Case: Municipal Corporation of Greater Bombay Vs. M/s. New Standard Engineering Company Limited

pp. 144-45). 12. In Banwarilal Agarwalla v. State of Bihar ( 1962 (1) SCR 33the question arose whether Section 59(3) of the Mines Act, 1952 requiring the Central Government to consult every Mining Board before framing regulations was mandatory. The court held that since the regulations framed would impinge heavily on the actual working of mines, the requirement of consultation of the Mining Boards is mandatory. This view has been affirmed in Kali Pada Chowdhury v. Union of India ( 1963 (2) SCR 904 the provision regarding consultation with the State Electricity Board in Section 4 of the Electricity Act, 1910 as amended in 1950 for exercising the power of revoking a licence by the State Government was held to be mandatory since it was intended to provide additional safeguard to the licensee. In Naraindas Indurkhya v. State of M.P. ( 1974 (4) SCC 788the prior consultation with the Education Board under Section 4(1) of the M.P. Act 13 of 1973 for prescription of text-books by the State Government is also held to be mandatory since it is a condition for the exercise of the power. In Agricultural, Horticultural and Forestry Industry Training Board v. Aylesbury Mushrooms Ltd. ( 1972 (1) WLR 190 : 1972 (1) All(ER) 280 the Minister was required before making an industrial training order, to have prior consultations with the interested Associations under Section 2(4) of the Industrial Training Act, 1964. The Minister invited numerous organisations to consult with him about an order for agricultural industries, but in one of the cases, the letter miscarried so that the Mushroom Growers Association was not consulted. Members of the Association, it was held were not bound by the order of the Minister since a mandatory requirement had not been observed. 13. Prof. Wade points out : (H.W.R. Wade, Administrative Law, 6th edn., p. 247) "Procedural safeguards, which are so often imposed for the benefit of persons affected by the exercise of administrative powers, are normally regarded as mandatory, so that it is fatal to disregard them. Where there is a statutory duty to consult persons affected, this must genuinely be done, and reasonable opportunity for comment must be given." * 14. In the instant case, the Corporation has numerous obligatory functions to perform, namely drains and drainage works, scavenging and removal and disposal of refuse and rubbish, construction and maintenance of public streets, bridges, culverts, of works and means for providing water supply, electricity, maintenance of fire brigade, measures for preventing and checking the spread of dangerous diseases etc. (see Section 61 of the Act). All these measures require funds. The property tax appears to be the major source of corporation revenue. Consultation as envisaged under the Explanation is therefore definitely a matter of importance and consequence to the Corporation. Its right to recover normal rates of property tax would be deprived of if the government prepares a scheme for subsidised housing without its consultation. Section 154 provides for fixing the rateable value of the building for the purpose of levying property tax. Sub-section (1) provides a general principle for fixing the rateable value. Sub-section (3) is an exception to that principle and it is required to be followed in certain specified categories. The Corporation is bound to follow the exception provided under sub-section (3) if the building has been erected as part of a recognised scheme of subsidised housing for industrial workers. In such a case, the rateable value shall not exceed Rs. 32.50 for each such tenement inclusive of all service and other charges. That would affect the financial interests of the Corporation. Even according to the High Court the consultation referred to in the Explanation is a safeguard added in favour of the Corporation because the Corporation is likely to suffer to some extent its revenue in a given case. But nevertheless it was held that the consultation is directory and not to be regarded as mandatory. The High Court seems to have erred in this regard. The right to be consulted in opposition to a claim or proposal which will adversely affect its financial interests is to be regarded as mandatory. 15. There must be opportunity for the Corporation to express its views on the recognised scheme and the terms thereof. The opinion expressed by the Corporation may not be binding on the government to take decision. The government may take its own decision but consultation with the Corporation must be there on the essential points and the core of the subject involved. The consultation must enable the Corporation to consider the pros and cons of the question as to the concessional rate of property tax. (See : (i) Fletcher v. Minister of Town Planning and Country Planning ( 1947 (2) ALLER 496 ii) R. Pushpam v. State of Madras 1953 AIR(Mad) 392 : 1953 (1) MLJ 88 ).). If there is no such consultation the Corporation cannot be compelled to fix the rateable value of the building under sub-section (3). 16. Finally, we should refer briefly to one other reasoning adopted by the High Court. The High Court has stated that since the building plans were approved by the Corporation and the construction work was almost complete before the respondent approached the government for subsidy, it will have to be presumed that the government had taken judicial note of the rates likely to be charged by the Corporation or the loss, if any, it was likely to suffer. This assumption is wholly unjustified. No such inference could be possible from the Corporation licence for building construction. Such licence has nothing to do with the property tax to be levied. Our attention has not been drawn to any other material on which the government could have taken note of the rates likely to be charged by the Corporation or the loss that it might suffer in recovering the property tax on the basis of rentals of each tenement at Rs. 26.50. We are, therefore, not impressed with the conclusion reached by the High Court.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]14. In the instant case, the Corporation has numerous obligatory functions to perform, namely drains and drainage works, scavenging and removal and disposal of refuse and rubbish, construction and maintenance of public streets, bridges, culverts, of works and means for providing water supply, electricity, maintenance of fire brigade, measures for preventing and checking the spread of dangerous diseases etc. (see Section 61 of the Act). All these measures require funds. The property tax appears to be the major source of corporation revenue. Consultation as envisaged under the Explanation is therefore definitely a matter of importance and consequence to the Corporation. Its right to recover normal rates of property tax would be deprived of if the government prepares a scheme for subsidised housing without its consultation. Section 154 provides for fixing the rateable value of the building for the purpose of levying property tax. Sub-section (1) provides a general principle for fixing the rateable value. Sub-section (3) is an exception to that principle and it is required to be followed in certain specified categories. The Corporation is bound to follow the exception provided under sub-section (3) if the building has been erected as part of a recognised scheme of subsidised housing for industrial workers. In such a case, the rateable value shall not exceed Rs. 32.50 for each such tenement inclusive of all service and other charges. That would affect the financial interests of the Corporation. Even according to the High Court the consultation referred to in the Explanation is a safeguard added in favour of the Corporation because the Corporation is likely to suffer to some extent its revenue in a given case. But nevertheless it was held that the consultation is directory and not to be regarded as mandatory. The High Court seems to have erred in this regard. The right to be consulted in opposition to a claim or proposal which will adversely affect its financial interests is to be regarded asThere must be opportunity for the Corporation to express its views on the recognised scheme and the terms thereof. The opinion expressed by the Corporation may not be binding on the government to take decision. The government may take its own decision but consultation with the Corporation must be there on the essential points and the core of the subject involved. The consultation must enable the Corporation to consider the pros and cons of the question as to the concessional rate of property tax. (See : (i) Fletcherv. Minister of Town Planning and Country Planning ( 1947 (2) ALLER 496ii) R. Pushpam v. State of Madras 1953 AIR(Mad) 392 : 1953 (1) MLJ 88 ).). If there is no such consultation the Corporation cannot be compelled to fix the rateable value of the building under sub-sectionFinally, we should refer briefly to one other reasoning adopted by the High Court. The High Court has stated that since the building plans were approved by the Corporation and the construction work was almost complete before the respondent approached the government for subsidy, it will have to be presumed that the government had taken judicial note of the rates likely to be charged by the Corporation or the loss, if any, it was likely to suffer. This assumption is wholly unjustified. No such inference could be possible from the Corporation licence for building construction. Such licence has nothing to do with the property tax to be levied. Our attention has not been drawn to any other material on which the government could have taken note of the rates likely to be charged by the Corporation or the loss that it might suffer in recovering the property tax on the basis of rentals of each tenement at Rs. 26.50. We are, therefore, not impressed with the conclusion reached by the High Court