REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 7503-7537 OF 2002

Bangalore Development Authority … Appellant

versus

The Air Craft Employees Cooperative

Society Ltd. and others … Respondents

J U D G M E N T

G. S. Singhvi, J.

1.These appeals are directed against the order of the Division

Bench of the Karnataka High Court whereby the writ petitions

filed by the respondents were allowed, Section 32(5A) of the

Bangalore Development Authority Act, 1976 (for short, ‘the 1976

Act’) was declared as violative of Article 14 of the Constitution,

void and inoperative and the conditions incorporated in the

orders passed by the Bangalore Development Authority (BDA)

sanctioning residential layout plans or work orders in terms of

which respondents were required to pay/deposit various

charges/sums specified therein were quashed and a direction

was issued for refund of the amount.

2.With the formation of the new State of Mysore, it was

considered necessary to have a uniform law for planned growth

of land use and development and for the making and execution of

town planning schemes. Therefore, the State Legislature enacted

the Mysore Town and Country Planning Act, 1961 (for short, ‘the

Town Planning Act’). The objectives of that Act were:

(i) to create conditions favourable for planning and replanning of

the urban and rural areas in the State of Mysore, with a view to

providing full civic and social amenities for the people in the

State;

(ii) to stop uncontrolled development of land due to land

speculation and profiteering in land;

(iii)to preserve and improve existing recreational facilities and

other amenities contributing towards balanced use of land; and

(iv)to direct the future growth of populated areas in the State,

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with a view to ensuring desirable standards of environmental

health and hygiene, and creating facilities for the orderly growth

of industry and commerce, thereby promoting general standards

of living in the State.

3.The State of Mysore was renamed Karnataka in 1973.

Thereupon, necessary consequential changes were made in the

nomenclature of various enactments including the Town

Planning Act.

4.Section 4 of the Town Planning Act envisages constitution of

a State Town Planning Board by the State Government. By Act

No.14 of 1964, the Town Planning Act was amended and Chapter

I-A comprising of Sections 4-A to 4-H was inserted. These

provisions enabled the State Government to issue notification

and declare any area in the State to be a local planning area for

the purposes of the Act and constitute the “Planning Authority”

having jurisdiction over that area. Section 9(1) (unamended)

imposed a duty on every Planning Authority to carry out a survey

of the area within its jurisdiction, prepare and publish an outline

development plan for such area and submit the same to the State

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Government for provisional approval. In terms of Section 12(1)

(unamended), an outline development plan was required to

indicate the manner in which the development and improvement

of the entire planning area was to be carried out and regulated.

Section 19(1), as it then stood, contemplated preparation of a

comprehensive development plan and submission of the same for

the approval of the State Government. Section 21 (unamended)

gave an indication of the factors which were to be included in the

comprehensive development plan. Section 26 (unamended)

imposed a duty on every Planning Authority to prepare town

planning schemes incorporating therein the contents specified in

sub-section (1) of that Section. For the sake of reference, these

provisions are extracted below :

“4-A. Declaration of Local Planning Areas, their

amalgamation, sub-division, inclusion of any area

in a Local Planning Area. -

(1) The State Government may, by notification,

declare any area in the State to be a Local Planning

Area for the purposes of this Act, this Act shall apply

to such area:

Provided that no military cantonment or part of

a military cantonment shall be included in any such

area.

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4-C. Constitution of Planning Authority. - (1) As

soon as may be, after declaration of a local planning

area, the State Government in consultation with the

Board, may, by notification in the Official Gazette,

constitute for the purposes of the performance of the

functions assigned to it, an authority to be called the

“Planning Authority”ﾝof that area, having

jurisdiction over that area.

9. Preparation of Outline Development Plan.-(1)

Every Planning Authority shall, as soon as may be,

carry out a survey of the area within its jurisdiction

and shall, not later than two years from the date of

commencement of this Act, prepare and publish in

the prescribed manner an outline development plan

for such area and submit it to the State Government,

through the Director, for provisional approval:

Provided that on application made by a

Planning Authority, the State Government may from

time to time by order, extend the aforesaid period by

such periods as it thinks fit.

12. Contents of Outline Development Plan.-(1) An

outline development plan shall generally indicate the

manner in which the development and improvement

of the entire planning area within the jurisdiction of

the Planning Authority are to be carried out and

regulated. In particular it shall include,-

(a) a general land-use plan and zoning of land-use

for residential, commercial, industrial, agricultural,

recreational, educational and other public purposes;

(b) proposals for roads and highways;

(c) proposals for the reservation of land for the

purposes of the Union, any State, any local authority

or any other authority established by law in India;

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(d) proposals for declaring certain areas as areas of

special control, development in such areas being

subject to such regulations as may be made in

regard to building line, height of buildings, floor area

ratio, architectural features and such other

particulars as may be prescribed;

(e) such other proposals for public or other purposes

as may from time to time be approved by the

Planning Authority or directed by the State

Government in this behalf.

19. Preparation of the Comprehensive

Development Plan.-(1) As soon as may be after the

publication of the Outline Development Plan and the

Regulations under sub-section (4) of section 13, but

not later than three years from such date, every

Planning Authority shall prepare in the prescribed

manner a comprehensive Development Plan and

submit it through the Director together with a report

containing the information prescribed, to the State

Government for approval:

Provided that on application made by a

Planning Authority, the State Government may, from

time to time, by order in writing, extend the aforesaid

period by such periods as it thinks fit.

21. Contents of the Comprehensive Development

Plan.-(1) The comprehensive Development Plan shall

consist of a series of maps and documents indicating

the manner in which the development and

improvement of the entire planning area within the

jurisdiction of the Planning Authority are to be

carried out and regulated. Such plan shall include

proposals for the following namely:-

(a) comprehensive zoning of land-use for the

planning area, together with zoning regulations;

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(b) complete street pattern, indicating major and

minor roads, national and state high ways, and

traffic circulation pattern, for meeting immediate and

future requirements;

(c) areas reserved for agriculture, parks, play-

grounds and other recreational uses, public open

spaces, public buildings and institutions and areas

reserved for such other purposes as may be

expedient for new civic development;

(d) major road improvements;

(e) areas for new housing;

(f) new areas earmarked for future development and

expansion; and

(g) the stages by which the plan is to be carried out.

(2) The report shall further contain a summary of the

findings in the surveys carried out under sub-section

(2) of section 19, and give relevant information and

data supporting proposals in the plan and deal in

detail with.-

(a) acquisition of land for the purpose of

implementing the plan,

(b) financial responsibility connected with the

proposed improvements, and

(c) the manner in which these responsibilities are

proposed to be met.

26. Making of town planning scheme and its

contents.—(1) Subject to the provisions of this Act, a

Planning Authority, for the purpose of implementing

the proposals in the Comprehensive Development

Plan published under sub-section (4) of section 22,

may make one or more town planning schemes for

the area within its jurisdiction or any part thereof.

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(2) Such town planning scheme may make provisions

for any of the following matters namely,—

(a) the laying out or re-laying out of land, either

vacant or already built upon;

(b) the filling up or reclamation of low-lying, swamp or

unhealthy areas or levelling up of land;

(c) lay-out of new streets or roads; construction,

diversion, extension, alteration, improvement and

stopping up of streets, roads and communications;

(d) the construction, alteration and removal of

buildings, bridges and other structures;

(e) the allotment or reservation of land for roads, open

spaces, gardens, recreation grounds, schools,

markets, green belts and dairies, transport facilities

and public purposes of all kinds;

(f) drainage inclusive of sewerage, surface or sub-soil

drainage and sewage disposal;

(g) lighting;

(h) water supply;

(i) the preservation of objects of historical or national

interest or natural beauty and of buildings actually

used for religious purposes;

(j) the imposition of conditions and restrictions in

regard to the open space to be maintained about

buildings, the percentage of building area for a plot,

the number, size, height and character of buildings

allowed in specified areas, the purposes to which

buildings or specified areas may or may not be

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appropriated, the sub-division of plots, the

discontinuance of objectionable users of land in any

area in reasonable periods, parking space and loading

and unloading space for any building and the sizes of

projections and advertisement signs;

(k) the suspension, so far as may be necessary for the

proper carrying out of the scheme, of any rule, bye-

law, regulation, notification or order, made or issued

under any Act of the State Legislature or any of the

Acts which the State Legislature is competent to

amend;

(l) such other matter not inconsistent with the objects

of this Act as may be prescribed.”

5.The 1976 Act was enacted by the State legislature in the

backdrop of the decision taken at the conference of the Ministers

for Housing and Urban Development held at Delhi in November

1971 that a common authority should be set up for the

development of Metropolitan Cities. Before the constitution of

the BDA, different authorities like the City of Bangalore

Municipal Corporation, the City Improvement Trust Board, the

Karnataka Industrial Area Development Board, the Housing

Board and the Bangalore City Planning Authority were exercising

jurisdiction over the Bangalore Metropolitan Area. Some of the

functions of these authorities like development, planning etc.

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were overlapping and creating avoidable confusion. Not only this,

the intervention of multiple authorities was impeding coordinated

development of the Metropolitan Area. It was, therefore,

considered appropriate that a single authority like the Delhi

Development Authority should be set up for the city of Bangalore

and areas adjacent thereto which, in due course, would become

part of the city. It was also realised that haphazard and irregular

growth would continue unless checked by the development

authority and it may not be possible to rectify/correct mistakes

in the future. For achieving these objectives, the State legislature

enacted the 1976 Act. Simultaneously, Section 81-B was

inserted in the Town Planning Act for deemed dissolution of the

City Planning Authority in relation to the area falling within the

jurisdiction of the BDA. The preamble of the 1976 Act and the

definitions of “Authority”, “Amenity”, “Civic amenity”, “Bangalore

Metropolitan Area”, “Development”, “Engineering operations”,

“Local Authority”, “Means of access” contained in Section 2

thereof are reproduced below:

“An Act to provide for the establishment of a

Development Authority for the development of the City

10

of Bangalore and areas adjacent thereto and for

matters connected therewith

2. Definitions.- In this Act, unless the context

otherwise requires,-

(a) “Authority” means the Bangalore Development

Authority constituted under section 3;

(b) “Amenity” includes road, street, lighting,

drainage, public works and such other conveniences

as the Government may, by notification, specify to be

an amenity for the purposes of this Act;

(bb) “Civic amenity” means,-

(i) a market, a post office, a telephone exchange, a

bank, a fair price shop, a milk booth, a school, a

dispensary, a hospital, a pathological laboratory, a

maternity home, a child care centre, a library, a

gymnasium, a bus stand or a bus depot;

(ii) a recreation centre run by the Government or the

Corporation;

(iii) a centre for educational, social or cultural

activities established by the Central Government or

the State Government or by a body established by the

Central Government or the State Government ;

(iv) a centre for educational, religious, social or

cultural activities or for philanthropic service run by a

cooperative society registered under the Karnataka

Co-operative Societies Act, 1959 (Karnataka Act 11 of

1959) or a society registered under the Karnataka

Societies Registration Act, 1960 (Karnataka Act 17 of

1960) or by a trust created wholly for charitable,

educational or religious purposes ;

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(v) a police station, an area office or a service station

of the Corporation or the Bangalore Water Supply and

Sewerage Board or the Karnataka Electricity Board ;

and

(vi) such other amenity as the Government may, by

notification, specify;

(c) “Bangalore Metropolitan Area” means the area

comprising the City of Bangalore as defined in the

City of Bangalore Municipal Corporation Act, 1949

(Mysore Act 69 of 1949), the areas where the City of

Bangalore Improvement Act, 1945 (Mysore Act 5 of

1945) was immediately before the commencement of

this Act in force and such other areas adjacent to the

aforesaid as the Government may from time to time

by notification specify;

(j) “Development” with its grammatical variations

means the carrying out of building, engineering, or

other operations in or over or under land or the

making of any material change in any building or

land and includes redevelopment;

(k) “Engineering operations” means formation or

laying out of means of access to road;

(n) “Local Authority” means a municipal

corporation or a municipal council constituted or

continued under any law for the time being in force;

(o) “Means of access” includes any means of access

whether private or public, for vehicles or for foot

passengers, and includes a road;”

6.Sections 14, 15, 16, 28-A, 28-B, 28-C, 32(1) to (5A), 65, 65-B

67(1)(a) and (b) of the 1976 Act are also extracted below:

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“14. Objects of the Authority.- The objects of the

Authority shall be to promote and secure the

development of the Bangalore Metropolitan Area and

for that purpose the Authority shall have the power to

acquire, hold, manage and dispose of moveable and

immoveable property, whether within or outside the

area under its jurisdiction, to carry out building,

engineering and other operations and generally to do

all things necessary or expedient for the purposes of

such development and for purposes incidental

thereto.

15. Power of Authority to undertake works and

incur expenditure for development, etc.- (1) The

Authority may,-

(a) draw up detailed schemes (hereinafter referred to

as “development scheme”) for the development of the

Bangalore Metropolitan Area ; and

(b) with the previous approval of the Government,

undertake from time to time any works for the

development of the Bangalore Metropolitan Area and

incur expenditure therefor and also for the framing

and execution of development schemes.

(2) The Authority may also from time to time make

and take up any new or additional development

schemes,-

(i) on its own initiative, if satisfied of the sufficiency of

its resources, or

(ii) on the recommendation of the local authority if the

local authority places at the disposal of the Authority

the necessary funds for framing and carrying out any

scheme; or

(iii) otherwise.

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(3) Notwithstanding anything in this Act or in any

other law for the time being in force, the Government

may, whenever it deems necessary require the

Authority to take up any development scheme or work

and execute it subject to such terms and conditions

as may be specified by the Government.

16. Particulars to be provided for in a

development scheme.- Every development scheme

under section 15,- (1) shall, within the limits of the

area comprised in the scheme, provide for ,-

(a) the acquisition of any land which, in the opinion of

the Authority, will be necessary for or affected by the

execution of the scheme ;

(b) laying and re-laying out all or any land including

the construction and reconstruction of buildings and

formation and alteration of streets ;

(c) drainage, water supply and electricity ;

(d) the reservation of not less than fifteen percent of

the total area of the layout for public parks and

playgrounds and an additional area of not less than

ten percent of the total area of the layout for civic

amenities.

(2) may, within the limits aforesaid, provide for,-

(a) raising any land which the Authority may consider

expedient to raise to facilitate better drainage;

(b) forming open spaces for the better ventilation of

the area comprised in the scheme or any adjoining

area;

(c) the sanitary arrangements required ;

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(3) may, within and without the limits aforesaid

provide for the construction of houses.

28-A. Duty to maintain streets etc.- It shall be

incumbent on the Authority to make reasonable and

adequate provision by any means or measures which

it is lawfully competent to use or take, for the

following matters, namely,-

(a) the maintenance, keeping in repair, lighting and

cleansing of the streets formed by the Authority till

such streets are vested in the Corporation; and

(b) the drainage, sanitary arrangement and water

supply in respect of the streets formed by the

Authority.

28-B. Levy of tax on lands and buildings.- (1)

Notwithstanding anything contained in this Act, the

Authority may levy a tax on lands or buildings or on

both, situated within its jurisdiction (hereinafter

referred to as the property tax) at the same rates at

which such tax is levied by the Corporation within its

jurisdiction.

(2) The Provisions of the Karnataka Municipal

Corporations Act, 1976 (Karnataka Act 14 of 1977)

shall mutatis mutandis apply to the assessment and

collection of property tax.

Explanation.- For the purpose of this section

“property tax” means a tax simpliciter requiring no

service at all and not in the nature of fee inquiring

service.

28-C. Authority is deemed to be a Local Authority

for levy of cesses under certain Acts.-

Notwithstanding anything contained in any law for

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the time being force the Authority shall be deemed to

be a local authority for the purpose of levy and

collection of,-

(i) education cess under sections 16.17 and 17A of

the Karnataka Compulsory Primary Education Act,

1961 (Karnataka Act 9 of 1961);

(ii) health cess under sections 3,4 and 4A of the

Karnataka Health Cess Act, 1962 (Karnataka Act 28

of 1962);

(iii) library cess under section 30 of the Karnataka

Public Libraries Act, 1965 (Karnataka Act 10 of 1965);

and

(iv) beggary cess under section 31 of the Karnataka

Prohibition of Beggary Act, 1975 (Karnataka Act 27 of

1975).

32. Forming of new extensions or layouts or

making new private streets.- (1) Notwithstanding

anything to the contrary in any law for the time being

in force, no person shall form or attempt to form any

extension or layout for the purpose of constructing

buildings thereon without the express sanction in

writing of the Authority and except in accordance

with such conditions as the Authority may specify:

Provided that where any such extension or layout lies

within the local limits of the Corporation, the

Authority shall not sanction the formation of such

extension or layout without the concurrence of the

Corporation:

Provided further that where the Corporation and the

Authority do not agree on the formation of or the

conditions relating to the extension or layout, the

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matter shall be referred to the Government, whose

decision thereon shall be final.

(2) Any person intending to form an extension or

layout or to make a new private street, shall send to

the Commissioner a written application with plans

and sections showing the following particulars,-

(a) the laying out of the sites of the area upon streets,

lands or open spaces;

(b) the intended level, direction and width of the

street;

(c) the street alignment and the building line and the

proposed sites abutting the streets;

(d) the arrangement to be made for levelling, paving,

metalling, flagging, channelling, sewering, draining,

conserving and lighting the streets and for adequate

drinking water supply.

(3) The provisions of this Act and any rules or bye-

laws made under it as to the level and width of streets

and the height of buildings abutting thereon shall

apply also in the case of streets referred to in sub-

section (2) and all the particulars referred to in that

sub-section shall be subject to the approval of the

Authority.

(4) Within six months after the receipt of any

application under subsection (2), the Authority shall

either sanction the forming of the extension or layout

or making of street on such conditions as it may

think fit or disallow it or ask for further information

with respect to it.

(5) The Authority may require the applicant to

deposit, before sanctioning the application, the sums

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necessary for meeting the expenditure for making

roads, side-drains, culverts, underground drainage

and water supply and lighting and the charges for

such other purposes as such applicant may be called

upon by the Authority, provided the applicant also

agrees to transfer the ownership of the roads, drains,

water supply mains and open spaces laid out by him

to the Authority permanently without claiming any

compensation therefor.

(5A) Notwithstanding anything contained in this Act,

the Authority may require the applicant to deposit

before sanctioning the application such further sums

in addition to the sums referred to in the sub-section

(5) to meet such portion of the expenditure as the

Authority may determine towards the execution of

any scheme or work for augmenting water supply,

electricity, roads, transportation and such other

amenities within the Bangalore Metropolitan Area.

65. Government’s power to give directions to the

Authority.- The Government may give such

directions to the Authority as in its opinion are

necessary or expedient for carrying out the purposes

of this Act, and it shall be the duty of the Authority to

comply with such directions.

65-B. Submission of copies of resolution and

Government’s power to cancel the resolution or

order.- (1) The Commissioner shall submit to the

Government copies of all resolutions of the

Authority.

(2) If the Government is of opinion that the execution

of any resolution or order issued by or on behalf of

the Authority or the doing of any act which is about

to be done or is being done by or on behalf of the

Authority is in contravention of or in excess of the

powers conferred by this Act or any other law for the

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time being in force or is likely to lead to a breach of

peace or to cause injury or annoyance to the public

or to any class or body of persons or is prejudicial

to the interests of the authority, it may, by order in

writing, suspend the execution of such resolution or

order or prohibit the doing of any such act after

issuing a notice to the Authority to show cause,

within the specified period which shall not be less

than fifteen days, why,-

(a) the resolution or order may not be cancelled in

whole or in part; or

(b) any regulation or bye-law concerned may not be

repealed in whole or in part.

(3) Upon consideration of the reply, if any, received

from the authority and after such inquiry as it thinks

fit, Government may pass orders cancelling the

resolution or order or repealing the regulation or bye-

law and communicate the same to the authority.

(4) Government may at any time, on further

representation by the authority or otherwise, revise,

modify or revoke an order passed under subsection

(3).

67. Amendment of the Karnataka Town and

Country Planning Act, 1961.- (1) In the Karnataka

Town and Country Planning Act , 1961 (Karnataka

Act 11 of 1963),-

(a) in section 2, for item (i) of sub-clause (a) of clause

(7), the following item shall be substituted namely,-

“(i) the local planning area comprising the City of

Bangalore, the Bangalore Development Authority,

and”;

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(b) after section 81-A, the following section shall be

inserted, namely,-

“81-B. Consequences to ensue upon the

constitution of the Bangalore Development

Authority.- Notwithstanding anything contained

in this Act, with effect from the date on which

the Bangalore Development Authority is

constituted under the Bangalore Development

Authority Act, 1976 the following consequences

shall ensue,-

(i) the Bangalore Development Authority shall be

the local Planning Authority for the local

planning area comprising the City of Bangalore

with jurisdiction over the area which the City

Planning Authority for the City of Bangalore had

jurisdiction immediately before the date on

which the Bangalore Development Authority is

constituted;

(ii) the Bangalore Development Authority shall

exercise the powers, perform the functions and

discharge the duties under this Act as if it were

a Local Planning Authority constituted for the

Bangalore City;

(iii) the City Planning Authority shall stand

dissolved and upon such dissolution,-”

****”

7.In exercise of the power vested in it under Section 4-A(1) of the

Town Planning Act, the State Government issued Notifications

dated 1.11.1965 and 13.3.1984 declaring the areas specified

therein to be the “Local Planning Areas”. By the first

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notification, the State Government declared the area

comprising the city of Bangalore and 218 villages enumerated

in Schedule I thereto to be the “Local Planning Area” for the

purposes of the Town Planning Act and described it as the

Bangalore City Planning Area. The limits of the planning area

were described in Schedule II appended to the notification. By

the second notification, the area comprising 325 villages

around Bangalore (as mentioned in Schedule I) was declared

to be the Local Planning Area for the environs of Bangalore.

The limits of the city planning area were indicated in Schedule

II. At the end of Schedule II of the second notification, the

following note was added:

“This excludes the Bangalore City Local Planning Area

declared (by) Government Notification No.

PLN/42/MNP/65/SO/3446 dated 1-11-1965.”

8.A third notification was issued on 6.4.1984 under Section 4-

A(3) of the Town Planning Act amalgamating the Local

Planning Areas of Bangalore declared under the earlier two

notifications as “Bangalore City Planning Area” w.e.f.

1.4.1984.

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9.On 1.3.1988, the State Government issued notification under

Section 2(c) of the 1976 Act specifying the villages indicated in

the first Schedule and within the boundaries indicated in the

second Schedule to Notification dated 13.3.1984 to be the

areas for the purposes of that clause. We shall refer to this

notification a little later in the context of the High Court’s

negation of the respondents’ challenge to that notification on

the ground that the names of the villages or specified areas

had not been published in the Official Gazette and, as such,

the layout plans of the area comprised in those villages are not

governed by the 1976 Act.

10.As a result of unprecedented increase in the population of the

city of Bangalore between 1970 and 1980, the available civic

amenities like roads, water supply system and supply of

electricity were stretched to their limit. To meet the additional

requirement of water and electricity and to tackle the problems

of traffic, new schemes were prepared in the development plan

of Bangalore city, which was approved in 1984. These

included augmentation of water supply, formation of Ring

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Road etc. Bangalore Water Supply and Sewerage Board

(BWSSB) submitted a proposal to the State Government for

taking up of Cauvery Water Supply Scheme, Stage III (for

short, ‘the Cauvery Scheme’) for supply of an additional 270

MLD water to Bangalore at a cost of Rs. 240 crores. The

proposed financing pattern of the project was as follows:

(i) State Government - Rs.80/- crores,

(ii) Life Insurance

Corporation of India - Rs. 50/- crores,

(iii)Bangalore City

Corporation - Rs. 30/- crores, and

(iv) World Bank - Rs. 80/- crores.

11.By an order dated 28.06.1984, the State Government, after

taking cognizance of the difficulties being experienced by

BWSSB in supplying water to the Bangalore Metropolitan Area

and the possibility of acute shortage of water in next 10 years

if the supply was not augmented, granted approval to the

Cauvery Scheme.

12.Since the World Bank assistance was expected only in the

year 1988 and the Cauvery Scheme was to be implemented by

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1990 to meet the drinking water needs of the residents of

Bangalore, the issue was discussed in the meeting held on

01.01.1987 under the chairmanship of the Chief Secretary of

the State and it was decided that with a view to avoid

escalation in the cost, the funds may be collected from other

sources including the BDA because substantial quantity of

water was required for the layouts which were being developed

by it or likely to be developed in future. In furtherance of that

decision, the State Government issued order dated 25.03.1987

and directed the BDA to make a grant of Rs. 30 crores to

BWSSB to be paid in installments from 1987-88 to 1989-90 by

loading an extra amount as water supply component at the

rate of Rs. 10,000/- on an average per site for all the layouts

to be formed thereafter.

13.In compliance of the directions given by the State

Government, the BDA started collecting Rs.10,000/- per site.

Later on, the levy under the Cauvery Scheme was increased to

Rs.1 lac per acre. By 1992, it was realised that the BDA had

not been able to develop and distribute sites as expected.

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Therefore, a proposal was submitted by the Commissioner,

BDA to the State Government that contribution towards the

Cauvery Scheme may be distributed among those applying for

change of land use and the private layouts to be developed by

the house building societies and on major housing projects.

The State Government accepted the suggestion of the BDA and

passed order dated 12.1.1993 for the levy of charges under the

Cauvery Scheme at the rate of Rs.2 lacs per acre.

14.In 1992, the BDA also decided to take up the construction of

63.30 kilometers long Outer Ring Road and 3.5 kilometers

long Intermediate Ring Road at an estimated cost of Rs.115

crores with a possible escalation up to Rs.130 crores. 36.24

kilometers of the Outer Ring Road was to pass through the

BDA layouts and the balance was to pass through the land

outside the BDA layouts. The cost of construction of Outer

Ring Road passing through the BDA layout was to be met by

charging the allottees of sites in the BDA layouts. For the

balance 27.06 kilometers of Outer Ring Road and 3.5

kilometers of Intermediate Ring Road a proposal was prepared

25

to obtain financial assistance from the World Bank. In the

meeting held on 5.6.1992 under the chairmanship of the Chief

Secretary of the State, the possibility of taking loan from

HUDCO was explored. Simultaneously, it was considered

whether partial burden of the cost could be passed on to the

beneficiaries of the private layouts and it was agreed that like

the Cauvery Scheme, Ring Road surcharge should be levied on

the sites to be formed by the BDA and the private housing

societies at the rate of Rs.1 lac per acre. Thereafter, the BDA

passed Resolution dated 19.10.1992 for levy of charges at

different rates on change of land use in different areas and

Rs.1 lac per acre on the layouts of housing societies and

private lands as also the sites formed by itself.

15.The Air Craft Employees Cooperative Society Ltd. (respondent

in C.A. No.7503/2002) submitted an application for approval

of layout in respect of 324 acres 30 guntas land situated in

Singasandra and Kudlu villages, Surjapur Hobli and Begur

Hobli respectively. The application of the respondent was

considered in the BDA’s meeting held on 31.10.1991 and was

26

approved subject to various conditions including payment of

Rs.2 lacs per acre towards the Cauvery Scheme and Rs.1 lac

as Ring Road surcharge. Another condition incorporated in the

Resolution of the BDA was that the civil portion of work shall

be carried out by the respondent under its supervision. The

decision of the BDA was communicated to the respondent vide

letter dated 12.11.1992.

16.The respondent challenged the conditional sanction of its

layout in Writ Petition No.11144/1993 and prayed for

quashing the demand of Rs.2 lacs per acre towards the

Cauvery Scheme and Rs.1 lac as Ring Road surcharge by

making the following assertions:

(i)The order passed by the State Government was applicable

only to the sites to be formed by the BDA and not the layout of

private House Building Societies because as per the Chairman of

BWSSB, it will not be possible to take up the responsibility of

providing water supply and underground drainage to such

layouts and the societies had to make their own arrangements.

27

(ii) The Cauvery Scheme will be able to meet the requirements of

only the citizens residing within the municipal area and some

newly formed layouts adjacent to the city.

(iii) There is no provision in the Bangalore Water Supply and

Sewerage Act, 1964 (for short, ‘the 1964 Act’) under which the

burden of capital required for the execution of schemes could be

passed on to the private House Building Societies and, in any

case, the BWSSB can recover the cost by resorting to Section 16

of the 1964 Act.

(iv)Under the 1976 Act, the Government is not empowered to

authorise the BDA to transfer the cost of the Cauvery Scheme to

the private layouts.

(v)20,000 acres of land has been acquired by the BDA for

forming layouts in the vicinity of Bangalore and 10,000 acres had

been acquired by the Government for House Building Cooperative

Societies and if Rs.1 or 2 lacs per acre are charged, the

Government will collect about Rs.600 crores from the BDA itself,

though the latter’s contribution was initially fixed at Rs.30 crores

only.

28

(vi)The demand of Rs.1 or 2 lacs per acre towards the Cauvery

Scheme is ultra vires the provisions of Article 265 of the

Constitution.

(vii)The levy of Rs.1 lac per acre as Ring Road surcharge is not

sanctioned by law and the State and the BDA cannot burden the

private layouts without determining whether the Ring Road

would be of any use to the members of the House Building

Societies.

17.During the pendency of Writ Petition No.11144/1993, the

State legislature amended the 1976 Act by Act. No.17/1994

and inserted sub-section (5A) in Section 32 w.e.f. 20.6.1987

authorising the BDA to demand sums in addition to those

referred in sub-section (5) to meet the expenditure towards the

execution of any scheme or work for augmenting water supply,

electricity, roads, transportation and other amenities within

the Bangalore Metropolitan area.

18. The respondent promptly amended the writ petition and

challenged the constitutional validity of the newly inserted

sub-section by asserting that the provision is discriminatory

29

and violative of Article 14 of the Constitution because it gives

unbridled and uncanalized power to the BDA to demand

additional sums for different schemes. It was also pleaded

that sub-section (5A) has been inserted in Section 32 to

legitimize the conditions incorporated in letter dated

12.11.1992 for payment of charges for the Cauvery Scheme

and the Ring Road.

19.While the parties were litigating on the constitutionality of the

amended provision and legality of the conditional sanction of

the layout, the respondent applied for approval of the BDA for

starting civil work. The same was sanctioned subject to

payment of the following charges:

(i)Supervision Charges Rs. 92,26,687.00

(at the rate of 9% on Civil Work)

(ii)Improvement charges Rs. 1,65,95,008.00

(at the rate of Rs. 20 per sq. mtrs.)

(iii)Examination charges Rs. 4,14,876.00

(0-50 per sq. mtrs.)

(iv)Slum Clearance Development Rs. 20,74, 365.00

Charges (Rs. 25,000 per hectare)

(v)M.R.T.S. Tax Rs. 1,02,51, 875.00

30

(Rs. 50,000 per acre)

(vi)Miscellaneous Rs. 7,189.00

20.The respondent challenged the conditional approval of civil

work in Writ Petition No. 25833/1998 on the ground that the

1976 Act does not authorize such levies and that the

legislature has not laid down any guideline for creating such

demand from the private House Building Societies. An

additional plea taken by the respondent was that the BDA has

applied the provisions of Section 32 of the 1976 Act under a

mistaken impression that the layout was within its

jurisdiction. According to the respondent, no notification had

been issued by the State Government for including the villages

of North and South Talukas within the Bangalore Metropolitan

Area. Another plea taken by the respondent was that the State

Government has already collected conversion fine and, as

such, the BDA does not have the jurisdiction to levy

betterment fee. Similar plea was raised in respect of Mass

Rapid Transport System Cess and the Slum Clearance

charges.

31

21.The other House Building Cooperative Societies also filed writ

petitions between 1994 and 1998 for striking down Section

32(5A) and the conditional sanction of their layouts in terms of

which they were required to pay for the Cauvery Scheme and

the Ring Road apart from other charges mentioned in the

sanction of civil work as was done in the case of Air Craft

Employees Cooperative Society Limited. They generally

pleaded that:

i.the BDA has no jurisdiction to make demands requiring

payment of sums under various heads in the matter of

sanction of the residential layout plan as areas of their

layouts do not form part of the Bangalore Metropolitan

Area;

ii.the notification issued under Sec. 2(c) of the 1976 Act is not

valid as there is no specification of the adjacent areas;

iii.Notification dated 1.3.1988 is not in consonance with the

requirements of law as it does not specify the villages and

the areas which were sought to be declared and specified as

part of the Bangalore Metropolitan Area and the

32

specifications and schedules referred to in the notification

have not been published;

iv.the villages which include the lands that form a part of the

residential layouts also do not figure in the schedule to

Notification dt. 13.3.1984.

22.The writ petitions were contested by the appellant by making

the following assertions:

i.the lands of the respondents’ residential layout fall within

the local planning area of the authority and, therefore, they

are liable to pay layout charges in respect of the Cauvery

Scheme, Ring Road surcharge, slum clearance charge,

betterment levy, scrutiny fee, supervision charges, etc.

ii.the charges have been levied in terms of the directions given

by the State Government and the decision taken by the

BDA.

iii.the societies are required to carry out civil work under the

supervision of the BDA and, therefore, they are liable to pay

supervision charges.

33

iv.Section 32(5A) of the 1976 Act does not suffer from any

constitutional infirmity and guidance for levy of such

charges can be traced in the scheme of the Act.

23.The Division Bench of the High Court first considered the

question whether Notification dated 1.3.1988 issued under

Section 2(c) of the 1976 Act was invalid because the names of

the villages or the specified area had not been notified or

published in the Official Gazette and whether in the absence of

such notification, the villages in which the societies had

formed layouts cannot be treated as part of the Bangalore

Metropolitan Area. The Division Bench referred to the

definition of the expression “Bangalore Metropolitan Area”

contained in Section 2(c) of the 1976 Act, the contents of

Notification dated 1.3.1988 and held that the description of

the area given in the notification was in consonance with the

definition of the Bangalore Metropolitan Area because

reference had been made to the villages in Schedule I to

Notification dated 13.3.1984 and the boundaries of the

planning environs area as per Schedule II of the said

34

notification. The Division Bench opined that if Notifications

dated 13.3.1984 and 1.3.1988 are read together, it cannot be

said that the particular villages do not form part of the

Bangalore Metropolitan Area.

24.The Division Bench did not decide the plea of the respondents

that some of the villages were not included in the Schedules by

observing that determination of this question involves

investigation into a question of fact and this can be considered

at the time of approval of the layout plan of the particular

society.

25.The argument that while dealing with the issue raised in Writ

Petition No.13907/1995, the BDA had lost the territorial

jurisdiction because the areas in question had become part of

City Municipal Council, Byatarayanapura and City Municipal

Council, Krishnaraja Puram respectively vide Notification

dated 22.1.1996 was left to be decided by the BDA with liberty

to the concerned respondent to raise the same at an

appropriate stage.

35

26.The Division Bench then adverted to Articles 265 and 300A of

the Constitution and held that the BDA cannot levy or recover

the sums specified in the demand notice on the basis of the

government order or circular. The Division Bench further held

that the approval of layout plan or work order cannot be made

subject to the condition of deposit of the sum demanded by it.

The Division Bench then analysed the provisions of Section 32

of the 1976 Act and observed:

“No principle appears to have been laid down or

indicated for the authority to be kept in view and

followed when determining in such portion of the

expenditure, which expenditure have to relate to be

made or to be incurred in the execution of any

schemes or works as referred. No doubt, the schemes

or works for augmenting the water supply, electricity

and other amenities only provide that it should

be worked within the Bangalore Metropolitan Area

or work is to be for the benefit of the Bangalore

Metropolitan Area to provide amenities within

the Bangalore Metropolitan Area. But, the

question is that out of that expenditure which

the Bangalore Metropolitan Area has to bear or

incur what portion thereof the applicant

seeking approval of layout plan etc., will be

required to deposit and know the proportion or a

portion of that is to be determined by the

authority. There is nothing in this section to

indicate or to provide any guideline. There are

no rules framed under the Act with reference

to subsection (5-A) of Section 32 of the

36

Bangalore Development Authority Act, 1976 to provide

guidelines or to indicate as to how that is to be

determined. The section does not by itself provide

any procedure of either hearing or of giving the

notice to the persons affected, or there being

opportunity of being heard being given to the

concerned persons or person before determination

of the portion of the expenditure which the

Bangalore Development Authority has to incur with

reference to those schemes or works to be

levied thereunder.”

27.The Division Bench relied upon the ratio in Ram Krishna

Dalmia v. Shri Justice S.R. Tendolkar and Ors. AIR 1958 SC

538, Jyoti Pershad v. The Administrator for The Union

Territory of Delhi, AIR 1961 SC 1602; Devi Das Gopal

Krishnan v. State of Punjab, AIR 1967 SC 1895, State of

Kerala v. M/s. Travancore Chemicals and Manufacturing

Company (1998) 8 SCC 188 and observed:

“In the present case, sub-section (5-A) of

Section 32 of the Act, does not appear to provide

any guidelines so as to determine as to what exact

portion of the expenditure should the applicant

be required to deposit. No doubt, the entire

expenditure cannot be fastened on the applicant.

It does not provide any guidelines in this

regard. It does not provide the portion of the

amount the applicant maybe required to deposit

shall bear any percentage on the basis of

enjoyment of the benefit by the applicant or the

37

applicant likely to enjoy the benefit qua enjoyment

by total area or its population. It also does not

provide that the applicant before being required to

pay will have opportunity of disputing that

claim and challenging the correctness of the

portion proposed by the authority to be fastened on

him. Really the section appears to confer unbridle

powers without providing any guide lines or

guidance in that regard. The section also does not

provide any remedy against the order of authority

under Section 32(5) of the Act.

The learned counsel for the respondents contended

that there is remedy against the order of the authority

under Section 63 of the Act by way of

revision to the Government which may

consider the legality or propriety of the order or

proceedings. In our opinion, this contention of the

learned Counsel is without substance. In view of

the Non obstante clause contained in sub-section

(5-A) of Section 32 of the Act which provides that

exercise of that power and it may result in

or it may cause irrational discrimination

between the same set of persons and the persons

maybe deprived of their properties in the form of

money by the exercise of sweet will and

the unbridled discretion of the authority

concerned. In our view this provision as it

confers unbridle and uncontrolled power on

the authority as such it may enable unequal

and discriminatory treatment to be accorded

to the persons and it may enable the authority to

discriminate among the persons similarly situated.

Tested by the yardstick of the principle laid down

in Sri Rama Krishna Dalmia's case reported in

A.I.R.1958 Supreme Court 538 and Shri

Jyothi Pershad's case reported in A.I.R. 1961

Supreme Court 1602. We find that the provision

of sub-section (5-A) of Section 32 of the

38

Bangalore Development Act, 1976 suffers from

vice of discrimination and has tendency to enable

the authority to discriminate and as such hit by

Article 14 of the Constitution.”

28.The Division Bench finally concluded that the demand made

by the BDA with the support of Section 32(5A) is illegal and

without jurisdiction and accordingly allowed the writ petitions.

29.At this stage, it will be appropriate to mention that during the

course of hearing on 2.9.2009, Shri Dushyant Dave, learned

senior counsel appearing for one of the respondents stated

that a sum of Rs.300 crores (approximately) has been collected

by the BDA from the House Building Societies in lieu of

sanction of their layouts and substantial amount from the

allottees of the sites of the layouts developed by it between

1984-1992 and this, by itself, was sufficient to prove that the

exercise of power by the BDA under Section 32 (5A) of the

1976 Act is arbitrary. After considering the statement made by

Shri Dave, the Court directed the Commissioner and/or

Secretary of the BDA to file a detailed and specific affidavit

giving the particulars of contribution made by the BDA

39

towards the Cauvery Scheme and the amount demanded

and/or collected from those who applied for sanction of the

private layouts as also the allottees of the sites in the BDA

layouts. In compliance of the Court’s direction, Shri Siddaiah,

the then Commissioner, BDA, filed affidavit dated 11.11.2009,

paragraphs 2 to 5 of which are extracted below:

“2. The Government of Karnataka formed the

Cauvery Water IIIrd Stage Scheme in 1984. However,

the Government directed the Bangalore Development

Authority to contribute Rs. Thirty crores towards the

Cauvery Water IIIrd Stage Scheme by its order No.

HUD 97 MNI 81, Bangalore dated 25

th

March, 1987.

The Bangalore Development Authority started

collecting Cauvery Water Cess from 1988. However,

the Government by its order No. UDD 151

Bem.Aa.Se 2005, dated 03.05.2005 directed the

Bangalore Development Authority to stop collection

of the Cauvery Water Cess and Ring RoadCess and

MRTS Cess. A copy of the order of the Government

Order dated 03.05.2005 directing not collect any

cess referred above is produced herewith as

Annexure-‘A’. The BDA has charged and collected the

Cauvery water cess between 1988 and 2005. The

Cauvery Water cess collected by the BDA is

periodically transferred to the Bangalore Water

Supply and Sewerage Board (BWSSB). The chart

showing year wise payments made to BWSSB

towards the Cauvery Water Cess from 1988 till 2005

is produced herewith as Annexure-‘B’. The payment

chart shows the amount collected towards the

Cauvery Water Cess and paid to BWSSB. The chart

shows that a total sum of Rs. 34.55 crores are

collected from 1988 to April 2005. The sum of

40

Rs.34.55 crores collected is in respect of both private

layouts as well as Bangalore Development Authority

sites. The entire money collected towards the

Cauvery Water Cess has been paid to the Bangalore

Water Supply Sewerage Board, Bangalore as stated

above.

3. Similarly, the collection towards the Ring Road

Cess from the year 1992-93 and the collections were

made up to 2005-06. The total sum collected is

Rs.15.15 crores. The year-wise chart showing the

collection of Ring Road Cess is produced herewith as

Annexure-‘C’. The Ring Road Cess is collected only

from the private layouts.

4. With regard to certain averments made in W.P.

No. 11144/1993 with regard to estimated collection

of Cauvery Water Cess, it is submitted that the

estimates are far from accurate. It is just a guess

work. The averments made therein that the

Government has acquired around 10,000 acres

towards the private societies will not be within the

knowledge of the Bangalore Development Authority,

because the Government does not seek the opinion

or consent of BDA before acquiring land for a private

layout. The private layouts within the limits of BDA

have to apply to BDA for approval of a private under

Section 32 of BDA Act. From 1984 till 2005, 194

applications for approval of private layouts were

received and were approved by the Bangalore

Development Authority involving about an extent of

5668 acres and 15 3/4

th

gunthas (five thousand six

hundred and sixty-eight acres and fifteen and three

fourth gunthas). However, Cauvery Water Cess and

Ring Road Cess are levied and collected as stated

above from 1988 and 2005 respectively. The

submissions made in the Writ Petition to the

contrary are speculative.

41

5. Similarly, the averments in the W.P. that the

Bangalore Development Authority would collect

about 300 crores are speculative. It is submitted

with respect after the directions of the Government

in 2005, all the above collections have been stopped.

Hence, this affidavit.

BANGALORE DEV ELOPMENT AUTHORITY

BANGALORE

THE COLLECTION OF CAUVERY WATER CESS & PAID TO

BWSSB AS MENTIONED BELOW

(INR in Lakh)

SL NO CHEQUE NO. DATE AMOUNT

1 FROM FEB 1988 TO APRIL 1992 2,130.00

2 705908 02.11.1996 150.00

3 718093 21.01.1997 100.00

4 737303 15.03.1997 100.00

5 753086 06.07.1997 100.00

6 756449 30.12.1997 150.00

7 650002 18.03.1998 50.00

8 759664 20.07.1998 50.00

9 502441 22.01.1999 50.00

10 769862 15.09.1999 75.00

11 653066 04.06.2005 500.00

TOTAL 3,455.00

(Rupees Thirty Four Crores and Fifty Five Lakh)

Sd/-

Accounts Officer BDA,

Bangalore

ANNEXURE-II

YEAR WISE RING ROAD CESS

(INR in Lakh)

YEAR COLLECTIONS CHARGED TO RING

ROAD EXPEND.

BALANCE

1992-93

(Feb 93 on wards)

63.39 63.39 -1993 -94 183.89 183.89 -42

1994-95 217.87 217.87 -1995-96 331.14 331.14 -1996-97 162.08 162.08 -1997-98 180.79 180.79 -1988-99 84.23 84.23 -1999-00 50.49 50.49 -2000-01 19.48 19.48 -2001-02 0.30 0.30 -2002-03 7.34 7.34 -2003-04 - - -

2004-05 - - -

2005-06 214.27 214.27 -TOTAL 1,515.27 1,515.27

”

Letter dated 03.05.2005 of the State Government, which is

enclosed with the affidavit of Shri Siddaiah, is also reproduced

below:

“ GOVERNMENT OF KARNATAKA

UDD.151.BAN.2005 Karnataka Secretariat

Multistoried Building

Bangalore

Dated: 03.05.2005

Sub: Ring Road Cess, Augmentation Cess (Cauvery

Water Cess) & MRTS Cess.

Ref: Government Circular No. 249 of 2001 dated

20.09.2003.

In the above circular referred above, the

Government has withdrawn all earlier orders and

decided that henceforth Ring Road Cess,

Augmentation Cess (Cauvery Water Cess) & MRTS

Cess should not be levied. Even so some

43

Corporations, Municipalities and Authorities are

charging the above cess.

Therefore, until a decision is taken at the level

of the Government about the above stated subject

and until further directions, Ring Road Cess,

Augmentation Cess (Cauvery Water Cess) & MRTS

Cess should not be charged. Hence this order.

Sd/-03.05.2005

(V.R. Ilakal)

Addl. Secretary, Govt. of Karnataka

Urban Development”

30.Thereafter, Shri Anand R.H., President of the Bank Officers

and Officials House Building Cooperative Society Limited filed

detailed affidavit dated 08.03.2010, paragraphs 2 to 7 whereof

are reproduced below:

“2. I submit that this Hon’ble Court by order dated

02.09.2009 had directed the Commissioner and/or

Secretary of Appellant Bangalore Development

Authority (BDA for short) to file a detailed and

specific affidavit stating therein the total contribution

made by the BDA towards Cauvery Water Supply

Scheme Stage III and the amount demanded and/or

collected from those who applied for sanction of

private layouts as also the allottees of the sites in the

layouts prepared by the BDA itself.

3. I say that the BDA has deliberately not at all

disclosed the material facts:

44

i) the total number of the Housing Societies and

others who applied for sanction of layouts including

private layouts;

ii) the amount BDA has demanded from the Housing

Societies and others who have applied for sanction of

layouts and private layouts;

iii) the total number of sites formed in the layouts

formed by the BDA and allotted to the public;

(iv) the total amount demanded and collected from

the allottees of the sites in the layouts formed by

BDA itself;

v) as per Government order dated 25.03.1987 the

BDA was empowered to levy and collect amount

towards the Cauvery Water Supply Scheme also from

the Applicants who apply for change in land use and

for formation of Group Housing/other major

developments and for formation of Private Layouts.

The BDA has not disclosed the details of such

Applicants or the amount recovered from them in

terms of the Government order dated 25.03.1987.

4. I say that in the affidavit under reply the BDA has

stated that it has approved layouts involving about

an extent of 5668 acres and 15 ¾ guntas from 1984

till 2005. The extent of area involved in respect of

each of the Societies is more than 10 acres in each

layout. In terms of the Government Order the BDA

has demanded towards the Cauvery Water Supply

Scheme at the rate of Rs. 3,00,000/- (Rupees Three

Lakhs Only) per acre. Therefore, at a conservative

estimate the BDA has raised demand of more than

Rs. 170/- crores (5668 x Rs. 3 lakhs). This amount

pertains to only Housing Societies. As stated above

the BDA has not disclosed the total number of

45

layouts formed by it and the total number of site

allotted in the said layouts to its allottees. I say that

the BDA has in its officials site

http://www.bdabangalore.org/layout.htm has

furnished the layout information till 2007 which

information has been downloaded from the internet

by the deponent. As per the information published

by the BDA itself it has formed 62 layouts and has

made allotments of about 2 lakh sites to general

public. It is also stated therein that in the last one

decade more than 10 new layouts have been added

to the growing city of Bangalore by BDA as under:

A.BANASHANKARI 6

TH

STAGE

·743 acres land acquired for phase-3

Banashankari 6

th

Stage and Anjanapura Further

Extension in Uttarahalli Hobli, Bangalore South

Taluk, 5000 sites allotted in September 2002.

B. BANASHANKARI 6

TH

STAGE FURTHER

EXTENSION

·750 acres land acquired in Uttarahalli Hobli,

Bangalore South Taluk, 5800 allotted during

January 2004.

C. SIR. M. VISWESHWARAYA LAYOUT

·1337 acres and 22 guntas of land acquired for

SMV Layout allotted 10,000 sites during March

2003.

D. SIR. M. VISWESHWARAYA LAYOUT FURTHER

EXTENSION

·510 acres land acquired, 4200 allotted during

January, 2004. It is near Kengeri Hobli.

E. HSR Layout is on the South-Eastern part of the

city closer to Electronic City and Outer Ring Road. It

is one among the prestigious layouts of BDA.

46

A total of 9900 sites have been allotted in HSR

Layout during 1986 to 88, 92, 95 and 99.

F. Sir. M. Visweswaraya Nagar Layout is in the

Western part of the city. In SMV Layout we have

allotted 17, 624 sites

6 x 9 – 4445

9 x 12 – 7368

12 x 18 – 4167

15 x 24 – 1644

G. In SMV Further Extension we have allotted 3615

sites.

In Anjanpura Further Extension we have allotted

7340 sites

6 x 9 – 1835

9 x 12 – 3305

12 x 18 – 1335

15 x 24 – 365

H. In Arkavathi Layout, in the 1

st

Phase 1710 sites

and in the 2

nd

phase 8314 sites of different

dimensions. A total of 3664 (30x40) dimension sites

have been allotted totally at the rate of Rs. 2100 sq.

mtrs.

S.NoName of the

layout

Location No. of sites formed

Intermediate Corner Total No. of sites

allotted

1 BSK 6

th

Stage

2

South part of

the city with

approach

road from

Kengeri Road

15520 2379 17899 15520

5175 816 5991 5175

47

3 Anjanapura

Township 1 to 8

th

Block

4

South part of

the city with

approach

road from

Kanakapura

Road.

Biggest

Layout

formed in

recent years

5424 829 6253 5424

4340 683 5023 4340

5 SMV Layout

6 SMV further

extension

7 Arkavath

West part of

the city with

approach

road from

Nagarabhavi

Road

9696 1764 11460 9696

3615 650 4265 3615

20000 8600 28600 8813

True copy of the layout information

published by BDA in its official website:

http://www.bdabangalore.org/layout.htm as at 2007

is filed as ANNEXURE A-1 to this affidavit. The true

typed copy of Annexure A-1 is filed as ANNEXURE A-

2.

5. I say that if the total number of sites allotted by

the BDA in the layout formed by it if taken as 2

lakhs sites as stated in the BDA publication the

amount levied and collected by BDA from such

allottees will come to Rs. 200 crores (2,00,00,000 x

Rs. 10,000/-).

As stated in the BDA publication in the last decade

itself more than 73503 sites have been allotted by

the BDA in the layouts formed by itself. The amount

levied and collected by the BDA from these allottees

in the last one decade at the rate of Rs. 10,000/- per

site in terms of the Government Order dated

25.03.1987 towards the Cauvery Water Supply

Scheme itself will come to Rs. 73,50,30,000/-

(Rs.10,000 per site x 73503 sites).

6. I say that apart from the amount levied and

collected by BDA from the above mentioned

Applicants, the BDA must have collected the amount

towards the Cauvery Water Supply Scheme from the

Applicants who applied for change in land use and

48

for formation of Group Housing/other major

developments and for formation of Private Layouts at

the rate as prescribed in the Government Order

dated 25.03.1987.

7. I say that the facts and figures disclosed above is

based on the averments made in the affidavit filed by

BDA and the information official from

the official website of BDA

http://www.bdabangalore.org/layout.htm and I

believe the same to be correct. Therefore, it is

apparent that the BDA has demanded more than

Rs.370 crores from the societies whose layouts have

been approved by BDA (Rs. 170 crores) and from its

allottees (Rs. 200 crores) excluding the Applicants

who applied for change in land use and for formation

of Group Housing/other major developments and for

formation of Private Layouts.

I say that apart from the fact that the BDA is not

empowered to levy and collect the amount towards

Cauvery Water Supply Scheme and without

prejudice to the submission that the provisions of

Section 32(5-A) of the BDA Act is ultra vires the

Constitution and without prejudice to rights and

contentions raised in the Civil Appeal even assuming

that the BDA could levy and collect the amount

towards Cauvery Water Supply Scheme, the BDA

could collect only Rs. 30 crores. The BDA has

however demanded the payment towards Cauvery

Water Supply Scheme in excess of over Rs. 370

crores from the Housing Societies and its own

allottees apart from the demand made from the

Applicants who applied for change in land use and

for formation of Group Housing/other major

developments and for formation of Private Layouts

which facts have not been disclosed by the BDA. The

entire information pertaining to the demand and

collection of the funds towards Cauvery Water

49

Supply Scheme is available with BDA but has been

deliberately withheld. In any event even according to

the affidavit filed by the BDA it has collected

Rs.34.55 crores as against the limit of Rs. 30 crores

which it could collect under the Government Order.

Therefore, the amount collected is far in excess of its

limit. On this ground also the demand raised against

the Respondent Societies is illegal and without

authority of law.”

31.We shall first deal with the question whether the area in

which the respondents have formed layouts fall within the

Bangalore Metropolitan Area. In the impugned order, the

Division Bench has recorded brief reasons for negating the

respondents’ challenge to Notification dated 1.3.1988. The

conclusion recorded by the Division Bench and similar view

expressed by another Division Bench of the High Court in the

Commissioner, Bangalore Development Authority v. State of

Karnataka ILR 2006 KAR 318 will be deemed to have been

approved by the three Judge Bench of this Court in Bondu

Ramaswamy v. Bangalore Development Authority (2010) 7 SCC

129, which referred to Notifications dated 1.11.1965 and

13.3.1984 issued under Section 4A(1) of the Town Planning Act

50

and Notification dated 1.3.1988 issued under Section 2(c) of the

1976 Act and observed:

“A careful reading of the Notification dated 1-3-1988

would show that the clear intention of the State

Government was to declare the entire area declared

under the Notification dated 1-11-1965 and the

Notification dated 13-3-1984, together as the

Bangalore Metropolitan Area. The Notification dated

1-3-1988 clearly states that the entire area situated

within the boundaries indicated in Schedule II to

the Notification dated 13-3-1984 was the area for

the purpose of Section 2(c) of the BDA Act. There is

no dispute that the boundaries indicated in

Schedule II to the Notification dated 13-3-1984

would include not only the villages enumerated in

First Schedule to the Notification dated 13-3-1984

but also the area that was declared as planning

area under the Notification dated 1-11-1965. This is

because the areas declared under Notification dated

1-11-1965 are the core area (Bangalore City) and

the area surrounding the core area that is 218

villages forming the first concentric circle; and the

area declared under the Notification dated 13-3-

1984 (325 villages) surrounding the area declared

under the Notification dated 1-11-1965 forms the

second concentric circle. Therefore, the boundaries

of the lands declared under the Notification dated

13-3-1984, would also include the lands which were

declared under the Notification dated 1-11-1965

and therefore, the 16 villages which are the subject-

matter of the impugned acquisition, are part of the

Bangalore Metropolitan Area.

The learned counsel for the appellants contended

that the note at the end of Second Schedule to the

Notification dated 13-3-1984 excluded the

Bangalore City Planning Area declared under the

51

Notification dated 1-11-1965. As the planning area

that was being declared under the Notification dated

13-3-1984 was in addition to the area that was

declared under the Notification dated 1-11-1965, it

was made clear in the note at the end of the

Notification dated 13-3-1984 that the area declared

under the Notification dated 1-11-1965 is to be

excluded. The purpose of the note was not to

exclude the area declared under the Notification

dated 1-11-1965 from the local planning area. The

intention was to specify what was being added to

the local planning area declared under the

Notification dated 1-11-1965. But in the Notification

dated 1-3-1988, what is declared as the Bangalore

Metropolitan Area is the area, that is, within the

boundaries indicated in Schedule II to the

Notification dated 13-3-1984, which as noticed

above is the area notified on 1-11-1965 as also the

area notified on 13-3-1984. The note in the

Notification dated 13-3-1984 was only a note for the

purposes of the Notification dated 13-3-1984 and

did not form part of the Notification dated 1-3-1988.

There is therefore no doubt that the intention of the

State Government was to include the entire area

within the boundaries described in Schedule II, that

is, the area declared under the two Notifications

dated 1-11-1965 and 13-3-1984, as the Bangalore

Metropolitan Area.

In fact ever since 1988 everyone had proceeded on

the basis that the Bangalore Metropolitan Area

included the entire area within the boundaries

mentioned in Schedule II to the Notification dated

13-3-1984. Between 1988 and 2003, BDA had made

several development schemes for the areas in the

first concentric circle around Bangalore City (that

is, in the 218 villages described in First Schedule to

the Notification dated 1-11-1965) and the State

Government had sanctioned them. None of those

52

were challenged on the ground that the area was

not part of Bangalore Metropolitan Area.”

The Bench then considered the argument that the language of

notification dated 1.3.1988 cannot lead to a conclusion that the

areas specified in the Schedule were made part of the Bangalore

Metropolitan Area, referred to the doctrine of casus omissus, the

judgment of the Constitution Bench in Padma Sundara Rao v.

State of T. N. (2003) 5 SCC 533 and proceeded to observe:

“Let us now refer to the wording and the ambiguity

in the notification. Section 2(c) of the BDA Act makes

it clear that the city of Bangalore as defined in the

Municipal Corporation Act is part of Bangalore

Metropolitan Area. It also makes it clear that the

areas where the City of Bangalore Improvement Act,

1945 was in force, is also part of Bangalore

Metropolitan Area. It contemplates other areas

adjacent to the aforesaid areas being specified as

part of Bangalore Metropolitan Area by a notification.

Therefore, clearly, the area that is contemplated for

being specified in a notification under Section 2(c) is

“other areas adjacent” to the areas specifically

referred to in Section 2(c). But it is seen from the

Notification dated 1-3-1988 that it does not purport

to specify the “such other areas adjacent” to the

areas specifically referred to in Section 2(c), but

purports to specify the Bangalore Metropolitan Area

itself as it states that it is specifying the “areas for

the purpose of the said clause”. If the notification

specifies the entire Bangalore Metropolitan Area, the

interpretation put forth by the appellants that only

the villages included in Schedule I to the Notification

53

dated 13-3-1984 would be the Bangalore

Metropolitan Area, would result in an absurd

situation. Obviously the city of Bangalore and the

adjoining areas which were notified under the City of

Bangalore Improvement Act, 1945 are already

included in the Bangalore Metropolitan Area and the

interpretation put forth by the appellants would have

the effect of excluding those areas from the

Bangalore Metropolitan Area.

As stated above, the core area or the inner circle

area, that is, Bangalore City, is a part of Bangalore

Metropolitan Area in view of the definition under

Section 2(c). The 218 villages specified in the

Notification dated 1-11-1965 are the villages

immediately surrounding and adjoining Bangalore

City and it forms the first concentric circle area

around the core area of Bangalore City. The 325

villages listed in First Schedule to the Notification

dated 13-3-1984 are situated beyond the 218

villages and form a wider second concentric circle

around the central core area and the first concentric

circle area of 218 villages. That is why the

Notification dated 1-3-1988 made it clear that the

Bangalore Metropolitan Area would be the area

within the boundaries indicated in Second Schedule

to the Notification dated 13-3-1984. It would mean

that the three areas, namely, the central core area,

the adjoining 218 villages constituting the first

concentric circle area and the next adjoining 325

villages forming the second concentric circle are all

included within the Bangalore Metropolitan Area.

What is already specifically included by Section 2(c)

of the BDA Act cannot obviously be excluded by

Notification dated 1-3-1988 while purporting to

specify the additional areas adjoining to the areas

which were already enumerated. Therefore, the

54

proper way of reading the Notification dated 1-3-

1988 is to read it as specifying 325 villages which are

described in the First Schedule to the Notification

dated 13-3-1984 to be added to the existing

metropolitan area and clarifying that the entire areas

within the boundaries of Second Schedule to the

Notification dated 13-3-1984 would constitute the

Bangalore Metropolitan Area. There is no dispute

that the boundaries indicated in the Notification

dated 13-3-1984 would clearly include the 16

villages which are the subject-matter of the

acquisition.”

32.In view of the judgment in Bondu Ramaswamy v. Bangalore

Development Authority (supra), we hold that the villages specified

in the schedules appended to Notifications dated 1.11.1965 and

13.3.1984 form part of the Bangalore Metropolitan Area. The

question whether the BDA has lost territorial jurisdiction over

the area in which the House Building Societies have formed

layouts need not be decided because the learned counsel for the

respondents did not challenge the observations made by the

Division Bench of the High Court.

33.We shall now consider the following core questions:

(1)whether Section 32(5A) of the 1976 Act is violative of

Article 14 of the Constitution;

55

(2)whether Section 32(5A) of the 1976 Act suffers from

the vice of excessive delegation of legislative power;

(3)whether the demand of charges under the Cauvery

Scheme etc. amounts to tax and is, therefore,

ultra vires the provisions of Article 265 of the

Constitution; and

(4)whether the BDA has collected charges from the house

building societies and the allottees of sites of the

layouts prepared by it far in excess of its contribution

towards the Cauvery Scheme, MRTS, etc.

Question (1)

34.Shri Altaf Ahmed, learned senior counsel appearing for the

BDA and Shri Sanjay R. Hegde, learned counsel for the State of

Karnataka argued that Section 32(5A) is not violative of Article 14

of the Constitution inasmuch as it does not operate unequally

qua the allottees of the sites of the layouts prepared by the house

building societies on the one hand and the BDA layouts on the

other hand. Learned counsel emphasised that the allottees of

sites in the BDA layouts which were carved out after 20.06.1987

have been burdened with the liability to pay charges for the

56

Cauvery Scheme as well as Ring Road and no discrimination has

been practiced between the two sets of allottees. Learned senior

counsel Shri Altaf Ahmed submitted that even otherwise there is

no comparison between the BDA layouts which were formed by

spending substantial public funds and the private layouts

prepared by the house building societies. Learned counsel

referred to the additional affidavit of Shri Siddaiah to show that

Rs. 34.55 crores were collected by the BDA between 1988 and

2005 both from the private layouts as well as the BDA sites and

the entire amount has been paid to BWSSB in lieu of the BDA’s

share in the Cauvery Scheme.

35. Shri K.K. Venugopal and Shri P. Vishwanatha Shetty,

learned senior advocates and Shri R.S. Hegde and other learned

counsel appearing for the respondents supported the conclusion

recorded by the High Court that Section 32(5A) is violative of

Article 14 of the Constitution by emphasizing that the impugned

provision has resulted in hostile discrimination between the

allottees of sites in the layouts of the house building societies

and other people living in the Bangalore Metropolitan Area.

57

Learned counsel submitted that while the benefit of the Cauvery

Scheme, Ring Road, etc. will be availed by all the residents of the

Bangalore Metropolitan Area, the cost of amenities have been

loaded exclusively on the allottees of the sites of the private

layouts and to some extent the BDA layouts and in this manner

similarly situated persons have been discriminated. Shri

Venugopal referred to the averments contained in paragraphs 4

to 6 of the amendment application filed in Writ Petition No.

11144/1993 to drive home the point that the BDA has loaded its

share towards the Cauvery Scheme and Ring Road exclusively on

the allottees of the private layouts leaving out the remaining

population of the Bangalore Metropolitan Area.

36.In our view, the High Court committed serious error by

recording a finding that Section 32(5A) is discriminatory and

violative of Article 14 of the Constitution. While deciding the

issue relating to constitutionality of the Section, the High Court

overlooked the well-established principle that a statutory

provision is presumed to be constitutionally valid unless proved

otherwise and burden lies upon the person who alleges

58

discrimination to lay strong factual foundation to prove that the

provision offends the equality clause enshrined in the

Constitution.

37.In Charanjit Lal Chowdhuri v. Union of India (1950) 1 SCR

869, this Court enunciated the rule of presumption in favour of

constitutionality of the statute in the following words:

“Prima facie, the argument appears to be a plausible

one, but it requires a careful examination, and, while

examining it, two principles have to be borne in mind :-

(1) that a law may be constitutional even though it

relates to a single individual, in those cases where on

account of some special circumstances or reasons

applicable to him and not applicable to others, that

single individual may be treated as a class by himself;

(2) that it is the accepted doctrine of the American

courts, which I consider to be well-founded on

principle, that the presumption is always in favour of

the constitutionality of an enactment, and the burden

is upon him who attacks it to show that there has been

a clear transgression of the constitutional principles. A

clear enunciation of this latter doctrine is to be found in

Middleton v. Texas Power and Light Company 248 U.S.

152, 157, in which the relevant passage runs as

follows:

“It must be presumed that a legislature understands

and correctly appreciates the need of its own people,

that its laws are directed to problems made manifest by

experience and that its discriminations are based upon

adequate grounds.””

(emphasis supplied)

59

38.In M.H. Quareshi v. State of Bihar (1959) 1 SCR 629, this

Court observed:

“The Courts, it is accepted, must presume that the

legislature understands and correctly appreciates the

needs of its own people, that its laws are directed to

problems made manifest by experience and that its

discriminations are based on adequate grounds. It

must be borne in mind that the legislature is free to

recognise degrees of harm and may confine its

restrictions to those cases where the need is deemed to

be the clearest and finally that in order to sustain the

presumption of constitutionality the Court may take

into consideration matters of common knowledge,

matters of common report, the history of the times, and

may assume every state of facts which can be conceived

existing at the time of legislation.”

39.In Ram Krishna Dalmia v. Justice S.R. Tendolkar (supra), to

which reference has been made in the impugned order, this

Court laid down various propositions including the following:

“(b) that there is always a presumption in favour of the

constitutionality of an enactment and the burden is

upon him who attacks it to show that there has been a

clear transgression of the constitutional principles;

(e) that in order to sustain the presumption of

constitutionality the court may take into consideration

matters of common knowledge, matters of common

report, the history of the times and may assume every

state of facts which can be conceived existing at the

time of legislation;”

60

40.In R.K. Garg v. Union of India (1981) 4 SCC 675 the

Constitution Bench reiterated the well-settled principles in the

following words:

“While considering the constitutional validity of a

statute said to be violative of Article 14, it is necessary

to bear in mind certain well established principles

which have been evolved by the courts as rules of

guidance in discharge of its constitutional function of

judicial review. The first rule is that there is always a

presumption in favour of the constitutionality of a

statute and the burden is upon him who attacks it to

show that there has been a clear transgression of the

constitutional principles. This rule is based on the

assumption, judicially recognised and accepted, that

the legislature understands and correctly appreciates

the needs of its own people, its laws are directed to

problems made manifest by experience and its

discrimination are based on adequate grounds. The

presumption of constitutionality is indeed so strong

that in order to sustain it, the Court may take into

consideration matters of common knowledge, matters

of common report, the history of the times and may

assume every state of facts which can be conceived

existing at the time of legislation.”

41.Though, in the writ petitions filed by them, the respondents

pleaded that Section 32(5A) is discriminatory, no factual

foundation was laid in support of this plea and in the absence of

such foundation, the High Court was not at all justified in

61

recording a conclusion that the impugned provision is violative of

the equality clause contained in Article 14 of the Constitution.

42.While examining the issue of hostile discrimination in the

context of Section 32(5A), the Court cannot be oblivious of the

fact that due to unprecedented increase in the population of the

Bangalore City and the policy decision taken by the State

Government to encourage house building societies to form

private layouts, the BDA was obliged to take effective measures

to improve the civic amenities like water supply, electricity,

roads, transportation, etc. within the Bangalore Metropolitan

Area and for this it became necessary to augment the resources

by the BDA itself or through other State

agencies/instrumentalities by making suitable contribution. It

would be a matter of sheer speculation whether in the absence of

increase in the population of the Bangalore Metropolitan Area

and problems relating to planned development, the legislature

would have enacted the 1976 Act and the State and its

agencies/instrumentalities would have spent substantial amount

for augmenting water supply, electricity, transportation and

62

other amenities. However, the fact of the matter is that with a

view to cater to the new areas, and for making the concept of

planned development a reality qua the layouts of the private

House Building Societies and those involved in execution of large

housing projects, etc., the BDA and other

agencies/instrumentalities of the State incurred substantial

expenditure for augmenting the water supply, electricity, etc.

There could be no justification to transfer the burden of this

expenditure on the residents of the areas which were already part

of the city of Bangalore. In other words, other residents could not

be called upon to share the burden of cost of the amenities

largely meant for newly developed areas. Therefore, it is not

possible to approve the view taken by the High Court that by

restricting the scope of loading the burden of expenses to the

allottees of the sites in the layouts developed after 1987, the

legislature violated Article 14 of the Constitution.

Question (2)

43.Learned senior counsel for the BDA and the counsel

appearing for the State assailed the finding recorded by the High

63

Court that Section 32(5A) is a piece of excessive delegation by

pointing out that while the sums specified in Section 32(5) are

required to be deposited by those intending to form an extension

or layout to meet the expenditure for making roads, side-drains,

underground drainage and water supply, lighting etc., the

amount required to be deposited under Section 32(5A) is meant

for developing the infrastructure necessary for augmenting the

supply of water, electricity, construction of roads, etc., which are

an integral part of the concept of planned development. Learned

counsel emphasised that the policy of the legislation is clearly

discernable from the Preamble of the 1976 Act and its provisions

in terms of which the BDA is required to ensure planned

development of the Bangalore Metropolitan Area. Both, Shri

Ahmed and Shri Sanjay R. Hegde submitted that Section 32(5A)

does not confer unbridled and unguided power upon the BDA

and by using the expression “such portion of the expenditure as

the Authority may determine towards the execution of any

scheme or work for augmenting water supply, electricity, roads”

and the legislature has provided sufficient guidance for exercise

of power by the BDA. In support of this argument, learned

64

counsel relied upon the judgments in Municipal Board, Hapur v.

Raghuvendra Kripal and others (1966) 1 SCR 950, Corporation of

Calcutta and another v. Liberty Cinema (1965) 2 SCR 477 and

Bhavesh D. Parish and others v. Union of India and another

(2000) 5 SCC 471.

44.Shri K. K. Venugopal, Shri P. Vishwanatha Shetty, learned

senior counsel and other learned counsel appearing for the

respondents reiterated the argument made before the High Court

that Section 32(5A) suffers from the vice of excessive delegation

because the legislature has not laid down any policy for recovery

of cost of infrastructure required for augmentation of supply of

water, electricity, roads, transportation, etc. Learned senior

counsel referred to the averments contained in the amended writ

petitions to show that the cost of additional infrastructure is

recovered only from those who apply for sanction of private

layouts and there is no provision for distribution of liability by

creating demand on others including those to whom sites are

allotted in the BDA layouts. Shri Venugopal referred to Sections

15 and 16 of the Act to show that the BDA is required to prepare

65

development scheme and execute the same and argued that the

cost of the scheme cannot be loaded only on the private layouts.

Learned counsel relied upon the judgments in Daymond v South

West Water Authority (1976) 1 All England Law Reports 39, The

State of West Bengal v. Anwar Ali Sarkar (1952) SCR 284, Devi

Das Gopal Krishnan and Ors. v. State of Punjab and Ors. (supra)

and A.N. Parasuraman and others v. State of Tamil Nadu (1989)

4 SCC 683 to support the conclusion recorded by the High Court

that Section 32 (5A) is a piece of excessive delegation.

45.The issue relating to excessive delegation of legislative

powers has engaged the attention of this Court for the last more

than half century. In Devi Das Gopal Krishnan and Ors. v. State

of Punjab and Ors. (supra), Kunnathat Thathunni Moopil Nair v.

State of Kerala ( 1961) 3 SCR 77 and A.N. Parasuraman and

others v. State of Tamil Nadu (supra), the Court did not favour a

liberal application of the concept of delegation of legislative

powers but in a large number of other judgments including Jyoti

Pershad v. the Administrator for the Union Territory of Delhi

(supra), Ajoy Kumar Banerjee v. Union of India (1984) 3 SCC

66

127, Maharashtra State Board of S.H.S.E. v. Paritosh

Bhupeshkumar Sheth (1984) 4 SCC 27, Kishan Prakash Sharma

v. Union of India (2001) 5 SCC 212 and Union of India v. Azadi

Bachao Andolan (2004) 10 SCC 1, the Court recognized that it is

not possible for the legislature to enact laws with minute details

to deal with increasing complexities of governance in a political

democracy, and held that the legislature can lay down broad

policy principles and guidelines and leave the details to be

worked out by the executive and the agencies/instrumentalities

of the State and that the delegation of the powers upon such

authorities to implement the legislative policy cannot be

castigated as excessive delegation of the legislative power.

46.In Jyoti Pershad v. the Administrator for the Union Territory

of Delhi (supra), the Court dealt with the question whether

Section 19(1) of the Slum Areas (Improvement and Clearance)

Act, 1956 which adversely affected the decree of eviction obtained

by the landlord against the tenant was a piece of excessive

delegation. It was argued that the power vested in the competent

authority to withhold eviction in pursuance of orders or decrees

67

of the Court was ultra vires the provisions of the Constitution.

While repelling this argument, the Court referred to the

provisions of the 1956 Act and observed:

“In the context of modern conditions and the variety

and complexity of the situations which present

themselves for solution, it is not possible for the

Legislature to envisage in detail every possibility and

make provision for them. The Legislature therefore is

forced to leave the authorities created by it an ample

discretion limited, however, by the guidance afforded

by the Act. This is the ratio of delegated legislation,

and is a process which has come to stay, and which

one may be permitted to observe is not without its

advantages. So long therefore as the Legislature

indicates, in the operative provisions of the statute

with certainty, the policy and purpose of the

enactment, the mere fact that the legislation is

skeletal, or the fact that a discretion is left to those

entrusted with administering the law, affords no basis

either for the contention that there has been an

excessive delegation of legislative power as to amount

to an abdication of its functions, or that the discretion

vested is uncanalised and unguided as to amount to a

carte blanche to discriminate. The second is that if

the power or discretion has been conferred in a

manner which is legal and constitutional, the fact

that Parliament could possibly have made more

detailed provisions, could obviously not be a ground

for invalidating the law.”

(emphasis supplied)

47.In Maharashtra State Board of S.H.S.E. v. Paritosh

Bhupeshkumar Sheth, (supra), the Court while dealing with the

68

issue of excessive delegation of power to the Board of Secondary

Education observed:

“So long as the body entrusted with the task of

framing the rules or regulations acts within the scope

of the authority conferred on it, in the sense that the

rules or regulations made by it have a rational nexus

with the object and purpose of the statute, the court

should not concern itself with the wisdom or

efficaciousness of such rules or regulations. It is

exclusively within the province of the legislature and

its delegate to determine, as a matter of policy, how

the provisions of the statute can best be implemented

and what measures, substantive as well as

procedural would have to be incorporated in the rules

or regulations for the efficacious achievement of the

objects and purposes of the Act. It is not for the Court

to examine the merits or demerits of such a policy

because its scrutiny has to be limited to the question

as to whether the impugned regulations fall within

the scope of the regulation-making power conferred

on the delegate by the statute.”

48.In Ajoy Kumar Banerjee v. Union of India (supra), the three

Judge Bench, while interpreting the provisions of the General

Insurance Business (Nationalisation) Act, 1972, observed:

“The growth of legislative power of the executive is a

significant development of the twentieth century.

The theory of laissez-faire has been given a go-by

and large and comprehensive powers are being

assumed by the State with a view to improve social

and economic well-being of the people. Most of the

modern socio-economic legislations passed by the

69

Legislature lay down the guiding principles of the

legislative policy. The Legislatures, because of

limitation imposed upon them and the time factor,

hardly can go into the matters in detail. The

practice of empowering the executive to make

subordinate legislation within the prescribed sphere

has evolved out of practical necessity and pragmatic

needs of the modem welfare State.

Regarding delegated legislation, the principle which

has been well established is that Legislature must

lay down the guidelines, the principles of policy for

the authority to whom power to make subordinate

legislation is entrusted. The legitimacy of delegated

legislation depends upon its being used as ancillary

which the Legislature considers to be necessary for

the purpose of exercising its legislative power

effectively and completely. The Legislature must

retain in its own hand the essential legislative

function which consists in declaring the legislative

policy and lay down the standard which is to be

enacted into a rule of law, and what can be

delegated in the task of subordinate legislation

which by very nature is ancillary to the statute

which delegates the power to make it effective

provided the legislative policy is enunciated with

sufficient clearness or a standard laid down. The

courts cannot and do not interfere on the discretion

that undoubtedly rests with the Legislature itself in

determining the extent of the delegated power in a

particular case.”

(emphasis supplied)

49.In Kishan Prakash Sharma v. Union of India (2001) 5 SCC

70

212, the Constitution Bench speaking through Rajendra Babu, J.

(as he then was), summed up the principle of delegated

legislation in the following words:

“The legislatures in India have been held to possess

wide power of legislation subject, however, to

certain limitations such as the legislature cannot

delegate essential legislative functions which consist

in the determination or choosing of the legislative

policy and of formally enacting that policy into a

binding rule of conduct. The legislature cannot

delegate uncanalised and uncontrolled power. The

legislature must set the limits of the power

delegated by declaring the policy of the law and by

laying down standards for guidance of those on

whom the power to execute the law is conferred.

Thus the delegation is valid only when the

legislative policy and guidelines to implement it are

adequately laid down and the delegate is only

empowered to carry out the policy within the

guidelines laid down by the legislature. The

legislature may, after laying down the legislative

policy, confer discretion on an administrative

agency as to the execution of the policy and leave it

to the agency to work out the details within the

framework of the policy. When the Constitution

entrusts the duty of law-making to Parliament and

the legislatures of States, it impliedly prohibits them

to throw away that responsibility on the shoulders

of some other authority. An area of compromise is

struck that Parliament cannot work in detail the

various requirements of giving effect to the

enactment and, therefore, that area will be left to be

filled in by the delegatee. Thus, the question is

whether any particular legislation suffers from

excessive delegation and in ascertaining the same,

the scheme, the provisions of the statute including

71

its preamble, and the facts and circumstances in

the background of which the statute is enacted, the

history of the legislation, the complexity of the

problems which a modern State has to face, will

have to be taken note of and if, on a liberal

construction given to a statute, a legislative policy

and guidelines for its execution are brought out, the

statute, even if skeletal, will be upheld to be valid

but this rule of liberal construction should not be

carried by the court to the extent of always trying to

discover a dormant or latent legislative policy to

sustain an arbitrary power conferred on the

executive.”

(emphasis supplied)

50.In Union of India v. Azadi Bachao Andolan (supra), the

Court was called upon to consider the constitutionality of the

Indo-Mauritius Double Taxation Avoidance Convention, 1983.

While rejecting the argument that Section 90 of the Income Tax

Act, under which the Treaty is said to have been entered,

amounted to delegation of the essential legislative functions, the

Court observed:

“The question whether a particular delegated

legislation is in excess of the power of the supporting

legislation conferred on the delegate, has to be

determined with regard not only to specific provisions

contained in the relevant statute conferring the power

to make rules or regulations, but also the object and

purpose of the Act as can be gathered from the

various provisions of the enactment. It would be

72

wholly wrong for the court to substitute its own

opinion as to what principle or policy would best

serve the objects and purposes of the Act; nor is it

open to the court to sit in judgment over the wisdom,

the effectiveness or otherwise of the policy, so as to

declare a regulation ultra vires merely on the ground

that, in the view of the court, the impugned provision

will not help to carry through the object and purposes

of the Act.”

(emphasis supplied)

51.The principle which can be deduced from the above noted

precedents is that while examining challenge to the

constitutionality of a statutory provision on the ground of

excessive delegation, the Court must look into the policy

underlying the particular legislation and this can be done by

making a reference to the Preamble, the objects sought to be

achieved by the particular legislation and the scheme thereof and

that the Court would not sit over the wisdom of the legislature

and nullify the provisions under which the power to implement

the particular provision is conferred upon the executive

authorities.

52.The policy underlying the 1976 Act is clearly discernable

from the Preamble of the Town Planning Act and the 1976 Act

73

and the objects sought to be achieved by the two legislations,

namely, development of the City of Bangalore and areas adjacent

thereto. The Town Planning Act was enacted for the regulation of

planned growth of land use and development and for the making

and execution of town planning schemes in the entire State

including the City of Bangalore. By virtue of Section 67 of the

1976 Act and with the insertion of Section 81-B in the Town

Planning Act by Act No.12 of 1976, the BDA became the Local

Planning Authority for the local planning area comprising the

City of Bangalore with jurisdiction over an area which the City

Planning Authority for the City of Bangalore had immediately

before the constitution of the BDA and the latter has been

empowered to exercise the powers, perform the functions and

discharge the duties under the Town Planning Act as if it were a

Local Planning Authority constituted for the Bangalore City. In

other words, w.e.f. 20.12.1975, i.e., the date on which the 1976

Act was enforced, the BDA acquired the status of a Local

Planning Authority as defined in Section 2(7) read with Section

4(C) of the Town Planning Act in respect of the City of Bangalore

and thereby acquired the powers which were earlier vested in the

74

Local Planning Authority constituted for the Bangalore City. The

objects sought to be achieved by the legislature by enacting the

Town Planning Act were to create conditions favourable for

planning and replanning of the urban and rural areas in the

State so that full civic and social amenities could be available for

the people of the State; to stop uncontrolled development of land

due to land speculation and profiteering in land; to preserve and

improve existing recreational facilities and other amenities

contributing towards the balance use of land and future growth

of populated areas in the State ensuring desirable standards of

environment, health, hygiene and creation of facilities of orderly

growth of industry and commerce. The Town Planning Act also

envisaged preparation of the town planning schemes and

execution thereof by the Planning Authorities constituted for the

specified areas. Section 9 (unamended) envisaged preparation of

outline development plan incorporating therein the various

matters enumerated in Section 12(1), preparation of

comprehensive development plan by including the proposal for

comprehensive zoning of land use for the planning area; building

complete street pattern indicating major and minor roads,

75

National and State highways and traffic circulation pattern for

meeting immediate and future requirements; areas for new

housing and new areas earmarked for future development and

expansion. The definition of “development” contained in Section

2(j) of the 1976 Act is somewhat similar to the one contained in

Section 1(c) of the Town Planning Act. Section 14 of the 1976 Act

lays down that the objects of the BDA shall be to promote and

secure the development of the Bangalore Metropolitan Area and

for that purpose, the BDA shall have the power to acquire, hold

manage and dispose of movable and immovable property,

whether within or outside the area under its jurisdiction.

“Bangalore Metropolitan Area” has been defined under Section

2(c) of the 1976 Act. It consists of the following areas: (a) area

comprising the City of Bangalore as defined in the City of

Bangalore Municipal Corporation Act, 1949 which is now

replaced by the Karnataka Municipal Corporations Act, 1976, (b)

the areas where the City of Bangalore Improvement Act, 1945

was immediately before the commencement of the 1976 Act in

force, and (c) such other areas adjacent to the aforesaid as the

Government may from time to time by notification specify.

76

Section 15 empowers the BDA to draw up detailed schemes and

undertake works for the development of the Bangalore

Metropolitan Area and incur expenditure for that purpose. It can

also take up any new or additional development scheme on its

own, subject to the availability of sufficient resources. If a local

authority provides necessary funds for framing and carrying out

any scheme, then too, the BDA can take up such scheme. Under

Section 15(3), which contains a non obstante clause, the

Government can issue direction to the BDA to take up any

development scheme or work and execute it subject to such

terms and conditions as may be specified by it. Section 16

enumerates the matters which are required to be included in the

scheme, i.e., the acquisition of land necessary for or affected by

the execution of the scheme, laying or relaying of land including

construction and reconstruction of buildings and formation and

alteration of streets, drainage, water supply and electricity,

reservation of land for public parks or playgrounds and at least

10% of the total area for civil amenities. The development

scheme may also provide for raising of any land to facilitate

better drainage, forming of open spaces for better ventilation of

77

the area comprised in the scheme or any adjoining area and the

sanitary arrangement. Sections 17 to 19 contain the mechanism

for finalisation of the scheme and its approval by the State

Government as also the acquisition of land for the purposes of

the scheme. Sections 20 to 26 provide for levy and collection of

betterment tax. Section 27 specifies the time limit of five years

from the date of publication of the scheme in the Official Gazette

for execution of the scheme as also consequence of non

execution. Section 28-A casts a duty on the BDA to ensure

proper maintenance, lighting and cleansing of the streets and the

drainage, sanitary arrangement and water supply in respect of

the streets formed by it. Section 32 provides for formation of new

extensions or layouts or making of new private streets, which can

be done only after obtaining express sanction from the BDA and

subject to the conditions which may be specified by the BDA.

Section 32(5) lays down that the BDA can call upon the applicant

to deposit the sums necessary for meeting the expenditure for

making roads, drains, culverts, underground drainage and water

supply and lighting and the charges for such other purposes as

may be indicated by the BDA, as a condition precedent to the

78

grant of application. Section 32(5A), which also contains a non

obstante clause, empowers the BDA to require the applicant to

deposit additional amount to meet a portion of the expenditure,

which the BDA may determine towards the execution of any

scheme or work for augmenting water supply, electricity, roads,

transportation and such other amenities within the Bangalore

Metropolitan Area.

53.The above survey of the relevant provisions of the 1961 and

the 1976 Acts makes it clear that the basic object of the two

enactments is to ensure planned development of the areas which

formed part of the Bangalore Metropolitan Area as on 15.12.1975

and other adjacent areas which may be notified by the

Government from time to time. The BDA is under an obligation

to provide “amenities” as defined in Section 2(b) and “civic

amenities” as defined in Section 2(bb) of the 1976 Act for the

entire Bangalore Metropolitan Area. In exercise of the powers

vested in it under Sections 15 and 16, the BDA can prepare

detailed schemes for the development of the Bangalore

Metropolitan Area and incur expenditure for implementing those

79

schemes, which are termed as development schemes. The

expenditure incurred by the BDA in the implementation of the

development schemes can be loaded on the beneficiaries of the

development schemes. By virtue of Notifications dated 1.11.1965

and 13.3.1984 issued under Section 4A(1) of the Town Planning

Act and notification dated 1.3.1988 issued under Section 2(c) of

the 1976 Act, hundreds of villages adjacent to the City of

Bangalore were merged in the Bangalore Metropolitan Area. For

these areas, the BDA was and is bound to provide amenities like

water, electricity, streets, roads, sewerage, transport system, etc.,

which are available to the existing Metropolitan Area of the City

of Bangalore. This task could not have been accomplished by the

BDA alone from its meager fiscal resources. Therefore, the State

Government, the BDA and other instrumentalities of the State

like BWSSB had to pool their resources as also man and material

to augment water supply, electricity and transport facilities and

also make provision for construction of new roads, layouts, etc.

The BDA had to contribute to the funds required for new water

supply scheme, generation of additional electricity and

development of a mass rapid transport system to decongest the

80

Bangalore Metropolitan Area. This is the reason why the State

Government passed orders dated 25.3.1987 and 12.1.1993,

which could appropriately be treated as directions issued under

Section 65 of the 1976 Act for carrying out the purposes of the

Act and approved the proposal for loading the BDA’s share of

expenditure in the execution of the Cauvery Scheme on all the

layouts to be formed thereafter. With the insertion of Section

32(5A) in the 1976 Act, these orders acquired the legislative

mandate. In terms of that section, the BDA has been vested with

the power to call upon the applicants desirous of forming new

extensions or layouts or private streets to pay a specified sum in

addition to the sums referred to in Section 32(5) to meet a

portion of the expenditure incurred for the execution of any

scheme or work for augmenting water supply, electricity, roads,

transportation and other amenities.

54.At the cost of repetition, it will be apposite to observe that

apart from the Preamble and the objects of the 1961 and 1976

Acts and the scheme of the two enactments, the expression “such

portion of the expenditure as the Authority may determine

81

towards the execution of any scheme or work for augmenting

water supply, electricity, roads, transportation and such other

amenities” supplies sufficient guidance for the exercise of power

by the BDA under Section 32(5A) and it is not possible to agree

with the learned counsel for the respondents that the section

confers unbridled and uncanalised power upon the BDA to

demand an unspecified amount from those desirous of forming

private layouts. It is needless to say that the exercise of power by

the BDA under Section 32(5A) is always subject to directions

which can be given by the State Government under Section 65.

We may add that it could not have been possible for the

legislature to make provision for effective implementation of the

provisions contained in the 1961 and 1976 Acts for the

development of the Bangalore Metropolitan Area and this task

had to be delegated to some other agency/instrumentality of the

State.

55.The above discussion leads to the conclusion that Section

32(5A) does not suffer from the vice of excessive delegation and

the legislative guidelines can be traced in the Preamble of the

82

1961 and 1976 Acts and the object and scheme of the two

legislations.

Question (3)

56.The next question which calls for determination is whether

the demand of charges under the Cauvery Scheme, etc. amounts

to imposition of tax and is, therefore, ultra vires the provision of

Article 265 of the Constitution.

57.The debate whether a particular levy can be treated as ‘fee’

or ‘tax’ and whether in the absence of direct evidence of quid pro

quo, the levy would always be treated as tax has engaged the

attention of this Court and almost all the High Courts for the last

more than four decades.

58.In Kewal Krishan Puri v. State of Punjab (1980) 1 SCC 416,

the Constitution Bench considered the question whether the

resolutions passed by the Agriculture Market Committees in

Punjab and Haryana to increase the market fee on the

agricultural produce bought and sold by the licensees in the

notified market areas from Rs. 2/- to Rs. 3/- for every Rs. 100/-

83

were legally sustainable. After noticing the distinction between

tax and fee and a large number of precedents, the Constitution

Bench culled out the following principles:

“(1) That the amount of fee realised must be

earmarked for rendering services to the licensees in

the notified market area and a good and substantial

portion of it must be shown to be expended for this

purpose.

(2) That the services rendered to the licensees must

be in relation to the transaction of purchase or sale of

the agricultural produce.

(3) That while rendering services in the market area

for the purposes of facilitating the transactions of

purchase and sale with a view to achieve the objects

of the marketing legislation it is not necessary to

confer the whole of the benefit on the licensees but

some special benefits must be conferred on them

which have a direct, close and reasonable correlation

between the licensees and the transactions.

(4) That while conferring some special benefits on the

licensees it is permissible to render such service in

the market which may be in the general interest of all

concerned with the transactions taking place in the

market.

(5) That spending the amount of market fees for the

purpose of augmenting the agricultural produce, its

facility of transport in villages and to provide other

facilities meant mainly or exclusively for the benefit of

the agriculturists is not permissible on the ground

that such services in the long run go to increase the

volume of transactions in the market ultimately

benefiting the traders also. Such an indirect and

84

remote benefit to the traders is in no sense a special

benefit to them.

(6) That the element of quid pro quo may not be

possible, or even necessary, to be established with

arithmetical exactitude but even broadly and

reasonably it must be established by the authorities

who charge the fees that the amount is being spent

for rendering services to those on whom falls the

burden of the fee.

(7) At least a good and substantial portion of the

amount collected on account of fees, may be in the

neighbourhood of two-thirds or three-fourths, must

be shown with reasonable certainty as being spent for

rendering services of the kind mentioned above.”

59.The ratio of the aforesaid judgment was substantially

diluted in Southern Pharmaceuticals and Chemicals, Trichur and

others v. State of Kerala and others (1981) 4 SCC 391. In the

latter decision, the Court considered the constitutional validity of

Sections 12-A, 12-B, 14(e) and (f) and 68-A of the Kerala Abkari

Act 1077. One of the questions considered by the 3-Judge Bench

was whether the levy of supervisory charges under Section 14 (e)

of the Act and Rule 16(4) of the Kerala Rectified Spirit Rules,

1972 could be regarded as fee even though there was no quid pro

quo between the levy and the services rendered by the State. The

85

Bench referred to the distinction between tax and fee highlighted

in the Commissioner, Hindu Religious Endowments, Madras v.

Lakshmindra Thirtha Swamiar of Shirur Mutt (1954) SCR 1005

and proceeded to observe:

““Fees” are the amounts paid for a privilege, and are

not an obligation, but the payment is voluntary. Fees

are distinguished from taxes in that the chief purpose

of a tax is to raise funds for the support of the

Government or for a public purpose, while a fee may

be charged for the privilege or benefit conferred, or

service rendered or to meet the expenses connected

therewith. Thus, fees are nothing but payment for

some special privilege granted on service rendered.

Taxes and taxation are, therefore, distinguishable

from various other contributions, charges, or burdens

paid or imposed for particular purposes and under

particular powers or functions of the Government. It

is now increasingly realised that merely because the

collections for the services rendered or grant of a

privilege or licence, are taken to the consolidated fund

of the State and are not separately appropriated

towards the expenditure for rendering the service is

not by itself decisive. That is because the Constitution

did not contemplate it to be an essential element of a

fee that it should be credited to a separate fund and

not to the consolidated fund. It is also increasingly

realised that the element of quid pro quo stricto senso

is not always a sine qua non of a fee. It is needless to

stress that the element of quid pro quo is not

necessarily absent in every tax. We may, in this

connection, refer with profit to the observations of

Seervai in his Constitutional Law, to the effect:

86

“It is submitted that as recognised by

Mukherjea, J. himself, the fact that the

collections are not merged in the consolidated

fund, is not conclusive, though that fact may

enable a court to say that very important feature

of a fee was present. But the attention of the

Supreme Court does not appear to have been

called to Article 266 which requires that all

revenues of the Union of India and the States

must go into their respective consolidated funds

and all other public moneys must go into the

respective public accounts of the Union and the

States. It is submitted that if the services

rendered are not by a separate body like the

Charity Commissioner, but by a government

department, the character of the imposition

would not change because under Article 266 the

moneys collected for the services must be

credited to the consolidated fund. It may be

mentioned that the element of quid pro quo is

not necessarily absent in every tax.””

(emphasis supplied)

The three Judge Bench also referred to the Constitution Bench

judgment in Kewal Krishna Puri v. State of Punjab (supra) and

observed:

“To our mind, these observations are not intended

and meant as laying down a rule of universal

application. The Court was considering the rate of a

market fee, and the question was whether there was

any justification for the increase in rate from Rs 2 per

every hundred rupees to Rs 3. There was no material

placed to justify the increase in rate of the fee and,

therefore, it partook the nature of a tax. It seems that

87

the Court proceeded on the assumption that the

element of quid pro quo must always be present in a

fee. The traditional concept of quid pro quo is

undergoing a transformation.”

60.The test laid down in Kewal Krishna Puri v. State of Punjab

(supra) was again considered in Sreenivasa General Traders v.

State of A.P. (1983) 4 SCC 353. In that case, the petitioners had

challenged the constitutional validity of the increase in the rate of

market fee levied under the Andhra Pradesh (Agricultural

Produce and Livestock) Markets Act, 1966 from 50 paise to Rs.

1/- on every Rs. 100/- of the aggregate amount for which the

notified agricultural produce, etc. were purchased or sold in the

notified market area. The petitioners relied upon the proposition

laid down in Kewal Krishna Puri’s case (supra) in support of their

argument that in the absence of any evidence or correlation

between the levy and special services rendered by the Market

Committees to the beneficiaries, the levy should be regarded as

tax. The three Judge Bench referred to the proposition laid down

in Kewal Krishna Puri’s case (supra) and observed:

“It would appear that there are certain observations to

be found in the judgment in Kewal Krishan Puri case

88

which were really not necessary for purposes of the

decision and go beyond the occasion and therefore

they have no binding authority though they may have

merely persuasive value. The observation made

therein seeking to quantify the extent of correlation

between the amount of fee collected and the cost of

rendition of service, namely: (SCC p. 435, para 23):

“At least a good and substantial portion of the

amount collected on account of fees, maybe in the

neighbourhood of two-thirds or three-fourths, must

be shown with reasonable certainty as being spent for

rendering services in the market to the payer of fee”,

appears to be an obiter.

The traditional view that there must be actual quid

pro quo for a fee has undergone a sea change in the

subsequent decisions. The distinction between a tax

and a fee lies primarily in the fact that a tax is levied

as part of a common burden, while a fee is for

payment of a specific benefit or privilege although the

special advantage is secondary to the primary motive

of regulation in public interest if the element of

revenue for general purpose of the State

predominates, the levy becomes a tax. In regard to

fees there is, and must always be, correlation between

the fee collected and the service intended to be

rendered. In determining whether a levy is a fee, the

true test must be whether its primary and essential

purpose is to render specific services to a specified

area or class; it may be of no consequence that the

State may ultimately and indirectly be benefited by it.

The power of any legislature to levy a fee is

conditioned by the fact that it must be “by and large”

a quid pro quo for the services rendered. However,

correlationship between the levy and the services

rendered (sic or) expected is one of general character

and not of mathematical exactitude. All that is

necessary is that there should be a “reasonable

89

relationship” between the levy of the fee and the

services rendered.”

61.In Kishan Lal Lakhmi Chand v. State of Haryana 1993 Supp

(4) SCC 461, while dealing with the constitutionality of the levy of

cess under the Haryana Rural Development Act, 1986, the three

Judge Bench referred to the scheme of the Act and held that from

the scheme of the Act it would be clear that there is a broad,

reasonable and general corelationship between the levy and the

resultant benefit to the producer of the agricultural produce,

dealer and purchasers as a class though no single payer of the

fee receives direct or personal benefit from those services.

Though the general public may be benefited from some of the

services like laying roads, the primary service was to the

producer, dealer and purchaser of the agricultural produce.

62.In Krishi Upaj Mandi Samiti v. Orient Paper & Industries

Ltd. (1995) 1 SCC 655 the two Judge Bench reviewed and

analysed various precedents including the judgments in

Commissioner, Hindu Religious Endowments v. Sri Lakshmindra

Thirtha Swamiar of Sri Shirur Mutt (supra), Mahant Sri

90

Jagannath Ramanuj Das v. State of Orissa (1954) SCR 1046,

Ratilal Panachand Gandhi v. State of Bombay (1954) SCR 1055,

H.H. Sadhundra Thirtha Swamiar v. Commissioner for Hindu

Religious and Charitable Endowments 1963 Supp (2) SCR 302,

Corporation of Calcutta v. Liberty Cinema (supra), Kewal Krishna

Puri v. State of Punjab (supra), Sreenivasa General Traders v.

State of A.P. (supra), Om Parkash Agarwal v. Giri Raj Kishori

(1986) 1 SCC 722, Kishan Lal Lakhmi Chand v. State of Haryana

(supra) and culled out 9 propositions, of which proposition No. 7

is extracted below:

“(7) It is not a postulate of a fee that it must have

relation to the actual service rendered. However, the

rendering of service has to be established. The service,

further, cannot be remote. The test of quid pro quo is

not to be satisfied with close or proximate relationship

in all kinds of fees. A good and substantial portion of

the fee must, however, be shown to be expended for

the purpose for which the fee is levied. It is not

necessary to confer the whole of the benefit on the

payers of the fee but some special benefit must be

conferred on them which has a direct and reasonable

corelation to the fee. While conferring some special

benefits on the payers of the fees, it is permissible to

render service in the general interest of all concerned.

The element of quid pro quo is not possible or even

necessary to be established with arithmetical

exactitude. But it must be established broadly and

reasonably that the amount is being spent for

91

rendering services to those on whom the burden of the

fee falls. There is no postulate of a fee that it must

have a direct relation to the actual services rendered

by the authorities to each individual to obtain the

benefit of the service. The element of quid pro quo in

the strict sense is not always a sine qua non for a fee.

The element of quid pro quo is not necessarily absent

in every tax. It is enough if there is a broad,

reasonable and general corelationship between the

levy and the resultant benefit to the class of people on

which the fee is levied though no single payer of the fee

receives direct or personal benefit from those services.

It is immaterial that the general public may also be

benefited from some of the services if the primary

service intended is for the payers of the fees.”

63.In I.T.C. Ltd. v. State of Karnataka 1985 (Supp) SCC 476,

another three Judge Bench considered the validity of levy and

collection of market fee from sellers of specified agricultural

produce. Sabyasachi Mukharji, J. (as he then was), with whom

Fazal Ali, J. (as he then was) agreed, laid down the following

principles:

“(1) there should be relationship between service and

fee,

(2) that the relationship is reasonable cannot be

established with mathematical exactitude in the sense

that both sides must be equally balanced,

(3) in the course of rendering such services to the

payers of the fee if some other benefits accrue or arise

to others, quid pro quo is not destroyed. The concept

92

of quid pro quo should be judged in the context of the

present days — a concept of markets which are

expected to render various services and provide

various amenities, and these benefits cannot be

divorced from the benefits accruing incidentally to

others,

(4) a reasonable projection for the future years of

practical scheme is permissible, and

(5) services rendered must be to the users of those

markets or to the subsequent users of those markets

as a class. Though fee is not levied as a part of

common burden yet service and payment cannot

exactly be balanced.

(6) The primary object and the essential purpose of the

imposition must be looked into.”

64.If the conditions imposed by the BDA requiring the

respondents to pay for augmentation of water supply, electricity,

transport, etc. are scrutinized in the light of the principles laid

down in Sreenivasa General Traders v. State of A.P. (supra),

Kishan Lal Lakhmi Chand v. State of Haryana (supra) and I.T.C.

Ltd. v. State of Karnataka (supra), it cannot be said that the

demand made by the BDA amounts to levy of tax and is ultra

vires Article 265 of the Constitution.

65.Under the 1976 Act, the BDA is obliged to provide different

types of amenities to the population of the Bangalore

93

Metropolitan Area including the allottees of the sites in the

layouts prepared by house building societies. It is quite possible

that they may not be the direct beneficiaries of one or the other

amenities made available by the BDA, but this cannot detract

from the fact that they will certainly be benefited by the

construction of the Outer Ring Road and Intermediate Ring Road,

Mass Rapid Transport System, etc. They will also be the ultimate

beneficiaries of the Cauvery Scheme because availability of

additional 270 MLD water to Bangalore will enable BWSSB to

spare water for the private layouts. It is neither the pleaded case

of the respondents nor it has been argued that the allottees of

sites in the layouts to be developed by the private societies will

not get benefit of amenities provided by the BDA. Thus, charges

demanded by the BDA under Section 32(5A) cannot be termed as

tax and declared unconstitutional on the ground that the same

are not sanctioned by the law enacted by competent legislature.

Question (4)

66.The only issue which survives for consideration is whether

the charges demanded by the BDA are totally disproportionate to

94

its contribution towards Cauvery Water Scheme, Ring Road,

Mass Rapid Transport System, etc. We may have examined the

issue in detail but in view of the affidavit dated 11.11.2009 filed

by Shri Siddaiah, the then Commissioner, BDA to the effect that

only Rs. 34.55 crores have been collected between February,

1988 to 4.6.2005 towards the Cauvery Scheme and a sum of Rs.

15.15 crores has been collected by way of Ring Road surcharge

between 1992-93 and 2005-06 and that the State Government

has directed that henceforth Ring Road surcharge, the Cauvery

Water Cess and MRTS Cess should not be levied till appropriate

decision is taken, we do not consider it necessary to adjudicate

the controversy, more so, because in the written arguments filed

on behalf of the BDA it has been categorically stated that the

Government has to take a decision about the pending demands

and the Court may issue appropriate direction in the matter,

which the BDA will comply. In our view, ends of justice will be

served by directing the State Government to take appropriate

decision in the light of communication dated 03.05.2005.

95

67. So far as the levy of supervision charges, improvement

charges, examination charges, slum clearance

development charges and MRTS cess is concerned, it is

appropriate to mention that the High Court has not

assigned any reason for declaring the levy of these

charges to be illegal. Therefore, that part of the impugned

order cannot be sustained. Nevertheless, we feel that the

State Government should take appropriate decision in

the matter of levy of these charges as well and determine

whether the same were disproportionate to the expenses

incurred by it, the BDA or any other

agency/instrumentality of the State.

68. In the result, the appeals are allowed, the impugned

order is set aside and the writ petitions filed by the

respondents are dismissed subject to the direction that

within three months from the date of receipt/production

of the copy of this judgment, the State Government shall

take appropriate decision in the context of

communication dated 03.05.2005. Within this period,

96

the State Government shall also decide whether the levy

of supervision charges, improvement charges,

examination charges, slum clearance development

charges and MRTS cess at the rates specified in the

communications of the BDA was excessive. The decision

of the State Government should be communicated to the

respondents within next four weeks. If any of the

respondents feel aggrieved by the decision of the State

Government then it shall be free to avail appropriate legal

remedy. The parties shall bear their respective costs.

...……..….………………….…J.

[G.S. Singhvi]

………..….………………….…J.

[Asok Kumar Ganguly]

New Delhi,

January 24, 2012.

97