Full Judgment Text
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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.