Case: Municipal Board, Hapur Vs. Raghuvendra Kripal And Others

a delegation which may be called excessive such excessive delegation may be struck down. I may in this connection refer to two decisions of this Court, namely, In re The Delhi Laws Act, 1912, (1951) SCR 747 : (AIR 1951 SC 332 ) and Rajnarain Singh v. The Chairman, Patna Administration Committee (1955) 1 SCR 290 : (AIR 1954 SC 569 ). It has been held in these cases that an essential legislative function cannot be delegated by the legislature. Exactly what constitutes essential function cannot be enunciated in general terms. But the essential legislative function consists in the determination of the legislative policy and its formulation as a binding rule of conduct. It cannot be said that an unlimited right of delegation is inherent in the legislative power itself. This is not warranted by the provisions of the Constitution and the legitimacy of delegation depends entirely upon its being used as an ancillary measure which the legislature considers to be necessary for the purpose of exercising its legislative powers effectively and completely. The legislature must retain its own hands the essential legislative functions which consists in declaring the legislative policy and laying down the standard which is to be enacted into a rule of law and what can be delegated is the task of subordinate legislation which by its very nature is ancillary to the statute which delegates the power to make it. Provided the legislative policy is enunciated with sufficient clearness or a standard is laid down, the Courts should not interfere with the discretion that undoubtedly rests with the legislature itself in determining the extent of delegation necessary in it particular case. 32. In these two cases the question arose whether certain laws could be applied to certain areas with such modification as the executive authority deemed fit to make. It was held that where the executive authority was permitted, at its discretion, to apply without modification (save incidental changes such as name and place), the whole of any law already in existence in any part of India that would be good. Further the executive authority could even be authorised to select further laws in a similar way and to apply them to certain areas. But where the authorisation was to repeat laws already in force in the area and either substitute other laws with or without modification, this was held to be excessive delegation and ultra vires. Further where the modification in a law to be applied did not affect any essential change in the law and alter its policy it could be modified to that extent and applied by the executive authority under delegated authority. But where a modification effects a radical change in the policy of the law to be applied such an authority could not be delegated and would be ultra vires. 33. It is on the basis of these principles that I have to see whether S. 135 (3) can be upheld. There is no doubt that the legislature delegated its power of imposing taxes, including the power to fix the rate, to the municipal board by S. 128 with respect to taxes specified therein. I have already said that generally speaking the fixation of rate of tax is one of the essential legislative functions but there may be situations where it may not be considered to be an essential legislative function and may be delegated by the legislature to subordinate authorities with proper safeguards. I have also said that in the field of local taxation relating to municipal boards and district boards and similar other bodies there are reasons for delegating fixation of the rate to such bodies subject to proper safeguards. This is exactly what has been done under the Act subject to the safeguards, contained in Ss. 131 to 135 (1). If those safeguards are followed, the delegation in my opinion would be a proper delegation and could not be challenged as ultra vires on the ground of excessive delegation. But if the legislature after laying down with great care safeguards as to the imposition of tax including its rate makes a blanket provision like S. 135 (3), which at one stroke does away with all those safeguards-and this is what in my opinion S. 135 (3) has done in the present case- the position that results after such provision is that there is delegation of even the essential function of fixing the rate to the subordinate authority without any safeguard. Such a delegation would in my opinion be excessive delegation and would be ultra vires. 34. The question then is whether in the present case I should save the delegation contained in S. 128 read with the safeguards provided in S. 131 to S. 135 (1) for the imposition of various taxes mentioned therein or uphold S. 135 (3) which in one sweep does away with all the safeguards. In my opinion S. 135 (3) is severable and the legislature would have provided for various safeguards contained in S. 131 to S 135 (1) when it delegated the power to impose a tax including the fixation of rate to municipal boards. It would, therefore, in my opinion be right to hold that Ss. 128 to 135 (2) indicate proper delegation of the authority of the legislature to impose taxes specified in S. 128 and that it is sub-s. (3) of S. 135 which should be struck down because it is the only provision which makes the delegation excessive. I would, therefore, hold that S. 135 (3) inasmuch as it makes the delegation contained in Ss. 128 to 135 (2) excessive must be served from the rest of the sections which are otherwise a proper exercise of delegation of legislative authority and should be struck down on the ground of excessive delegation. 35. I would, therefore, dismiss the appeal with costs and uphold the order of the High Court holding that the tax imposed by the appellant had not been validly imposed though on a different ground. ORDER 36.

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

Explanation:
1[ds]There is at the very start the fundamental fact that the power to tax in a State can only be exercised by the State Legislature, the extent of the power being fixed by the Constitution. The taxes which the State Legislatures are allowed to raise are enumerated in the Seventh Schedule to the Constitution. The State Legislature can impose all these taxes itself but it is usual to authorise the levy of some of them by local authorities for their own purpose Taxes so raised by a local authority are not imposed by it as a legislature but as a delegate of the legislature. What is done is binding by the authority of the legislature and the tax is valid only if it is one of the taxes the delegate can raise and the delegate imposes it in accordance with the conditions laid down by the legislature8. Itis thus that we find an elaborate procedure prescribed by all the Municipal Acts. In the U.P. Municipalities Act also, as we have seen, a Board must first pass a special Resolution framing a proposal and the draft rules, invite objections, consider them, and then get them approved by Government. After this approval there must be a final special resolution imposing the tax from a particular date and the Government then notifies the imposition of the tax. It is the duty of Government to see that the various steps laid down for the imposition of the tax are followed. Before it notifies the resolution Government satisfies itself about the requirements. The notification is made conclusive proof that the tax is imposed in accordance with the provisions of the Act. The question arises: Is this rule of conclusive evidence such as to shut out all enquiry by Courts? We have no hesitation in answering the question in the negative. There are certain matters which, of course, cannot be established conclusively by a notification under S. 135 (3). For example, no notification can issue unless there is a special resolution. The special resolution is the sine qua non of the notification. The State Government cannot impose a tax all by itself by notifying the imposition of the tax, without a resolution by the Board. Again, the notification cannot authorise the imposition of a tax not included in S. 128 of the Municipalities Act. Neither a Municipal Board nor a State Government can exercise such a power. A tax can only be said to be imposed in accordance with the provisions of the Municipalities Act, if it is contemplated by the Act. There is a difference between the tax and the imposition of the tax. The former is the levy itself and the latter the method by which the levy is imposed and collected. What the sub-section does is to put beyond question the procedure by which the tax is imposed, that is to say, the various steps taken to impose it. A tax not authorised can never be within the protection afforded to the procedure for imposing taxes. Such a tax may be challenged, not with reference to the manner of the imposition but as an illegal impost9. Itwould thus appear that at the very start the selection of the tax must be with reference to the delegated powers. The Municipal Board or the State Government cannot select a tax which the legislature has not mentioned in S. 128 of the Municipalities Act. As the State Government cannot itself impose the tax it must have before it, the special resolution of the Board before notifying the imposition. Between the special resolution selecting a tax for imposition and the special resolution imposing it sundry procedure is gone through and section 135 (8) says that the notification by Government is conclusive proof that the procedure was correctly followedAs observed already some of the provisions controlling the imposition of a tax must be fully complied with because they are vital and therefore mandatory, and the others may be complied with substantially but not literally, because they are directory. In either case the agency for seeing to this compliance is the State Government. It is hardly to be expected that the State Government would not do its duty or that it would allow breaches of the provision to go uncertified One can hardly imagine that an omission to comply with the fundamental provisions would ever be condoned. The law reports show that even before the addition of the provision making the notification conclusive evidence of the proper imposition of the tax, complaints brought before the courts concerned provisions dealing with publicity or requiring ministerial fulfillment. Even in the two earlier cases which reached this Court and also the present case, the complaint is of a breach of one of the provisions which can only be regarded as directory. In cases of minor departures from the letter of the law especially in matters not fundamental, it is for the Government to see whether there has been substantial or reasonable compliance. Once Government condones the departure, the decision of Government is rightly made final by making the notification conclusive evidence of the compliance with the requirements of the Act.It is not necessary to investigate whether a complete lack of observance of the provisions would be afforded the same protection. It is most unlikely that this would ever happen and before we pronounce our opinion we should like to see such a caseIt is impossible for the Legislature to pass statutes for the imposition of such taxes in local areas. The power must be delegated. Regard being had to the democratic set up of the municipalities which need the proceeds of these taxes for their own administration, it is proper to leave to these municipalities the power to impose and collect these taxes. The taxes are, however, predetermined and a procedure for consulting the wishes of the people is devised. But the matter is not left entirely in the hands of the Municipal Boards. As the State Legislature cannot supervise the due observance of its laws by the Municipal Boards, power is given to the State Government to check their actions. The imposition of the tax is left to the Municipal Boards but the duty to see that the provisions for publicity, and obtaining the views of the persons to be taxed are fully complied with is laid upon the State Government. The proceedings for the imposition of the tax, however, must come to a conclusion at some stage after which it can be said that the tax has been imposed. That stage is reached, not when the special resolution of the Municipal Board is passed, but when the notification by Government is issued. Now it is impossible to leave the matter open so that complaints about the imposition of the tax or the breach of this rule or that may continue to be raised. The door to objections must at some stage be shut and the Legislature considers that, if the Sate Government approves of the special resolution, all enquiry must cease. This is not a case of excessive delegation unless one starts with the notion that the State Government may collude with the Municipal Board to disregard deliberately the provisions for the imposition of the tax. There is no warrant for such a supposition. The provision making the notification conclusive evidence of the proper imposition of the tax is conceived in the best interest of compliance of the provisions by the Boards and not to facilitate their breach. It cannot, therefore, be said that there is excessive delegationThe first is the question of discrimination which is said to arise from the proviso which makes the notification conclusive in respect of the procedure by which the tax is imposed. There are numerous statutes, including the Evidence Act, in which a fact is taken to be conclusively proved from the existence of some other fact. The law is full of fictions and irrebuttable presumptions which also involve proof of facts. It has never been suggested before that when the Legislature says that enquiry into the truth or otherwise of a fact shall stop at a given stage and the fact taken to be conclusively proved, that a question of discrimination arises. The tax payers in the Municipality are allowed under the Municipalities Act to object to the proposal for the tax and the rules and to have their objections considered. They cannot, of course, be allowed to keep on agitating and a stage must come when it may be said that the provisions of the Act have been duly observed. That stage is reached after Government has scrutinized the proposal, the rules, the objections and the orders and has approved of the proposal, a special resolution is passed by the Municipal Board and a notification is issued. It cannot be said that sub-s. (3) of S. 135 which leads to the conclusion that the imposition of the tax is according to the Municipalities Act is discriminatory because it only concludes objections against the procedure followed in the imposition of the taxThe next objection that the impugned sub-section involves the exercise of judicial functions not open to the Legislature, is wholly erroneous. The sub-section only shuts out further enquiry and makes the notification final. There is no exercise of a judicial function. In our country there is no rigid separation of powers and the legislature often frames a rule such as is incorporated in the third sub-section of S. 135. The Evidence Act is full of such provisions. In the United States of America where the separation of powers is extremely rigid in some of the constitutions of the States it may be open to objection that the Legislature in shutting out enquiry into the truth of a fact encroaches upon the judicial power of the State. Such disability has never been found to exist in our country although legislation of this type is only too frequent. The objection is, therefore, without substance.