The Corporation of Madras vs R. Sundaram and Another

K. Veeraswami, J.—This appeal arises from an order of Kailasam, J., allowing the first respondent''s petition under Article 226 of the

Constitution and directing the appellant, which is the Corporation of Madras, to apply for sanction of the State Government as provided for in

Section 102 proviso (a) of the Madras City Municipal Corporation Act, 1919, for exemption of the whole of water and drainage tax and the

lighting tax in West Mambalam area. The first respondent is a landlord residing in West Mambalam and is said to own four houses in different

roads in the area. He complained that the West Mambalam area had been neglected and uncared for by the Corporation in providing water and

drainage amenities, which has caused great inconvenience to the residents in the area. The demand notices served on the first respondent showed

that the property tax was levied at the certain percentage of the annual value of the buildings and the tax included levy for water, drainage and

lighting. The first respondent addressed the Corporation several letters about the neglect of the area and paid the tax for general purposes, lighting

and cess ; but the portion of the tax relating to water and drainage he deducted and did not pay. In the circumstances, the Corporation, said the

petitioner, was not entitled to collect property tax comprising of charges for water and drainage purposes and that Section 99 itself was clear read

with Section 102 proviso (a) that the owners of property in the area would be entitled to exemption of tax in respect of non-provision of water and

drainage facilities. On these premises, this Court was moved for a direction to the Corporation to exempt the 95th division, namely, the area of

West Mambalam from liability to pay water and drainage tax till these facilities were extended to the area. The petition was resisted by the

Corporation. It referred to the fact that drainage schemes for the area were being executed in stages and the Council of the Corporation had not

considered the area for exemption and actually no proposal had been sent up by it for sanction of any such exemption. According to the

Commissioner for the Corporation, if there was no water and drainage system provided in the area, alternate arrangements had been provided to

render such services like water lorries to store street located tanks at important places and that such lorries fitted with pump system were also daily

sent to remove the drainage and sullage water. On this account it was stated that the Corporation was incurring a huge expenditure. The

Commissioner further maintained that the property tax was not related to the services rendered, but to meet the general cost of the municipal

services rendered in and to the city, and, therefore, the demand of property tax in full was not illegal. Kailasam, J., on a consideration of the

relative sections in the the Madras City Municipal Corporation Act, was of opinion that the Corporation was in law bound to apply to the State

Government for exemption from payment of the whole of the water and drainage tax. The learned Judge accordingly gave the direction we

mentioned earlier.

There is no dispute before us that as a matter of fact there is no water or drainage system provided so far by the Corporation in the West

Mambalam area. But Mr. Chengalvaroyan, who appears for the appellant, contends that though the council has power to apply to the State

Government for exemption, there is no compulsion or obligation that it should do so, notwithstanding the fact that a particular area is not provided

with water or drainage system. He says that the property tax is levied inter alia for general purpose of maintaining the water and drainage system in

the city in its entirety and any question of exemption for any particular area will have to be viewed only from that standpoint. On the other hand, for

the first respondent the contention is that the Corporation in spite of several communications from him has not even cared to consider the matter,

bring it before the Council and come to a decision whether exemption should be granted and, if so, the State Government should be approached

for their consent. Strong reliance is placed on proviso (a) to Section 102 of the Madras City Municipal Corporation Act, and it is urged that the

proviso makes it explicit, that, when a particular area is not served with water or drainage system, it is the duty of the Council to take steps for

exempting the area from tax proportionate to the water and drainage facilities not provided for.

Part III of the Act is devoted to taxation and finance. In Chapter V, Section 98 enumerates the kinds of taxes the Council may levy and among

them property tax is one. The section does not refer to water tax or drainage tax as such. But Section 99(1) does speak of such a tax. It says that

the property tax may comprise of a tax for general purposes, a water and drainage tax for the purpose of defraying the expenses connected with

the water and drainage system of the city and a lighting tax for the purpose of defraying the expenses connected with the lighting of the city. Section

99(1) authorises the Council by a resolution to levy tax on all buildings and lands within the city except those exempted by or under the Act or any

other law. The charge is at such percentages of the annual value of the buildings and lands as may be fixed by the Council. Elaborate provisions

have been made prescribing the procedure and the method by which the annual value of a building for the levy of property tax, a few provisions''

follow providing for exemptions. Section 101 deals with general exemptions with which we are not at the moment concerned; and the next with

special exemptions and alternative bases of property tax. This section at the opening prescribes as to how the rates of property tax are to be fixed.

proviso (a) to that part of the section reads:

Provided that--(a) the Council may, with the sanction of the State Government, exempt any local area from the whole or a portion of the water and

drainage tax or of the lighting tax on the ground that such area is not deriving any or the full benefit from the water supply and drainage or from the

lighting system.

With reference to Section 138 Part III in the Fourth Schedule, by Clause 30, it is provided that the Commissioner shall keep separate accounts

of all moneys received and expended in connection with the water tax, the drainage tax and the lighting tax.

A general survey of these provisions leaves us with the impression that they appear to make no distinction between a tax and a fee. But no

argument has been addressed to us as to what precisely is the nature and effect of the water and drainage tax spoken to by proviso (a) to Section

But it is clear from Section 98 that the tax levied is property tax and its character remains to be that, whatever be its components. The effect

of Section 99(1) to our minds, is that levy of property tax by the Council is permissible if it comprises of a charge for anyone or more of the three

purposes mentioned therein. In quantifying property tax subject to the rate thereof being in accordance with Sub-section (2) of Section 99, the

Council, we are inclined to think, may be expected to keep in view the water drainage and lighting system provided and the expenses which would

have to be met on account of providing those amenities. But there is no indication in Chapter V of Part III of the Act that property tax, if it includes

water, drainage and lighting tax, even where anyone or more of these amenities have not been provided for, is for that reason, and to that extent

unauthorised or illegal or invalid. If that were not so there would be no need to provide for an exemption. The exemption in proviso (a) to Section

102 presupposes a levy which is valid, but from which exemption may be granted in particular circumstances. In our opinion, proviso (a) to

Section 102 should be read and understood in the context of the rest of the provisions in Chapter V of Part III. We are inclined to think, therefore,

that merely because property tax is levied inclusive of water and drainage tax, though no facilities have been provided for, it cannot be regarded as

illegal and no owner of property can, on that assumption, withhold any part of the tax, as if it were attributable to water and drainage not provided

for in the area in which the property is situate. The tax so levied can legitimately be collected and the Council is entitled to do it.

But that does not conclude the matter in favour of the appellant. The Council which is vested with a power under proviso (a) to Section 102 has

got a duty to exercise it more especially when the statute conceives it, for the benefit of an area or section of the city. The law requires that the

Council in exercise of that power should consider whether, because a particular area is not provided with water and drainage system it should be

exempt from water and drainage tax so to speak. If the Council resolves in favour of exemption of the area, it has, before it gives effect to the

exemption, to seek and secure the sanction of the State Government. The complaint of the first respondent is that the Council has failed even to

respond to his several letters inviting its attention to the failure to provide for water and drainage system in West Mambalam area and to consider in

the context whether the area should not be exempted from property tax corresponding to the extent of such failure. We are inclined to think that

there is substance in the contention and that is what the learned Judge felt and quite rightly. It is a well settled principle that where a public body is

vested with a power or discretion, it is for exercise and not for inaction and it is especially so, when the power or discretion has been vested for the

benefit of those who will be affected by its non-exercise. But whether, on the merits, the exemption should be extended to a particular area will be

a matter of detail and will depend on several circumstances. If the Council thought that having regard to the expenses the Corporation has to incur

for providing in general a water, drainage and lighting system for the city as a whole, it would not be possible, without affecting its financial position

to grant exemption, it would be within its discretion to deny exemption. We do not understand proviso (a) to Section 102 as implying that the fact

of non-provision of any of the facilities comprehended by it will by itself necessarily compel the Council to grant exemption and that the area

affected will be entitled as a matter of right to such an exemption. If exemption should follow as a matter of right, the proviso should have been

differently worded and not in the present form, which seems to leave the judgment to the Council.

It follows from what we have said that the duty of the Council is to consider with reference to all the relevant facts and circumstances whether

exemption to a particular area to any extent under proviso (a) to Section 102 is called for, and, if so, whether the consent of the Government

therefore should not be obtained. That duty the Council has failed to discharge so far as the West Mambalam area is concerned.

On that view of the matter, the appeal is dismissed with costs. Counsel''s fee Rs. 100.