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Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • S.S Dhawan, J.
Acts
  • Secs. 131 to 135 of the U.P Municipalities Act
  • Secs. 131 to 135 of the Municipalities Act
  • Sec. 130-A of the U.P Municipalities Act
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Cites
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Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • S.S Dhawan, J.
Acts
  • Secs. 131 to 135 of the U.P Municipalities Act
  • Secs. 131 to 135 of the Municipalities Act
  • Sec. 130-A of the U.P Municipalities Act
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Smart Summary

Judgment Summary: Dhawan, J. — Petition under Article 226 challenging imposition of water tax (Chandausi)

Factual and Procedural Background

This is a petition under Article 226 of the Constitution challenging the legality of a water tax imposed by the Government of Uttar Pradesh on inhabitants of the Municipality of Chandausi after the Municipal Board allegedly failed to comply with Government directions under Section 130‑A of the U.P. Municipalities Act.

Facts, as set out in the supporting affidavit:

  • Three petitioners are inhabitants of the Municipal limits: the first and second petitioners claim ownership of several houses; the third is a member of a joint Hindu family owning houses within the Municipality.
  • The State Government issued a notification dated 29 January 1957 under Section 130‑A directing the Municipal Board to levy a water tax at the rate of 10% on annual value of buildings and land.
  • The Municipal Board considered it unnecessary to levy the tax and did not act on the direction.
  • Thereafter the State Government passed an order dated 21 October 1957 under sub‑section (3) of Section 130‑A imposing the tax with effect from 1 December 1957.
  • On 21 October 1957 the Government published draft rules under Section 300(1) inviting objections; on 21 November 1957 a further notification finalised the draft rules.
  • Pursuant to these notifications the Municipal Board (respondent no. 2) issued notices of demand to the petitioners calling on them to pay the tax. The petitioners challenged these demands in this Court.

Legal Issues Presented

  1. Whether the procedure prescribed by Sections 131 to 135 of the U.P. Municipalities Act must be followed even when the State Government imposes a tax under Section 130‑A(3) after the Municipal Board fails to carry out Government directions.
  2. Whether an order under Section 130‑A(3) of the Act, which is to "operate as if it had been a resolution duly passed by the Board," can itself dispense with the subsequent procedural safeguards (including the right of inhabitants to object) and thus directly impose a tax on inhabitants.
  3. Whether the State's method of imposing the tax without following Sections 131–135 contravenes Article 265 of the Constitution ("no tax shall be levied or collected except by authority of law") and whether short‑circuiting the statutory procedure could raise issues under Article 14 (equal protection) by discriminating between inhabitants of different Municipalities.

Arguments of the Parties

Petitioners' Arguments

  • The procedure mandated by Sections 131 to 135 was not followed before imposing the water tax; therefore the tax is illegal.
  • The tax imposed without following those procedures is contrary to Article 265 of the Constitution.

State and Municipal Board's Arguments (Respondents)

  • The State and the Municipal Board admitted that Sections 131 to 135 were not followed but contended those Sections do not apply where a Municipal Board fails to carry out the orders of the State Government; in such cases Section 130‑A(3) allows the Government to impose or modify the tax and treat its order as a Board resolution.
  • Counsel for the Board further pointed out that one petitioner had, at one time, voted in favour of the proposal to impose the tax and invited the Court to consider that conduct in exercising its discretionary power to grant mandamus.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court undertook a textual and purposive examination of Sections 128–135 of the U.P. Municipalities Act and relevant constitutional provisions (specifically Article 265 and Article 14, as discussed in the judgment). The principal steps in the reasoning were:

  1. Textual analysis of Section 130‑A:
    • Sub‑section (1) empowers the State Government to require a Board to impose a tax; sub‑section (2) empowers modification of an existing tax; sub‑section (3) provides that if the Board fails to carry out such an order, the State Government may pass an order imposing or modifying the tax and "thereupon the order of the State Government shall operate as if it had been a resolution duly passed by the Board."
    • The Court accepted that Section 130‑A(3) gives the Government the power to fill the gap caused by the Board's failure by passing an order which is to be treated as equivalent to a Board resolution.
  2. Distinction between the Government's order as an equivalent "first step" and the subsequent statutory procedure:
    • The Court held that the Government's order cannot, by itself, have the immediate legal effect of imposing the tax on inhabitants. Instead, the order is equivalent to the initial resolution that the Board would have had to pass; it does not dispense with the remainder of the statutory process laid down in Sections 131–135.
    • The Court analysed Sections 131–135 step‑by‑step: (a) Section 131 requires the Board to pass a special resolution specifying tax details and prepare draft rules; (b) Section 132 gives inhabitants the right to submit objections and requires the Board to consider and possibly modify proposals in light of objections; (c) the modified proposals, together with objections, are to be considered by the State Government or prescribed authority under Section 133, which may reject, modify, return, or sanction proposals; (d) on sanction, Section 134 requires the Board to pass a special resolution directing imposition of the tax from a specified date; (e) Section 135 requires the Board to submit the resolution to the State Government/prescribed authority, which must notify imposition in the Gazette — only after this final step can the tax be lawfully levied.
  3. Protection of inhabitants' statutory rights and constitutional concerns:
    • The Court emphasised that the statutory procedure guarantees the inhabitants a concrete right to object (Section 132) and that there is nothing in Section 130‑A indicating the Government may deprive inhabitants of that right when imposing a tax under Section 130‑A(3).
    • The Court rejected the respondents' contention that Sections 131–135 do not apply in Government‑imposed cases, reasoning that to allow the Government to bypass the objection process would penalise inhabitants for the Board's non‑compliance and might amount to unconstitutional discrimination in breach of Article 14.
    • The Court found no reasonable nexus between the punitive effect of depriving inhabitants of objection rights and the object of Section 130‑A (which is to prevent Municipal Boards from defying Government directions).
  4. Discretion and conduct of a petitioner who had voted in favour:
    • The Court acknowledged the Board's submission that one petitioner had earlier voted for the tax and that relief by mandamus is discretionary. However, the Court concluded that even if one petitioner's conduct were relevant, it could not validate a tax not levied according to the statutory procedure and required by Article 265 to be levied "by authority of law." The Court emphasized protection of many inhabitants who may be innocent of any Board members' conduct and who were deprived of their right to object.
  5. Conclusion of legal analysis:
    • The procedure adopted by the Government (effectively attempting to short‑circuit Sections 131–135) was not sanctioned by law and infringed the rule of law; the Government's decision could not be permitted to stand without the statutory safeguards being observed.

Holding and Implications

Holding: Petition allowed; a writ of mandamus is issued commanding the respondents not to demand any water tax from the petitioners on the basis of the notification dated 21 October 1957.

Direct consequences and practical implications stated by the Court (as drawn from the opinion):

  • The specific demands for water tax based on the notification dated 21 October 1957 are set aside in respect of the petitioners; the respondents are commanded not to demand the tax from these petitioners on that basis.
  • The Court made clear that it remained open to the Government to "start from the stage of Sub‑Sec. 3 of Sec. 130‑A treating its own order as if it had been a resolution duly passed by the Board," but in doing so the remaining statutory procedure (including the steps and inhabitants' rights under Sections 131–135) must be followed before a tax can be lawfully levied.
  • All parties were directed to bear their own costs.

The opinion does not purport to create or state any broader binding precedent beyond this interpretation; the Court confined itself to declaring that the impugned procedure was not lawful in the circumstances of this petition and to protecting the statutory rights of the inhabitants.

Source: judgment of Dhawan, J., as provided. All content in this summary is drawn exclusively from the provided opinion and does not add or infer facts beyond that text.

Show full summary ...

    Om Prakash Sharma v. State Of Uttar Pradesh

    Dhawan, J.:— This is a petition under Art. 226 of the Constitution impugning the legality of a water tax imposed by the Government of the State of Uttar Pradesh on the Municipal inhabitants of Chandausi after the Municipal Board of Chandausi had failed to carry out the instructions of the Government issued under Sec. 130-A of the U.P Municipalities Act to impose the aforesaid tax. The facts as alleged in the affidavit supporting the petition are these. The three petitioners are residents within the limits of the Municipal Board. The first and the second petitioners claim to be the owners of several houses within the Municipality and the third is a member of the joint Hindu Family owing houses within it. It is alleged that the U.P Government issued a notification on 29th January, 1957, under Sec. 130-A of the Municipalities Act directing the Municipal Board to levy on the buildings and land situate within its limits a water tax at the rate of 10 per cent on their annual value. It appears that the Municipal Board took the view that it was not necessary to levy such a tax. Thereupon the Government passed an order on 21st October, 1957, under sub-sec. 3 of Sec. 130-A imposing the tax with effect from 1st December, 1957. The next step was a notification under Sec. 300(1) of the Act published on the same date containing draft rules for assessment and realisation of the water-tax and inviting objections to them. There was a further notification dated 21st November, 1957, by which draft rules were finalised. In pursuance of these notifications the Municipal Board of Chandausi, respondent no. 2, issued notices of demand against the first and second petitioners and the Karta of the joint family of the petitioner calling upon them to pay the tax. Aggrieved by this demand the petitioners have come to this court for relief.

    2. There is very little controversy as to the facts in this case. The contention of the petitioners is that the procedure prescribed by Secs. 131 to 135 of the U.P Municipalities Act has not been followed. This is admitted both by the State and by the Municipal Board, who contend that these Sections do not apply in cases where a Municipal Board fails to carry out the orders of the State Government to impose a tax. After hearing learned counsel for the petitioners, the Standing counsel for the State and counsel for the Board, I have come to the conclusion that the failure of Government to follow the procedure prescribed by Secs. 131 to 135 of the Municipalities Act renders the tax illegal and even contrary to Article 265 of the Constitution which enjoins that no tax shall be levied or collected except by authority of law. It is necessary to examine the meaning and scope of Secs. 128 to 135 for this purpose. Sec. 128 authorities a Municipal Board to impose 14 kinds of taxes including a water tax on the annual value of buildings or land or of both. This power is made subject to any general rules or special orders of the State Government. Sec. 129 prohibits the Board from imposing certain kinds of taxes and is not relevant to the present discussion. Sec. 130 contains the restrictions on the power to impose a scavenging tax which too is not relevant to the present controversy. Sec. 130-A deals with the power of the State Government to require a Municipal Board to impose a tax, and the entire controversy in this case depends upon the meaning and scope of this Section. It has therefore to be quoted verbatim:

    “130-A. (1) The State Government may, by general or special order, published in the official Gazette, require a board to impose any tax mentioned in sec. 128, not already imposed, at such rate and within such period as may be specified in the notification, and the Board shall thereupon act accordingly.

    (2) The State Government may require a board to modify the rate of any tax already imposed and thereupon the Board shall modify the tax as required.

    (3) If the Board fails to carry out the order passed under sub-sec. (1) or (2), the State Government, may pass suitable order imposing or modifying the tax, and thereupon the order of the State Government, shall operate as if it had been a resolution duly passed by the Board.”

    3. This section is divided into three sub-sections. The first enables the State Government to issue a direction to the Board to impose a tax. The second empowers the Government to require a Board to increase, modify or vary the rate of any tax already imposed. The third deals with the situation where a Board has failed to carry out the orders of the Government requiring it either to impose or to alter a tax. It says that in such a situation the State Government may itself pass an order imposing, increasing, modifying or varying the tax. Then comes the vital sentence explaining the legal effect of such an order. It says, “Thereupon the order of the State Government shall operate as if it had been a resolution duly passed by the Board.” It is clear from the language of this section that the State Government has the power to fill up the gap created by the failure of the Board to carry out its directions by passing an order which will be treated in law as a resolution validly passed by the Board. In my view such an order cannot of itself have the effect of imposing a tax on the inhabitants of the Municipality but may be treated as equivalent to a resolution passed by the Board. In other words, the order of the State Government shall be treated as the first step which would have been taken by the Board itself, if it had agreed to the suggestion of the Government. But it does not preclude the necessity of following all the other subsequent steps nor does it empower the State Government to short-circuit the procedure laid down in the Act and make a short-cut to the final stage of notification of imposition of the tax under Sec. 135(3) of the Act.

    4. I have carefully examined the procedure contemplated by secs. 131 to 135 and I am of the opinion that it assures certain fights to the inhabitants of the Municipality which must be observed in all cases irrespective of whether the tax is being imposed by the willing co-operation of the Municipal Board or by an order of the Government in default of it. Sec. 131 says that if a Board desires to impose a tax it shall pass a special resolution specifying the tax, the person or class of persons to be made liable to it, the amount or rate of the tax and certain other matters. The Board is also required to prepare a draft of the rules which it desires the State Government to make in respect of the tax. It also enjoins that the proposals for the tax shall be published in the prescribed manner. Sec. 132 gives to any inhabitant of the Municipality the right to submit his objections in writing, within a prescribed period, to all or any of the proposals published under Sec. 131. This is not an empty right, for sub-sec. 2 gives the Board the power to modify its proposals after hearing the objections. Even after this, the modified proposals have again to be published and the citizens have the right to object to them too. After all this has been done the Board is required to publish its finally settled proposals and submit them to the prescribed authority. But it must submit along with the final proposals the objections of the inhabitants, if any. The next step is the consideration of the proposals by the State Government or the prescribed authority under Sec. 133. It has the power to reject, modify or sanction the proposals after considering the objections which had been filed before the Board under the previous sanction. The Government or the prescribed authority may either refuse to sanction the proposals or return them to the Board for further consideration or sanction them with modifications. After the proposals have been sanctioned they are sent back to the Board which has to pass a special resolution under Sec. 134 directing the imposition of the tax with effect from a date to be specified in the resolution. This is not the end of the procedure, for a vital step has still to be taken under Sec. 135. A copy of the resolution must be submitted by the Board to the State Government or the prescribed authority as the case may be, which shall notify in the official Gazette the imposition of the tax from the appointed date. After this final step has been taken the tax can be imposed and levied as a tax by authority of law.

    5. It is noteworthy that the most important part of the procedure is the one relating to the right of the inhabitants, who will ultimately be called upon to pay the tax, to make objections against it. There is nothing in the language of Sec. 130-A suggesting that in cases where a Municipal Board defies or non-co-operates with the Government and the latter is compelled to pass an order in consequence, the inhabitants of the Municipality must be penalised to the extent of being deprived of their statutory right of making objections. Learned counsel for the State and the Board contended that the procedure prescribed by Secs. 131 to 135 does not apply to a case where the State Government is compelled to impose a tax after the failure of the Board to comply with its orders. I do not agree. Sec. 130-A merely clothes the order of the State Government with the status and sanctity of a resolution passed by the Board. The legal effect of such an order will be exactly as if the Board has passed a resolution in accordance with the wishes of the State Government. This is a far cry from the contention that the effect of such an order must be that the sins of the Municipal Board are visited on the inhabitants of the Municipality. I see no warrant for such an interpretation of Sub-Sec. (3). If it were to be interpreted in the manner suggested by both the learned counsel for the respondents, the section itself may be hit by Art. 14 of the Constitution. The object of this provision is to prevent Municipal Boards from defying the Government. If the method of achieving this object is to destroy the statutory rights of the inhabitants, it will be difficult to find any reasonable connection between the provision and the objects sought to be achieved. I cannot see how the short-circuiting of the rights of the inhabitants of the Municipality under Sec. 132 can have the deterrent effect of inducing the Municipal Boards to carry out the wishes of the Government. The only result of such an interpretation is to make innocent persons suffer for the fault of a few delinquent members of the Board. The discrimination between inhabitants of a Municipality which has complied with the orders of the Government-and those of a Municipality which them, will not be based on any reasonable classification and may amount to unconstitutional discrimination.

    6. It was suggested by learned counsel for the Board that one of the petitioners is a member of the Board who had at one time actually voted in favour of the proposal to impose a tax. I was asked to consider this conduct in view of the fact that the power to grant a writ of mandamus is discretionary. I have given this matter my careful consideration. But I am of the opinion that, whatever be the conduct of one of these petitioners, this Court cannot sanction the imposition of a tax which has not been levied according to the procedure established by law and which cannot therefore be claimed to be a tax levied by authority of law, as required by Art. 265 of the Constitution. Furthermore, this Court cannot stand by and permit the imposition of a tax upon hundreds of the inhabitants of the Municipality, who may not be responsible at all for any conduct of any of the petitioners and who have been deprived of their valuable right of making objections against the tax. The procedure adopted by the Government is not sanctioned by law and in fact makes an inroad into the rule of law. The decision of the Government cannot, therefore, be allowed to stand.

    7. I, allow this petition and direct the issue of a writ of mandamus commanding the respondents not to demand any water tax from the petitioners on the basis of the notification dated 21st October, 1957.

    8. I would however like to make it clear that it is still open to the Government to start from the stage of Sub-Sec. 3 of Sec. 130-A treating its own order as if it had been a resolution duly passed by the Board. In the circumstances of the case all the parties shall bear their own costs.

    9. Petition allowed.

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    Om Prakash Sharma v. State Of Uttar Pradesh
    (Feb 26, 1959)