l A

TRUSTEES FOR THE IMPROVEMENT OF CALCUTTA

CHANDRA SEKHAR MALLICK & ORS.

May 6, 1977

[M. H. BEG, C.J., Y. V. CHANDRACHUD,

P. N. BHAGWATI,

V. R.

KRISHNA IYER, N. L. UNTWALIA, S. MURTAZA FAZAL ALI AND P. S.

KAILASAM, JJ.]

Calcutta llnprovement Act, 1911-Sec. 78A to 78G-Whether unconstitur

tional-If suffers from the vice of excessive delegation-RuJes 11 to 21, if 1' ultra vires the A ct.

The respondents were the owners of buildings situated in a street known as Fire Lane in the city of Calcutta. The Board of Trustees for the Jmprovement of Calcutta in exercise of the power conferred under s. 39(c) passed the necessary resolution and proceeeded to frame a street scheme for the area which included Fire Lane as also the buildings belonging to the respondent'i.

The notice containing the requisite particulars was pub!ished by the Board.

The respondents submitted their objections but the Board after bearing the respondents rejected the objections and applied to the State Government for sanction under s. 47.

Ultimately, the State Government granted sanction under s. 48.

The Board was of the opinion that as a result of the making of the street scheme, lands of the respondents which were comprised in the street scheme would increase in value.

The scheme, therefore, contained a declaration that a betterment fee shall be payable by the respondents in respect of the increases in the value of their respective lands.

The Board gave a notice of the proposed assessment of the betterment fee under s. 78B (1} and then proceeded under s. (2) of that section to assess the betterment fee payable by the respondent.

The respondents dissented from the assessment made on them and the matter was thereupon referred for determination by arbitrators as contemplated under section 78(B)(4), and an award was made.

The respondents filed writ petitions challenging the validity of the award made by the arbitrators. Section 39 provides that whenever the Board is of the opinion that for the purpose, inter alia, of creating new or improving existing means of communication and facilities for traffic, it is expedient to lay out new streets 'or to alter existin~ street, the Board may pass a resolution to that effect and then proceed to frame a street scheme for such area as it may think fit.

Section 43 requires the Board to give a notice mentioning where the map of the area and a statement of the land which is proposed to be acquired may be inspected.

The said notice is to be published for general public under s. 45. Individual notice is to be served on every person whose name appears in Municipal Assessment Book as being primarily liable to pay the owner's share of the consolidated rate.

Under s. 45(2), a person dissenting from the recovery of betterment fee has to state his reasons.

Under s. 47 the Board after hearing all persons making dissent may either abandon the scheme or accept it with such modifications and thereafter submit it to the State Gover11.ment containing reasons given for the dissent.

The Board is reqnired to publish notice of the fact that a particular

cheme has been submitted to the Government for its sanction.

The State Government may then refuse to sanction the: scheme or sanction it with or without any modifications. The ; rincipal ground on which the validity of the Award of the Arbitrators was impugned in the writ petitioners was that section 78A to section 78G of the Act were ultra vires and void and that R.ulcs 11 to 21 of the Rules were also invalid. The High Court upheld the challenge and -; truck down section 78B to s. 78G and Rule! 11 to 21, as invalid.

Allowing the appeal,

HELD (I) The view taken by the High Court on the validity o! section 78A to 78G is clearly erroneous. The High Court thought that the sections suffer from the vice of excessive delegation of legislative power because for determining what land should bear the burden of betterment fee, arbitrary and uncontrolled power hM been given to the Trust and its Engine<n either ·

CALCUTTA IMPROVEMENT TRUSTEES v. c. S. MALLICK !37 (Bhagwati, J.) include or not to include within the scheme lands which arc required for the execution thereof.

The reasoning of the High Court is clearly based on an erroneous premise.

Section 39 lays down the factors which would guide the Board in deciding which area should be included in the scheme. It is only when the Board finds that for carrying out any of the four purposes set out in section 39, it is expedient to lay out new street or to alter existing street that the Board can proceed to frame a Scheme. Again the decision of the Board is not final. lt is subject to the sanction of the State Government. Even after the scheme is sanctioned by the State Government it is open to the owner of the land to show that in fact the land would not increase in value by reason of the, making of the scheme. The Board has to decide objectively whether there is any increase in the value of the land at a1l and if there is, assess the betterment fee on that basis.

If the assessee does not agree with the betteri:nent fees assessed, he is entitled to dissent and to have a bearing.

Even thereafter if 1he owner is not satisfied by the decision of the Board he can have this question determined by

a body of two independent arbitrators who would objectively decide the question.

Therefore, there is no voice of excessive delegation.

[142 CMH_, 143 AMD]

(2) Rule 11 provides the machinery for appointment of arbitrators in a case where the objectors fail to elect an arbitrator.

Rules 12 to 21 lay down the procedure regulating the proceedings of arbitrator.

These Rules are clearly covered by clause 3(a) of s. 137. The High Court completely erred in observM ing that the Rules are ultra vires the Act. [141 C, 142 B]

CIVIL APPELLATE JURISDICTION : Civil Appear Nos. 579-580 of 1976.

(From the judgment and order dated 1-12-1972 of the Calcutta High Court in Civil Rule Nos. 4110 and 4111/64)

P. K. Chatterjee, G.' S. Chatterjee and D.

Mukherjee, for tht appellant.

P. K. Mukherjee, for respondents in CA No. 579/76 and RR I (u) to 1 (i), 3 and 4 in CA No. 580/76.

The Judgment of the Court was delivered by

BHAGWATI, J., These appeals by certificate are directed against a judgment of a Division Bench of the Calcutta High Court striking down section 78-B to section 78-G of the Calcutta Improvement Act, 1911 as invalid on the ground of excessive delegation of legislative jl<lwer as also contravention of Article 14 of the Constitution and declaring rules 11 to 21 of the Rules framed by the Government under sub-section ( 3a) of section 13 7 as ultra vires the provisions of the Act.

The facts giving rise to the appeals lie in a very narrow compass and may be

briefly stated as follows.

;; The respondents in Civil Appeal No. 579 of 1976 are the owner•

of a building bearing No. 35 situate at Lower Circular Road, Calcutta while the respondents in Civil Appeal No. 580 of 1976 are owners of 6 a building bearing No. I/ A situate in Mcleod Street, Calcutta.

There was a street known as Fire Lane connecting the Lower Circular Road on the east to Mcleod Street on the West.

In or about November 1954 the Board of Trustees for the Improvement of Calcutta (hereinafter

referred to as the Board) acting in exercise of the power conferred under section 39, clause ( c), passed the necessary resolution and proceeded to frame a Street Scheme for the area which included Fire Lane as al•o H the buildings belonging to the respondents.

The notice contain; ng the requisit particulars was published by the Boord on 24th November,

I )

1954 as required by section 43.

The respondents submitted their object10Hs agamst tne Street Scheme on 7th Decemoer, 1954 but tne Board, aner 11eanug tne respondents, re1ected the obiecuons and appllcu to the State Government tor sanclion unuer sect10n 'l'I and the Sueet Scheme was ultilllatly sancuoned by the ~'ate Government unuer secuon 4~ on 17th JJecemoer, 1956. 1ne tloard was ot the op,]}ion that as a result of the makmg of the Street Scheme, land,, of the respondents which were compnsed in. the Street Scheme would increase in value and the Street Scheme, therefore, contained a declaration that a betterment iec shall be payable by the respondents in respect of the increase in the value of therr respective lands resultmg from the execut, on of the Street Scheme.

The Board gave notice of the proposed assessment of the bettennent fee to the respondents under sub-section (1) of section 78-B and the1' proceeded under sub-section (2) of that section to assess the betterment fee payable by the respondents.

The betterment fee was asse.sed at Rs. 2,15,441/- in the case of the Lower Circular Road property and at Rs. 4,241 /- in the case of Mcleod Street property and notice of this assessment was given to the respondents.

The respondents in each case dissented from the assessment made on them and the matter was thereupon referred for detennination by arbitrators as contemplated under sub-section ( 4) of sction 78-B. The arbitrators were appointed according to the procedure set out ill section 78C and after hearing the parties, the arbitrators made their award on 23rd September, 1964 detennining the betterment fee payable in the case of Lower Circular Road property at Rs. 1,25,000/- and in the case of Mcleod Street property at Rs. 4,241/-.

The respondents thereupon filed a writ petition in each case challenging the validity of the award made by the arbitrators.

The principal ground on which the validity of the award of the arbitrators was impugned in the writ petiions was that section 78A to section 78G of the Act were ultra vires and void and rules 11 to 21 of the. Rules were also invalid.

There were also certain other subsidiary grounds taken in the writ petitions but they have not formed the subject-matter of debate before us and hence we need not refer to them.

Though the writ petitions were filed as far back as 1964 immediately after making of the Award by the Arbitrators, they unfortunately could not reach hearing before the High Court until Jul\ 1971 and then also, the hear'ng took considerable time and it con .. eluded only on 17th August, 1971.

It appears that during the hear .. ing of the writ petitions, it was brought to the notice of the High Court that the question as to the constitutional validity of section 78A of the Act was also raised in another case, namely, Civil Rules No. 2156 of 1969 and that case had already been heard by another Division Bench of the High Court and was pending for judgment.

The f"ia':J C0t1rt, therefore, decided to hold back the preparation of the i"do.- ment in the writ petitions and to await the judgment of the other Division Bench in Civil Rule No. 2156 of 1969.

We do not know when the iudrn1ent was delivered in Civil Rule No. 2156 of. 1969 but it appears that the Division Bench which heard that case did not nr'~ nounce upon the constitutional validity of section 78A and disoosed

of that case on other grounds.

The result was that the High Court

CALCUTTA IMPROVEMENT TRUSTEES V. C. S. MALLICK 139 (Bhagwati, I.) had to decide the question of constitutional validity of section 78A to section 78G in the present writ petitions and it proceeded to deliver its judgment in 1st December, 1972 striking down section 78-B to section 78G and rules 11 to 21 as invalid.

We are constrained to observe that the judgment to the High Court visibly bears marks of superficiality and lack of proper consideration which are inevitable when a judgment is delivered fifteen months after the conclusion of the arguments.

The correctness of this judgment is impugned in the present appeals preferred by the trustees for the Improvement of Calcutta after obtaining certificate from the High Court.

We have gone through the judgment of the High Court with the due care and attntion which every judgment of a High CoUrt demands of us but despite our utmost anxiety and effort we have not been able to appreciate the reasoning which led the High Court to strike down section 78-B to section 78G and rules 11 to 21 as invalid.

Section 78A tl> section 78G were not in the Act as originally enacted but they were introduced in the Act by the Calcutta Improvement (Amendment) Act, 1931.

These sections contain a fasciculus of provisions relating to betterment fee, where, by the making of any improvement scheme, any land in the area comprised in the scheme which is not required for the execution thereof, is increased in value.

Chapter III of the Act deals with improvement schemes and section 35-D provides that an improvement scheme may be of one of four types, namely, a general improvement scheme, a street scheme, a housing accommodation scheme and a re-housing scheme.

We are concerned in these appeals with a Street Scheme and hence we shall refer only to those provisions which relate to a street scheme.

Section 39 provides that whenever the Board is of opinion that for the purpose inter alia of creating new or improving existing, means of communication andl facilities for traffic, it is expedient to lay out new streets or to alter existing streets, the Board may pass a resolution to that effect and 11hall then proceed to frame a street scheme for such area as may think fit.

When any street scheme has been framed, . section 43, sub~ section ( 1 J requires that the Board shall prepare a notice stating the fact that the scheme has been framed, the boundries of the area comprised in the scheme and the place at wh; ch the particulars of the 11cheme, a map of the area comprised in the scheme and a statement

of the land which is proposed to be acquired and the land in regard to whicf. it is proposed to recover a betterment fee may be seen at reasonable hours.

Sub-section (2) of section 43 provides for publication of this notice with a stntement of the period within which objections may be received.

The Board is also required by section 45, sub-section ( 1) to serve a notice on every person whose name appears 1 in the Municipal assessment book as being primarily liable to oav tne

owner's share of the consolidated rate or the rate on the annual value ol. holdings, in respect of any land in regard to which the Board prnposes to recover a betterment fee.

Sub-section (2) of section 45 provides that such notice shall require such person if he dissent" frnm

the recovery of betterment fee, to state his reasons in writing within a period of sixty days. Section 47, sub-section (1) then provides that the Bo:ird shall consider any statement of dissent received under secl0-722SCI/77

t t

tion 45, sub-section (2) and after hearing all persons making su: dissent who may desire to be heard, the Board may either abandon the scheme or apply to the State Government for sanction to the scheme with such mod1ficat10n, if any, as the Board may consider necessary.

When the Board applies for sanct.on of the scheme to the State Government, the Board is required under sub-section (2) of section 4 7 to send inter alia a list of the names of all persons who have dissented under section 45 from the proposed recovery o4.' the bettenuent fee and a stacement of the reasons given for such dissent.

Sub-section (3) of section 47 provides that when any application has been submitted to the State Government for sanction, the Board shall cause notice of the fact to be published for two consecutive weeks in the official Gazette and in the local newspapers.

The State Government may then under section 48 either sanction the scheme with or without modification or refuse to sanction the same.

It will be seen from these pw-.isions that a detailed and elaborate machinery is pr<~.vided by the Legislature tor the purpose of framing a street scheme.

When a street scheme is framed, the area comprised in the street scheme would include lands of two categorie.'>, one ca tegory, being of lands which are necessary to be acquued for the purpose of execution of the street scheme and the other being category of lands which are not required for the execution of the street scheme but which would increase in value as a result of the making of the street scheme.

Since the latter category of land would increase in value an<l the owners of such lands would be benefitted by the making of the street scheme, section 78A empowers the Board, in framing the street scheme, to declare that a betterment fee shall be payable by the owners of such lands "in respect of the increase in the value of the land resulting from the execution of the schemes". What shall be the quantum of the betterment fee is laid down in sub-section

(2) of section 78A which says that it shall be "an amount equal to one-half of the increase in the value of the land resulting from the execution of the scheme" to be calculated in the manner there pro vided.

Section 7-8-B provides for assessment of betterment fee by the Board afte.r giving an opportunity to the person concerned to be heard and if such person dissent~ from the assessment made by the Board, the matter is required to be determi11cd by the arbitrators in the manner provided by section 78C.

That section lays down in meticulous detail the machinery for selection and app0intment of arbitrators and the making of an award by them determininj!; the amount of bettennent fee.

The fees to be paid to the arbitrators arc provided in section 78-D and section 78E declares that the proceedimrs of the arbitrators shall be governed by rules to be made in th!"

behalf under section 137, provided that everv party to such proceedings shall be entitled to appear before the arbitrators either in person nr hv his authorised agent.

Section 78F "Jrovides. for !riving of notice bv the Board to persons liable to pay the betterment fee detennined

bv the Bo::ird or the arbitrators, as the case mav be, and section 780 makes provision in rePard to payment of betterment fee.

The auestion i whether sections. 78A to 78G are ultra vires and void as suffering from the vice of excessive delej?ation of legislative power, or con-· I ravention of Article 14 of the Constitution.

CALCUTTA IMPROVEMENT TRUSTEES v. C. S. MALLICK 141 (Bhagwati, J.) We will first examine the validity of rules 11 to 21.

These rules A fonn P"dft of the Rules made by the State Government claiming to act in exercise of the power conferred under clause (3a) of section 137.

This clause was added in section 13 7 by the Amending Act of 1931 at the same time when section 78A to section 78G were enacted and it empowered the State Government to make rules inter alia for determining the qualifications and disqualifications of, the conditions and mode of election, selection or appointment of, an arbitrator and for B regulating the proceedings of arbitrators under section 78C.

This power was conferred on the State Government in addition to that given to it under section 86.

Now, Rule 1 contains definitions, while 2 to 11 provide for the qualifications and disqualifications of and the conditions and mode of election, selection and appointment, of arbitrators.

It is indeed difficult to see how Rule 11 could be struck down by the High Court as invalid.

It provides the machinary for C appointment of arbitrators in a case where the objectors fail to elect an arbitrator.

That would fall fairly and squarely within the tern1s of clause (3a) of section 137.

Rules 12 to 21 lay down the procedure regulating the proceedings of arbitrators and they are clearly covered by the latter part of clause (3a) of section 137, which speaks of Rules "far regulating the proceedings of arbitrators under section

78C". With the great respect to the learned judges of the High D Court, we think impossible to contend that Rules 11 to 21 are outside the rule making power of the State Government under clause (3a) of section 137.

The High Court seems to have relied on a passaQe from the Calcutta Improvement Trust Manual published under the authority of the State Government which states that "the rules were framed by the Government under section 137 of the Calcutta Improvement Act, 1911 regarding the nominations of arbitrators for settlement E of bettennent fee in the Local Self Government Department Notification--dated 5th May, 1934.

That indicates that the rules for regulating the proceeding of an arbitrator under section 78C are not within the purview of these rules, Yet Rules 11 to 23 in the Rules framed under section 137 cover a field which is much beyond the subject of 'lomination of arbitrators for settlement of bettennent fee" and on the basis of this statement, held that "Rules 11 to 21 are F outside the region of the purpose for which the State Government has exercised its power under section 137". This is indeed strange logic for striking down Rules 11 to 21 as ultra vires clause (3a) of section 137.

The vl!lidity of these rules has to be judged by reference to the question as to whether they fall within, the scope of the! rule mak-, ing power conferred under clause (3a) of section 137 and not on the basis of some opinion expressed by the author of the Calcutta G lmpwvement Trust Manual.

When it is clear beyond doubt that clause (3a) of section 137 emnowers the State Government to make rules for rel!lllatiM the proceedinos of arhitrat0,,-,; under section 78C and Rules 11 to 21 are plainlv rules falling within this category. we fail to see bow thv cn ""i;-a, Tu t.,,,.. C'"'"rlPm.,,""ci as outside the rnle

m"king power conferred on the State Government.

The State Government has deliheratelv and au0w'rlu exerci<e<l its rule making H power under clause (3a) of section 137 and m"<le Rules. 11 to 21 fo; regulating the proceedings of arbitrators.

The High Court has

also made reference t.o section 86 and struck down Rules 11 t.o 21 as invalid on the ground that they do not purport to have been mado under section 86 under which alone, according to the High Cuurt,

rules could be made tor carrying out the purposes of secLon 78A to section 78G. But the reference to section 86 seems to be clearly misconceived, since that section confers power on the State Government t.o make rules for carrying out "tbe purposes of this Chapter" and section 86 being in Chapter V, the words "this Chapter" can have reference only t.o Chapter V and not t.o Chapter IV which contains sections 78A t.o 78G.

Obviously, therefore, no rules could be made under section 86 for carrying out the purposes of section 78A to section 780. The High Conrt was, in the circumstances, clearly in error in taking the view that Rules 11 to 21 were ultra vires the Act.

This was a wholly indefensible view and even the learned counsel appearing on behalf of the respondents found it difficult t.o support it.

That takes us to the question of the constitutional validity of section 7 SA to section 7 8G.

The view taken by the IL gh Conrt on this point also is difficult t.o understand. The High Conrt appears to have thought that tbese sections suffer from the voice of excessive delegation of legislative power because "for determining what land shall bear the burden of that fee" (that is betterment fee) "arbitrary and uncontrolled power has been given to the Trust or its engineers either t.o include or not to include within the scheme lands which are not required for the execution thereof" and "it leaves t.o the Trust and/ or its employees t.o determine arbitrarily what shall be the extent of the area compr[sed in the Scheme by enabling them t.o include in the scheme lands which are not required for execution of the scheme." This reasoning is clearly based on an erroneous premise.

It is not correct to say that it is left to the unfettered and unregulated discretion of the Board and/or its employees to decide what lands to include in the scheme, apart from those required for the execution of the scheme. Section 39, to which we have already referred, lays down the factors which would guide the Board in deciding what area

should be included in the scheme.

It is only when the Board finds that for carrying out any of the four purposes set out in section 39, it is expedient to lay out new street or to alter existing street, that the Board can proceed to frame a scheme for such area as it thinks fit and the selection of the area by the Board would, therefore, be guided by the purpose for which the scheme is to be framed.

Then again, the decision of the Board in regard to the lands to be included in tho scheme is not. final.

Where, by reason of the making of the scheme, the value of any land included in the scheme has, in the cpinion of tho Board, increased in value and a betterment fee is, therefore, payable by the owner of the land, an opportunity is given to him to dissent from the recovery of such betterment fee and to state his reasons why

he so dissents and the Board is then required to g've him a hearing and ultimately, if proper case is made out, the Board may modify the scheme by excluding snch land and even if the Board is not inclined to make -any such modification, the State Government, while !riving its sanction, may still take into account the dissent made bv the owner

of the land and consider the reasons !riven by him, and if satisfied, exclude such land from the scheme at the time of giving sanction. It will.

CALCUTTA IMPROVEMENT TRUSTEES v. C. S. MALLICK 143 (Bhagwati, J.) therefore, be seen that not only is guidance given to the Board in selecting the lands to be included in the scheme, but there are also safeguards provided with a view to ensuring that lands are not arbitrarily or capriciously included in the scheme.

Even after the scheme is sanctioned by the State Government, it open to the owner of the land to show that in fact the land would not increase in value by reason of the making of the scheme. The betterment fee being co-related to the increase in the value of the land, the Board assessmg the amount of betterrr; ent fee under section 78-B would have to determine objectively whether there is any increase in the value of the land and if so, assess the amount al betterment fee on that basis. If the owner of the land dissents from the assessment made by the Board, he can have the matter referred to arbitrators and the arbitrators would then determine the amount of betterment fee and while doing so, they would naturally have to find out whether there is any increase in the value of the land at all an dif there is, then what is the quantum of such increase.

The owner of the land is given an opportunity under the scheme of section 78A to section 78G to have this question determined by a body of two independent arbitrators who would objectively determine whether there is any increase in the value of the land on account of the making of the scheme.

These being the relevant provisions, it is difficult to see how section 78-B to section 78-G could be regarded as suffering from the vice of excessive delegation of legislative power.

The attack against the validity of these sections on the basis or infraction of Article 14 of the Constitution must also fail since the challenge under Article 14 is only another facet of the challenge on the ground of excessive delegation of legislative power.

We are, there- 1, ore, of the view tlmt section 78-B to section 78G are valid and the High Court was wrong in striking them down as ultra vires and void.

We cannot part with this case without making one final observation.

The unarguably small dimension of the constitutional question raised here is apparent from what we have said.

This Court has dual responsibility to the country. It has to decide the cases brought before it justly and satisfactorily and at the. same time, liquidate arrears of

pending cases. Both bear upon the credibility of the judicial system.

F But because of article 144A broueht in by the Forty Second Amendment Act, seven judges of this Court have to sit and hear every c:><e

where the constitutionality of !\11 Act, rule, bye-law or .even a small notification is challenged. Processual pragmatism in the light of actual experience of the working of this Court, will easily convince any one that, in the context of the current docket explosion and long pendencv of cases, the insistence on this inconvenient plurality which requires G more than half the full strength of the Court to sit to hear such ~. is a decisive step in the neative direction. Many questions of constitutional importance have already been covered by the rulings of this Court so that he who runs and reads may resolve them. To require seven judces to perform such jobs is surely supererogatory.

Tho present ppeal itself.is a triking illustration. Where really imoortnt issues anse for consideration, any bench of this Court would certainly H refer, where necessary, such matters for consideration or reconsideration by a large bench-less or more than seven, according to the requirement

' I

I l

A of the situation.

To prescribe arithmetically is to petrify unimaginatively.

We do not say anything about the validity of Article 144A one way or the other but merely highlight the paralysing impact on the highest court and the Jong-term cause of justice, flowing from the numerical rigidity newly inserted by the Forty Second Constitution Amendment Act. We hope and trust that this matter will receive ur-

B gent attention of Parliament.

We accordingly allow the appeals and dismiss the writ petitions of the respondents.

The respondents will pay the costs of the appellant thronghout. \'

P.H.P.

Appeals allowed.