1

AFR

HIGH COURT OF CHHATTISGARH, BILASPUR

WPPIL No. 2 of 20 21

Order Reserved on: 05 .0 5 .2023

Order Delivered on: 12 .0 5 .2023

Vinay Dubey S/o Shri Late A.L. Dubey Aged About 52 Years Advocate,

R/o Ware House Road Near Shaffered School, Bilaspur, District

Bilaspur Chhattisgarh.

---- Petitioner

Versus

1.State Of Chhattisgarh Through Secretary , Department of Urban

Administration And Development, Naya Raipur, Chhattisgarh.

2.Bilaspur Smart City Ltd. Through Its Managing Director / CEO Vikash

Bhawan, Nehru Chowk , Bilaspur , Chhattisgarh 495001.

3.Raipur Smart City Ltd. Through Its Managing Director / CEO

Chatrapati Shivajee Maharaj Outdoor Stadium , Budhapara, Near

Vivekanand Sarovar, Raipur Chhattisgarh 492001

4.Saamanya Sabha Nagar Palik Nigam Bilaspur Through Speaker

Sheikh Nazeeruddin, Nagar Nigam Town Hall Bilaspur Chhattisgarh

5.Mayor In Council Nagar Palik Nigam Bilaspur Through Mayor

Ramsharan Yadav, Town Hall, Nagar Nigam, Bilaspur Chhattisgarh

6.Saamanya Sabha Nagar Palik Nigam Raipur Through Speaker

Pramod Dubey, Nagar Nigam Office Kali Bari, Raipur Chhattisgarh

7.Mayor In Council Nagar Palik Nigam Raipur Through Mayor Ezaz

Dhebhar, Nagar Nigam, Nagar Nigam Office Kali Bari, Raipur

Chhattisgarh 2023:CGHC:13581-DB

Neutral Citation

2

8.Union of India Through Secretary, Ministry of Housing And Urban

Affairs, Govt. of India New Delhi

---- Respondents

(Cause Title taken from Case Information System)

For Petitioner :Mr. Sudeep Shrivastava, Advocate.

For Respondents No. 1 :Mr. Raghavendra Pradhan Additional Advocate

General

For Respondents No. 2 and 3Mr. Sumesh Bajaj, Mr. Rishabh Bajaj and Ms.

Saloni Verma, Advocates.

For Respondent No. 4 Mr. Harshwardhan, Advocate

For Respondent No. 5 Mr. Ashok Kumar Verma alongwith Mr. Gajendra

Kumar Sahu, Advocates

For Respondents No. 6 and 7Dr. Sudeep Agrawal, Advocate

For Respondent No. 8 :Mr. Ramakant Mishra, Deputy Solicitor General

Hon'ble Mr. Ramesh Sinha, Chief Justice

Hon’ble Mr. Deepak Kumar Tiwari Judge

C A V Order

Per Ramesh Sinha, Chief Justice

1. The petitioner, who is a practicing Advocate, claims himself to be a

known social worker. He has filed the present petition in the

representative capacity of the citizens of Bilaspur and Raipur Municipal

Corporation seeking for the following reliefs:

“1. That, this Hon’ble Court may kindly be pleased to call

for the entire records pertaining to the formation and

operation of the Bilaspur Smart City Limited and Raipur

Smart City Limited.

2. That, this Hon’ble Court may kindly be pleased to

issue an appropriate Writ/Order/Direction to quash the

order dated 17.08.2016 F-528/2-16/18, (Annexure P-4)

passed by resondent No. 1 constituting Bilaspur Smart

City Co. Ltd. And Raipur Smart City Ltd. and in

consequence thereof declare all the actions taken in

furtherance of the order dated 17.08.2016 as null and void. 2023:CGHC:13581-DB

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3.That, this Hon’ble Court may kindly be pleased to

issue an appropriate writ/order/direction to reconstitute the

Board of Directors of the Bilaspur Smart City Limited and

Raipur Smart City Limited in manner so that at least 50%

of the members would come from elected members of the

Nagar Palik Nigam Bilaspur and Raipur respectively.

4. That, this Hon’ble Court may kindly be pleased to

issue an appropriate writ/order/direction to make Mayor

and Speaker as member of the Board of Directors of the

Bilaspur Smart City Limited and Raipur Smart City Limited.

5.That, this Hon’ble Court may kindly be pleased to

issue an appropriate writ/order/direction to the effect to

take post facto approval of all the development works

completed by the Bilaspur Smart City Limited and Raipur

Smart City Limited since their inception from the

concerned elected bodies of the Nagar Palik Nigam as per

the prescribed procedure.

6.That, this Hon’ble Court may kindly be pleased to

issue an appropriate writ/order/direction to the effect to

constitute Ward Committee and Mohalla Samiti in Nagar

Nigam of the State.

7.That, this Hon’ble Court may kindly be pleased to

issue an appropriate writ/order/direction to the effect to

frame rules for constitution,functions, powers and

procedures for conduct of business of the Wards

Committee.

8. That, this Hon’ble Court may be pleased to pass any

other order/relief that this Hon’ble Court may please deem

fit and proper in the facts and circumstances of the case

including grant of cost of the instant litigation.”

2. Challenge in this petition is to the alleged usurpation of powers and

authorities of Municipal Corporation Bilaspur and Raipur by the Smart

Cities Limited i.e. the Bilaspur Smart City Limited (for short, the BSCL)

and the Raipur Smart City Limited (for short, the RSCL) in

contravention of the Chhattisgarh Municipal Corporation Act, 1956 as

well as Article 243 of the Constitution of India as by the 74

th

amendment,

Constitutional democracy was extended beyond the Parliament and

Assembly to Panchayats and Municipalities. By introduction of Smart

City Limited, the Special Purpose Vehicle Companies (for short, the

SPV) has undermined the elected local bodies and have also usurped

their powers and functions. 2023:CGHC:13581-DB

Neutral Citation

4

3. The facts, in brief, as projected by the petitioner are that the

Government of India, Department of Housing and Urban Affairs,

launched a Smart City Mission (for short, the SCM) to fund different

selected cities for standard development. The said mission was to be

implemented through SPVs. The respondent No. 1 incorporated BSCL

and RSCL as SPVs in September, 2016 to carry out the development

and maintenance work in the particular assigned areas of Bilaspur and

Raipur Municipal Corporation. Some typical features of comprehensive

development in Smart Cities are described as under:

(i) Promoting mixed land use in area- based development—

planning for ‘unplanned areas’ containing a range of

compatible activities and land uses close to one another in

order to make land use more efficient. The States will enable

some flexibility in land use and building bye-laws to adapt to

change;

(ii)Housing and inclusiveness-expand housing opportunities

for all;

(iii)Creating walkable localities-reduce congestion, air

pollution and resource depletion, boost local economy,

promote interactions and ensure security. The road network is

created or refurbished not only for vehicles and public

transport, but also for pedestrians and cyclists, and necessary

administrative services are offered within walking or cycling

distance;

(iv)Preserving and developing open spaces— parks,

playgrounds, and recreational spaces in order to enhance the

quality of life of citizens, reduce the urban heat effects in

Areas and generally promote eco-balance;

(v)Promoting a variety of transport options— Transit

Oriented Development (TOD), public transport and last mile

para-transport connectivity;

(vi)Making governance citizen-friendly and cost effective —

increasingly rely on online services to bring about

accountability and transparency, especially using mobiles to

reduce cost of services and providing services without having

to go to municipal offices; form e-groups to listen to people

and obtain feedback and use online monitoring of programs

and activities with the aid of cyber tour of worksites;

(vii)Giving an identity to the city. — based on its main

economic activity, such as local cuisine, health, education,

arts and craft, culture, sports goods, furniture, hosiery, textile,

dairy, etc;

(viii) Applying Smart Solutions to infrastructure and services

in area-based developmentviii. in order to make them better. 2023:CGHC:13581-DB

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For example, making Areas less vulnerable to disasters, using

fewer resources, and providing cheaper services.”

4. According to the Union of India, the strategy to create Smart Cities are

as under:

“(i)The strategic components of Area-based development in

the Smart Cities Mission are city improvement (retrofitting),

city renewal (redevelopment) and city extension (greenfield

development) plus a Pan-city initiative in which Smart

Solutions are applied covering larger parts of the city. Below

are given the descriptions of the three models of Area-based

Smart City Development:

Retrofitting will introduce planning in an existing built-

up area to achieve Smart City objectives, along with

other objectives, to make the existing area more

efficient and liveable. In retrofitting, an area consisting

of more than 500 acres will be identified by the city in

consultation with citizens. Depending on the existing

level of infrastructure services in the identified area and

the vision of the residents, the cities will prepare a

strategy to become smart. Since existing structures are

largely to remain intact in this model, it is expected that

more intensive infrastructure service levels and a large

number of smart applications will be packed into the

retrofitted Smart City. This strategy may also be

completed in a shorter time frame, leading to its

replication in another part of the city.

Redevelopment will effect a replacement of the existing

built-up environment and enable co-creation of a new

layout with enhanced infrastructure using mixed land

use and increased density. Redevelopment envisages

an area of more than 50 acres, identified by Urban

Local Bodies (ULBs) in consultation with citizens. For

instance, a new layout plan of the identified area will be

prepared with mixed land-use, higher FSI and high

ground coverage. Two examples of the redevelopment

model are the Saifee Burhani Upliftment Project in

Mumbai (also called the Bhendi Bazaar Project) and

the redevelopment of East Kidwai Nagar in New Delhi

being undertaken by the National Building

Construction Corporation.

Greenfield development will introduce most of the

Smart Solutions in a previously vacant area (more than

250 acres) using innovative planning, plan financing

and plan implementation tools (e.g. land pooling/ land

reconstitution) with provision for affordable housing,

especially for the poor. Greenfield developments are

required around cities in order to address the needs of

the expanding population. One well known example is

the GIFT City in Gujarat. Unlike retrofitting and

redevelopment, greenfield developments could be

located either within the limits of the ULB or within the

limits of the local Urban Development Authority (UDA). 2023:CGHC:13581-DB

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6

Pan-city development envisages application of

selected Smart Solutions to the existing city-wide

infrastructure. Application of Smart Solutions will

involve the use of technology, information and data to

make infrastructure and services better. For example,

applying Smart Solutions in the transport sector

(intelligent traffic management system) and reducing

average commute time or cost to citizens will have

positive effects on productivity and quality of life of

citizens. Another example can be waste water

recycling and smart metering which can make a

substantial contribution to better water management in

the city.

The Smart City proposal of each shortlisted city is

expected to encapsulate either a retrofitting or

redevelopment or greenfield development model, or a

mix thereof and a Pan-city feature with Smart

Solution(s). It is important to note that pan-city is an

additional feature to be provided. Since Smart City is

taking a compact area approach, it is necessary that

all the city residents feel there is something in it for

them also. Therefore, the additional requirement of

some (at least one) city-wide smart solution has been

put in the scheme to make it inclusive.

For North Eastern and Himalayan States, the area

proposed to be developed will be one-half of what is

prescribed for any of the alternative models –

retrofitting, redevelopment or greenfield development.”

5. The scheme further provides that each Smart City will have a SPV

which will be headed by a full time CEO and have nominees of Central

Government, State Government and ULB on its Board. The

States/ULBs shall ensure that a dedicated and substantial revenue

stream is made available to the SPV so as to make it self-sustainable

and could evolve its own credit worthiness for raising additional

resources from the market and Government contribution for Smart City

is used only to create infrastructure that has public benefit outcomes.

The execution of projects may be done through joint ventures,

subsidiaries, public-private partnership (PPP), turnkey contracts, etc.

suitably dovetailed with revenue streams. The SPV will be a limited

company incorporated under the Companies Act, 2013 at the city-level,

in which the State/UT and the ULB will be the promoters having 50:50

equity shareholding. The private sector or financial institutions could be 2023:CGHC:13581-DB

Neutral Citation

7

considered for taking equity stake in the SPV, provided the

shareholding pattern of 50:50 of the State/UT and the ULB is

maintained and the State/UT and the ULB together have majority

shareholding and control of the SPV.

6. So far as financing of the Smart City Project is concerned, the same is

described in the mission Statement and Guidelines (Annexure P/1)

which reads as follows:

The Smart City Mission will be operated as a Centrally

Sponsored Scheme (CSS) and the Central Government

proposes to give financial support to the Mission to the extent

of Rs. 48,000 crores over five years i.e. on an average Rs.

100 crore per city per year. An equal amount, on a matching

basis, will have to be contributed by the State/ULB; therefore,

nearly Rupees one lakh crore of Government/ULB funds will

be available for Smart Cities development.

The project cost of each Smart City proposal will vary

depending upon the level of ambition, model and capacity to

execute and repay. It is anticipated that substantial funds will

be required to implement the Smart City proposal and

towards this end, Government grants of both the Centre and

State will be leveraged to attract funding from internal and

external sources. The success of this endeavour will depend

upon the robustness of SPV’s revenue model and comfort

provided to lenders and investors. A number of State

Governments have successfully set up financial

intermediaries (such as Tamil Nadu, Gujarat, Orissa, Punjab,

Maharashtra, Karnataka, Madhya Pradesh and Bihar) which

can be tapped for support and other States may consider

some similar set up in their respective States. Some form of

guarantee by the State or such a financial intermediary could

also be considered as instrument of comfort referred to

above. It is expected that a number of schemes in the Smart

City will be taken up on PPP basis and the SPVs have to

accomplish this.

The GOI funds and the matching contribution by the

States/ULB will meet only a part of the project cost. Balance

funds are expected to be mobilized from:

i. States/ ULBs own resources from collection of user

fees, beneficiary charges and impact fees, land

monetization, debt, loans, etc.

ii. Additional resources transferred due to acceptance

of the recommendations of the Fourteenth Finance

Commission (FFC).

iii. Innovative finance mechanisms such as municipal

bonds with credit rating of ULBs, Pooled Finance

Mechanism, Tax Increment Financing (TIF). 2023:CGHC:13581-DB

Neutral Citation

8

iv. Other Central Government schemes like Swachh

Bharat Mission, AMRUT, National Heritage City

Development and Augmentation Yojana (HRIDAY).

v. Leverage borrowings from financial institutions,

including bilateral and multilateral institutions, both

domestic and external sources.

vi. States/UTs may also access the National

Investment and Infrastructure Fund (NIIF), which was

announced by the Finance Minister in his 2015 Budget

Speech, and is likely to be set up this year.

Private sector through PPPs.

The distribution of funds under the Scheme will be as

follows:

i. 93% project funds.

ii. 5% Administrative and Office Expenses (A&OE)

funds for state/ULB (towards preparation of SCPs

and for PMCs, Pilot studies connected to area-

based developments and deployment and

generation of Smart Solutions, capacity building

as approved in the Challenge and online services).

Iii. 2% A&OE funds for MoUD (Mission Directorate

and connected activities/structures, Research,

Pilot studies, Capacity Building, and concurrent

evaluation).

7. On 17.08.2016 (Annexure P/4), the Urban Administration and

Development Department, Government of Chhattisgarh, issued an order

for constituting the Board of Directors for BSCL and RSCL. The same

reads as under:

jk;iqj LekVZ flVh fyfeVsM (RSCL) dk lapkyd eaMy fuEukuqlkj gksxk%&

dza- inuke daiuh ds cksMZ esa in

1-izeq[k lfpo @lfpo@fo’ks"k lfpo] uxjh;

iz’kklu ,oa fodkl foHkkx

v/;{k

2- Lakpkyd] uxfj; iz’kklu lg eq[; dk;Zikyu

vf/kdkjh] lwMk

mik/;{k

3- izca/k lapkyd] NRRkhlx<+ jkT; fo|qr forj.k

daiuh e;kZ- (CDPDCL)

lapkyd

4-eq[; dk;Zikyu vf/kdkjh] N-x- baQksVsd ,oa

ck;sfVd izeks’ku lkslk;Vh (CHIPS)

lapkyd

5-eq[; dk;Zikyu vf/kdkjh] jk;iqj fodkl

izkf/kdj.k (RDA)

lapkyd

6- dysDVj] ftyk& jk;iqj lapkyd

7- Ikqfyl v/kh{kd]ftyk jk;iqj lapkyd

8-vk;qDr] uxj ikfyd fuxe izca/k lapkyd] lg eq[; dk;Zikyu

vf/kdkjh 2023:CGHC:13581-DB

Neutral Citation

9

9-Hkkjr ljdkj@’kgjh fodkl ea=ky; ds izfrfuf/klapkyd

10-DkiksZjsV dk;Z ea=ky; ,oa Hkkjrh; izfrHkwfr ,oa

fofu;e cksMZ (SEBI) }kjk tkjh lwph esa ls

p;fur Lora= lapkyd

Lora= lapkyd

fcykliqj LekVZ flVh fyfeVsM (BSCL) dk lapkyd eaMy fuEukuqlkj gksxk%&

dza- inuke daiuh ds cksMZ esa in

1-izeq[k lfpo @lfpo@fo’ks"k lfpo]

uxjh; iz’kklu ,oa fodkl foHkkx

v/;{k

2-Lakpkyd] uxfj; iz’kklu lg eq[;

dk;Zikyu vf/kdkjh ]lwMk

mik/;{k

3-izca/k lapkyd] NRRkhlx<+ jkT; fo|qr

forj.k daiuh e;kZ- (CDPDCL)

lapkyd

4-eq[; dk;Zikyu vf/kdkjh] N-x-

baQksVsd ,oa ck;sfVd izeks’ku lkslk;Vh

(CHIPS)

lapkyd

5-eq[; dk;Zikfydk vf/kdkjh] vjik fodkl

{ks= fodkl izkf/kdj.k (ASADA)

lapkyd

6-dysDVj ]ftyk fcykliqj lapkyd

7-iqfyl v/kh{kd]ftyk fcykliqj lapkyd

8-vk;qDr] uxj fuxe ikfyd fuxe]

fcykliqj

izca/k lapkyd ]lg eq[; dk;Zikyu vf/kdkjh

9- Hkkjr ljdkj@’kgjh fodkl ea=ky; ds

izfrfuf/k

lapkyd

10-DkiksZjsV dk;Z ea=ky; ,oa Hkkjrh; izfrHkwfr

,oa fofu;e cksMZ (SEBI) }kjk tkjh lwph

esa ls p;fur Lora= lapkyd

Lora= lapkyd

8. According to the learned counsel for the petitioner, during 2016 to 2020,

several development works were carried out by the BSCL and RSCL

without any monitoring or supervision of the elected body of the

Municipal Corporation, Bilaspur or Raipur. The BSCL and RSCL have

issued number of tenders for various works which are within the domain

of the Municipal Corporations viz. Shifting of high mast lights, LED

lighting works, selection of agency for design and planning, BT road

construction, land scaping work, upgradation of schools, water supply

system, water meter fitting, parking construction, footpath construction,

traffic management consultant, preparation of local area plan, canopy 2023:CGHC:13581-DB

Neutral Citation

10

structures in schools, firefighting infrastructure etc. which would be

evident from the documents annexed as Annexure P/6 and P/7.

9. The grievance, which the petitioner appears to have, is that the

functions and activities which ought to be performed by the Municipal

Corporation of Bilaspur and Raipur, are being performed by the BSCL

and RSCL which amounts to usurpation of the powers of the Municipal

Corporations by a Company.

10.Mr. Sudeep Shrivastava, learned counsel for the petitioner would submit

that the 74

th

Amendment of the Constitution has given a constitutional

status to the Municipal Corporations and added Article 243W read with

Schedule 12 which provides the areas where a Municipal Corporation

would operate. The Chhattisgarh Nagar Palika Nigam Adhiniyam, 1956

though was enacted prior to 74

th

Amendment, but the same is in

consonance with 74

th

Amendment and Section 66 and 67 of the

Adhiniyam, 1956 provides for all possible areas of power which are

necessary for urban development which includes planning,

construction, maintenance of all public spaces and buildings etc. A SPV

Company cannot act independently in the areas falling within the

Municipal Corporation as would be clear from Section 2 of the

Adhiniyam, 1956. When the said Act was enacted, it has repealed all

other previous arrangements and while doing so, it provides in Section

2 that on the application of the Act to any city under sub-section (3) of

Section 1, the authority or any institution, if performing the Municipal

functions shall cease to perform such function and all assets and

liabilities of such authority or institution shall vest in the Municipal

Corporation constituted under this Act. Meaning thereby that no

authority can perform functions entrusted to a Municipal Corporation in

Municipal Areas. Thus, by the said logic, the BSCL or the RSCL cannot 2023:CGHC:13581-DB

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11

perform any functions which has been entrusted to the Municipal

Corporations under the Act of 1956. As per Section 82 of the Act of

1956, all the property of the nature specified thereunder vests in and

and under the control of the Corporation. Despite there being provision

of members of the ULB being taken as members in the Board of

Directors of the SPV, no member of the Municipal Corporation Bilaspur

or Raipur has been appointed as Director of the Company. A bare

perusal of the order dated 17.08.2016 (Annexure P/4) would reveal that

in a 10 member Board, none of the elected member of the Municipal

Corporation or even the Mayor or Speaker has been appointed as

Director of the Company. Only the Commissioner of the Municipal

Corporation has been appointed as Managing Director/Chief Executive

Officer of the Company in independent capacity.

11.Mr. Shrivastava would further draw the attention of the Court to

paragraph 10 of the Smart City Mission Statement and Guidelines

which provides that the implementation of the Mission at the City level

will be done by a Special Purpose Vehicle (SPV) created for the

purpose. The SPV will plan, appraise, approve, release funds,

implement, manage, operate, monitor and evaluate the Smart City

development projects. Each Smart City will have a SPV which will be

headed by a full time CEO and have nominees of Central Government,

State Government and ULB on its Board. The States/ULBs shall ensure

that, (a) a dedicated and substantial revenue stream is made available

to the SPV so as to make it self- sustainable and could evolve its own

credit worthiness for raising additional resources from the market and

(b) Government contribution for Smart City is used only to create

infrastructure that has public benefit outcomes. The execution of

projects may be done through joint ventures, subsidiaries, public-private

partnership (PPP), turnkey contracts, etc. suitably dovetailed with 2023:CGHC:13581-DB

Neutral Citation

12

revenue streams. The same would mean that the SPVs, having

nominees of the Central and the State Government in the Board of

Directors would completely usurp the powers of the Municipal

Corporation.

12.The Government of India has not prescribed any particular model to be

adopted for the Smart Cities as it was mindful that urban development is

a State subject and different State Acts have different provisions to suit

their local needs. The State and the Urban Local Bodies (for short, the

ULBs) are joint 50% - 50% promoters, thus have the right to nominate

persons in the Board of Directors of the SPVs. Project, planning and

implementation are completely out of the Government of India’s role and

they were left to the SPVs and their share holders namely the ULBs and

the State Government which would mean that no project in the

Municipal Area could be undertaken by the SPVs without due approval

of the Municipal Corporation. The SPVs cannot act beyond the authority

which were given by the State Government and the ULBs and in the

instant case, the SPVs are planning, executing many projects from

public funds without the authority given to them as contemplated in law.

Both RSCL and BSCL have been executing several projects spending

hundreds of crores of rupees with no supervision or monitoring by the

elected body of the Municipal Corporation of Raipur and Bilaspur.

13.Mr. Shrivastava would next submit that the Board of Directors of the

BSCL and RSCL have not been appointed following the principle of the

‘promotional representation’ as prevailed in Company Law. The

Municipal Corporation, being the 50% owner of the BSCL and RSCL,

deserve to have all its major functionary in the Board of Directors. In

absence of any elected person’s representation in the Board of

Directors of the Company and in absence of approval for any work from 2023:CGHC:13581-DB

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13

the respective Municipal Corporation, all the projects which are being

executed, are without due approval as contemplated in law and also

without any accountability. The BSCL and the RSCL should be under

the command and control of the respective Municipal Corporations and

should also have the right to appoint the members of the Board of

Directors. At no stage of planning, aproval, execution or payment, the

file of any tender issued by the SPVs is brought before the Mayor/

Mayor-inCouncil/Samanya Sabha where the work is being done in the

notified areas of these Municipal Corporations. The SPVs does not have

any separate source of income and its employees are getting paid by

the respective Municipal Corporations from their own funds and they are

not doing or reporting any work to the Municipal Corporation. He would

draw the attention of the Court to the list (Annexure P-9) to show that

the employees of the Bilaspur Municipal Corporation have been

performing their duties in the BSCL. Further, the Collector, Bilaspur,

vide its communication dated 27.07.2010 (Annexure P/10) has

authorised the Managing Director of the BSCL as the executing agency

for the establishment and development work of three English Medium

School by the Corporate Social Responsibility (CSR) fund provided by

the South Eastern Coalfields Ltd. In the past, such works were assigned

the Municipal Corporations or the Public Works Department whereas

the same is now being handed over to the SPVs. Mr. Shrivastava would

lastly submit that the BSCL or the RSCL could work as subordinate to

the Municipal Corporation and not as an independent body. In the

present situation, not a single file relating to any kind of activities is

placed either before the Municipal Corporation or before the elected

representatives of the Municipal Corporation and the SPVs i.e. the

BSCL and the RSCL are acting as per their own sweet will. 2023:CGHC:13581-DB

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14.In support of his contentions, he would draw attention of the Court to

Section 25 of the Act of 1956 which defines the powers and functions of

the Mayor, Section 27 which provides for meeting of the Corporation

and Committee, Section 29 with regard to convening of meeting,

Section 30 which provides for power of Speaker and Mayor to call

special meeting, Section 66 which deals with matters to be provided for

by Corporation, Section 67 which provides for matters which may be

provided for by Corporation at its discretion, Section 69 which deals

with functions of several municipal authorities, Section 73 which deals

with contracts by or on behalf of the Corporation, Section 82 which

deals with the properties which vests in Corporation.

15.For proper adjudication of the lis, it would be proper to take not of some

of the provisions of the Constitution of India, the Act of 1956 as well as

the Smart Cities Mission Statement and Guidelines. The same reads as

under:

243W. Powers, authority and responsibilities of

Municipalities, etc. Subject to the provisions of this

Constitution, the Legislature of a State may, by law, endow

(a) the Municipalities with such powers and authority as may be

necessary to enable them to function as institutions of self

government and such law may contain provisions for the

devolution of powers and responsibilities upon Municipalities,

subject to such conditions as may be specified therein, with

respect to

(i) the preparation of plans for economic development and

social justice;

(ii) the performance of functions and the implementation of

schemes as may be entrusted to them including those in

relation to the matters listed in the Twelfth Schedule;

The Twelfth Schedule reads as under:

1. Urban planning including town planning.

2. Regulation of land-use and construction of buildings.

3. Planning for economic and social development.

4. Roads and bridges.

5. Water supply for domestic, industrial and, commercial

purposes. 2023:CGHC:13581-DB

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6. Public health, sanitation conservancy and solid waste

management.

7. Fire services.

8. Urban forestry protection of the environment. and

promotion of ecological aspects.

9. Safeguarding the interests of weaker sections of

society, including the handicapped and mentally retarded.

10. Slum improvement and upgradation.

11. Urban poverty alleviation.

12. Provision of urban amenities and facilities such as

parks, gardens, play-grounds. 13. Promotion of cultural,

educational and aesthetic aspects.

14. Burials and burial grounds; cremations, cremation

grounds and electric crematoriums.

15. Cattle ponds; prevention of cruelty to animals.

16. Vital statistics including registration of births and

deaths.

17. Public amenities including street lighting, parking lots,

bus stops and public conveniences.

18. Regulation of slaughter houses and tanneries.”

16.Section 82 of the Act of 1956 reads as under:

“82. Property vested in Corporation. - (1) Subject to

any special reservation made or to any special conditions

imposed by the Government, all property of the nature

hereinafter in this section specified and situated within the

city, shall vest in and be under the control of the

Corporation, and with all other property which has already

vested, or may hereinafter vest in the Corporation shall be

held and applied by it for the purposes of this Act, namely :

(a) all public gates, markets, slaughter-houses, manure

and night-soil deposits and public buildings of every

description which have been constructed or maintained

out of the municipal fund;

(b) all public streams, rivers, springs, and works for the

supply, storage and distribution of water for public

purposes and all bridges, buildings, engines, materials

and things connected therewith or appertaining thereto,

and also any adjacent land (not being private property)

appertaining to any public tank or well;

(c) all public sewers and drains, and all sewers, drains,

culverts and watercourses in or under any public street or

constructed by or tor the Corporation along side any public

street, and all works, materials and things appertaining

thereto;

(d) all dust, dirt, dungs, ashes, refuse, animal matter, or

filth or rubbish of any kind, or dead bodies, of animals,

collected by the Corporation from the streets, houses,

privies, sewers, cesspools or elsewhere or deposited in

places fixed by the Corporation; 2023:CGHC:13581-DB

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(e) all public lands, lamp-posts and apparatus connected

therewith or appertaining thereof;

(f) all land or other property transferred to the Corporation

by the Government or acquired by gift, purchase or

otherwise for local public purposes;

(g) all public streets, not being land owned by the

Government and the pavements, stone and other material

thereof and also trees growing on, and erections,

materials, implements and things provided for such

streets;

(h) all open lands which are neither the property of any

person nor of the Government.

(2) All property such as tank, playground, park, garden

and other places meant for public utility vested in the

Corporation shall neither be used for any other purpose

nor be permitted to use for any other purpose by the

Corporation.

82A. No property of the Corporation such as school, tank,

play ground or park meant for public use shall not be

allowed to be used for any other purpose on a permanent

basis.”

17.Mr. H.S.Ahluwalia, learned counsel for the respondent No. 1, while

opposing this petition and praying for its dismissal would submit that the

instant petition is not maintainable for the reason that the petitioner has

neither challenged the guidelines issued by the Ministry of Urban

Development, Government of India, nor has pointed out any specific

provision as to how the guidelines framed by the Government of India,

which in fact is a policy decision taken by the Government of India, is

per se illegal or against any provision of law. Smart City is a benevolent

project to meet out the challenges of urbanization. The RSCL has been

formed after due approval from the Samanya Sabha on 29.03.2016

(Annexure R-1/1). It is amply clear that unanimous decision was taken

by the representatives of the people of the said Municipal Corporation to

form RSCL. The petitioner has not pointed out any specific provision of

law as to how the formation of RSCL is against the basic mandate of the

Act of 1956. Rather, the objectives of the Smart City Mission is in

consonance with the provisions of the Act of 1956 and is in harmony

with the constitutional provisions. In concurrence of the letter dated 2023:CGHC:13581-DB

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02.12.2019 issued by the Department of Housing and Urban

Development, New Delhi, Government of India, the Smart City Advisory

Forum has been constituted by the State Government on 19.03.2020

(Annexure R-1/2) which constitutes several elected reprsentatives who

impart necessary advise for the better implementation and execution of

the Smart City Mission. The mission statement and guidelines, issued

by the Government of India, Ministry of Urban Development, is a policy

decision arrived upon by a conscious and prudent decision which calls

for no interference by this Hon’ble Court. He would rely on the decision

of Hon’ble Supreme Court in State of Punjab & Others v. Ram

Lubhaya Bagga & Others, reported in (1998) 4 SCC 117, wherein it

was held that questioning the validity of a governmental policy is not

normally within the domain of any Court, to weigh the pros and cons of

the policy or to scrutinize it and test the degree of its beneficial or

equitable disposition for the purpose of varying, modifying or annulling

it, based on howsoever sound and good reasoning, except where it is

arbitrary or violative of any constitutional, statutory or any other

provision of law. When government forms its policy, it is based on a

number of circumstances on facts, law including constraints based on

its resources. It is also based on expert opinion. It would be dangerous if

the Court is asked to test the utility, beneficial effect of the policy or its

appraisal based on facts set out on affidavits. The Court would dissuade

itself from entering into this realm which belongs to the executive. It is

within this matrix, that it is to be seen whether the new policy violates

Article 21 of the Constitution of India which it restricts reimbursement on

account of its financial constraints. He would further rely on the decision

of the Hon’ble Supreme Court in Vincent v. Union of India, reported in

(1987) 2 SCC 165, wherein it has been held that it is the obligation of

the State to ensure the creation and the sustaining of conditions 2023:CGHC:13581-DB

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18

congenial to good health. It was further observed that in a series of

pronouncements during the recent years, the Hon’ble Supreme Court

has culled out from the provisions of Part IV of the Constitution these

several obligations of the State and called upon it to effectuate them in

order that the resultant pictured by the Constitution Fathers may

become a reality. Relying on Directorate of Film Festivals & Others

v. Gaurav Ashwin Jain & Others, reported in (2007) 4 SCC 737, in

paragarph 16, the Hon’ble Supreme Courth as held that the scope of

judicial review of governmental policy is now well defined. Courts do not

and cannot act as Appellate Authorities examining the correctness,

suitability and appropriateness of a policy. Nor are Courts Advisors to

the Executive on matters of policy which the Executive is entitled to

formulate. The scope of judicial review when examining a policy of the

government is to check whether it violates the fundamental rights of the

citizens or is opposed to the provisions of the Constitution, or opposed

to any statutory provision or manifestly arbitrary. Courts cannot interfere

with policy either on the ground that it is erroneous or on the ground that

a better, fairer or wiser alternative is available. Legality of the policy, and

not the wisdom or soundness of the policy, is the subject of judicial

review. Further, in Manohar Lal Sharma v. Union of India &

Another, reported in (2013) 6 SCC 616, it was observed by the Hon’ble

Supreme Court that the Executive function comprises both the

determination of policy as well as carrying it into execution. The Court

does not interfere unless the policy is unconstitutional or contrary to the

statutory provisions or arbitrary, irrational or in abuse of power. Mr.

Ahluwalia, learned counsel for the State would further rely on the

decisions of the Hon’ble Supreme Court in Parisons Agrotech Pvt.

Ltd. & Another v. Union of India & Others, reported in (2015) 9 SCC

657, Ramsharan Autyanuprasi v. Union of India & Others, reported 2023:CGHC:13581-DB

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in (1989) Supp 1 SCC 251, Dattaraj Nathuji Thaware v. State of

Maharashtra & Others, reported in (2005) 1 SCC 590, State of

Uttaranchal v. Balwant Singh Chaufal & Others, reported in (2010)

3 SCC 402. In light of the observations made in these decisions

rendered by the Hon’ble Supreme Court, he would pray for dismissal of

this petition.

18.Mr. Sumesh Bajaj, learned counsel appearing for the respondents No. 2

and 3 i.e. BSCL and RSCL would submit that the petitioner has filed the

instant petition mainly challenging the constitution of the SPVs of the

two Smart Cities namely BSCL and RSCL and the crux and thrust of

the petition is the constitution of the Board of Directors and alleged

usurping of functions of the Municipal Corporations by these two Smart

Cities. At the outset, he would submit that the Smart City Mission

Scheme is not under challenge and the petitioner has chosen to let the

Scheme remain intact. In this situation, the scope of the instant petition

would be confined to test that whether the Scheme guidelines have

been followed or not and arguments advanced by the petitioner painting

the Scheme black would be of no help to the petitioner. As far as the

constitution of the Board of Directors is concerned, he would refer to

clause 3 of the Mission Statement and Guidelines (Annexure P/1),

which reads as under:

“3. Board of Directors

The Board of Directors will have representatives of Central

Government, State Government, ULB and Independent

Directors, in addition to the CEO and Functional Directors.

Additional Directors (such as representative of parastatal)

may be taken on the Board, as considered necessary. The

Company and shareholders will voluntarily comply with the

provision of the Companies Act 2013 with respect to

induction of independent directors. Below, are given the

broad terms of appointment and role of the SPV Board:-

3.1 The Chairperson of the SPV will be the Divisional

Commissioner/Collector/Municipal Commissioner/ Chief 2023:CGHC:13581-DB

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Executive of the Urban Development Authority as decided

by the State Government.

3.2 The representative of the Central Government will be a

Director on the Board of the SPV and will be appointed by

the MoUD.

3.3 The CEO of the SPV will be appointed with the approval

of the MoUD. The CEO will be appointed for a fixed term of

three years and will be removed only with the prior approval

of MoUD. The functions of the CEO include:

a. Overseeing and managing the general conduct of the

day-to-day operations of the SPV subject to the supervision

and control of the Board.

b. Entering into contracts or arrangements for and on behalf

of the Company in all matters within the ordinary course of

the Company’s business.

c. To formulate and submit to the Board of Directors for

approval a Human Resource Policy that will lay down

procedures for creation of staff positions, qualifications of

staff, recruitment procedures, compensation and termination

procedures.

d. Recruitment and removal of the senior management of

the Company and the creation of new positions in

accordance with the Company’s approved budget and the

recruitment or increase of employees in accordance with the

Human Resource Policy laid down by the Board.

e. Supervising the work of all employees and managers of

the Company and the determination of their duties,

responsibilities and authority;

3.4 The Independent Directors will be selected from the

data bank(s) maintained by the Ministry of Corporate Affairs

and preference will be given to those who have served as

independent directors in the Board of Companies fulfilling

Clause 49 of the listing agreement of Securities and

Exchange Board of India (SEBI).”

19.Further, the representation of the elected public representatives is

mandated in Clauses 13.2 and 13.3 of the Mission Statement and

Guidelines, in the State Level and the City Level Committees. The same

reads as under:

13. Mission Monitoring

13.1 National Level

An Apex Committee (AC), headed by the Secretary, MoUD and

comprising representatives of related Ministries and organisations

will approve the Proposals for Smart Cities Mission, monitor their

progress and release funds. This Committee will meet

periodically, as considered necessary. The AC will consist of the

following indicative members:

i. Secretary, Housing and Poverty Alleviation Member 2023:CGHC:13581-DB

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ii. Secretary (Expenditure) Member

iii. Joint Secretary, Finance, MoUD Member

iv. Director, NIUA Member

v. Chief Planner, Town and Country Planning Member

vi. Select Principal Secretaries of States Member

vii. Select CEOs of SPVs Member

viii. Mission Director Member Secretary

13.1.1 The Representatives of stakeholders like UN Habitat,

World Bank, TERI, Centre for Development of Advanced

Computing (C-DAC), Centre for Smart Cities (CSC), Bangalore or

other bilateral and multilateral agencies and urban planning

experts may be invited with the approval of the Chair.

13.1.2 The AC will provide overall guidance and play an advisory

role to the Mission and its key responsibilities are given below.

i. Review the list of the names of Cities sent by the State

Governments after Stage 1.

ii. Review the proposals evaluated by panel of experts after Stage

2.

iii. Approve the release of funds based on progress in

implementation.

iv. Recommend mid-course correction in the implementation tools

as and when required.

v. Undertake quarterly review of activities of the scheme including

budget, implementation and co-ordination with other missions/

schemes and activities of various ministries.

13.1.3There will be a National Mission Director, not below the

rank of Joint Secretary to Government of India who will be the

overall in-charge of all activities related to the Mission. A Mission

Directorate will take support from subject matter experts and such

staff as considered necessary. The key responsibilities of the

Mission Directorate are given below:

i. Develop strategic blueprint and detailed implementation road

map of the Smart Cities Mission, including the detailed design of

the City Challenge.

ii. Coordinate across Centre, States, ULBs and external

stakeholders in order to ensure that external agencies are

efficiently used for preparation of SCP, DPRs, sharing of best

practices, developing Smart Solution, etc.

iii. Oversee Capacity building and assisting in handholding of

SPVs, State and ULBs. This includes developing and retaining a

best practice repository (Model RFP documents, Draft DPRs,

Financial models, land monetization ideas, best practices in SPV

formation, use of financial instruments and risk mitigation

techniques) and mechanism for knowledge sharing across States

and ULBs (through publications, workshops, seminars).

13.2State Level

There shall be a State level High Powered Steering Committee

(HPSC) chaired by the Chief Secretary, which would steer the

Mission Programme in its entirety. The HPSC will have

representatives of State Government departments. The Mayor 2023:CGHC:13581-DB

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and Municipal Commissioner of the ULB relating to the Smart City

would be represented in the HPSC. There would also be a State

Mission Director who will be an officer not below the rank of

Secretary to the State Government, nominated by the State

Government. The State Mission Director will function as the

Member-Secretary of the State HPSC. The indicative composition

of HPSC is given below:

i. Principal Secretary, Finance,

ii. Principal Secretary, Planning,

iii. Principal Secretary/Director, Town & Country Planning

Department, State/UT Governments,

iv. Representative of MoUD,

v. Select CEO of SPV in the State,*

vi. Select Mayors and Municipal Commissioners /Chief Executive

of the ULBs, and Heads of the concerned State Line

Departments,

vii. Secretary/Engineer-in-Chief or equivalent, Public Health

Engineering Department,

viii. Principal Secretary, Urban Development – Member Secretary.

The key responsibilities of the HPSC are given below.

i. Provide guidance to the Mission and provide State level

platform for exchange of ideas pertaining to development of Smart

Cities.

ii. Oversee the process of first stage intra-State competition on the

basis of Stage 1 criteria.

iii. Review the SCPs and send to the MoUD for participation in the

Challenge.

13.3City Level

A Smart City Advisory Forum will be established at the city level

for all 100 Smart Cities to advise and enable collaboration among

various stakeholders and will include the District Collector, MP,

MLA, Mayor, CEO of SPV, local youths, technical experts, and at

least one member from the area who is a,

i. President / secretary representing registered Residents Welfare

Association,

ii. Member of registered Tax Payers Association / Rate Payers

Association,

iii. President / Secretary of slum level federation, and

iv. Members of a Non-Governmental Organization (NGO) or

Mahila Mandali / Chamber of Commerce / Youth Associations.

The CEO of the SPV will be the convener of the Smart City

Advisory Forum.”

20.Mr. Bajaj would next submit that the mandate contained in the aforesaid

clauses have been strictly and piously followed and therefore the

constitution of the Board cannot be found fault with. Further the 2023:CGHC:13581-DB

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representation and control of an Urban Local Body (ULB) is not only

restricted up to the State Level / City Level Committees but is germane

in the ownership of the Company itself as is evident from clause 10.2 of

the Mission Statement and Guidelines. The said clause reads as under:

“10.2The SPV will be a limited Company incorporated

under the Companies Act, 2013 at the city-level, in which the

State/UT and the ULB will be the promoters having 50:50

equity shareholding. The private sector or financial

institutions could be considered for taking equity stake in the

SPV, provided the shareholding pattern of 50:50 of the

State/UT and the ULB is maintained and the State/UT and

the ULB together have majority shareholding and control of

the SPV.”

21.Mr. Bajaj would also submit that it is trite law that the shareholders are

the owners of the Company under the Companies Act, 2013, under

which the two companies are a ‘Government Company’ as defined in

Section 2 (45) of the Act of 2013. Further Section 2(27) of the Act of

2013 clearly stipulates that ‘control’ would be directly or indirectly and

by virtue of shareholding. Further Sections 55 and 69 (3) of the

Chhattisgarh Municipal Corporation Act, 1956 clearly stipulates that a

Commissioner would be the Principal Executive Officer of the

Corporation and entire executive powers of the Corporation would vest

in the Commissioner. Thus also it cannot be said that the mandate of

the Scheme is not satisfied merely by taking the Commissioner on the

Board of Directors. The Scheme clearly mandates that if any City wants

to participate in the Scheme and avail the benefits of hundreds of crores

of Union of India funds then the condition precedent would be the ULB

delegating its powers and functions in favour of the SPV which is

provided in clause 4 of Annexure 5 of the Mission Statement and

Guidelines. This delegation, in the instant case, has been duly done by

both the ULBs and the petitioner is now trying to find fault with this

delegation itself and which is not permissible. This is so because firstly it

is not a delegation under any statute and for which it can be said that it 2023:CGHC:13581-DB

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is illegal or contrary to the provisions. The instant delegation is more of a

promissory in nature in order to avail the benefits of the Scheme. It is a

delegation by choice and not compulsory. The ULBs in question could

have very well chosen not to opt for this delegation and could have

remained out of the Scheme. Secondly, even today, neither the

delegator nor the delegatee has any problem with the delegation and

the petitioner would absolutely not have any locus to enter into this

arena. Lastly, if this contention of the petitioner is to be accepted then

the two ULBs have to be ousted from the Scheme which contemplates

this delegation as the Scheme itself is not under challenge. So far as the

functions and responsibilities of the SPVs are concerned, the same are

also specifically mentioned in Clause 10.1 and 10.6 under the heading

‘Implementation by Special Purpose Vehicle (SPV) and Clause 5 of

Annexure 5 of the Mission Statement and Guidelines. Thus, as long as

the Scheme remains intact, the petitioner cannot be permitted to refer to

the provisions of the Constitution of India or the Chhattisgarh Municipal

Corporation Act, 1956 alleging that the functions and powers of an ULB

cannot be usurped by an SPV, as for this, a litigation would be required

challenging the Scheme itself branding it to be in contravention, if at all,

of the statutory provisions. Further, even otherwise, the functions of the

SPVs are to provide smart solutions and not only the routine and regular

functions assigned to an ULB under the Act of 1956. The Scheme

mandates that the entire infrastructural development is to be done by

the cost borne in equal shares by the Union of India and the State

Governments / ULBs. In the instant case, admittedly, 50% of the cost is

being borne by the Union of India and the entire balance of 50% is being

borne by the State Government. The petitioner’s farfetched justification

that the ULBs are also contributing is not acceptable in the teeth of the

Scheme document. It would be pertinent to mention here that example 2023:CGHC:13581-DB

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of City of Thane was given to demonstrate that the elected members are

on the Board in Thane. In this regard, Mr. Bajaj would submit that the

State of Maharashtra has issued instructions that the ULBs have to

contribute 25% towards total cost (50% of 50%) and therefore the

structure of representation probably is in that manner. Another important

aspect of the matter is that ultimately it would be the ULB itself which

would be the beneficiary of the entire infrastructural developments and

smart solutions as after the term of the Scheme expires, all the

developments and solutions would fall in the pool of the ULB, benefiting

the same manifolds. A small example to this is the revenue and tax

collection has already skyrocketed in view of the GIS survey conducted

by the Smart Cities as a part of its working. He would also submit that

the Smart Cities Mission is not to be equated to the normal and general

functioning of an ULB as it is majorly meant for applying smart solutions

for the citizenry. One more example in this regard can be quoted which

is related to traffic signals which would become smart and automatically

open and close windows for traffic reading the density of the traffic,

instead of the present type which opens and closes for pre-programmed

specific period. Another issue raised by the petitioner was with regard to

the employees of the ULBs being used by the SPVs. In this regard it is

respectfully submitted that the SPVs do have a separate and dedicated

staff structure and additionally if the staff of the ULB, if sitting idly, is

used for the services of the SPV, then there should be no complaint

about the same. It is absolutely incorrect on part of the petitioner to read

out abstracts from the reply filed by the Union of India and infer that the

Union of India accepts and supports the claim of the petitioner. If the

entire reply is read in whole then this inference being drawn by the

petitioner would go down the drain. Lastly, he would submit that the

instant petition is liable to be dismissed not only on the merits of the 2023:CGHC:13581-DB

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case, as discussed supra, but also holding the same to be not

maintainable in view of the objections being taken infra: -

a. The petition is hit by the principles of unexplained delay and laches as

it is incorrect to say that the petition has been filed in the year 2021 only

when the works started maturing. The petition is inherently against the

order dated 17.08.2016 (Annexure P-4) relating to the constitution of the

Board and which has nothing to do with the maturing of the works being

executed.

b. The petition is also pre-mature as it is settled principle that a cause of

action would arise only if there is a legal right, an assertion of such legal

right and a denial of the same. The petition itself admits in para 3 (C) (V)

that the petitioner has not represented anywhere before knocking the

doors of this Hon’ble Court.

c. Such a serious issue ought not to be entertained in a casual petition as

paragraphs 8.24, 8.25 and relief clauses 6 and 7 have nothing to do with

the instant dispute and are absolutely alien to the dispute.

d. Though the locus of the petitioner, in a PIL, is not to be very strictly

tested but in the instant case it cannot be lost sight that the beneficiaries

for whom the instant petition is being 3 triggered are all learned public

elected persons and cannot be said to be not capable of approaching

this Hon’ble Court directly and therefore the petition is liable to dismissed

on this count also.

e. It has been laid down in a catena of judgments that the veil is required

to be lifted to get a clear picture of the bonafides behind any PIL. If this is

done then it would be clear that initially the ULBs participate in the

Scheme and voluntarily delegate their powers in favour of the SPVs.

Thereafter the instant PIL comes to be filed by individual and in which

the main grievance appears to be usurping the powers of the elected 2023:CGHC:13581-DB

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members. The elected members, arrayed as respondents in the petition,

support the petition. Furthermore, this fact cannot also be lost sight of

that the petitioner had made all efforts to get the Union of India funds

lapsed and wasted in the month of March 2022 and which bout of

litigation is already on record in the instant petition.

In support of his contentions, he would rely on the decisions of the

Hon’ble Supreme Court in Esteem Properties Private Ltd. v. Chetan

Kamble & Others, 2022 SCC Online SC 246 (paras 26 to 29,) Dr. B.

Singh v. Union of India & Others, AIR 2004 SC 1923 (paras 5, 12,

13, 15 and 17), Arun Kumar Agrawal v. Union of India & Others,

(2014) 2 SCC 609 (paras 95 and 98), B.P.Singhal v. Union of India &

Another, (2010) 6 SCC 331 (paras 12 to 15), Tehseen S. Poonawalla

v. Union of India & Another, AIR 2018 SC 5538 (paras 72 and 73)

and Narmada Bachao Andolan v. Union of India & Others , AIR

2000 SC 3751 (paras 78, 255, 256, 257 and 259).

22.In the additional return filed on behalf of respondent No. 2, the

respondent-BSCL has attempted to highlight various sections of the

Companies Act, 2013 namely, Section 2(27) which defines the term

‘control’, Section 2(47) which defines the term ‘Independent Director’,

Section 2(55) which defines the term ‘member’, Section 152(1) of the

Act. 2013, to contend that only share holders have the power and

discretion to appoint an eligible person as a Director of the Company

and interference with such power provided by the Act of 2013 would be

unjust. Clause 3.4 of Annexure 5 of the Smart City Mission Guidelines

provides for appointment of independent Director.

23.Mr. Harshwardhan, learned counsel appearing for the respondent No.

4-Samanya Sabha, Nagar Palik Nigam, Bilaspur, would support the

petitioner and contend that representation of Urban Local Body as 2023:CGHC:13581-DB

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mandated and contemplated by the Smart City Mission Scheme means

the elected representatives of the Urban Local Body which would

include Mayor, Speaker, nominated members of the Samanya Sabha

and Mayor-in-Council etc. and the same cannot be interpreted in any

other manner. However, acting contrary in flagrant violation of the basic

principles of law, the constitution of BSCL has been illegally done by the

State Government. It goes against the basic idea that the SPV is run by

a handful number of bureaucrats appointed by the State Government.

He would draw the attention of the Court towards the examples of other

Smart City SPVs constituted and established in other parts of the

country like Pune, Thane, Nagpur, Warangal and Trivandrun for

implementation of Smart City Projects where the Government has

included Mayor, Speaker and other members/Ward Councillors in the

Board of Directors befitting the legal requirements under the guidelines

of Smart City Mission. In the present scenario, the respondent No. 4 is

helpless to provide any feedback or redressal of grievances of the

public of Bilaspur Municipal Corporation when all the activities of the

Corporation have been usurped by the BSCL. Exclusion of the elected

representatives of the Municipal Corporation has frustrated the

fundamentals of the scheme itself. The respondent No. 4, being the

democratically elected body representing the will of each and every

resident/voter of Bilaspur Municipal area are seriously affected and

prejudiced by such illegal constitution and illegal functioning, actions of

the BSCL as the powers of the members of the answering respondent

are seriously curtailed by such functioning of BSCL.

24.Mr. Ashok Kumar Verma, learned counsel appearing for the respondent

No. 5-Mayor-in-Council, Nagar Palik Niagam, Bilaspur would also

support the petitioner and make similar submissions. Apart from that, he

would submit that Mayor-in-Council is elected by democratic way of 2023:CGHC:13581-DB

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election whose powers have been described in Section 25, 37 and 45 of

the Act of 1956 and the powers and duties of the Municipal Corporation

is described in Section 66 of the Act. An elected representative has a

better say in respect of any developmental works. He would further

contend that the respondent No. 5 is not against the existence of BSCL

but only wishes that all the works authorised under the Act may be done

by the BSCL but underthe direction and scrutiny of respondent No. 5.

Further, all the payments for the works done should be done only after

prior sanction of the respondent No. 5 and the Board of Directors should

be reconstituted by nominating Mayor-in-Council as Director of the

BSCL. He would lastly submit that as mandated under the Smart City

Mission, there should be a full time Chief Executive Officer of the BSCL

but the Municipal Commissioner, Bilaspur is working as CEO of the

BSCL. After election of respondent No. 5, there had been only one

meeting of the Advisory Committee and there is no clear provision as to

who will call and convene the meeting of the Advisory Committee

because of which the public works are suffering and the BSCL is

functioning according to its whims and fancies.

25.Dr. Sudeep Agrawal, learned counsel appearing for the respondents

No. 6 and 7 i.e. Samanya Sabha, Nagar Palik Nigam, Raipur and the

Mayor-in-Council, Nagar Palik Nigam, Raipur, respectively, would also

support the petitioner and submit that adequate representation has not

been given to the elected members of the Raipur Municipal Corporation

in the Board of Directors of RSCL. He would submit that the Mayor,

Speaker, two elected members from amongst the Samanya Sabha of

Municipal Corporation, etc. should have been included as the members

of the Board of Directors. Dr. Agrawal would draw the attention of the

Court to clause 13.3 of the Mission Statement and Guidelines issued by 2023:CGHC:13581-DB

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the Ministry of Urban Development, Government of India, which

provides for constitution of Smart City Advisory Forum.

26.Mr. Ramakant Mishra, learned Deputy Solicitor General, appearing for

the respondent No. 8/Union of India would submit that the Smart City

Mission is an initiative of Government of India to meet the challenges of

urbanization by comprehensive development of physical, institutional,

social and economic infrastructure. The instant petition is based on ill

founded facts and baseless grounds which are wholly devoid of merits

and substance. There is no illegality whatsoever in any act of the Union

of India as alleged in the writ petition and they have acted in accordance

with law. The present petition is liable to be dismissed at the threshold.

The Government of India has not prescribed any particular model to be

adopted by the smart cities. The approach is not ‘one size fits all’ each

city could formulate its own concept, vision, mission and plan for a

smart city which is feasible to its local needs, resources and level of

ambition. They could chose their model of smart city. Under the smart

city mission, it has been prescribed that the implementation at the city

level will be done by a SPV. The SPV will be a limited company

incorporated under the Act of 2013 in which the State/UT and the ULB

will be the promoters having 50:50 equity share holding. The smart city

mission will be operated as a Centrally Sponsored Scheme. Each

selected smart city will be entitled to receive approximately Rs. 1000

Crore (Rs. 500 Crores from the Government of India and equal

matching share of Rs. 500 Crores from the respective State

Government/ULB. The SPVs are responsible for only those projects that

have been entrusted to them by the ULBs under the Smart City Mission

and not for any other functions/ responsibilities of the ULBs. The Smart

City Guidelines provide that the SPVs are owned by the ULBs and the

State Government and thus become the entities under their control and 2023:CGHC:13581-DB

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31

according to the Act of 2013, ‘control’ shall include the right to appoint

majority of the Directors or to control the management or policy decision

exercisable by a person or persons acting individually or in concert,

directly or indirectly, including by virtue of their shareholding or

management rights or shareholders agreement or voting agreement or

in any other manner. The Boards of SPV should be normally constituted

based on the principle of proportional representation i.e. constitution

based on share ownership. However, in practice, this was not the case

in several SPVs. In some SPVs, the ULB had majority while in others,

the State Government had the majority representation. But this never

hindered the functioning of the SPV. The Board of Directors of SPVs are

accountable to the shareholders, and in this case, the ULBs and SPVs

being the shareholders, the SPVs are accountable to ULBs. This was

sought to be achieved through the representation of ULBs on Boards

and Committees of the SPVs. Thus, creation of SPVs in no way interfere

with the provisions of the Constitution of India regarding local self

government or the powers of the ULBs. The SPVs are merely

companies established under the Act of 2013 created jointly by the

State Government and the ULBs with equal ownership to implement

projects under the SCM for the benefits of the citizens and are not

responsible for other functions of the ULBs. The SPVs do not have

responsibilities or authority beyond those that are given by the owners

(State Government and the ULBs). SPVs have been created only to

enhance the operational efficiencies of the ULBs for implementation of

SCM projects for the benefits of the citizens. The SCM was launched in

the year 2015 for a period of 5 years which was to end in the month of

June 2020. However, the same was extended for a period upto June,

2023 as all the smart cities were not selected in one go. The Smart City

project is being implemented under a nationally sponsored scheme 2023:CGHC:13581-DB

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32

framed by the Government of India in order to ensure speedy

development of identified cities as Smart City and its implementation

and execution is totally a policy decision based on the administrative

function of the State which is not open to challenge under the writ

petition. Therefore, the present petition is liable to be dismissed.

27.From perusal of the return, it is evident that the respondents No. 4, 5, 6

and 7 are supporting the petitioner while the respondents No. 1, 2, 3

and 8 are opposing the petition. The main contesting party in this

petition are the respondents No. 2 and 3 i.e. the BSCL and RSCL. Apart

from other grounds, the respondents No. 1, 2, 3 and 8 have also raised

the question of maintainability of this petition. In this regard, it would be

pertinent to refer the order dated 14.03.2022 passed by this Court,

which is quite elaborate wherein this Court has observed as under:

“In respect of IA Nos. 04 of 2021 and 05 of 2021 filed by

respondent No.2, namely, Bilaspur Smart City Limited and IA

Nos.06 of 2021, 08 of 2022 and 10 of 2022 filed by respondent

No.3,namely, Raipur Smart City Limited, we have heard Mr.

Sudiep Shrivastava, learned counsel for the petitioner on

10.03.2022, 11.03.2022 and today also.

We had heard Mr. Mukul Rohatgi, learned Senior Counsel,

appearing for respondent Nos. 2 and 3 assisted by Mr. Sumesh

Bajaj and Mr. Rishabh Bajaj on 10.03.2022, and Mr. Sumesh

Bajaj and Ms. Misha Rohatgi Mohta, on 11.03.2022.

We have also heard Mr. H.S. Ahluwalia, learned Deputy

Advocate General, appearing for respondent No.1, Mr. Harsh

Wardhan, learned counsel, appearing for respondent No.4, Mr.

Ashok Kumar Verma with Mr. Gajendra Kumar Sahu, learned

counsel, appearing for respondent No.5, Dr. Sudeep Agrawal,

learned counsel, appearing for respondent Nos. 6 & 7, and Mr.

Ramakant Mishra, learned Assistant Solicitor General for Union

of India, appearing for respondent No.8.

The Union of India launched a mission called ‘Smart Cities

Mission’, the objective being to promote cities that provide core

infrastructure and give a decent quality of life to its citizens, a

clean and sustainable environment and application of 'Smart'

Solutions’. The focus is on sustainable and inclusive

development and the idea is to look at compact areas, create a

replicable model which will act like a light-house to other

aspiring cities. The core infrastructure elements in a Smart City

includes: (i) adequate water supply, (ii) assured electricity

supply, (iii) sanitation, including solid waste management, (iv)

efficient urban mobility and public transport, (v) affordable 2023:CGHC:13581-DB

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33

housing, especially for the poor, (vi) robust IT connectivity and

digitalization, (vii) good governance, especially e-Governance

and citizen participation, (viii) sustainable environment, (ix)

safety and security of citizens, particularly women, children and

the elderly, and (x) health and education.

The purpose of Smart Cities Mission is to drive economic

growth and improve the quality of life of people by enabling

local area development and harnessing technology. The

mission is to cover 100 cities and its duration was to be for a

period of five years beginning from the Financial Year 2015 - 6

to the Financial Year 2019-20. However, it is common ground

that the mission is extended till June, 2023, the same having

been continued in light of the evaluation done by the Ministry of

Urban Development. A total number of 100 Smart Cities have

been distributed amongst the Sates and Union Territories on

the basis of equitable criteria, which is not necessary to go into

for the purpose of disposal of these IAs.

There is a process of selection of Smart Cities and for the State

of Chhattisgarh, Raipur, Bilaspur and Atal Nagar have been

identified as Smart Cities. The implementation of Smart Cities

Mission at the city level is done by a Special Purpose Vehicle

(SPV) created for the purpose. The SPV, according to the

Mission Guidelines, will be headed by a full-time Chief

Executive Officer (CEO) and would have nominees from the

Central Government, the State Government and the Urban

Local Bodies (ULB) on the Board of Directors. The SPV will be

a limited company incorporated under the Companies Act,

2013 at the city-level, in which the State/UTs and the ULB will

be the promoters having 50:50 equity shareholding. Funds

provided by the Government of India in the Smart Cities

Mission to the SPV will be in the form of tied grant and kept in a

separate Grant Fund, which is to be utilized only for the

purposes for which the grants have been given. The Smart

Cities Mission will be operated as a Centrally Sponsored

Scheme (CSS) and the Central Government proposes to give

financial support to the mission to the extent of Rs.48,000

crores over five years, i.e., on an average of Rs.100 crores per

city per year. An equal amount, on a matching basis, is to be

contributed by the State/ULB and thus, about Rs. One Lakh

crore of Government/ULB funds are to be made available for

smart cities development.

The Public Interest Litigation was filed on 14.12.2020

alleging that in the garb of SPV, the State Government had

actually usurped the powers and functions of the elected

bodies of Bilaspur Nagar Nigam and Raipur Nagar Nigam as

during the period from 2016 to 2020, several development

works have been carried out by Bilaspur and Raipur SPV

without any monitoring and supervision of the elected bodies of

Bilaspur and Raipur. At no stage of planning, approval,

execution or payment, the file of any tender issued by the SPV

is brought before the Mayor / Mayor-In-Council / Samanya

Sabha despite the work being done in the notified areas of the

Nagar Nigams.

At this juncture, it will be relevant to take note of the order

dated 14.09.2021 as all the IAs under consideration had been 2023:CGHC:13581-DB

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34

filed in view of the aforesaid order dated 14.09.2021. The said

order reads as follows:

“Mr. Sudeep Shrivastava, Advocate for the petitioner. Mr.

Vikram Sharma, Deputy Govt. Advocate for the

State/respondent No.1.

Mr. Mateen Siddique, Advocate for respondent Nos. 2 &

3. None for respondent Nos. 4 to 7.

Mr. Ramakant Mishra, ASG for Union of

India/respondent No.8.

Heard on prayer for interim relief (I.A. No. 01/2020).

Learned counsel for the petitioner would argue that the

development of the urban area by and under the executive

control of Smart City Limited, constituted for the development

of Raipur and Bilaspur, does not denude the local body namely

Corporation of two cities and their authorities as provided under

the Chhattisgarh Corporation Act, but the government's

company has been carrying out development work without

taking approval of various projects by the local body, which is

statutorily mandated under the Municipal laws. He further

submits that in a matter of development under the smart city

project, the provisions of Municipal Corporation Act had to be

complied with. Therefore, the projects which are being

implemented by the Smart Cities of Raipur and Bilaspur are

illegal and without the authority of law. He would pray would

pray that the projects in future be not allowed to function

without due approval/procedure as required under the

Constitution of India and Chhattisgarh Municipal Corporation

Act.

Mr. Siddique, learned counsel appearing for respondent

Nos. 2 & 3 would submit that the projects of Smart City is being

implemented under a nationally sponsored scheme framed by

the Central Government in order to ensure speedy

development of identified cities and the modality of execution of

plan for development of identified cities as Smart City and

execution is in the realm of administrative function and is not

open to challenge.

Learned ASG would submit that in the present case, the

reply has not been filed by the Union of India so far, therefore,

he may be granted time to file the reply.

Learned State counsel would submit that this case is

required to be argued at length.

Learned counsel for respondent Nos. 2 & 3 would submit

that if any interim order is granted, it may affect the ongoing

projects and very purpose for development of the cities under

the Smart City Project.

Having heard learned counsel for the parties and various

submissions which have been made before us, we are of the

opinion that looking to the very nature of the dispute raised

before us and that under the Smart City Project, developments

work of two cities have already been undertaken by the agency,

we are not inclined to pass any interim order in the ongoing

projects. In case respondent Nos. 2 & 3 formulate future

projects, it should be brought to the notice of this Court before

its implementation. 2023:CGHC:13581-DB

Neutral Citation

35

Learned ASG is granted one last opportunity to file reply,

if any, within four weeks. Rejoinder, if any, may also be filed

within two weeks thereafter.

List this matter after 6 week.”

Mr. Mukul Rohatgi, learned senior counsel for respondent Nos.

2 and 3 has submitted that the averments made in this Public

Interest Litigation would go to show that the present is a proxy

petition on behalf of the Urban Local Bodies and therefore, the

Public Interest Litigation, at any rate, ought not to have been

entertained as the elected representatives of the Urban Local

Bodies would have approached this Court if there was any

encroachment on their powers and functions, as the petitioner

would like to contend. The Public Interest Litigation was filed

most belatedly after original period of the Smart Cities Mission

had expired and it is another matter that the mission is

continued for the period up to June 2023. He relies on a

decision of the Hon'ble Supreme Court in Esteem Properties

Pvt. Ltd. Vs. Chetan Kamble and others, reported in 2022 SCC

Online SC 246, to contend that, by no stretch of imagination,

can it be said that the elected representatives in the Urban

Local Bodies are handicapped by ignorance, indigence and

illiteracy so as to enable the petitioner to maintain the

application.

Placing reliance on a letter dated 28.10.2021 issued by

the Joint Secretary, Ministry of Housing and Urban Affairs, Mr.

Mukul Rohatgi, learned senior counsel submits that the CEOs

of the SPVs have been impressed upon to see to it that all work

orders are issued before March, 2022 and that when extension

of Smart Cities Mission was granted, a written commitment

was given by the Smart Cities Mission that no project funded

by Smart Cities Mission funds (Center/State), will be left to be

work ordered post March 2022. It is also submitted that there is

every possibility of funds being lapsed if the work orders are

not issued, as indicated.

It is submitted that implementation of the projects as

indicated in the IAs in question would enure to the benefit of the

citizens and public interest lies in allowing such projects to be

completed without 10 any hindrance. Mr. Rohatgi has drawn

our attention to the Smart Cities Mission Statement &

Guidelines, with special reference to mission monitoring at

National Level, State Level and City Level to highlight that there

is larger public participation in the implementation of the

projects under the Smart Cities Mission.

During the course of proceedings today, in view of the

order dated 11.03.2022, two IAs being IA No. 13/2022,

pertaining to respondent No. 2 and IA No. 14/2022, pertaining

to respondent No. 3 have been filed bringing on record the

projects in which the work orders can be issued immediately.

Mr. Bajaj has drawn our attention to a letter dated

07.01.2022 issued by the Minister of Housing and Urban Affairs

to the Chief Minister of the State of Chhattisgarh, to submit that

beyond 31.03.2022, no fund will be released by the Center in

respect of projects in which work orders have not been issued. 2023:CGHC:13581-DB

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36

Mr. H.S. Ahluwalia, learned Deputy Advocate General

and Mr. Ramakant Mishra, learned Assistant Solicitor General

endorsed the submissions of Mr. Mukul Rohatgi and submitted

that the projects for which permission is sought for should be

allowed to be continued for the benefit of the local public.

Mr. Sudiep Shrivastava, learned counsel for the

petitioner submits that none of the elected members of the

Nagar Nigam and not even a Mayor had been made Director of

the SPV and only the Commissioner of the Municipal

Corporation has been appointed as CEO. He submits that

Article 243W of the Constitution of India provides, amongst

others, that the Urban Municipalities are to implement schemes

in relation to matters listed in Twelfth Schedule, which includes

urban planning including town planning, regulation of land-use

and construction of buildings, planning for economic and social

development, roads and bridges, water supply for domestic,

industrial and commercial purposes, public health, sanitation

conservancy and solid waste management etc., which are now

sought to be undertaken by the SPV. In substance, he submits

that the scheme of Smart City as implemented in the State of

Chhattisgarh is in violation of the Nagar Palik Nigam

Adhiniyam, 1956 and is violative of three tier democratic

system of governance, as envisaged in Article 243P to 243ZC

of the Constitution of India.

Refuting the submission of Mr. Rohatgi, Mr. Shrivastava

submits that if the elected representatives, for whatever

reasons, do not challenge an arbitrary and illegal action of the

Smart Cities Mission in encroaching upon the field reserved for

Municipalities, a conscious citizen has a right to espouse such

cause in a public interest litigation and in that context, he has

referred to a decision in the case of Manohar Joshi v. State of

Maharashtra and Others, reported in (2012) 3 SCC 619, with

particular reference to paragraph 185 to impress upon the

Court that when the cause or issue relates to matters of good

governance in the constitutional sense, a person is entitled to

canvass the issue in a public interest litigation. He has also

placed reliance on a decision in the case of S.R. Bommai v.

Union of India, reported in (1994) 3 SCC 1, which is essentially

a case under Article 356 of the Constitution of India, to impress

upon the Court the significance of the three-tier democratic

system. He submits that if permission is granted, as sought for

in the IAs, the petition will become infructuous.

Mr. Ashok Kumar Varma, learned counsel, appearing for

respondent No.5 endorsed the submissions of Mr. Sudiep

Shrivastava. However, Mr. Varma submits that he is not

supporting the petitioner so far as the prayer for quashing of

formation of Bilaspur Smart City Company Limited and Raipur

Smart City Company Limited is concerned, but would contend

that the Board of Directors of the same should be reconstituted

with the elected members of the Nagar Palik Nigam. Mr. Harsh

Wardhan, learned counsel, appearing for respondent No. 4 as

well as Dr. Sudeep Agrawal, learned counsel, appearing for

respondents No. 6 and 7 also endorse the submissions of Mr.

Varma. 2023:CGHC:13581-DB

Neutral Citation

37

We have considered the submissions of learned counsel for the

parties and have also perused the materials on record for the

purpose of disposal of Ias.

At this juncture, this Court would not adjudicate on the issue as

to whether the Public Interest Litigation is maintainable or

whether it should not have been entertained.

It is seen that at the State Level, there is a High Powered

Steering Committee (HPSC) where select Mayors and

Municipal Commissioners/Chief Executive of the ULBs and

Heads of the concerned State Line Departments are Members

and that there is public participation. A perusal of the

responsibilities of the HPSC as indicated in the guidelines

would go to show that it is tasked to provide guidance to the

Mission and provide State level platform for exchange of ideas

pertaining to development of smart cities. At the city level, a

Smart City Advisory Forum is to be established to advise and

enable collaboration among various stakeholders, which

includes the District Collector, MP, MLA, Mayor, CEO of SPV,

local youths, technical experts, and at least one member from

the area, who is a (I) President/Secretary representing

registered Residents Welfare Association, (ii) Member of

registered Tax Payers Association / Rate Payers Association,

(iii) President/Secretary of slum level federation and (iv)

Members of a Non-government Organisation (NGO) or 14

Mahila Mandali/Chamber of Commerce/Youth Associations.

Raipur Smart City Limited and Bilaspur Smart City Limited

were incorporated on 16.09.2016 as Government Companies

under the Companies Act, 2013. The petitioner has himself

averred that on 17.08.2016, the Board of Directors of Bilaspur

Smart City Limited and Raipur Smart City Limited had been

constituted. Bilaspur Smart City Limited and Raipur Smart City

Limited have continued to undertake projects. However, till the

expiry of the original period after the Financial Year 2019-2020,

no issue was raised that the SPV usurped the powers and

responsibilities and had encroached the domain of the ULBs.

As late as in the year 2020, this Public Interest Litigation came

to be filed and by order dated 14.09.2021, this Court rejected

the prayer for stay of the ongoing projects. At the same time,

this Court observed in the order dated 14.09.2021 that in case

the respondent Nos. 2 and 3 formulate future projects, it should

be brought to the notice of this Court before its implementation.

It is in view of the above observation of this Court in the order

dated 14.09.2021, the present IAs No. 4/2021, 5/2021, 6/2021,

8/2022 and 10/2022 had been filed.

A perusal of the aforesaid IAs would go to show that projects

were at various stages. In respect of some of the projects, they

are yet to be sanctioned.

In IA No. 13/2022, vide Annexure R-2/E, the respondent No. 2

has given a list of 14 projects in which work orders can be

issued immediately. Similarly, in IA No. 14/2022, vide Annexure

R-3/F, the respondent No. 3 has given a list of 42 projects in

which work orders can be issued. The value of 14 projects as

listed in Annexure R-2/E of IA No. 13/2022 is Rs. 46.89 Crores

and the value of 42 projects as listed in Annexure R-3/F of IA

No. 14/2022, is Rs. 25.12 Crores. 2023:CGHC:13581-DB

Neutral Citation

38

Mr. Bajaj has submitted that efforts are being made to issue

before 31.03.2022 as many work orders as possible, subject to

permission granted by this Court, so that funds do not lapse.

Where the projects are ready for implementation by way of

issuing work orders, and as almost six years have gone by

since the incorporation of Bilaspur Smart City Limited and

Raipur Smart City Limited and when the Smart Cities Mission

itself is coming to an end in about a year and three months as it

stands today, taking note of the belated approach to this Court,

we are of the opinion that refusing to grant permission for

implementation of the projects would not be in public interest,

notwithstanding the contention raised by Mr. Shrivastava that

the SPVs have encroached into the territory of the ULBs, which

contention will have to to be considered in a full-scale hearing.

Accordingly, IAs No. 4/2021, 5/2021, 6/2021, 8/2022, 10/2022,

13/2022 and 14/2022 are disposed of providing that the

respondents No. 2 and 3 may go ahead with regard to the

projects mentioned in the two annexures i.e. Annexure R-2/E of

IA No. 13/2022 and Annexure R-3/F of IA No. 14/2022.

28.So far as the question with regard to maintainability is concerned, in

view of the fact that the writ petition was filed 11.12.2020 and since then

this case has been pending and various interim orders have been

passed, this Court does not consider it proper to adjudicate the matter

on this point and proceeds to decide the case on merits.

29.The contesting respondents have also raised the ground of delay in

filing the petition as the Smart City Mission was launched by the

Government of India in 2015 and the Joint Secretary, Urban

Development Department, Government of Chhattisgarh issued an order

on 17.08.2016 constituting Board of Directors for RSCL and BSCL, and

this petition came to be filed in the year 2020 for which there is no

explanation.

30.Mr. Shrivastava, learned counsel for the petitioner, in response to the

averments made by the RSCL and BSCL, would submit that the PIL

jurisdiction has much evolved and the Constitutional Courts even

register letters as PIL and even suo moto cases on the basis of

newspaper publications. On the question of delay, it is submitted that

this PIL raises an important constitutional question and delay could not 2023:CGHC:13581-DB

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39

be taken as ground to oppose the PIL. The Smart City Project was

initially for a period of fiveyears. The first four projects in BSCL were

commenced in 2019 and the public at large came to know about the

general functioning of the SPVs only after that and in the year 2020,

bulk of projects started coming in and that became the reason to file the

instant PIL in December, 2020. The Government of India has extended

the project period from 2016-2021 to 2016-2023 and further upto 2024.

So far as locus of the petitioner is concerned, when the cause or issue

relates to matters of good governance in the Constitutional sense, and

there are no particular individuals or class of persons who can be said

to be injured persons, groups of persons who may be drawn from

different walks of life. In support of this contention, he would rely on

Bangalore Medical Trust v. B.S. Muddappa & Others, reported in

(1991) 4 SCC 54.

31.Mr. Shrivastava would also contend that the ‘advisory role’ is not within

the meaning of control as per clause 10.2 of the Smart City Mission. He

would rely on Section 2(27) of the Act of 2013 which defines the term

‘control’ as―control shall include the right to appoint majority of the

directors or to control the management or policy decisions exercisable

by a person or persons acting individually or in concert, directly or

indirectly, including by virtue of their shareholding or management rights

or shareholders agreements or voting agreements or in any other

manner. Clause 3.3.a of Annexure 5 of the Mission Document says that

overseeing and managing the general conduct of the day-to-day

operations of the SPV subject to the supervision and control of the

Board. Hence, the advice is not binding and the power of decision

making rests with the Board of Directors of the SPVs and advisory role

is not control. Even there is no representation of the elected members of

Municipal Corporation in the Board of Directors. With regard to the 2023:CGHC:13581-DB

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40

contention of the respondents that the Commissioner, Municipal

Corporation, is also one of the member of the Board of Directors, he

would submit that the Board of Directors of the SPV act independently

and not under the directions of the Corporation’s Samanya Sabha or the

Mayor-in-Council. Further, the definition of the term ‘Commissioner’ as

per the Act of 1956, is the Municipal Commissioner for the city

appointed under Section 54 and includes an acting Commissioner

appointed under sub-section (2) of Section 57 and any municipal officer

empowered under this Act to exercise, perform or discharge any of the

powers, duties or functions of the Commissioner to the extent to which

such officer is so empowered; and the functions of municipal authorities

have been defined in Section 69 and 70 of the Act of 1956.

32.Mr. Shrivastava would also submit that so-called delegation of the

functions are void ab initio as it is settled position of law that essential

functions conferred under the Constitution cannot be delegated and

unless the statute provides for delegation of power, the same cannot be

delegated. He would rely on para 6, 7 and 8 of the judgment of the

Supreme Court in Sidhartha Sarawgi v. Board of Trustees For Port

of Kolkata & Others, reported in (2014) 16 SCC 248. Mr. Shrivastava

would further submit that continuation of the SPVs are in violation of the

basic structure of the Constitution, and in this regard, he would rely on

paragraph 316 of the decision of the Hon’ble Supreme Court in

Kesavananda Bharati & Ors vs State of Kerala case, reported in

(1973) 4 SCC 225. In view of the same, he would submit that

continuation of the BSCL and RSCL in the present form could not be

allowed as it is against the three-tier parliamentary governance model

which is the basic structure of the Constitution of India. If these SPVs

are to be allowed, the only way is that they should work as subordinate

to the Municipal Corporation and all the projects should be initiated, 2023:CGHC:13581-DB

Neutral Citation

41

implemented only after the approval/permission from the elected bodies

of the Municipal Corporation and also should be under the scrutiny of

the elected bodies.

33.In the State of Chhattisgarh, three smart cities i.e. Bilaspur, Raipur and

Naya Raipur have come into existence. Naya Raipur does not have any

Municipal Corporation, hence there is no challenge with regard to it.

34.The entire controversy in this petition revolves around the alleged

usurpation of the powers of the Municipal Corporation, Bilaspur and

Raipur by the respective SPVs i.e. BSCL and RSCL. From persual of

the Smart City Mission Statement and Guidelines (Annexure P/1) it is

apparent that it is a Scheme launched by the Government of India for

meeting the challenges of urbanization and developmental activities to

be carried in selected cities of the country. The Central Government,

State Government and the Urban Local Bodies would contribute for

carrying out the activities by the SPVs, in the instant case, the RSCL

and BSCL. Though, as per the pleadings and submissions made by the

learned counsel for the petitioner, it appears that there is no

representation of the elected members in the Board of Directors of

RSCL and BSCL, however, it cannot be said that the powers of the

Municipal Corporation has been usurped by the said SPVs as the other

normal routine works are still being performed by the authorities of the

Municipal Corporation, Raipur and Bilaspur, under the command and

control of the elected representatives i.e. the Mayor, Samany Sabha etc.

35.The Scheme clearly mandates that if any city wants to participate in the

Scheme and avail the funds from the Union of India, then the condition

precedent would be that the Urban Local Body will have to delegate its

powers and functions in favour of the SPV as per Clause 4 of Annexure

5 of the Mission Statement and Guidelines. Both the SPVs were 2023:CGHC:13581-DB

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42

delegated the powers by the respective Municipal Corporations with an

open eye and it cannot say that the powers have been usurped by the

SPVs.

36.Everything comes with a price tag. The State Government/Urban Local

Bodies were mindful of the fact that it will have to hand over / delegate

the functions and powers under the Scheme to avail the benefit of huge

amount of fund for the developmental activities. Ultimately, it is the

general public of Municipal Corporation, Bilaspur and Raipur who are

the beneficiaries of the developmental activities carried on by the SPVs.

37.The only grievance which appears to be hammered before this Court is

that the elected members/body of the Municipal Corporation does not

have effective participation or role in implementation of the

developmental activities carried on by the SVPs as there is no elected

member in the Board of Directors of RSCL and BSCL, as aforestated.

Surprisingly, no elected member of the local body i.e. Municipal

Corporation, Bilaspur or Raipur, has challenged either the scheme or

the constitution of the Board of Directors and the challenge to the

alleged usurpation of powers and authorities of the Municipal

Corporation has been made by an individual i.e. the petitioner. However,

after filing of the petition, the respondents i.e. the respondents No. 4, 5,

6 and 7 are supporting the cause of the petitioner. What restrained them

from challenging the so-called usurpation of powers till date, is beyond

comprehension. If the respondents No. 4, 5, 6 and 7 or any other

elected representatives were so conscious about alleged encroachment

made in their field by the SPVs, they ought to have opted for not

implementing the Scheme or could have challenged the same as and

when the Scheme was launched in the year 2015. The Scheme, which

was initially for a period of five years, was to end in the month of June, 2023:CGHC:13581-DB

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43

2020 which was further extended till June, 2023, the Scheme was

allowed to continue peacefully till December 2020 when this petition

was filed and now when the work of the Smart City Project is about to

reach its completion, such an objection is now being raised by the

petitioner and the elected members of the representatives of the

Municipal Corporations which appears to be collusive and with oblique

motive between them which will stall the projects which are for the

advancement and development of the two major cities of the State of

Chhattisgarh.

38.In view of the foregoing discussion, this Court is of the opinion that no

interference is called for by this Court in exercise of its extraordinary

powers under Article 226 of the Constitution of India, the present PIL

lacks merit and is accordingly dismissed.

Sd/- Sd/-

(Deepak Kumar Tiwari) (Ramesh Sinha)

Judge Chief Justice

Order date:- 12.05.2023

Amit 2023:CGHC:13581-DB

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