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REPORTABLE

IN THE SUPREME COURT OF INDIA  CIVIL APPELLATE JURISDICTION  

Civil Appeal  No(s).  2511/2011

THE MUNICIPAL COUNCIL, RAGHOGARH & ANR.  …Appellant(s)

                               VERSUS

NATIONAL FERTILIZER LTD. & ORS.                   …Respondent(s)

WITH

Civil Appeal No. 2512/2011

THE MUNICIPAL COUNCIL, RAGHOGARH & ANR.  …Appellant(s)

                               VERSUS

GAS AUTHORITY OF INDIA LIMITED & ORS.         …Respondent(s)

JUDGMENT

N.V. RAMANA, J.

1. These  two  Appeals  arise  out  of  a  common  Judgment

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passed on 3rd August, 2007 in First Appeal Nos.1 of 1996 and 175

of 1995, respectively, by the High Court of Madhya Pradesh, Bench

at Gwalior.

2. The short question that arises for our consideration in

these  appeals  is  whether  the  contesting  respondents  herein,  i.e.

National Fertilizers Limited and Gas Authority of India Limited, are

liable  to  pay  external  development  charges  to  the  appellant—

Municipal Council as per its demand?

3. Both the contesting respondents in these appeals were

allotted forest  lands within the municipal  limits  of  the  appellant

Council. Subsequently, the respondents were served with a notice

calling  upon  them  to  deposit  external  development  charges  @

Rs.5/- per sq. meter in consonance with Government of  Madhya

Pradesh,  Housing  and Environment  Department,  Notification No.

F.3-39/32/85, dated 28-11-1985. Raising objections, respondents

challenged the notices by filing Civil Suits before the District Judge,

Guna,  Madhya  Pradesh  contending  that  they  are  Central

Government entities and would not come under the purview of the

said  Notification  and  hence  sought  declaration  and  permanent

injunction  restraining  the  appellant  from  demanding  external

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development fee from them.

4. The District Judge, Guna by separate judgments dated

11th October, 1995 decreed the Suits in favour of respondents and

declared that the defendants (appellant and proforma respondents

herein) jointly or severally have no right to recover amount by name

of external development fee and no amount shall be recovered from

the  plaintiffs  (respondents  herein)  in  the  form  of  external

development fee.

5. Against  the  said  judgment  of  the  District  Judge,  the

appellant moved the High Court by way of First Appeals challenging

the decree that the Suit has been filed before expiry of period of

notice under Section 80, CPC and no Suit is maintainable against

the  Municipal  Council  without  notice  under  Section  319  of  the

Municipalities Act. The other stand taken by the appellant was that

since the plaintiffs  are avoiding recovery of  external  development

fee, therefore, without payment of ad valorem court fee suit ought to

have been dismissed or the trial  Court should have  rejected the

plaint for insufficient payment of court fee.

6. The Division Bench of the High Court by judgment dated

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12th May, 2005 allowed the First Appeals and set aside the decree

passed by the trial Court. The High Court, however, without giving

its opinion on the merits, held that both the Suits have not been

properly valued and notice issued was not one under Section 80,

CPC and Suits as filed were not maintainable. In the absence of

notice under Section 319 of the Madhya Pradesh Municipalities Act,

Suit against Municipal Council is not maintainable.  

7. The contesting respondents herein challenged aforesaid

judgment of the High Court in Civil Appeal Nos. 3502 and 3503 of

2006 before this Court. By order dated 21st November, 2006 this

Court opined that having regard to the fact that the State of M.P.

did not prefer any appeal against the judgment and decree passed

by the learned trial Judge, the Division Bench of the High Court

went wrong in holding that the suit was barred under Section 80,

CPC. So far as the non-maintainability of the suit for want of notice

under  Section  319  of  the  M.P.  Municipalities  Act  is  concerned,

neither any such plea was taken in the written statement nor any

issue was raised before the trial Court by the Municipal Council.

Therefore, it was held that the Division Bench of the High Court

was wrong in holding that  the Suit  was not maintainable.   This

Court,  accordingly,  set  aside  the  judgment  passed  by  the  High

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Court  and  remitted  the  matter  back  to  the  High  Court  for

consideration of the first appeals on merit.

8. The High Court, after considering the matter on merits,

by the judgment impugned herein, formed the opinion that the trial

Court  did  not  commit  any  error  in  declaring  that  the  appellant

Municipal Council had no authority under law to charge external

development cost  and thereby affirmed the  judgment of  the  trial

Court  and  dismissed  the  appeals  of  the  Municipal  Council.

Aggrieved thereby, the said Municipal Council is in appeal before

us.

9. The case put forward on behalf of the appellant Municipal

Council is that it is a statutory body providing various amenities

and  necessities  to  the  general  public  residing  in  its  area  limits.

Relying on  Order No.F./3-39/32/85 dated 28-11-1983 of Housing

and Environment Department, Government of Madhya Pradesh, it

is stated that the areas where there is a Municipal Committee or

Municipal Corporation, the internal development work of colonies

by  House  Construction  Societies  and  individual  persons  will  be

done in supervision of respective Municipal Committee or Municipal

Corporation. For that all the activities pertaining to maintenance,

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civil  amenities, development work and construction require heavy

expenditure. About Rs.5 lakhs per month is the electricity bill to

maintain the streetlights and to run pump houses. Nearly Rs.25

lakhs per annum are the vehicle maintenance charges, Rs.50 lakhs

for  supply  of  water  and  pipeline  maintenance  and  about  Rs.25

lakhs  for  sanitation  and  Rs.2  crores  per  year  is  required  for

maintenance,  construction  and  development  of  roads.  In  view

thereof, in accordance with the prevailing rules, the externational

development fee @ Rs.5/- per. Sq.m. has been legally charged on

the contesting respondents and they are liable to make payment.

But,  unfortunately  the  trial  Court  committed  legal  error  and

declared that the defendants (appellant and proforma respondents

herein) jointly or severally have no right to recover amount by name

of external development fee from the plaintiffs (respondents herein)

and the same view has been affirmed by the High Court. The entire

development  activity  in  the  Municipality,  Rahograh  has  come  to

standstill and it is therefore necessary for this Court to set aside the

impugned judgment.

10. On behalf of contesting respondents, it is contended that

the contesting respondents are not private entities, nor colonizers.

The ownership of the institutions lies with the Government of India

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in whose control the day to day activities of the institutions are run.

The institutions being totally  secured,  no outsider can enter  the

Company  premises  without  prior  permission.  As  regards  the

maintenance,  cleanliness,  electricity,  roads  and  safeguarding

environment in the entire area is being done by the institutions and

therefore they are not binding on the demands of Municipal Council

for making payment of external development charges. The Courts

below have thoroughly examined the issue in clear legal view and

only thereafter rendered the judgment in their favour and therefore

there  is  no  occasion for  this  Court  to  exercise  the  power  under

Article 136 of the Constitution to interfere in these appeals.  

11. Having heard learned counsel on either side, we have also

given  our  thoughtful  consideration  to  various  Government  of

Madhya Pradesh Orders including the first and foremost Order on

the issue in question viz., No. 2681/1677/32, dated 6th July, 1978

for levying internal development charges. The subsequent Order No.

2997/C.R.129/32/Bhopal, dated 27th July, 1978 provides certain

relaxations regarding the mode of payment of the amount required

to be deposited under original order dated 6th July, 1978. The next

one is the Order No. F.3-39/32/85 dated 28th November, 1983 on

levying external development fee @ Rs.5/- per sq. mtr.  

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12. It  is  clearly  noticeable  from  the  aforementioned

Government Orders that they are meant for housing construction

societies,  colonizers  and  individual  persons  where  the  internal

developmental  works  of  the  colonies  are  done  by  the  respective

house construction society, colonizers or individual persons. In the

same way, if any colonizer, house construction society or individual

person  constructs  a  colony  under  the  supervision  of  Municipal

Committee or Municipal Corporation, as the case may be, Rs.5/-

per sq. mtr. towards external development charges are applicable.

While  so,  in  the  case  on  hand,  the  contesting  respondents  are

neither colonizers nor house construction societies or individuals.

The dwelling units developed by them are for their employees only

and not meant for sale or for letting out on rent.  Apparently, the

construction of dwelling units and the residential areas developed

by  the  contesting  respondents  are  done  by  the  contesting

respondents  i.e.  Government  entities  being  Public  Sector

Undertakings with the investment of Central Government.  

13. For all  the  aforementioned reasons we do not  see  any

error in the impugned judgment. In our opinion, the trial Court as

well as the High Court considered all the relevant issues in their

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true  spirit  and came to  the  right  conclusion that  the  contesting

respondents  are  not  liable  to  pay  any  amount  in  the  form  of

external  development  fee  as  demanded  by  the  appellants.  The

appeals fail and therefore stand dismissed devoid of merit without

any order as to costs.

...................................J.                                                 (N.V. RAMANA)

...................................J.                                                        (S. ABDUL NAZEER)

NEW DELHI,  JANUARY 30, 2018.