http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: SILIGURI MUNICIPALITY & OTHERS

       Vs.

RESPONDENT: AMALENDU DAS & OTHERS

DATE OF JUDGMENT06/01/1984

BENCH: SEN, A.P. (J) BENCH: SEN, A.P. (J) THAKKAR, M.P. (J)

CITATION:  1984 AIR  653            1984 SCR  (2) 344  1984 SCC  (2) 436        1984 SCALE  (1)278  CITATOR INFO :  F          1985 SC 330  (1,2,6)  F          1985 SC1289  (2)  R          1986 SC 614  (5,6)

ACT:      Constitution of India 1950, Articles 136 & 226      High Court-Proceedings  under Article  226-Validity  of tax or  levy questioned-Stay  of recovery  of  tax  or  levy claimed-Factors to  be considered by High Court before grant of interim stay.      Supreme Court-Interference  with interlocutory order of High Court granting stay of recovery of tax-When arises.

HEADNOTE:      The appellant  Municipality in  its Appeal  by  Special Leave impugned  the interlocutory  order of  the High  Court restraining the  Municipality from  recovering  a  graduated consolidated rate  on the  annual value  of the  holdings in terms of  the amended  provisions in sections 123 and 124 of the Bengal  Municipal Act,  1932 as  amended by  the  Bengal Municipal (Amendment) Act, 1980.      Allowing the Appeal, ^      HELD: 1. The High Court should not in proceedings under Article 226  of the  Constitution grant any stay of recovery of tax  save under very exceptional circumstances. The grant of stay  in such  matters, should  be an exception and not a rule. [345F]      2. The  levy or  impost does  not become  become bad as soon as a Writ Petition is instituted to assail the validity of the  levy. There  is no warrant for presuming the levy to be bad  at the  very threshold  of the proceedings. The main purpose of  passing an interim order is to evolve a workable formula of  a workable  arrangement to the extent called for by the  demands of  the situation. The only consideration at that juncture  is to  ensure that no prejudice is occasioned to the  rate payers  in case  they ultimately  succeed. This object can  be attained  by requiring  the authority levying the impost  to give  an undertaking  to refund or adjust the levied amount  against future  dues, in  the  event  of  the entire levy  or a  part thereof  being ultimately held to be invalid by the Court. [345 G-H; 346 A]

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

    3. The  main purpose  of passing an interim order is to evolve a  workable formula  or a workable arrangement to the extent called for by the demands of the situation keeping in mind the  presumption regarding the constitutionality of the legislation and  the vulnerability of the challenge, only is order that  no irreparable  injury is  occasioned. The Court has therefore to strike a delicate balance after considering the pros  and cons of the matter lest larger public interest is  not   jeopardized  and  institutional  embarrassment  is eschewed. [346H; 347A] 345      4. The  Court has to show awareness of the fact that in the case  of the  fact that in the case of a Municipality it cannot function  or meet  its financial  obligations if  its source of revenue is blocked by an interim order restraining it from  recovering the taxes as per the impugned provision. The Municipality  has to  maintain essential civic services, run public  institutions,  purchase  supplies  and  pay  the salaries of its employees etc. The grant of an interlocutory order would  paralyze the  administration and  dislocate the entire working.  These serious ramifications were lost sight of by  the High  Court in  the instant case while making the impugned order. [346 C-D]

JUDGMENT:      CIVIL APPELLANT  JURISDICTION: Civil  Appeal No. 762 of 1984.      Appeal by  special leave  for  an  interlocutory  order dated August 25, 1983 of the Calcutta High Court.      K.K. Venugopal,  N.N. Gooptu  and  H.K.  Puri  for  the Appellants.      S.L. Aneja for the Respondent.      The Order of the Court was delivered by      SEN, J.  This  appeal  by  special  leave  is  directed against an  interlocutory order dated August 25, 1983 passed by  the   Calcutta  High   Court  restraining  the  Siliguri Municipality,  the   appellant  herein,  from  recovering  a graduated consolidated  rate on  the  annual  value  of  the holdings in  terms of  the amended provisions in ss. 123 and 124 of  the Bengal  Municipal Act,  1932, as  amended by the Bengal Municipal (Amendment) Act, 1980.      We are  constrained  to  make  the  observations  which follows as  we do  feel dismayed at the tendency on the part of some  of the High Court to grant interlocutory orders for the mere  asking. Normally, the High Courts should not, as a rule, in  proceedings under  Art. 226  of  the  Constitution grant  any   stay  of   recovery  of  tax  save  under  very exceptional  circumstances.   The  grant  of  stay  in  such matters, should be an exception and not a rule.      It is needless to stress that a levy or impost does not become bad as soon as a writ petition is instituted in order to assail  the validity  of the  levy. So  also there  is no warrant for  presuming the  levy  to  be  bad  at  the  very threshold of the proceedings. The only consideration at that juncture is to ensure that no prejudice is occasioned to the rate  payers   in  case   they  ultimately  succeed  at  the conclusion of  the proceedings.  This object can be attained by requiring  the body  or authority  levying the  impost to give an undertaking to refund or 346 adjust against  future dues,  the levy  of tax  or rate or a part thereof, as the case may be, in the event of the entire levy or  a part  thereof being ultimately held to be invalid

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

by the  Court without obliging the tax-payers to institute a civil suit  in order  to claim  the amount already recovered from them.  On the other hand, the Court cannot be unmindful of the  need to  protect the authority levying the tax, for, at that  stage the  Court has  to proceed  on the hypothesis that the  challenge may or may not succeed. The Court has to show awareness of the fact that in a case like the present a municipality  cannot   function  or   meet   its   financial obligations if  its source  of  revenue  is  blocked  by  an interim order  restraining the  municipality from recovering the taxes  as per  the  impugned  provision.  And  that  the municipality has  to maintain  essential civic services like water supply, street lighting and public streets etc., apart from running public institutions like schools, dispensaries, libraries etc.  What is  more, supplies have to he purchased and salaries  have to be paid. The grant of an interlocutory order of  this nature  would paralyze the administration and dislocate the  entire working  of the municipality. It seems that these  serious ramifications  of the  matter were  lost sight of while making the impugned order.      We will be failing in our duty if we do not advert to a feature which  causes us  dismay and distress. On a previous occasion, a  Division Bench  had vacated  an  interim  order passed by  a learned  Single Judge  on similar  facts  in  a similar situation. Even so when a similar matter giving rise to the  present appeal came up again, the same learned Judge whose order had been reversed earlier, granted a nonspeaking interlocutory order  of the aforesaid nature. This order was in turn  confirmed by  a Division  Bench without  a speaking order articulating  reasons for  granting a  stay  when  the earlier Bench had vacated the stay. We mean no disrespect to the High Court in emphasizing the necessity for sell-imposed discipline in  such matters  in obeisance  to  such  weighty institutional  considerations  like  the  need  to  maintain decorum and  comity. So  also we  mean no  disrespect to the High Court  in stressing the need for self-discipline on the part of  the High  Court in  passing interim  orders without entering into  the question  of amplitude  and width  of the powers of  the High  Court to grant interim relief. The main purpose of  passing an interim order is to evolve a workable formula or  a workable  arrangement to the extent called for by  the  demands  of  the  situation  keeping  in  mind  the presumption   regarding   the   constitutionality   of   the legislation and  the vulnerability of the challenge, only in order that  no irreparable  injury in  occasioned. The Court has therefore to strike a delicate 347 balance after  considering the  pros and  cons of the matter last  larger   public  interest   is  not   jeopardized  and institutional embarrassment is eschewed.      For these  reasons, the  appeal must  be  allowed.  The order passed  by  the  High  Court  dated  August  25,  1983 restraining the  Siliguri  Municipality  from  recovering  a graduated consolidated  rate on  the  annual  value  of  the holdings in terms of the amended provisions contained in ss. 123 and 124 of the Bengal Municipal (Amendment) Act, 1980 is set aside.  We wish  to place  on record that Shri Venugopal appearing  with  Shri  Naro  Narayan  Gooptu  has  given  an undertaking on  behalf of the Siliguri Municipality that the municipality shall refund the difference between the revised and the  old rates  within three  months of the order of the High Court  in case  the writ petition is finally allowed by the High Court.      There shall be no order as to costs. N.V.K.                                       Appeal allowed.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

348