1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.2787 OF 2001 1.Small Scale Entrepreneurs Association, Late Shri.Sharad Kelkar Common Facility Centre, Rabale, Navi Mumbai, through its President Shri.N.D.Chavan 2.Mahape Industries Welfare Association, EL – 105, Electronic Zone, MIDC, Mahape, Navi Mumbai – 400 709, through its Vice President Mr.D.Narsiah 3.Mr.D.Narsiah, Managing Partner, National Engineering Corporation, EL – 105, Electronic Zone, MIDC, Mahape Navi Mumbai – 400 709. 4.Mr.Sanjay Mehta, Managing Director, M/s.Protolab Electrotechnologies Pvt.Ltd., EL – 93, Electronic Zone, MIDC, Mahape, Navi Mumbai – 400 709. .. Petitioners V/s 1.State of Maharashtra, through The Chief Secretary, Govt.of Maharashtra, Mantralaya, Mumbai 400 032. 2.The Secretary, Industries & Labour Dept., Government of Maharashtra, Mantralaya Mumbai 400 032. 3.The Secretary, Urban Development Dept., Government of Maharashtra, Mantralaya, Mumbai 400 032. 4.The Industries Commissioner, 2 for the State of Maharashtra, Directorate of Industries, New Administrative Building, Opp.Mantralaya, Mumbai. 5.Maharashtra Industrial Development Corporation (MIDC), through the Chief Executive Officer, Mahakali Caves Road, Andheri (E), Mumbai 400 093. 6.The Navi Mumbai Municipal Corporation through the Commissioner, Belapur Bhavan C.B.D., Belapaur, Navi Mumbai 400 614. 7.The Area Manager, Maharashtra Industrial Development Corporation (MIDC), Mahape, Navi Mumbai. .. Respondents Ms.Rajani Ayer, Senior Counsel with Mr.Firoz Palkhiwala, Ms.Mili V.Thakkar, Ms.S.V.Thakkar, Mr.Vijay P. Salunkhe and Mr.Hemang Engineer for the petitioners, Ms.S.S.Bhende, learned AGP for Respondent Nos.1 to 4. Mr.R.S.Apte, Senior Counsel with Mr.A.A.Garge for Respondent No.6­ NMMC. Ms.Deepa Chavan, with Mr.Kiran Gandhi and Mr.Ravindra R.Chile for Respondent Nos.5 and 7 being the MIDC and its Area Manager. ....... CORAM : P. B.MAJMUDAR & R.G.KETKAR, JJ. JUDGMENT RESERVED ON : 6TH MAY, 2010 JUDGMENT PRONOUNCED ON : 8TH JULY, 2010 3 JUDGMENT : (Per R.G.Ketkar, J.) 1. By this petition under Article 226 of the Constitution of India, the petitioners inter­alia challenge the action of Respondent No. 6, Municipal Corporation of the City of Navi Mumbai (for short NMMC) to levy and collect the property taxes, rates and cess; seek declaration that the Thane Trans Creek (for short TTC) area admeasuring 24.690 Sq.Kilometers within the jurisdiction of Respondent No.5­Maharashtra Industrial Development Corporation (for short MIDC) does not fall within the municipal limits of NMMC as per the Notification bearing No.NBC 1091/140/CR­14/91/UD­20 dated December 17, 1991 and consequently, the NMMC has no power to levy and collect any taxes including the property taxes and cess from the petitioners. The petitioners have also sought appropriate writ directing 1st Respondent­State of Maharashtra to constitute the TTC and Thane Belapur Industrial Area (for short TBIA) into Industrial Township by issuing Notification as per Section 341F of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965 (for short “Act of 1965”). The petitioners also challenge the demand notices issued by the 4 NMMC as also the Memorandum of Understanding (for short MOU) dated December 1, 2005 entered into between the MIDC and the NMMC. 2. The petitioner No.1 is a Small Scale Entrepreneurs Association having Registration No.SMAH/2505/THN & F­3418 THN. The Petitioner No.2 is Mahape Industries Welfare Association having Registration No.Mah/37/2001/Thane. The Petitioner Nos.3 & 4 are the Managing Directors of the units in Mahape. The petitioner Nos.1 to 4 collectively, hereinafter, will be referred as the petitioners. 3. The core issues that arise in the present petition are as follows:­ (1) Whether after the Constitution (74th) Amendment Act 1992 and Amendment to the ‘Act of 1965’ which came into force on May 31, 1994 the Government of Maharashtra can indefinitely postpone the issue of notification for the formation of Industrial Townships? (2) Whether it was the bonafide decision of the State Government, not to constitute TTC & TBIA known to be the oldest and the largest Industrial areas from constituting Industrial Townships while allowing several other Industrial 5 areas in the State to become Industrial Townships under the ‘Act of 1965’? (3) Whether the Bombay Provincial Municipal Corporations Act, 1949 (for short BPMC Act) will prevail over the Maharashtra Industrial Development Act, 1961 (for short MID Act) in case of conflict between the two statutes? (4) Whether the NMMC can levy property taxes in the Industrial area without rendering services of any type, civic or otherwise, particularly when it is the obligation of the MIDC to provide all the necessary infrastructure and services including water supply, sewerage, road, street lights etc.? (5) Whether the NMMC can levy municipal taxes in an area which is within the municipal limits of NMMC where the NMMC does not render any services in that area? (6) Whether the TTC area admeasuring 24.690 Sq. Kilometers within the jurisdiction of MIDC falls within the Municipal limits of NMMC? 4. Before dealing with the issues raised in this petition, it is necessary to make a brief reference to the circumstances leading to the filing of the present petition. 6 5. In the year 1961, MID Act was enacted inter­alia to make special provision for securing orderly establishment in industrial areas and industrial estates of industries in the State of Maharashtra, and to assist generally in the organization thereof, and for that purpose to establish an Industrial Development Corporation, and for purposes connected with the aforesaid matters. In furtherance therof, the private lands as well Government lands in 19 villages, list whereof is at Exh.”K” at page No.141, were acquired by the State Government and the MIDC was established in the year 1962. These lands came to be vested in the MIDC. 6. Under the Notification dated March 20, 1971 issued by the Urban Development, Public Health & Housing Department of the State of Maharashtra, an area comprised in 28 villages was designated as a site for new town to be known as “New Bombay”. By another Notification dated March 20, 1971 issued by the Urban Development, Public Health & Housing Department of the State of Maharashtra, City and Industrial Development Corporation (for short CIDCO) was designated as a New Town Development Authority for the area covered under 7 the earlier Notification dated March 20, 1971. 7. Under the Notification dated August 16, 1973 issued by the Urban Development, Public Health & Housing Department of the State of Maharashtra, additional area was included in the site designated for New Bombay in the final Plan for Bombay Metropolitan Region and consequently the Government felt that in the public interest, the said added area should be developed as an integral part of the site and accordingly, included this added area in the proposed New Town viz.New Bombay. By another Notification dated August 16, 1973 issued by the Urban Development, Public Health and Housing Department, the State Government designated CIDCO as New Town Development Authority for the additional area as well. 8. By a draft Notification dated August 27, 1991 issued by the Urban Development Department of the State of Maharashtra u/s.3 (2) of the BPMC Act, proposed that the local areas of 30 villages to constitute NMMC. On December 12, 1991 an Addendum to the said Notification was issued by the Urban Development Department of the State of Maharashtra adding 14 villages constituting the NMMC. None of the petitioners or any 8 member raised any objection to these notifications. After considering the objections and suggestions, the Urban Development Department of the State of Maharashtra issued final Notification on December 17, 1991 constituting the NMMC. 9. It is the case of the petitioners that by the letters dated March 8, 1994 and May 4, 1994 issued by the Chief Executive Officer of the MIDC to the Secretary, Urban Development Department of the State of Maharashtra, submitted a proposal for declaration of New Industrial Municipal Township in respect of six locations, one of them being TTC. On September 7, 1994 in exercise of power conferred by Article 201(i) of the Memorandum of Association and Articles of Association of CIDCO, the State Government directed the CIDCO to transfer 50% amount of the development charges collected from the NMMC area so far to the NMMC immediately and further directed that the NMMC shall act as a Planning Authority for development of Nodes of Vashi­Sanpada, Nerul, Belapur­CBD and Airoli as provided u/s. 2(15)(a) of the Maharashtra Regional and Town Planning Act 1966 (for short M.R.& T.P.Act). 10.On December 16, 1994 the Urban Development Department of 9 the Government of Maharashtra issued a directive u/s.154 of the M.R.& T.P.Act modifying the earlier order dated September 7, 1994. The said directive is at Exhibit S, pages 152, 153 of the petition. 11. On November 20, 1996 the additional Chief Secretary, Urban Development Department, Government of Maharashtra, issued directions to the MIDC, the Mumbai Municipal Corporation and others inter­alia setting out therein that the development/building permission within the MIDC area shall be given by the MIDC as per the Development Control Regulations for that area regardless of its inclusion within or outside jurisdiction of the local authority. However, it is obligatory on the part of MIDC to obtain ‘No Dues certificate’ from the local authority before granting such permissions. The MIDC Shall ask for such a certificate from local authority and in case no communication is received within period 60 days it will be presumed that there are no dues. In cases where such areas included within the jurisdiction of the local authority i.e. Municipal Corporation or Municipal Council, development charges required to be levied shall be recovered by by the MIDC 10 and handed over to the respective local authority. The capital works providing infrastructures, within the MIDC area shall be carried out by the MIDC and the same shall be handed over to the local authority, free of cost, for maintenance. Till then the present system of providing water supply, fire fighting arrangements etc. be continued to be provided by the local authority. The Property Tax, Octroi etc. shall be collected by the local authority. Similarly, licenses required under the local authority shall be issued by the concerned local authority. On September 28, 2000, CIDCO issued notice u/s.37 of the M.R.& T.P.Act proposing the modifications to regulation 16.3(1­a) C of General Development Control Regulations for Navi Mumbai. 12.It is the case of the petitioners that on the assumption that the MIDC area is included within its jurisdiction on August 23, 2001 final notice was issued by NMMC giving 48 hours time to the members of the petitioners for depositing the arrears of property tax. It is at this stage, the above petition was filed on June 11, 2001. 13.The petition, as was originally filed, claimed for declaration that the levy and collection of the property taxes by the NMMC from 11 the petitioners is not for the purposes of the BPMC Act and hence without the authority of law and bad in law; to declare that clause 7(1) of the first schedule of the M.R.& T.P.Act prohibits the levy and collection of “taxes including the property taxes” from the petitioners. The petitioners also claimed refund of all the amounts collected in the name of the property tax and or such other or any other levies to the petitioners. The petitioners further prayed for direction to the State Government to act as per section 341F of the Maharashtra Municipal Corporation and Municipal Councils (Amendment) Act, 1994 to constitute the TTC & TBIA into the Industrial Township by issuing the Notification in the official gazette. As and by way of of interim reliefs, the petitioners prayed for stay of 48 hours notice issued by the NMMC. 14.By order dated June 12, 2001 the Court issued notices to the Respondent Nos.5 to 7 as the Respondent Nos.1 to 4 were represented through the Counsel, and the notices were made returnable in four weeks. In the meantime, the ad­interim relief in terms of prayer clause 9(a) of the petition was granted. By that order the Court granted stay of all the 48 hours notices 12 issued by NMMC to the petitioners threatening attachment of the property and belongings of the petitioners and the sale thereof by way of an action. 15.The matter was heard before this Court for admission and on September 14, 2001 the Court issued rule and the rule was made returnable after six weeks. The Court refused interim relief. The petitioners took out Civil Application No.115 of 2002 for review of the order dated September 14, 2001. After hearing both sides, the Court dismissed the Civil Application on January 21, 2002. The petitioners carried the matter before the Apex Court by filing the SLP against the said decision. The Apex Court dismissed the SLP preferred by the petitioners on October 4, 2002. In the meantime, the petitioners took out Civil Application No.807 of 2002 praying for interim order, which was also rejected by this Court on April 19, 2002. 16.The petitioners thereafter took out the Civil Application No. 1057 of 2005 for amendment of the writ petition on March 18, 2005 interalia contending that certain documents were required to be brought on record for deciding the controversy in the petition. These documents were searched out by the petitioners 13 recently. Apart from the prayer for amendment in the petition, the petitioners prayed for injunction restraining the NMMC from in any manner demanding, levying, collecting and or recovering any rates or taxes including the property tax and sales tax from the petitioners. By an order dated August 19, 2005, the Court allowed the Civil Application only in so far prayer of amendment concerned. Pursuant to the said order, the petitioners carried out amendment in the original petition and added paragraph Nos. 5A to 5N after paragraph No.5. The added paragraphs refer to the Exhibits K to X. The petitioners added words “rates and cess” after the words “property taxes” in prayer clauses (A) and (C). 17.The MIDC and the NMMC entered into MOU on December 1, 2005 for handing over the maintenance of infrastructure facilities within the TTC area to the NMMC. On January 24, 2006 this Court dismissed the petition on the ground that the petitioners have an equally efficacious alternate remedy of appeal u/s.406 of the BPMC Act. The petitioners carried the matter to the Apex Court and by an order dated May 8, 2006 the Apex Court set aside the order of this Court dated January 24, 14 2006 and remanded the matter to this Court for disposal on merits. All the contentions of both the parties, except the question of an alternate remedy, were kept open. 18.On April 2, 2007 the petitioners took out the Civil Application No.1788 of 2007 and Civil Application No.1789 of 2007 for amendment of the writ petition. By an order dated July 12, 2007 both the applications were allowed by this Court. Pursuant to the order of this Court in Civil Application No.1788 of 2007 the petitioners added:­ (1) Paragraph 5K­1 after Paragraph No.5K. (2) Paragraph 5L­1 after Paragraph No.5L. (3) Paragraph 4c­1 to 4c­4 after Paragraph No.4­c. (4) Ground A1 to A8 after Ground A. (5) Prayer (D­1) (i) to (iii), (D­2) (i) to (iii), (D­3) (i) to (ii) after prayer D. (6) Prayer clause (a­1) (i) & (ii) after prayer (a) in Paragraph No.16. The added paragraphs refer to Exhibits Y, Z, B­1 to B­9. 19.Pursuant to the order passed in the Civil Application No.1789 of 2007, the petitioners added: 15 (1) paragaph 4c­5 and 4c­6 after paragraph No.4c­4 These added paragraphs refer to Exhibits B­10 to B­22. (2) sub paragraph before the submissions in Ground A­1 (3) prayer (iv) in prayer (D­1) (4) prayer (iv) in prayer (D­2) (5) Interim prayers (iii) and (iv) in prayer (a­1) in paragraph 16. 20.In the meantime, by Notification dated June 8, 2007 issued by the Urban Development Department, Government of Maharashtra u/s.3 (3) (a) of the BPMC Act, 14 villages as more particularly set out in Schedule 1 appended thereto were excluded from the limits of the NMMC and the revised boundaries of the NMMC were specified in Schedule II appended thereto. 21.The Petition was heard before this Court on September 4, 2007, October 4, 2007 and October 18, 2007 when, according to the petitioners, this Court declined orally to grant the interim reliefs. The petitioners therefore preferred SLP against these orders before the Apex Court and the same was dismissed on January 4, 2008. 16 22.On June 17, 2008 Civil Application No.1048 of 2008 taken out by the petitioners for amendment was allowed. Pursuant to this order, the petitioners added:­ (1) paragraph 5AB1 to 5AB7 after paragraph No.5A and before grounds 5A­1 to 5A­8. These paragraphs refer to Exhibits M1 to M9. (2) sub paragraphs before submissions in ground A1 of the petition. 23.On September 8, 2008 the petitioners took out Civil Application No.2115 of 2008 for amendment of the writ petition. The said application was allowed on September 29, 2008. Pursuant to that order, the petitioners added:­ (1) paragraph (A­3) (2) prayer (A1) after prayer (A) and before prayer (B) in paragraph No.8 of the petition. 24.The Petitioners have come out with the case that the MIDC area does not fall within the territorial jurisdiction of the NMMC and consequently the NMMC has no power to levy and recover taxes and cess in the MIDC area. The petitioners rely upon 17 Notification dated December 17, 1991 and the draft Notifications dated August 27, 1991 and the Addendum dated December 2, 1991. Comparing the language employed in the draft notifications and the final notification dated December 17, 1991, it is submitted that the MIDC area does not form part of the municipal limits of the NMMC. The petitioners also rely upon the directives dated September 7, 1994 and December 16, 1994 issued by the State Government in support of the submissions. The petitioners rely upon various maps produced by the parties to this petition, the boundaries described in these maps as compared to the boundaries set out in the final Notification dated December 17, 1991 to contend that the MIDC area does not form part of the municipal limits of the NMMC. The petitioners have also brought on record the area calculations to substantiate their claim that the MIDC area does not form part of the municipal limits. 25.Without prejudice to their basic contention that the MIDC area does not form part of the municipal limits of NMMC, the petitioners submit that in view of clause 7 of the First Schedule of the M.R.& T.P.Act, they are not liable to pay the property taxes 18 and the other taxes levied by the NMMC as they are the lessees of MIDC. The petitioners rely upon the Division Bench Judgment of this Court in the case of Jalgaon Municipal Corporation in Writ Petition No.1012 of 2003 dated 9th October, 2006 for contending that it is the statutory obligation of MIDC to provide services in the area falling under the MIDC and consequently, the NMMC cannot provide any services in the said area. The petitioners have brought on record the levies of MIDC and NMMC. They submit that none of the duties as prescribed under sections 63 and 66 of the BPMC Act are discharged by the NMMC in so far as the MIDC area is concerned and consequently, the NMMC cannot levy and recover any taxes from the MIDC area. The petitioners have also assailed the MOU dated December 1, 2005 entered into between the MIDC and the NMMC, whereunder, the MIDC has handed over the maintenance of roads, drains etc. to the NMMC. It is the contention of the petitioners that the MIDC cannot contract out of its statutory functions. By entering into MOU dated December 1, 2005 the MIDC has abdicated its statutory duties. 26.On April 11, 2002 the NMMC filed first affidavit of Mr.Prakash 19 Kulkarni, Deputy Assessor and Collector (Property Tax), interalia contending that none of the petitioners or any other organization or association of Industries had objected to inclusion of Industrial area within the municipal limits of the NMMC at the time of its formation. As per section 127 of the BPMC Act, the NMMC is authorised to impose property taxes among other taxes within its area. The mode and manner of recovering the municipal taxes is laid down u/s.128 of the BPMC Act. After following the procedure laid down under the BPMC Act, the NMMC has levied the property tax on all the buildings and lands within its area including the TTC Industrial area of the MIDC. 27.In so far as the prayer of the petitioners to constitute TTC area into the Industrial Township, it was contended that as per Article 243(Q) of the Constitution of India, it is left to the discretion of the State Government and consequently the petitioners cannot pray for writ of mandamus. It was denied that the NMMC levied the property taxes with retrospective effect. On these among other grounds, it was contended that the petition is liable to be dismissed. 20 28.The MIDC filed its first reply dated July 29, 2002 through Mr.Sanjay D.Patil, Chief Planner, interalia contending that the correspondence was exchanged between the authorities of the MIDC and the State Government for establishment of the Industrial Township. The subject of formation of the Industrial Township is, however, within the domain of the State Government. 29.On behalf of the NMMC, Mr.Prakash Kulkarni, Joint Commissioner (Property Tax), made 2nd affidavit, interalia contending that pursuant to the Government Notification dated December 17, 1991 the NMMC was constituted w.e.f. January 1, 1992, which includes TTC Industrial area. By Notification dated December 16, 1994 issued by the Urban Development Department of the Government of Maharashtra, the NMMC was designated as a Planning Authority and was empowered to exercise powers of the Planning Authority as more particularly set out in the Schedule appended to the said Notification. As per the Section 40 (1A) of the M.R.& T.P.Act, the MIDC is designated as a special Planning Authority for the notified area of the TTC Industrial area. The functions as enumerated by the M.R.& 21 T.P.Act are different from those enumerated under the BPMC Act. The Notification dated December 16, 1994 makes functional differentiation between the MIDC and the NMMC in respect of the town planning only. Under the BMPC Act there are provisions for formation of the wards and pursuant to these provisions, the NMMC is divided in 88 wards, out of which 15 wards fall within the area of MIDC. It is further averred that in the matter of taxation, there is no quid pro quo. It is not a fee or service charge for reimbursement of expenses incurred for rendering the services. The authorities like MIDC or CIDCO are basically developmental agencies who ensure planned and scientific development of the land within the designated area. Once the substantial development of the infrastructural facilities is over, such facilities are handed over to the municipal bodies for maintenance and upgradation. The tax is an compulsory exaction of money by public authority for public purposes enforceable by law and is not a payment for services rendered. It is further averred in the affidavit the NMMC incurred expenses for developmental work of infrastructural facilities in the TTC area. The NMMC runs four Primary Health Centers in the MIDC 22 and the services therein are availed of by the workforce employed in the Industrial Establishment. The affidavit also highlights the attempts made by the petitioners for obtaining interim reliefs and all those attempts were unsuccessful. 30.The petitioners filed affidavit in rejoinder dated August 14, 2007 to the reply filed by the NMMC. The petitioners reiterated their contentions as regards the authority of NMMC to levy and recover taxes, cess and charges. The petitioners filed additional affidavit dated September 3, 2007 setting out therein coercive action of the NMMC for recovery of its dues. 31.On behalf of NMMC third affidavit was made by Mr.Prakash B.Kulkarni, Deputy Assessor and Collector on July 8, 2008 wherein, the Notification dated December 17, 1991 and the Map showing limits of NMMC & the Notification dated June 8, 2007 were enclosed. It was further brought on record that the NMMC declared its intention u/s.38 of the M.R.& T.P.Act to revise the development plan and to that effect Notification dated