Full Judgment Text
fa1071.13
-1-
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
FIRST APPEAL NO. 1071 OF 2013
WITH
CIVIL APPICATION NO. 14046 OF 2013
WITH
CIVIL APPLICATION NO. 5275 OF 2013
WITH
CIVIL APPLICATION NO. 12 OF 2014
Gramaudyogik Shikshan Mandal,
Aurangabad (a registered Charitable Trust)
having its head Office at
M.I.T. Campus, Satara Parisar,
Aurangabad,
through its General Secretary
Shri Munish Rattanlal Sharma,
Age 40 years, Occ. Service,
R/o. Aurangabad ...Appellant
versus
The Municipal Corporation
Aurangabad
Through its Commissioner ...Respondent
.....
Mr. J.R. Shah, advocate for the appellant
Mr. U.K. Patil, advocate for respondent
.....
CORAM : K.U. CHANDIWAL, J.
Date of Reserving
th
the Judgment : 7 January, 2014
Date of pronouncing
th
the Judgment : 26 February, 2014
JUDGMENT :-
1. Admit.
::: Downloaded on - 02/06/2024 02:48:31 :::
fa1071.13
-2-
2. Record and proceeding received. Heard finally.
3. The appellant (Original plaintiff) feels aggrieved by the judgment
and decree passed by the learned C.J.S.D. (Corporation Court)
Aurangabad in Special Civil Suit No. 19 of 2010, dismissing the
appellant’s suit.
RELEVANT FACTS
4. (a) The appellant is educational charitable trust, imparting
technical education and training situate in land survey No. 72 of
village Satara, Tq. and District Aurangabad. A suit for
declaration and perpetual injunction and for recovery of Rs.
5,79,270/- was filed against the Municipal Corporation,
Aurangabad. The suit was restricted to levy of property tax
concerning library building meant for educational purpose. The
plaintiff canvased, the property does not come within limits of
Aurangabad Municipal Corporation, and without having authority
it claimed Rs.21,92,937/- as an amount of tax on library building.
An amount of Rs.5,79,270/- has been paid by the appellant
under duress and urged for a decree that the bill demand dated
19.9.2008 was illegal.
(b) In the suit, respondent Corporation appeared by filing
::: Downloaded on - 02/06/2024 02:48:31 :::
fa1071.13
-3-
written statement and justified its claim. Learned C.J.S.D.
framed issues. Parties adduced evidence and on 22.3.2013, the
suit was dismissed. Hence this appeal.
5. The short point in the present appeal is whether the respondent
Municipal Corporation is justified in claiming tax on building erected in
land Gat No. 72 of village Satara, which is outside the limits of
Aurangabad Municipal Corporation.
6. The appellant has relied upon the judgment of Division Bench of
this court in writ petition No. 1234 of 2010 - Vyankatesh Yadavrao
Shinde vs. State of Maharashtra – 2010 (4) Mh.L.J. 338. Mr. Shah,
learned counsel for the appellant says, the finding of the Division
Bench in writ petition No. 1234 of 2010 has answered the core issue,
subject in the suit and appeal. He reiterates, since Gat No.72 is not
forming part of Municipal Corporation area, there was no justification
on the part of Municipal Corporation (respondent) to levy tax.
According to him, any application seeking municipal permission for
construction of building or paying tax in past has not estopped the
appellant from challenging authority of Corporation to levy tax. There
is no estoppal against the statute as indicated in 1995 (5) SCC 440-
Bhagwat Bhagwantrao vs. State of Punjab and others. At the most,
the Corporation can impose development charges under Section 124
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-4-
of Municipal Corporation Act. The development charges and property
charges are different.
7. Mr. Patil, appearing for the Corporation says that urban
development department has sanctioned development plan of
Aurangabad city, which includes land Gat No.72. The appellant has
got construction permission sanctioned from Municipal Corporation.
The land Gat No. 72 is in Corporation since inception. Taxes are levied
for providing services. Government of Maharashtra has by its letter
dated 17.4.2010 informed the Municipal Corporation its intention to
include land survey Nos. 28 to 44 and 46 of 75 within limits of
Aurangabad Municipal Corporation, in pursuance to observations in
writ petition No. 1234 of 2010 and consequently has asked the
Municipal Corporation to send proposal for getting necessary sanction
and hence a meeting dated 4.9.2010 was conveyed. The resolution
dated 4.9.2010 recorded by the Municipal Corporation to include Gat
no. 28 to 44 and Gat No. 46 to 75 in Municipal Corporation area is not
given effect to, as subject No.68 dealing with this aspect has been
kept abeyance by the Municipal Corporation, Aurangabad.
8. The learned C.J.S.D. based on the pleadings of the parties
formulated following issues and accordingly recorded findings.
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-5-
ISSUES FINDINGS
1. Whether the plaintiff proved that
survey No.72 is situated outside the
limits of Aurangabad Municipal
Corporation? ...No
2. Whether the plaintiff proves that the
demand bill dated 19.9.2008 bearing
No. 37589 issued by the defendant
Municipal Corporation is null and void? ...No
2A. Whether plaintiff proves that suit property
is exempted from payment of property
tax as alleged? ...No
3. Whether the plaintiff proves that the
defendant Municipal Corporation illegally
recovered Rs.5,79,270/- from them as
alleged ...No
4. Whether the plaintiff is entitled to relief
of declaration as prayed? ...No
5. Whether the plaintiff is entitled to relief
of perpetual injunction as prayed? ...No
6. Whether the plaintiff is entitled to recover
Rs.579,270/- from the defendant
Corporation as prayed? ...No
7. What order or decree? Suit is dismissed
with costs.
9. The controversy involves and rests to legal steps expected by
authorities whether, taken or not. Hence, factual scenario need not be
dwelt upon.
10. Section 3 of Municipal Corporation Act (formerly Bombay
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-6-
Provincial Municipal Corporation Act 1949) provides for specification of
larger urban area and constitution of Corporation. Section 3 of the
said Act reads as under:-
3. Specification of larger urban areas and constitution of
Corporation.
(1) The Corporation for every City constituted under this Act
existing on the date of coming into force of the
Maharashtra Municipal Corporations and Municipal
Councils (Amendment) Act, 1994, specified as a larger
urban area in the notification issued in respect thereof
under clause (2) of Article 243-Q of the Constitution of
India, shall be deemed to be duly constituted Municipal
Corporation for the larger urban area so specified forming
a City, known by the name “The Municipal Corporation of
the City of .......”
(2) Save as provided in sub-section (1), the State
Government may, having regard to the factors mentioned
in clause (2) of Article 243-Q of the Constitution of India,
specify by notification in the Official Gazette, and urban
area with a population of not less than three lakhs as a
larger urban area.
(2A) Every larger urban area so specified by the State
Government under sub-section (2) shall form a city and
there shall be a Municipal Corporation for such larger
urban area known by the name of the Municipal
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-7-
Corporation of the city of .....’
(3) (a) subject to the provisions of sub-section (2), the State
Government may also from time to time after consultation
with the Corporation by notification in the Official Gazette,
alter the limits specified for any larger urban area under
sub-section (1) or sub-section (2) so as to include therein,
or to exclude therefrom, such area as is specified in the
notification.
(b) Where any area is included within the limits of the
larger urban area under clause (a) any appointment,
notifications, notices, taxes, orders, schemes, licences,
permissions, rules, by-laws or forms made, issued,
imposed or granted under this Act or any other law, which
are for the time being in force in the larger urban area,
shall, notwithstanding anything contained in any other law
for the time being in force but save as otherwise provided
in section 129A or any other provision of this Act, apply to
and be in force in the additional area also from the date
that area is included in the larger urban area.
(4) The power to issue a notification under this section shall
be subject to the condition of previous publication. ”
11. It is explicit that limits of larger urban area are required to be
notified and published in official gazette in tune with Article 243Q and
particularly clause 2 of the Constitution of India. Article 243Q deals
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-8-
with constitution of Municipalities which reads as under:-
“ 243Q. Constitution of Municipalities.-
(1) There shall be constituted in every State,-
(a) a Nagar Panchayat (by whatever name called) for a
transitional area, that is to say, an area in transition from a
rural area to an urban area;
(b) a Municipal Council for a smaller urban area; and
(c) a Municipal Corporation for a larger urban area, in
accordance with the provisions of this Part:
Provided that a Municipality under this clause may not be
constituted in such urban area or part thereof as the Governor may,
having regard to the size of the area and the municipal services
being provided or proposed to be provided by an industrial
establishment in that area and such other factors as he may deem
fit, by public notification, specify to be an industrial township.
(2) In this article, "a transitional area", "a smaller urban area" or
"a larger urban area" means such area as the Governor may, having
regard to the population of the area, the density of the population
therein, the revenue generated for local administration, the
percentage of employment in non-agricultural activities, the
economic importance or such other factors as he may deem fit,
specify by public notification for the purposes of this Part. “
12. There is no controversy as such village Satara, particularly land
survey No.72 was forming part of village Satara. The inclusion of land
in development plan of Aurangabad Municipal Corporation dated
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-9-
15.10.1991 is sought to be put in force by Municipal Corporation.
However, the legal position cannot be squeezed, as inclusion of
development of area under development plan and in larger area of
Municipal Corporation have different criteria. They travel in different
legal concepts. Section 3 referred to above, will have to be followed
scrupulously which from available record is not yet followed. It is not
that Corporation or the state is powerless to do so. However, no steps
are taken as yet by the Municipal Corporation though as referred
earlier, Government of Maharashtra has by virtue of direction in writ
petition indicated on 17.4.2010 to incorporate survey Nos. 28 to 44
and 46 to 75 within limits of Aurangabad Municipal Corporation, of
course, by observance of Law. In that exercise, State desired,
Municipal Corporation to send resolution and thereby to ensure inviting
objections for such purpose. Corporation has kept resolution No. 68
dated 4.9.2010 in abeyance. Even if such resolution is passed, no
objections are invited as yet. Thus, it is viewed that as of today, there
is no government notification to include the above referred lands within
limits of Aurangabad Municipal Corporation.
13. The Division Bench has also discussed that even if Aurangabad
Municipal Corporation has treated area covered in survey Nos. 28 to
44 and 46 to 75 for village Satara to be part of Municipal Corporation
limits, however, placing reliance on development plan, cannot be a
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-10-
answer to address the controversy. Division Bench has observed in
para 4 “Whether particular area is part of Corporation limits or
otherwise, can be answered only on the basis of the Notification
issued by the State Government in that behalf. It is admitted position
that there is no notification available either with the Corporation or with
the State Government which would suggest that Gat Nos. 28 to 44 and
46 to 75 of village Satara were part of then Municipal Council,
Aurangabad or for that matter Municipal Corporation, Aurangabad.
The limits of then Municipal Council, Aurangabad are to be deemed to
be included in the limits of Aurangabad Municipal Corporation being
part of Schedule-I of the Notification. It is not in dispute that Satara
village and more particularly Gat Nos. 28 to 44 and 46 to 75 situate at
village Satara are not mentioned in Schedule-II of the said notification.”
14. Division Bench has indicated that the powers of the Government
for issuing notification are not taken away. The State Government has
to take appropriate measures to issue notification to address the
anomaly. It is curious, inspite of directions of Division Bench, for last
3-4 years, no steps are taken by the Authorities.
15. Mr. Patil, learned counsel for the Corporation is unable to point
out government notification in terms of section 3 of Maharashtra
Municipal Corporation Act. On the contrary, the very purport of
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-11-
Resolution by subject No.68 dated 24.9.2010 suggest there is no
notification to that effect from the Government of Maharashtra.
16. For inclusion of any village from village limits in Corporation, is
again to be answered in tune with Section 4(2) of Bombay Village
Panchayat Act 1958. Section 4 deals with declaration of village
conceived as under:-
4. Declaration of Village :- (1) l[Every village specified in
the notification issued under clause (g) of article 243 of the
Constitution of India shall be known by the name of that village
specified in that notification.]
Provided that, where a group of revenue village or hamlets
or other such administrative unit or part thereof is [specified in
that notification] to be a village, the village shall be known by the
name of the revenue Village, hamlet or as the case may be,
administrative unit or part thereof, having the largest population.
(2) Where the circumstances so require to include or exclude
any local area from the local area. of a village or to alter the
limits of a village or that a local area shall cease to be a village,
then the notification issued in the like manner after consultation
with the Standing Committee and the Panchayat concerned,' at
any time, may provide to-
(a) include within, or exclude "from any village, any local area
or otherwise alter the limits of any village, or
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-12-
(b) declare that any local area shall cease to be a village;
and thereupon the local area shall be so included or
excluded, or the limits of the village so altered, or, as the
case may be, the local area shall cease to be a village: ”
Whereas circumstances required to include or exclude any local
area from local area of village or to alter limits of village or that local
area shall ceased to be a village then notification has to be issued in
the like manner after consultation with standing committee and the
Gram Sabha of the Panchayat concerned at any time, it may provide
(a) include within, or exclude "from any village, any local area or
otherwise alter the limits of any village, or (b) declare that any local
area shall cease to be a village and thereupon the local area shall be
so included or excluded, or the limits of the village so altered, or, as
the case may be, the local area shall cease to be a village. No such
procedure seems to be adhered, at least no document is flashed, to
tune with above compliance.
17. The effect of section 4 of Bombay Village Panchayat Act also
cannot be taken away relating to a legal rights flowing in favour of tax
payer i.e. the appellant.
18. Thus, the source of power of Municipal Corporation will
necessarily flow by virtue of Section 3(b) of the above referred
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-13-
Corporation Act. Compliance of Section 4 of Bombay Village
Panchayat Act also has to be established by Respondents. Until the
area is notified as such, the Corporation shall not get right or authority
to impose tax. It is more than clear Government’s powers are not
eclipsed, however, there should be a procedure to be followed under
the statute. This is more so, the amended provisions of Article 243G
th rd
having come in force from 1.6.1993 (74 amendment) alongwith 73
amendment, warrants such compliance.
19. Article 243G of the Constitution of India contemplates as under:-
“243G. Powers, authority and responsibilities of
Panchayats”.-
Subject to the provisions of this Constitution, the Legislature of a
State may, by law, endow the Panchayats with such powers and
authority as may be necessary to enable them to function as
institutions of self-government and such law may contain provisions
for the devolution of powers and responsibilities upon Panchayats at
the appropriate level, subject to such conditions as may be specified
therein, with respect to-
(a) the preparation of plans for economic development and social
justice;
(b) the implementation of schemes for economic development and
social justice as may be entrusted to them including those in relation
to the matters listed in the Eleventh Schedule.”
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-14-
20. Constitution of India mandate that no tax shall be levied or
collected except by authority of law. Hon’ble Supreme Court has
observed “tax is undoubtedly in the nature of compulsory extraction of
money by public authority for public purpose the payment which is
acceptance by law. AIR 1954 SC 388- Ratilal Gandhi vs. State of
Bombay .
21. The Maharashtra Regional Town Planning Act 1966 deals with
provisions or planning of development and use of land to make better
provision for preparation of development plan, particularly to provide
for creation of new towns. The M.R.T.P. Act does not provide
conferring power on development authority to enable to levy taxes.
Sanction of legislature to create development authority was with a view
to establish new town and have authorized such development
authority to acquire whole transferred land situate within area of
jurisdiction of new town or site to be established.
22. The powers conferred upon the development authority are under
Section 160 of M.R.T.P. Act, which is reproduced as under:-
“160. Dissolution of Regional Planning Board, Special Planning
Authority and New Town Development Authority: -
(1) Where the State Government is satisfied that the purposes
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-15-
for which any Regional Board, Special Planning Authority or
Development Authority was established under this Act have been
substantially achieved so as to render the continued existence of the
Board or Authority in the opinion of the State Government
unnecessary [or where the State Government is of opinion that the
work of acquiring, developing and disposing of land in the area of
any new town should be entrusted to any corporation, company or
subsidiary company referred to in sub-section (3A) of section 113;]
the State Government may, by notification in the Official Gazette,
declare that the Regional Board, Special Planning Authority or
Development Authority [constituted under sub-section (2) of section
113] shall be dissolved with effect from such date as may be
specified in the notification [or that the Development Authority
declared under sub-section (3A) of section 113 shall cease to
function in relation to such area of the new town from such date as
may be specified in the notification]; and such Board or Authority
shall be deemed to be dissolved accordingly [or as the case may be,
shall be deemed to cease to function in relation to such area of such
new town].
(2) From the said date-
(a) all properties, funds and dues which are vested in,
or realizable by the Regional Board, Special Planning
Authority or Development Authority [for the purposes of the
Act] shall vest in, or be realizable, by the State Government;
(b) all liabilities which are enforceable against the
Regional Board, Special Planning Authority or Development
Authority shall be enforceable against the State Government;
and
(c) for the purpose of carrying out any development
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-16-
which has not been fully carried out by the Board or
Authority and for the purpose of realizing properties, funds
and dues referred to in clause (a), the functions of the
Regional Board, Special Planning Authority, or Development
Authority shall be discharged by the State Government.
[(3) Where a Development Authority constituted under sub-
section (2) of section 113 for the area of any new town in dissolved,
and a corporation or company in relation to that area is declared to
be New Town Development Authority for that area under sub-section
(3A) of section 113, then the provisions of sub-section (2) of this
section shall consequent upon such dissolution apply with this
modification that as if for the words "State Government" wherever,
they occur, the words, brackets, figures and letter "Development
Authority declared under sub-section (3A) section 113" were
substituted.]
Section 114(3) of M.R.T.P. Act reads as under:-
“114. (3) For the avoidance of doubt, it is hereby declared that the
provision of sub section (1) with respect to the powers of
Development Authorities relate only to their capacity as statutory
corporation; and nothing in this section shall be construed as
authorizing the disregard by a Development Authority of any
enactment or rule of law. ”
23. It is indeed more than clear that the development authority has
not been conferred with right to levy tax and make recovery thereof.
The development authority at the most can recover development
charges in terms of Section 124 of M.R.T.P. Act, which is indeed not
inconsistent with the levy structure of taxes.
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-17-
24. The appellant applying for mandatory permission to Municipal
Corporation or making some payment in past will not operate as
estoppel to question legality of demand notice. There was no
conferment of power upon Municipal Corporation for inclusion of these
survey numbers within limits of Municipal Corporation, even if it was
shown in the development plan. The development plan is naturally
prospective and for future achievements. The Corporation cannot be
expected to act arbitrary and in whims to pressurize citizen to bow to
its unethical demands and shrug off its legal obligation.
25. There is no controversy that Municipal Corporation is public
body and has to do various functions to public at large, including
maintain employees for discharge of various functions towards public.
Taxes are for providing services, however, that does not mean that
without following requisite procedure under law without inclusion of a
particular survey number within Corporation limit, the Corporation is
permitted to levy tax.
26. It was pointed out by the appellant that the Municipal
Corporation has not provided basic amenities in the village. There are
no roads, no sewage/drainage line, no water supply. Though this is
not the stage to deal with these submissions, still Corporation is
certainly under an obligation to provide basic amenities since it has
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-18-
recovered development charges. The Corporation has no licence to
plunder. There should not be institutional malaise in implementing
regulation and good governance. Corporation’s inability thus is
associated with inhibition of powers, for want of inclusion of properties
in its limit.
27. In the fact situation, the question formulated herein before will
have to be answered in favour of the appellant that land Gat No.72 of
village Satara is outside limits of Aurangabad Municipal Corporation.
28. The appeal is partly allowed. The demand notice dated
19.9.2008, bearing No. 37589, issued by Municipal Corporation is held
illegal. Appellant’s amount of Rs.5,79,270/- lying with Municipal
Corporation will be subject to accounts. No costs.
29. Civil application Nos. 5275 of 2013, 14046 of 2013 and 12 of
2014 disposed of.
*
::: Downloaded on - 02/06/2024 02:48:32 :::
-1-
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
FIRST APPEAL NO. 1071 OF 2013
WITH
CIVIL APPICATION NO. 14046 OF 2013
WITH
CIVIL APPLICATION NO. 5275 OF 2013
WITH
CIVIL APPLICATION NO. 12 OF 2014
Gramaudyogik Shikshan Mandal,
Aurangabad (a registered Charitable Trust)
having its head Office at
M.I.T. Campus, Satara Parisar,
Aurangabad,
through its General Secretary
Shri Munish Rattanlal Sharma,
Age 40 years, Occ. Service,
R/o. Aurangabad ...Appellant
versus
The Municipal Corporation
Aurangabad
Through its Commissioner ...Respondent
.....
Mr. J.R. Shah, advocate for the appellant
Mr. U.K. Patil, advocate for respondent
.....
CORAM : K.U. CHANDIWAL, J.
Date of Reserving
th
the Judgment : 7 January, 2014
Date of pronouncing
th
the Judgment : 26 February, 2014
JUDGMENT :-
1. Admit.
::: Downloaded on - 02/06/2024 02:48:31 :::
fa1071.13
-2-
2. Record and proceeding received. Heard finally.
3. The appellant (Original plaintiff) feels aggrieved by the judgment
and decree passed by the learned C.J.S.D. (Corporation Court)
Aurangabad in Special Civil Suit No. 19 of 2010, dismissing the
appellant’s suit.
RELEVANT FACTS
4. (a) The appellant is educational charitable trust, imparting
technical education and training situate in land survey No. 72 of
village Satara, Tq. and District Aurangabad. A suit for
declaration and perpetual injunction and for recovery of Rs.
5,79,270/- was filed against the Municipal Corporation,
Aurangabad. The suit was restricted to levy of property tax
concerning library building meant for educational purpose. The
plaintiff canvased, the property does not come within limits of
Aurangabad Municipal Corporation, and without having authority
it claimed Rs.21,92,937/- as an amount of tax on library building.
An amount of Rs.5,79,270/- has been paid by the appellant
under duress and urged for a decree that the bill demand dated
19.9.2008 was illegal.
(b) In the suit, respondent Corporation appeared by filing
::: Downloaded on - 02/06/2024 02:48:31 :::
fa1071.13
-3-
written statement and justified its claim. Learned C.J.S.D.
framed issues. Parties adduced evidence and on 22.3.2013, the
suit was dismissed. Hence this appeal.
5. The short point in the present appeal is whether the respondent
Municipal Corporation is justified in claiming tax on building erected in
land Gat No. 72 of village Satara, which is outside the limits of
Aurangabad Municipal Corporation.
6. The appellant has relied upon the judgment of Division Bench of
this court in writ petition No. 1234 of 2010 - Vyankatesh Yadavrao
Shinde vs. State of Maharashtra – 2010 (4) Mh.L.J. 338. Mr. Shah,
learned counsel for the appellant says, the finding of the Division
Bench in writ petition No. 1234 of 2010 has answered the core issue,
subject in the suit and appeal. He reiterates, since Gat No.72 is not
forming part of Municipal Corporation area, there was no justification
on the part of Municipal Corporation (respondent) to levy tax.
According to him, any application seeking municipal permission for
construction of building or paying tax in past has not estopped the
appellant from challenging authority of Corporation to levy tax. There
is no estoppal against the statute as indicated in 1995 (5) SCC 440-
Bhagwat Bhagwantrao vs. State of Punjab and others. At the most,
the Corporation can impose development charges under Section 124
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-4-
of Municipal Corporation Act. The development charges and property
charges are different.
7. Mr. Patil, appearing for the Corporation says that urban
development department has sanctioned development plan of
Aurangabad city, which includes land Gat No.72. The appellant has
got construction permission sanctioned from Municipal Corporation.
The land Gat No. 72 is in Corporation since inception. Taxes are levied
for providing services. Government of Maharashtra has by its letter
dated 17.4.2010 informed the Municipal Corporation its intention to
include land survey Nos. 28 to 44 and 46 of 75 within limits of
Aurangabad Municipal Corporation, in pursuance to observations in
writ petition No. 1234 of 2010 and consequently has asked the
Municipal Corporation to send proposal for getting necessary sanction
and hence a meeting dated 4.9.2010 was conveyed. The resolution
dated 4.9.2010 recorded by the Municipal Corporation to include Gat
no. 28 to 44 and Gat No. 46 to 75 in Municipal Corporation area is not
given effect to, as subject No.68 dealing with this aspect has been
kept abeyance by the Municipal Corporation, Aurangabad.
8. The learned C.J.S.D. based on the pleadings of the parties
formulated following issues and accordingly recorded findings.
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-5-
ISSUES FINDINGS
1. Whether the plaintiff proved that
survey No.72 is situated outside the
limits of Aurangabad Municipal
Corporation? ...No
2. Whether the plaintiff proves that the
demand bill dated 19.9.2008 bearing
No. 37589 issued by the defendant
Municipal Corporation is null and void? ...No
2A. Whether plaintiff proves that suit property
is exempted from payment of property
tax as alleged? ...No
3. Whether the plaintiff proves that the
defendant Municipal Corporation illegally
recovered Rs.5,79,270/- from them as
alleged ...No
4. Whether the plaintiff is entitled to relief
of declaration as prayed? ...No
5. Whether the plaintiff is entitled to relief
of perpetual injunction as prayed? ...No
6. Whether the plaintiff is entitled to recover
Rs.579,270/- from the defendant
Corporation as prayed? ...No
7. What order or decree? Suit is dismissed
with costs.
9. The controversy involves and rests to legal steps expected by
authorities whether, taken or not. Hence, factual scenario need not be
dwelt upon.
10. Section 3 of Municipal Corporation Act (formerly Bombay
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-6-
Provincial Municipal Corporation Act 1949) provides for specification of
larger urban area and constitution of Corporation. Section 3 of the
said Act reads as under:-
3. Specification of larger urban areas and constitution of
Corporation.
(1) The Corporation for every City constituted under this Act
existing on the date of coming into force of the
Maharashtra Municipal Corporations and Municipal
Councils (Amendment) Act, 1994, specified as a larger
urban area in the notification issued in respect thereof
under clause (2) of Article 243-Q of the Constitution of
India, shall be deemed to be duly constituted Municipal
Corporation for the larger urban area so specified forming
a City, known by the name “The Municipal Corporation of
the City of .......”
(2) Save as provided in sub-section (1), the State
Government may, having regard to the factors mentioned
in clause (2) of Article 243-Q of the Constitution of India,
specify by notification in the Official Gazette, and urban
area with a population of not less than three lakhs as a
larger urban area.
(2A) Every larger urban area so specified by the State
Government under sub-section (2) shall form a city and
there shall be a Municipal Corporation for such larger
urban area known by the name of the Municipal
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-7-
Corporation of the city of .....’
(3) (a) subject to the provisions of sub-section (2), the State
Government may also from time to time after consultation
with the Corporation by notification in the Official Gazette,
alter the limits specified for any larger urban area under
sub-section (1) or sub-section (2) so as to include therein,
or to exclude therefrom, such area as is specified in the
notification.
(b) Where any area is included within the limits of the
larger urban area under clause (a) any appointment,
notifications, notices, taxes, orders, schemes, licences,
permissions, rules, by-laws or forms made, issued,
imposed or granted under this Act or any other law, which
are for the time being in force in the larger urban area,
shall, notwithstanding anything contained in any other law
for the time being in force but save as otherwise provided
in section 129A or any other provision of this Act, apply to
and be in force in the additional area also from the date
that area is included in the larger urban area.
(4) The power to issue a notification under this section shall
be subject to the condition of previous publication. ”
11. It is explicit that limits of larger urban area are required to be
notified and published in official gazette in tune with Article 243Q and
particularly clause 2 of the Constitution of India. Article 243Q deals
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-8-
with constitution of Municipalities which reads as under:-
“ 243Q. Constitution of Municipalities.-
(1) There shall be constituted in every State,-
(a) a Nagar Panchayat (by whatever name called) for a
transitional area, that is to say, an area in transition from a
rural area to an urban area;
(b) a Municipal Council for a smaller urban area; and
(c) a Municipal Corporation for a larger urban area, in
accordance with the provisions of this Part:
Provided that a Municipality under this clause may not be
constituted in such urban area or part thereof as the Governor may,
having regard to the size of the area and the municipal services
being provided or proposed to be provided by an industrial
establishment in that area and such other factors as he may deem
fit, by public notification, specify to be an industrial township.
(2) In this article, "a transitional area", "a smaller urban area" or
"a larger urban area" means such area as the Governor may, having
regard to the population of the area, the density of the population
therein, the revenue generated for local administration, the
percentage of employment in non-agricultural activities, the
economic importance or such other factors as he may deem fit,
specify by public notification for the purposes of this Part. “
12. There is no controversy as such village Satara, particularly land
survey No.72 was forming part of village Satara. The inclusion of land
in development plan of Aurangabad Municipal Corporation dated
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-9-
15.10.1991 is sought to be put in force by Municipal Corporation.
However, the legal position cannot be squeezed, as inclusion of
development of area under development plan and in larger area of
Municipal Corporation have different criteria. They travel in different
legal concepts. Section 3 referred to above, will have to be followed
scrupulously which from available record is not yet followed. It is not
that Corporation or the state is powerless to do so. However, no steps
are taken as yet by the Municipal Corporation though as referred
earlier, Government of Maharashtra has by virtue of direction in writ
petition indicated on 17.4.2010 to incorporate survey Nos. 28 to 44
and 46 to 75 within limits of Aurangabad Municipal Corporation, of
course, by observance of Law. In that exercise, State desired,
Municipal Corporation to send resolution and thereby to ensure inviting
objections for such purpose. Corporation has kept resolution No. 68
dated 4.9.2010 in abeyance. Even if such resolution is passed, no
objections are invited as yet. Thus, it is viewed that as of today, there
is no government notification to include the above referred lands within
limits of Aurangabad Municipal Corporation.
13. The Division Bench has also discussed that even if Aurangabad
Municipal Corporation has treated area covered in survey Nos. 28 to
44 and 46 to 75 for village Satara to be part of Municipal Corporation
limits, however, placing reliance on development plan, cannot be a
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-10-
answer to address the controversy. Division Bench has observed in
para 4 “Whether particular area is part of Corporation limits or
otherwise, can be answered only on the basis of the Notification
issued by the State Government in that behalf. It is admitted position
that there is no notification available either with the Corporation or with
the State Government which would suggest that Gat Nos. 28 to 44 and
46 to 75 of village Satara were part of then Municipal Council,
Aurangabad or for that matter Municipal Corporation, Aurangabad.
The limits of then Municipal Council, Aurangabad are to be deemed to
be included in the limits of Aurangabad Municipal Corporation being
part of Schedule-I of the Notification. It is not in dispute that Satara
village and more particularly Gat Nos. 28 to 44 and 46 to 75 situate at
village Satara are not mentioned in Schedule-II of the said notification.”
14. Division Bench has indicated that the powers of the Government
for issuing notification are not taken away. The State Government has
to take appropriate measures to issue notification to address the
anomaly. It is curious, inspite of directions of Division Bench, for last
3-4 years, no steps are taken by the Authorities.
15. Mr. Patil, learned counsel for the Corporation is unable to point
out government notification in terms of section 3 of Maharashtra
Municipal Corporation Act. On the contrary, the very purport of
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-11-
Resolution by subject No.68 dated 24.9.2010 suggest there is no
notification to that effect from the Government of Maharashtra.
16. For inclusion of any village from village limits in Corporation, is
again to be answered in tune with Section 4(2) of Bombay Village
Panchayat Act 1958. Section 4 deals with declaration of village
conceived as under:-
4. Declaration of Village :- (1) l[Every village specified in
the notification issued under clause (g) of article 243 of the
Constitution of India shall be known by the name of that village
specified in that notification.]
Provided that, where a group of revenue village or hamlets
or other such administrative unit or part thereof is [specified in
that notification] to be a village, the village shall be known by the
name of the revenue Village, hamlet or as the case may be,
administrative unit or part thereof, having the largest population.
(2) Where the circumstances so require to include or exclude
any local area from the local area. of a village or to alter the
limits of a village or that a local area shall cease to be a village,
then the notification issued in the like manner after consultation
with the Standing Committee and the Panchayat concerned,' at
any time, may provide to-
(a) include within, or exclude "from any village, any local area
or otherwise alter the limits of any village, or
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-12-
(b) declare that any local area shall cease to be a village;
and thereupon the local area shall be so included or
excluded, or the limits of the village so altered, or, as the
case may be, the local area shall cease to be a village: ”
Whereas circumstances required to include or exclude any local
area from local area of village or to alter limits of village or that local
area shall ceased to be a village then notification has to be issued in
the like manner after consultation with standing committee and the
Gram Sabha of the Panchayat concerned at any time, it may provide
(a) include within, or exclude "from any village, any local area or
otherwise alter the limits of any village, or (b) declare that any local
area shall cease to be a village and thereupon the local area shall be
so included or excluded, or the limits of the village so altered, or, as
the case may be, the local area shall cease to be a village. No such
procedure seems to be adhered, at least no document is flashed, to
tune with above compliance.
17. The effect of section 4 of Bombay Village Panchayat Act also
cannot be taken away relating to a legal rights flowing in favour of tax
payer i.e. the appellant.
18. Thus, the source of power of Municipal Corporation will
necessarily flow by virtue of Section 3(b) of the above referred
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-13-
Corporation Act. Compliance of Section 4 of Bombay Village
Panchayat Act also has to be established by Respondents. Until the
area is notified as such, the Corporation shall not get right or authority
to impose tax. It is more than clear Government’s powers are not
eclipsed, however, there should be a procedure to be followed under
the statute. This is more so, the amended provisions of Article 243G
th rd
having come in force from 1.6.1993 (74 amendment) alongwith 73
amendment, warrants such compliance.
19. Article 243G of the Constitution of India contemplates as under:-
“243G. Powers, authority and responsibilities of
Panchayats”.-
Subject to the provisions of this Constitution, the Legislature of a
State may, by law, endow the Panchayats with such powers and
authority as may be necessary to enable them to function as
institutions of self-government and such law may contain provisions
for the devolution of powers and responsibilities upon Panchayats at
the appropriate level, subject to such conditions as may be specified
therein, with respect to-
(a) the preparation of plans for economic development and social
justice;
(b) the implementation of schemes for economic development and
social justice as may be entrusted to them including those in relation
to the matters listed in the Eleventh Schedule.”
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-14-
20. Constitution of India mandate that no tax shall be levied or
collected except by authority of law. Hon’ble Supreme Court has
observed “tax is undoubtedly in the nature of compulsory extraction of
money by public authority for public purpose the payment which is
acceptance by law. AIR 1954 SC 388- Ratilal Gandhi vs. State of
Bombay .
21. The Maharashtra Regional Town Planning Act 1966 deals with
provisions or planning of development and use of land to make better
provision for preparation of development plan, particularly to provide
for creation of new towns. The M.R.T.P. Act does not provide
conferring power on development authority to enable to levy taxes.
Sanction of legislature to create development authority was with a view
to establish new town and have authorized such development
authority to acquire whole transferred land situate within area of
jurisdiction of new town or site to be established.
22. The powers conferred upon the development authority are under
Section 160 of M.R.T.P. Act, which is reproduced as under:-
“160. Dissolution of Regional Planning Board, Special Planning
Authority and New Town Development Authority: -
(1) Where the State Government is satisfied that the purposes
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-15-
for which any Regional Board, Special Planning Authority or
Development Authority was established under this Act have been
substantially achieved so as to render the continued existence of the
Board or Authority in the opinion of the State Government
unnecessary [or where the State Government is of opinion that the
work of acquiring, developing and disposing of land in the area of
any new town should be entrusted to any corporation, company or
subsidiary company referred to in sub-section (3A) of section 113;]
the State Government may, by notification in the Official Gazette,
declare that the Regional Board, Special Planning Authority or
Development Authority [constituted under sub-section (2) of section
113] shall be dissolved with effect from such date as may be
specified in the notification [or that the Development Authority
declared under sub-section (3A) of section 113 shall cease to
function in relation to such area of the new town from such date as
may be specified in the notification]; and such Board or Authority
shall be deemed to be dissolved accordingly [or as the case may be,
shall be deemed to cease to function in relation to such area of such
new town].
(2) From the said date-
(a) all properties, funds and dues which are vested in,
or realizable by the Regional Board, Special Planning
Authority or Development Authority [for the purposes of the
Act] shall vest in, or be realizable, by the State Government;
(b) all liabilities which are enforceable against the
Regional Board, Special Planning Authority or Development
Authority shall be enforceable against the State Government;
and
(c) for the purpose of carrying out any development
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-16-
which has not been fully carried out by the Board or
Authority and for the purpose of realizing properties, funds
and dues referred to in clause (a), the functions of the
Regional Board, Special Planning Authority, or Development
Authority shall be discharged by the State Government.
[(3) Where a Development Authority constituted under sub-
section (2) of section 113 for the area of any new town in dissolved,
and a corporation or company in relation to that area is declared to
be New Town Development Authority for that area under sub-section
(3A) of section 113, then the provisions of sub-section (2) of this
section shall consequent upon such dissolution apply with this
modification that as if for the words "State Government" wherever,
they occur, the words, brackets, figures and letter "Development
Authority declared under sub-section (3A) section 113" were
substituted.]
Section 114(3) of M.R.T.P. Act reads as under:-
“114. (3) For the avoidance of doubt, it is hereby declared that the
provision of sub section (1) with respect to the powers of
Development Authorities relate only to their capacity as statutory
corporation; and nothing in this section shall be construed as
authorizing the disregard by a Development Authority of any
enactment or rule of law. ”
23. It is indeed more than clear that the development authority has
not been conferred with right to levy tax and make recovery thereof.
The development authority at the most can recover development
charges in terms of Section 124 of M.R.T.P. Act, which is indeed not
inconsistent with the levy structure of taxes.
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-17-
24. The appellant applying for mandatory permission to Municipal
Corporation or making some payment in past will not operate as
estoppel to question legality of demand notice. There was no
conferment of power upon Municipal Corporation for inclusion of these
survey numbers within limits of Municipal Corporation, even if it was
shown in the development plan. The development plan is naturally
prospective and for future achievements. The Corporation cannot be
expected to act arbitrary and in whims to pressurize citizen to bow to
its unethical demands and shrug off its legal obligation.
25. There is no controversy that Municipal Corporation is public
body and has to do various functions to public at large, including
maintain employees for discharge of various functions towards public.
Taxes are for providing services, however, that does not mean that
without following requisite procedure under law without inclusion of a
particular survey number within Corporation limit, the Corporation is
permitted to levy tax.
26. It was pointed out by the appellant that the Municipal
Corporation has not provided basic amenities in the village. There are
no roads, no sewage/drainage line, no water supply. Though this is
not the stage to deal with these submissions, still Corporation is
certainly under an obligation to provide basic amenities since it has
::: Downloaded on - 02/06/2024 02:48:32 :::
fa1071.13
-18-
recovered development charges. The Corporation has no licence to
plunder. There should not be institutional malaise in implementing
regulation and good governance. Corporation’s inability thus is
associated with inhibition of powers, for want of inclusion of properties
in its limit.
27. In the fact situation, the question formulated herein before will
have to be answered in favour of the appellant that land Gat No.72 of
village Satara is outside limits of Aurangabad Municipal Corporation.
28. The appeal is partly allowed. The demand notice dated
19.9.2008, bearing No. 37589, issued by Municipal Corporation is held
illegal. Appellant’s amount of Rs.5,79,270/- lying with Municipal
Corporation will be subject to accounts. No costs.
29. Civil application Nos. 5275 of 2013, 14046 of 2013 and 12 of
2014 disposed of.
*
::: Downloaded on - 02/06/2024 02:48:32 :::