18 December 1964
Supreme Court


Case number: Appeal (civil) 974 of 1964






DATE OF JUDGMENT: 18/12/1964


CITATION:  1965 AIR 1321            1965 SCR  (2) 653  CITATOR INFO :  R          1973 SC1041  (13)  RF         1992 SC2279  (34)

ACT: 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.

HEADNOTE: 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]

JUDGMENT: 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



Collector’s Order. 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 final. 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 Act.               (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  SubCommittee 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  assessees. 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 assessed;               (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 costs.                                     Appeal dismissed. 660