Monthly Archives: May 2013

SCI Interim Order 22/08/2003 in support of BDA declining to open BDA Khatas:-B.D.A vs Air Craft Employees Coop.Society

SCI Interim Order in support of BDA declining to open BDA Khatas:
Date : 22/08/2003:  CORAM : HON'BLE MR. JUSTICE R.C. LAHOTI & MR. 
JUSTICE ASHOK BHAN  
 Bangalore Development Authority vs Air Craft Employees Coop.Society 
C.A.No. 7503-7537 OF 2002
ITEM No.5                    Court No. 3                  SECTION IVA
                                                          A/N MATTER 

                S U P R E M E   C O U R T   O F   I N D I A
                          RECORD OF PROCEEDINGS

  I.A.No.1-35 in Civil Appeal No.7503-7537/2002

  BANGALORE DEVELOPMENT AUTHORITY                           Appellant (s)

                              VERSUS

  AIR CRAFT EMPLOYEES COOP.SOCIETY LTD&ORS                  Respondent (s)
  (For stay/directions)

  With I.A.No.4 in C.A.No.971/2003
  (For stay/directions)

  Date : 22/08/2003 This  Petition  was  called on for hearing today.

  CORAM :
           HON'BLE MR. JUSTICE R.C. LAHOTI                   
           HON'BLE MR. JUSTICE ASHOK BHAN                    

  For Appellant (s)	Mr. Altaf Ahmed, A.S.G.
			Mr. S.K. Kulkarni, Adv.
			Mr. Gireesh Kumar, Adv.
			Mr. Ankur S. Kulkarni, Adv.
			Mr. Vijay Kumar, Adv.                    

  For Respondent (s)
  in CAs.7503-37/02:	Mr. Shanti Bhushan, Sr.Adv.
			Mr. V.R. Reddy, Sr.Adv.
			Mr. Shashi Kiran Shetty, Adv.
			Mr. M. Sreenivasa, Adv.
                        Mr. E.C. Vidya Sagar,Adv.
			Mr. B.K. Choudhary, Adv.

  in CA 971/03:		Mr. Shanti Bhushan, Sr.Adv.
			Mr. E.C. Vidya Sagar, Adv.
			Mr. V. Anand, Adv.
			Mr. B.K. Choudhary, Av.

			Ms. Vanita Bhargava, Adv.
			Mrs. Sreedevi Raja, Adv.       
	                Ms. Bina Gupta,Adv.

			Mr. R.S. Hegde, Adv.
			Mr. Chandra Prakash, Adv.                       
			Mr. P.P. Singh,Adv.

  For Respondent (s)	Mr. A.P. Jain, Adv.
			Ms. E.R. Sumathry, Adv.
			Mr. K.R. Nagaraja,Adv.

                        Mr. N. Ganpathy,Adv.

								 ...2/-

-2-

           UPON hearing counsel the Court made the following
                               O R D E R 

I.A.Nos.1-35 in C.A.Nos.7503-7537/02:
	The issuance of khata certificate to the members of the respondent Society is
 held up by the appellant-Authority because of a demand of Rs.3,08,10,000/- outstanding
 against the society in terms of the agreement dated 28th February, 2001 entered into 
between the society and the Authority.  These applications filed by the respondents 
seek direction to the appellant-Authority not to withhold issuance of khata certificate
 for the said demand.
	Having perused the record and having heard the learned counsel for the parties,
 we are satisfied that this demand was not the subject matter of the writ petition in
 the High Court nor is the subject matter of these appeals.  An interim relief beyond the
 scope  of the main lis cannot be allowed.
	The applications are, therefore, dismissed.
I.A.No.4 in C.A.No.971/2003:
	Auctioning of the sites bearing Nos.110 and 110/A of Koramangala IV 'B' Block,
 Bangalore has been held by the appellant-Authority on 18.8.2003.  The learned 
Additional Solicitor General, appearing for the appellant-Authority, states that the
 auction shall not be given effect to unless permitted by the Court.  That statement
 is taken on record.
	Let reply to the application be filed within two weeks.  Rejoinder, if any, 
be filed in two weeks thereafter.

	(N. Annapurna)		               (Radha R. Bhatia)
	 Court Master		                 Court Master
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Bangalore Development Authority vs Air Craft Employees Coop.Society Dtd.24 January, 2012

Supreme Court of India:  G. S. Singhvi, J.and Hon’ble Mr. Justice Asok Kumar Ganguly.        Judgment on 24 January, 2012:- Bangalore Development Authority vs Air Craft Employees Coop.Society … [in r/o Thirty to Thirty Five HBCS ]

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 7503-7537 OF 2002

Bangalore Development Authority                              … Appellant

versus

The Air Craft Employees Cooperative
Society Ltd. and others                                    …Respondents

J U D G M E N T

G. S. Singhvi, J.

1.       These appeals       are directed against the order of          the

Division Bench of the Karnataka High Court whereby the writ

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

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

`the 1976 Act’) was declared as violative of Article 14 of the

Constitution,    void        and   inoperative   and   the     conditions

incorporated in the orders passed by the Bangalore Development

Authority (BDA) sanctioning residential layout plans or work

orders   in   terms     of    which   respondents   were     required    to

pay/deposit various charges/sums specified therein were quashed

and a direction was issued for refund of the amount.
2

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

considered necessary to have a uniform law for planned growth

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

town     planning         schemes.        Therefore,      the    State    Legislature

enacted the Mysore Town and Country Planning Act, 1961 (for

short, `the Town Planning Act’).                      The objectives of that Act

were      :

(i) to create conditions favourable for planning and replanning

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

view    to     providing      full    civic     and    social    amenities      for    the

people in the State;

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

speculation and profiteering in land;

(iii)     to preserve and improve existing recreational facilities

and other amenities contributing towards balanced use of land;

and

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

State,        with    a    view      to   ensuring      desirable       standards      of

environmental health and hygiene, and creating facilities for

the orderly growth of industry and commerce, thereby promoting

general standards of living in the State.

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

Thereupon, necessary consequential changes were made in the

nomenclature of various enactments including the Town Planning
3

Act.

4.        Section      4    of      the     Town       Planning             Act     envisages

constitution      of   a    State    Town       Planning      Board          by    the   State

Government.       By Act No.14 of 1964, the Town Planning Act was

amended and Chapter I-A comprising of Sections 4-A to 4-H was

inserted.      These provisions enabled the State Government to

issue notification and declare any area in the State to be a

local planning area for the purposes of the Act and constitute

the “Planning Authority” having jurisdiction over that area.

Section    9(1)     (unamended)      imposed       a     duty      on       every   Planning

Authority    to     carry    out     a    survey       of    the    area          within   its

jurisdiction, prepare and publish an outline development plan

for such area and submit the same to the State Government for

provisional approval.            In terms of Section 12(1) (unamended),

an outline development plan was required to indicate the manner

in which the development and improvement of the entire planning

area was to be carried out and regulated.                       Section 19(1), as it

then    stood,      contemplated          preparation         of        a    comprehensive

development plan and submission of the same for the approval of

the State Government. Section 21 (unamended) gave an indication

of the factors which were to be included in the comprehensive

development plan.           Section 26 (unamended) imposed a duty on

every   Planning       Authority      to       prepare      town    planning         schemes

incorporating therein the contents specified in sub-section (1)

of that Section. For the sake of reference, these provisions
4

are extracted below :

“4-A. Declaration of Local Planning Areas, their
amalgamation, sub-division, inclusion of any area
in a Local Planning Area. –

(1) The State Government may, by notification,
declare any area in the State to be a Local
Planning Area for the purposes of this Act, this
Act shall apply to such area:

Provided that no military cantonment or
part of a military cantonment shall be included
in any such area.

4-C. Constitution of Planning Authority. – (1) As
soon as may be, after declaration of a local
planning   area,    the   State   Government   in
consultation with the Board, may, by notification
in the Official Gazette, constitute for the
purposes of the performance of the functions
assigned to it, an authority to be called the
“Planning Authority”  of that area, having
jurisdiction over that area.

9. Preparation of Outline Development Plan.-(1)
Every Planning Authority shall, as soon as may
be, carry out a survey of the area within its
jurisdiction and shall, not later than two years
from the date of commencement of this Act,
prepare and publish in the prescribed manner an
outline development plan for such area and submit
it to the State Government, through the Director,
for provisional approval:
Provided that on application made by a
Planning Authority, the State Government may from
time to time by order, extend the aforesaid
period by such periods as it thinks fit.

12. Contents of Outline Development Plan.-(1) An
outline development plan shall generally indicate
the   manner   in  which   the   development  and
improvement of the entire planning area within
the jurisdiction of the Planning Authority are to
be carried out and regulated. In particular it
shall include,-

(a) a general land-use plan and zoning of land-
use for residential, commercial, industrial,
agricultural, recreational, educational and other
public purposes;
5

(b) proposals for roads and highways;

(c) proposals for the reservation of land for the
purposes of the Union, any State, any local
authority or any other authority established by
law in India;

(d) proposals for declaring certain areas as
areas of special control, development in such
areas being subject to such regulations as may be
made in regard to building line, height of
buildings,   floor   area  ratio,   architectural
features and such other particulars as may be
prescribed;

(e) such other proposals for public or other
purposes as may from time to time be approved by
the Planning Authority or directed by the State
Government in this behalf.

19. Preparation of the Comprehensive Development
Plan.-(1) As soon as may be after the publication
of   the   Outline   Development  Plan   and   the
Regulations under sub-section (4) of section 13,
but not later than three years from such date,
every Planning Authority shall prepare in the
prescribed manner a comprehensive Development
Plan and submit it through the Director together
with   a   report   containing   the   information
prescribed, to the State Government for approval:
Provided that on application made by a
Planning Authority, the State Government may,
from time to time, by order in writing, extend
the aforesaid period by such periods as it thinks
fit.

21. Contents of the Comprehensive Development
Plan.-(1) The comprehensive Development Plan
shall consist of a series of maps and documents
indicating the manner in which the development
and improvement of the entire planning area
within the jurisdiction of the Planning Authority
are to be carried out and regulated. Such plan
shall   include  proposals   for  the   following
namely:-

(a) comprehensive zoning of land-use for the
planning area, together with zoning regulations;

(b) complete street pattern, indicating major and
minor roads, national and state high ways, and
6

traffic   circulation    pattern,      for     meeting
immediate and future requirements;

(c) areas reserved for agriculture, parks, play-
grounds and other recreational uses, public open
spaces, public buildings and institutions and
areas reserved for such other purposes as may be
expedient for new civic development;

(d) major road improvements;

(e) areas for new housing;

(f) new areas earmarked for future development
and expansion; and

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

(2) The report shall further contain a summary of
the findings in the surveys carried out under
sub-section (2) of section 19, and give relevant
information and data supporting proposals in the
plan and deal in detail with.-

(a) acquisition of land        for   the   purpose   of
implementing the plan,

(b) financial responsibility connected with the
proposed improvements, and

(c) the manner in which these responsibilities
are proposed to be met.

26. Making of town planning scheme and its
contents.–(1) Subject to the provisions of this
Act, a Planning Authority, for the purpose of
implementing the proposals in the Comprehensive
Development Plan published under sub-section (4)
of section 22, may make one or more town planning
schemes for the area within its jurisdiction or
any part thereof.

(2) Such town planning scheme may make provisions
for any of the following matters namely,–

(a) the laying out or re-laying out          of   land,
either vacant or already built upon;

(b) the filling up or reclamation of low-lying,
swamp or unhealthy areas or levelling up of land;
7

(c)   lay-out   of    new   streets   or   roads;
construction, diversion, extension, alteration,
improvement and stopping up of streets, roads and
communications;

(d) the construction, alteration and removal of
buildings, bridges and other structures;

(e) the allotment or reservation of land for
roads, open spaces, gardens, recreation grounds,
schools,  markets,  green   belts  and  dairies,
transport facilities and public purposes of all
kinds;

(f) drainage inclusive of sewerage, surface or
sub-soil drainage and sewage disposal;

(g) lighting;

(h) water supply;

(i) the preservation of objects of historical or
national interest or natural beauty and of
buildings actually used for religious purposes;

(j) the imposition of conditions and restrictions
in regard to the open space to be maintained
about buildings, the percentage of building area
for a plot, the number, size, height and
character of buildings allowed in specified
areas, the purposes to which buildings or
specified areas may or may not be appropriated,
the sub-division of plots, the discontinuance of
objectionable users of land in any area in
reasonable periods, parking space and loading and
unloading space for any building and the sizes of
projections and advertisement signs;

(k) the suspension, so far as may be necessary
for the proper carrying out of the scheme, of any
rule, bye-law, regulation, notification or order,
made or issued under any Act of the State
Legislature or any of the Acts which the State
Legislature is competent to amend;

(l) such other matter not inconsistent with the
objects of this Act as may be prescribed.”

5.   The 1976 Act was enacted by the State legislature in the
8

backdrop      of   the   decision      taken    at     the    conference        of    the

Ministers for Housing and Urban Development held at Delhi in

November 1971 that a common authority should be set up for the

development of Metropolitan Cities.                  Before the constitution of

the    BDA,   different     authorities        like    the     City     of    Bangalore

Municipal Corporation, the City Improvement Trust Board, the

Karnataka Industrial Area Development Board, the Housing Board

and    the    Bangalore    City    Planning         Authority      were      exercising

jurisdiction over the Bangalore Metropolitan Area. Some of the

functions of these authorities like development, planning etc.

were overlapping and creating avoidable confusion. Not only

this, the intervention of multiple authorities was impeding

coordinated        development    of    the    Metropolitan         Area.      It    was,

therefore, considered appropriate that a single authority like

the Delhi Development Authority should be set up for the city

of Bangalore and areas adjacent thereto which, in due course,

would become part of the city.                      It was also realised that

haphazard and irregular growth would continue unless checked by

the    development       authority     and     it    may     not   be    possible      to

rectify/correct mistakes in the future. For achieving these

objectives,        the   State    legislature         enacted      the       1976    Act.

Simultaneously, Section 81-B was inserted in the Town Planning

Act for deemed dissolution of the City Planning Authority in

relation to the area falling within the jurisdiction of the

BDA.     The preamble of the 1976 Act and the definitions of
9

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

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

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

thereof are reproduced below:

“An Act to provide for the establishment of a
Development Authority for the development of the
City of Bangalore and areas adjacent thereto and
for matters connected therewith

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

(a) “Authority” means the Bangalore Development
Authority constituted under section 3;

(b) “Amenity” includes road, street, lighting,
drainage,    public   works     and    such    other
conveniences    as   the    Government    may,    by
notification, specify to be an amenity for the
purposes of this Act;

(bb) “Civic amenity” means,-
(i) a market, a post office, a telephone
exchange, a bank, a fair price shop, a milk
booth, a school, a dispensary, a hospital, a
pathological laboratory, a maternity home, a
child care centre, a library, a gymnasium, a bus
stand or a bus depot;

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

(iii)   a centre for educational, social or
cultural activities established by the Central
Government or the State Government or by a body
established by the Central Government or the
State Government ;

(iv) a centre for educational, religious, social
or cultural activities or for philanthropic
service run by a cooperative society registered
under the Karnataka Co-operative Societies Act,
1959 (Karnataka Act 11 of 1959) or a society
registered   under    the   Karnataka   Societies
Registration Act, 1960 (Karnataka Act 17 of 1960)
or by a trust created wholly for charitable,
10

educational or religious purposes ;

(v) a police station, an area office or a service
station of the Corporation or the Bangalore Water
Supply and Sewerage Board or the Karnataka
Electricity Board ; and

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

(c) “Bangalore Metropolitan Area” means the area
comprising the City of Bangalore as defined in
the City of Bangalore Municipal Corporation Act,
1949 (Mysore Act 69 of 1949), the areas where the
City of Bangalore Improvement Act, 1945 (Mysore
Act 5 of 1945) was immediately before the
commencement of this Act in force and such other
areas adjacent to the
aforesaid as the Government may from time to time
by notification specify;

(j) “Development” with its grammatical variations
means the carrying out of building, engineering,
or other operations in or over or under land or
the making of any material change in any building
or land and includes redevelopment;

(k) “Engineering operations” means formation or
laying out of means of access to road;

(n)    “Local   Authority”   means  a   municipal
corporation or a municipal council constituted or
continued under any law for the time being in
force;

(o) “Means of access” includes any means of
access whether private or public, for vehicles or
for foot passengers, and includes a road;”

6. Sections 14, 15, 16, 28-A, 28-B, 28-C, 32(1) to (5A), 65, 65-
B 67(1)(a) and (b) of the 1976 Act are also extracted below:

“14. Objects of the Authority.- The objects of
the Authority shall be to promote and secure the
development of the Bangalore Metropolitan Area
and for that purpose the Authority shall have the
11

power to acquire, hold, manage and dispose of
moveable and immoveable property, whether within
or outside the area under its jurisdiction, to
carry   out   building,  engineering   and   other
operations and generally to do all things
necessary or expedient for the purposes of such
development and for purposes incidental thereto.

15. Power of Authority to undertake works and
incur expenditure for development, etc.- (1) The
Authority may,-
(a)   draw   up  detailed  schemes   (hereinafter
referred to as “development scheme”) for the
development of the Bangalore Metropolitan Area ;
and

(b) with the previous approval of the Government,
undertake from time to time any works for the
development of the Bangalore Metropolitan Area
and incur expenditure therefor and also for the
framing and execution of development schemes.

(2) The Authority may also from time to time make
and take up any new or additional development
schemes,-

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

(ii) on the recommendation of the local authority
if the local authority places at the disposal of
the Authority the necessary funds for framing and
carrying out any scheme; or

(iii) otherwise.

(3) Notwithstanding anything in this Act or in
any other law for the time being in force, the
Government may, whenever it deems necessary
require the Authority to take up any development
scheme or work and execute it subject to such
terms and conditions as may be specified by the
Government.

16.   Particulars to  be   provided  for in   a
development scheme.- Every development scheme
under section 15,- (1) shall, within the limits
of the area comprised in the scheme, provide
for ,-
12

(a) the acquisition of any land which, in the
opinion of the Authority, will be necessary for
or affected by the execution of the scheme ;

(b) laying and re-laying out all or any land
including the construction and reconstruction of
buildings and formation and alteration of streets
;

(c) drainage, water supply and electricity ;

(d) the reservation of not less than fifteen
percent of the total area of the layout for
public parks and playgrounds and an additional
area of not less than ten percent of the total
area of the layout for civic amenities.

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

(a) raising any land which the Authority may
consider expedient to raise to facilitate better
drainage;

(b)   forming   open   spaces for   the  better
ventilation of the area comprised in the scheme
or any adjoining area;

(c) the sanitary arrangements required ;

(3) may, within and without the limits aforesaid
provide for the construction of houses.

28-A. Duty to maintain streets etc.- It shall be
incumbent on the Authority to make reasonable and
adequate provision by any means or measures which
it is lawfully competent to use or take, for the
following matters, namely,-

(a) the maintenance, keeping in repair, lighting
and cleansing of the streets formed by the
Authority till such streets are vested in the
Corporation; and

(b) the drainage, sanitary arrangement and water
supply in respect of the streets formed by the
Authority.

28-B. Levy of tax on lands and buildings.- (1)
Notwithstanding anything contained in this Act,
13

the Authority may levy a tax on lands            or
buildings or on both, situated within           its
jurisdiction (hereinafter referred to as        the
property tax) at the same rates at which such   tax
is   levied   by  the   Corporation  within     its
jurisdiction.

(2) The Provisions of the Karnataka Municipal
Corporations Act, 1976 (Karnataka Act 14 of 1977)
shall mutatis mutandis apply to the assessment
and collection of property tax.

Explanation.- For the purpose of this section
“property tax” means a tax simpliciter requiring
no service at all and not in the nature of fee
inquiring service.

28-C. Authority is deemed to be a Local Authority
for   levy   of  cesses   under   certain  Acts.-
Notwithstanding anything contained in any law for
the time being force the Authority shall be
deemed to be a local authority for the purpose of
levy and collection of,-

(i) education cess under sections 16.17 and 17A
of the Karnataka Compulsory Primary Education
Act, 1961 (Karnataka Act 9 of 1961);

(ii) health cess under sections 3,4 and 4A of the
Karnataka Health Cess Act, 1962 (Karnataka Act 28
of 1962);

(iii) library cess under section 30 of the
Karnataka Public Libraries Act, 1965 (Karnataka
Act 10 of 1965); and

(iv) beggary cess under       section 31 of the
Karnataka   Prohibition  of    Beggary Act, 1975
(Karnataka Act 27 of 1975).

32. Forming of new extensions or layouts or
making new private streets.- (1) Notwithstanding
anything to the contrary in any law for the time
being in force, no person shall form or attempt
to form any extension or layout for the purpose
of constructing buildings thereon without the
express sanction in writing of the Authority and
except in accordance with such conditions as the
Authority may specify:
14

Provided that where any such extension or layout
lies within the local limits of the Corporation,
the Authority shall not sanction the formation of
such extension or layout without the concurrence
of the Corporation:

Provided further that where the Corporation and
the Authority do not agree on the formation of or
the conditions relating to the extension or
layout, the matter shall be referred to the
Government, whose decision thereon shall be
final.

(2) Any person intending to form an extension or
layout or to make a new private street, shall
send to the Commissioner a written application
with plans and sections showing the following
particulars,-

(a) the laying out of the sites of the area upon
streets, lands or open spaces;

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

(c) the street alignment and the building line
and the proposed sites abutting the streets;

(d) the arrangement to be made for levelling,
paving,    metalling,    flagging,    channelling,
sewering, draining, conserving and lighting the
streets and for adequate drinking water supply.

(3) The provisions of this Act and any rules or
bye-laws made under it as to the level and width
of streets and the height of buildings abutting
thereon shall apply also in the case of streets
referred to in sub-section (2) and all the
particulars referred to in that sub-section shall
be subject to the approval of the Authority.

(4) Within six months after the receipt of any
application under subsection (2), the Authority
shall   either  sanction   the   forming  of   the
extension or layout or making of street on such
conditions as it may think fit or disallow it or
ask for further information with respect to it.

(5) The Authority may require the applicant to
15

deposit, before sanctioning the application, the
sums necessary for meeting the expenditure for
making roads, side-drains, culverts, underground
drainage and water supply and lighting and the
charges for such other purposes as such applicant
may be called upon by the Authority, provided the
applicant also agrees to transfer the ownership
of the roads, drains, water supply mains and open
spaces   laid  out  by   him  to   the  Authority
permanently without claiming any compensation
therefor.

(5A) Notwithstanding anything contained in this
Act, the Authority may require the applicant to
deposit before sanctioning the application such
further sums in addition to the sums referred to
in the sub-section (5) to meet such portion of
the expenditure as the Authority may determine
towards the execution of any scheme or work for
augmenting water supply, electricity, roads,
transportation and such other amenities within
the Bangalore Metropolitan Area.

65. Government’s power to give directions to the
Authority.-   The   Government   may   give   such
directions to the Authority as in its opinion are
necessary or expedient for carrying out the
purposes of this Act, and it shall be the duty of
the Authority to comply with such directions.

65-B. Submission    of copies   of resolution and
Government’s power to cancel the resolution or
order.- (1) The Commissioner shall submit to the
Government   copies   of   all resolutions of the
Authority.

(2) If the Government is of opinion that the
execution of any resolution or order issued by or
on behalf of the Authority or the doing of any
act which   is about  to be   done  or is   being
done by or on behalf of the      Authority is in
contravention of or in excess of the powers
conferred by this Act or any other law for the
time being   in force or is likely to lead to a
breach of peace or to cause injury or annoyance
to the public    or  to   any class or    body of
persons or is prejudicial to the     interests of
the authority, it may, by order in writing,
suspend the execution of such resolution or order
or prohibit   the doing of any   such   act after
16

issuing a notice to the Authority to show cause,
within the specified period which shall not be
less than fifteen days, why,-

(a) the resolution or order may not be cancelled
in   whole or in part; or
(b) any regulation or bye-law concerned may not
be repealed in whole or in part.

(3) Upon consideration of the reply, if any,
received from the authority and after such
inquiry as it thinks fit, Government may    pass
orders    cancelling the resolution or order or
repealing   the   regulation    or  bye-law  and
communicate the same to the authority.

(4) Government may at any time, on further
representation by the authority or otherwise,
revise, modify or revoke an order passed under
subsection (3).

67. Amendment of the Karnataka Town and Country
Planning Act, 1961.- (1) In the Karnataka Town
and Country Planning Act , 1961 (Karnataka Act 11
of 1963),-

(a) in section 2, for item (i) of sub-clause (a)
of clause (7), the following item shall be
substituted namely,-

“(i) the local planning area comprising the City
of    Bangalore,   the   Bangalore    Development
Authority, and”;

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

“81-B.    Consequences   to    ensue   upon    the
constitution    of   the   Bangalore   Development
Authority.- Notwithstanding anything contained in
this Act, with effect from the date on which the
Bangalore Development Authority is constituted
under the Bangalore Development Authority Act,
1976 the following consequences shall ensue,-

(i) the Bangalore Development Authority shall be
the local Planning Authority for the local
planning area comprising the City of Bangalore
with jurisdiction over the area which the City
17

Planning Authority for the City of Bangalore had
jurisdiction immediately before the date on which
the    Bangalore    Development   Authority    is
constituted;

(ii) the Bangalore Development Authority shall
exercise the powers, perform the functions and
discharge the duties under this Act as if it were
a Local Planning Authority constituted for the
Bangalore City;

(iii) the City Planning Authority shall                        stand
dissolved and upon such dissolution,-”

****”

7. In exercise of the power vested in it under Section 4-A(1)
of    the    Town    Planning    Act,        the    State   Government   issued

Notifications dated 1.11.1965 and 13.3.1984 declaring the

areas specified therein to be the “Local Planning Areas”.

By the first notification, the State Government declared

the area comprising the city of Bangalore and 218 villages

enumerated in Schedule I thereto to be the “Local Planning

Area”       for    the   purposes      of     the   Town    Planning   Act   and

described it as the Bangalore City Planning Area.                            The

limits of the planning area were described in Schedule II

appended to the notification.                  By the second notification,

the    area       comprising    325        villages   around   Bangalore     (as

mentioned in Schedule I) was declared to be the Local

Planning Area for the environs of Bangalore.                       The limits

of the city planning area were indicated in Schedule II.

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

following note was added:
18

“This excludes the Bangalore City Local Planning
Area declared (by) Government Notification No.
PLN/42/MNP/65/SO/3446 dated 1-11-1965.”

8. A third notification was issued on 6.4.1984 under Section
4-A(3) of the Town Planning Act amalgamating the Local

Planning Areas of Bangalore declared under the earlier two

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

1.4.1984.

9. On 1.3.1988, the State Government issued notification
under Section 2(c) of the 1976 Act specifying the villages

indicated in the first Schedule and within the boundaries

indicated in the second Schedule to Notification dated

13.3.1984 to be the areas for the purposes of that clause.

We shall refer to this notification a little later in the

context of the High Court’s negation of the respondents’

challenge   to   that    notification   on    the   ground   that   the

names of the villages or specified areas had not been

published in the Official Gazette and, as such, the layout

plans of the area comprised in those villages are not

governed by the 1976 Act.

10.As a result of unprecedented increase in the population of
the city of Bangalore between 1970 and 1980, the available

civic amenities like roads, water supply system and supply

of electricity were stretched to their limit.            To meet the

additional requirement of water and electricity and to
19

tackle the problems of traffic, new schemes were prepared

in    the   development   plan     of   Bangalore   city,   which   was

approved in 1984.         These included augmentation of water

supply,     formation   of   Ring    Road   etc.    Bangalore   Water

Supply and Sewerage Board (BWSSB) submitted a proposal to

the State Government for taking up of Cauvery Water Supply

Scheme, Stage III (for short, `the Cauvery Scheme’) for

supply of an additional 270 MLD water to Bangalore at a

cost of Rs. 240 crores. The proposed financing pattern of

the project was as follows:

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

(ii)     Life Insurance

Corporation of India      –          Rs. 50/- crores,

(iii)    Bangalore City
Corporation               –      Rs. 30/- crores, and

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

11.By an order dated 28.06.1984, the State Government, after
taking cognizance of the difficulties being experienced by

BWSSB in supplying water to the Bangalore Metropolitan

Area and the possibility of acute shortage of water in

next 10 years if the supply was not augmented, granted

approval to the Cauvery Scheme.

12.Since the World Bank assistance was expected only in the
year 1988 and the Cauvery Scheme was to be implemented by

1990 to meet the drinking water needs of the residents of
20

Bangalore, the issue was discussed in the meeting held on

01.01.1987 under the chairmanship of the Chief Secretary

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

escalation in the cost, the funds may be collected from

other     sources         including          the     BDA        because         substantial

quantity of water was required for the layouts which were

being developed by it or likely to be developed in future.

In    furtherance         of    that     decision,         the     State         Government

issued order dated 25.03.1987 and directed the BDA to make

a     grant    of    Rs.       30     crores       to    BWSSB        to    be     paid      in

installments from 1987-88 to 1989-90 by loading an extra

amount    as    water          supply    component          at    the       rate       of   Rs.

10,000/- on an average per site for all the layouts to be

formed thereafter.

13.In    compliance         of     the    directions            given        by    the    State

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

site.         Later on, the levy under the Cauvery Scheme was

increased to Rs.1 lac per acre.                         By 1992, it was realised

that the BDA had not been able to develop and distribute

sites as expected.              Therefore, a proposal was submitted by

the     Commissioner,           BDA     to     the       State        Government            that

contribution towards the Cauvery Scheme may be distributed

among    those      applying          for    change        of    land       use    and      the

private       layouts      to    be     developed        by     the    house       building

societies       and       on     major       housing       projects.            The     State
21

Government accepted the suggestion of the BDA and passed

order dated 12.1.1993 for the levy of charges under the

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

14.In 1992, the BDA also decided to take up the construction
of     63.30     kilometers      long    Outer      Ring   Road    and    3.5

kilometers long Intermediate Ring Road at an estimated

cost of Rs.115 crores with a possible escalation up to

Rs.130 crores.        36.24 kilometers of the Outer Ring Road

was to pass through the BDA layouts and the balance was to

pass through the land outside the BDA layouts. The cost of

construction of Outer Ring Road passing through the BDA

layout was to be met by charging the allottees of sites in

the BDA layouts.           For the balance 27.06 kilometers of

Outer Ring Road and 3.5 kilometers of Intermediate Ring

Road     a     proposal    was     prepared      to     obtain     financial

assistance from the World Bank. In the meeting held on

5.6.1992 under the chairmanship of the Chief Secretary of

the State, the possibility of taking loan from HUDCO was

explored.       Simultaneously,         it    was     considered     whether

partial       burden of the cost could be passed on to the

beneficiaries of the private layouts and it was agreed

that like the Cauvery Scheme, Ring Road surcharge should

be levied on the sites to be formed by the BDA and the

private housing societies at the rate of Rs.1 lac per

acre.        Thereafter,   the     BDA       passed    Resolution        dated
22

19.10.1992       for    levy       of    charges         at     different    rates    on

change of land use in different areas and Rs.1 lac per

acre on the layouts of housing societies and private lands

as also the sites formed by itself.

15.The     Air     Craft       Employees             Cooperative          Society     Ltd.

(respondent in C.A. No.7503/2002) submitted an application

for approval of layout in respect of 324 acres 30 guntas

land situated in Singasandra and Kudlu villages, Surjapur

Hobli and Begur Hobli respectively.                             The application of

the respondent was considered in the BDA’s meeting held on

31.10.1991 and was approved subject to various conditions

including       payment       of    Rs.2       lacs       per    acre     towards    the

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

Another condition incorporated in the Resolution of the

BDA was that the civil portion of work shall be carried

out by the respondent under its supervision. The decision

of the BDA was communicated to the respondent vide letter

dated 12.11.1992.

16.The respondent challenged the conditional sanction of its
layout    in     Writ    Petition            No.11144/1993         and     prayed    for

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

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

making the following assertions:

(i)          The   order     passed        by     the    State    Government       was

applicable only to the sites to be formed by the BDA and
23

not    the    layout       of    private       House    Building       Societies

because as per the Chairman of BWSSB, it will not be

possible      to    take    up     the    responsibility         of    providing

water supply and underground drainage to such layouts

and the societies had to make their own arrangements.

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

requirements of only the citizens residing within the

municipal area and some newly formed layouts adjacent to

the city.

(iii)    There      is   no      provision      in     the    Bangalore       Water

Supply    and      Sewerage       Act,   1964    (for        short,   `the     1964

Act’) under which the burden of capital required for the

execution of schemes could be passed on to the private

House Building Societies and, in any case, the BWSSB can

recover the cost by resorting to Section 16 of the 1964

Act.

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

empowered to authorise the BDA to transfer the cost of

the Cauvery Scheme to the private layouts.

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

for forming layouts in the vicinity of Bangalore and

10,000 acres had been acquired by the Government for

House Building Cooperative Societies and if Rs.1 or 2

lacs per acre are charged, the Government will collect

about    Rs.600     crores        from   the    BDA     itself,       though    the
24

latter’s     contribution        was    initially        fixed         at     Rs.30

crores only.

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

Cauvery Scheme is ultra vires the provisions of Article

265 of the Constitution.

(vii)     The    levy     of   Rs.1    lac     per    acre     as   Ring      Road

surcharge is not sanctioned by law and the State and the

BDA     cannot      burden       the     private         layouts            without

determining whether the Ring Road would be of any use to

the members of the House Building Societies.

17.During the pendency of Writ Petition No.11144/1993, the
State legislature amended the 1976 Act by Act. No.17/1994

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

20.6.1987 authorising the BDA to demand sums in addition

to     those     referred       in    sub-section           (5)     to      meet    the

expenditure towards the execution of any scheme or work

for         augmenting       water        supply,         electricity,            roads,

transportation and other amenities within the Bangalore

Metropolitan area.

18. The respondent promptly amended the writ petition and
challenged        the     constitutional          validity        of     the       newly

inserted sub-section by asserting that the provision is

discriminatory           and    violative         of      Article      14     of     the

Constitution because it gives unbridled and uncanalized

power to the BDA to demand additional sums for different
25

schemes.    It was also pleaded that sub-section (5A) has

been inserted in Section 32 to legitimize the conditions

incorporated in letter dated 12.11.1992 for payment of

charges for the     Cauvery Scheme and the Ring Road.

19.While the parties were litigating on the constitutionality
of the amended provision and legality of the conditional

sanction   of     the    layout,      the   respondent     applied    for

approval of the BDA for starting civil work. The same was

sanctioned subject to payment of the following charges:

(i)Supervision Charges            Rs. 92,26,687.00
(at the rate of 9% on Civil Work)

(ii) Improvement charges               Rs. 1,65,95,008.00
(at the rate of Rs. 20 per sq. mtrs.)

(iii)Examination charges                           Rs. 4,14,876.00
(0-50 per sq. mtrs.)

(iv) Slum Clearance Development                    Rs. 20,74, 365.00
Charges (Rs. 25,000 per hectare)

(v)   M.R.T.S. Tax                                 Rs. 1,02,51, 875.00
(Rs. 50,000 per acre)

(vi)     Miscellaneous                     Rs. 7,189.00

20.The respondent challenged the conditional approval of
civil work in Writ Petition No. 25833/1998 on the ground

that the 1976 Act does not authorize such levies and that

the   legislature       has   not    laid   down   any   guideline   for

creating   such    demand     from    the   private      House   Building

Societies. An additional plea taken by the respondent was

that the BDA has applied the provisions of Section 32 of
26

the 1976 Act under a mistaken impression that the layout

was within its jurisdiction. According to the respondent,

no notification had been issued by the State Government

for       including      the    villages      of   North   and     South   Talukas

within the Bangalore Metropolitan Area. Another plea taken

by    the       respondent      was    that    the    State       Government     has

already collected conversion fine and, as such, the BDA

does not have the jurisdiction to levy betterment fee.

Similar plea was raised in respect of Mass Rapid Transport

System Cess and the Slum Clearance charges.

21.The other House Building Cooperative Societies also filed
writ petitions between 1994 and 1998 for striking down

Section         32(5A)    and    the       conditional     sanction       of    their

layouts in terms of which they were required to pay for

the Cauvery Scheme and the Ring Road apart from other

charges mentioned in the sanction of civil work as was

done       in   the    case     of    Air    Craft    Employees      Cooperative

Society Limited. They generally pleaded that:

i.          the   BDA     has    no    jurisdiction      to    make   demands

requiring payment of sums under various heads in the

matter of sanction of the residential layout plan as

areas      of     their    layouts       do   not     form    part    of     the

Bangalore Metropolitan Area;

ii.         the notification issued under Sec. 2(c) of the

1976 Act is not valid as there is no specification of
27

the adjacent areas;

iii.     Notification dated 1.3.1988 is not in consonance

with the requirements of law as it does not specify the

villages and the areas which were sought to be declared

and    specified   as   part       of   the   Bangalore   Metropolitan

Area and the specifications and schedules referred to

in the notification have not been published;

iv.      the villages which include the lands that form a

part of the residential layouts also do not figure in

the schedule to Notification dt. 13.3.1984.

22.The writ petitions were contested by the appellant by
making the following assertions:

i.     the lands of the respondents’ residential layout

fall within the local planning area of the authority

and, therefore, they are liable to pay layout charges in

respect of the Cauvery Scheme, Ring Road surcharge, slum

clearance    charge,         betterment         levy,   scrutiny      fee,

supervision charges, etc.

ii.the   charges      have     been     levied     in   terms    of    the

directions    given     by     the      State    Government     and   the

decision taken by the BDA.

iii.the societies are required to carry out civil work

under the supervision of the BDA and, therefore, they

are liable to pay supervision charges.

iv.Section 32(5A) of the 1976 Act does not suffer from
28

any constitutional infirmity and guidance for levy of

such charges can be traced in the scheme of the Act.

23.The Division Bench of the High Court first considered the
question whether Notification dated 1.3.1988 issued under

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

of     the   villages   or   the       specified      area   had    not   been

notified or published in the Official Gazette and whether

in the absence of such notification, the villages in which

the societies had formed layouts cannot be treated as part

of the Bangalore Metropolitan Area.                   The Division Bench

referred to the definition of the expression “Bangalore

Metropolitan Area” contained in Section                  2(c) of the 1976

Act, the contents of Notification dated 1.3.1988 and held

that the description of the area given in the notification

was in consonance with the definition of the Bangalore

Metropolitan Area because reference had been made to the

villages in Schedule I to Notification dated 13.3.1984 and

the    boundaries    of     the    planning     environs     area    as   per

Schedule II of the said notification.                  The Division Bench

opined that if Notifications dated 13.3.1984 and 1.3.1988

are read together, it cannot be said that the particular

villages do not form part of the Bangalore Metropolitan

Area.

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

respondents that some of the villages were not included in
29

the    Schedules    by   observing   that   determination    of    this

question involves investigation into a question of fact

and this can be considered at the time of approval of the

layout plan of the particular society.

25.The argument that while dealing with the issue raised in
Writ    Petition     No.13907/1995,    the     BDA   had    lost   the

territorial jurisdiction because the areas in question had

become part of City Municipal Council, Byatarayanapura and

City    Municipal    Council,    Krishnaraja    Puram   respectively

vide Notification dated 22.1.1996 was left to be decided

by the BDA with liberty to the concerned respondent to

raise the same at an appropriate stage.

26.The Division Bench then adverted to Articles 265 and 300A
of the Constitution and held that the BDA cannot levy or

recover the sums specified in the demand notice on the

basis of the government order or circular.              The Division

Bench further held that the approval of layout plan or

work order cannot be made subject to the condition of

deposit of the sum demanded by it. The Division Bench then

analysed the provisions of Section 32 of the 1976 Act and

observed:

“No principle appears to have been laid down or
indicated for the authority to be kept in view and
followed when determining in such portion of the
expenditure, which expenditure have to relate to
be made or to be incurred in the execution of any
schemes or works as referred.      No doubt, the
schemes or works for augmenting the water supply,
electricity and other amenities       only provide
30

that   it should be worked within the            Bangalore
Metropolitan        Area or work is to be for the
benefit      of the        Bangalore Metropolitan Area
to        provide           amenities within            the
Bangalore        Metropolitan          Area.           But,
the question            is          that out of        that
expenditure              which            the Bangalore
Metropolitan Area has to bear or incur                 what
portion      thereof       the      applicant      seeking
approval         of layout       plan etc.,      will    be
required to deposit and know the proportion or a
portion of that is to be              determined by the
authority.       There is nothing in this section
to indicate        or        to provide any guideline.
There       are        no rules         framed        under
the Act with            reference to            subsection
(5-A)           of        Section        32       of    the
Bangalore Development Authority Act, 1976 to
provide      guidelines or to indicate as to how
that is to be determined. The section                  does
not by itself      provide any          procedure        of
either     hearing or of giving the notice to the
persons affected,        or     there being opportunity
of      being         heard being         given     to the
concerned     persons     or    person              before
determination            of     the portion of          the
expenditure       which the        Bangalore Development
Authority has to incur             with reference        to
those     schemes or        works     to     be     levied
thereunder.”

27.The Division Bench relied upon the ratio in Ram Krishna
Dalmia v. Shri Justice S.R. Tendolkar and Ors. AIR 1958 SC

538,   Jyoti    Pershad      v.   The    Administrator     for   The   Union

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

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

Kerala    v.    M/s.   Travancore        Chemicals   and    Manufacturing

Company    (1998) 8 SCC 188 and observed:

“In     the     present case, sub-section     (5-A)
of Section    32 of   the Act,  does not appear to
provide     any guidelines so as to determine as to
31

what exact       portion of        the       expenditure
should    the applicant           be        required to
deposit.        No doubt,      the entire expenditure
cannot be fastened       on    the      applicant.    It
does     not         provide any      guidelines      in
this regard.       It     does      not      provide the
portion    of   the   amount    the   applicant    maybe
required to         deposit        shall        bear any
percentage      on      the     basis of       enjoyment
of   the benefit by the applicant             or     the
applicant     likely to enjoy the benefit qua
enjoyment       by total    area or its      population.
It also does not provide that             the applicant
before    being    required     to pay         will have
opportunity        of     disputing     that       claim
and challenging the correctness of         the portion
proposed      by the authority to be        fastened on
him.     Really the section appears to confer
unbridle powers       without      providing any guide
lines or guidance in that regard. The section also
does not provide any remedy against the order of
authority under Section 32(5) of the Act.

The learned counsel for the respondents contended
that there is remedy against the order of the
authority         under       Section      63     of      the
Act       by        way of        revision        to      the
Government         which          may         consider the
legality    or    propriety      of        the    order    or
proceedings. In our opinion,           this contention of
the    learned              Counsel is                without
substance. In view of            the      Non       obstante
clause contained        in sub-section          (5-A)      of
Section 32          of the Act which provides that
exercise of      that power           and it              may
result       in       or        it       may            cause
irrational discrimination between the same set of
persons and the persons maybe deprived of               their
properties    in    the        form of         money       by
the      exercise        of       sweet        will       and
the unbridled          discretion of         the authority
concerned.     In our        view       this provision as
it      confers        unbridle          and uncontrolled
power     on the authority           as such       it     may
enable        unequal            and        discriminatory
treatment      to      be accorded to the persons and
it may enable the authority to                 discriminate
among the persons similarly             situated. Tested
by the yardstick of          the principle        laid down
in Sri     Rama Krishna Dalmia’s case reported in
A.I.R.1958 Supreme        Court        538      and      Shri
32

Jyothi      Pershad’s    case reported     in A.I.R.
1961 Supreme Court 1602. We        find that     the
provision of sub-section (5-A) of Section         32
of      the      Bangalore Development Act,     1976
suffers      from vice    of discrimination and has
tendency to enable          the authority         to
discriminate and as such      hit by     Article 14
of the Constitution.”

28.The Division Bench finally concluded that the demand made
by the BDA with the support of Section 32(5A) is illegal

and without jurisdiction and accordingly allowed the writ

petitions.

29.At this stage, it will be appropriate to mention that
during the course of hearing on 2.9.2009, Shri Dushyant

Dave,   learned       senior   counsel          appearing        for   one   of   the

respondents       stated       that        a     sum        of    Rs.300        crores

(approximately) has been collected by the BDA from the

House   Building      Societies       in       lieu    of    sanction      of   their

layouts and substantial amount from the allottees of the

sites of the layouts developed by it between 1984-1992 and

this, by itself, was sufficient to prove that the exercise

of power by the BDA under Section 32 (5A) of the 1976 Act

is arbitrary. After considering the statement made by Shri

Dave, the Court directed the Commissioner and/or Secretary

of   the   BDA   to    file    a   detailed           and   specific     affidavit

giving the particulars of contribution made by the BDA

towards the Cauvery Scheme and the amount demanded and/or

collected    from      those   who      applied        for       sanction    of   the
33

private layouts as also the allottees of the sites in the

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

Siddaiah,   the    then   Commissioner,   BDA,   filed   affidavit

dated 11.11.2009, paragraphs 2 to 5 of which are extracted

below:

“2. The Government of Karnataka formed the
Cauvery Water IIIrd Stage Scheme in 1984.
However, the Government directed the Bangalore
Development Authority to contribute Rs. Thirty
crores towards the Cauvery Water IIIrd Stage
Scheme by its order No. HUD 97 MNI 81, Bangalore
dated 25th March, 1987. The Bangalore Development
Authority started collecting Cauvery Water Cess
from 1988. However, the Government by its order
No. UDD 151 Bem.Aa.Se 2005, dated 03.05.2005
directed the Bangalore Development Authority to
stop collection of the Cauvery Water Cess and
Ring Road      Cess and MRTS Cess. A copy of the
order of the Government Order dated 03.05.2005
directing not collect any cess referred above is
produced herewith as Annexure-`A’. The BDA has
charged and collected the Cauvery water cess
between 1988 and 2005. The Cauvery Water cess
collected by the BDA is periodically transferred
to the Bangalore Water Supply and Sewerage Board
(BWSSB). The chart showing year wise payments
made to BWSSB towards the Cauvery Water Cess from
1988   till   2005   is   produced   herewith  as
Annexure-`B’. The payment chart shows the amount
collected towards the Cauvery Water Cess and paid
to BWSSB. The chart shows that a total sum of Rs.
34.55 crores are collected from 1988 to April
2005. The sum of Rs.34.55 crores collected is in
respect of both private layouts as well as
Bangalore Development Authority sites. The entire
money collected towards the Cauvery Water Cess
has been paid to the Bangalore Water Supply
Sewerage Board, Bangalore as stated above.

3. Similarly, the collection towards the Ring
Road   Cess  from  the   year  1992-93   and  the
collections were made up to 2005-06. The total
sum collected is Rs.15.15 crores. The year-wise
chart showing the collection of Ring Road Cess is
produced herewith as Annexure-`C’. The Ring Road
34

Cess is collected only from the private layouts.

4. With regard to certain averments made in W.P.
No.   11144/1993    with  regard   to   estimated
collection of Cauvery Water Cess, it is submitted
that the estimates are far from accurate. It is
just a guess work. The averments made therein
that the Government has acquired around 10,000
acres towards the private societies will not be
within the knowledge of the Bangalore Development
Authority, because the Government does not seek
the opinion or consent of BDA before acquiring
land for a private layout. The private layouts
within the limits of BDA have to apply to BDA for
approval of a private under Section 32 of BDA
Act. From 1984 till 2005, 194 applications for
approval of private layouts were received and
were   approved  by   the  Bangalore  Development
Authority involving about an extent of 5668 acres
and 15 3/4th gunthas (five thousand six hundred
and sixty-eight acres and fifteen and three
fourth gunthas). However, Cauvery Water Cess and
Ring Road Cess are levied and collected as stated
above from 1988 and 2005 respectively. The
submissions made in the Writ Petition to the
contrary are speculative.

5. Similarly, the averments in the W.P. that the
Bangalore Development Authority would collect
about 300 crores are speculative. It is submitted
with   respect  after   the   directions  of  the
Government in 2005, all the above collections
have been stopped. Hence, this affidavit.

BANGALORE DEVELOPMENT AUTHORITY BANGALORE

THE COLLECTION OF CAUVERY WATER CESS & PAID
TO BWSSB AS MENTIONED BELOW
(INR in Lakh)

S         CHEQUE        DATE        AMOUNT
L           NO.

N
O
1        FROM FEB 1988 TO           2,130.00
APRIL 1992
2        705908     02.11.1996      150.00
3        718093     21.01.1997      100.00
4        737303     15.03.1997      100.00
35

5       753086     06.07.1997              100.00
6       756449     30.12.1997              150.00
7       650002     18.03.1998              50.00
8       759664     20.07.1998              50.00
9       502441     22.01.1999              50.00
1       769862     15.09.1999              75.00
0
1           653066     04.06.2005              500.00
1
TOTAL                                      3,455.00

(Rupees Thirty Four Crores and Fifty Five Lakh)

Sd/-

Accounts Officer BDA,

Bangalore

ANNEXURE-II
YEAR WISE RING ROAD CESS

(INR in Lakh)
YEAR           COLLECTI        CHARGED TO        BALANCE
ONS        RING  ROAD
EXPEND.

1992-93              63.39             63.39                –
(Feb 93 on
wards)
1993 -94            183.89            183.89                –
1994-95             217.87            217.87                –
1995-96             331.14            331.14                –
1996-97             162.08            162.08                –
1997-98             180.79            180.79                –
1988-99              84.23             84.23                –
1999-00              50.49             50.49                –
2000-01              19.48             19.48                –
2001-02               0.30              0.30                –
2002-03               7.34              7.34                –
2003-04                  –                 –                –
2004-05                  –                 –                –
2005-06             214.27            214.27                –
TOTAL             1,515.27          1,515.27
36

Letter    dated     03.05.2005    of    the    State       Government,    which   is

enclosed     with     the   affidavit         of    Shri     Siddaiah,    is   also

reproduced below:

”                     GOVERNMENT OF KARNATAKA

UDD.151.BAN.2005                                   Karnataka Secretariat
Multistoried Building
Bangalore

Dated: 03.05.2005

Sub: Ring Road Cess, Augmentation Cess (Cauvery Water Cess) &
MRTS Cess.

Ref: Government Circular No. 249 of 2001 dated 20.09.2003.

In the above circular referred above, the Government has
withdrawn all earlier orders and decided that henceforth Ring
Road Cess, Augmentation Cess (Cauvery Water Cess) & MRTS Cess
should not be levied. Even so some Corporations, Municipalities
and Authorities are charging the above cess.

Therefore,      until a decision is taken at the level of the
Government about       the above stated subject and until further
directions, Ring       Road Cess, Augmentation Cess (Cauvery Water
Cess) & MRTS Cess      should not be charged. Hence this order.

Sd/-03.05.2005
(V.R. Ilakal)
Addl. Secretary, Govt. of Karnataka
Urban Development”

30.Thereafter, Shri Anand R.H., President of the Bank Officers
and   Officials    House     Building      Cooperative      Society    Limited

filed detailed affidavit dated 08.03.2010, paragraphs 2 to 7

whereof are reproduced below:

“2. I submit that this Hon’ble Court by order
37

dated 02.09.2009 had directed the Commissioner
and/or    Secretary   of    Appellant  Bangalore
Development Authority (BDA for short) to file a
detailed and specific affidavit stating therein
the total contribution made by the BDA towards
Cauvery Water Supply Scheme Stage III and the
amount demanded and/or collected from those who
applied for sanction of private layouts as also
the allottees of the sites in the layouts
prepared by the BDA itself.

3. I say that the BDA has deliberately not at all
disclosed the material facts:

i) the total number of the Housing Societies and
others who applied for sanction of layouts
including private layouts;

ii) the amount BDA has demanded from the Housing
Societies   and others who have applied for
sanction of layouts and private layouts;

iii) the total number of sites formed in the
layouts formed by the BDA and allotted to the
public;

(iv) the total amount demanded and collected from
the allottees of the sites in the layouts formed
by BDA itself;

v) as per Government order dated 25.03.1987 the
BDA was empowered to levy and collect amount
towards the Cauvery Water Supply Scheme also from
the Applicants who apply for change in land use
and for formation of Group Housing/other major
developments   and    for   formation  of   Private
Layouts. The BDA has not disclosed the details of
such Applicants or the amount recovered from them
in   terms   of    the    Government  order   dated
25.03.1987.

4. I say that in the affidavit under reply the
BDA has stated that it has approved layouts
involving about an extent of 5668 acres and 15 �
guntas from 1984 till 2005.   The extent of area
involved in respect of each of the Societies is
more than 10 acres in each layout. In terms of
the Government Order the BDA has demanded towards
the Cauvery Water Supply Scheme at the rate of
38

Rs. 3,00,000/- (Rupees Three Lakhs Only) per
acre. Therefore, at a conservative estimate the
BDA has raised demand of more than Rs. 170/-
crores (5668 x Rs. 3 lakhs). This amount pertains
to only Housing Societies. As stated above the
BDA has not disclosed the total number of layouts
formed by it and the total number of site
allotted in the said layouts to its allottees. I
say that the BDA has in its officials site
http://www.bdabangalore.org/layout.htm        has
furnished the layout information till 2007 which
information has been downloaded from the internet
by the deponent. As per the information published
by the BDA itself it has formed 62 layouts and
has made allotments of about 2 lakh sites to
general public. It is also stated therein that in
the last one decade more than 10 new layouts have
been added to the growing city of Bangalore by
BDA as under:

A. BANASHANKARI 6TH STAGE
� 743 acres land acquired for phase-3
Banashankari 6th Stage and Anjanapura
Further   Extension   in  Uttarahalli
Hobli, Bangalore South Taluk, 5000
sites allotted in September 2002.

B. BANASHANKARI 6TH STAGE FURTHER EXTENSION
� 750     acres    land    acquired in
Uttarahalli Hobli, Bangalore South
Taluk, 5800 allotted during January
2004.

C. SIR. M. VISWESHWARAYA LAYOUT
� 1337 acres and 22 guntas of land
acquired for SMV Layout allotted
10,000 sites during March 2003.

D. SIR. M. VISWESHWARAYA LAYOUT FURTHER EXTENSION
� 510    acres   land   acquired,   4200
allotted during January, 2004. It is
near Kengeri Hobli.

E. HSR Layout is on the South-Eastern part of the
city closer to Electronic City and Outer Ring
Road. It is one among the prestigious layouts of
BDA.

A total of 9900 sites have been allotted in HSR
39

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

F. Sir. M. Visweswaraya Nagar Layout is in the
Western part of the city. In SMV Layout we have
allotted 17, 624 sites

6 x 9 � 4445
9 x 12 � 7368
12 x 18 � 4167
15 x 24 � 1644

G. In SMV Further Extension we have allotted 3615
sites.

In Anjanpura Further Extension we have allotted
7340 sites

6 x 9 � 1835
9 x 12 � 3305
12 x 18 � 1335
15 x 24 � 365

H. In Arkavathi Layout,       in the 1st Phase 1710
sites and in the 2nd phase   8314 sites of different
dimensions. A total of       3664 (30×40) dimension
sites have been allotted     totally at the rate of
Rs. 2100 sq. mtrs.

SName     of Locatio       No. of sites
.the         n          Inte      C          T     No
Nlayout                 rmed      o          o     .
o                       iate      r          t     of
n          a     si
e          l     te
r                s
al
lo
tt
ed
40

1 BSK         South     1552              1      15
2             part      5175      8       5      51
of the              1       9      75
city                6       9
with                        1
approa
ch
road
from
Kenger
i Road
3 Anjanapur   South     5424      8       6      54
a           part      4340      6       5      43
Township    of the              8       0      40
1 to 8th    city                3       2
Block       with                        3
4             approa
ch
road
from
Kanaka
pura
Road.
Bigges
t
Layout
formed
in
recent
years
5    SMV      West      9696      1       1      96
6SMV          part of   3615      6       4      36
further                2000      8       2      88
the       0         6       8      13
extension    city
7    Arkav                        0       6
with                0       0
ath      approac                     0
h road
from
Nagarab
havi
Road

True    copy    of    the   layout    information
published by BDA in its official website: http://
http://www.bdabangalore.org/layout.htm as at 2007 is
filed as ANNEXURE A-1 to this affidavit. The true
typed copy of Annexure A-1 is filed as ANNEXURE
A-2.
41

5. I say that if the total number of sites
allotted by the BDA in the layout formed by it if
taken as 2 lakhs sites as stated in the BDA
publication the amount levied and collected by
BDA from such allottees will come to Rs. 200
crores (2,00,00,000 x Rs. 10,000/-).

As stated in the BDA publication in the last
decade itself more than 73503 sites have been
allotted by the BDA in the layouts formed by
itself. The amount levied and collected by the
BDA from these allottees in the last one decade
at the rate of Rs. 10,000/- per site in terms of
the Government Order dated 25.03.1987 towards the
Cauvery Water Supply Scheme itself will come to
Rs. 73,50,30,000/- (Rs.10,000 per site x 73503
sites).

6. I say that apart from the amount levied and
collected   by BDA from the above mentioned
Applicants, the BDA must have collected the
amount towards the Cauvery Water Supply Scheme
from the Applicants who applied for change in
land use and for formation of Group Housing/other
major developments and for formation of Private
Layouts at the rate as prescribed in the
Government Order dated 25.03.1987.

7.   I say that the facts and figures disclosed
above is based on the averments made in the
affidavit filed by BDA               and         the
information      official     from      the official
website                    of                    BDA
http://www.bdabangalore.org/layout.htm      and    I
believe the same to be correct. Therefore, it is
apparent that the BDA has demanded more than
Rs.370 crores from the societies whose layouts
have been approved by BDA (Rs. 170 crores) and
from its allottees (Rs. 200 crores) excluding the
Applicants who applied for change in land use and
for   formation    of  Group   Housing/other   major
developments    and   for   formation    of  Private
Layouts.

I say that apart from the fact that the BDA is
not empowered to levy and collect the amount
towards Cauvery Water Supply Scheme and without
prejudice to the submission that the provisions
of Section 32(5-A) of the BDA Act is ultra vires
the Constitution and without prejudice to rights
42

and contentions raised in the Civil Appeal even
assuming that the BDA could levy and collect the
amount towards Cauvery Water Supply Scheme, the
BDA could collect only Rs. 30 crores. The BDA has
however demanded the payment towards Cauvery
Water Supply Scheme in excess of over Rs. 370
crores from the Housing Societies and its own
allottees apart from the demand made from the
Applicants who applied for change in land use and
for   formation   of   Group    Housing/other  major
developments and for formation of Private Layouts
which facts have not been disclosed by the BDA.
The entire information pertaining to the demand
and collection of the funds towards Cauvery Water
Supply Scheme is available with BDA but has been
deliberately    withheld.    In    any   event  even
according to the affidavit filed by the BDA it
has collected Rs.34.55 crores as against the
limit of Rs. 30 crores which it could collect
under the Government Order. Therefore, the amount
collected is far in excess of its limit. On this
ground   also the demand raised against the
Respondent Societies is illegal and without
authority of law.”

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

in which the respondents have formed layouts fall within the

Bangalore    Metropolitan       Area.        In   the   impugned        order,    the

Division    Bench    has   recorded     brief     reasons    for    negating      the

respondents’    challenge       to    Notification      dated      1.3.1988.      The

conclusion    recorded     by   the   Division     Bench     and    similar      view

expressed by another Division Bench of the High Court in the

Commissioner,       Bangalore    Development       Authority       v.    State     of

Karnataka ILR 2006 KAR 318 will be deemed to have been approved

by the three Judge Bench of this Court in Bondu Ramaswamy v.

Bangalore    Development        Authority     (2010)     7   SCC     129,        which

referred to Notifications dated 1.11.1965 and 13.3.1984 issued
43

under Section 4A(1) of the Town Planning Act and Notification

dated 1.3.1988 issued under Section 2(c) of the 1976 Act and

observed:

“A careful reading of the Notification dated 1-3-
1988 would show that the clear intention of the
State Government was to declare the entire area
declared under the Notification dated         1-11-
1965   and  the   Notification   dated   13-3-1984,
together as the Bangalore Metropolitan Area. The
Notification dated 1-3-1988 clearly states that
the entire area situated within the boundaries
indicated in Schedule II to the Notification dated
13-3-1984 was the area for the purpose of Section
2(c) of the BDA Act. There is no dispute that the
boundaries indicated in Schedule II to the
Notification dated 13-3-1984 would include not
only the villages enumerated in First Schedule to
the Notification dated 13-3-1984 but also the area
that was declared as planning area under the
Notification dated 1-11-1965. This is because the
areas declared under Notification dated 1-11-1965
are the core area (Bangalore City) and the area
surrounding the core area that is 218 villages
forming the first concentric circle; and the area
declared under the Notification dated 13-3-1984
(325 villages) surrounding the area declared under
the Notification dated 1-11-1965 forms the second
concentric circle. Therefore, the boundaries of
the lands declared under the Notification dated
13-3-1984, would also include the lands which were
declared under the Notification dated 1-11-1965
and therefore, the 16 villages which are the
subject-matter of the impugned acquisition, are
part of the Bangalore Metropolitan Area.

The learned counsel for the appellants contended
that the note at the end of Second Schedule to the
Notification   dated    13-3-1984   excluded   the
Bangalore City Planning Area declared under the
Notification dated 1-11-1965. As the planning area
that was being declared under the Notification
dated 13-3-1984 was in addition to the area that
was declared under the Notification dated 1-11-
1965, it was made clear in the note at the end of
the Notification dated 13-3-1984 that the area
declared under the Notification dated 1-11-1965 is
to be excluded. The purpose of the note was not to
44

exclude the area declared under the Notification
dated 1-11-1965 from the local planning area. The
intention was to specify what was being added to
the local planning area declared under the
Notification   dated   1-11-1965.   But   in   the
Notification dated 1-3-1988, what is declared as
the Bangalore Metropolitan Area is the area, that
is, within the boundaries indicated in Schedule II
to the Notification dated 13-3-1984, which as
noticed above is the area notified on 1-11-1965 as
also the area notified on 13-3-1984. The note in
the Notification dated 13-3-1984 was only a note
for the purposes of the Notification dated 13-3-
1984 and did not form part of the Notification
dated 1-3-1988. There is therefore no doubt that
the intention of the State Government was to
include the entire area within the boundaries
described in Schedule II, that is, the area
declared under the two Notifications dated 1-11-
1965 and 13-3-1984, as the Bangalore Metropolitan
Area.

In fact ever since 1988 everyone had proceeded on
the basis that the Bangalore Metropolitan Area
included the entire area within the boundaries
mentioned in Schedule II to the Notification dated
13-3-1984. Between 1988 and 2003, BDA had made
several development schemes for the areas in the
first concentric circle around Bangalore City
(that is, in the 218 villages described in First
Schedule to the Notification dated 1-11-1965) and
the State Government had sanctioned them. None of
those were challenged on the ground that the area
was not part of Bangalore Metropolitan Area.”

The Bench then considered the argument that the language of

notification dated 1.3.1988 cannot lead to a conclusion that

the   areas specified   in the Schedule were made part of the

Bangalore Metropolitan Area, referred to the doctrine of casus

omissus,   the   judgment   of   the   Constitution   Bench   in   Padma

Sundara Rao v. State of T. N. (2003) 5 SCC 533 and proceeded to

observe:
45

“Let us now refer to the wording and the ambiguity in the
notification. Section 2(c) of the BDA Act makes it clear that
the city of Bangalore as defined in the Municipal Corporation
Act is part of Bangalore Metropolitan Area. It also makes it
clear that the areas where the City of Bangalore Improvement
Act, 1945 was in force, is also part of Bangalore Metropolitan
Area. It contemplates other areas adjacent to the aforesaid
areas being specified as part of Bangalore Metropolitan Area by
a   notification.  Therefore,   clearly,   the  area   that   is
contemplated for being specified in a notification under
Section   2(c)  is   “other  areas   adjacent”  to   the   areas
specifically referred to in Section 2(c). But it is seen from
the Notification dated 1-3-1988 that it does not purport to
specify the “such other areas adjacent” to the areas
specifically referred to in Section 2(c), but purports to
specify the Bangalore Metropolitan Area itself as it states
that it is specifying the “areas for the purpose of the said
clause”. If the notification specifies the entire Bangalore
Metropolitan Area, the interpretation put forth by the
appellants that only the villages included in Schedule I to the
Notification   dated   13-3-1984   would    be  the    Bangalore
Metropolitan Area, would result in an absurd situation.
Obviously the city of Bangalore and the adjoining areas which
were notified under the City of Bangalore Improvement Act, 1945
are already included in the Bangalore Metropolitan Area and the
interpretation put forth by the appellants would have the
effect of excluding those areas from the Bangalore Metropolitan
Area.

As stated above, the core area or the inner circle area, that
is, Bangalore City, is a part of Bangalore Metropolitan Area in
view of the definition under Section 2(c). The 218 villages
specified in the Notification dated 1-11-1965 are the villages
immediately surrounding and adjoining Bangalore City and it
forms the first concentric circle area around the core area of
Bangalore City. The 325 villages listed in First Schedule to
the Notification dated 13-3-1984 are situated beyond the 218
villages and form a wider second concentric circle around the
central core area and the first concentric circle area of 218
villages. That is why the Notification dated 1-3-1988 made it
clear that the Bangalore Metropolitan Area would be the area
within the boundaries indicated in Second Schedule to the
Notification dated 13-3-1984. It would mean that the three
areas, namely, the central core area, the adjoining 218
villages constituting the first concentric circle area and the
next adjoining 325 villages forming the second concentric
circle are all included within the Bangalore Metropolitan Area.

What is already specifically included by Section 2(c) of the
BDA Act cannot obviously be excluded by Notification dated 1-3-
46

1988 while purporting to specify the additional areas adjoining
to the areas which were already enumerated. Therefore, the
proper way of reading the Notification dated 1-3-1988 is to
read it as specifying 325 villages which are described in the
First Schedule to the Notification dated 13-3-1984 to be added
to the existing metropolitan area and clarifying that the
entire areas within the boundaries of Second Schedule to the
Notification dated 13-3-1984 would constitute the Bangalore
Metropolitan Area. There is no dispute that the boundaries
indicated in the Notification dated 13-3-1984 would clearly
include the 16 villages which are the subject-matter of the
acquisition.”

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

Development          Authority      (supra),          we    hold        that    the    villages

specified       in    the    schedules         appended       to       Notifications      dated

1.11.1965 and 13.3.1984 form part of the Bangalore Metropolitan

Area.      The       question      whether          the    BDA    has        lost   territorial

jurisdiction          over    the       area    in        which        the    House    Building

Societies have formed layouts need not be decided because the

learned    counsel          for   the    respondents             did    not     challenge    the

observations made by the Division Bench of the High Court.

33.       We shall now consider the following core questions:

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

violative of                      Article 14 of the Constitution;

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

vice of excessive delegation of legislative power;

(3)       whether the         demand      of charges under the Cauvery Scheme

etc.      amounts            to     tax and is, therefore, ultra vires the

provisions of Article 265 of the Constitution; and

(4)       whether the BDA has collected charges from the house
47

building societies and the allottees of sites of the layouts

prepared by it far in excess of its contribution towards the

Cauvery Scheme, MRTS, etc.

Question (1)

34.      Shri Altaf Ahmed, learned senior counsel appearing for

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

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

Article 14 of the Constitution inasmuch as it does not operate

unequally      qua    the     allottees       of    the    sites      of   the    layouts

prepared by the house building societies on the one hand and

the BDA layouts on the other hand. Learned counsel emphasised

that   the allottees          of sites in the BDA layouts which were

carved       out    after    20.06.1987          have   been    burdened      with      the

liability to pay charges for the Cauvery Scheme as well as Ring

Road and no discrimination has been practiced between the two

sets   of     allottees.      Learned       senior      counsel    Shri    Altaf     Ahmed

submitted that even otherwise there is no comparison between

the    BDA    layouts       which    were     formed      by   spending    substantial

public funds and the private layouts prepared by the house

building societies. Learned counsel referred to the additional

affidavit of Shri Siddaiah to show that Rs. 34.55 crores were

collected      by    the    BDA     between      1988    and   2005    both      from   the

private layouts as well as the BDA sites and the entire amount

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

Cauvery Scheme.
48

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

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

counsel appearing for the respondents supported the conclusion

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

Article 14 of the Constitution by emphasizing that the impugned

provision has resulted in hostile discrimination between the

allottees     of     sites    in   the    layouts      of   the   house      building

societies and other people living in the Bangalore Metropolitan

Area. Learned counsel submitted that while the benefit of the

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

residents     of     the   Bangalore      Metropolitan      Area,      the    cost   of

amenities have been loaded exclusively on the allottees of the

sites of the private layouts and to some extent the BDA layouts

and   in     this    manner    similarly        situated    persons       have   been

discriminated.        Shri     Venugopal        referred     to     the      averments

contained in paragraphs 4 to 6 of the amendment application

filed in Writ Petition No. 11144/1993 to drive home the point

that the BDA has loaded its share towards the Cauvery Scheme

and   Ring    Road    exclusively        on    the   allottees    of   the    private

layouts leaving out the remaining population of the Bangalore

Metropolitan Area.

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

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

violative of Article 14 of the Constitution. While deciding the

issue relating to constitutionality of the Section, the High
49

Court     overlooked    the     well-established           principle   that    a

statutory provision is presumed to be constitutionally valid

unless proved otherwise and burden lies upon the person who

alleges      discrimination    to   lay    strong    factual    foundation    to

prove that the provision offends the equality clause enshrined

in the Constitution.

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

SCR   869,    this   Court    enunciated    the     rule   of   presumption   in

favour of constitutionality of the statute in the following

words:

“Prima facie, the argument appears to be a plausible one, but
it requires a careful examination, and, while examining it, two
principles have to be borne in mind :- (1) that a law may be
constitutional even though it relates to a single individual,
in those cases where on account of some special circumstances
or reasons applicable to him and not applicable to others, that
single individual may be treated as a class by himself; (2)
that it is the accepted doctrine of the American courts, which
I consider to be well-founded on principle, that the
presumption is always in favour of the constitutionality of an
enactment, and the burden is upon him who attacks it to show
that there has been a clear transgression of the constitutional
principles. A clear enunciation of this latter doctrine is to
be found in Middleton v. Texas Power and Light Company 248 U.S.
152, 157, in which the relevant passage runs as follows:

“It must be presumed that a legislature understands and
correctly appreciates the need of its own people, that its laws
are directed to problems made manifest by experience and that
its discriminations are based upon adequate grounds.””

(emphasis supplied)

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

this Court observed:

“The Courts, it is accepted, must presume that the legislature
understands and correctly appreciates the needs of its own
people, that its laws are directed to problems made manifest by
50

experience and that its discriminations are based on adequate
grounds. It must be borne in mind that the legislature is free
to recognise degrees of harm and may confine its restrictions
to those cases where the need is deemed to be the clearest and
finally   that  in   order  to   sustain  the   presumption  of
constitutionality the Court may take into consideration matters
of common knowledge, matters of common report, the history of
the times, and may assume every state of facts which can be
conceived existing at the time of legislation.”

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

to which reference has been made in the impugned order, this

Court laid down various propositions including the following:

“(b) that there is always a presumption in favour of the
constitutionality of an enactment and the burden is upon him
who attacks it to show that there has been a clear
transgression of the constitutional principles;

(e)   that   in   order   to   sustain   the    presumption  of
constitutionality the court may take into consideration matters
of common knowledge, matters of common report, the history of
the times and may assume every state of facts which can be
conceived existing at the time of legislation;”

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

Constitution Bench reiterated the well-settled principles in

the following words:

“While considering the constitutional validity of a statute
said to be violative of Article 14, it is necessary to bear in
mind certain well established principles which have been
evolved by the courts as rules of guidance in discharge of its
constitutional function of judicial review. The first rule is
that there is always a presumption in favour of the
constitutionality of a statute and the burden is upon him who
attacks it to show that there has been a clear transgression of
the constitutional principles. This rule is based on the
assumption, judicially recognised and accepted, that the
legislature understands and correctly appreciates the needs of
its own people, its laws are directed to problems made manifest
by experience and its discrimination are based on adequate
grounds. The presumption of constitutionality is indeed so
strong that in order to sustain it, the Court may take into
51

consideration matters of common knowledge, matters of common
report, the history of the times and may assume every state of
facts which can be conceived existing at the time of
legislation.”

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

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

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

absence    of such    foundation, the High Court was not at all

justified in recording a conclusion that the impugned provision

is violative of the equality clause contained in Article 14 of

the Constitution.

42.       While examining the issue of hostile discrimination in

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

the fact that due to unprecedented increase in the population

of the Bangalore City and the policy decision taken by the

State Government to encourage house building societies to form

private layouts, the BDA was obliged to take effective measures

to improve the civic amenities like water supply, electricity,

roads, transportation, etc. within the Bangalore Metropolitan

Area and for this it became necessary to augment the resources

by     the      BDA       itself        or        through      other        State

agencies/instrumentalities by making suitable contribution. It

would be a matter of sheer speculation whether in the absence

of increase in the population of the Bangalore Metropolitan

Area   and    problems     relating         to   planned    development,     the

legislature would have enacted the 1976 Act and the State and
52

its    agencies/instrumentalities          would       have       spent       substantial

amount for augmenting water supply, electricity, transportation

and other amenities. However, the fact of the matter is that

with a view to cater to the new areas, and for making the

concept of planned development a reality qua the layouts of the

private     House   Building     Societies            and     those       involved    in

execution of large housing projects, etc., the BDA and other

agencies/instrumentalities       of    the       State      incurred          substantial

expenditure for augmenting the water supply, electricity, etc.

There could be no justification to transfer the burden of this

expenditure on the residents of the areas which were already

part of the city of Bangalore. In other words, other residents

could not be called upon to share the burden of cost of the

amenities largely meant for newly developed areas. Therefore,

it is not possible to approve the view taken by the High Court

that by restricting the scope of loading the burden of expenses

to the allottees of the sites in the layouts developed after

1987, the legislature violated Article 14 of the Constitution.

Question (2)

43.       Learned   senior   counsel       for    the       BDA    and    the    counsel

appearing for the State assailed the finding recorded by the

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

delegation by pointing out that while the sums specified in

Section 32(5) are required to be deposited by those intending

to form an extension or layout to meet the expenditure for
53

making      roads,      side-drains,         underground            drainage      and    water

supply,     lighting       etc.,     the     amount       required     to    be    deposited

under Section 32(5A) is meant for developing the infrastructure

necessary      for      augmenting        the        supply    of   water,     electricity,

construction of roads, etc., which are an integral part of the

concept of planned development. Learned counsel emphasised that

the policy of the legislation is clearly discernable from the

Preamble of the 1976 Act and its provisions in terms of which

the   BDA     is   required        to     ensure       planned      development         of   the

Bangalore Metropolitan Area. Both, Shri Ahmed and Shri Sanjay

R.    Hegde      submitted         that     Section          32(5A)   does     not      confer

unbridled and unguided power upon the BDA and by using the

expression “such portion of the expenditure as the Authority

may determine towards the execution of any scheme or work for

augmenting         water         supply,        electricity,          roads”       and       the

legislature has provided sufficient guidance for exercise of

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

relied      upon     the        judgments       in     Municipal      Board,      Hapur      v.

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

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

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

(2000) 5 SCC 471.

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

learned senior counsel and other learned counsel appearing for

the respondents reiterated the argument made before the High
54

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

delegation because the legislature has not laid down any policy

for     recovery      of    cost     of        infrastructure     required      for

augmentation       of      supply    of        water,    electricity,      roads,

transportation, etc.          Learned senior counsel referred to the

averments contained in the amended writ petitions to show that

the cost of additional infrastructure is recovered only from

those who apply for sanction of private layouts and there is no

provision for distribution of liability by creating demand on

others including those to whom sites are allotted in the BDA

layouts.    Shri Venugopal referred to Sections 15 and 16 of the

Act to show that the BDA is required to prepare development

scheme and execute the same and argued that the cost of the

scheme cannot be loaded only on the private layouts. Learned

counsel relied upon the judgments in Daymond v South West Water

Authority (1976) 1 All England Law Reports 39, The State of

West Bengal v. Anwar Ali Sarkar (1952) SCR 284, Devi Das Gopal

Krishnan and Ors. v. State of Punjab and Ors. (supra) and A.N.

Parasuraman and others v. State of Tamil Nadu (1989) 4 SCC 683

to    support   the     conclusion   recorded       by   the    High   Court   that

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

45.      The    issue       relating       to     excessive      delegation      of

legislative powers has engaged the attention of this Court for

the last more than half century. In Devi Das Gopal Krishnan and

Ors. v. State of Punjab and Ors. (supra), Kunnathat Thathunni
55

Moopil Nair v. State of Kerala ( 1961) 3 SCR 77 and A.N.

Parasuraman and others v. State of Tamil Nadu (supra), the

Court did not favour a liberal application of the concept of

delegation of legislative powers but in a large number of other

judgments including Jyoti Pershad v. the Administrator for the

Union Territory of Delhi (supra), Ajoy Kumar Banerjee v. Union

of India (1984) 3 SCC 127, Maharashtra State Board of S.H.S.E.

v. Paritosh Bhupeshkumar Sheth (1984) 4 SCC 27, Kishan Prakash

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

v. Azadi Bachao Andolan (2004) 10 SCC 1, the Court recognized

that it is not possible for the legislature to enact laws with

minute      details       to   deal    with    increasing         complexities    of

governance     in     a    political     democracy,     and       held   that    the

legislature can lay down broad policy principles and guidelines

and leave the details to be worked out by the executive and the

agencies/instrumentalities of the State and that the delegation

of    the    powers       upon    such   authorities         to    implement     the

legislative policy cannot be castigated as excessive delegation

of the legislative power.

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

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

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

Clearance) Act, 1956 which adversely affected the decree of

eviction obtained by the landlord against the tenant was a

piece of excessive delegation. It was argued that the power
56

vested   in   the   competent     authority      to   withhold     eviction     in

pursuance of orders or decrees of the Court was ultra vires the

provisions of the Constitution.             While repelling this argument,

the   Court   referred    to   the     provisions     of   the   1956    Act    and

observed:

“In the context of modern conditions and the variety and
complexity of the situations which present themselves for
solution, it is not possible for the Legislature to envisage in
detail every possibility and make provision for them. The
Legislature therefore is forced to leave the authorities
created by it an ample discretion limited, however, by the
guidance afforded by the Act. This is the ratio of delegated
legislation, and is a process which has come to stay, and which
one may be permitted to observe is not without its advantages.
So long therefore as the Legislature indicates, in the
operative provisions of the statute with certainty, the policy
and purpose of the enactment, the mere fact that the
legislation is skeletal, or the fact that a discretion is left
to those entrusted with administering the law, affords no basis
either for the contention that there has been an excessive
delegation of legislative power as to amount to an abdication
of its functions, or that the discretion vested is uncanalised
and unguided as to amount to a carte blanche to discriminate.
The second is that if the power or discretion has been
conferred in a manner which is legal and constitutional, the
fact that Parliament could possibly have made more detailed
provisions, could obviously not be a ground for invalidating
the law.”

(emphasis supplied)

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

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

issue    of   excessive     delegation      of   power     to    the    Board    of

Secondary Education observed:

“So long as the body entrusted with the task of framing the
rules or regulations acts within the scope of the authority
conferred on it, in the sense that the rules or regulations
made by it have a rational nexus with the object and purpose of
the statute, the court should not concern itself with the
57

wisdom or efficaciousness of such rules or regulations. It is
exclusively within the province of the legislature and its
delegate to determine, as a matter of policy, how the
provisions of the statute can best be implemented and what
measures, substantive as well as procedural would have to be
incorporated in the rules or regulations for the efficacious
achievement of the objects and purposes of the Act. It is not
for the Court to examine the merits or demerits of such a
policy because its scrutiny has to be limited to the question
as to whether the impugned regulations fall within the scope of
the regulation-making power conferred on the delegate by the
statute.”

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

three Judge Bench, while interpreting the provisions of the

General     Insurance   Business        (Nationalisation)   Act,   1972,

observed:

“The growth of legislative power of the executive is a
significant development of the twentieth century. The theory of
laissez-faire   has  been   given   a  go-by   and  large   and
comprehensive powers are being assumed by the State with a view
to improve social and economic well-being of the people. Most
of the modern socio-economic legislations passed by the
Legislature lay down the guiding principles of the legislative
policy. The Legislatures, because of limitation imposed upon
them and the time factor, hardly can go into the matters in
detail. The practice of empowering the executive to make
subordinate legislation within the prescribed sphere has
evolved out of practical necessity and pragmatic needs of the
modem welfare State.

Regarding delegated legislation, the principle which has been
well established is that Legislature must lay down the
guidelines, the principles of policy for the authority to whom
power to make subordinate legislation is entrusted. The
legitimacy of delegated legislation depends upon its being used
as ancillary which the Legislature considers to be necessary
for the purpose of exercising its legislative power effectively
and completely. The Legislature must retain in its own hand the
essential legislative function which consists in declaring the
legislative policy and lay down the standard which is to be
enacted into a rule of law, and what can be delegated in the
task of subordinate legislation which by very nature is
ancillary to the statute which delegates the power to make it
58

effective provided the legislative policy is enunciated with
sufficient clearness or a standard laid down. The courts cannot
and do not interfere on the discretion that undoubtedly rests
with the Legislature itself in determining the extent of the
delegated power in a particular case.”

(emphasis supplied)

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

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

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

legislation in the following words:

“The legislatures in India have been held to possess wide power
of legislation subject, however, to certain limitations such as
the legislature cannot delegate essential legislative functions
which consist in the determination or choosing of the
legislative policy and of formally enacting that policy into a
binding rule of conduct. The legislature cannot delegate
uncanalised and uncontrolled power. The legislature must set
the limits of the power delegated by declaring the policy of
the law and by laying down standards for guidance of those on
whom the power to execute the law is conferred. Thus the
delegation is valid only when the legislative policy and
guidelines to implement it are adequately laid down and the
delegate is only empowered to carry out the policy within the
guidelines laid down by the legislature. The legislature may,
after laying down the legislative policy, confer discretion on
an administrative agency as to the execution of the policy and
leave it to the agency to work out the details within the
framework of the policy. When the Constitution entrusts the
duty of law-making to Parliament and the legislatures of
States, it impliedly prohibits them to throw away that
responsibility on the shoulders of some other authority. An
area of compromise is struck that Parliament cannot work in
detail the various requirements of giving effect to the
enactment and, therefore, that area will be left to be filled
in by the delegatee. Thus, the question is whether any
particular legislation suffers from excessive delegation and in
ascertaining the same, the scheme, the provisions of the
statute including its preamble, and the facts and circumstances
in the background of which the statute is enacted, the history
of the legislation, the complexity of the problems which a
modern State has to face, will have to be taken note of and if,
on a liberal construction given to a statute, a legislative
policy and guidelines for its execution are brought out, the
59

statute, even if skeletal, will be upheld to be valid but this
rule of liberal construction should not be carried by the court
to the extent of always trying to discover a dormant or latent
legislative policy to sustain an arbitrary power conferred on
the executive.”
(emphasis supplied)

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

Court was called upon to consider the constitutionality of the

Indo-Mauritius     Double   Taxation       Avoidance      Convention,        1983.

While rejecting the argument that Section 90 of the Income Tax

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

amounted to delegation of the essential legislative functions,

the Court observed:

“The question whether a particular delegated legislation is in
excess of the power of the supporting legislation conferred on
the delegate, has to be determined with regard not only to
specific   provisions   contained  in   the   relevant  statute
conferring the power to make rules or regulations, but also the
object and purpose of the Act as can be gathered from the
various provisions of the enactment. It would be wholly wrong
for the court to substitute its own opinion as to what
principle or policy would best serve the objects and purposes
of the Act; nor is it open to the court to sit in judgment over
the wisdom, the effectiveness or otherwise of the policy, so as
to declare a regulation ultra vires merely on the ground that,
in the view of the court, the impugned provision will not help
to carry through the object and purposes of the Act.”

(emphasis supplied)

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

precedents    is     that   while        examining     challenge        to     the

constitutionality of a statutory provision on the ground of

excessive    delegation,    the   Court     must   look    into   the    policy

underlying the particular legislation and this can be done by
60

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

achieved by the particular legislation and the scheme thereof

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

legislature and nullify the provisions under which the power to

implement     the   particular      provision      is    conferred     upon   the

executive authorities.

52.     The     policy      underlying     the     1976     Act   is     clearly

discernable from the Preamble of the Town Planning Act and the

1976 Act and the objects sought to be achieved by the two

legislations, namely, development of the City of Bangalore and

areas adjacent thereto. The Town Planning Act was enacted for

the regulation of planned growth of land use and development

and for the making and execution of town planning schemes in

the entire State including the City of Bangalore.                 By virtue of

Section 67 of the 1976 Act and with the insertion of Section

81-B in the Town Planning Act by Act No.12 of 1976, the BDA

became the Local Planning Authority for the local planning area

comprising the City of Bangalore with jurisdiction over an area

which the City Planning Authority for the City of Bangalore had

immediately before the constitution of the BDA and the latter

has   been    empowered      to   exercise       the    powers,   perform     the

functions and discharge the duties under the Town Planning Act

as if it were a Local Planning Authority constituted for the

Bangalore City.       In other words, w.e.f. 20.12.1975, i.e., the

date on which the 1976 Act was enforced, the BDA acquired the
61

status of a Local Planning Authority as defined in Section 2(7)

read with Section 4(C) of the Town Planning Act in respect of

the City of Bangalore and thereby acquired the powers which

were earlier vested in the Local Planning Authority constituted

for the Bangalore City.           The objects sought to be achieved by

the   legislature    by     enacting      the       Town       Planning    Act    were    to

create conditions favourable for planning and replanning of the

urban and rural areas in the State so that full civic and

social   amenities    could       be    available         for    the    people     of    the

State; to stop uncontrolled development of land due to land

speculation and profiteering in land; to preserve and improve

existing    recreational           facilities              and     other         amenities

contributing towards the balance use of land and future growth

of populated areas in the State ensuring desirable standards of

environment,    health,      hygiene          and   creation       of     facilities      of

orderly growth of industry and commerce.                        The Town Planning Act

also envisaged preparation of the town planning schemes and

execution thereof by the Planning Authorities constituted for

the    specified     areas.        Section           9     (unamended)           envisaged

preparation of outline development plan incorporating therein

the various matters enumerated in Section 12(1), preparation of

comprehensive development plan by including the proposal for

comprehensive      zoning    of        land    use       for     the    planning    area;

building complete street pattern indicating major and minor

roads,   National    and     State      highways         and     traffic    circulation
62

pattern for meeting immediate and future requirements; areas

for new housing and new areas earmarked for future development

and expansion.          The definition of “development” contained in

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

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

of the 1976 Act lays down that the objects of the BDA shall be

to     promote    and     secure      the     development         of    the       Bangalore

Metropolitan Area and for that purpose, the BDA shall have the

power    to   acquire,        hold    manage       and      dispose    of     movable     and

immovable property, whether within or outside the area under

its     jurisdiction.         “Bangalore         Metropolitan         Area”       has     been

defined under Section 2(c) of the 1976 Act.                        It consists of the

following areas: (a) area comprising the City of Bangalore as

defined in the City of Bangalore Municipal Corporation Act,

1949     which    is      now    replaced         by     the    Karnataka         Municipal

Corporations       Act,    1976,      (b)     the      areas    where       the    City    of

Bangalore     Improvement         Act,    1945        was    immediately       before      the

commencement of the 1976 Act in force, and (c) such other areas

adjacent to the aforesaid as the Government may from time to

time by notification specify.                    Section 15 empowers the BDA to

draw     up   detailed          schemes     and        undertake       works      for     the

development       of    the     Bangalore         Metropolitan         Area    and      incur

expenditure for that purpose.                    It can also take up any new or

additional       development         scheme      on    its     own,    subject       to   the

availability of sufficient resources.                          If a local authority
63

provides       necessary      funds     for          framing      and     carrying       out    any

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

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

Government      can    issue        direction         to    the     BDA    to     take    up    any

development scheme or work and execute it subject to such terms

and    conditions       as    may     be     specified            by    it.           Section    16

enumerates the matters which are required to be included in the

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

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

including       construction         and    reconstruction                of    buildings       and

formation and alteration of streets, drainage, water supply and

electricity,          reservation          of        land        for    public         parks     or

playgrounds      and    at    least        10%       of    the    total        area    for    civil

amenities.       The development scheme may also provide for raising

of any land to facilitate better drainage, forming of open

spaces for better ventilation of the area comprised in the

scheme    or    any    adjoining       area          and    the    sanitary
arrangement.

Sections 17 to 19 contain the mechanism for finalisation of the

scheme and its approval by the State Government as also the

acquisition of land for the purposes of the scheme.     Sections

20 to 26 provide for levy and collection of betterment tax.

Section 27 specifies the time limit of five years from the date

of    publication       of    the     scheme         in     the    Official       Gazette       for

execution of the scheme as also consequence of non execution.

Section     28-A      casts     a    duty        on       the     BDA   to      ensure       proper
64

maintenance,    lighting        and    cleansing       of    the    streets      and    the

drainage, sanitary arrangement and water supply in respect of

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

new extensions or layouts or making of new private streets,

which can be done only after obtaining express sanction from

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

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

the applicant to deposit the sums necessary for meeting the

expenditure    for      making    roads,       drains,      culverts,      underground

drainage and water supply and lighting and the charges for such

other purposes as may be indicated by the BDA, as a condition

precedent to the grant of application.                      Section 32(5A), which

also    contains    a    non    obstante        clause,     empowers       the    BDA    to

require the applicant to deposit additional amount to meet a

portion of the expenditure, which the BDA may determine towards

the    execution    of    any    scheme        or   work    for    augmenting      water

supply,    electricity,         roads,       transportation         and    such    other

amenities within the Bangalore Metropolitan Area.

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

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

two enactments is to ensure planned development of the areas

which formed part of the Bangalore Metropolitan Area as on

15.12.1975 and other adjacent areas which may be notified by

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

obligation to provide “amenities” as defined in Section 2(b)
65

and “civic amenities” as defined in Section 2(bb) of the 1976

Act for the entire Bangalore Metropolitan Area. In exercise of

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

prepare detailed schemes for the development of the Bangalore

Metropolitan Area and incur expenditure for implementing those

schemes,     which   are   termed    as    development         schemes.     The

expenditure incurred by the BDA in the implementation of the

development schemes can be loaded on the beneficiaries of the

development schemes. By virtue of Notifications dated 1.11.1965

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

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

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

Bangalore were merged in the Bangalore Metropolitan Area.                   For

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

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

etc., which are available to the existing Metropolitan Area of

the   City   of   Bangalore.     This     task   could    not     have     been

accomplished by the BDA alone from its meager fiscal resources.

Therefore,     the   State     Government,       the     BDA     and      other

instrumentalities of the State like BWSSB had to pool their

resources as also man and material to augment water supply,

electricity and transport facilities and also make provision

for construction of new roads, layouts, etc.              The BDA had to

contribute to the funds required for new water supply scheme,

generation of additional electricity and development of a mass
66

rapid transport system to decongest the Bangalore Metropolitan

Area.     This    is the     reason why the State Government passed

orders dated 25.3.1987 and 12.1.1993, which could appropriately

be treated as directions issued under Section 65 of the 1976

Act for carrying out the purposes of the Act and approved the

proposal for loading the BDA’s share of expenditure in the

execution of the Cauvery Scheme on all the layouts to be formed

thereafter. With the insertion of Section 32(5A) in the 1976

Act, these orders acquired the legislative mandate.                         In terms

of that section, the BDA has been vested with the power to call

upon    the   applicants     desirous          of   forming   new    extensions     or

layouts or private streets to pay a specified sum in addition

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

the expenditure incurred for the execution of any scheme or

work    for      augmenting       water        supply,     electricity,       roads,

transportation and other amenities.

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

observe that apart from the Preamble and the objects of the

1961 and 1976 Acts and the scheme of the two enactments, the

expression “such portion of the expenditure as the Authority

may determine towards the execution of any scheme or work for

augmenting water supply, electricity, roads, transportation and

such    other    amenities”       supplies      sufficient     guidance      for    the

exercise of power by the BDA under Section 32(5A) and it is not

possible to agree with the learned counsel for the respondents
67

that the section confers unbridled and uncanalised power upon

the BDA to demand an unspecified amount from those desirous of

forming    private        layouts.      It    is        needless       to     say    that   the

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

subject      to    directions         which       can     be    given        by     the   State

Government under Section 65. We may add that it could not have

been   possible        for      the    legislature         to        make    provision      for

effective implementation of the provisions contained in the

1961   and      1976     Acts    for    the       development          of     the    Bangalore

Metropolitan Area and this task had to be delegated to some

other agency/instrumentality of the State.

55.       The     above      discussion       leads       to     the        conclusion      that

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

delegation and the legislative guidelines can be traced in the

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

the two legislations.

Question (3)

56.       The     next    question      which       calls       for     determination        is

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

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

provision of Article 265 of the Constitution.

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

`fee’ or `tax’ and whether in the absence of direct evidence of

quid pro quo, the levy would always be treated as tax has

engaged the attention of this Court and almost all the High
68

Courts for the last more than four decades.

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

416, the Constitution Bench considered the question whether the

resolutions     passed    by    the   Agriculture    Market   Committees    in

Punjab    and   Haryana        to   increase   the   market    fee   on    the

agricultural produce bought and sold by the licensees in the

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

100/- were legally sustainable. After noticing the distinction

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

Constitution Bench culled out the following principles:

“(1) That the amount of fee realised must be earmarked for
rendering services to the licensees in the notified market area
and a good and substantial portion of it must be shown to be
expended for this purpose.

(2) That the services rendered to the licensees must be in
relation to the transaction of purchase or sale of the
agricultural produce.

(3) That while rendering services in the market area for the
purposes of facilitating the transactions of purchase and sale
with a view to achieve the objects of the marketing legislation
it is not necessary to confer the whole of the benefit on the
licensees but some special benefits must be conferred on them
which have a direct, close and reasonable correlation between
the licensees and the transactions.

(4) That while conferring some special benefits on the
licensees it is permissible to render such service in the
market which may be in the general interest of all concerned
with the transactions taking place in the market.

(5) That spending the amount of market fees for the purpose of
augmenting the agricultural produce, its facility of transport
in villages and to provide other facilities meant mainly or
exclusively for the benefit of the agriculturists is not
permissible on the ground that such services in the long run go
to increase the volume of transactions in the market ultimately
benefiting the traders also. Such an indirect and remote
benefit to the traders is in no sense a special benefit to
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them.

(6) That the element of quid pro quo may not be possible, or
even necessary, to be established with arithmetical exactitude
but even broadly and reasonably it must be established by the
authorities who charge the fees that the amount is being spent
for rendering services to those on whom falls the burden of the
fee.

(7) At least a good and substantial portion of the amount
collected on account of fees, may be in the neighbourhood of
two-thirds or three-fourths, must be shown with reasonable
certainty as being spent for rendering services of the kind
mentioned above.”

59.       The ratio of the aforesaid judgment was substantially

diluted in Southern Pharmaceuticals and Chemicals, Trichur and

others v. State of Kerala and others (1981) 4 SCC 391.
In the latter     decision,    the       Court     considered    the   constitutional

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

Kerala Abkari Act 1077. One of the questions considered by the

3-Judge Bench was whether the levy of supervisory charges under

Section    14   (e)    of   the    Act     and   Rule   16(4)   of   the   Kerala

Rectified Spirit Rules, 1972 could be regarded as fee even

though there was no quid pro quo between the levy and the

services rendered by the State.     The Bench referred to the

distinction      between      tax         and    fee    highlighted    in     the

Commissioner, Hindu Religious Endowments, Madras v. Lakshmindra

Thirtha Swamiar of Shirur Mutt (1954) SCR 1005 and proceeded to

observe:

“”Fees” are the amounts paid for a privilege, and are not an
obligation,   but   the  payment   is   voluntary.  Fees   are
distinguished from taxes in that the chief purpose of a tax is
70

to raise funds for the support of the Government or for a
public purpose, while a fee may be charged for the privilege or
benefit conferred, or service rendered or to meet the expenses
connected therewith. Thus, fees are nothing but payment for
some special privilege granted on service rendered. Taxes and
taxation are, therefore, distinguishable from various other
contributions, charges, or burdens paid or imposed for
particular purposes and under particular powers or functions of
the Government. It is now increasingly realised that merely
because the collections for the services rendered or grant of a
privilege or licence, are taken to the consolidated fund of the
State   and  are   not  separately  appropriated   towards  the
expenditure for rendering the service is not by itself
decisive. That is because the Constitution did not contemplate
it to be an essential element of a fee that it should be
credited to a separate fund and not to the consolidated fund.
It is also increasingly realised that the element of quid pro
quo stricto senso is not always a sine qua non of a fee. It is
needless to stress that the element of quid pro quo is not
necessarily absent in every tax. We may, in this connection,
refer with profit to the observations of Seervai in his
Constitutional Law, to the effect:

“It is submitted that as recognised by Mukherjea, J. himself,
the fact that the collections are not merged in the
consolidated fund, is not conclusive, though that fact may
enable a court to say that very important feature of a fee was
present. But the attention of the Supreme Court does not appear
to have been called to Article 266 which requires that all
revenues of the Union of India and the States must go into
their respective consolidated funds and all other public moneys
must go into the respective public accounts of the Union and
the States. It is submitted that if the services rendered are
not by a separate body like the Charity Commissioner, but by a
government department, the character of the imposition would
not change because under Article 266 the moneys collected for
the services must be credited to the consolidated fund. It may
be mentioned that the element of quid pro quo is not
necessarily absent in every tax.””
(emphasis supplied)

The three Judge Bench also referred to the Constitution Bench

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

observed:

“To our mind, these observations are not intended and meant as
laying down a rule of universal application. The Court was
71

considering the rate of a market fee, and the question was
whether there was any justification for the increase in rate
from Rs 2 per every hundred rupees to Rs 3. There was no
material placed to justify the increase in rate of the fee and,
therefore, it partook the nature of a tax. It seems that the
Court proceeded on the assumption that the element of quid pro
quo must always be present in a fee. The traditional concept of
quid pro quo is undergoing a transformation.”

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

Punjab   (supra)   was   again    considered         in   Sreenivasa    General

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

petitioners had challenged the constitutional validity of the

increase in the rate of market fee levied under the Andhra

Pradesh (Agricultural Produce and Livestock) Markets Act, 1966

from 50 paise to Rs. 1/- on every Rs. 100/- of the aggregate

amount for which the notified agricultural produce, etc. were

purchased or sold in the notified market area. The petitioners

relied upon the proposition laid down in Kewal Krishna Puri’s

case (supra) in support of their argument that in the absence

of any evidence or correlation between the levy and special

services    rendered     by      the        Market    Committees       to   the

beneficiaries, the levy should be regarded as tax. The three

Judge Bench referred to the proposition laid down in Kewal

Krishna Puri’s case (supra) and observed:

“It would appear that there are certain observations to be
found in the judgment in Kewal Krishan Puri case which were
really not necessary for purposes of the decision and go beyond
the occasion and therefore they have no binding authority
though they may have merely persuasive value. The observation
made therein seeking to quantify the extent of correlation
between the amount of fee collected and the cost of rendition
of service, namely: (SCC p. 435, para 23): “At least a good and
72

substantial portion of the amount collected on account of fees,
maybe in the neighbourhood of two-thirds or three-fourths, must
be shown with reasonable certainty as being spent for rendering
services in the market to the payer of fee”, appears to be an
obiter.

The traditional view that there must be actual quid pro quo for
a fee has undergone a sea change in the subsequent decisions.
The distinction between a tax and a fee lies primarily in the
fact that a tax is levied as part of a common burden, while a
fee is for payment of a specific benefit or privilege although
the special advantage is secondary to the primary motive of
regulation in public interest if the element of revenue for
general purpose of the State predominates, the levy becomes a
tax. In regard to fees there is, and must always be,
correlation between the fee collected and the service intended
to be rendered. In determining whether a levy is a fee, the
true test must be whether its primary and essential purpose is
to render specific services to a specified area or class; it
may be of no consequence that the State may ultimately and
indirectly be benefited by it. The power of any legislature to
levy a fee is conditioned by the fact that it must be “by and
large” a quid pro quo for the services rendered. However,
correlationship between the levy and the services rendered (sic
or) expected is one of general character and not of
mathematical exactitude. All that is necessary is that there
should be a “reasonable relationship” between the levy of the
fee and the services rendered.”

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

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

levy of cess under the Haryana Rural Development Act, 1986, the

three Judge Bench referred to the scheme of the Act and held

that from the scheme of the Act it would be clear that there is

a broad, reasonable and general corelationship between the levy

and the resultant benefit to the producer of the agricultural

produce, dealer and purchasers as a class though no single

payer of the fee receives direct or personal benefit from those

services. Though the general public may be benefited from some
73

of the services like laying roads, the primary service was to

the producer, dealer and purchaser of the agricultural produce.

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

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

various    precedents      including      the   judgments     in   Commissioner,

Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar

of Sri Shirur Mutt (supra), Mahant Sri Jagannath Ramanuj Das v.

State of Orissa (1954) SCR 1046, Ratilal Panachand Gandhi v.

State of Bombay (1954) SCR 1055, H.H. Sadhundra Thirtha Swamiar

v. Commissioner for Hindu Religious and Charitable Endowments

1963    Supp   (2)   SCR    302,   Corporation     of   Calcutta     v.   Liberty

Cinema (supra), Kewal Krishna Puri v. State of Punjab (supra),

Sreenivasa General Traders v. State of A.P. (supra), Om Parkash

Agarwal v. Giri Raj Kishori (1986) 1 SCC 722, Kishan Lal Lakhmi

Chand     v.   State       of   Haryana     (supra)     and    culled     out   9

propositions, of which proposition No. 7 is extracted below:

“(7) It is not a postulate of a fee that it must have relation
to the actual service rendered. However, the rendering of
service has to be established. The service, further, cannot be
remote. The test of quid pro quo is not to be satisfied with
close or proximate relationship in all kinds of fees. A good
and substantial portion of the fee must, however, be shown to
be expended for the purpose for which the fee is levied. It is
not necessary to confer the whole of the benefit on the payers
of the fee but some special benefit must be conferred on them
which has a direct and reasonable corelation to the fee. While
conferring some special benefits on the payers of the fees, it
is permissible to render service in the general interest of all
concerned. The element of quid pro quo is not possible or even
necessary to be established with arithmetical exactitude. But
it must be established broadly and reasonably that the amount
is being spent for rendering services to those on whom the
burden of the fee falls. There is no postulate of a fee that it
must have a direct relation to the actual services rendered by
74

the authorities to each individual to obtain the benefit of the
service. The element of quid pro quo in the strict sense is not
always a sine qua non for a fee. The element of quid pro quo is
not necessarily absent in every tax. It is enough if there is a
broad, reasonable and general corelationship between the levy
and the resultant benefit to the class of people on which the
fee is levied though no single payer of the fee receives direct
or personal benefit from those services. It is immaterial that
the general public may also be benefited from some of the
services if the primary service intended is for the payers of
the fees.”

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

476, another three Judge Bench considered the validity of levy

and   collection   of   market   fee   from   sellers   of   specified

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

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

following principles:

“(1) there should be relationship between service and fee,

(2) that the relationship is reasonable cannot be established
with mathematical exactitude in the sense that both sides must
be equally balanced,

(3) in the course of rendering such services to the payers of
the fee if some other benefits accrue or arise to others, quid
pro quo is not destroyed. The concept of quid pro quo should be
judged in the context of the present days — a concept of
markets which are expected to render various services and
provide various amenities, and these benefits cannot be
divorced from the benefits accruing incidentally to others,

(4) a reasonable projection for the future years of practical
scheme is permissible, and

(5) services rendered must be to the users of those markets or
to the subsequent users of those markets as a class. Though fee
is not levied as a part of common burden yet service and
payment cannot exactly be balanced.

(6) The primary object and the          essential   purpose    of   the
imposition must be looked into.”
75

64.       If   the  conditions  imposed   by  the    BDA   requiring
the respondents         to     pay     for      augmentation
of     water     supply,
electricity, transport, etc. are scrutinized in the light of

the principles laid down in Sreenivasa General Traders v. State

of A.P. (supra), Kishan Lal Lakhmi Chand v. State of Haryana

(supra)    and      I.T.C.      Ltd.   v.    State       of    Karnataka
(supra),  it cannot be said that the demand made by the BDA amounts
to levy of tax and is ultra vires Article 265 of the Constitution.

65.       Under      the    1976   Act, the  BDA  is  obliged   to
provide different types of amenities to the population of the Bangalore
Metropolitan Area including the allottees of the sites in the layouts prepared
by    house      building        societies. It    is   quite possible that they
may not be the direct beneficiaries of one or the other amenities made
available by the BDA, but this cannot    detract        from    the     fact
that      they     will    certainly        be benefited      by    the     construction
of     the    Outer       Ring    Road      and Intermediate Ring Road, Mass Rapid
Transport System, etc. They will also be the ultimate beneficiaries of the
Cauvery Scheme because availability of additional 270 MLD water to Bangalore
will enable BWSSB to spare water for the private layouts. It is neither the pleaded
case of the respondents nor it has been argued    that      the    allottees
of sites   in the layouts   to be developed by the private societies will not get
benefit of amenities provided by the BDA.   Thus, charges demanded by the
BDA under Section 32(5A) cannot be termed as tax and declared
76

unconstitutional on the ground that the same are not sanctioned by the law
enacted by competent legislature.

Question (4)

66.         The    only     issue     which    survives         for    consideration
is whether       the     charges       demanded         by        the    BDA
are   totally disproportionate    to    its    contribution   towards   Cauvery
Water Scheme, Ring Road, Mass Rapid Transport System, etc. We may have
examined the issue in detail but in view of the affidavit dated 11.11.2009 filed
by Shri Siddaiah, the then Commissioner, BDA    to    the    effect that only
Rs.     34.55      crores    have     been collected    between February, 1988
to    4.6.2005      towards     the Cauvery Scheme and a sum of Rs. 15.15 crores
has been collected by way of Ring Road surcharge between 1992-93 and 2005-06
and that the State Government has directed that henceforth Ring Road surcharge,
the Cauvery Water Cess and MRTS Cess should not be    levied  till appropriate
decision  is taken,  we do  not consider it necessary to adjudicate the controversy,
more so, because in the written arguments filed on behalf of the BDA it has been
categorically stated that the Government has to take a decision about the pending
demands and the Court may issue appropriate direction in the matter, which the
BDA will comply.

In our view, ends of justice will be served by directing the State Government to
take appropriate decision in the light of communication dated 03.05.2005.

67.         So far as the levy of supervision charges, improvement
77

charges, examination charges, slum clearance development charges and MRTS
cess is concerned, it is appropriate to mention that the High Court has not assigned
any reason for declaring the levy of these charges to be illegal. Therefore, that part
of the impugned order cannot be   sustained. Nevertheless,   we  feel   that   the
State Government    should   take  appropriate  decision  in  the matter of levy of
these charges as well and determine whether the same were disproportionate to
the expenses  incurred      by     it,         the        BDA      or      any
other agency/instrumentality of the State.

68.   In the result, the appeals are allowed, the impugned  order is set aside and
the writ petitions filed by the respondents are dismissed subject to the direction that
within three months from the date of receipt/production of the copy of this
judgment, the State Government shall take   appropriate   decision    in  the
context        of communication dated 03.05.2005.    Within this period, the
State Government shall also decide whether the levy of supervision   charges,
improvement           charges,    examination charges,   slum    clearance
development        charges       and   MRTS cess at the rates specified in the
communications of the  BDA was excessive. The decision of the State Government
should be communicated to the respondents within next four weeks. If any of the
respondents feel aggrieved by
78

the decision of the State Government then it shall be free  to avail appropriate
legal   remedy.   The  parties  shall bear their respective costs.

………………………………….J.
[G.S. Singhvi]
………………………………….J.
[Asok Kumar Ganguly]

New Delhi,
January 24, 2012.
79

ITEM NO.1A                  COURT NO.6             SECTION IVA

S U P R E M E     C O U R T   O F    I N D I A
RECORD OF PROCEEDINGS

CIVIL APPEAL NO(s). 7503-7537 OF 2002

BANGALORE DEVELOPMENT AUTHORITY                      Appellant (s)

VERSUS

AIR CRAFT EMPLOYEES COOP.SOCIETY LTD&ORS             Respondent(s)

Date:   24/01/2012     These   Appeals      were   called     on   for
pronouncement of Judgment today.

For Appellant(s)      Mr. S.K. Kulkarni,Adv.
Mr. Ankursku Lkarni,Adv.
Mr. Vijay Kumar,Adv.

For Respondent(s)     Mr.Vishwanatha Shetty,Sr.Adv
Mr. E.C. Vidya Sagar,Adv.

Ms. Bina Gupta ,Adv

Mr. P.P. Singh ,Adv

Mr. Sanjay R. Hegde ,Adv
Mr. Bipin Kalappa,Adv.
Mr. MN Krishna,Adv.

UPON hearing counsel the Court made the following
O R D E R

Hon’ble Mr. Justice G.S. Singhvi pronounced the judgment
of the Bench comprising His Lordship and Hon’ble Mr. Justice
Asok Kumar Ganguly.

Appeals are allowed in terms of the Judgement.
80

(N.K. Goel)                       (VEENA KHERA)
Court Master                      Court Master
[signed reportable Judgment is placed on the file]

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