IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No 18 of 1983 For Approval and Signature: Hon'ble MR.JUSTICE D.K.TRIVEDI and Hon'ble MR.JUSTICE K.M.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- AHMEDABAD MUNICIPAL CORPORATION,AHMEDABAD. Versus UNION OF INDIA,MINISTRY OF DEFENCE,NEW DELHI. -------------------------------------------------------------- Appearance: 1. First Appeal No. 18 of 1983 MR PRASHANT G DESAI for Petitioner No. 1 MR DN PATEL for Respondent No. 1-2 -------------------------------------------------------------- CORAM : MR.JUSTICE D.K.TRIVEDI and MR.JUSTICE K.M.MEHTA Date of decision: 7/04/2003 C.A.V. JUDGEMENT (Per : MR.JUSTICE K.M.MEHTA) 1. Ahmedabad Municipal Corporation - appellant original plaintiff has filed this appeal under Section 96 of the Code of Civil Procedure, against the judgment and decree dated 26th February, 1982, in Civil Suit No.2680 of 1977 filed by the plaintiff. The learned Judge by his impugned judgment has held that the Union of India - the defendant is exempted from liability of incremental contribution under the provisions of the Bombay Town Planning Act, 1954 (hereinafter referred to as `the said Act'). 2. The facts giving rise to this appeal are as under:- 2.1 The Ahmedabad Municipal Corporation - plaintiff had filed a Civil Suit No.2680 of 1977 before the City Civil Court, Ahmedabad, and prayed for a decree that defendant Union of India be directed to pay to the plaintiff a sum of Rs.1,03,139.25p/- with 6% interest from the date of the suit till the payment and costs. The said amount represents "incremental contribution" levied by the plaintiff under the provisions of the said Act. 2.2 Mr.P.G.Desai, learned counsel has referred to plaint and other documents in connection with Town Planning Scheme, Ahmedabad 15 and made following submissions on facts: 2.2(A) There was a property namely piece of land originally bearing Survey Nos.154 and 155 of Dariapur Kazipur Asarwa part of Final Plot No.4 situated in the area of Dariapur Kazipur ad-measuring 50890 square yards. The plaintiff declared its intention to make the Town Planning Scheme for the area covering part of the revenue village of Asarwa, Dariapur, Kajipur under its Resolution No.46 dated 1.5.1953. 2.2(B) It was further submitted that the then Government of Bombay thereafter made further resolution on 9.11.1953 and refused to sanction the intention of the plaintiff Corporation - local authority till the area was included within the limits of the local authority. The local authority thereafter declared its intention again to make a scheme by its resolution dated 1.2.54. The then Government under its resolution dated 25.5.56 sanctioned the intention to make the draft town planning scheme for the area. The area under the scheme was situated on the northern boundary of the Corporation limits. It is bounded on the north by the cantonment area, on the south by Magazine Fort and the area of Town Planning Scheme, Ahmedabad No.VII on the east and west by the area of Town Planning Scheme, Ahmedabad No.8. The total area comprised in this scheme is 75 Acres approximately. The area being adjacent to the magazine fort was prohibited for building use under Government Military Notification. It, therefore, remained undeveloped though quite ripe for building purposes. With the withdrawal of Government Notification and consequential removal of restriction for the development of this area for building purposes, it became fit for immediate development. But as it had no internal accesses and facilities for public services like water, drainage, lighting etc., quite essential for promotion of development, it remained barren and undeveloped. In order to extend these services and facilitate the speedy development of the area, the Ahmedabad Municipal Corporation got this area included within its limits. 2.2(C) The plaintiff in making this scheme, made departure from its past practice of planning an area under a Town Planning Scheme and prepared a comprehensive development scheme in such a way that the smallest building unit could get direct pucca approach with all public services, after keeping sufficient lands reserved for public purposes. The plaintiff accordingly prepared and published the draft scheme by a Notification in the extra-ordinary issue of Bombay Government Gazette dated 28.3.1957 (Part-II). The draft scheme so prepared and published was ultimately sanctioned by Government under its Notification dated 12.12.1957 subject to certain conditions mentioned therein. 2.2(D) The learned counsel submitted that in exercise of the powers conferred by Sec.31 of the said Act, the Government appointed a Town Planning Officer for the said draft scheme. That the Town Planning Officer so appointed, after following the procedure prescribed under the said Act, submitted to the Government of Gujarat the final Town Planning Scheme, Ahmedabad No.S. VII (Dariapur, Kajipur, Asarwa part) for its sanction as required by sub-section (2) of Sec.42 of the said Act. The Town Planning Officer gave his award on 3.12.64 (Exh.28) and held that the final scheme as now drawn up, incorporating the decisions of the Board of appeal, for the construction of asphalt, roads, storm water, drain, water supply pipe lines, undergone drainage, electric street lighting for the scheme area. The scheme also provides for school, pumping station, play-ground, etc. The total estimated cost of works is Rs.7,02,100/-. These works are to be completed within a period of three years from the date of the final scheme comes into force. It was further held that the execution of the scheme was finally drawn up, the area included in the scheme will get all the necessary amenities for a happy community life, and it is hoped this part of the city will develop into a healthy suburb. 2.2(E) The Government of Gujarat, in exercise of the powers conferred by Sec.51 of the said Act, was pleased to sanction the final scheme by Notification dated 23.1.1965 and fixed the first day of March, 1965, as the date on which all the liabilities created by the scheme shall take effect and the final scheme was to come into force. Thus the Town Planning Scheme No.17 had come into force with effect from 1.3.1965 and had become a part of the said Act since that date. 2.3 It was further stated that as per the said final scheme the Government of India - Union of India defendant in suit has been shown as the owner of Survey Nos.154 and 155 ad-measuring about 28919 sq.yards and 54209 sq.yards respectively. That the said survey numbers have been reconstituted under the Town Planning Scheme and has been given Final Plot No.4 ad-measuring 50890 sq.yards. That the remaining land had been taken for the public purpose under the said scheme. Thus it is averred in the plaint that at present under the Town Planning Scheme No.17 (Dariapur, Kazipur, Asarwa part) Ahmedabad, the Government is the owner of Final Plot No.4 ad-measuring 50890 sq.yards. Thus under the said scheme the Government of India is liable to pay "incremental contribution" to the Corporation in this behalf under the provisions of the said Act. 2.4 It was further stated that under the provisions of the said Act the defendant was given option either to pay the amount of "incremental contribution" to the local authority in one lump sum or by 10(Ten) equal instalments. In the said Act, it is also further provided that if the person liable to pay the amount elects to pay the amount by instalments, he would be liable to pay interest at the rate of 4.5% per annum. The Government of India did not elect to pay the above said amount in one sum. Hence the defendant was bound to pay the above said amount of Rs.63,063/- in ten equal installments together with 4.5% interest. The first instalment of Rs.6303.30 paise become payable on 1.3.1965. 2.5 It was further stated that as the local authority has made a declaration for making a town planning scheme under the Bombay Town Planning Act, 1915 on 1.5.1953. The plaintiff submitted that during the course of making a town planning scheme, the Town Planning Act, 1915 were repealed by Bombay Town Planning Act, 1954. The plaintiff submitted that on the date of declaration, the Bombay Town Planning Act, 1915 was in force and the plaintiff has got powers to levy contribution under the Bombay Town Planning Act, 1915 and the land in question was liable to be levied contribution and the right of plaintiff to levy the contribution on the land in question was continued and the liability of the defendants was also continued for payment of contribution under the provisions of the said Act. 2.6 It was further stated that in view of the aforesaid facts the defendants are liable to pay the "incremental contribution" as fixed by the Town Planning Officer. The defendants had not preferred appeal against the decisions of the Town Planning Officer so far the amount of contribution is concerned. In that view of the matter, the decision of the Town Planning Officer as regards the amount of contribution has become final, conclusive and binding to the defendants. In that view of the matter, also now the defendants cannot raise any contentions or raise dispute about the liability of the payment of contribution fixed by the Town Planning Officer. It was further submitted that the betterment charge or incremental contribution levied under the said Act is not tax. 2.7 In view of the aforesaid facts, the plaintiff stated that the defendants are liable to pay the incremental contribution to the local authority as under: Total amount of contribution levied under Rs.63,063.00 the scheme Interest payable as per Act Rs.40,076.25 Sec.74 of the BTPA Act 1954 Less amount paid Nil ------------- Net amount payable Rs.1,03,139.25 2.8 Thus the defendants are liable to pay the plaintiff Ahmedabad Municipal Corporation, the amount of Rs.1,03,139.25/-. 2.9 It was further submitted that under section 76 of the said Act, for the dues of the local authority, a first statutory charge is created on the plot in question. Thus there is a statutory charge on the Final Plot No.4 situated in the T.P.S. No.17, Ahmedabad for the amount due to the local authority. 2.10 As the defendants have failed and neglect to make the payment the plaintiff addressed a statutory notice of demand on 16.12.1976 (Exh.34). The same has been received by the defendant on 20.12.76. Inspite of that the defendants have failed and neglect to pay the amount. Hence the plaintiffs have filed suit on 24.2.1977 claiming the said amount as an incremental contribution with 6% interest from the date of the suit till the payment. 3. The Union of India had filed a written statement before the City Civil Court, Ahmedabad (Exh.14). It was submitted that in view of Article 285(1) of the Constitution of India the property of the Union of India shall be exempted from all taxes i.e. incremental contribution imposed by the State or by an authority within a state. The said article makes it clear that the exemption applies to taxes levied by the local authority such as Municipal Corporation. It was submitted that under Article 366(28) of the Constitution of India `taxation' includes imposition of any tax or impose, whether general or local or special and "tax" shall be construed accordingly. It was submitted that Sec.76 of the said Act which lays down the mode of recovery also makes any sum of incremental contribution recoverable as if the amount thereof were a property tax. This is indicative of the fact that the incremental contribution claimed by the plaintiff in the present case is really in the nature of property tax and hence it is submitted that the defendant is exempted by virtue of Article 285(1) of the Constitution from payment of incremental contribution. For other facts the defendant denied by filing the written statement on 21.7.80. 3.1 Before the trial court issues were framed on 12.2.81 (Exh.17) and plaintiff produced certain documentary evidence in support of his contention particularly copy of award by Town Planning Officer (Exh.28), Notification dated 23.1.65 issued by Under Secretary, Rural Development, Government of Gujarat, sanctioning the final scheme (Exh.27). The record of rights showing the Union of India as an owner of the land (Exh.29), the bill for obtaining incremental contribution from the Union of India (Exh.31). Extract of demand register (Exh.33), the copy of the notice dated 16.12.76 Exh.34 and the resolution of the Corporation at Exh.36 in this behalf. The defendant did not produce any documents in this behalf. The parties did not led any oral evidence in this behalf. 3.2 Thereafter the matter was heard by the learned City Civil Judge, Ahmedabad and the learned Judge by his impugned judgment has held that suit is maintainable at law. However the learned Judge come to the conclusion that in view of Article 285 of the Constitution of India, the defendant Union of India is exempted from liability of incremental contribution demanded by the plaintiff in this behalf. Ultimately the suit was dismissed by judgment and decree dated 26.2.1982. 4. Being aggrieved and dissatisfied with the said action the plaintiff has filed this appeal before this Court. The said appeal was admitted on 19th January, 1983. 5. On behalf of the appellant - plaintiff Mr.Prashant G.Desai, learned counsel has appeared and contended that the reasonings and findings of the learned Judge that amount of incremental contribution is exempted under Article 285(1) of the Constitution of India is errorneous, unjust and illegal. To substantiate his contention, learned counsel for the appellant has invited our attention to the provisions of The Bombay Town Planning Act, 1954 and The Bombay Town Planning Rules, 1955. 5.1 He has invited our attention to Sec.2(2) of the said Act which provides definition of "development plan" means a plan for the development or redevelopment or improvement of the entire area within the jurisdiction of a local authority prepared under sec.3. Sec.2(5) provides "owner" includes any person for the time being received or entitled to receive whether on his own account or as agent, trustee, guardian, manager or receiver for another person or for any religious or charitable purpose, the rents or profits of the property in connection with which it is used. Sec.2(6) provides "plot" means a continuous portion of land held in one ownership. Sec.2(7) provides "preliminary scheme" means a scheme relating to a town planning scheme prepared by the Town Planning Officer under section 45. Sec.2(9) provides "reconstituted plot" means a plot which is in any way altered by the making of a town planning scheme. Sec.3 provides development plan. Sec.4 provides declaration of intention of making development plan. Sec.5 provides manner of preparing development plan. Sec.7 provides contents of development plan. Sec.8 provides submission of development plan and other information to Government. Sec.10 provides power of Government to sanction development plan and consequences thereof. Sec.16 provides sanction for sub-division of plot or lay-out of private street. Sec.18 provides making and contents of town planning scheme. Chapter IV provides declaration of intention to make a scheme and making of a draft scheme. Sec.21 provides land in respect of which town planning scheme may be made. Sec.22 provides power of local authority to resolve on declaration of intention to make scheme. Sec.23 provides making and publication of draft scheme. Sec.24 provides power of State Government to require local authority to make scheme. Sec.25 provides contents of draft scheme. Sec.28 provides power of State Government to sanction scheme. Chapter V provides the Town Planning Officer and the Board of Appeal. Sec.31 provides appointment of Town Planning Officer. Sec.32 provides Duties of Town Planning Officer. Sec.34 provides appeal. Sec.35 provides Constitution of Board of Appeal. Sec.40 provides powers of Board to decide matters finally. Sec.43 provides decision of Town Planning Officer to be final in certain matters and variation of scheme in view of decision in appeal. Chapter VI provides splitting up of scheme into sections and preliminary schemes. Sec.45 provides Town Planning Officer to prepare preliminary scheme. Sec.50 provides Compensation for land vested in local authority under sec.46 and restoration of such land in certain cases. Sec.51 provides final scheme. Sec.53 provides effect of final schemes. Sec.54 provides power of local authority to evict summarily. Chapter VII provides Joint Town Planning Schemes. Sec.62 provides joint town planning schemes. Sec.64 provides costs of scheme. Sec.65 provides as under: "Sec.65 For the purposes of this Act the increments shall be deemed to be the amount by which at the date of the declaration of intention to make a scheme the market value of a plot included in the final scheme estimated on the assumption that the scheme has been completed would exceed at the same date the market value of the same plot estimated without reference to improvements contemplated in the scheme: Provided that in estimating such values the value of buildings or other works erected or in the course of erection on such plot shall not be taken into consideration." "Sec.66 provides Contribution towards costs of schemes." "(1) The costs of the scheme shall be met wholly or in part by a contribution to be levied by the local authority on each plot included in the final scheme calculated in proportion to the increment which is estimated to accrue in respect of such plot by the Town Planning Officer: Provided that - [ (i) (a) Where the cost of the scheme does not exceed half the increment, the cost shall be met wholly by a contribution, and (b) where it exceeds half the increment, to the extent of half the increment it shall be met by a contribution and the excess shall be borne by the local authority;] (ii) where a plot is subject to a mortgage with possession or to a lease the Town Planning Officer shall determine in what proportion the mortgagee or lessee on the one hand and the mortgagor or lessor on the other hand shall pay such contribution. (iii) no such contribution shall be levied on a plot used, allotted or reserved for a public purpose or purpose of the local authority which is solely for the benefit of owners or residents within the area of the scheme; and (iv) the contribution levied on a plot used, allotted or reserved for a public purpose or purpose of the local authority which is beneficial partly to the owners or residents within the area of the scheme and partly to the general public shall be calculated in proportion to the benefit estimated to accrue to the general public from such use, allotment of reservation. (2) The owner of each plot included in the final scheme shall be primarily liable for the payment of the contribution leviable in respect of such plot. Section 67 of the Act makes provisions for certain adjustments and it reads thus:- "67. The amount by which the total value of the plots included in the final scheme with all the buildings and works thereon allotted to a person falls short of or exceeds the total value of the original plots with all the buildings and works thereon of such person shall be deducted from or added to, as the case may be, the contributions leviable from such persons, each of such plots being estimated at its market value at the date of the declaration of intention to make a scheme or the date of a notification under sub-section (1) of Section 24 and without reference to improvements due to the alteration of its boundaries." Sec.68 provides transfer of right from original to reconstituted plot or extinction of such right. Sec.69 provides compensation in respect of property or right injuriously affected by scheme. Sec.70 provides exclusion or limitation of compensation in certain cases. Sec.74 provides payment of net amount due to local authority. Sec.75 provides power of local authority to make agreement. 5.1(A) Learned counsel has also pointed out the provisions of the Bombay Town Planning Rules, 1955. The said rules have been enacted under Section 87 of the Bombay Town Planning Act, 1954. Rule 3 provides publication of declaration under section 4. Rule 4 provides publication of development plan. Rule 5 provides Rule 4 to apply to development plan prepared by State Government. Rule 6 provides notices before entry under Sections 6 and 20. Rule 7 provides time limit for sanctioning development plan and regulation. Rule 9 provides manner of inquiry under sections 13, 16 and 29. Rule 11 provides inquiry procedure where ownership is disputed. Rule 12 provides publication of declaration under section 22. Rule 13 provides meeting of owners and framing of tentative proposals. Rule 14 provides publication of draft scheme under section 23. Rule 16 provides manner of publication of notification under section 24. Rule 17 provides contents of draft scheme. Rule 19 provides appointments of Town Planning Officer and President of Board of Appeal to be notified. Rule 21 provides procedure to be followed by Town Planning Officer. Rule 24 provides preliminary scheme. Rule 28 provides notice before enforcement of scheme. Rule 29 provides variation of scheme. Rule 30 provides time limit for claiming compensation." 5.2 Learned counsel has also invited our attention at Exh.29 record of rights of the land in question. Exh.28 brief history of the scheme. Exh.32 Map of the scheme which shows the original boundary shown in yellow and Final Plot is shown in Red and also another boundary shown in pink to show that how the land was used for the development purpose under the provisions of the Town Planning Act. He has also referred to the assessment register which sown that how the Municipality is entitled to Rs.63,063/regarding incremental contribution and Exh.33 showing the scheme being sanctioned and total amount to be levied Rs.1,03,139.25 and also invited out attention at Exh.34 statutory notice dated 16.12.1946 addressed to the Union of India in this behalf and resolution to file suit against Union of India. 5.3 The learned counsel for the plaintiff has relied upon the decision of the Hon'ble Supreme Court in the case of State of Gujarat Vs. Shantilal Mangaldas and others reported in AIR 1969 SC 634, particularly he has relied upon para 13 and para 16 of the said judgment. He has further stated that in that case the Hon'ble Supreme Court was considering the provisions of the Bombay Town Planning Act particularly secs.53 and 67 of the said Act. The Hon'ble Supreme Court has held that it is a law for compulsory acquisition of property by the State as defined in Article 12 within the meaning of Article 31(2) of the Constitution and Sections 53 and 67 of the Act regarded as law for acquisition of land for public purposes do not infringe the fundamental right under Article 31(2) of the Constitution. It has been further stated that Section 53 provides for readjustment of titles by local authority in reconstituted plots and not for their vesting in local authority. The Hon'ble Supreme Court has also considered Sections 81 and 84 of the said Act and held that Section 81 merely provides that the land needed for the purpose of a town planning scheme or development plan shall be deemed to be land needed for a public purpose within the meaning of the Land Acquisition Act, 1894. Section 84 only contemplates a special class of cases in which the land which is included in a town planning scheme is needed by the State Government for a public purpose other than that for which it is included in the scheme. The Hon'ble Supreme Court has considered the entire scheme of the Act particularly para 13 and 16 the Hon'ble Supreme Court laid down the principle regarding interpretation of Section 67 and Section 71 of the Act which reads as under: "para.13 Under the Act the cost of the scheme is to be met wholly or