Reserved Judgment IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition No. 801 of 2009 (M/S) Kumaon Garhwal Chamber of Commerce and Industry Chamber House Industrial Estate, Bajpur Raod Kashipur, District Udham Singh Nagar through its President Sri Rajeev Ghai and others … Petitioner. Versus State of Uttarakhand through its Secretary Panchayat Raj Dehradun and others … Respondents. Mr. MC. Bansal, Advocate for the petitioners. Mr. K.C. Tiwari, Brief Holder for the State. Mr. A.D. Tripathi, Advocate for respondent No.2. (Hon’ble B.S. Verma, J. ) By means of this petition the petitioners have sought the following relief- (1) To issue a writ, order or direction in the nature of certiorari to quash the amended notification no. Ik=kad 942@jktLo@xtV 2006-2007] dated 6-9-2006 published by respondent No.1 in the official gazette on 9-9-2006, and further to quash the direction letter/ order dated 8-1-2008 issued by the respondent No.1 to the respondent No.2 (Annexure Nos. 1 and 2 respectively). (2) To issue a writ, order or direction in the nature of mandamus directing the respondents, not to recover the license fee from the petitioners nos. 2 to 5 and other members of the petitioner No.1. (3) To issue any other writ, order or direction or grant such other further relief in favour of the petitioners which this Hon’ble Court may deem fit and proper in the facts and circumstances of the case. Brief facts according to the petitioner, giving rise to this petition, are that petitioner No.1 is a society duly registered under Registration of Securities Act. Its main purpose is to promote and project the trade, commerce and industry of the area and to watch the interest of the member industrial units and further to represent or make known their point of view and the interest of the Chamber as a whole before Governmental or Quasi-Governmental authorities, trade or industrial body, Chamber of Commerce and other 2 organizations and with that aim to lead delegations, representations etc and to conduct correspondence, negotiations and to take all such proceedings legal or otherwise may be necessary or expedient and to obtain for them such concession and privilege as may be deemed necessary. The newly constituted State of Uttarakhand was declared as special category State by the Central Government and a new Industrial Policy and an action plan for development of industries and generation of employment in the State was provided. The Central Government notified the State Industrial Development Corporation of Uttaranchal Ltd.(SIDCUL) as a nodal agency for routing the subsidized incentives under various schemes provided in the new Industrial Policy issued on 7.1.2003. After creation of State of Uttarakhand as per Section 89 of U.P. Reorganization Act, 2000, the U.P. Industrial Development Act 1976 was adopted by the State of Uttarakhand and the State of Uttarakhand constituted an Industrial Development Authority Uttarakhand. The whole industrial development infrastructure of Industrial Estate Pant Nagar is to be carried out by the SIDCUL and SIDCUL is to provide land on lease to the industrialist. Apart from charging land premium from the allottee the SIDCUL also charges the location benefit charges, corner plot charges, operation and maintenance charges and occupation charges etc from the allottee. It is further alleged in the petition that it is the duty of SIDCUL to provide all amenities which includes roads, water supply, street lightening, power supply, sewerage, drainage, treatment and disposal of industrial waste and town refuge and other community facilities, services or conveyance as the State Govt. may by notification specify to be an amenity for this purpose. The grievance of the petitioner is that Zila Panchayat Udham Singh Nagar has imposed license fee upon all the industrial units established in the Industrial Estate Pant Nagar(SIDCUL) on the basis of Rule 11(3) dated 6-9-2006 as published on 9-9-2006 in the Official Gazette. It is further case of the petitioner that all the Factories established in Integrated Industrial Estate Pant Nagar are required to obtain a license from the Assistant Director Factories and 3 Boilers (Uttarakhand) for which necessary license fee is paid to the licensing authority under Manual of Factories Uttar Pradesh. The petitioners 2 to 5 have also obtained licenses from the Assistant Director Factories and Boilers (Uttarakhand). The Zila Panchayat has no statutory powers to frame bye-laws for charging license fee from the industrial unites established in an Industrial Estate like Industrial Estate Pant Nagar. It is further alleged by the petitioner that Industrial Estate Pant Nagar is a duly notified area for establishing industries therein hence it is an urban area and not the rural area and the Zila Panchayat U.S. Nagar has got no right to charge license fee from the industrial units. The petitioner also sent representation to the Commissioner Kumaon Division Nainital, against the action of respondent No.1, as well as to the Upper Mukhya Adhikari, Zila Panchayat U.S. Nagar, demanding licences fee through the amended notification no. Ik=kad 942@jktLo@xtV@ 2006-2007] dated 6-9-2006 published by respondent No.1in the official gazette on 9-9- 2006. According to the petitioner the above notification is ultra virus and liable to be quashed. Hence this petition. The State of Uttarakhand/respondent No.1 filed counter affidavit and alleged that the byelaws of Zila Panchayat were published in the official gazetted after being duly approved by the State Government in accordance with the provisions of Section 239(2) of the U.P. Kshettra Panchayat & Zila Panchayat Act, 1961 as applicable to the State of Uttarakhand. Earlier when Udham Singh Nagar was a part of district Nainital, Zila Panchayat Nainital had made its byelaws imposing license fee on the Mills/Factories operating within the District. In view of byelaw 11(3) of the Zila Panchayat is authorised to recover license fee from the industrial units and factories operating within its territory. It is further alleged in the counter affidavit that in response to a letter dated 29-11-2008 of the Managing Director, SIDCUL, Dehradun the State Government vide its order No. 2873/VII-II/219-m|ksx/2008 dated 17-2-2009 has clarified that the byelaws framed under Section 239 of the 1961 Act are also applicable to the Industrial Estate. 4 It is further alleged in the counter affidavit that with the coming into force of an amendment w.e.f. 30-5-1994 notified area and town area committees were replaced by the new nomenclature of Nagar Panchayat. A joint reading of section 143 and 239 of the Kshettra Panchayat & Zila Panchayat Act makes it clear that the impugned byelaws are completely intravires the constitution as the Act confers power on the Zila Panchayat to impose license fee. The respondent No.2, Zila Panchayat also filed counter affidavit and reiterated the facts mentioned by the State in its counter affidavit. It is alleged in the counter affidavit that the Zila Panchayat has framed bye-laws under Section 239 of the Act, approved by the Commissioner and notified in the Gazette Notification dated 24-12- 2005 and (correction) Notification dated 9th September 2006, to control and manage the factories and industries running therein the local/rural area under its limit. The respondent No.2 also alleged that Regional Manager Sri N.C. Pant vide his letter No. 5124 dated 3rd June, 2008 asked the Zila Panchayat that the Industrial Area is out of the limit of Municipal area and it has stopped to remove the solid wastes of the factories, therefore, arrangement be made to remove the solid wastes of the factories and cleaning the surroundings and also protect the commuters from the hygienic condition. On this Zila Panchayat wrote letter to the State Govt. to give direction regarding collection of license fees from the industries established in the industrial estate and in reply thereto the Government has directed the respondent to collect the license fees from the industries/factors according to the provision of bye-laws and the said provisions are equally applicable to the industrial area of Pant Nagar/SIDCUL vide Govt. Order No. 987/XII/08/90(11)/2005 dated 8th January 2008 and Govt. Order No. 2873/VII-II/219- Udhyog/2008 dated 17th February, 2009. It is also alleged by the respondent/Zila Panchayat that near about 200 industries/factories are in operation in the SIDCUL Industrial Estate and 90% of the factory/industry owners are paying the license fees to the respondent and only 10% are against of it. 5 The petitioners filed rejoinder affidavit and denied the contents of the counter affidavit filed by the respondents and reiterated the facts mentioned in the writ petition. I have heard learned counsel for the parties and perused the record. The main controversy to be decided in this writ petition is- ‘whether the respondent No.2, Zila Panchayat, Udham Singh Nagar can levy license fee from the factories/industries established within the precincts of Industrial Estate Pant Nagar/SIDCUL Rudrapur District Udham Singh Nagar or not?’. Perusal of record shows that the Upper Mukhya Adhikari, Zila Panchayat Udham Singh Nagar has issued amended Notification Ik=kad 942@jktLo@xtV@ 2006-2007] dated 6-9-2006 published by respondent No.1 in the official gazette on 9-9-2006, annexed as Annexure No.1 to the writ petition. Through above notification provision of recovery of license fee from the mills/factors established within the area of District Udham Singh was made. Further vide Govt. Order No. 987/XII/08/90(11)/2005 dated 8th January 2008, the Upper Mukhya Adhikari, Zila Panchayat, Udham Singh Nagar was directed to recover license fee in accordance with the provisions of relevant rules. Learned counsel for the petitioners has submitted that at present 283 industrial units are working in the Industrial Estate Pant Nagar (SIDCUL) at Rudrapur District Udham Singh Nagar and these units are duly registered under the Societies Registration Act vide Annexure 4 and 5 to the writ petition. After creation of new State of Uttarakhand and according to section 89 of U.P. Reorganization Act, 2000 the U.P. Industrial Area Development Act of 1976 was adopted by the State of Uttarakhand and the State of Uttarakhand constituted an Industrial Development Authority Uttarakhand and a notification was duly issued on 7.7.2005 which was published in the official Gazette on 9-7-2005. According to para –3 of this notification all the activities of the Industrial Development Authority were to be routed by the SIDCUL. SIDCUL has been empowered to impose development charges and taxes on the industrial units established in the industrial estate Pant Nagar and the Zila Panchayat has no 6 authority to collect taxes from the industries/mills established within the township of Pant Nagar. Learned counsel also submitted that Zila Panchayat is a duly constituted body for the Rural areas and not for urban/notified areas. On the other hand learned counsel appearing on behalf of respondents submitted that Zila Panchayat has been empowered to make bye-laws for its own purpose and for the purpose of Kshetriya Panchayat applicable to the whole or any part of rural area of the District U/Ss 143 and 239 of Kshettra Panchayat and Zila Panchayat Adhiniyam (Uttaranchal Act No. 15 of 2002 and Uttaranchal Act No. 8 of 2002). To resolve the controversy in the case it would be reasonable to quote the relevant provisions of law. According to Zila Panchayat it has been empowered to make bye-law under the provisions of section 143 and 239 of Kshettra Panchayat and Zila Panchayat Adhiniyam, which are quoted below- ‘143. Licence fee, etc.- A Zila Panchayat or Kshettra Panchayat may charge a fee to be fixed by bye-law for any license, sanction or permission which it is entitled or required to grant by or under this Act. 239. Powers of Zila Panchayat to make bye-laws – (1) A Zila Panchayat may, and where required by the State Government shall, make bye-laws for its own purposes and for the purposes of Kshettra Panchayats, applicable to the whole or any part of the rural area of the district, consistent with this Act and with any rule, in respect of maters required by this Acts to be governed by bye-laws and for the purposes of promoting or maintaining the health, safety and convenience of the inhabitants of the rural area of the district and for the furtherance of the administration of this Act in the Khand and the district. (2) In particular and without prejudice to the generality of the power conferred by sub-section (1), a Zila Panchayat may, in the exercise of the said power, make any byelaws described in the list below.’ A bare perusal of Section 143 of the Act, shows that Zila Panchayat may charge a fee to be fixed by bye-law for any license, sanction or permission which it is entitled or required to grant by or under this Act. The power of Zila Panchayat to make bye-laws has been given under Section 239 of the Act. But this power of Zila Panchayat is applicable to the whole or any part of the rural area of 7 the District for promoting or maintaining the health, safety and convenience of the inhabitants of the rural area of the District, and not for urban /notified areas. Further, Zila Panchayat may, in exercise of the said power make any bye-laws described in the list given in Section 239 of the Act and perusal of the list shows that the Zila Panchayat has not been empowered to make bye-law to grant license to the industries/mills established in its territory. There is only mention in para (3) of List H-Miscellaneous that Zila Panchayat may make any bye-laws for holding of fairs and industrial exhibitions and that too within the rural areas being the property of Government or of Zila Panchayat, or a Kshettra Panchayat or being under the control of Zila Panchayat or a Kshettra Panchayat. Learned counsel appearing on behalf of the respondents has submitted that Zila Panchayat has been empowered to frame bye- laws under the provisions of Section 143 and 239(2) of the Act, and recover license fee from the industries established within the limits of Zila Panchayat. In support of his contention he has cited before me the judgment of Division Bench of this Court, dated 30-11-2006, rendered in W.P. No. 7410 of 2001 (M/B), M/s Shriram Honda Equipment Ltd vs. State of Uttar Pradesh and others. I have gone through the above cited case and I find that the facts of the above cited case are totally different. The petitioner in the above cited case M/s Shriram Honda Equipment Ltd. is established in Kichha and not within the Industrial Area Pant Nagar, SIDCUL and that area has not been notified under any agency not controlled under the control of Zila Panchayat. Section 37 of the Act is a restriction clause in respect of jurisdiction of Zila Panchayat which reads as below- 37. Savings in respect of jurisdiction of Zila Panchayat and Kshettra Panchayats- Nothing in this Act shall- (1) confer on any Kshettra Panchayat or Zila Panchayat any right in respect of any work or institution carried out and maintained by any agency not under the control of such Kshettra Panchayat or Zila Panchayat; or 8 (2) entitle a Kshettra Panchayat or Zila Panchayat to exercise within the limits of any Municipal Corporation, Municipality, notified area, cantonment or town area and authority which is vested in the Municipal Corporation, Municipality, notified area committee, cantonment board, district Magistrate, any other magistrate or town area committee, as the case may be, provided that the Kshettra Panchayat or Zila Panchayat may nevertheless- (a) omitted by Section 9 of U.P. Act No. 16 of 1965 (b) construct, maintain and control within the aforesaid limits any school, library, hospital, dispensary, poor house, asylum, orphanage, inspection house or other building or institution which is not maintained exclusively for the benefit of persons residing within the aforesaid limits, and do anything within the aforesaid limits the doing of which is necessary for the efficient discharge of its functions under this Act. Therefore, by perusal of above provision of law, it is crystal clear that any Kshettra Panchayat or Zila Panchayat has no jurisdiction and right in respect of any work or institution carried out and maintained by any agency not under the control of such Kshettra or Zila Panchayat. It is pertinent to mention here that in the case in hand SIDCUL is an agency duly constituted by law for carrying out all the development works and to collect tax in the industrial estate of Pant Nagar and it is not under the control of Zila Panchayat hence the Zila Panchayat is ceased to operate or to have jurisdiction in respect of industrial estate Pant Nagar. ‘Rural area’ has been defined U/S 2(10) of the Act, which runs as under- “2. Definitions- In this Act unless there be something repugnant in the subject or context- (10)”Rural Area” means the area of a district excluding every municipality, notified area, town area, cantonment and area of Municipal Corporation situated in the district.” 9 A combined reading of Section 2(10) and section 37(1) of the Act goes to show that by this Adhiniyam the Zila Panchayat is ceased to operate or to have jurisdiction in respect of notified area. The Industrial Estate Pant Nagar is a notified area/industrial town hence it is not a rural area but it is an urban industrial area and out of the purview of the Adhiniyam. It is pertinent to mention here that a fee is payment levied by an authority in respect of services performed by it. The Hon’ble Apex Court in the case of M. Chandru versus Member Secretary Chennai Metropolitan Development Authority and another, reported in (2009) 4 Supreme Court Cases 72, has held as under- “24. We have seen that a fee is a payment levied by an authority in respect of services performed by it for the benefit of the payer, while a tax is payable for the common benefits conferred by the authority on all taxpayers. A fee is a payment made for some special benefit enjoyed by the payer and the payment is proportional to such benefit. Money raised by fee is appropriated for the performance of the service and does not merge in the general revenue. Where, however, the service is indistinguishable from the public services and forms part of the latter it is necessary to inquire what is the primary object of the levy and the essential purpose which it is intended to achieve. While there is no quid pro quo between a taxpayer and the authority in case of a tax, there is a necessary co-relation between fee collected and the service intended to be rendered. Of course the quid pro quo need not be understood in mathematical equivalence but only in a fair correspondence between the two. A broad co-relationship is all that is necessary.” In the instant case respondent Zila Panchayat has tried to establish that Regional Manager Sri N.C. Pant vide his letter No. 5124 dated 3rd June, 2008 has asked the Zila Panchayat that the Industrial Area is out of the limit of Municipal area and it has stopped to remove the solid wastes of the factories, therefore, arrangement be made to remove the solid wastes of the factories and cleaning the surroundings and also protect the commuters from the hygienic condition and keeping in view the aforesaid request Zila Panchayat wrote letter to 10 State Govt to give direction regarding collection of license fees from the industries established in the industrial estate and thereafter proceedings of issuing the byelaws has started. However, the petitioners have denied any kindly of services that are being rendered by Zila Panchayat within industrial area. Therefore, the respondent Zila Panchayat has also failed to establish that the license fee to be realized under the byelaws is a payment levied by it in respect of services performed by it for the benefit of the fee-payer. This fact is also not proved that there is necessary co-relation between fee collected and the service intended to be rendered. However, any-how the Zila Panchayat has not been empowered by statutory provisions of law referred above to levy license fee upon the mills/factories within the industrial area, as the industrial estate Pant Nagar has been earmarked and notified by the Government as special area for the development of industries/ factories and SIDCUL has been notified as Nodal Agency for maintenance of up-keeping of the industries/mills, to collect taxes, to provide all amenities which includes roads, water supply, street lighting, power supply, sewerage, drainage, treatment and disposal of industrial waste and town refuge and other community facilities, services or conveyance. In view of discussions made above, the writ petition is liable to be allowed. The impugned notification as well as the action on the part of the respondent Zila Panchayat to recover license fee from the petitioners is certainly against the specific provisions of the Act and cannot be permitted to stand in the eyes of law. The writ petition is allowed. The respondents are directed not to recover the license fee from the petitioners as well as the other factories/mills established within the Industrial Area Pant Nagar (SIDCUL), pursuant to amended notification no. i=kWkd 942@jktLo@xtV& 2006-2007 dated 6-9-2006 published by respondent No.1 in the official gazetted on 9-9-2006. The aforesaid amended notification, as well as the direction letter/ order dated 8-1-2008 issued by the respondent No.1 to the respondent No.2, contained in annexure Nos. 1 and 2 respectively in the writ petition, so far as they relate to the factories/mills established within the Industrial Area Pant 11 Nagar (SIDCUL), District Udham Singh Nagar, cannot be enforced in view of provision of Section 37(1) of the Kshettra Panchayat & Zila Panchayat Act. Dated: December 16, 2010 (B.S. Verma, J. ) ISB