Leave granted.
These two appeals are inter connected tossing up an important
question of law regarding the interpretation of Article 243 Q of
the Constitution of India.
It is not necessary for us to give the complete factual
details and history of the case for the purpose of this order
except the bare minimum. The litigation revolves around the
upgradation by a notification dated 6.10.2008 of Gram Panchayat of
Napasar Village as Nagar Palika (Municipality) Class IV1 category
by the State of Rajasthan purportedly in exercise of power
conferred under Section 3(1)(A) of the Rajasthan Municipalities
PRAKASH SHARMA 20082. Legality of the said notification was challengedDate: Ordinance2018.05.02
1 State Government while exercising power conferred to it under section 3 (1) (A) of the Nagar Palika ordinance 2008,
State Government hereby declares Gram Panchayat Napasar as Nagar Palika Fourth category. Existing limit/area of the
Gram Panchayat Napasar will be the area of Nagar Palika Napasar.
2 The ordinance was eventually replaced by Rajasthan Municipalities Act, 2009.
before the Rajasthan High Court in a writ petition. It was
dismissed by a learned Single Judge. Aggrieved by the dismissal,
the matter was carried in a writ appeal. During the pendency of
the writ appeal, the impugned notification dated 6.10.2008 was
withdrawn by another State of Rajasthan by a notification dated
18.9.2009. The writ appeal was therefore, rendered infructuous.
Challenging the notification dated 18.9.2009, another writ
petition came to be filed. The said writ petition was allowed by a
Division Bench by its judgment dated 13.5.2015 quashing the
notification and directing the State to take consequential steps.3
Aggrieved by the same, SLP(C)No.11091/2017 came to be filed.
Pursuant to the direction of the High Court, a fresh notification
dated 2.6.2016 came to be issued once again for establishing a
Nagarpalika for the Napasar village. Challenging the said
notification, another writ petition came to be filed before the
Rajasthan High Court. It was dismissed by a judgment dated
3.8.2016. On appeal, the same was confirmed by the Division Bench
by its judgment dated 12.9.2016. Aggrieved by the same,
SLP(C)No.38618 of 2016 is filed.
The correctness of the two judgments of the High Court
impugned in these two appeals, is questioned on various grounds.
In our opinion, it is not necessary to examine the various
submissions made before us. The impugned actions of the respondent
State which culminated in the two impugned judgments of the High
Court suffers from a fundamental infirmity which goes to the root
3 The consequent act referred to by the court is that a new notification was directed to be issued.
of the matter.
The establishment of municipalities and their organisations is
governed by Part IX A (consisting of Articles 243P to 243ZG) of the
Constitution of India inserted in the Constitution by the
Constitution 74th (Amendment) Act, 1992 with effect from 1.6.1993.
Article 243P (e) defines the expression “Municipality” to mean an
institution of self-government constituted under Article 243 Q.
Article 243 Q of the Constitution of India declares as follows:
“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 smaller urban area; and
(c) a Municipal Corporation for a larger urban area,
in accordance with 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.”
Article 243Q contemplates the constitution of three different
categories of bodies known as (i) Nagar Panchayat for a
transitional area, (ii) Municipal Council for a smaller urban areas
and (iii) Municipal Corporation for a larger urban area.
It is declared under Article 243Q(2) that the expressions “a
transitional area”, “a smaller urban area” and “a larger urban
area” (hereinafter collectively referred to as “AREAS”) would mean
such areas as may be specified by the Governor by a public
notification for the purpose of Part IX A of the Constitution of
India. Article 243Q(2) further obligates the Governor to have due
regard to the various factors mentioned therein before specifying
the AREAS i.e. population of the area, the density of the
population, the revenue generated in the area for local
administration, percentage of employment in non-agricultural
activities, the economic importance or such other factors as he may
deem fit.
It, therefore, appears from the scheme of Article 243Q(2) that
the Governor is not free to notify ‘AREAS’ in his absolute
discretion but is required to fix the parameters necessary to
determine whether a particular AREA is a transitional area or a
smaller urban area or a larger urban area with due regard to the
factors mentioned above. It is implicit that such parameters must
be uniform for the entire State. It is only after the determination
of the parameters, various municipal bodies contemplated under
Article 243Q(1) could be constituted.
In response to a specific query whether any notification
contemplated under Article 243(Q)(2) had been issued by the State
of Rajasthan, Mr. Guru Krishnakumar learned senior counsel
appearing for the State of Rajasthan, produced two notifications
dated 4.7.1995 and 30.4.2012. On a plain reading of both the
notifications, it appears that these notifications had been issued
in exercise of the statutory powers conferred on the State
Government by two different enactments known as “The Rajasthan
Municipality Act, 1959 (since repealed) and the Rajasthan
Municipalities Act, 2009. Apart from the declaration regarding the
source of power for the issuance of these notifications to be
authority conferred by the various provisions of the above
mentioned two enactments, it appears from the tenor and scheme of
the notifications that these notifications purport to classify
municipalities only on the basis of population. The various other
parameters to which regard is required to be had under Article
243Q(2) were not taken into consideration for the purpose of
classification made under the above mentioned two notifications.
Therefore, in our opinion, these two notifications cannot be
treated as notifications contemplated under Article 243(Q)(2).
In the absence of any notification which meets the
requirements of Article 243Q(2), the entire exercise undertaken by
the State of Rajasthan in upgrading the Napasar village Gram
Panchayat to be a Nagarpalika – [that is equivalent to Nagar
Panchayat as mentioned in Article 243Q(1)(a)] is unconstitutional
as it is inconsistent with the requirements of the Constitution
under Article 243Q of the Constitution of India. Therefore, the
initial notification dated 6.10.2008 itself is unsustainable.
Unfortunately, this aspect has not been noticed by the High Court
obviously because it was not brought to the notice of the High
Court. The fact that a litigant before the court does not point
out the relevant principles and provisions of law does not prevent
the court from examining the issues involved in the lis, more
particularly, when the process which is the subject matter of
litigation before the court is inconsistent with the mandate of the
Constitution. It is a settled principle of law that courts are
bound to take note of the constitution and the laws.4
We, therefore, have no choice but to hold that the initial
notification dated 6.10.2008 is unconstitutional. Therefore, the
legality of various actions which followed that notification and
4 S.C. Prashar & Another v. Vasantsen Dwarkadas & Others, AIR 1963 SC 1356
98. The Department in this case had relied on the amending Act of 1953 before the High Court. Though the
High Court considered the case from the angle of the second proviso to sub-section 3 of Section 34 and also struck it
down as unconstitutional it did not take into consideration Section 31. sub-sections (1), (2) and (3) of Section 34 of the
principal Act (including It was argued before us that we cannot take Section 31 into account if it was not referred
to by the High Court. But a court is required to take judicial notice of statutes and if Section 31 of the Act 1953
said that of course the amendments as made by the 1953 Act) shall apply and shall be deemed always to have applied
to any assessment or re-assessment for any year ending before April 1, 1948, it is the duty of court, and tribunals to
read Section 34 in that manner and in no other. In our opinion it was not open to the High Court to read Section 34
without Section 31 which contained a legislative construction and made Section 34 retrospective. This omission has
vitiated the High Court's reasoning.
121. The questions as framed refer to the provisions of Section 34(3) of the Income Tax Act. They also
mentioned two sets of dates, namely, the dates of the returns (7-3-1951 and 14-1-1952) and the date of the assessment
(17-11-1953). Now we know that before the first day of April, 1952, there was a four-year limit for assessments or re-
assessments under sub-section 3 of Section 34 but thereafter that limit was removed by the proviso added by Section
18 of the amending Act of 1953 and by Section 31 of the same Act assessments made before or after the
commencement of the amending Act of 1953 (1-4-1-952) were declared valid if proceedings commenced after
September 8, 1948. The question as framed cannot be answered without reference to Section 31 and even if
parties did not bring it to the notice of the High Court it was the duty of the High Court to look into the
validating provisions of Section 31. If the High Court did not, we know of no rule or decision of this Court
which prevents us from looking into a validating provision which existed at the time of the High Court's
decision and was overlooked by it and which by itself furnished the answer to the question propounded for the
opinion of the High Court. No decision of this Court lays down that in determining the true answer to a question
referred under Section 66, this Court is confined only to those sections to which the Tribunal or the High Court
referred. Indeed, there are many cases which say the contrary: see Kusumben Mahadevia v. CIT [(1960) 3 SCR
417], Zoraster & Co. v. CIT [(1961) 1 SCR 210] and the recent case of Scindia Steam Navigation Co. v. CIT [(1961)
42 ITR 589]. We must, therefore, look into Section 31 to determine these appeals.
the judgments of the High Court which examined the legality of
those actions, in our view, need not be examined. All such
subsequent action of the State which led to litigation suffer from
a fundamental constitutional flaw. The impugned judgments of the
High Court rendered without examining the true scope and scheme of
Part IXA of the Constitution and more particularly Article 243Q(2)
are per incuriam.
Mr. A. Subba Rao, learned counsel appearing for the non-State
respondents in SLP(C)No.11091/2017 submitted that in view of the
findings recorded by the High court that in the interregnum, lot of
development (such as the establishment of industries, educational
institutions and hospitals etc.) took place in the geographical
area in question, and therefore, this Court may not interfere with
the notification upgrading the area in question to a Nagarpalika as
such interference would have the effect of reducing the Nagarpalika
into a Gram Panchayat once again. Confronted with the question as
to what would be the prejudice the non-State respondents would
suffer by such consequence, Mr. Rao submitted that there is a
possibility of the industries being shifted away from the area in
question. It is only an apprehension. We find no basis in the
pleading for such apprehensions nor do we see any reason which
might lead to such a possibility. Therefore, the submission is
rejected.
The appeals are disposed of accordingly.