PETITIONER: TRUSTEES FOR THE IMPROVEMENT OF CALCUTTA Vs. RESPONDENT: CHANDRA SEKHAR MALLICK & ORS. DATE OF JUDGMENT06/05/1977 BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. BEG, M. HAMEEDULLAH (CJ) CHANDRACHUD, Y.V. KRISHNAIYER, V.R. UNTWALIA, N.L. FAZALALI, SYED MURTAZA KAILASAM, P.S. CITATION: 1977 AIR 2034 1978 SCR (1) 136 1977 SCC (3) 448 ACT: Calcutta Improvement Act, 1911-Sec. 78A to 78G-Whether unconstitutional-If suffers from the vice of excessive delegation-Rules 11 to 21, it ultra vires the Act. HEADNOTE: The respondents were the owners of buildings situated in a street known as Fire Lane in the city of Calcutta. The Board of Trustees for the Improvement of Calcutta in exercise of the power conferred under s. 39(c) passed the necessary resolution and proceeded to frame a street scheme for the area which included Fire Lane as also the buildings belonging to the respondents. The notice containing the requisite particulars was published by the Board. The respondents submitted their objections but the Board after hearing the respondents rejected the objections and applied to the State Government for sanction under s. 47. Ultimately, the State Government granted sanction under s. 48. The Board was of the opinion that as a result of the making of the street scheme, lands of the respondents which were comprised in the street scheme would increase in value. The scheme, therefore, contained a declaration that a betterment fee shall be payable by the respondents in respect of the increases in the value of their respective lands. The Board gave a notice of the proposed assessment of the betterment fee under s. 78B(1) and then proceeded under s. (2) of that section to assess the betterment fee payable by the respondent. The respondents dissented from the assessment made on them and the matter was thereupon referred for determination by arbitrators as contemplated under section 78(B)(4), and an award was made. The respondents filed writ petitions challenging the validity of the award made by the arbitrators. Section 39 provides that whenever the Board is of the opinion that for the purpose, inter alia, of creating new or improving existing means of communication and facilities for traffic, it is expedient to lay out new streets or to alter existing street, the Board may pass a resolution to that effect and then proceed to frame a street scheme for such area as it may think fit. Section 43 requires the Board to give a notice mentioning where the map of the area and a statement of the land which is proposed to be acquired may be inspected. The said notice is to be published for general public under s. 45. Individual notice is to be served on every person whose name appears in Municipal Assessment Book as being primarily liable to pay the owner's share of the consolidated rate. Under s. 45(2), a person dissenting from the recovery of betterment fee has to state his reasons. Under s. 47 the Board after hearing all persons making dissent may either abandon the scheme or accept it with such modifications and thereafter submit it to the State Government containing reasons given for the dissent. The Board is required to publish notice of the fact that a particular scheme has been submitted to the Government for its sanction. The State Government may then refuse to sanction the scheme or sanction it with or without any modifications. The principal ground on which the validity of the Award of the Arbitrators was impugned in the writ petitioners was that section 78A to section 78G of the Act were ultra vires and void and that Rules 11 to 21 of the Rules were also invalid. The High Court upheld the challenge and struck down section 78B to s. 786 and Rules 11 to 21, as invalid. Allowing the appeal, HELD (1) The view taken by the High Court on the validity of section 78A to 78G is clearly erroneous. The High Court thought that the sections suffer from the vice of excessive delegation of legislative power because for determining what land should bear the burden of betterment fee, arbitrary and ,uncontrolled power has been given to the Trust and its Engineers either 137 include or not to include within the scheme lands which are required for the execution thereof. The reasoning of the High Court is clearly based on an erroneous premise. Section 39 lays down the factors which would guide the Board in deciding which area should be included in the scheme. It is only when the Board finds that for carrying out any of the four purposes set out in section 39, it is expedient to lay out new street or to alter existing street that the Board can proceed to frame a Scheme. Again the decision of the Board is not final. It is subject to the sanction of the State Government. Even after the scheme is sanctioned by the State Government it is open to the owner of the land to show that in fact the land would not increase in value by reason of the making of the scheme. The Board has to decide objectively whether there is any increase in the value of the land at all and if there is, assess the betterment fee on that basis. If the assessee does not agree with the betterment fees assessed, he is entitled to dissent and to have a hearing. Even thereafter if the owner is not satisfied by the decision of the Board he can have this question determined by a body of two independent arbitrators who would objectively decide the question. Therefore, there is no voice of excessive delegation. [142 C-H, 143 A-D] (2)Rule 11 provides the machinery for appointment of arbitrators in a case where the objectors fail to elect an arbitrator. Rules 12 to 21 lay down the procedure regulating the proceedings of arbitrator. These Rules are clearly covered by clause 3(a) of s. 137. The High Court completely erred in observing that the Rules are ultra vires the Act. [141 C, 142 B] JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appear Nos. 579-580 of
1976.
(From the judgment and order dated 1-12-1972 of the Calcutta
High Court in Civil Rule Nos. 41 1 0 and 4111 /64)
P.K. Chatterjee, G. S. Chatterjee and D. P. Mukherjee, for
the appellant.
P.K. Mukherjee, for respondents in CA No. 579/76 and RR 1
(a) to 1 (1), 3 and 4 in CA No. 580/76.
The Judgment of the Court was delivered by
BHAGWANTI, J., These appeals by certificate are directed
against a judgment of a Division Bench of the Calcutta High
Court striking down section 78-B to section 78-G of the
Calcutta Improvement Act, 1911 as invalid on the ground of
excessive delegation of legislative power as also
contravention of Article 14 of the Constitution and
declaring rules 11 to 21 of the Rules framed by the
Government under sub-section (3a) of section 137 as ultra
vires the provisions of the Act. The facts giving rise to
the appeals lie in a very narrow compass and may be briefly
stated as follows.
The respondents in Civil Appeal No,. 579 of 1976 are the
owners of a building bearing No. 35 situate at Lower
Circular Road, Calcutta while the respondents in Civil
Appeal No. 580 of 1976 are owners of a building bearing No.
1 /A situate in Mcleod Street, Calcutta. There was a street
knows as Fire Lane connecting the Lower Circular Road on the
cast to Mcleod Street on the West. In or about November
1954. the Board of Trustees for the Improvement of Calcutta
(hereinafter referred to as the Board) acting in exercise of
the power conferred under section 39, clause (c), passed the
necessary resolution and proceeded to frame a Street Scheme
for the area which included Fire Lane as also the buildings
belonging to ‘the respondents. The notice containing the
requisite particulars was published by the Board on 24th
November,
138
1954 as required by section 43. The respondents submitted
their objections against the Street Scheme on 7th December,
1954 but tile Board, after nearing the respondents, rejected
the objections and applied to the State Government for
sanction under section 47 and the Street Scheme was
ultimately sanctioned by the State Government under section
48 on 17th December, 1956. The board was of the opinion
that as a result of the making of the Street Scheme, lands
of the respondents which were comprised in the Street Scheme
would increase in value, and the Street Scheme, therefore,
contained a declaration that a betterment fee shall be
payable by the respondents in respect of the increase in the
value of their respective lands resulting from the execution
of the Street Scheme. The Board gave notice of the proposed
assessment of the betterment fee to the respondents under
sub-section (1) of section 7 8-B and then proceeded under
subsection (2) of that section to assess the betterment fee
payable by the respondents. The betterment fee was assessed
at Rs. 2,15,441/- in the case of the Lower Circular Road
property and at Rs. 4,241/- in the case of Mcleod Street
property and notice of this assessment was given to the
respondents. The respondents in each case dissented from
the assessment made on them and the matter was thereupon
referred for determination by arbitrators as contemplated
under sub-section (4) of section 78-B. The arbitrators were
appointed according to the procedure set out in section 78C
and after hearing the parties, the arbitrators made their
award on 23rd September, 1964 determining the betterment fee
payable in the case of Lower Circular Road property at Rs.
1,25,000/- and in the case of Mcleod Street property at Rs.
4,241/-. The respondents thereupon filed a writ petition in
each case challenging the validity of the award made by the
arbitrators.
The principal ground on which the validity of the award of
the arbitrators was impugned in the writ petitions was that
section 78A to section 78G of the Act were ultra vires and
void and rules 1 1 to 21 of the Rules were also invalid.
There were also certain other subsidiary grounds taken in
the writ petitions but they have not formed the subject-
matter of debate before us and hence we need not refer to
them. Though the writ petitions were filed as far back as
1964 immediately after making of the Award by the
Arbitrators, they unfortunately could not reach hearing
before the High Court until July 1971 and then also, the
hearing took considerable time and it concluded only on 17th
August,, 1971.. It appears that during the bearing of the
writ petitions, it was brought to the notice of the High
Court that the question as to the constitutional validity of
section 78A of the Act was also raised in another case,
namely, Civil Rules No. 2156 of 1969 and that case bad
already been heard by another Division Bench of the High
Court and was pending for judgment. The High Court,
therefore, decided to bold back the preparation of the judg-
ment in the writ petitions and to await the judgment of the
other Division Bench in Civil Rule No. 2156 of 1969. We. do
not know when the judgment was delivered in Civil Rule No.
2156 of 1969 but it appears that the Division Bench which
beard that case did not pronounce upon the constitutional
validity of section 78A and disposed of that case on other
grounds. The result was that the High Court
139
had to decide the question of constitutional validity of
section 78A to section 78G in the present writ petitions and
it proceeded to deliver its judgment in 1st December, 1972
striking down section 78-B to section 78G and rules 11 to 21
as invalid. We are constrained to observe that the judgment
to the High Court visibly bears marks of superficiality and
lack of proper consideration which are inevitable When a
judgment is delivered. fifteen months after the conclusion
of the arguments. The correctness of this judgment is
impugned in the present appeals preferred by the trustees
for the Improvement of Calcutta after obtaining certificate
from the High Court.
We have gone through the judgment of the High Court with the
due care and attention which every judgment of a High Court
demands of us but despite our utmost anxiety and effort we
have not been able to appreciate the reasoning which led the
High Court to strike down section 78-B to section 786 and
rules 1 1 to 21 as invalid. Section 78A to section 78G were
not in the Act as originally enacted but they were
introduced in the Act by the Calcutta Improvement (Amend-
ment) Act, 1931. These sections contain a fasciculus of
provisions relating to betterment fee, where, by the making
of any improvement scheme, any land in the area comprised in
the scheme which is not required for the execution thereof,
is increased in value. Chapter In of the Act deals with
improvement schemes and section 35-D provides that an
improvement scheme may be of one of four types, namely, a
general improvement scheme, a street scheme, a housing
accommodation scheme and a re-housing scheme. We are
concerned in these appeals with a Street Scheme and hence we
shall refer only to those provisions which relate to a
street scheme. Section 39 provides that whenever the Board
is of opinion that for the purpose inter alia of creating
new or unproving existing, means of communication and
facilities for traffic, it is expedient to lay out new
streets or to alter, existing streets, the Board may pass a
resolution to that effect and shall then proceed to frame a
street scheme for such area as may think fit. When any
street scheme has been framed, section 43, subsection (1)
requires that the Board shall prepare a notice stating the
fact that the scheme has been framed, the boundaries of the
area comprised in the scheme and the place at which the
particulars of the scheme, a map of the area comprised in
the scheme and a statement of the land which is proposed to
be acquired and the land in regard to which it is proposed
to recover a betterment fee may be seen at reasonable hours.
Sub-section (2) of section 43 provide-, for publication of
this notice with a statement of the period within which
objections may be received. The Board is also required by
section 45, subsection (1) to serve a notice on every person
whose name appears in the Municipal assessment book as being
primarily liable to pay the owners share of the consolidated
rate or the rate on the annual value of holdings, in respect
of any land in regard to which the Board pro poses to
recover a betterment fee. Sub-section (2) of section 45
provides that such notice shall require such person if he
dissents from the recovery of betterment fee, to state his
reasons in writing within a period of sixty days. Section
47, sub-section (1) then provides that the Bonrd shall
consider any statement of dissent received under sec-
10-722SCI/77
140
tion 45, sub-section (2) and after hearing all persons
making suc-dissent who may desire to be heard, the Board may
either abandon the scheme or apply to the State Government
for sanction to the scheme with such modification, if any,
as the Board may consider necessary. When the Board applies
for sanction of the scheme to the State Government, the
Board is required under sub-section (2) of section 47 to
send inter alia a list of the names of all persons who have
dissented under section 45 from the proposed recovery of the
betterment fee and a statement of the reasons given for such
dissent. Sub-section (3) of section 47 provides that when
any application has been submitted to the State Government
for sanction, the Board shall cause notice of the fact to be
published for two consecutive weeks in the official Gazette
and in the local newspapers. The State Government may then
under section 48 either sanction the scheme with or without
modification or refuse to sanction the same.
It will be seen from these provisions that a detailed and
elaborate machinery is provided by the Legislature for the
purpose of framing a street scheme. When a street scheme is
framed, the area comprised in the street scheme would
include lands of two categories, one category, being of
landswhich. are necessary to be acquired for the
purpose of execution of the street scheme and the
other being category of landswhich are not required for the
execution of the street scheme but which would increase in
value as a result of the making of the street scheme. Since
the latter category of land would increase in value and the
owners of such lands would be benefited by the making of the
street scheme, section 78A empowers the Board, in framing
the street scheme, to declare that a betterment fee shall be
payable by the owners of such lands “in respect of the
increase in the value of the land resulting from the
execution of the schemes”. What shall be the quantum of the
betterment fee is laid down in sub-section (2) of section
78A which says that it shall be “an amount equal to one-half
of the increase in the value of the land resulting from the
execution of the scheme’ to be calculated in the manner
there provided. Section 78-B provides for assessment of
betterment fee by the Board after giving an opportunity to
the person concerned to be beard and if such person
dissent,; from the assessment made by the Board, the matter
is required to be determined by the arbitrators in the
manner provided by section 78C. That section lays down in
meticulous detail the machinery for selection and
appointment of arbitrators and the making of an award by
them determining the amount of betterment fee. The fees to
be paid to the arbitrators arc provided in section 78-D and
section 78E declares that the proceedings of the arbitrators
shall be governed by rules to be made in this behalf under
section 137, provided that every party to such proceedings
shall be entitled to appear before the arbitrators either in
person or by his authorised agent. Section 78F provider,
for giving of notice by the Board to persons liable to pay
the betterment fee determined by the Board or the
arbitrators, as the case may be, and section 78G Takes
provision in regard to payment of betterment fee. The ques-
tion is whether sections 78A to 78G are ultra vires and void
as suffering from the vice of excessive delegation of.
legislative power, or contravention of Article 14 of the
Constitution.
141
We will first examine the validity of rules 11 to 21. These
rules form part of the Rules made by the State Government
claiming to act in exercise of the power conferred under
clause (3a) of section 137. This clause was added in
section 137 by the Amending Act of 1931 at the same time
when section 78A to section 78G were enacted and it
empowered the State Government to make rules inter alia for
determining the qualifications and disqualifications of, the
conditions and mode of election, selection or appointment
of, an arbitrator and for regulating the proceedings of
arbitrators under section 78C. This power was conferred on
the State Government in addition to that given to it under
section 86. Now, Rule 1 contains definitions, while 2 to 11
provide for the qualifications and disqualifications of an($
the conditions and mode of election, selection and
appointment, of arbitrators. It is indeed difficult to see
how Rule 11 could be struck down by the High Court as
invalid. It provides the machinary for appointment of
arbitrators in a case where the objectors fail to elect an
arbitrator. That would fall fairly and squarely within
the terms of clause (3a)of section 137. Rules 12 to 21 lay
down the procedure regulating the proceedings of arbitrators
and they are clearly covered by the latter part of clause
(3a) of section 137, which speaks of Rules “far regulating
the proceedings of arbitrators under section 78C”. With the
great respect to the learned judges of the High Court, we
think impossible to contend that Rules 11 to 21 are outside
the rule making power of the State Government under clause
(3a) of section 137. The High Court to have relied on a
passage from the Calcutta Improvement Trust Manual published
under the authority of the State Government which states
that “the rules were framed by the Government under section
137 of the Calcutta Improvement Act, 1911 regarding the
nominations of arbitrators for settlement of betterment fee
in the Local Self Government Department Notification-dated
5th May, 1934. That indicates that the rules for regulating
the proceeding of an arbitrator under section 78C are not
within the purview of these rules, Yet Rules 11 to 23 in
the Rules framed under section 137 cover a field which is
much beyond the subject of nomination of arbitrators for
settlement of betterment fee” and on the basis of this
statement, held that “Rules 11 to 21 are outside the region
of the purpose for which the State Government has exercised
its power under section 137”. This is indeed strange logic
for striking down Rules 11 to 21 as ultra vires clause (3a)
of section 137. The validity of these rules has to be
judged by reference to the question as to whether they fall
within, the scope of the rule making power conferred under
clause (3a) of section 137 and not on the basis of some
opinion expressed by the author of the Calcutta Improvement
Trust Manual. When it is clear beyond doubt that clause
(3a) of section 137 empowers the State Government to make
rules for regulating the proceedings of arbitrators under
section 78C and Rules 11 to 21 are plainly rules falling
within this category, we fail to see how they can possibly
be condemned as outside the rule making power conferred on
the State Government. The State Government has deliberately
and avowedly exercised its rule making power under clause
(3a) of section 137 and made Rules 11 to 21 for regulating
the proceedings of arbitrators. The High Court has
142
also made reference to Section 86 and struck down Rules 11
to 21 as invalid on the ground that they do not purport to
have been made under section 86 under which alone, according
to the High Court, rules could be made for carrying out the
purposes of section 78A to Section 78G. But the reference,
to section 86 seems to be clearly misconceived, since that
section confers power on the State Government to make rules
for carrying out “the purposes of this Chapter” and section
86 being in Chapter V, the words “this Chapter” can have
reference only to Chapter V and not to Chapter IV which
contains sections 78A to 78G. Obviously, therefore, no
rules could be made under section 86 for carrying out the
purposes of section 78A to section 78G. The High Court was,
in the circumstances, clearly in error in taking the view
that Rules 1 1 to 21 were ultra vires the Act. This was a
wholly indefensible view and even the learned counsel
appearing on behalf of the respondents found it difficult to
support it.
That takes us to the question of the constitutional validity
of section 78A to section 78G. The view taken by the High
Court on this point also is difficult to understand. The
High Court appears to have though that these sections suffer
from the voice of excessive delegation of legislative power
because “for determining what land shall bear the burden of
that fee?’ (that is betterment fee) “arbitrary and
uncontrolled power has been given to the Trust or its
engineers either to include or not to include within the
scheme lands which are not required for the execution
thereof” and “it leaves to the Trust and/ or its employees
to determine arbitrarily what shall be the extent of the
area comprised in the’: Scheme by enabling them to include
in the scheme lands which are not required for execution of
the scheme.” This reasoning is clearly based on an erroneous
premise. It is not correct to say that it is left to the
unfettered and unregulated discretion of the Board and/or
its employees to decide what lands to include in the scheme,
apart from those required for the execution of the scheme.
Section 39, to which we have already referred, lays down the
factors which would guide the Board in deciding what area
should be included in the scheme. It is only when the Board
finds that for carrying out any of the four purposes set out
in section 39, it is expedient to lay out new street or to
alter existing street, that the Board can proceed to frame a
scheme for such area as it thinks fit and the selection of
the area by the Board would, therefore, be guided by the
purpose for which the scheme is to be framed. Then again,
the decision of the Board in regard to the lands to be
included in the scheme is not final. Where, by reason of
the making of the scheme, the value of any land included in
the scheme has, in the opinion of the Board, increased in
value and a betterment fee is, therefore, payable by the
owner of the land, an opportunity is given to ‘him to
dissent from the recovery of such betterment fee and to
state his reasons why be so dissents and the Board is then
required to give him a hearing and ultimately, if proper
case is made out, the Board may modify the scheme by
excluding such land and even if the Board is not inclined to
make any such modification, the State Government, while
giving its sanction, may still take into account the dissent
made by the owner of the land and consider the reasons given
by him, and if satisfied, exclude such land from the scheme
at the time of giving sanction. It will,
143
therefore, be seen that not only is guidance given to the
Board in selecting the lands to be included in the scheme,
but there are also safeguards provided with a view to
ensuring that lands are not arbitrarily or capriciously
included in the scheme. Even after the scheme is sanctioned
by the State Government, it is, open to the owner of the
land to show that in fact the land would not increase in
value by reason of the making of the scheme. The betterment
fee being co-related to the increase in the value of the
land, the, Board assessing the amount of betterment fee
under section 78-B would have to determine objectively
whether there is any increase in the value of the land and
if so, assess the amount of betterment fee on that basis.
If the owner of the land dissents from the assessment made
by the Board, he can have the matter referred to arbitrators
and the arbitrators would then determine the amount of
betterment fee and while doing so, they would naturally have
to find out whether there is any increase in the value of
the land at all and if there is, then what is the quantum of
such increase. The owner of the land is given an
opportunity under the scheme of section 78A to section
78G to have this question determined by a body of two
independent arbitrators who would objectively determine
whether there is any increase in the value of the land on
account of the making of the scheme. These being the
relevant provisions, it is difficult to see how section 78-B
to section 78-G could be regarded as suffering from the vice
of excessive delegation of legislative power. The attack
against the validity of these sections on the basis of
infraction of Article 14 of the Constitution must also fail
since the challenge under Article 14 is only another facet
of the challenge on the ground of excessive delegation of
legislative power. We are, therefore, of the view that
section 78-B to section 78G are valid and the High Court was
wrong in striking them down as ultra vires and void.
We cannot part with this case without making one final
observation. The unarguably small dimension of the
constitutional question raised here is apparent from what we
have said. This Court has dual responsibility to the
country. It has to decide the cases brought before it
justly and satisfactorily and at the same time, liquidate
arrears of pending cases. Both bear upon the credibility of
the judicial system. But because of article 144A brought in
by the Forty Second Amendment Act, seven judges of this
Court have to sit and hear every case where the
constitutionality of an Act, rule, bye-law or even a small
notification is challenged. Processual pragmatism in the
light of actual experience of the working of this Court,
will easily convince any one that, in the context of the
current docket explosion and long pendency of cases, the
insistence on this inconvenient plurality which requires
more than half the full strength of the Court to sit to hear
such cases,, is a decisive step in the negative direction.
Many questions of constitutional importance have already
been covered by the rulings of this Court so that he who
runs and reads may resolve them. To require seven judges to
perform such jobs is surely supererogatory. The present
appeal itself is a striking illustration. Where really
important issues arise for consideration, any bench of this
Court would certainly refer, where necessary, such matters
for consideration or reconsideration by a large bench-less
or more than seven, according to the requirement
144
of the situation. To prescribe arithmetically is to petrify
unimaginatively. We do not say anything about the validity
of Article 144A one way or the other but merely highlight
the paralysing impact on the highest court and the long-term
cause of justice, flowing from the numerical rigidity newly
inserted by the Forty Second Constitution Amendment Act. We
hope and trust that this matter will receive urgent
attention of Parliament.
We accordingly allow the appeals and dismiss the writ
petitions of the respondents. The respondents will pay the
costs of the appellant throughout.
P.H.P. Appeals allowed.
145
