Sunday, May 4, 2014
Saturday, May 3, 2014
A satisfactory reply to complaints is of fundamental importance in the Administration – Citizens Relationship.
Good governance signifies the way an Administration ameliorates the standard of living of the members of its society, by creating, and making available the basic amenities of life; providing its people security of life and the opportunity to better their lot; instills hope in their hearts for a promising future; affording participation and capacity to influence, in the decision-making in public affairs; sustaining a responsive judicial system which dispenses justice on merits in a fair, unbiased and meaningful manner; and maintaining accountability and honesty in each wing or functionary of the Government administration.
Forms of accountability may differ but the basic idea remains the same that the holders of Public Office must be publicly able to justify their exercise of power not only as legally valid but also socially wise just and reasonable, chiefly designed to add something more to the quality of life of the people.
Every Society & every Individual Citizen has certain basic assumptions to take it for granted from the State that-
(i) His Life & Property will be protected and his liberty will be preserved;
(ii) He can appropriate for his own use what he has created by his own labour and what he has acquired under the existing economic order;
(iii) That others will act with due care and will not cast upon him an unreasonable risk of injury;
(iv) That others will not commit any intentional aggression upon him;
(v) That people with whom he deals will carry out their undertakings and will act in good faith;
(vi) That he will have security as a job holder;
(vii) That State will bear the risk of unforeseen misfortune;
(viii) That State will bear the burden of supporting him when he becomes aged;
(ix) That, therefore, whenever, there is breach of aforesaid expectations, and the complaints is made to the “State”, it will be duly replied. Article 12 of Constitution of India defines “State” as a every Public functionary, whether State Govt / Central Govt / Municipal body / Statutory bodies / Any instrumentality / Agency of the Govt etc.
However, the experience is otherwise. Public authorities / Public officers, especially highly placed, soaked in arrogance of their powers, generally do not bother themselves to the complaint of Citizens, and their replies, whenever made, most of times, are deliberately illogical and evasive. The experience is that the holders of public offices treat the authority in their hands, as a ruler rather than one in public service.
The Officials, in the usual spirit of lawlessness, were often heard saying, (one may also call it various forms of passionate corruption) in the words of Legal learned - Professor Upendra Baxi--
a) As an Authority of Public Power, I have this and that power. I exercise it in this or that manner because I so wish. The only good reason which I exercise my power this or that manner is that I wish to exercise it in this or that manner;
b) As an Authority of Public Power- I may so act as to favour some and disfavour others;
c) As an Authority of Public Power- I may so act as to give an impression that I am acting within my powers but in reality I may be acting outside it;
d) As an Authority of Public Power- I may decide by myself what your rights and liabilities are without giving you any chance to be heard, Or I may make your opportunity to be heard a meaningless ritual;
e) As an Authority of Public Power- I may decide but declines to let you know the reasons or grounds of my decisions or provide reasons without being reasonable;
f) As an Authority of Public Power- I may use my power to help you only if I am gratified in cash or in kind;
g) As an Authority of Public Power- I may choose to use my power only after a good deal of delay and inconvenience to people;
h) As an Authority of Public Power- I may just refuse to exercise the powers I have regardless of my legal obligation to act and regardless of social impact of my inaction.
In this essay, I seek to list some of the provisions of law, and the judgments of the Apex court and High courts, which casts duty upon the Public Authorities to “Respond”.
“…The Governments, government departments or statutory authorities are defendants in a large number of Cases pending in various courts in the country. Judicial notice can be taken of the fact that in a large number of cases either the notice is not replied to or in the few cases where a reply is sent, it is generally vague and evasive. It not only gives rise to avoidable litigation but also results in heavy expenses and costs to the exchequer as well.
A proper reply can result in reduction of litigation between the State and the citizens. In case a proper reply is sent, either the claim in the notice may be admitted or the area of controversy curtailed, or the citizen may be satisfied on knowing the stand of the State.
Having regard to the existing state of affairs, we direct all Governments, Central or State or other authorities concerned, whenever any statute requires service of notice as a condition precedent for filing of suit or other proceedings against it, to nominate, within a period of three months, an officer who shall be made responsible to ensure that replies to notices under Section 80 or similar provisions are sent within the period stipulated in a particular legislation.
The replies shall be sent after due application of mind. Despite, if the court finds that either the notice has not been replied to or the reply is evasive and vague and has been sent without proper application of mind, the court shall ordinarily award heavy costs against the Government and direct it to take appropriate action against the officer concerned including recovery of costs from him.”.
Para 1: The grievance made in this Petition is that the Collector, Pune has failed to decide the representation made by the Petitioner on 28th June, 2011. We are appalled to notice the laxity and indifference of the Collector in not expediting the process of deciding the subject representation even after the service of present Writ Petition. Admittedly, no decision has been communicated to the Petitioner till date. Institution or pendency of this Petition was certainly not an impediment for taking the decision. As a matter of fact, any prudent officer would expedite the process as soon as he is served with the copy of the Petition making grievance against him about his inaction. The attitude of the officer in not deciding the representation, even after service of this Writ Petition, is to say the least deplorable.
Para 4: Copy of this order be forwarded to the Chief Secretary, with a hope that the Chief Secretary would cause to issue instructions/circular, before 19th January, 2013, to all concerned departments and officers that, if any representation is made, the same should be considered and final decision thereon must be taken within the period specified in the earlier Government Circular No. SKN – 02/2010/P. No. 29/A2 dated 16th February, 2010 and the decision so taken should be communicated to the party concerned within the same time.
Further, if any Petition is filed before the Court, making grievance about the inaction of the Authority, at least upon service of copy of such Petition, the concerned officer must dispose of the representation within four weeks from receipt of notice of such proceedings and communicate the decision to the concerned party as well as report that fact to the office of the Government Pleader for bringing it to the notice of the Court whenever the matter is taken up for hearing. It must be made amply clear that failure to comply with this condition may entail in initiating departmental action against the concerned officer and serious view may be taken in the matter.
Para 5: This we are required to observe because, on any given Court working day, the Court is called upon to deal with substantial number of Writ Petitions, in respect of the subject assigned to the concerned Division Bench, directing the Authorities to dispose of the representations within specified time. This litigation is certainly avoidable, if the representations were to be decided in a time bound manner by the Authority and including to communicate the decision so taken to the concerned parties soon thereafter.
Para 5. Large number of petitions under Article 226 of the Constitution of India are being filed in this Court making a grievance regarding failure to register the offence in accordance with sub-section 1 of Section 154 of the said Code, though either complaint in writing is lodged with the concerned police station or the statement of the complainant is recorded by the Police. Such petitions are being filed only because the concerned officer of the police do not care to inform the complainants about the action taken on the complaints. In view of the decision of the Full Bench, at highest and that also in exceptional and rare cases, the concerned officer has time of two days to hold preliminary enquiry. In all other cases, the officer is expected to act immediately. Only in exceptional cases, he gets time of two days. The very fact that subsection (3) of Section 154 gives a remedy to the person aggrieved by the failure on the part of the officer to record the information shows that the duty is cast on the police officer with whom the complaint is filed, to immediately inform the complainant about the refusal to record the information referred to under Subsection (1) of Section 154 of the said Code and officer in-charge of the police station is duty bound to issue communication to the complainant of refusal on his part to record information. Only if such information is communicated to the complainant that he will be in a position to avail of the remedy under Subsection (3) of Section 154 of the said Code.
7. We are of the view that the Director General of Police should issue directions to all police stations in the State directing the officers in-charge of the police station to forthwith issue a communication to the complainants about refusal to record the information in terms of Subsection (1) of Section 154. Appropriate time limit which should be very short will have to be provided for issuing said communication so that the very object of lodging complaint should not be frustrated. If there is a gross delay in issuing communication, even the remedies provided under the said Code in a given case may become redundant. Such direction is required to be issued to ensure that complainants get opportunity to avail of the remedies under the said Code.
8. Hence, we dispose of the petition by passing following order :
(ii) We hereby direct the Director General of Police to issue directions to all the police stations in the State as indicated in the earlier part of this order.
We have come across several writ petitions in which similar relief is claimed not only in respect of inaction of the authority dealing with land acquisition proceedings, but even other departments, such as Cooperative Department, Caste Scrutiny Committee, Education Department, Social Welfare Department, Zilla Parishads and the like. We find that substantial number of writ petitions, such as the present petition, which are filed in this Court, are avoidable, if the officials of the State were to discharge their statutory obligation of deciding the representation within a reasonable time. In the present case, petitioner has submitted her application almost one year back i.e. 5th January, 2009.
It is unnecessary to underscore that the applicant would have legitimate expectation of early redressal of her grievance. Indubitably, expeditious decision on the representation or application is a right ingrained in Article 21 of the Constitution of India. Even when no period of limitation to dispose of representation / application is prescribed under statute, it has to be done expeditiously within a reasonable time (see Bharat Steel Tubes Ltd. V/s State of Haryana - [ (1988) 3 S.C.C., 478 ]. That is the duty cast upon the officials, for, existence of power to decide such application / representation is coupled with duty to decide the same expeditiously.
It will not be out of place to restate the legal position expounded by the Division Bench of this Court in a recent decision in the case of Vaishali Atmaram Suryawanshi V/s the State of Maharashtra in Writ Petition No.7055/2009 decided on 16th December, 2009. Notably, due to the inaction of the Authority (officials), not only the citizen has to suffer the agony of uncertainty and delayed justice, but at the same time the State exchequer is incurred on legal proceedings, which is wholly avoidable.
In our view, the Chief Secretary of the State of Maharashtra should issue appropriate instructions or circular to all the concerned officials of the respective departments, not only to one referred to above, but a general circular, instructing all the Departments that if the officials are required to dispose of any application or representation under the provisions of law, they shall do so within a reasonable time and in any case not later than the time specified in the said circular, failing which the concerned official will be held personally responsible and may be proceeded for appropriate Departmental action including for dereliction of duty. The Government Pleader assures to convey the sentiments of the Court to the Chief Secretary for taking appropriate action, as may be advised, and report compliance to the Court within four weeks from today.
Para 7: It is important to note that provisions of Citizens Charter by the Administrative Departments of the Government must be made known to the common man for whom it is meant. It is no doubt true that Citizens Charter which was published, though put on the website, however, in order to apprise the common man about the Citizens Charter, we direct each Administrative Department of the State Government to affix copy of Citizens Charter prepared by that Department on the notice board to be placed on the front lobby of the Department or at such a place which is easily visible to members of public who visit the Department. The entire exercise must be completed by each Department within a period of two months from today. We also expect the State Government to finalize the Rules to carry out purpose of the Act without further delay and notify the same in the official gazette.
Para 8 Pre-suit statutory notice as required under Section 527 of MMC Act, as also under Section 164 of MCS Act, 1960, required to be addressed to the Registrar before initiating suit clearly served public purpose underlying the mandatory provisions. When such notices are issued and served upon public authorities, they get reasonable opportunity to avoid unnecessary litigation and also to avoid unnecessary expenses which may have to be spent in a long drawn out legal battle.
Object of pre-suit statutory notice is to furnish an opportunity to the Public Authority to know before hand about the prospective plaintiff, particulars of his name, address, grievance, cause of action etc., so that Public Authority can reconsider its legal position and may resolve to take steps to settle the claim at pre-litigation stage. The provision is therefore intended to save the valuable public time and money.
Procedural Guidelines for Quasi-Judicial Authority:
Para 17. This Court in exercise of powers conferred under Articles 226 and 227 of the Constitution of India prescribes the following procedure to be adopted by quasi-judicial authorities including the Ministers, Secretaries, officials and litigants while hearing and determining appeals, revisions, review applications and interim applications etc.:
(1) Memo of appeal or revision, review and or any application shall specifically mention under which enactment and/or under what provisions of law the said appeal/ review/ revision or application is filed.
(2) The appellant/ applicant shall give a synopsis of concise dates and events along with the memo of appeal or revision.
(3) The appeal, revision and/or application shall be filed within a period stipulated under the law governing the subject from the receipt of the order/ decision which is impugned in the above matter. In the event of delay, it should only be entertained along with application for condonation of delay.
(4) At the time of presentation of the appeal, review or revision, the applicant shall, if, filed in person, establish his identity by necessary documents or he shall file proceedings through authorized agent, and/or advocate.
(5) The application shall be accompanied by sufficient copies for every opponents/ respondents and also supply 2 extra copies for the authorities.
(6) For issuance of summons to the opponents/ respondents, court fees/ postal stamps of sufficient amount shall be affixed on the application form/ memo of appeal or revision as the case may be.
(7) In addition to service through the authority, appellant/ applicant may separately send the additional copies to each of the opponents/ respondents by registered post acknowledgement due and may file affidavit of service along with evidence of despatch. The postal and acknowledgment alone should be treated as evidence of service in the event of service through postal authority.
(8) In the event of an urgency of obtaining an interim relief like stay, injunction/ other interim order or direction or status-quo etc, a specific case of urgency should be made out in the application, which the authority may entertain subject to the brief reasons recorded. The said order shall also be communicated immediately to all the effected persons. The proof of timely despatch of the Registered A.D.s and all the acknowledgments shall be separately maintained.
(9) If there is real urgency, the concerned authority may grant ex parte interim/ ad-interim relief for the reasons to be recorded for a particular period only within which time the service on the concerned opponents/ respondents shall be effected. Appellant/ applicant should file affidavit of service, if such party requires early hearing or continuation for interim relief or of an appeal, revision or review.
(10) The competent authority shall also communicate the next date of hearing to all the parties along with time and place and shall, as far as possible, adhere to the said date and time of hearing.
(11) The concerned official in every department should be asked to remain present at the time of hearing and assist the concerned authority in the matter.
(12) Reasonable sufficient time be provided between the date of receipt of notice and the actual date of hearing. If any party is unable to remain present at the time of hearing for a sufficient cause, one further opportunity should be given to such party for hearing.
(13) The authority hearing quasi-judicial matters shall duly fix a date, time and venue for such hearing. Such authority shall refrain from interacting with third party during the course of hearing either in person or on phone and shall not do any act which would tend to affect or prejudice fair hearing.
(14) A speaking order shall be passed by the authority hearing the matter as early as possible after the hearing is concluded and, as far as possible, within a period of four to eight weeks from the conclusion of the hearing, on the basis of the record before it as well as the submissions made at the hearing. The order must contain reasons in support of the order.
(15) The authority shall not receive information or documents after the hearing is concluded and/or shall not pass the speaking order on the basis of such documents and/or information unless such material is brought to the notice of the parties to the proceedings following rules of natural justice.
(16) The order passed by the quasi-judicial authority on the hearing shall be forthwith communicated to all the parties by Registered A.D.
(17) No application or request or prayer from the political worker, Member of Legislative Assembly, Member of Parliament or third party shall be entertained in the quasi-judicial proceedings unless such person is a party respondent or intervenor in the proceedings.
(18) The order pronounced shall be communicated to the parties immediately.
(19) Record of hearing shall be meticulously maintained in a separate Roznama.
(20) The notings of concerned officials/ law assistants to assist the authority shall include only content of facts and legal provisions along with case laws, if any.
(21) The notings made by the law officials/ concerned officials shall not be in the form of order.
It was a case where, despite being specifically brought to the knowledge of the law being laid down by the Bombay High Court, the Public officer acted in breach of the law laid down; and the High Court, in the Writ jurisdiction, initiated Contempt proceedings against the said officer. The Court held that –
(a) It is immaterial that in a previous litigation the particular petitioner before the Court
was or was not a party, but if a law on a particular point has been laid down by the High Court, it must be followed by all authorities and tribunals in the State;
(b) The law laid down by the High Court must be followed by all authorities and subordinate tribunals when it has been declared by the highest Court in the State and they cannot ignore it either in initiating proceedings or deciding on the rights involved in such a proceeding;
(c) If inspite of the earlier exposition of law by the High Court having been pointed out and attention being pointedly drawn to that legal position, in utter disregard of that position, proceedings are initiated, it must be held to be a wilful disregard of the law laid down by the High Court and would amount to civil contempt as defined in S. 2 (b) of the Contempt of Courts Act, 1971.
I am hasten to add here the critical observation of the Apex court in the case of State Of Uttaranchal Versus Sunil Kumar Vaish – [(2011) 8 SCC 670] Para 18 and 19
Para 18 Judicial determination has to be seen as an outcome of a reasoned process of adjudication initiated and documented by a party based, on mainly events which happened in the past. Courts' clear reasoning and analysis are basic requirements in a judicial determination when parties demand it so that they can administer justice justly and correctly, in relation to the findings on law and facts. Judicial decision must be perceived by the parties and by the society at large, as being the result of a correct and proper application of legal rules, proper evaluation of the evidence adduced and application of legal procedure. The parties should be convinced that their case has been properly considered and decided.
I, therefore, say that whenever any representation / complaint is being made to any Public Authority / Public official, the aforesaid relevant and applicable judgment may also be expressly brought to the knowledge of the Authority concerned, thereby securing an speedy and reasoned reply.
And, in case, if the concerned public authority choose to remain silent on the received complaint, or reply in interplay of words, than, a simple letter may be recorded to the concerned High Court / Apex court, requesting it to take Su Moto cognizance (action on its own) of the contempt of the order of the court, being committed by the concerned authority / official; and the copy of said letter may also be sent to the concerned authority / official; and thereafter, after sometime, say about, expiry of about 30 days, an RTI may be filed with the concerned High court / Apex court, requesting it to furnish the details of action taken by it, on your said letter. The draft of said letter to the High court / Apex court and draft of RTI Application is annexed herewith. The Apex court and every High court have prescribed the form in which RTI Application can be made to it.
Further, the complainant may also file a Writ Petition before concerned High court under Article 226 of the Constitution of India, against the concerned public authority / official, and praying the court to direct the concerned public authority / official to make a “Reasoned reply” to the Petitioner’s complaint / Notice; and the reply shall be made in accordance with the law laid down by the Apex court in Salem Advocate Bar Association, Tamil Nadu Vs. Union of India [(2005) 6 SCC 344]; with a further prayer that reasonable and deterrent cost must also be imposed on the concerned authority / official, for his / its willful failure in making a due reply;
It may further be prayed that reply of public authority / official, shall deal with the substantial points which has been raised therein in the said complaint / Notice and shall cover other relevant points; and eschew irrelevancies and reply shall demonstrate that the authority has given due consideration to the points in controversy and that decisions of the public authority / official on the issue raised in the said complaint / Notice have been reached according to law.
It may further be prayed to initiate contempt proceedings against the concerned Public official, as laid down in Bombay High Court ruling stated hereinabove.
If Writ is filed for this limited purpose, than it may be disposed of in two to three hearings; and, if any such order is passed, than that public authority / official is bound to make a reasoned and proper reply, in a time bound manner.
However, all persons, aggrieved by the acts and omissions of public authorities / officials, may not have easy access to the High Courts, leave alone Apex court. Therefore, a Civil Suit for mandatory Injunction u/s 39 of Specific Relief Act, 1963, may be filed before the District Court / City Civil Court, seeking necessary reliefs.
The law declared by Apex court, by virtue of Article 141 and 144 of the Constitution of India, is binding on all public authorities / judicial authorities, and directions so given by Apex court becomes the law of the land. And therefore, the City Civil courts, District courts, shall also have the jurisdiction to direct the public authority / official to give proper and reasoned reply to the Notice issued to it; with a further relief praying that “A Reference shall be made to the High Court concerned to initiate contempt proceedings against the concerned Public authority / official”. However, while filing this Suit, the mandatory Notice provided u/s 80 may not be given, for, the relief in the Suit is claimed on the premise that concerned public authority / official is not making a reply to the Notice, sent to it u/s 80.
I finally seek to recall an historic incident of Indian freedom struggle, occasioned with Mohandas Karamchand Gandhi (His Journey towards Mahatma). In the year 1893, when in South Africa, while holding a First Class Compartment ticket and traveling in, Gandhi was thrown out of the train, for in those times “Blacks” were not allowed to travel in the First Class Compartment, notwithstanding they hold a valid ticket. It was 9.00 in the chill night. That designated “Black” sent a Telegram to the General Manager of the Railways and registered his complaint. The Complaint of that designated “Black” was attended, forthwith, and the General Manager instructed the Station master to secure that complainant reaches his destination safely. Complainant was accommodated in the very next morning train to his destination.
And here, in the era of INDEPENDENCE and 21st Century of modern democracy, we have Citizens of Sovereign India, of whose complaints are ordinarily attended with avoidance, annoyance and sometimes with hostility.
Complaints to public authorities / officials is the most legitimate incident of a democracy, and giving of satisfactory reply, is a healthy discipline for all who exercise powers over others.
Before I conclude, I must sincerely thanks Mr. Jagdish Gai, who takes great pain, everyday, in retrieving from Newspapers etc., the important rulings of the Apex court / High Court / Consumer Courts / GRs / Notifications which are announced every day, and generously shares with the community at large. Many of the Bombay High Court rulings stated hereinbefore were furnished by him, and I have merely arranged them in proper fashion.
1. Draft of section 80 Notice;
2. Draft of Letter to Apex court / High Court, requesting it to take Su Moto cognizance of contempt committed by the concerned public official of the concerned public authority;
3. Draft of RTI Application;
For other Legal options, please see point Nos.11 and 12 of the Legal Prescriptions (Index)
Friday, April 4, 2014
1. Vide Mah. Act 11 of 2009, the State of Maharashtra amended the Mumbai Municipal Corporation Act, 1888 (MMC Act) to enable BMC to levy property tax based on “capital value” of the properties as against the rateable value of the properties as provided for in the MMC Act, 1888, prior to the said amendment.
2. One of the main objects of introducing / shifting to the capital value system was to remove the disparities in tax liabilities between old and new properties / buildings. The earlier method was based on RLR (Residential Letting Rates) / Annual Letting Value of the property.
3. Under the earlier method, the tax was collected on the basis of rateable value fixed by BMC; and the rateable value was fixed from the date of first occupation, based on certain factors, such as location of the property, i.e. ward-wise and locality-wise; and rateable value of the Property remained unchanged once they were assessed and occupied (except in case of change of user); and rates were revised periodically. The Revised rates were applicable for newly developed properties once they were occupied, and this is the precise reason for disparity in tax liability of old properties and new properties, wherein the rateable value of old properties remained frozen once it was assessed, and the new properties were liable to pay taxes as per contemporary rateable value.
a) The 4th proviso to impugned section 140A frustrate the mandate of Article 14 of the Constitution of India, i.e. to say, whereas Article 14 guarantees all persons the equality before the law, the said section confers exemption from increased payment of taxation, to all the residential unit holders having upto a 46.45 sq. mtr (500 sq. ft.) carpet area, irrespective of the capital value of the property concerned.
b) The discrimination lies wherein (i) the properties having identical capital value, but some of the properties would not be subjected to increased tax liability and some of the properties would be subjected to increased tax liability; and (ii) where the capital value of the properties substantially differs, the properties bearing a very high capital value would not be subjected to increased tax liability, but properties bearing comparatively much lesser capital values would be subjected to increased tax liability.
c) The Stamp Duty Ready Reckoner rates for the year 2010, which is taken as a base value for arriving at a Capital value of Residential properties, divides the entire Mumbai into 124 Zones and 575 Sub-Zones; and the base value of the properties situated therein in each of the zone and sub-zone varies from Rs.19,400/- per sq. mtr (Entry No.333) to Rs.3,79,400/- per sq. mtr (Entry No.75).
(d) The repercussion of the 4th proviso, when read with 1st and 3rd proviso to said section, would continue at the lapse of 5 years, wherein the class of individuals set out in the 4th proviso would stand to benefit at the cost of remaining individuals, although both the classes stands on similar footing, and therefore, the solemn object of introducing capital value based system to “reduce disparity in burden of tax”, is frustrated and in fact defeated.
(e) The said 4th proviso would also create a situation wherein in the same residential Building, comprising units of 500 sq. ft. of carpet area and just above 500 sq. ft. carpet area, the individuals having a flat of 500 sq. ft. would not be liable for the increase in the tax, but individuals even having a 510 sq. ft. of flat may be subjected to increase of tax two times over the preceding year.
(a) In the scheme of taxation vis a vis to civic services provided under the mandate of law (sections 61 to 63B of MMC Act), at least two broad classes can be ascertained – (i) A Class of persons who owns or is otherwise liable to pay property tax; (ii) A Class of persons who live in “slums” and “Houseless” who are not liable to pay property tax, but otherwise are entitled to minimum basic civic services. Therefore, it would not be incorrect to say that the “former” class bears the burden of the “latter”.
(b) 4th proviso to said impugned section, as far as residential units are concerned, further creates “two class” of persons in the “former” class, one who owns residential units admeasuring about / upto 46.45 sq. mtrs / 500 sq. ft. carpet area (about 2BHK flat), and another class of persons who owns residential units admeasuring above 45.46 sq. mtrs / 500 sq. ft. carpet area.
(c) Whereas impugned section 140A creates “two class” of persons in the “former”, by virtue of 4th proviso, one class of persons is sought to be exempted from additional burden of tax and the second class is further burdened with (a) outgo of more money due to introduction of property based in capital value; (b) the additional share of burden which is sought to be exempted by virtue of 4th proviso to section 140A, including the burden as set out in Clause (a) hereinabove, thereby frustrating the very object of rationalizing the burden of taxation on each of the property.
(a) The 4th proviso sought to sympathize with the prosperous class who have the privilege of having a 46.45 sq. mtr (500 sq. ft. flat) (Nearly 2 BHK flat) in the city of Mumbai and the proviso completely overlooks the class of “Houseless”, who are waiting to be housed. There is absolutely no reason or merit in granting the exemption from increased tax liability to the said class of people.
(b) By no stretch of imagination it can be argued that individuals who own a residential units upto 500 sq. ft. in the city of Mumbai constitute a poor class / weaker section of the society. On the contrary, by levying tax uniformly on both the classes, a substantial equality / rationality in the levy of tax burden could have been achieved.
(c) The 4th proviso sought to confer exemption to a privileged class and ignoring the deprived class. A combined reading of sections 63(a), 63(aa), 63(jjc), 63(jje), 354C(1)(A)(c), 354RM to 354RQ and section 460 of the MMC Act, 1888, and Article 243W (a)(i) and Entry Nos.3, 9, 10, 11 of 12th Schedule to the Constitution of India, obliges the Respondent No.2, inter alia, to attend to the needs of “Houseless”.
(d) It is further submitted that budgetary constraints of BMC may ordinarily discourage it to embark upon and implement “Housing Schemes” for the “Houseless” and for those living on “footpath”, i.e. Mahatma Gandhi Path Kranti Yojna. Etc; and therefore it is irrational to subsidize the privilege class of persons owning about 46.45 sq. mtr (500 sq. ft.) of flat in Mumbai.
a) Section 3(b) of the Maharashtra Act No.VI of 2012, inserted sub section (2A) to section 140A of the MMC Act, 1888, which permits the BMC to recover taxes for earlier three years, i.e. 2010-11, 2011-12 and 2012-13.
b) The permitting the recovery of tax for earlier years is illegal, for it is inconsistent with the mandate of other provisions of the MMC Act, 1888, more particularly of section 139 of the MMC Act, 1888.
c) Although retrospective exaction of taxation is not altogether impermissible, but at the same time, it cannot be invoked indiscriminately; and it has to be seen and evaluate in each case of its due application.
d) The taxing power of the Local bodies is limited to the extent, for carrying out its obligatory and discretionary functions under the statute. That in area of taxation, Local bodies do not enjoy the same freedom and latitude as otherwise being enjoyed by the Parliament and the State Legislature. There are inherent limitations on the part of Local bodies to recover taxes, that is to say, they can impose and recover taxes, “Only for the purposes of the Act” under which they are incorporated.
e) The Local bodies have been assigned certain obligatory functions which it must perform and for which it must find money by taxation. It has also been assigned certain discretionary functions. If it undertakes any of them, it must find money. Even though the money that has to be found may be large, it is not unlimited, for, it must be only for the discharge of functions whether obligatory or optional assigned to the Local body.
f) The limit to which the Corporation can tax is therefore, circumscribed by the need to finance the functions, obligatory or optional, which it has to or may undertake to perform. It will be not open to the Local body to collect more than it needs for the functions it performs.
g) And, Local bodies make budgetary provisions for each year and are entitled to exact tax for the said amount. The Corporation is obliged to prepare annually the estimates of expenditure and income, comprising therein, inter alia, an estimate of expenditure to be incurred by the Corporation in the next ensuing official year; and inter alia, a statement of proposal as to the taxation which it will, in his opinion, be necessary or expedient to impose under the provisions of this Act, for the next ensuing official year. Therefore, there is no room for permitting the recovery of tax for erstwhile years, for, the local body is always entitled to raise revenue which is required by them, for the concerned fiscal year.
h) The Local bodies, similarly, cannot raise the rate of taxation to such an extent, or to recover purported tax for earlier years, as to provide a “surplus” which is much more than what it needs for carrying out the functions assigned to it.
i) In the instance case, section 139 of the MMC Act, 1888, expressly declare that,” For the purposes of this Act, taxation shall be imposed as follows …...”.
j) Chapter III of the MMC Act, 1888, comprising duties and powers of the Municipal Authorities, in section 61, 62, 62A, 62B, 62BB, 62C, 62D, 62E lays down the obligatory duties of the Corporation, i.e. BMV; and Section 63 lays down the discretionary nature of functions which may be undertaken by the Corporation.
k) Section 125 of the said Act obliges the Commissioner of the Corporation to prepare annually the estimates of expenditure and income, comprising therein, inter alia, an estimate of expenditure to be incurred by the Corporation in the next ensuing official year; and inter alia, an estimate of receipts and income for the next ensuing official year, other than from taxation; and, a statement of proposal as to the taxation which it will, in his opinion, be necessary or expedient to impose under the provisions of this Act, for the next ensuing official year.
l) Therefore, there is no room for to permit the recovering of tax for erstwhile years, for, the local body is always entitled to raise revenue which is required by them, for the concerned fiscal year.
m) The same principle would apply to the fixation of rates of taxation and if per chance the Corporation fixes rates which are unreasonable, there is control in the court to strike down such an unreasonable impost.
a) The main objects of introducing / shifting to the capital value system was to remove the disparities in tax liabilities between old and new properties / buildings. The earlier method was based on RLR (Residential Letting Rates) Annual Letting Value.
b) The earlier method of valuation have led to a huge disparity whereby old properties were paying much less tax as compared to new properties; and the disparity had widened with the passage of time. The situation had reached a stage whereby owners of flats constructed in posh locality in South Mumbai, say forty or fifty years back, were paying lesser taxes than a newly constructed property situated even in far away suburbs like Borivali, for the equivalent area, inspite of the fact that those properties in South Mumbai commanded much higher value than the properties at far away suburbs.
c) Therefore, it was proposed to introduce levying of property tax on lands or buildings based on their Capital value.
d) Therefore, if any rationalization of burden of tax is to be achieved, the new tax system, i.e. Capital Value system, should provide a framework wherein the burden of tax on old properties should reasonably increase, and at the same time, the burden of tax on newer properties should decrease, or, at least it should not increase; and thereby some degree of rationality / reasonableness / equality / parity / fairness / equivalence may be achieved in the burden of tax among various users of properties.
e) Now look at the very basic framework of the capital value system. It sought to levy property tax on “all” lands and buildings, based on their capital value. This system does not distinguish old properties or newer properties.
f) The 1st proviso to section 140A(1) of the MMC Act, 1888, is clearly indicative of the fact that, by reason of adoption of levy of property tax on buildings and lands based on their capital value, the tax burden on the “subject” may increase substantially and multi fold; and therefore, it is provided that there should be some cap to any such increase; and therefore a cap of 2 times for buildings and lands used for residential purposes and 3 times for non-residential purposes was sought to be mandated.
g) Therefore, in the new system, it may be noted that, whereas there would be an increase of tax burden on old properties, to the extent of 2 times and 3 times, but there is no corresponding decrease or stability in tax burden on newer properties, and there would be simultaneous increase of tax burden on newer properties as well.
h) The only beneficiaries of this capital value system, whose tax liability would be reduced, are the owners of properties, who have let out their property on Leave & License, and who were subjected to excessive property tax under the erstwhile Rateable value system. By introduction of this system, the levy is made neutral, irrespective of whether the property is let out on Leave & License or self-occupied.
i) Therefore, the “means” adopted to achieve the ends, fails to achieve the ends, i.e. rationality in the burden of taxation over the “subjects”.
a) Ordinarily a tax on land is assessed on the actual or the potential productivity of the land sought to be taxed. In other words, the tax has reference to the income actually made, or which could have been made, with due diligence, and, therefore, is levied with due regard to the incidence of the taxation.
b) The expression “Rate" is used to indicate an impost levied by a local authority to raise funds for its expenses; and had acquired a special meaning, and it meant a tax for local purposes, imposed by local authorities, on the basis of a percentage of the Annul Letting value, for which the land or building might reasonably fetch.
c) Notwithstanding the fact that “levy based on rate” based on “Annual letting value” had led to great disparity on the share of burden of taxation among the “various Ratepayers”; the nexus of levy, based on Annual letting value had a cogent and balanced nexus with the incidence of taxation.
d) Nonetheless there is no nexus with the capital value of a property and the nature of the levy. By levying it directly at a percentage of the capital value, the real incidence of taxation is camouflaged.
e) The levy based on capital value of the property has no reference to income, either actual or potential, from the property sought to be taxed. Hence, it may be rightly be stated that the Act obliges every person who holds land or building to pay the tax at a particular rate prescribed, whether or not he makes any income out of the property; or whether or not the property is capable of yielding any income.
f) Whereas there is no challenge to the legislative competence of the State to levy tax on lands and buildings based on their capital value, the levy of tax/ rate based on capital value may be permissible only in those cases where Rateable value of the property cannot be ascertained and therefore the concerned property may be valued on the basis of its capital value, and may be taxed accordingly.
a) The 1st proviso to section 140A(1) of the MMC Act, 1888, is clearly indicative of the fact that, by reason of adoption of levy of property tax on buildings and lands based on their capital value, the tax burden on the “subject” may increase substantially and multi fold; and therefore, it is provided that there should be some cap to any such increase; and therefore a cap of 2 times for buildings and lands used for residential purposes and 3 times for non-residential purposes was sought to be mandated.
b) Section 140A(2A) of the MMC Act, 1888, further empowers the MMC to recover from the “Ratepayer” the difference of tax liability, which may arise due to valuation based on Rateable value and capital value, for earlier three years, i.e. for the year 2010-11, 2011-12, 2012-13.
c) Therefore, a subject, in respect of his residence ,if was paying a property tax of say Rs.10,000/-, in the financial year 2012-13, he may be asked to shell out Rs.70,000/-for the year 2013-14; and a subject, in respect of his business, if paying a property tax of say Rs.20,000, in the year 2012-13, may be asked to shell out at least Rs.2,00,000/- for the year 2013-14.
Fairness and uniformity are basic principles of property tax assessment, whatever system of taxation may be employed. Whereas similar civic services are provided by the Municipality to all “Rate payers”, the “Rate”, i.e. the tax must fall on them, “equally”, as far as practicable; That each of the criteria, which has no bearing / nexus with the quantum / degree of the services which are provided by the Local Body, shall not be considered in the valuation of the Capital Value of the Property; and therefore there is no reason to charge more tax or less tax, based on “Age of the Building, construction type.
The Rules are ultra vires of the parent Act, under which they are enacted, that is to, it is in clear breach section 154(1A)(b) of the MMC Act. Section 154(1A)(b) inter alia, provides that the Commissioner while fixing the Capital value, inter alia, shall consider the carpet area of the building.
Whereas in the Rules, the Capital value of the Building is based on SDRR, and SDRR is based on Built up area, thus the Rules prescribe the ascertainment of the capital value of the Buildings on built-up area.
Whereas in the Rules, the Capital value of the Building is based on SDRR, and SDRR is based on Built up area, thus the Rules prescribe the ascertainment of the capital value of the Buildings on built-up area.
The Rules are ultra vires of the parent Act, under which they are enacted, that is to say, they are in clear breach section 154(2) Mumbai Municipal Corporation Act, 1888.
Section 154(2) of the MMC Act expressly states that the value of any machinery contained in or situate in any land or building shall not be included in valuing the capital value of the said land and building.
The value of the Buildings mentioned in the Stamp Duty Ready Reckoner are inclusive of machinery within the building such as Electrical Lifts and Pumps.
Thus deriving the capital value based on the said SDRR in which the value of machinery inheres, and using that as a base for levying property tax, would be ex-facie illegal.
The Legislature was conscious of the fact that (a) SDRR is based on built up area; (b) The valuations indicated in SDRR includes machinery which inheres in any building; (c) MMC Act and Stamp Act are not pari material Acts; (d) SDRR is only for the limited purpose of levying Stamp duty on the transactions of sale and purchase of lands or buildings, and therefore SDRR may not truly reflect the correct valuation of any land or building.
The Legislature have had expressly chosen to use the expression “Shall have regard while fixing the base value”. If the Legislature had wanted SDRR to be considered as a base value of lands or buildings, it may have expressed its intention by stating so.
And, therefore, comprehensive reliance on the valuation indicated in SDRR is ex-facie unlawful, and deserves to be declared so.
The Hon’ble Bombay High Court have had the occasion to observe that, … it is now, a well settled principle of law that the ready reckoner is prepared by the State Govt for the purpose of computing Stamp duty payable on transaction. The Ready Reckoner cannot be regarded as an accurate reflection of market value…”. The observation of this Court assumes significance, for, the Court was unequivocal in stating that, “a well settled principle of law…”. (2014) 1 MhLJ 152.
a) Art. 265 of the Constitution imposes a limitation on the taxing power of the State, in so far as it provides that the State shall not levy or collect a tax, except by authority of law, that is to say, a tax cannot be levied or collected by a mere executive fiat. It has to be done by authority of law, which must mean valid law enacted by the competent Legislature.
b) In order that the law may be valid, the tax proposed to be levied must be within the legislative competence of the Legislature imposing a tax and authorizing the collection thereof; and, secondly, the tax must be subject to the conditions laid down in Article 13 of the Constitution. One of such condition envisaged by Article 13(2) is that the Legislature shall not make any law which takes away or abridges the equality clause in Article 14, which enjoins the State not to deny to any person, equality before the law or the equal protection of the laws of the country. It cannot be disputed that if the Act infringes the provisions of Article 14 of the Constitution of India, it must be struck down as unconstitutional.
a) The Indian Constitution, most noticeable under Article 14 and 19 permitted Courts to undertake inquiries into the substantive fairness of the legislations, which Courts undertook under classification and reasonableness tests respectively.
b) "It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differential which distinguished persons or things that are grouped together from others left out of the group and, (ii) that differentia must have a rational relation to the object sought to be achieved by the statute in question. The differentia which is the basis of the classification and the object of the Act are two distinct things.
a) Classification means segregation in classes which have a systematic relationship, usually found in common properties and characteristics. It postulates a rational basis and does not mean hording together of certain persons and classes arbitrarily. The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience.
b) The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.
c) Though a law ex-facie appears to treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situated, it may be said that the law offends the equality clause. It will then be the duty of the court to scrutinize the effect of the law carefully to ascertain its real impact on the persons or property similarly situated. Conversely, a law may treat persons who appear to be similarly situated differently; but on investigation they may be found not to be similarly situated. To state it differently, it is not the phraseology of a statute that governs the situation but the effect of the law that is decisive.
d) What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. In substance, the differentia required is that it must be real and substantial, bearing some just and reasonable relation to the object of the legislation. The fact that the classification by itself is reasonable is not enough to support it unless there is nexus between the classification and the object to be achieved. Art. 14 certainly apply where equals are treated differently without any reasonable basis.
a) The constitutional standards by which the sufficiency of the differentia which forms a valid basis for classification may be measured, has been repeatedly stated by the courts. If it rests of a difference which bears a fair and just relation to the object for which it is proposed, it is constitutional. To put it differently, the means must have nexus with the ends.
b) If legislation discriminates one person or class of persons against others similarly situated and denies to the former the privileges that are enjoyed by the latter, it may be regarded as "hostile" in the sense that it affects injuriously the interests of that persons or class.
c) That while good faith and knowledge of the existing conditions on the part of a Legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the Court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to discriminating legislation.
d) A statute may direct its provisions against one individual person or things or to several individual person or things but no reasonable basis of classification may appear on the fact of it or be deducible from the surrounding circumstances; or matters of common knowledge. In such a case the Court will strike down the law as an instance of naked discrimination.
e) In determining the validity or otherwise of a statute or of the statutory provision, the Court have to examine whether such classification is or can be reasonably regarded as based upon some differentia which distinguishes such persons or things grouped together from those left out of the group; and whether such differentia has a reasonable relation to the object sought to be achieved by the statute.
f) The intelligible differentia classification test often focused on why the classification was carried out. While the definition of the class was readily ascertainable and one could fathom whom the law would apply to, the Courts often found that the class was not created on the basis of some acceptable or reasonable standard of general applicability based on the inherent properties or the characteristics of the class created. In such cases, the Court looked for reasonable, ascertainable or inherent basis of general applicability on the strength of which the discrimination was sought to be carried out. The Court would investigate the reasonableness and justifications of dividing persons into different groups and look to see if there were compelling reasons to distinguish between two classes.
g) In determining the impact of State action upon constitutional guarantees which are fundamental, it follows that the extent of protection against impairment of a fundamental right is determined not by the object of the Legislature nor by the form of the action, but by its direct operation upon the individual's rights, that is to say, It is not the object of the authority, making the law, nor the form of action, it is the effect of the law and of the action upon the right which attracts the jurisdiction of the Court to grant relief.
h) The above principles may be borne in mind by the Courts when they are called upon to adjudge the constitutionality of any particular law attacked as discriminatory and violative of the equal protection of the laws.
The law of the Constitution is not only for those who govern, and, for the theorist, but also for the bulk of the people, for the common man, for whose benefit & pride, and, safeguard, the Constitution has also been written.
Number of Writ Petitions have been filed in the Bombay High Court, inter alia, challenging this system of taxation. Janhit Manch, to which the present author is a Member, has also filed a PIL in the Bombay High Court in this respect.