M. Chandru v. Member-Secretary Metropolitan Development, (SC) BS201069
SUPREME COURT OF INDIA

Before:- S. B. Sinha and Dr. M. K. Sharma, JJ.

Civil Appeals No. 1079 of 2009. with Nos. 1080, 1081, 1083, 1082 and 1084 of 2009, D/d. 17.2.2009.

M Chandru - Appellant

Versus

Member - Secretary, Chennai Metropolitan Development Authority and Another

For the Appellants :- L. Nageshwara Rao, Senior Advocate (Jayanath Muth Raj, Ms Malvika G. and C. K. Sasi, Advocates).

For the Respondents :- V. Krishnamurthy, Senior Advocate [T. HArish Kumar, V. Vasudevan (for R. Nedumaran) and S. Thananjayan, Advocates]

A. Tamil Nadu Town and Country Planning Act, 1971, Sections 9A, 9E, 59, 60, 61 and 63A - Chennai Metropolitan Water Supply and Sewerage Act, 1978, Sections 6(2)(xii-a), 81(2)(jj), 2(f)(i),(v) and (vii), 7, 45 and 56 - Constitution of India, 1950, Article 265 - Levying of infrastructure development charges (IDC) - Legality of - Appellants asked to deposit specified sums towards IDC payable to Chennai Metropolitan Water Supply and Sewerage Board (Sewerage Board) by Chennai Metropolitan Development Authority (CMDA) - Held - Rate of IDC had already been fixed by Sewerage Board - Although Sewerage Board had power to levy IDC, its authorisation to CDMA to collect the same was valid and did not amount to delegation of power to levy IDC - Part of High Court order on such point upheld albeit for different reasons.

[Para ]

B. Chennai Metropolitan Water Supply and Sewerage Infrastructure Development Charges (Levy and Collection) Regulations, 1998, Regulations 4 and 3(a), (b), (c) and (d) - Regulation 4 has been made in terms whereof CMDA has been authorised to collect IDC - Thus, matter providing for collection of IDC is a matter of procedure and not a substantive provision.

[Para 21]

C. Constitution of India, 1950, Article 12 - Statutory authority - Delegation of power - Held - Statutory authority can delegate its power when there is a provision in the statute - Power to delegate, thus, being a statutory requirement must find it's place in the Principal Act itself and not in the Regulations.

[Para 19]

D. Town Planning - Chennai Metropolitan Water Supply and Sewerage Act, 1978, Section 78-B - Constitution of India, 1950, Articles 73 and 162 - Scope of Section 78-B - Held - Orders and directions under Section 78-B of 1978 Act can be issued when the Government forms an opinion that the same are necessary or expedient for carrying out the purpose of the Act - Directions cannot be issued in respect of matters which are beyond the provisions of the statute.

[Para 20]

E. Chennai Metropolitan Water Supply and Sewerage Act, 1978, Section 6(2)(xii-a) - Constitution of India, 1950, Article 265 - Development fee - Nature of - Determination - Under Section 6(2)(xii-a) infrastructure development charges (IDC) levied on builders or developers of special buildings and multi-storeyed buildings @ Rs 64 per square metre - IDC whether is a fee - Held - Said question could be answered by applying principle of quid pro quo - Matter remitted to High Court for fresh consideration since the basis for fixation of rate was not disclosed - Direction issued to the State to justify levy of fee by filing an affidavit before High Court.

[Paras 23 and 27]

F. Chennai Metropolitan Water Supply and Sewerage Act, 1978 - Object of - 1978 Act enacted to provide for constitution of Sewerage Board to attend to the growing needs and for proper development and regulation of water supply and sewerages services in the Chennai Metropolitan Area.

[Para 8]

Cases Referred :-

Sri Krishna Das v. Town Area Committee, Chirgaon., (1990) 3 SCC 645.

Jindal Stainless Ltd. (2) & Anr. v. State of Haryana & Ors., (2006) 7 SCC 241.

Mumbai Agricultural Produce Market Committee & Anr. v. Hindustan Lever Ltd. & Ors., (2008) SCC 575.

Mohan Meakin Ltd. v. State of H.P. & Ors., 2009 (1) SCALE 510.

A.P. Paper Mills Ltd. v. Govt. of A.P. and Another., (2000) 8 SCC 167.

Ashok Lanka v. Rishi Dixit, (2005) 5 SCC 598.

Kerala Samsthana Chethu Thozhilali Union v. State of Kerala and Others., (2006) 4 SCC 327.

State of Kerala and 20 Others v. Maharashtra Distilleries Ltd. and Others., (2005) 11 SCC 1.

Mica Micanite Industries v. State of Bihar and Others.,(1971) 2 SCC 236.

JUDGMENT

S.B. Sinha, J. - Leave granted.

INTRODUCTION

2. Legality and/or validity of Infrastructure Development Charges (IDC) by Chennai Metropolitan Development Authority (CMDA) allegedly on 2 behalf of Chennai Metropolitan Water Supply and Sewerage Board (the Sewerage Board) for issuing planning permission in regard to the construction of multi-storeyed building and/or special building is in question in this appeal which arises out of a judgment and order dated 20.12.2006 passed by a Division Bench of the High Court of Judicature at Madras in W.P. No.34702 of 2006.

BACKGROUND FACTS

3. Appellants herein are builders and developers and individuals who had applied for grant of permission for construction of multi-storeyed building and/or special building before the CMDA. They were asked to deposit specified sums towards IDC payable to the Sewerage Board by CMDA. Contending that CMDA had no power to collect IDC and the Sewerage Board is otherwise obligated to supply water and provide sewerage connection, they filed writ petitions before the High Court of Madras. The said writ petitions have been dismissed by reason of the impugned judgment.

SUBMISSIONS

4. Mr. L. Nageshwar Rao, learned counsel appearing on behalf of the appellants, would contend :

5. Mr. Krishnamurty, learned senior counsel appearing on behalf of the respondent, on the other hand, urged :

STATUTORY PROVISIONS

6. The Legislature of the State of Tamil Nadu enacted the Tamil Nadu Town and Country Planning Act, 1971 (the 1971 Act). Levy of development fees by CMDA is prescribed thereunder as a pre-condition for grant of permission to construct building.

Relevant provisions of the 1971 Act read as under:

7. The 1978 Act was enacted to provide for the constitution of Sewerage Board to attend to the growing needs and for proper development and regulation of water supply and sewerage services in the Chennai Metropolitan Area. Relevant provisions of 1978 Act are as under :

8. Clause (jj) of Section 81 of the 1978 Act provides for regulation making power pursuant whereto or in furtherance whereof the State of Tamil Nadu made Regulations in the year 1998 known as The Chennai Metropolitan Water Supply and Sewerage Infrastructure Development Charges (Levy and Collection) Regulations, 1998 in respect of 'manner' and 'basis' for collection of charges, relevant provisions whereof are as under :

Delegation

9. On or about 5.3.1998, the Sewerage Board in the 197th meeting of its Board of Directors resolved to collect infrastructure development fee at a flat rate of Rs. 64/- per square meter and to authorise CMDA to act as its agent for calculation, collection and remittance of the infrastructure development charges or IDC to the Board and to grant NOC to applicant builders of special buildings and multistoreyed flats without referring individual cases to the Board. An office order being No.9/98 issued on 23.3.1998 by CMDA as regards processing of applications for planning permission fixing Rs. 64/- per square meter as IDC for multi-storeyed building which was to be collected by CMDA and transfer to Sewerage Board.

10. A Government Order being No.146 was also passed by Housing and Urban Development Department directing CMDA to collect Rs. 64/- per square meter from applicants towards IDC.

11. The 1978 Act was amended in terms whereof Sections 6(2)(xii-a) and Section 81(jj) were inserted empowering the Sewerage Board to collect IDC from applicant, builder or developer of multi-storeyed or special buildings.

12. Appellant herein applied for planning permission for construction of a multi-storeyed building before CMDA on 8.11.2005. A sum of Rs. 53,29,500/- towards development charges was demanded by CMDA in terms of its letter dated 8.9.2006 including a sum of Rs. 5,30,500 towards IDC payable to the Sewerage Board for developing water and sewerage facilities as a pre-condition for considering the said application.

13. It is on the aforementioned premise, the writ petition was filed which by reason of the impugned judgment has been dismissed.

Findings Of The High Court

14. (a) Levy has been made for the services rendered and to strengthen and maintain the water supply and sewerage infrastructure.

DELEGATION ISSUE

15. Indisputably, development charges for land and building are levied in terms of the provisions of Section 59, 60 and 69 of the 1971 Act. Such charges are payable at the time of seeking planning permission for the development of land and building. The stipulated charges, at the relevant time, was Rs. 1,00,000/- per hectare in the case of development of land and Rs. 25/- per square meter in the case of buildings. Water and sewage charges are levied in terms of Sections 45 and 56 of 1978 Act, which are required to be paid to the Sewerage Board at the time of seeking connection.

16. As noticed hereinbefore, IDC at the rate of Rs. 64/- per square meter is levied only on builders or developers of special buildings or multi-storeyed buildings in terms of Section 6(2)(xii-a) of 1978 Act and Regulations made pursuant to the amendment of Section 81(2)(jj) thereof. IDC indisputably is 13 in addition to the charges levied under Sections 59, 60 and 61 of 1971 Act and Sections 45 and 56 of 1978 Act.

17. Regulations, as noticed hereinbefore, were framed as regards, "manner" and 'basis' for collection of charges.

18. The High Court opined that as the CMDA had been empowered to collect the said charges in terms of the Regulations by reason of a resolution of the Board of Directors of the Sewerage Board in its meeting held on 5.3.1998, the same is valid in law.

19. The Sewerage Board is a State within the meaning of Article 12 of the Constitution of India. It is a creature of a statute. It can delegate its power provided there exists a provision in the Act. Power to delegate, thus, being a statutory requirement must find its place in the principal Act itself and not in the Regulation. The High Court, in our opinion, has asked unto itself a wrong question. The appropriate question required to be posed was not as to whether the CMDA was appointed as an agent, but was as to whether the Sewerage Board could delegate its power to CMDA. It may have some advantages. But the same may not answer the legal requirement.

20. Mr. Krishnamurty, however, has submitted that the Sewerage Board is bound by the direction issued by the Government.

CMDA may be a local authority within the provisions of the 1978 Act but it is an independent body. Prima facie, there is nothing to show that it has any statutory role to play in the functioning of the Sewerage Board. As a local authority, it has certain duties to perform. It, however, appears that the function relating to water supply and sewage services are vested in the Board itself. It was, therefore, the Board which could levy the charges. It had such a power in terms of Sections 45 and 54 of the Act. Our attention has been drawn to Section 78(b) of the Act to contend that the Government has power to issue orders and directions. Such orders and directions can be issued when the Government forms an opinion that the same are necessary or expedient for carrying out the purpose of the Act. Directions cannot be issued in respect of the matters which are beyond the provisions of the statute.

21. However, it appears that Section 81(2)(jj) which was inserted by Tamil Nadu Act 49 of 1988, the Board has been empowered to frame regulations in relation to the 'manner' and 'basis' on which the IDC shall be collected. In terms of the aforementioned power, Regulation 4 has been made in terms whereof CMDA has been authorised to collect IDC. Thus, the matter providing for collection of IDC is a matter of procedure and not a substantive provision. It, in that view of the matter, is not a delegation of power. CMDA is not appropriating any fund collected on behalf of the Sewerage Board. It has no power to utilise any amount. The power of collection is merely an incidental power. They have no power to assess or appropriate the same; the rate having been fixed.

22. Although for different reasons, we, thus, uphold that part of the order of the High Court on this count.

QUID PRO QUO

23. State or the Board did not state as to on what basis the rate of Rs. 64/- per square meter was fixed. What was the amount to be spent towards services to be rendered to the multi-storeyed and special buildings had not been spelt out. What had merely been stated was that the amount was necessary to be spent for overall development of the water supply and sewerage system. It is not contended before us that IDC is not a fee but a tax. If it is a fee, the principle of quid pro quo shall apply. Like a State, all other authorities who are statutorily empowered to levy the same must spell out as to on what basis, the same is charged. The State has not placed any material before the High Court. The High Court has also not addressed itself properly on the same issue. It failed to pose unto itself a relevant question. It proceeded on the basis as if over all development charges by itself is sufficient to levy a fee without spelling out how the services 16 rendered will satisfy the equivalence doctrine for the purpose of levy and collection of fees.

24. In Sri Krishna Das v. Town Area Committee, Chirgaon [(1990) 3 SCC 645], this Court observed :

In Jindal Stainless Ltd. (2) & Anr. v. State of Haryana & Ors. [(2006) 7 SCC 241], a Constitution Bench of this Court stated:

In Mumbai Agricultural Produce Market Committee & Anr. v. Hindustan Lever Ltd. & Ors. [(2008) SCC 575], this Court observed :

It was further stated : (Hindustan lever Case (2008) 5 SCC 575.

Recently, in Mohan Meakin Ltd. v. State of H.P. & Ors. [2009 (1) SCALE 510], this Court opined that the jurisdiction of the State to impose such a levy is limited. When a fee is levied, the question as regards 'aspects of power to levy fee vis-a-vis tax' must be borne in mind.

25. Furthermore, it was held in A.P. Paper Mills Ltd. v. Govt. of A.P. and Another [(2000) 8 SCC 167] that even if a fee is levied for issuance of permit, it was only for the purpose of recovering the administrative charges. [See also Ashok Lanka and Another v. Rishi Dixit and Others (2005) 5 SCC 598].

This Court in Kerala Samsthana Chethu Thozhilali Union v. State of Kerala and Others [(2006) 4 SCC 327], upon noticing State of Kerala and 20 Others v. Maharashtra Distilleries Ltd. and Others [(2005) 11 SCC 1], opined:

26. Even while levying a fee, a quantum jump is deprecated.

In Indian Mica Micanite Industries v. The State of Bihar and Others [(1971) 2 SCC 236], it has been held:

In this case, the State in fact has not produced any material whatsoever before the High Court, which it was required for meeting the challenge on imposition of fee by it.

27. As in the case of Mohan Meakin Ltd., in this case also no justification for levy of fee has been placed before the High Court, we are of the opinion that the matter should be remitted to the High Court for consideration of the matter afresh.

In the writ petition, State of Tamil Nadu may be impleaded as a party. The parties shall be at liberty to produce such material before the High Court for justification for levy of fee. The State of Tamil Nadu is directed to file an affidavit before the High Court to justify the levy of fee. The affidavit should be filed within four weeks.

28. The impugned order is set aside. The appeals are allowed. The High Court is requested to dispose of the matter as expeditiously as possible. No costs.

.