STATE OF MYSORE ETC. versus M. L. NAGADE AND GADAG & ORS.

DESAI, J." Civil Appeals Nos. 1221-1222/70 arise from a decision of the Division Bel\ch of the then Bish Court of Mysore at Bangalore in Writ Petition Nos. 672/63 and 193/64 by which the High Court quashed the demand of Non-Agricultural assessement (N. A. assessment for short) made by the respondents on the ground that Rule 71 as amended on July 4, 1958 of. the Hyderabad Land Revenue Rules which appeared to have been repealed and re-enacted as the Andhra Pradesh (Telengana Area) Land Revenue Rules, 1951 was unconstitutional being violative of Ait. 14 of the Constitution and hence void.

pp. 95–96, margin H

Civil Appeals Nos. 1407 to 1413/70 arise frorri a decision of the Division Bench of the same High Court in a group of writ petitions by which the High Court quashed the demand of Non-Agricultural assessment on the ground that Rule 81 of the Bombay Land Revenue Rules as amended ori March 27, 1958 was unconstitutional being violative of Art. 14 and hence void.

p. 96, margin B

Appellants in both the groups are the State of Myso're and some officers. Respondents are the original petitioners in both the groups.

p. 96, margin B

·Rule 71 of the Hyderabad Land Revenue Rules and Rule 81 of the Bombay Land Revenue Rules were amended in an identical manner but on two different dates and the validity of .each amended rule was questioned on identical grounds and more or less the High Court for identical reasons quashed both the Rules as amended and almost identical grounds were convassed in support of rival contentions before us and therefore, all these appeals are disgosed of by this common jucfgment.

p. 96, margin B

The boundaries of old Mysore State underwent a change consequent upon the re'6rganisation of States in 1.956. Some portion of former Bombay State as weUas.some portion of the old Hyderabad State were allocated to Mysore State. This historical phenomenon led to different Land Revenue Code remaining in-operation in· different parts of the State of Mysore. To be precise that area of forme.r Bombay State forming part of Mysore State continued to b" governed in respect ofland revenue by the Bombay Land Revenue Code, 1879 and the rules made thereunder. Similarly that area of former Hyderabad State which was allocated to Mysore· State continued to be governed by .the Hyderabad Land. Revenue Act (VIII of 13 l 7F).

p. 96, margin F

In Re C. A. Nds. 1221-1222/70 : Respondents questioned the v·alidity of the amended Rule 71 of the Hyderabad Land Revenue Rules which came into force from July 4, 1958. It reads as under :

p. 97

"71 (I) : Mode of assessment in the event of diversion of agricultural lands to non-a-gricultural purposes, the special assessment shall be levied as follows :- !a) in the case of. land situated in any village the population of which does not exceed. 5,000 the rate of special asse.ssment Jeviab!e shall be not less than the agricultural assessment leviable on such land and

p. 97, margin A

note more Rs. 40 per acre. (b) in. the case of land situated in any village or town other.then a town coming under Sub-Rule (c) of this. Rule, the population of which exceeds 5,000 the rate . of special assessment leviable shall be not less than

p. 97, margin C

Rs. 40 per acre and not more. than Rs. 80 per acre. · (c) 'in the case of land situated within an area compiis- . ing the Municipality limits of the town of Raichur, Gulbarga and Bidar the rafo of special assessment leviable shall be not less than Rs.· J 50 per acre and

p. 97, margin D

not more than Rs. 250 per acre."

p. 97, margin E

The validity of the amended rule was challenged on the ground that it provides no gu.idelines for determining N.A. assessment for v.arious plots and that it suffers from the vice of excessive delegatio~ of essential legislative functions and therefore any demand raised m exercise of the power conferred by the amended Rule 71 would be arbitrary and therefore violative of Art.14 of the Constitution.·

p. 97, margin E

In Re. C.A. Nos, 1407 to 1413/'70 : Respondents who were petitioners in the. High Court questioned the validity of Rule. 81 of the Bombay Land Revenue Rules as amended. on March 27, 1958. It reads as under :

p. 97, margin G

"81 '(1): Rate of Non-Agricultural assessment:

p. 97, margin G

The· rate of Non-Agric1dtural assessment \eviabl~ shall be as follows :- (a) in the case of land situated in any village the population of which does not exceed 5,000 the rate of Non- Agricultural assessment leviable shall be not ·less than the agricultural assessment Jeviable on such

pp. 97–98, margin H

land and not more than Rs. 40 per acre. (b) in the case of land situated in any village or town . other than a town coming under Clause (c) of this rule, the population of wpich exceeds 5,000 the rate of Non-Argicultral assessment leViable shall be not foss than Rs. 40 per acre and not more than Rs. 80 per ·

p. 98, margin A

acre. (c) in the case of land situated in any City or Town referred to in the Table to Rule 100, the rate of No11- Argicultural assessment leviable shall be not less than Rs. 150 per acre and not more than Rs. 250 p•:r

p. 98, margin C

acre. (d) Non-Argicultural assessment win be levied at uniform rates'for the entire extent converted for non-agricultural purposes,, irrespective of the extent actually

p. 98, margin D

built upon.'' The game contention which was advanced in the former .group of petitions was repeated in this group of petitions.

p. 98, margin E

Validity of both the Rules was questioned on other diverse grounds but except the one herein mentioned, other contention.s did not find favour with the High Court and therefore, they need not be recapitulated Jiere.

p. 98, margin E

The sole contention which found favour with the High C~urt was that the Rule under challenge confers unguided and uncontrolled power and there is no guideline either in the Act or the Rules and · there is excessive delegation of legislative functions and thet•!fore, both the amended Rules are violative of Art. 14 of the Constitution.

p. 98, margin F

Thus the question which falls for consideration is ·whether the amended Rule 71 of the Hyderabad Land Revenue Rules and amended Rule 81 of the Bombay Land Revenue Rules suffer from the vice of excessive delegation of legislative functions or that. it confers ncanalised and unsuided arbitrary power on the officers or there is no guideline to govern the discretion while enforcing and implement· ing the !WO Rules.

pp. 98–99, margin G

We would first examine the validity of amended Rule 71 of the Hederabad Land Revenue Rules. The Hyderabad J,and Revenue Act (VIII of 1317F) was enacted to amend and consolidate the orders and regulations relating to land revenue. It is an exhaustive Code divided into 12 Chapters. Chapter U deals with appointment of Revenue Officers and their respective powers. Chapter IV 'contains provision in respect of land and land revenue. Sec. 24 provides that · all unalienated lands belong to Government. Sec .. 48 provides that all land, whether applied to agricultural or any other purpose and wherever i;ituate shall be liable to payment of land revenue to the Government in accordance with provisions of this Chapter and Chapters VII and IX except in case title to land has been transferred to any municipality or the revenue thereof bas been wholly remitted under any special contract with the Government or under any order or law. Sec. 50 which is material for the present purpose confers power for assessment and levy of land revenue. It reads as under : .

p. 99, margin A

"50. Land revenue shall be assessed according to the various modes of use- (a) agricultural use. (b) In addition to agricultural use any other use from which profit or advantage is derived .

p. 99, margin C

. When rate is assessed on any land for any one of the aforesaid purposes and the land is,' appopriat~ for any other purpose the rate thereof shall be altere<) and fixed again, although the term of subsisting settlement may not

p. 99, margin F

have expired." It becomes clear that the land revenue was to be assessed according to the use to which the land is put and especially in the case of use of land for purposes other than agriculture, the N.A. assessment would be assessed keepin11 in view the use to which the land is put and the profit or advanta11e derived from •uch use of the land. Chapter VII contains provisions for Survey and settelement ·of land which would include assessment in respect of each survey, piece and parcel ofland. Sec. 84 provides for a11nouncement of .th~ assessment and the manner in which it is made, and the 'announcement should include the assessment fixed in m.pect of each plot of land called survey number. Chapter IX ma~es . provision for responsibility:of payment of revenue apd the method of. its rec9ve~y and the priority of payment .in 'respect of land revenue. Chapter · X deals with the procedure prescribed for revenue . officers in dealing with cases under the Land Revenue Act. Chapter XI provides for appeal, review and revision of the orders of revenue officers. Sec; 172 confers power. on the Government to make .rules by publication in the Jarida (presumably Official Gazette) consistent with the provisions of the Act to carry out the purpose and objects of the Act and for the guidance of .all persons in matters connected with the enforcement of the Act or in matters not expressly provided for in the Act. In exercise M this power, Hyderabad Land Revenue Rules have been enacted and promulgated subsequently repealed and re-enacted ·as the Andhra Pradesh (Telengana Area) land Revenu<> Rules, 1951. Rule 71 a~ ame~ded on July 4, 1958 has been extracted hereinbefore. It provides for mode of assessment in the event of diversion of· agricultural lands to non-agricultural purposes. Briefly, N.A. assessment also styled as special assessment has to be levied within the minimum and the max'mum as provided in sub-clauses (a), (b) and (c) of Rule 71 (I). The amended ru.le also confers power for upward revision· of N .A. assessment at intervals.

pp. 99–100, margin F

ls this power uncan(llised, unguided or arbitrary? Rule 71 (I) as amended recites that in different ar~as correlated. to population between th~ !looi and the.ceiling therein prescribed, N.A. assessment has to be levied. Ordinarily the land is put to agricultural use and the assessment is to be levied depending upon the use of the, land for agricultural purp<:>ses. Where there is a diversion in .the use of land, a special assessment called N.A. assessment can be levied. The right to levy N.A. assessment is not in dispute. And N.A. aSS<'8Sment is none-tj1e-Jess assessment of revenue to be paid for the use of· the ]and. What is questioned is that the power conferred by the rule gives ~o much wide arbitrary disceretion to the officers that in the ··absence. of guidelines the revenue nfficers indifferent areas may act arbitrarily and therefore, in the absence .of guicelines this rule is violative of Art. 14. ,

p. 100, margin E

The question therefore, is whether there is any guideline for_ the exercise of this power ? It is by now well-recognised that guideline µ~ed not be found iii. tji.e· impugned provision. The same may be collected from the setting in which the provision is placed, the purpose for which the Act is enacted and even the preamble of the statute in ·which the provision is incorporated. A legisiation or statute is enacted to achieve some public purpose and ihe policy of law and the object sought to be achieved can furnish reliable guidelines for the exercise of discretionary power. Prof. Wills .in his Constitutional Law, P·. 587 observes as under:

pp. 100–101, margin H

"If a statute declares a definite policy, there is a sufficiently definite standard·for the.rule against the delegation of legislative power, and also for equality if the standard is.reasonable. If no standard is scfup, to avoid the violation of equality" those exercising ihe power must act as though they were ad.ministering a valid standard."

p. 101, margin B

In Kunnathat Thatizunni Moopil Nair v. The State of Kera/a and Another('), a Constitution Dench of this Court struck down the Travancore-Cochin Land Tax Act, 1955 as being violative of Art. 14 on the ground that unequals were treated equally. By the impugned Act all lands in the State of wbatever description and held under whatever tenure wei;c to be charged and leVied a uniform rate of tax to be called tlie basic tax. This· Court held tliat the Act obliged every· person who held land t.o pay the tax at the flat rate prescribed, whether or not he made any income out of the 'Property, or whether or not the property was capable of yi_elding any income. Consequently, the Court held there was no attempt at classification in the provisions of the Act and it was one of those cases where the lack of classification created inequality. In reaching this conclusion, Sinha, q speaking for the majority observed ·as under :

p. 101, margin C

"The Act thus proposes to imowa liability' on landholders to pay a tax which is nono be levied on a judicial basis, because (I) the procedure to be adopted does not require a notice to be given. to the proposed_[assessee; (2) there is no procedure for rectification of mistakes . committed by the Assessing Authority; (3) there is no. procedure prescribed for obtaining the opinion of a superior Civil Conrt on questions of law~ as is generally found in all taxing statutes; and ,(4) no duty is cast upon· the Assessing Authority to act judicially in the matter of assessment proceedings. Nor is there any right of appeal provided to such assessee as may feel aggrieved by the order of assessment."

pp. 101–102, margin F

This decision is of no assistance because Hyderabad Land Revenue Act prescribed a detailed method of assessment and relve· vant provisions would be followed while levying N.A. Assessment . The Rule circumscribes the operation of the discretion between the floor and the ceiling. The various slabs are correlated to population. Sec. 50 itself provides that the N.A. assessment will be assesed keep· ing in view the use of the land and the profit derived from· the use. Further the orders made by the Revenue Officers are not only appealable but even a review petition is contemplated at the instance of the person aggrieved by the order of assessment. Therefore, the criteria which appealed to the Constitution Bench in striking down the Travancore·Cochin Land Tax Act, 1955 are not available in this case. Ori. the contrary where are such detailed provisions for. assess· ment of Non-Agricultural assessment such as use of land, profit derived by the use of the land, the maxima and minima and the various rates correlated to population.

p. 102, margin A

In New Manek Chowk Spinning and Weaving Mills Co. Ltd and ors. v. Municipal Corporation of the City of Ahmedabad and Ors.( a Constitution Bench of this Court struck down the assessment of property tax by the Municipal Corporation inter a/ia on the ground that the method of levy of tax on the basis of floor area was against the provisions of the Act and the Rules made thereunder. The Court held that the method of taxation on the basis of floor area was sure to give rise to inequalities as there had been no classification of fuctories on any. rational basis and the (:orporation failed to observe the law to determine the annual rental value of each building and land comprised in each of the Textile factories. We fail to see how this decision would be of any use because there is no flat rate levy here and the N.A. assessment has to be levied in respect of each plot of land keeping in view its location, use and the profit derived by the use of the lari.d.

p. 102, margin D

Reference was next made to State of Andhra Pradesh & A11r. v: Nal/a Raja Reddy & Ors.(') Affirming the decision of the Andhra High (I) (1967) 2 S.C.R. 679.

p. 102, margin G

[1967) 3 S.C.R.

p. 102, margin G

MYsoRt-v. M.L. NAGADE (Desai, •

p. 103

i.) Court which declared Andhra Pradesh Lartd Revenue (Additional Assessmet1t) and Cess Revision Act, 1962 as unconstitutional, the Court held that the classification based on ayacuts has no reasonable relation to the duration of water suppl}' Or to the <tuality or the pro· . ductivity of the soil and that Secs. 3 and 4 fidrtg tile minimum fiat rate for dry or waste land as the case may be, have ignored the well· established tarams. principle and therefore, the classification attempted in either ~ase has no teasonable relation to the objects sought to be achieved, namely, imposition of fair asssessment and rationalisation of revenue assessmelflt structure. Agairt we fail to see how. the decision would help us because geographicaf classification based on population criterion is a valid basis for classincation. ·

p. 103

The next case to which out attention was drawn was State.of Kera/a v. Haji K. Haji k. Kutty Naha & Ors. etc,(') in which this Court upheld the decision of the Kerala High Court dedarirtg Kerala Buildings tax Act, 1961 ultra -vites the Cortstitution in that. it infiringed the equality clause of the Constitution. The Court following its decision in New Manek ChoWk case held that in the absence of any rational classilication which was not even attempted, the tax levied on ftoot area alone ignoring the use to which the building is put, the materials used in putting up the structure ·had the pernicious effect of treating unequals as eqnals aird therefore, violative of Art. 14 of the Cortstitutimi: This decision hM hatdly any relevance to the issue raised before us.

p. 103, margin C

As agaihst the afore-mentioned decisions, it would be advantageous to refer to Rangildas VarajdtJJ Khattdwala v. Collector of Silrat and Ors.('} 'l'he power to levy N.A. assessment was questioned, before this Court albeit under different set of citcumstanc~s. 1he land involved in the dispute wa:s governed by the Bombay Personal Inams Abolition Act, 1952, whose constitutional validity was chailenged. The Court held the Act was protected by the umbrella of Art. 31A ~f the Constitution,

p. 103, margin E

the next contention raised irt that case was that the Collector could not have levied N.A. assessment under Sec, 52 .of the Bombay Land Revenue Code. Negativing this contention, this Court held tha:t when the land is being used t'or· non-agricultural purpose, Sec .

p. 103, margin E

(!) 1 S.C.R. (2) 1 S.C.R. 951, 48 makes it obligatory upon the assessing officer when assessing the land revenue to look to the use to which it is put at the time of the _ assessment and assess it according to such use. . Rule 71 provides for three safeguards against arbitrary exercise of power viz. (i) use of the land, (ii) profit derived from the use of the land and, (iii) location of the land. ·

pp. 103–104, margin H

In this connection we may refer to the latest decision of this Court in Avinder Singh etc. v. State of Punjab & Anr. etc.(') After a review of large .number of decisions this Court held that delegation of some part of leeislative power· becomes a compulsive nece,ssity for viabilty and functioning of the various institutions created by the · Constitution. Pertinent observation may be extracted :

p. 104, margin A

. "The Law-making is not a turnkey project readymade in all detail and once this situation is grasped the dynamics of dclagation easily follow. Thus we reach the - second constitutional rule that the essentials of legislative functions shall not be delegated but the - inessentials however numerous and significant they be, may well be. made over. to appropriate agencies. Of course, every delegate is subject to the authority and control of the principal and exercise of delegated power can always be directed, corrected or cancelled by the principal. Therefore, the third principle that emerges is that even. if there be delegation, parliainentary control . over delegated legislation should be a living countinuity as a constitutional necessity. Within these triple principles, Operation Delegation is at once expedient, exigent and even essential if the legislative process is not to get stuck up or bogged down or come to' a grinding halt with a few, complicated bills."

p. 104, margin C

Thus it is crystal clear that the legislature can delegate details to be worked out by the the delegate and the details may be numerous and significant. yet they may well be made over to the appropriate agency.

p. 104, margin F

Applying this yardstick, what emerges in this case. Rule 71 mad~ in exercise of the rule making power conferred by Sec. 172 of I S.C.R. 845, the Hyderabad Land Revenue Act. This rule making power is to be exercised for the purpose of earring out the provisions of Act. The basic purpose for which the Land Revenue Act is enacled is for empowering the State and its agencies and its official to assess and levy land revenue. Whenever land is diverted to use other tjlan agriculture, power is conferred to levy N .A. assessment or special assessment but this assessment is to be determined under· the amen.ded Rule 71 keeping in view the purpose of the Act, namely, levying and collection of revenue,'the use to which the land is put, the profit derived from such deviated. use of the land and again correlated to popul~tion as set out in various sub-clauses of amended Rule 71 and within jloor and ceiling prescribed in the impugned rule. Further the order made by the assessing authority is made appealable and review· able. In out opinion, there is· sufficient guideline.in the Act and the Rules following which the assessing authority has to assess the N.A. assessment. In this connection, it will be advantageous to refer to the oft quoted passage from Wills which bears repetition. It reads as under:

pp. 104–105, margin G

"A State does. not have to tax everything in order' to tax something. It is allowed to pick and choose districts, objects, persons, methods.and even rates for taxation, if'it does" so reasonably ...... " .

p. 105, margin D

. The High Court in .our opinion unfortunately fell into an error in holding that Rule 71 allowed a wide margin to the revenue officers in the matter of determining the special assessment to .be levied on land used for non-agricultural purposes. The High Court failed to notice that area within which the discretion of the revenue officer can operate is circumscribed b'oth by the floor and ceiling fixed and while determining t.he quantum of assessment, the revenue officer has to bear· in mind the use to which land is put as also the profit derived from the use of the land. The order made by the revenue officer is appealab!e. Now when a demand· is raised, it .can always be con· troverted under the various provisions of the relevant rules and the· concerned assessee will have full opportunity to yirdicate his stand. It should not be over-looked thadhe land revenue is a tax and the validity of the taxing statute has to be d~termine.d keeping in vfow the fact that in the matter of taxation, the .Court allows wide area of picking and" choosing and the slab system. ·we are therefore, of ·the opinion that there wa"s sufficient guideline to govern "the .discretion of ~he revenl!e .officer and the rule could not be struck down on · the ground that it confers wide arbitrary, uncanalised discretionary power \~uncontrolled by any guidelines.

pp. 105–106, margin E

A very feeble attempt was made to urge that there was exceS• . sive delegation of essential legislative functions to thll executive ·giving.it the power not only to enact the rule bat to ll!fl1md it so as to vary the N. A. assessment. Sec. 50 clearly confers power on the State Legislature to levy assessment and when the land is diverted to a use other than agriculture, the legislature · conferred the power· to levy N.A. assessment. Elaborate provision· has been niade for levying assessment. Sec. 172 conferred power to enact rules for givi·og effect to the provision of the Act and the guideline was· provided as herein above indicated. Therefore, we are not impressed by the submission that in the case the legislature was guilty of delegating its essential . 'legislative functions in favour of the executive.

p. 106, margin A

Re C.A. Nos. 1407 to 1413/70: In this group of appeals, vires of amended rule 81 of the Bombay Land Revenue Rules was questioned on the same identical grounds and the challenge. must fail for the same reasons. We may however, briefly point out the scheme of the relevant. Act and the rules governing this case.

p. 106, margin C

Bombay Land Revenue Act was enacted in the year 18 79 to consolidate and amend law relating to revenue officers and to the assessment and recovery of land revenue and other matters connected with the Land Revenue Administration·. Sec. 48 confers power to . levy and assess the land revenue with reference to the use of the land -(a) for the purpose of agriculture, (b) for the purpose of building, , and (cl for a purpose other than agriculture or building. Chapter VIII includes provision for Surveys, Assessments and Settlements of Land Revenue. Chapter VIII-A makes forther provisions for assessment and settlement of land revenue on agricnlturaj land. Chapter xr. makes detailed provision for the procedure to be followed by the revenue officers while discharging their duties and carrying out the functions imposed by the Code. Chapter Xlil provides foi· appeals and.revisions against the orders of the revenue officers .. Sec~ 21'4 confers power on the State Government to make rules not inconsistent with the provisions of the Act to carry put the purpose and object thefeof and for the guidance ?fall persons in mattetf 1:onnectcd with the enforcement of the Act. Armed with this povv€fr; Land Revenue Rules, 1951 were enacted. Chapter XIV headed 'imp()sitlon and revision of non-agricultural assessment' make detailed provisions for assessment and levy of N.A. assessment. Rule 80 confers power for alteration of assessment when land assessed or held for agricul· tural purpose if used for non-agricultural purpose. Rule 80A confers power for revision of N.A. assessment on the expiry of the period for which assessment on any land was assessed and levied. Rule 81 provides for ordinary rates of N.A. assessment.. It was amended and the validity of the amended rule is in question. Floor and ceiling rates vary from area to area demarcated on the basis of population and it is further provided that in fixing the rates within floor and the ceiling, due regard shall be had to the general level of the value of , the lands in the locality used for non-agricultural purposes. Rule 82 makes detailed provision for the rate of non-agricultural assessment to be determined in accordance with that provision where special rate of non-agricultural assessment is in 'force. Where N.A. assessment is levied at an ordinary rate, the Commissfoner before detor· .·mining the rate at which N.A. assessment will be levied on any parti· cular plot has by notification to divide the villages, towns and cities in each district in his division to which a standard rate under Rule 82 has not been extended into two classes. Even while assessing N.A. assessment, the Commissioner has to keep in view the level of value of land in the locality used for non-agricultural purposes. In our opinion, both the Act and Rules thus provide for sufficient guidelines, and it cannot be said that the Commissioner enjoys wide arbitrary discretionary power. The discretion has to operate within the floor and the ceiling; the yardstick is the value of the land used for non-agricultural purposes in the .locality, the area has to be divided village-wise, town-wise, city-wise and overall what is being assessed is land revenue because N .A. assessment is none· the· less land revenue. In our opinion, the High Court was in error in striking down the provision on the ground that the Commissioner enjoyed wide arbitrary discretion uncontrolled by any guidelines. The discretion is not only controlled but there is sufficient guidelines in the Act and the Rules and therefore, the High Court was in error in striking down the demanded Rule 81.

pp. 106–107, margin E

It was in passing urged that there is no prov1S1on for notice before N.A. assessment is levied. We would expect revenue authority ordinarily to hear the person affected by the order levying N.A. assessment or at the time of its appeal or revision, but on this count the demand cannot be struck down because when a demand is served, it can be objec"ted · to and the decision is appealable. It cannot be said that the Rule would be bad as it does not inhere the princi- 'ples of natural justice.

pp. 107–108, margin D

The decisions of the . High Court were not sought to be supported on any other ground. Accordingly, these appeals must succeed.

p. 108, margin A

All the appeals are allowed and the judgments 'of the High Court in both the groups are quashed and set aside and the writ petitions filed by the respondents are dismissed with costs throughout. H.S.K. Appeals allowed.

p. 108, margin B