property tax was taken away.

11.     A Comparative table showing relevant provisions of the 1978 Act and

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the impugned Amendment Act is as under:

The 1978 Act The Amendment Act 5. Members of the Board: (1) The  Board shall consist of a Chairman  and two other members to be  appointed by the State Govt. (2) The Chairman shall be a person  who is or has been an officer of the  State Govt. not below the rank of a  Secretary. (3) Of the two other members \026  (a) one shall be a person who is or  has been a member of the judicial  service for not less than 7 years and  has experience in municipal affairs;  and (b) the other shall be a person  holding a degree in Civil  Engineering and having knowledge  and experience in the work of  valuation and assessment for not less  than seven years. (4) The Chairman and the other  members of the Board shall hold  office for such period not exceeding  six years as the State Government  may determine and the terms and  conditions of their service including  salaries and allowances shall be such  as may be prescribed. 5. Members of the Board \026 (1) The  Board shall consist of a Chairman  and four other members to be  appointed by the State Govt. (2) The Chairman shall be a person  who is or has been an officer of the  State Govt. (not below the rank of  Secretary including ex-officio  Secretary). (3) The four other members shall  include the Director of Local Bodies,  Government of West Bengal, who  shall be the ex-officio member of the  Board, and such other officers of the  State Government or non-official  experts having knowledge and  experience in the field of judiciary,  Engineering, Valuation and  Assessment of properties, economics  or social science as the State  Government may determine. (4) The Chairman and the other  members of the Board shall hold  office for such period not exceeding  four years as the State Government  may determine and the terms and  conditions of their service, including  salaries and allowances shall be such  as may be prescribed. (5) The Board shall have a Member-  Secretary who shall be appointed by  the State Government from amongst  the members referred to in sub-

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section (3) and shall be the Chief  Executive Officer of the Board. 5A. Validation \026 Notwithstanding  anything contained elsewhere in this  Act, no action of the Board shall be  invalid or otherwise called in  question merely on the ground of the  existence of any vacancy (initial or  subsequent) in the office of the  members of the Board. 5A. Validation \026 Notwithstanding  anything contained elsewhere in this  Act, no action of the Board shall be  invalid or otherwise called in  question merely on the ground of the  existence of any vacancy (initial or  subsequent) in the office of the  members of the Board. 8. Expenditure incurred on account  of salaries and allowances \026 The  expenditure incurred by the Board  for meeting the salaries and  allowances of the Chairman, the  other members, the Secretary and  Officers and employees serving  under the Board shall be defrayed  out of the Fund. 8. Expenditure incurred on account  of salaries and allowances \026 The  expenditure incurred by the Board  for meeting the salaries and  allowances of the Chairman, the  other members, the Secretary and  Officers and employees serving  under the Board shall be defrayed  out of the Fund. 8A. The Board shall maintain the  prescribed manner a register of  registered valuer surveyors (Gr. I)  and registered valuer \026 Surveyors  (Gr. II). 8B. Every person who possess such  qualifications as may be prescribed  shall, subject to such terms and  conditions and on payment of such  fee, as may be prescribed, be entitled  to have his name entered in the  register of registered valuer  surveyors (Gr. I) and registered  valuer \026 surveyors (Gr. II). 10. Preparation of the draft valuation  list \026 (1) When the valuation under  Sec. 9 of the lands and buildings in  any area has been completed, the  Board shall cause such valuation to  be entered in a list. (2) The Board shall publish the  valuation list in such manner as may  be prescribed and shall specify a date  within which objections to the list  may be filed. (3) After the expiry of the date  specified in sub-sec (2) and within  the objection shall be determined,  after giving the objector an

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opportunity of being heard by such  officer or officers of the Board as it  may specify in this behalf. (4) The objection shall be filed and  determined in such manner as may  be prescribed. 10. *** 11. Publication of final valuation list  \026 When objections have been  determined, the Board shall prepare a  final valuation list and shall give  public notice of the place or places  where such list may be inspected and  the valuation (together with the  amount of consolidated rate thereon)  as recorded in the final valuation list  shall, subject to the provisions of  Sections 14 and 15, be conclusive. 11. Publication of final valuation list  \026 When the general valuation of  lands and buildings has been made  by the Board under Sec. 9, the Board  shall prepare a valuation list and  shall give public notice of the place  or places where the valuation list  may be inspected, and the valuation  as aforesaid together with the amount  of consolidated rate or property tax,  as the case may be, payable thereon,  as recorded in the valuation list shall,  subject to the provisions of Sections  14 & 15 be conclusive.  The Board  shall give a notice in writing to the  owner or to the lessee, sub-lessee or  occupier of any land or building, as  the case may be, in all case in which  the valuation of such land or building  is made for the first time or the  annual valuation of such land or  building as increased: Provided that the valuation list as  aforesaid may be prepared and  published in respect of all the  holdings of any municipal area or  any area within the jurisdiction of a  Corporation specified in the  notification under sub-sec (1) of Sec  9 or the holdings of any municipal  area within such group of wards or  any area within such group of wards  within the jurisdiction of a  Corporation as the State Government  may determine. 12. Amendment of Valuation list by  Board \026 The Board may, for reasons  to be recorded in writing, amend the  valuation list at any time before the  date specified for filing objections  under sub-sec (2) of Section 10. 12. ****

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12A. Alteration or amendment of  valuation list \026 (1) Notwithstanding  anything contained in Sec 11, the  Board may at any time before the  date of hearing of an application for  review under Section 14 and for  reasons to be recorded in writing,  direct any alteration or amendment  of the valuation list : - (a) by inserting therein the name of  any person whose name ought to be  inserted; or (b) by inserting therein any land or  building previously omitted together  with the valuation thereof; or (c) by striking out the name of any  person or any land or building not  liable for payment of consolidated  rate or property tax, as the case may  be; or (d) by increasing or decreasing the  annual valuation of any holding  which, in the opinion, of the Board,  has been substantially under-valued  or over-valued by reasons of fraud,  mis-representation, mistake or error. 14. Application for review \026  (1) The owner or occupier or any  other person primarily liable to pay  consolidated rate may, if dissatisfied  with the valuation of any land or  building as entered in the final  valuation list, apply to the Board to  review the valuation. (2) The application shall be filed  within such time and in such manner  as may be prescribed. (3) Every application presented  under sub-sec (1) shall be heard and  determined by a Review Committee  constituted under Sec 15 in  accordance with such procedure as  may be prescribed. (4) No application shall be  entertained unless the amount of  consolidated rate as recorded in the  final valuation list referred to in Sec  11 has been paid or deposited in the  office of the Corporation or the  Municipality, as the case may be,  before the application is filed and the  application shall fail unless amount  is continued to be paid or deposited  till the application is finally disposed  of. 14. Application for review \026  (1) The owner or occupier or any  other person primarily liable to pay  consolidated rate for property tax, as  the case may be, may if dissatisfied  with the valuation of any land or  building as entered in the valuation  list, apply to the Corporation or the  Board of Councillors concerned to  review the valuation.

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(2) The application shall be filed  within such time and in such manner  as may be prescribed. (3) Every application presented  under sub-sec (1) shall be heard and  determined by a Review Committee  constituted under Sec 15 in  accordance with such procedure as  may be prescribed. (4) No application u/sub-sec (1) shall  be entertained unless the amount of  consolidated rate or property tax, as  the case may be, on the previous  valuation of land or building as  aforesaid has been paid or deposited  in the office of the Corporation or  Municipality, as the case may be,  before the application is filed, and  every such application shall fail  unless the amount of consolidated  rate or property tax as the case may  be on the previous valuation as  aforesaid is continued to be paid or  deposited in the Office of the  Corporation or Municipality, as the  case may be, till such application is  disposed of. Provided that wherever the previous  valuation refers to a valuation made  under the Bengal Municipal Act,  1932 (Bengal Act XV of 1932), and  in force on the date immediately  before the commencement of the  West Bengal Municipal Act, 1993  (West Bengal Act XXII of 1993), no  application under sub-section (1)  shall be entertained unless the  amount of consolidated rate on such  previous valuation has been paid or  deposited or is continued to be paid  or deposited in the office of the  concerned Municipality.  15. Review Committee \026 (1) The  State Government shall constitute  such number of Review Committee  as may be considered necessary to  hear the applications filed under sub- section (1) of Section 14. (2) Each such Review Committee  shall consist of two members of  whom one shall be its President.  The  President of each Review Committee  shall be appointed by the State Govt.  on such terms and conditions and  shall possess such qualifications as  may be prescribed.  The other  members of the Review Committee  shall be, where the matter relates to \026  (i) any land or building in any Ward  in Calcutta or Howrah or  Chandranagore, the Councillor of the  Ward; or (ii) any land or building in any Ward  in a municipality, the Commissioner  of that Ward; or

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(iii) any land or building in any area  other than the areas mentioned in  clauses (i) and (ii), such person as  the State Government may appoint: Provided that when a Corporation is,  or the Commissioners of a  Municipality are, superseded, the  State Government shall appoint a  person residing in the Ward to which  the matter relates as the other  member referred in clause (i) or  clause (ii). Provided further that no meeting of a  Review Committee shall be held if  the President is absent: Provided also that no decision of a  Review Committee shall be invalid  or otherwise called in question  merely by reason of any vacancy in  the office of the other member or due  to absence of such member from any  sitting.

(3) The Review Committee may  confirm, reduce, enhance or annul  the valuation of land or building or  may direct fresh valuation to be  made after such further enquiry as  the Review Committee may direct. (4) If there is any difference of  opinion between the members of the  Review Committee, the matter shall  be referred to the Board for decision. (5) The decision of the Review  Committee or of the Board, as the  case may be, shall be final and no  suit or proceeding shall lie in any  Civil Court in respect of any matter  which has been or may be referred to  the Review Committee or has been  decided by the Review Committee or  the Board. 15. Review Committee \026 Every  Corporation or Municipality shall, by  a resolution constitute Review  Committee (s) to hear applications  presented under sub-sec (1) of Sec  14. (2) Every Review Committee shall  be presided over by the Chairman or  the Vice-Chairman of the  Municipality and shall consist of two  other members, being Councillors of  the Municipality, as may be  nominated by the Board of  Councillors, and another member,

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who shall be an officer of the Board  having knowledge in the assessment  of municipal valuation, deputed by  the Board:

Provided that in the case of a  Corporation, the Presiding Officer  and two other members of the  Review Committee shall be such  persons as may be nominated by the  Corporation from amongst the  Councillors by a resolution:

Provided further that no decision of a  Review Committee shall be invalid  or called in question merely by  reason of any vacancy in the  composition of the Committee or  absence of any member from a  meeting thereof other than the  Presiding Officer: Provided also that the decision of a  Review Committee shall be  unanimous. Provided also that when a  Corporation or a Municipality is  dissolved, the State Govt shall  constitute by notification the Review  Committee consisting of a President  and such number of other members  as may be specified in the  notification for the purpose of  hearing applications for review. (3) The Review Committee may  confirm, reduce, enhance or annul  the valuation of land or building as  may direct fresh valuation to be  made after such further enquiry as  the Review Committee may direct. (4) If there is any difference of  opinion amongst the members of the  Review Committee, the matter shall  be referred to the Board for decision. (5) The decision of the Review  Committee or of the Board, as the  case may be, shall be final and no  suit or proceeding shall lie in any  Civil Court in respect of any matter  which has been or may be referred to  the Review Committee or has been  decided by the Review Committee or  the Board.          12.     The 1978 Act, as noticed hereinbefore, was amended in the year 1994.   By reason of the said Amendment Act, a proviso was added to Section 9  which is in the following terms:

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"Provided that the Board may, in accordance with  a resolution in this behalf adopted at a meeting of  the Board and with the previous approval of the  State Government, require (a valuer - Surveyor  Grade I or valuer \026 surveyor of Grade II) to make,  subject to such conditions as may be prescribed,  the general valuation of lands and buildings in the  area as aforesaid or in any part thereof under the  superintendence, direction and control of the  Board on payment of such remuneration as the  Board may determine, and every such valuation  shall be deemed to have been made by the Board."

13.     The effect of the said amendments is inter alia to take away the right  of an assessee of a pre-decisional hearing.  The provisions of the  Amendment Act only provide for a review of the valuation made by the  Board as pre-decisional hearing is not required to be given.  A review  contemplated under the 1978 Act is for all intent and purport in the nature of  an appeal.  The proviso appended to Section 9 of the 1978 Act is an enabling  provision in terms whereof general valuation of lands and buildings in the  area as aforesaid or in any part thereof made by a Valuer \026 Surveyor Grade I  or Valuer-Surveyor of Grade II, however, shall be under the  superintendence, direction and control of the Board.  Admittedly, no such  exercise had been undertaken.

14.     Valuation of lands and buildings is a complex exercise.  It requires  certain amount of expertise.  Valuation is made upon obtaining data  prepared from a scientific study.  Valuation of a land or building would  depend upon several factors.  Several methods of valuation may be applied  for determination thereof.  It is for the expert ordinarily to arrive at a  decision as to which mode of valuation having regard to a particular set of  factors would entail a correct evaluation.  However, in determining the  valuation of a land or building, it is not expected of a statutory authority to  take recourse to the course of action which may be arbitrary, unscientific or  haphazard in nature.  Although the proviso appended to Section 9 of the  1978 Act, provided for certain safeguards and as thereby a legal fiction has  been created, the same, as noticed hereinbefore, is optional.  The Board is  not bound to take recourse thereto.  Who would be the surveyors eligible for  carrying out the survey requires prior approval of the State.  The learned  Single Judge in his judgment noticed that in stead and place of appointing  experts in the field, only casual employees were recruited by the  Municipality, who made door to door survey of the properties situated  within the area of Bidhannagar Municipality and collected the purported  datas of the concerned premises in a field book wherefrom an inspection  book was prepared and only on the basis thereof valuation was determined  by the Board.  Such a course of action was not contemplated by law.

15.     Section 9(1) of the 1978 Act provides for survey in specific areas.  We  may notice that the appellants in their writ petition and in particular  Paragraphs 16 to 24 thereof categorically stated in regard to the mode and  manner in which the valuation is required to be done and had in fact been  conducted.  Paragraph 23 thereof is as under:

"23. The Central Valuation Board had no  infrastructure of its own in survey the building to  ascertain the reasonable valuation and they  depended entirely upon what the Municipality had  conveyed to them which in turn was based on  surmise and conjecture is the Municipality did not  and/ or could not carry out any house to house  survey of all the 17070 holdings in Salt Lake."

16.     In their counter-affidavits, the respondents inter alia stated:

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"18. The allegations made in paragraph 23 of the  said application are categorically denied and  disputed and it is stated that it is on the advice of  the Central Valuation Board that the Municipal  authority engaged casual staff who, undertook  door to door survey of the holdings on being  exhaustively trained by the competent office are of  Central Valuation Board.  The basic data thus  collected have been transferred to the Inspection  Book.  Central Valuation Board prepared the  valuation list on such data and the Municipality  thereafter despatched notices signed by the  Member Secretary of Central Valuation Board to  owner/ occupier etc."

17.     The Board, therefore, delegated its power to the Municipality which  was impermissible in law.  It had no control over the recruitments made by  the Municipality.  Probably it even did not have any control over their work.   Who had been supervising the job of the said casual employees has not been  disclosed.       

18.     The result of such an unscientific study may produce a disastrous  result and in fact from the pattern of increase in demands by the Bidhanagar  Municipality it appears that the increase in the valuation ranges from  3954%, i.e., 39.5 times to 137%, i.e., 1.4 times.  Such exorbitant increase in  the tax on the public is, in our opinion, itself indicative of arbitrariness, and  hence, violative of Article 14 of the Constitution.  In a democracy, the  people are supreme, and all authorities must function for the public welfare.   Excessive increase in the tax burden on the public is surely not for the public  welfare.  Also, in the aforementioned context, in our opinion, the very  method applied by the Municipality and the Central Valuation Board must  be held to be arbitrary in nature and hence violative of the Constitution.  In  Maneka Gandhi v. Union of India [AIR 1978 SC 597], it was held that  arbitrariness may be violative of Article 14 of the Constitution.

19.     No person was appointed who had an expertise in the field.  The  casual employees appointed were not trained personnel.  Their qualifications  are not known.  On what basis they could determine the valuation of the  buildings and lands has also not been disclosed.  They, being not   government servants, ordinarily would not have the power to enter into the  premises of persons so as to infringe the right of privacy which is otherwise  granted to an authority under the 1978 Act.

20.     In view of the mode and manner in which the general valuation had  been prepared without giving an opportunity of hearing and/ or in any event  without even asking the residents of the area in general to have their say, the  provisions of the 1978 Act are required to be construed.

21.     Section 11 of the 1978 makes such general valuation final.  Section 10  has been deleted but the finality clause attached to Section 11 has been  retained.  By reason of the Amendment Act, the finality clause has been  converted to a conclusive one, subject of course to the provisions of Sections  14 and 15 of the 1978 Act.  The provision has been made for giving notice  only to the lessees and sub-lessees who were occupiers of the buildings  where valuation is intended to be made for the first time or the valuation is  sought to be increased.

22.     Section 12 of the 1978 Act which provided for certain safeguards  insofar as it empowered the Board to make amendment of the valuation list  has been omitted.  Section 13 had been omitted in the year 1984.  It is in the  aforementioned backdrop, that the provision for review contained in Section  14 is required to be taken into consideration.  Before, however, we resort  thereto, it may be noticed that in terms of an unamended provision of

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Section 14, a Review Committee was constituted in terms of Section 15 of  the 1978 Act.

23.     Under the unamended provision of Section 15, the State Government  was to constitute a number of review committees which were required to  hear applications presented under Sub-section (1) of Section 14.  Such  review committees consisted of two members, out of whom the President  was required to be appointed by the State Government on such terms and  conditions and who was to possess such qualifications which were  prescribed and the other member was to be one of the Councillors  concerned.  The said provision has no application in the instant case.  Sub- section (3) of Section 15 of the Unamended Act had a plenary power to  confirm, reduce, enhance or annul the valuation of land or building.  The  Review Committee had the jurisdiction to make further enquiry as it thought  fit and proper.  It was only the decision of the Review Committee which was  made final.  

24.     Under the Amended provisions, however, the power of the State  which was an independent authority, has been taken away.  Power to  constitute Review Committee has been conferred upon every Corporation or  Municipality, as the case may be.  Every Review Committee was to be  presided by the Chairman or the Vice-Chairman of the Municipality and  would consist of two Councillors of the Municipality and an officer of the  Board having knowledge in the assessment of municipal valuation.   

25.     From the plenary and unlimited power of such Review Committee, its  power has been curtained only to 25% in the year 2002.  The rule of  majority has been taken away.  The decision under the amended provision is  required to be unanimous.  In case of difference of opinion, the matter is  required to be referred back to the Board.

26.     The provisions, in our opinion, are per se unreasonable and arbitrary.   The Review Committee is not independent of the Municipality or the Board.   Whereas under the 1978 Act, a person having the requisite knowledge was  to be appointed by the State Government as Chairman of the Review  Committee, the affairs of the Review Committee are controlled only by the  Municipality concerned and the Board under the Amendment Act.  The  Municipality essentially is interested in increase in valuation of lands and  buildings as it would fetch more income to its coffers.  It is unthinkable that  although the power to make annual valuation is not to be preceded by an  opportunity of being heard to the person who would be affected thereby, the  power of the Review Committee has been curtailed to 25% of the valuation  made by the Board.  The members are not independent person and each one  of them is, in one way or the other, interested in the matter.  Even the officer  nominated by the Board who is said to be an expert might have something to  do with the annual valuation of the area in question.  In any event, the effect  of the amendment is that annual valuation is to be made by the Board, then  the objections are to be heard by a Committee which again consists of  members of the Municipality and the Board, and in the event, the decision is  not unanimous, the matter again goes back to the Board.

27.     This provision is akin to the well-known doctrine of Caesar to Caesar.   It per se contravenes the values attached to the principles of natural justice.   We must also take notice of the fact that even the jurisdiction of civil court is  barred and, thus, the only remedy which would be available to the taxpayer  would be to take recourse to judicial review.  Its application in the matter of  this nature where disputed questions of fact may arise for its determination,  would be very limited.  It is unfortunate that the Division Bench opined,  although there was no provision therefor, that in case of any final decision of  the Board, the taxpayer can go back to the Review Committee.   

28.     The proviso appended to Section 14 of the 1978 Act makes the  situation worse inasmuch as before taking recourse to the review provision a  pre-deposit is to be made in terms thereof.  A statute which provides for civil  or evil consequences must conform to the test of reasonableness, fairness

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and non-arbitrariness.   

29.     Ordinarily an order entailing civil consequences should be preceded  by an opportunity of being heard. [See Rajesh Kumar and Ors. v. D.C.I.T.  and Ors., (2007) 2 SCC 181]  The impugned Act, however, has taken away  such a provision which existed in the earlier one.

30.     It may be that the legislature thought that while preparing the general  valuation, it may not be possible to give an opportunity of hearing as such  and, an opportunity of hearing may be given at a later stage.  It is true that an  order of assessment under the Act is conclusive subject to Sections 14 and  15 of the Act but keeping in view the limited power conferred upon the  Revenue Committee thereunder in terms whereof a part of demand is beyond  the pale thereof, it is possible that in a given case the entire exercise of  review may end in futility.  What, thus, was necessary was to provide for an  independent and impartial body constituted for the general redressal of the  grievance of the taxpayers.

31.     The Committee should not have consisted of the authorities of the  Municipality and the officers of the Board alone.  Section 15 does not  provide for any expertise on the part of the Councillors to determine the  objections.  As many committees as the Municipality likes may be  constituted.  Rationality in the decision is, thus, not guaranteed.   

32.     In Swadeshi Cotton Mills v. Union of India [(1981) 1 SCC 664], this  Court held:   "44. In short, the general principle \027 as  distinguished from an absolute rule of uniform  application \027 seems to be that where a statute  does not, in terms, exclude this rule of prior  hearing but contemplates a post-decisional hearing  amounting to a full review of the original order on  merits, then such a statute would be construed as  excluding the audi alteram partem rule at the pre- decisional stage. Conversely, if the statute  conferring the power is silent with regard to the  giving of a pre-decisional hear ing to the person  affected and the administrative decision taken by  the authority involves civil consequences of a  grave nature, and no full review or appeal on  merits against that decision is provided, courts will  be extremely reluctant to construe such a statute as  excluding the duty of affording even a minimal  hearing shorn of all its formal trappings and  dilatory features at the pre-decisional stage, unless,  viewed pragmatically, it would paralyse the  administrative progress or frustrate the need fo r  utmost promptitude. In short, this rule of fair play  "must not be jettisoned save in very exceptional  circumstances where compulsive necessity so  demands". The court must make every effort to  salvage this cardinal rule to the maximum extent  possible, with situational modifications. But, to  recall the words of Bhagwati, J., the core of it  must, however, remain, namely, that the person  affected must have reasonable opportunity of being  heard and the hearing must be a genuine hearing  and not an empty pub lic relations exercise."   33.     This Court in Calcutta Gujarati Education Society and Another v.  Calcutta Municipal Corpn. and Others [(2003) 10 SCC 533], held: "30. The aforesaid ground also does not seem to be  acceptable. It is true that burden of tax based on  valuation in the assessment is to be borne by the

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tenant or occupier but as we have examined the  provisions, even though the landlord remains  inactive by not contesting the assessment  proposed, the tenant or occupier has to be vigilant  and has the right to object to the same pursuant to  the public and written notices. The tenants or  occupants who have to shoulder major portion of  the tax burden, therefore, have to be vigilant and  raise objections pursuant to public and written  notices and contest the assessments on valid  grounds in their own interest.   50. We have examined the scheme of the Act and  we find that in apportioning the burden of tax on  landlord and tenant a uniform scheme or tax  structure has been evolved under the Act on the  basis of actual and notional rental value of the  premises. The liability of the landlord towards tax  is limited to the valuation based on actual rent  received and the assessment made of the tax based  on letting value of the premises is the liability of  the tenant/sub-tenant or occupier. Merely because  the Tenancy Act is attracted to accommodations  with rent less than Rs   3000 per month and not to  other accommodations having higher rent, does not  create any dissimilar situation in application of the  Act to various categories of tenants paying rent  more or less than Rs   3000. The portion of tax  liable to be paid by the occupant or tenant is not  directly recovered by the Corporation from them  but is recoverable through the landlord and the  landlord has been given right of reimbursement by  demanding it from the tenant, sub-tenant or the  occupant. For recovering such portion the tax  payable by the tenant, sub-tenant or occupant,  which has been paid by the landlord, is deemed to  be "rent" only for the limited purpose of its  recovery. The modes of recovery are by a demand  n otice under the Tenancy Act and if necessary, by  filing an eviction suit. Resort to remedy before the  regular court is also not prohibited. On this aspect  of apportionment of tax and mode of recovery of  tax, the Act does not make any discrimination  between tenants of premises covered by the  Tenancy Act and others not covered by the said  Act.  51. As a result of the discussion aforesaid, we find  no vice in any of the provisions of the Act  although we have considered it necessary to  interpret the provisions harmoniously for better  application of the provisions of the Act and the  Tenancy Act. The various legal provisions assailed  before us have been interpreted by us and our  conclusions are as under:  "( 1 ) In view of specific provisions of the Act and  as the provisions of the Act impose burden of tax  to an appreciable extent on the tenants, sub-tenants  and occupiers and the tax is liable to be recovered  from them through the landlord or directly by  attachment of rent or other coercive modes, the  tenants, sub-tenants and occupants are entitled to  an opportunity to participate in the process of  valuation and assessment. They are entitled,  therefore to written notices apart from public  notice for assessmen t, revision of assessment or

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amendment of assessment of the ’consolidated  rate’ or tax. It is also made clear that pursuant to  the public notice or written notice, the returns  submitted by the tenant, sub-tenant or occupier,  with regard to determination of annual value shall  be considered by the Corporation. The same  procedure would be followed in revision of the  annual valuation.   ( 2 ) It is further made clear that non-issuance of  public notice or notices and/or non-service of  written notices to the ’persons primarily liable’  would not necessarily invalidate the proceedings of  assessment or reassessment or amendment of the  valuation for consolidated rate unless it is  established by the party aggrieved that a serious  prejudice was caused to it for want of notice.   ( 3 ) Under the provisions of the Act since the  tenant, sub-tenant or occupier have to share the  burden of an appreciable portion of ’consolidated  rate’ exclusive or inclusive of ’surcharge’ in  relation to properties used for non-residential and  commercial purposes and as the Act provides for  opportunity of participation to them pursuant to a  public notice and written notice in assessment and  reassessment of tax, they have a right of appeal  provided under the Act. It is made clear that  tenants, sub-tenants and occupiers held liable for  payment of a portion of tax have a right of appeal  on predeposit of a portion of tax levied and made  recoverable from them.   ( 4 ) It is also made clear that to enable the tenant,  sub-tenant or occupier as ’person liable’ to pay  ’consolidated rate’, they would have a right to  obtain necessary information on payment of  requisite fee in accordance with Section 178 of the  Act and corporation authorities are legally bound  to furnish such requisite information."   [See also Paras 32 to 34 and 40]

34.     The 1978 Act or even the Amending Act have not provided any  guidelines.  Guidelines are provided in the Municipality Act.  When a statute  does not provide for procedural fairness, it may be ultra vires.   

35.     In Dr. Balbir Singh and Others v. M/s. M.C.D. and Others [(1985) 1  SCC 167], this Court held:   "It is indeed strange that the assessing authorities  should have declined to assess the rateable value of  494 properties in South Delhi on the basis of  standard rent determinable on the principles laid  down in sub-section (1)(A) (2)( b ) or (1)(B)(2)( b  ) of Section 6, merely on the ground that in the  opinion of the assessing authorities "the assessees  failed to produce the documentary evidence as  regards the aggregate amount of reasonable cost of  construction and the market price of land  comprised in the premises on the date of  commencement of the construction". If the  assessees failed to produce the documentary  evidence to establish the reasonable cost of  construction of the premises or the market price of  the land comprised in the premises, the asse ssing  authorities could arrive at their own estimate of  these two constituent items in the application of  the principles set out in sub-section (1)(A) (2)( b )

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or (1)(B)(2)( b ) of Section 6. But on this account,  the assessing authorities could not justify resort to  sub-section (4) of Section 9. It is only where for  any reason it is not possible to determine the  standard rent of any premises on the principles set  forth in Section 6 that the standard rent may be  fixed under sub-section (4) of Section 9 and  merely because the owner does not produce  satisfactory evidence showing what was the  reasonable cost of construction of the premises or  the market price of the land at the date of  commencement of the construction, it cannot be  said that it is not possible to determine the standard  rent on the principles set out in sub-section (1)(A)  (2)( b ) or (1)( b )(2)( b ) of Section 6. Take for  example a case where the owner produces  evidence which is found to be incorrect or which  does not appear to be satisfactory; can the  assessing authorities in such a case resort to sub- section (4) of Section 9 stating that it is not  possible to determine the standard rent on the  principles set out in sub-section (1)(A)(2)( b ) or  (1)(B)(2)( b ) of Section 6. The assessing  authorities would obviously have to estimate for  themselves, on the basis of such material as may  be gathered by them, the reasonable cost of  construction and the market price of the land and  arrive at their own determination of the standard  rent. This is an exercise with which the assessing  authorities are quite familiar and it is not  something unusual for them or beyond their  competence and capability. It may be noted that  even while fixing standard rent under sub-section  (4) of Section 9, the assessing authorities have to  rely on such material as may be available with  them and determine the standard rent on the basis  of such material by a process estimation."

36.     In R.K. Kaura v. Municipal Commr., MCD and Others [(2005) 11  SCC 524], this Court held:   "6. It is true that the order of the respondent  Authorities dated 14-11-1996 records that the  appellant had appeared and requested for  rectification of ex parte assessment dated 9-11- 1993 and had also produced documents. However,  it appears that the basis for arriving at the market  price of the land had not in fact been disclosed to  the appellant nor was the appellant given any  opportunity of meeting the same. Accordingly, we  set aside the impugned order dated 14-11-1996 and  direct the authorities concerned to redetermine the  rateable value for the period from March 1989 to  31-3-1994."

37.     When a substantive unreasonableness is to be found in a statute, it  may have to be declared unconstitutional. 38.     In C.B. Gautam v. Union of India and Others [(1993) 1 SCC 78],  emphasising the need to comply with principle of natural justice, it was held: "\005Although Chapter XX-C does not contain any  express provision for the affected parties being  given an opportunity to be heard before an order  for purchase is made under Section 269-UD, not to  read the requirement of such an opportunity would  be to give too literal and strict an interpretation to

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the provisions of Chapter XX-C and in the words  of Judge Learned Hand of the United States of  America "to make a fortress out of the dictionary".  Again, there is no express provision in Chapter  XX-C barring the giving of a show-cause notice or  reasonable opportunity to show cause nor is there  anything in the language of Chapter XX-C which  could lead to such an implication. The observance  of principles of natural justice is the pragmatic  requirement of fair play in action. In our view,  therefore, the requirement of an opportunity to  show cause being given before an order for  purchase by the Central Government is made by an  appropriate authority under Section 269-UD must  be read into the provisions of Chapter XX- C.  There is nothing in the language of Section 269- UD or any other provision in the said Chapter  which would negate such an opportunity being  given. Moreover, if such a requirement were not  read into the provisions of the said Chapter, they  would be seriously open to challenge on the  ground of violations of the provisions of Article 14  on the ground of non-compliance with principles  of natural justice. The provision that when an order  for purchase is made under Section 269-UD \027  reasons must be recorded in writing is no substitute  for a provision requiring a reasonable opportunity  of being heard before such an order is made.   31. The recording of reasons which lead to the  passing of the order is basically intended to serve a  two-fold purpose:    (1)   that the "party aggrieved" in the proceeding  before ( sic the appropriate authority) acquires  knowledge of the reasons and, in a proceeding  before the High Court or the Supreme Court (since  there is no right of appeal or revision), it has an  opportunity to demonstrate that the reasons which  persuaded the authority to pass an order adverse to  his interest were erroneous, irrational or irrelevant,  and     (2)   that the obligation to record reasons and  convey the same to the party concerned operates as  a deterrent against possible arbitrary action by the  quasi-judicial or the executive authority invested  with judicial powers.  

39.     In Krishna Mohan (P) Ltd. v. Municipal Corporation of Delhi & Ors.  [(2003) 7 SCC 151], this Court held: "51. In the result, we allow the appeals and hold as  under:  ( 1 ) Section 116(3) is declared invalid as it  delegates unguided and uncanalised legislative  powers to the Commissioner to declare any plant  or machinery as part of land or building for the  purpose of determination of the rateable value  thereof\005" [See also Dewan Daulat Rai Kapoor and Others v. New Delhi Municipal  Committee and Others [(1980) 1 SCC 685] 40.     In a case of this nature, provision for review was in effect and  substance a provision for appeal.  But, when a provision for appeal has been  laid down, the same should, for all intent and purport, must provide for an  effective remedy. 41.     This Court in Union of India & Anr. etc. vs. Tulsiram Patel etc. [AIR  1985 SC 1416], held:

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       "The second condition necessary for the  valid application of clause (b) of the second  proviso is that the disciplinary authority should  record in writing its reason for its satisfaction that  it was not reasonably practicable to hold the  inquiry contemplated by Article 311(2). This is a  constitutional obligation and if such reason is not  recorded in writing, the order dispensing with the  inquiry and the order of penalty following  thereupon would both be void and  unconstitutional."   

42.     The said dicta was affirmed by a Three Judge Bench of this Court in  Chief Security Officer & Ors. vs. Singasan Rabi Das [(1991) 1 SCC 729],  stating that principle of natural justice cannot be dispensed with on mere  ipso dixit.  [See also Tarsem Singh vs. State of Punjab & Ors. (Civil Appeal  No.1489 of 2004), decided on 25th January, 2006, Prithipal Singh v. State of  Punjab & Ors., 2006 (11) SCALE 28 and Indian Airlines Ltd. v. Prabha D.  Kanan [2006 (12) SCALE 58]          43.     Principles of natural justice are based on two basic pillars: (i)     Nobody shall be condemned unheard (audi alteram partem) (ii)    Nobody shall be judge of his own cause (nemo debet esse judex in  propria sua causa)

44.     Duty to assign reasons is, however, a judge made law.  It is considered  to be a third pillar.  [See Reliance Industries Ltd. v. Designated Authority  and Others, 2006 AIR SCW 4911]    45.    A Review Committee being a quasi judicial body was required to  fulfill the requirements of the three conditions.  There is furthermore no  reason whatsoever as to why the power of Review Committee was curtailed  only to the extent of 25%.  It is furthermore beyond any logic as to why rule  of simple majority in a multi-member committee could not be applied. 46.     In the case of AM (Serbia) & Ors v. Secretary of State for the Home  Department [2007] EWCA Civ 16, before the impugned amendment came  into force, the Immigration and Asylum Adjudication System had taken the  form of a right to appeal against a decision of the Secretary of State to an  adjudicator, with a further right of appeal with leave to the Immigration  Appeal Tribunal. The  jurisdiction of the IAT was not limited to points of  law. By the Nationality, Immigration and Asylum Act 2002, appeals from an  adjudicator to the IAT were restricted to appeals on points of law (section  101(1)) and conventional judicial review of a refusal of leave to appeal to  the IAT was replaced by statutory review of the leave decision (section  101(2)). The words "fairly, quickly and efficiently" formed the crux of the  debate which were derived from under section 106(1A) of the 2002 Act. The  court, while finding fault with the impugned amendment, observed:    "I have come to the conclusion that Rule 62(7) is  fundamentally flawed.  The significance of  Robinson is in its demonstration of the role of the  courts and the Tribunal in ensuring that the United  Kingdom does not fall foul of the Refugee  Convention, even where an obvious point of  Convention law has been missed by the  practitioners.  It surely applies on the same basis to  the ECHR, where the argument is even stronger  because, by section 6 of the Human Rights Act  1998, it is unlawful for a public authority to act in  a way which is incompatible with an ECHR right  and courts and the Tribunal are "public authorities"  for this purpose: section 6(3)(a).  There is then a  further logical stage in the argument.  If it is  incumbent upon the AIT to consider and decide  Robinson obvious points which have not been

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advanced by the appellant notwithstanding Rule  62(7), given the rationale of  Robinson there is  no rational basis for excluding and deciding points  of equal force which the appellant draws to the  attention of the Tribunal, even though they were  not embraced in the grounds of appeal sanctioned  by the IAT.  For these reasons, I consider that,  when he promulgated Rule 62(7), the Lord  Chancellor fell into legal error and the Rule cannot  survive the Wednesbury challenge."

47.     We, therefore, for the aforementioned reasonshave no other option but  to hold that the provisions for review conferred in terms of the statute for all  intent and purport are illusory ones and do not satisfy the test of Article 14  of the Constitution of India.  No statute which takes away sombody’s right  and/ or imposes duties, can be upheld where for all intent and purport, there  does not exist any provision for effective hearing. 48.     It is one of those statutes where a decision is rendered by a body  which may have an institutional bias although same is not ordinarily  contemplated in the case of an individual member being a part of a body.    49.    In Dr. Bonham’s case [8 Co Rep 113 at 118], Coke, CJ declared a  statute ultra vires where a body empowered to impose a levy was itself to be  benefited thereby.  The said decision was rendered despite the doctrine of  parliamentary sovereignty existing in the United Kingdom. 50.     We may notice that even this Court in Mithu v. State of Punjab  [(1983) 2 SCC 277] has applied the test of non-arbitrariness while striking  down Section 303 of the Indian Penal Code.  Although the Court may not go  into the question of a hardship which may be occasioned to the taxpayers but  where a fair procedure has not been laid down, in our opinion, the validity  thereof cannot be upheld.  [See Smith v. Kvaerner Cementation Foundations  Ltd (Bar Council intervening), (2006) 3 All ER 593] 51.     For the reasons aforementioned, the judgment of the Division Bench  of the High Court is set aside and that of the learned Single Judge is  restored.  The impugned Act is declared unconstitutional being violative of  Article 14 of the Constitution.  These appeals are allowed.  No costs.