Case: State of Assam Vs. The Amalgamated Tea Estates Company Limited &amp; Others

2. By notification dated May 22, 1958 issued in exercise of the powers conferred by Section 334 (1) of the Assam Municipal Act, 1956, the Government of Assam signified its intention to declare that with respect to a specified area (including a part of the Naharkatia Tea Estate) "improved arrangements" were required, and invited objections against that proposal from interested parties. The owners of the Naharkatia Tea Estate did not file any objection. On December 4, 1959 a notification was issued under Section 334 (4) declaring the specified area as the Naharkatia Town Committee. In consequence of that declaration holders of land and buildings, within the specified area became liable to pay certain municipal taxes. On receiving a demand from the Town Committee for license fee and municipal taxes the respondent Company (owner of the Naharkatia Tea Estate) filed a petition in the High Court of Assam challenging the validity of the notification dated December 4, 1959 and for an order restraining the Town Committee from taking any action in pursuance of the notification and the notices levying tax, on the plea that the notification was issued "as a colourable device for taxing the assets of the Company with the sole motive of augmenting the income of the Town Committee without any obligation or necessity to expend funds for providing municipal amenities. It was asserted that the Naharkatia Tea Estate was a "fully developed private property"; that it had arranged to provide all amenities required by law for the welfare of its employees and residents within the plantation, and on that account inclusion of the part of the plantation within the Town Committee was "illegal and in excess of the powers conferred by the Assam Municipal Act, 1956."3. The High Court accepted the contention of the Company. They observed that it could not have been the intention of the Legislature to provide for setting up a Town Committee in an area where adequate arrangements of lighting, maintenance of roads, conservancy,hospital amenities and other "welfare arrangements" had previously been made by the owner. In the view of the High Court the demands for licence fee and tax were made by the Town Committee with the "ulterior motive to get money from the tea estate without reference to any service of providing facilities and amenities and that the inclusion of the tea garden within the Town Committee area must be held to be mala fide and contrary to Section 334 of the Act". The High Court accordingly declared invalid the notification dated December 4, 1959 constituting the Naharkatia Town Committee insofar as it related to the area of the Naharakatia Tea Estate. The State of Assam has appealed to this Court with special leave.

Reasoning:
5. In paragraph 14 of the petition it is averred by the Amalgamated Tea Company Ltd., that "the inclusion of the plantation area of the petitioner within the jurisdiction of the Naharkatia Town Committee is not at all bone fide, inasmuch as it was made not with a view to provide improved arrangements or amenities to the inhabitants of the said plantation, but solely with the motive of augmenting the income of the said Town Committee without the obligation or necessity of any expenditure of municipal funds for providing anything in return as contemplated by law." The State of Assam it was claimed by the Company, had in issuing the notification, which included the plantation area of the Naharkatia Tea Estate, no acted bona fide. But no particulars were given of that plea. The plea raised on behalf of the Company was denied by the State of Assam. The Company tendered no evidence in support of the plea that the notification dated December 4, 1959, was issued for a collateralthe mere circumstance that in respect of some pockets in the specified area there may already exist arrangements made at private expense municipal facilities and amenities which after the constitution of the notified area, obligation to provide which may lie upon the Town Committee, it does not follow that in signifying its intention to declare the specified area, the State Government acted for a collateral purpose. The High Court was of the view that the Amalgamated Tea Company Ltd. had made arrangements for lighting, maintenance of roads, conservancy,hospital amenities and other welfare arrangements, and since improved arrangements were not necessary the notification of the State Government must be regarded as "mala fide". The notification of the State Government signifying its intention to declare a specified area as one in which improved arrangements may by made is undoubtedly not conclusive: in appropriate cases the validity of the notification may be challenged. But in the present case no ground has been made out on which such a challenge may be sustained.7. The Company raised no objection to the preliminary notification dated May 22, 1958, issued under(1) of Section 334 of the Assam Municipal Act, 1956. The writ petition was filed years after the constitution of the notified Town Committee and only after the demands for tax were made. Prima facie, such, a petition was, as characterised by counsel for the State of Assam, a "speculative petition". In our judgment, the High Court was in error in allowing the petition and declaring the notification under Section 334 (1) of the Act as illegal.8. We are here dealing with the validity of the notification issued by the State Government under(1) and (4) of Section 334. We are not called upon to pronounce upon the validity of the demands for licence free and other taxes levied by the Notified Town Committee. The Company may, if so advised, challenge the validity of the demands for the licence fee and the municipal taxes in appropriate proceedings.