REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 7503-7537 OF 2002

Bangalore Development Authority … Appellant

versus

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

J U D G M E N T

G. S. Singhvi, J.

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

Bench of the Karnataka High Court whereby the writ petitions  

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

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

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

void  and  inoperative  and  the  conditions  incorporated  in  the  

orders  passed  by  the  Bangalore  Development  Authority  (BDA)

sanctioning residential layout plans or work orders in terms of  

which  respondents  were  required  to  pay/deposit  various  

charges/sums  specified  therein  were  quashed  and  a  direction  

was issued for refund of the amount.    

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

considered necessary to have a uniform law for planned growth  

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

town planning schemes.  Therefore, the State Legislature enacted  

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

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

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

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

providing  full  civic  and social  amenities  for  the  people  in  the  

State;   

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

speculation and profiteering in land;   

(iii) to preserve and improve existing recreational facilities and  

other amenities contributing towards balanced use of land; and  

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

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with  a  view  to  ensuring  desirable  standards  of  environmental  

health and hygiene, and creating facilities for the orderly growth  

of industry and commerce, thereby promoting general standards  

of living in the State.      

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

Thereupon, necessary consequential changes were made in the  

nomenclature  of  various  enactments  including  the  Town  

Planning Act.  

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

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

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

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

provisions  enabled  the  State  Government  to  issue  notification  

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

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

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

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

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

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

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

(unamended),  an  outline  development  plan  was  required  to  

indicate the manner in which the development and improvement  

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

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

comprehensive development plan and submission of the same for  

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

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

comprehensive  development  plan.   Section  26  (unamended)  

imposed  a  duty  on  every  Planning  Authority  to  prepare  town  

planning schemes incorporating therein the contents specified in  

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

provisions are extracted below :   

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

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

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

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

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

Provided  that  on  application  made  by  a  Planning Authority, the State Government may from  time to time by order, extend the aforesaid period by  such periods as it thinks fit.    12. Contents of Outline Development Plan.-(1) An  outline development plan shall generally indicate the  manner in which the development and improvement  of the entire planning area within the jurisdiction of  the  Planning  Authority  are  to  be  carried  out  and  regulated. In particular it shall include,-

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

(b) proposals for roads and highways;

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

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

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

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

Provided  that  on  application  made  by  a  Planning Authority, the State Government may, from  time to time, by order in writing, extend the aforesaid  period by such periods as it thinks fit.

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

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

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(b)  complete  street  pattern,  indicating  major  and  minor  roads,  national  and  state  high  ways,  and  traffic circulation pattern, for meeting immediate and  future requirements;

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

(d) major road improvements;

(e) areas for new housing;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(g) lighting;

(h) water supply;

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

(j)  the  imposition  of  conditions  and  restrictions  in  regard  to  the  open  space  to  be  maintained  about  buildings, the percentage of building area for a plot,  the number, size,  height and character of buildings  allowed  in  specified  areas,  the  purposes  to  which  buildings  or  specified  areas  may  or  may  not  be  

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appropriated,  the  sub-division  of  plots,  the  discontinuance of objectionable users of land in any  area in reasonable periods, parking space and loading  and unloading space for any building and the sizes of  projections and advertisement signs;

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

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

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

backdrop of the decision taken at the conference of the Ministers  

for Housing and Urban Development held at Delhi in November  

1971  that  a  common  authority  should  be  set  up  for  the  

development of  Metropolitan Cities.   Before the constitution of  

the  BDA,  different  authorities  like  the  City  of  Bangalore  

Municipal Corporation, the City Improvement Trust Board, the  

Karnataka  Industrial  Area  Development  Board,  the  Housing  

Board and the Bangalore City Planning Authority were exercising  

jurisdiction over the Bangalore Metropolitan Area. Some of the  

functions  of  these  authorities  like  development,  planning  etc.  

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were overlapping and creating avoidable confusion. Not only this,  

the intervention of multiple authorities was impeding coordinated  

development  of  the  Metropolitan  Area.  It  was,  therefore,  

considered  appropriate  that  a  single  authority  like  the  Delhi  

Development Authority should be set up for the city of Bangalore  

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

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

growth  would  continue  unless  checked  by  the  development  

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

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

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

inserted in the Town Planning Act for deemed dissolution of the  

City Planning Authority in relation to the area falling within the  

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

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

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

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

thereof are reproduced below:        

“An  Act  to  provide  for  the  establishment  of  a  Development Authority for the development of the City  

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of  Bangalore  and  areas  adjacent  thereto  and  for  matters connected therewith

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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“14. Objects of the Authority.-  The objects of  the  Authority  shall  be  to  promote  and  secure  the  development of the Bangalore Metropolitan Area and  for that purpose the Authority shall have the power to  acquire, hold, manage and dispose of moveable and  immoveable property, whether within or outside the  area  under  its  jurisdiction,  to  carry  out  building,  engineering and other operations and generally to do  all things necessary or expedient for the purposes of  such  development  and  for  purposes  incidental  thereto.

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

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

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

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

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

(iii) otherwise.

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

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

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

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

(c) drainage, water supply and electricity ;

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

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

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

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

(c) the sanitary arrangements required ;

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

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

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

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

28-B.  Levy  of  tax  on  lands  and  buildings.-  (1)  Notwithstanding anything contained in this Act, the  Authority may levy a tax on lands or buildings or on  both,  situated  within  its  jurisdiction  (hereinafter  referred to as the property tax) at the same rates at  which such tax is levied by the Corporation within its  jurisdiction.

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

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

28-C. Authority is deemed to be a Local Authority  for  levy  of  cesses  under  certain  Acts.-  Notwithstanding  anything  contained  in  any  law  for  

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the time being force the Authority shall be deemed to  be  a  local  authority  for  the  purpose  of  levy  and  collection of,-

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

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

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

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

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

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

Provided further that where the Corporation and the  Authority  do  not  agree  on  the  formation  of  or  the  conditions  relating  to  the  extension  or  layout,  the  

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matter  shall  be  referred to  the  Government,  whose  decision thereon shall be final.

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

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

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

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

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

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

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

(5)  The  Authority  may  require  the  applicant  to  deposit, before sanctioning the application, the sums  

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

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

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

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

(2) If the Government is of opinion that the execution  of any resolution or order issued by or on behalf of  the  Authority or  the doing of any act which  is about  to be  done  or is  being done by or on behalf of the  Authority  is  in contravention of  or in excess of  the  powers conferred by this Act or any other law for the  

18

time being  in force or is likely to lead to a breach of  peace or to cause injury or annoyance to the public  or  to  any class or  body of persons or is prejudicial  to the  interests of the authority, it may, by order in  writing, suspend the execution of such resolution or  order or prohibit  the doing of any  such  act after  issuing  a  notice   to  the  Authority  to  show  cause,  within  the specified period  which shall not be less  than fifteen days, why,-  

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

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

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

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

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

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

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

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

(i) the Bangalore Development Authority shall be  the  local  Planning  Authority  for  the  local  planning area comprising the City of Bangalore  with  jurisdiction  over  the  area  which  the  City  Planning Authority for the City of Bangalore had  jurisdiction  immediately  before  the  date  on  which the  Bangalore  Development Authority  is  constituted;

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

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

****”

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

Town Planning Act, the State Government issued Notifications  

dated 1.11.1965 and 13.3.1984 declaring the areas specified  

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

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notification,  the  State  Government  declared  the  area  

comprising the city of Bangalore and 218 villages enumerated  

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

purposes of  the Town Planning Act  and described it  as the  

Bangalore City Planning Area.  The limits of the planning area  

were described in Schedule II appended to the notification.  By  

the  second  notification,  the  area  comprising  325  villages  

around Bangalore (as mentioned in Schedule I) was declared  

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

The limits of the city planning area were indicated in Schedule  

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

following note was added:

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

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

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

Planning  Areas  of  Bangalore  declared under  the  earlier  two  

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

1.4.1984.   

21

9. On 1.3.1988, the State Government issued notification under  

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

the first Schedule and within the boundaries indicated in the  

second  Schedule  to  Notification  dated  13.3.1984  to  be  the  

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

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

negation of the respondents’ challenge to that notification on  

the ground that the names of the villages or specified areas  

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

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

governed by the 1976 Act.

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

city of Bangalore between 1970 and 1980, the available civic  

amenities  like  roads,  water  supply  system  and  supply  of  

electricity were stretched to their limit.  To meet the additional  

requirement of water and electricity and to tackle the problems  

of traffic, new schemes were prepared in the development plan  

of  Bangalore  city,  which  was  approved  in  1984.   These  

included  augmentation  of  water  supply,  formation  of  Ring  

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Road  etc.   Bangalore  Water  Supply  and  Sewerage  Board  

(BWSSB) submitted a proposal  to the State Government for  

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

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

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

proposed financing pattern of the project was as follows:  

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

(ii) Life Insurance  Corporation of India - Rs. 50/- crores,

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

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

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

taking  cognizance  of  the  difficulties  being  experienced  by  

BWSSB in supplying water to the Bangalore Metropolitan Area  

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

if  the  supply  was  not  augmented,  granted  approval  to  the  

Cauvery Scheme.   

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

year 1988 and the Cauvery Scheme was to be implemented by  

23

1990  to  meet  the  drinking  water  needs  of  the  residents  of  

Bangalore,  the  issue was discussed in the  meeting held  on  

01.01.1987 under the chairmanship of the Chief Secretary of  

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

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

sources  including  the  BDA because  substantial  quantity  of  

water was required for the layouts which were being developed  

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

decision, the State Government issued order dated 25.03.1987  

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

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

loading an extra amount as water supply component at the  

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

to be formed thereafter.   

13.In  compliance  of  the  directions  given  by  the  State  

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

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

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

not  been  able  to  develop  and  distribute  sites  as  expected.  

24

Therefore,  a  proposal  was  submitted  by  the  Commissioner,  

BDA to the State Government that contribution towards the  

Cauvery Scheme may be distributed among those applying for  

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

the house building societies and on major housing projects.  

The State Government accepted the suggestion of the BDA and  

passed order dated 12.1.1993 for the levy of charges under the  

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

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

63.30  kilometers  long  Outer  Ring  Road  and  3.5  kilometers  

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

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

kilometers of the Outer Ring Road was to pass through the  

BDA layouts and the balance was to pass through the land  

outside  the  BDA layouts.  The cost  of  construction of  Outer  

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

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

balance  27.06  kilometers  of  Outer  Ring  Road  and  3.5  

kilometers of Intermediate Ring Road a proposal was prepared  

25

to  obtain  financial  assistance  from the  World  Bank.  In  the  

meeting held on 5.6.1992 under the chairmanship of the Chief  

Secretary  of  the  State,  the  possibility  of  taking  loan  from  

HUDCO  was  explored.  Simultaneously,  it  was  considered  

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

beneficiaries of the private layouts and it was agreed that like  

the Cauvery Scheme, Ring Road surcharge should be levied on  

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

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

passed  Resolution  dated  19.10.1992  for  levy  of  charges  at  

different rates on change of land use in different areas and  

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

private lands as also the sites formed by itself.

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

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

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

Singasandra  and  Kudlu  villages,  Surjapur  Hobli  and  Begur  

Hobli  respectively.   The  application  of  the  respondent  was  

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

26

approved subject to various conditions including payment of  

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

as Ring Road surcharge. Another condition incorporated in the  

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

be carried out by the respondent under its supervision. The  

decision of the BDA was communicated to the respondent vide  

letter dated 12.11.1992.

16.The  respondent  challenged  the  conditional  sanction  of  its  

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

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

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

making the following assertions:  

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

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

private House Building Societies because as per the Chairman of  

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

providing  water  supply  and  underground  drainage  to  such  

layouts and the societies had to make their own arrangements.

27

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

only the citizens residing within the municipal  area and some  

newly formed layouts adjacent to the city.   

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

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

burden of capital required for the execution of schemes could be  

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

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

of the 1964 Act.   

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

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

the private layouts.

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

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

been acquired by the Government for House Building Cooperative  

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

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

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

only.

28

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

Scheme  is  ultra  vires the  provisions  of  Article  265  of  the  

Constitution.

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

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

private  layouts  without  determining  whether  the  Ring  Road  

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

Societies.   

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

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

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

authorising  the  BDA to  demand sums in  addition  to  those  

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

execution of any scheme or work for augmenting water supply,  

electricity,  roads,  transportation  and other  amenities  within  

the Bangalore Metropolitan area.

18. The  respondent  promptly  amended  the  writ  petition  and  

challenged  the  constitutional  validity  of  the  newly  inserted  

sub-section by asserting that the provision is discriminatory  

29

and violative of Article 14 of the Constitution because it gives  

unbridled  and  uncanalized  power  to  the  BDA  to  demand  

additional  sums for  different  schemes.   It  was also pleaded  

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

legitimize  the  conditions  incorporated  in  letter  dated  

12.11.1992 for payment of   charges for the  Cauvery Scheme  

and the Ring Road.

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

amended provision and legality of the conditional sanction of  

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

starting  civil  work.  The  same  was  sanctioned  subject  to  

payment of the following charges:  

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

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

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

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

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

30

(Rs. 50,000 per acre)

(vi) Miscellaneous Rs. 7,189.00

20.The respondent  challenged the  conditional  approval  of  civil  

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

1976  Act  does  not  authorize  such  levies  and  that  the  

legislature has not laid down any guideline for creating such  

demand  from  the  private  House  Building  Societies.  An  

additional plea taken by the respondent was that the BDA has  

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

mistaken  impression  that  the  layout  was  within  its  

jurisdiction. According to the respondent, no notification had  

been issued by the State Government for including the villages  

of North and South Talukas within the Bangalore Metropolitan  

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

Government  has  already  collected  conversion  fine  and,  as  

such,  the  BDA  does  not  have  the  jurisdiction  to  levy  

betterment  fee.  Similar  plea  was  raised  in  respect  of  Mass  

Rapid  Transport  System  Cess  and  the  Slum  Clearance  

charges.

31

21.The other House Building Cooperative Societies also filed writ  

petitions between 1994 and 1998 for  striking down Section  

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

which they were required to pay for the Cauvery Scheme and  

the  Ring  Road  apart  from  other  charges  mentioned  in  the  

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

Employees  Cooperative  Society  Limited.  They  generally  

pleaded that:

i. the  BDA has  no jurisdiction  to  make  demands requiring  

payment  of  sums  under  various  heads  in  the  matter  of  

sanction  of  the  residential  layout  plan  as  areas  of  their  

layouts  do  not  form  part  of  the  Bangalore  Metropolitan  

Area;

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

valid as there is no specification of the adjacent areas;

iii. Notification dated 1.3.1988 is not in consonance with the  

requirements of law as it does not specify the villages and  

the areas which were sought to be declared and specified as  

part  of  the  Bangalore  Metropolitan  Area  and  the  

32

specifications and schedules referred to in the notification  

have not been published;

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

residential  layouts  also  do  not  figure  in  the  schedule  to  

Notification dt. 13.3.1984.

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

the following assertions:

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

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

are liable to pay layout charges in respect of the Cauvery  

Scheme,  Ring  Road  surcharge,  slum  clearance  charge,  

betterment levy, scrutiny fee, supervision charges, etc.

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

by  the  State  Government  and  the  decision  taken  by  the  

BDA.

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

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

supervision charges.

33

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

constitutional  infirmity  and  guidance  for  levy  of  such  

charges can be traced in the scheme of the Act.

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

question  whether  Notification  dated  1.3.1988  issued  under  

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

the  villages  or  the  specified  area  had  not  been  notified  or  

published in the Official Gazette and whether in the absence of  

such  notification,  the  villages  in  which  the  societies  had  

formed  layouts  cannot  be  treated  as  part  of  the  Bangalore  

Metropolitan  Area.   The  Division  Bench  referred  to  the  

definition  of  the  expression  “Bangalore  Metropolitan  Area”  

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

Notification dated 1.3.1988 and held that the description of  

the area given in the notification was in consonance with the  

definition  of  the  Bangalore  Metropolitan  Area  because  

reference  had  been  made  to  the  villages  in  Schedule  I  to  

Notification  dated  13.3.1984  and  the  boundaries  of  the  

planning  environs  area  as  per  Schedule  II  of  the  said  

34

notification.  The Division Bench opined that if  Notifications  

dated 13.3.1984 and 1.3.1988 are read together, it cannot be  

said  that  the  particular  villages  do  not  form  part  of  the  

Bangalore Metropolitan Area.

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

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

observing  that  determination  of  this  question  involves  

investigation into a question of fact and this can be considered  

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

society.

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

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

jurisdiction because the areas in question had become part of  

City Municipal Council, Byatarayanapura and City Municipal  

Council,  Krishnaraja  Puram  respectively  vide  Notification  

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

to  the  concerned  respondent  to  raise  the  same  at  an  

appropriate stage.

35

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

the Constitution and held that the BDA cannot levy or recover  

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

government order or circular.  The Division Bench further held  

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

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

The Division Bench then analysed the provisions of Section 32  

of the 1976 Act and observed:

“No  principle  appears  to  have  been  laid  down  or  indicated  for  the  authority  to  be  kept  in  view  and  followed  when  determining  in  such  portion  of  the  expenditure,  which expenditure  have  to  relate  to  be  made  or  to  be  incurred  in  the  execution  of  any  schemes or works as referred.  No doubt, the schemes  or works for augmenting the water  supply,  electricity  and other  amenities    only provide    that  it should  be worked within the  Bangalore Metropolitan    Area  or work  is to be for  the benefit    of the    Bangalore  Metropolitan Area to    provide    amenities  within  the    Bangalore    Metropolitan    Area.      But,    the  question    is    that out of  that    expenditure    which  the Bangalore    Metropolitan Area has  to  bear or  incur    what portion    thereof    the    applicant  seeking    approval    of layout  plan etc.,  will  be  required  to  deposit  and  know  the  proportion  or  a  portion  of   that  is   to  be     determined  by   the  authority.    There is nothing  in  this section    to  indicate    or    to provide any guideline.    There    are  no rules    framed    under     the Act with    reference  to    subsection       (5-A)      of    Section    32    of  the  

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Bangalore Development Authority Act, 1976 to provide  guidelines or  to indicate as  to how that  is  to be  determined.  The section    does    not by itself  provide  any    procedure    of either    hearing or of giving  the  notice to the    persons affected,    or    there being  opportunity of    being    heard being    given  to the  concerned persons or person    before determination  of   the  portion  of   the  expenditure     which  the  Bangalore Development Authority has  to incur    with  reference    to    those    schemes or    works    to    be  levied thereunder.”

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

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

538,  Jyoti  Pershad v.  The  Administrator  for  The  Union  

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

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

Kerala  v.  M/s.  Travancore  Chemicals  and  Manufacturing  

Company  (1998) 8 SCC 188 and observed:

“In    the    present case,  sub-section    (5-A)    of  Section  32 of  the Act,  does not appear to provide  any  guidelines  so  as  to  determine as  to  what  exact  portion of    the    expenditure should  the applicant  be    required to deposit.     No doubt,   the entire  expenditure cannot be fastened    on    the    applicant.  It    does    not      provide any    guidelines    in  this  regard.   It    does    not    provide the portion of the  amount the applicant maybe    required to    deposit  shall    bear any percentage    on    the    basis of  enjoyment    of  the benefit by the applicant    or    the  

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applicant   likely  to enjoy the  benefit  qua enjoyment  by total  area or its  population.     It also does not  provide that    the applicant  before  being  required  to  pay    will have      opportunity      of    disputing   that  claim      and challenging  the correctness of   the  portion  proposed    by the authority to be  fastened on  him.   Really  the  section  appears  to  confer  unbridle  powers     without     providing  any  guide  lines  or  guidance  in  that  regard.  The  section  also  does  not  provide  any  remedy  against  the  order  of  authority  under Section 32(5)  of  the Act.

The  learned  counsel  for  the  respondents  contended  that there is remedy against the order of the authority  under    Section   63    of    the    Act      by      way of  revision     to    the    Government    which    may  consider  the   legality  or  propriety  of   the  order  or  proceedings. In our opinion,   this contention of  the  learned    Counsel is    without    substance.  In view of  the    Non    obstante clause contained  in sub-section  (5-A)  of Section 32    of the Act which provides that  exercise of  that power    and it      may      result    in  or    it    may      cause      irrational discrimination  between  the same set of   persons and the persons  maybe deprived of  their  properties  in  the    form of  money    by    the    exercise    of    sweet    will    and  the  unbridled     discretion  of   the  authority  concerned.    In  our     view    this  provision  as  it  confers    unbridle    and uncontrolled    power    on  the authority    as such    it    may enable    unequal  and    discriminatory     treatment    to    be accorded  to  the  persons  and  it  may enable  the  authority  to  discriminate among  the persons similarly    situated.  Tested   by the yardstick of  the principle  laid down  in  Sri     Rama Krishna Dalmia's  case  reported   in  A.I.R.1958 Supreme    Court    538    and    Shri  Jyothi    Pershad's    case reported    in A.I.R. 1961  Supreme Court  1602. We    find that    the provision  of  sub-section   (5-A)   of  Section     32  of     the  

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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  

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towards  the  Cauvery  Scheme  and  the  amount  demanded  

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

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

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

the then Commissioner, BDA, filed affidavit dated 11.11.2009,  

paragraphs 2 to 5 of which are extracted below:  

“2.  The  Government  of  Karnataka  formed  the  Cauvery Water IIIrd Stage Scheme in 1984. However,  the Government directed the Bangalore Development  Authority to contribute Rs. Thirty crores towards the  Cauvery Water IIIrd Stage Scheme by its order No.  HUD 97 MNI 81, Bangalore dated 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 RoadCess  and  MRTS Cess. A copy of the order of the Government  Order  dated  03.05.2005  directing  not  collect  any  cess  referred  above  is  produced  herewith  as  Annexure-‘A’. The BDA has charged and collected the  Cauvery  water  cess  between  1988  and  2005.  The  Cauvery  Water  cess  collected  by  the  BDA  is  periodically  transferred  to  the  Bangalore  Water  Supply  and  Sewerage  Board  (BWSSB).  The  chart  showing  year  wise  payments  made  to  BWSSB  towards the Cauvery Water Cess from 1988 till 2005  is produced herewith as Annexure-‘B’. The payment  chart  shows  the  amount  collected  towards  the  Cauvery Water Cess and paid to BWSSB. The chart  shows  that  a  total  sum  of  Rs.  34.55  crores  are  collected  from  1988  to  April  2005.  The  sum  of  

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Rs.34.55 crores collected is in respect of both private  layouts as well as Bangalore Development Authority  sites.  The  entire  money  collected  towards  the  Cauvery Water Cess has been paid to the Bangalore  Water Supply Sewerage Board, Bangalore as stated  above.

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

4.  With regard to certain averments made in W.P.  No. 11144/1993 with regard to estimated collection  of  Cauvery  Water  Cess,  it  is  submitted  that  the  estimates are  far  from accurate.  It  is  just  a guess  work.  The  averments  made  therein  that  the  Government  has  acquired  around  10,000  acres  towards the private societies will  not be within the  knowledge of the Bangalore Development Authority,  because the Government does not seek the opinion  or consent of BDA before acquiring land for a private  layout. The private layouts within the limits of BDA  have to apply to BDA for approval of a private under  Section  32  of  BDA Act.  From 1984  till  2005,  194  applications  for  approval  of  private  layouts  were  received  and  were  approved  by  the  Bangalore  Development Authority involving about an extent of  5668 acres and 15 3/4th 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.

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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)

SL NO CHEQUE NO. DATE AMOUNT

1 FROM FEB 1988 TO APRIL 1992 2,130.00 2 705908 02.11.1996 150.00 3 718093 21.01.1997 100.00 4 737303 15.03.1997 100.00 5 753086 06.07.1997 100.00 6 756449 30.12.1997 150.00 7 650002 18.03.1998 50.00 8 759664 20.07.1998 50.00 9 502441 22.01.1999 50.00 10 769862 15.09.1999 75.00 11 653066 04.06.2005 500.00

TOTAL 3,455.00

(Rupees Thirty Four Crores and Fifty Five Lakh)

            Sd/- Accounts Officer BDA,  

Bangalore

ANNEXURE-II  YEAR WISE RING ROAD CESS    

     (INR in Lakh) YEAR COLLECTIONS CHARGED TO RING  

ROAD EXPEND. BALANCE

1992-93  (Feb 93 on wards)

63.39  63.39 -

1993 -94 183.89 183.89 -

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1994-95 217.87 217.87 - 1995-96 331.14 331.14 - 1996-97 162.08 162.08 - 1997-98 180.79 180.79 - 1988-99 84.23 84.23 - 1999-00 50.49 50.49 - 2000-01 19.48 19.48 - 2001-02 0.30 0.30 - 2002-03 7.34 7.34 - 2003-04 - - - 2004-05 - - - 2005-06 214.27 214.27 -

TOTAL 1,515.27 1,515.27 ”

Letter  dated  03.05.2005  of  the  State  Government,  which  is  

enclosed with the affidavit of Shri Siddaiah, is also reproduced  

below:

“               GOVERNMENT OF KARNATAKA

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

      Dated: 03.05.2005

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

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

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

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Corporations,  Municipalities  and  Authorities  are  charging the above cess.

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

Sd/-03.05.2005 (V.R. Ilakal)

Addl. Secretary, Govt. of Karnataka Urban Development”

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

and Officials House Building Cooperative Society Limited filed  

detailed affidavit dated 08.03.2010, paragraphs 2 to 7 whereof  

are reproduced below:  

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

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

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

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

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

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

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

4. I say that in the affidavit under reply the BDA has  stated that it has approved layouts involving about  an extent of 5668 acres and 15 ¾ guntas from 1984  till 2005.  The extent of area involved in respect of  each of the Societies is more than 10 acres in each  layout. In terms of the Government Order the BDA  has  demanded  towards  the  Cauvery  Water  Supply  Scheme at the rate of Rs. 3,00,000/- (Rupees Three  Lakhs  Only)  per  acre.  Therefore,  at  a  conservative  estimate the BDA has raised demand of more than  Rs. 170/- crores (5668 x Rs. 3 lakhs). This amount  pertains to only Housing Societies. As stated above  the  BDA  has  not  disclosed  the  total  number  of  

45

layouts  formed by  it  and the  total  number  of  site  allotted in the said layouts to its allottees. I say that  the  BDA  has  in  its  officials  site  http://www.bdabangalore.org/layout.htm  has  furnished  the  layout  information  till  2007  which  information has been downloaded from the internet  by the deponent. As per the information published  by the BDA itself it has formed 62 layouts and has  made  allotments  of  about  2  lakh  sites  to  general  public. It is also stated therein that in the last one  decade more than 10 new layouts have been added  to the growing city of Bangalore by BDA as under:  

A. BANASHANKARI 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.

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A  total  of  9900  sites  have  been  allotted  in  HSR  Layout during 1986 to 88, 92, 95 and 99.

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

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

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

In  Anjanpura  Further  Extension  we  have  allotted  7340 sites

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

H. In Arkavathi Layout, in the 1st Phase 1710 sites  and  in  the  2nd phase  8314  sites  of  different  dimensions. A total of 3664 (30x40) dimension sites  have been allotted totally at the rate of Rs. 2100 sq.  mtrs.

S.No Name  of  the  layout

Location No. of sites formed Intermediate Corner Total No.  of  sites  

allotted 1 BSK 6th Stage 2

South part of  the city with  approach  road  from  Kengeri Road

15520 2379 17899 15520 5175 816 5991 5175

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3 Anjanapura  Township 1 to 8th  Block

4

South part of  the city with  approach  road  from  Kanakapura  Road.  Biggest  Layout  formed  in  recent years

5424 829 6253 5424 4340 683 5023 4340

5 SMV Layout 6 SMV  further  

extension 7 Arkavath

West  part  of  the city with  approach  road  from  Nagarabhavi  Road

9696 1764 11460 9696 3615 650 4265 3615 20000 8600 28600 8813

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

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

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

6.  I  say  that  apart  from  the  amount  levied  and  collected  by  BDA  from  the  above  mentioned  Applicants, the BDA must have collected the amount  towards the Cauvery Water Supply Scheme from the  Applicants who applied for change in land use and  

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for  formation  of  Group  Housing/other  major  developments and for formation of Private Layouts at  the  rate  as  prescribed  in  the  Government  Order  dated 25.03.1987.

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

I say that apart from the fact that the BDA is not  empowered to levy and collect the amount towards  Cauvery  Water  Supply  Scheme  and  without  prejudice  to  the  submission  that  the  provisions  of  Section  32(5-A)  of  the  BDA  Act  is  ultra  vires  the  Constitution  and  without  prejudice  to  rights  and  contentions raised in the Civil Appeal even assuming  that  the  BDA  could  levy  and  collect  the  amount  towards  Cauvery  Water  Supply  Scheme,  the  BDA  could  collect  only  Rs.  30  crores.  The  BDA  has  however  demanded  the  payment  towards  Cauvery  Water  Supply  Scheme  in  excess  of  over  Rs.  370  crores  from  the  Housing  Societies  and  its  own  allottees  apart  from  the  demand  made  from  the  Applicants who applied for change in land use and  for  formation  of  Group  Housing/other  major  developments  and for  formation  of  Private  Layouts  which facts have not been disclosed by the BDA. The  entire  information  pertaining  to  the  demand  and  collection  of  the  funds  towards  Cauvery  Water  

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Supply Scheme is available with BDA but has been  deliberately withheld. In any event even according to  the  affidavit  filed  by  the  BDA  it  has  collected  Rs.34.55 crores as against the limit of Rs. 30 crores  which it could collect under the Government Order.  Therefore, the amount collected is far in excess of its  limit. On this ground also the demand raised against  the  Respondent  Societies  is  illegal  and  without  authority of law.”   

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

which  the  respondents  have  formed  layouts  fall  within  the  

Bangalore  Metropolitan  Area.   In  the  impugned  order,  the  

Division  Bench  has  recorded  brief  reasons  for  negating  the  

respondents’  challenge  to  Notification  dated  1.3.1988.  The  

conclusion  recorded  by  the  Division  Bench  and  similar  view  

expressed by another Division Bench of the High Court in the  

Commissioner,  Bangalore  Development  Authority  v.  State  of  

Karnataka  ILR  2006  KAR  318  will  be  deemed  to  have  been  

approved  by  the  three  Judge  Bench  of  this  Court  in  Bondu  

Ramaswamy v. Bangalore Development Authority (2010) 7 SCC  

129,  which  referred  to  Notifications  dated  1.11.1965  and  

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

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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  

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

In fact ever since 1988 everyone had proceeded on  the  basis  that  the  Bangalore  Metropolitan  Area  included  the  entire  area  within  the  boundaries  mentioned in Schedule II to the Notification dated  13-3-1984. Between 1988 and 2003, BDA had made  several  development  schemes for  the  areas in the  first  concentric  circle  around Bangalore  City  (that  is, in the 218 villages described in First Schedule to  the  Notification  dated  1-11-1965)  and  the  State  Government  had  sanctioned  them.  None  of  those  

52

were challenged on the ground that the area was  not part of Bangalore Metropolitan Area.”

The Bench then considered the argument that the language of  

notification dated 1.3.1988 cannot lead to a conclusion that the  

areas specified in the Schedule were made part of the Bangalore  

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

judgment of the Constitution Bench in Padma Sundara Rao v.  

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

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

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dated  13-3-1984  would  be  the  Bangalore  Metropolitan  Area,  would  result  in  an  absurd  situation.  Obviously  the  city  of  Bangalore  and the  adjoining areas which were notified under the City of  Bangalore  Improvement  Act,  1945  are  already  included in the Bangalore Metropolitan Area and the  interpretation put forth by the appellants would have  the  effect  of  excluding  those  areas  from  the  Bangalore Metropolitan Area.   

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

What is already specifically included by Section 2(c)  of  the  BDA  Act  cannot  obviously  be  excluded  by  Notification  dated  1-3-1988  while  purporting  to  specify  the  additional  areas  adjoining  to  the  areas  which  were  already  enumerated.  Therefore,  the  

54

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

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

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

in the schedules appended to Notifications dated 1.11.1965 and  

13.3.1984 form part  of  the Bangalore  Metropolitan Area.   The  

question whether the BDA has lost  territorial  jurisdiction over  

the  area  in  which  the  House  Building  Societies  have  formed  

layouts need not be decided because the learned counsel for the  

respondents  did  not  challenge  the  observations  made  by  the  

Division Bench of the High Court.

33. We shall now consider the following core questions:

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

Article 14 of the Constitution;  

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

the vice of excessive delegation of legislative power;

(3) whether the  demand  of charges under the Cauvery  

Scheme  etc.   amounts   to   tax and is, therefore,  

ultra  vires  the  provisions  of  Article  265  of  the  

Constitution; and

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

building  societies  and  the  allottees  of  sites  of  the  

layouts prepared by it far in excess of its contribution  

towards the Cauvery Scheme, MRTS, etc.

Question (1)

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

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

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

of the Constitution inasmuch as it does not operate unequally  

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

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

other  hand.  Learned  counsel  emphasised  that  the  allottees  of  

sites in the BDA layouts which were carved out after 20.06.1987  

have  been  burdened  with  the  liability  to  pay  charges  for  the  

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Cauvery Scheme as well as Ring Road and no discrimination has  

been practiced between the two sets of allottees. Learned senior  

counsel Shri Altaf Ahmed submitted that even otherwise there is  

no comparison between the BDA layouts which were formed by  

spending  substantial  public  funds  and  the  private  layouts  

prepared  by  the  house  building  societies.  Learned  counsel  

referred to the additional affidavit of Shri Siddaiah to show that  

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

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

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

share in the Cauvery Scheme.

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

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

counsel appearing for the respondents supported the conclusion  

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

Article 14 of the Constitution by emphasizing that the impugned  

provision  has  resulted  in  hostile  discrimination  between  the  

allottees of sites in the layouts of  the house building societies  

and  other  people  living  in  the  Bangalore  Metropolitan  Area.  

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Learned counsel submitted that while the benefit of the Cauvery  

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

Bangalore  Metropolitan  Area,  the  cost  of  amenities  have  been  

loaded  exclusively  on  the  allottees  of  the  sites  of  the  private  

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

similarly  situated  persons  have  been  discriminated.  Shri  

Venugopal referred to the averments contained in paragraphs 4  

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

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

share towards the Cauvery Scheme and Ring Road exclusively on  

the  allottees  of  the  private  layouts  leaving  out  the  remaining  

population of the Bangalore Metropolitan Area.

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

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

violative  of  Article  14  of  the  Constitution.  While  deciding  the  

issue relating to constitutionality of the Section, the High Court  

overlooked  the  well-established  principle  that  a  statutory  

provision is presumed to be constitutionally valid unless proved  

otherwise  and  burden  lies  upon  the  person  who  alleges  

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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)

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

Court observed:  

“The  Courts,  it  is  accepted,  must  presume  that  the  legislature  understands  and correctly  appreciates  the  needs of its own people, that its laws are directed to  problems  made  manifest  by  experience  and  that  its  discriminations  are  based  on  adequate  grounds.  It  must be borne in mind that the legislature is free to  recognise  degrees  of  harm  and  may  confine  its  restrictions to those cases where the need is deemed to  be the clearest and finally that in order to sustain the  presumption  of  constitutionality  the  Court  may  take  into  consideration  matters  of  common  knowledge,  matters of common report, the history of the times, and  may assume every state of facts which can be conceived  existing at the time of legislation.”

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

which  reference  has  been  made  in  the  impugned  order,  this  

Court laid down various propositions including the following:  

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

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

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

Constitution Bench reiterated the well-settled principles in the  

following words:

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

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

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

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

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

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recording a conclusion that the impugned provision is violative of  

the equality clause contained in Article 14 of the Constitution.  

42. While examining the issue of hostile discrimination in the  

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

fact that due to unprecedented increase in the population of the  

Bangalore  City  and  the  policy  decision  taken  by  the  State  

Government  to  encourage  house  building  societies  to  form  

private layouts, the BDA was obliged to take effective measures  

to  improve  the  civic  amenities  like  water  supply,  electricity,  

roads,  transportation,  etc.  within  the  Bangalore  Metropolitan  

Area and for this it became necessary to augment the resources  

by  the  BDA  itself  or  through  other  State  

agencies/instrumentalities  by  making  suitable  contribution.  It  

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

increase in the  population of  the  Bangalore  Metropolitan Area  

and problems relating  to  planned development,  the  legislature  

would  have  enacted  the  1976  Act  and  the  State  and  its  

agencies/instrumentalities would have spent substantial amount  

for  augmenting  water  supply,  electricity,  transportation  and  

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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  

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

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

required to be deposited by those intending to form an extension  

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

underground  drainage  and  water  supply,  lighting  etc.,  the  

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

for developing the infrastructure necessary for augmenting the  

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

an integral part of the concept of planned development. Learned  

counsel emphasised that the policy of the legislation is clearly  

discernable from the Preamble of the 1976 Act and its provisions  

in  terms  of  which  the  BDA  is  required  to  ensure  planned  

development  of  the  Bangalore  Metropolitan  Area.  Both,  Shri  

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

does not confer  unbridled and unguided power upon the BDA  

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

the  Authority  may  determine  towards  the  execution  of  any  

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

and the legislature has provided sufficient guidance for exercise  

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

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

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

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

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

(2000) 5 SCC 471.

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

senior  counsel  and  other  learned  counsel  appearing  for  the  

respondents reiterated the argument made before the High Court  

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

because the legislature has not laid down any policy for recovery  

of cost of infrastructure required for augmentation of supply of  

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

counsel referred to the averments contained in the amended writ  

petitions  to  show that  the  cost  of  additional  infrastructure  is  

recovered  only  from  those  who  apply  for  sanction  of  private  

layouts and there is no provision for distribution of liability by  

creating  demand on others  including those to  whom sites  are  

allotted in the BDA layouts.  Shri Venugopal referred to Sections  

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

65

development scheme and execute the same and argued that the  

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

Learned counsel relied upon the judgments in Daymond v South  

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

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

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

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

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

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

45. The  issue  relating  to  excessive  delegation  of  legislative  

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

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

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

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

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

liberal  application  of  the  concept  of  delegation  of  legislative  

powers but in a large number of other judgments including Jyoti  

Pershad v.  the  Administrator  for  the  Union  Territory  of  Delhi  

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

66

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

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

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

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

not possible for the legislature to enact laws with minute details  

to deal with increasing complexities of governance in a political  

democracy,  and  held  that  the  legislature  can lay  down broad  

policy  principles  and  guidelines  and  leave  the  details  to  be  

worked out by the executive and the agencies/instrumentalities  

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

authorities  to  implement  the  legislative  policy  cannot  be  

castigated as excessive delegation of the legislative power.

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

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

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

Act, 1956 which adversely affected the decree of eviction obtained  

by  the  landlord  against  the  tenant  was  a  piece  of  excessive  

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

authority to withhold eviction in pursuance of orders or decrees  

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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  

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issue of excessive delegation of power to the Board of Secondary  

Education observed:  

“So  long  as  the  body  entrusted  with  the  task  of  framing the rules or regulations acts within the scope  of the authority conferred on it, in the sense that the  rules or regulations made by it have a rational nexus  with the object and purpose of the statute, the court  should  not  concern  itself  with  the  wisdom  or  efficaciousness  of  such  rules  or  regulations.  It  is  exclusively within the province of the legislature and  its delegate to determine, as a matter of policy, how  the provisions of the statute can best be implemented  and  what  measures,  substantive  as  well  as  procedural would have to be incorporated in the rules  or regulations for the efficacious achievement of the  objects and purposes of the Act. It is not for the Court  to examine the merits or demerits of  such a policy  because its scrutiny has to be limited to the question  as  to  whether  the  impugned regulations  fall  within  the scope of  the regulation-making power conferred  on the delegate by the statute.”

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

Judge  Bench,  while  interpreting  the  provisions  of  the  General  

Insurance Business (Nationalisation) Act, 1972, observed:  

“The growth of legislative power of the executive is a  significant  development  of  the  twentieth  century.  The theory of laissez-faire has been given a go-by  and  large  and  comprehensive  powers  are  being  assumed by the State with a view to improve social  and economic well-being of the people. Most of the  modern socio-economic  legislations  passed  by  the  

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Legislature lay down the guiding principles of  the  legislative  policy.  The  Legislatures,  because  of  limitation imposed upon them and the time factor,  hardly  can  go  into  the  matters  in  detail.  The  practice  of  empowering  the  executive  to  make  subordinate legislation within the prescribed sphere  has evolved out of practical necessity and pragmatic  needs of the modem welfare State.

Regarding delegated legislation, the principle which  has been well established is that Legislature must  lay down the guidelines, the principles of policy for  the authority to whom power to make subordinate  legislation is entrusted. The legitimacy of delegated  legislation depends upon its being used as ancillary  which the Legislature considers to be necessary for  the  purpose  of  exercising  its  legislative  power  effectively  and  completely.  The  Legislature  must  retain  in  its  own  hand  the  essential  legislative  function which consists in declaring the legislative  policy  and lay  down the  standard which is  to  be  enacted  into  a  rule  of  law,  and  what  can  be  delegated  in  the  task  of  subordinate  legislation  which  by  very  nature  is  ancillary  to  the  statute  which  delegates  the  power  to  make  it  effective  provided  the  legislative  policy  is  enunciated  with  sufficient  clearness  or  a  standard laid  down.  The  courts cannot and do not interfere on the discretion  that undoubtedly rests with the Legislature itself in  determining the extent of the delegated power in a  particular case.”

(emphasis supplied)

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

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

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

legislation in the following words:  

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

71

its  preamble,  and the  facts  and circumstances  in  the background of which the statute is enacted, the  history  of  the  legislation,  the  complexity  of  the  problems  which  a  modern  State  has  to  face,  will  have  to  be  taken  note  of  and  if,  on  a  liberal  construction given to a statute, a legislative policy  and guidelines for its execution are brought out, the  statute, even if skeletal, will be upheld to be valid  but this rule of liberal construction should not be  carried by the court to the extent of always trying to  discover  a  dormant  or  latent  legislative  policy  to  sustain  an  arbitrary  power  conferred  on  the  executive.”

(emphasis supplied)

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

Court  was called upon to consider  the constitutionality  of  the  

Indo-Mauritius  Double  Taxation  Avoidance  Convention,  1983.  

While rejecting the argument that Section 90 of the Income Tax  

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

amounted to delegation of the essential legislative functions, the  

Court observed:  

“The  question  whether  a  particular  delegated  legislation is in excess of the power of the supporting  legislation  conferred  on  the  delegate,  has  to  be  determined with regard not only to specific provisions  contained in the relevant statute conferring the power  to make rules or regulations, but also the object and  purpose  of  the  Act  as  can  be  gathered  from  the  various  provisions  of  the  enactment.  It  would  be  

72

wholly  wrong  for  the  court  to  substitute  its  own  opinion  as  to  what  principle  or  policy  would  best  serve the objects and purposes of the Act; nor is it  open to the court to sit in judgment over the wisdom,  the effectiveness or otherwise of the policy, so as to  declare a regulation ultra vires merely on the ground  that, in the view of the court, the impugned provision  will not help to carry through the object and purposes  of the Act.”

(emphasis supplied)

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

precedents  is  that  while  examining  challenge  to  the  

constitutionality  of  a  statutory  provision  on  the  ground  of  

excessive  delegation,  the  Court  must  look  into  the  policy  

underlying  the  particular  legislation  and  this  can be  done  by  

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

achieved by the particular legislation and the scheme thereof and  

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

and nullify the provisions under which the power to implement  

the  particular  provision  is  conferred  upon  the  executive  

authorities.

52. The policy underlying the 1976 Act is  clearly discernable  

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

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

namely, development of the City of Bangalore and areas adjacent  

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

planned growth of land use and development and for the making  

and  execution  of  town  planning  schemes  in  the  entire  State  

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

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

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

Planning  Authority  for  the  local  planning  area  comprising  the  

City of Bangalore with jurisdiction over an area which the City  

Planning  Authority  for  the  City  of  Bangalore  had  immediately  

before  the  constitution  of  the  BDA  and  the  latter  has  been  

empowered to  exercise  the  powers,  perform the  functions and  

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

Local Planning Authority constituted for the Bangalore City.  In  

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

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

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

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

and thereby acquired the powers which were earlier vested in the  

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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,  

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National and State highways and traffic circulation pattern for  

meeting  immediate  and  future  requirements;  areas  for  new  

housing and new areas earmarked for future development and  

expansion.  The definition of “development” contained in Section  

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

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

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

secure the development of the Bangalore Metropolitan Area and  

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

manage  and  dispose  of  movable  and  immovable  property,  

whether  within  or  outside  the  area  under  its  jurisdiction.  

“Bangalore  Metropolitan Area” has been defined under Section  

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

comprising  the  City  of  Bangalore  as  defined  in  the  City  of  

Bangalore  Municipal  Corporation  Act,  1949  which  is  now  

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

the areas where the City of Bangalore Improvement Act,  1945  

was immediately before the commencement of the 1976 Act in  

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

Government  may  from  time  to  time  by  notification  specify.  

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Section 15 empowers the BDA to draw up detailed schemes and  

undertake  works  for  the  development  of  the  Bangalore  

Metropolitan Area and incur expenditure for that purpose.  It can  

also take up any new or additional development scheme on its  

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

authority provides necessary funds for framing and carrying out  

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

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

Government  can  issue  direction  to  the  BDA  to  take  up  any  

development  scheme  or  work  and  execute  it  subject  to  such  

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

enumerates the matters which are required to be included in the  

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

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

construction and reconstruction of buildings and formation and  

alteration  of  streets,  drainage,  water  supply  and  electricity,  

reservation of land for public parks or playgrounds and at least  

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

scheme  may  also  provide  for  raising  of  any  land  to  facilitate  

better drainage, forming of open spaces for better ventilation of  

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

sanitary arrangement.  Sections 17 to 19 contain the mechanism  

for  finalisation  of  the  scheme  and  its  approval  by  the  State  

Government as also the acquisition of land for the purposes of  

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

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

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

for  execution  of  the  scheme  as  also  consequence  of  non  

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

proper maintenance, lighting and cleansing of the streets and the  

drainage, sanitary arrangement and water supply in respect of  

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

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

be done only after obtaining express sanction from the BDA and  

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

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

to deposit  the sums necessary for meeting the expenditure for  

making roads, drains, culverts, underground drainage and water  

supply and lighting and the charges for such other purposes as  

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

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

obstante clause, empowers the BDA to require the applicant to  

deposit additional amount to meet a portion of the expenditure,  

which  the  BDA  may  determine  towards  the  execution  of  any  

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

transportation and such other  amenities  within the  Bangalore  

Metropolitan Area.

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

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

enactments is to ensure planned development of the areas which  

formed part of the Bangalore Metropolitan Area as on 15.12.1975  

and  other  adjacent  areas  which  may  be  notified  by  the  

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

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

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

entire  Bangalore  Metropolitan  Area.  In  exercise  of  the  powers  

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

detailed  schemes  for  the  development  of  the  Bangalore  

Metropolitan Area and incur expenditure for implementing those  

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schemes,  which  are  termed  as  development  schemes.  The  

expenditure incurred by the BDA in the implementation of the  

development schemes can be loaded on the beneficiaries of the  

development schemes. By virtue of Notifications dated 1.11.1965  

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

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

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

Bangalore were merged in the Bangalore Metropolitan Area.  For  

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

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

which are available to the existing Metropolitan Area of the City  

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

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

Government,  the BDA and other instrumentalities of the State  

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

to augment water supply, electricity and transport facilities and  

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

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

supply  scheme,  generation  of  additional  electricity  and  

development of a mass rapid transport system to decongest the  

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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  

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towards  the execution of  any scheme or  work for  augmenting  

water  supply,  electricity,  roads,  transportation and such other  

amenities” supplies sufficient guidance for the exercise of power  

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

with  the  learned counsel  for  the  respondents  that  the  section  

confers  unbridled  and  uncanalised  power  upon  the  BDA  to  

demand an unspecified amount from those desirous of forming  

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

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

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

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

legislature to make provision for effective implementation of the  

provisions  contained  in  the  1961  and  1976  Acts  for  the  

development of  the Bangalore Metropolitan Area and this task  

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

State.

55. The above discussion leads to the conclusion that Section  

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

the legislative guidelines can be traced in the Preamble of the  

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

legislations.

Question (3)

56. The next question which calls for determination is whether  

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

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

Article 265 of the Constitution.  

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

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

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

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

more than four decades.  

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

the  Constitution  Bench  considered  the  question  whether  the  

resolutions  passed  by  the  Agriculture  Market  Committees  in  

Punjab  and  Haryana  to  increase  the  market  fee  on  the  

agricultural  produce  bought  and  sold  by  the  licensees  in  the  

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

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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  

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remote benefit to the traders is in no sense a special  benefit to them.

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

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

59. The  ratio  of  the  aforesaid  judgment  was  substantially  

diluted in Southern Pharmaceuticals and Chemicals, Trichur and  

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

latter decision, the Court considered the constitutional validity of  

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

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

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

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

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

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

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Bench referred to the distinction between tax and fee highlighted  

in the Commissioner, Hindu Religious Endowments, Madras v.  

Lakshmindra Thirtha Swamiar of Shirur Mutt (1954) SCR 1005  

and proceeded to observe:  

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

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

(emphasis supplied)

The three Judge Bench also referred to the Constitution Bench  

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

observed:  

“To  our  mind,  these  observations  are  not  intended  and  meant  as  laying  down  a  rule  of  universal  application. The Court was considering the rate of a  market fee, and the question was whether there was  any justification for the increase in rate from Rs 2 per  every hundred rupees to Rs 3. There was no material  placed to justify the increase in rate of the fee and,  therefore, it partook the nature of a tax. It seems that  

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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  

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which were really not necessary for purposes of the  decision  and go  beyond the  occasion  and therefore  they have no binding authority though they may have  merely  persuasive  value.  The  observation  made  therein seeking to quantify the extent of correlation  between the amount of fee collected and the cost of  rendition of service, namely: (SCC p. 435, para 23):  “At  least  a  good  and  substantial  portion  of  the  amount  collected  on account of  fees,  maybe in  the  neighbourhood of  two-thirds  or  three-fourths,  must  be shown with reasonable certainty as being spent for  rendering services in the market to the payer of fee”,  appears to be an obiter.

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

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relationship”  between  the  levy  of  the  fee  and  the  services rendered.”

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

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

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

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

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

reasonable and general corelationship between the levy and the  

resultant  benefit  to  the  producer  of  the  agricultural  produce,  

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

fee  receives  direct  or  personal  benefit  from  those  services.  

Though the general public may be benefited from some of the  

services  like  laying  roads,  the  primary  service  was  to  the  

producer, dealer and purchaser of the agricultural produce.

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

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

analysed  various  precedents  including  the  judgments  in  

Commissioner, Hindu Religious Endowments v. Sri Lakshmindra  

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

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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  

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

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

another three Judge Bench considered the validity of levy and  

collection  of  market  fee  from  sellers  of  specified  agricultural  

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

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

principles:

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

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

(3)  in  the  course  of  rendering  such  services  to  the  payers of the fee if some other benefits accrue or arise  to others, quid pro quo is not destroyed. The concept  

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of quid pro quo should be judged in the context of the  present  days  —  a  concept  of  markets  which  are  expected  to  render  various  services  and  provide  various  amenities,  and  these  benefits  cannot  be  divorced  from  the  benefits  accruing  incidentally  to  others,  

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

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

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

64. If  the  conditions  imposed  by  the  BDA  requiring  the  

respondents to pay for augmentation of water supply, electricity,  

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

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

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

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

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

vires Article 265 of the Constitution.

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

types  of  amenities  to  the  population  of  the  Bangalore  

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Metropolitan  Area  including  the  allottees  of  the  sites  in  the  

layouts prepared by house building societies. It is quite possible  

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

amenities made available by the BDA, but this cannot detract  

from  the  fact  that  they  will  certainly  be  benefited  by  the  

construction of the Outer Ring Road and Intermediate Ring Road,  

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

beneficiaries  of  the  Cauvery  Scheme  because  availability  of  

additional  270 MLD water to Bangalore will  enable BWSSB to  

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

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

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

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

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

tax and declared unconstitutional on the ground that the same  

are not sanctioned by the law enacted by competent legislature.

Question (4)

66. The only issue which survives for consideration is whether  

the charges demanded by the BDA are totally disproportionate to  

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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.   

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

charges,  examination  charges,  slum  clearance  

development charges and MRTS cess is concerned, it is  

appropriate  to  mention  that  the  High  Court  has  not  

assigned  any  reason  for  declaring  the  levy  of  these  

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

order cannot be sustained. Nevertheless, we feel that the  

State  Government  should  take  appropriate  decision  in  

the matter of levy of these charges as well and determine  

whether the same were disproportionate to the expenses  

incurred  by  it,  the  BDA  or  any  other  

agency/instrumentality of the State.

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

order  is  set  aside  and  the  writ  petitions  filed  by  the  

respondents are dismissed subject to the direction that  

within three months from the date of receipt/production  

of the copy of this judgment, the State Government shall  

take  appropriate  decision  in  the  context  of  

communication  dated  03.05.2005.   Within  this  period,  

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the State Government shall also decide whether the levy  

of  supervision  charges,  improvement  charges,  

examination  charges,  slum  clearance  development  

charges  and  MRTS  cess  at  the  rates  specified  in  the  

communications of the BDA was excessive. The decision  

of the State Government should be communicated to the  

respondents  within  next  four  weeks.  If  any  of  the  

respondents feel  aggrieved by the decision of the State  

Government then it shall be free to avail appropriate legal  

remedy. The parties shall bear their respective costs.

...……..….………………….…J. [G.S. Singhvi]

………..….………………….…J.     [Asok Kumar Ganguly]

New Delhi, January 24, 2012.  

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