- (1.) In this appeal from the judgment of the Madhya Pradesh High Court the question which arises for decision is whether the assessment list of house tax and conservancy tax confirmed by the Municipal Council, Khurai, at a special meeting on February 24, 1964 is effective or is liable to be quashed on the ground that it was not made in accordance with the provisions of the Madhya Pradesh Municipalities Act, 1961 (hereafter referred to as the Act).
(2.) The material facts are not in dispute. On December 28, 1962 the Municipal Council by a resolution, appointed a Sub-Committee consisting of the Vice-President and two Members for hearing objections under S. 138 (2) of the Act against the new assessment which the Chief Municipal Officer would propose to make. On the 30th of that month the Chief Municipal Officer was directed to prepare the assessment lists for all the 11 wards into which the municipal area has been divided. Up-till then taxes were levied at the rate of Rs. 7-12-0 per cent on the annual letting value of the house properties and building sites liable to be taxed, on March 3, 1963 the Council considered a proposal for introducing a slab system for assessing these properties. Upon that one of the members, Smt. Poonabai suggested a modification of the office proposal and her suggestion was accepted by the majority of the members of the Council. On March 6, 1963 the assessment list prepared by the Chief Municipal Officer in pursuance of the resolution was authenticated by him. It was then duly published that day under S. 136 of the Act. Objections were also invited from the assessees. About 2,200 objections were lodged which were considered by the Sub-committee between April 7, 1963 and April 14, 1963. In the meanwhile it would appear that a suit had been instituted by some of the assessees in which the validity of the resolution of March 3, 1963 varying the rate of tax and seeking a permanent injunction against the Committee restraining it from giving effect to the new basis of assessment. The Committee, it would appear, realised that it could not vary the old rates without obtaining the sanction of the State Government and, therefore, in the written statement filed on its behalf, made it clear that an early meeting would be held for deciding whether the resolution of March 3, 1963 should not be given effect to. That meeting was held on April 28, 1963 and there the resoltition of March 3, 1963 was revoked and the old rate of assessment was reverted to.
(3.) Numerous complaints were made by assessees to the effect that the Sub-Committee had shown partiality in dealing with objections to assessments and had in fact shown favour to rich persons. The President of the Council enquired into the complaints and was satisfied that there was substance in them. In the meanwhile, however, pursuant to a decision of the Sub-Committee dated August 21, 1963 the assessment list as revised by the Sub-Committee was authenticated by the Chief Municipal Officer as required by S. 140 of the Act and was published on August 30, 1963. It would appear that notices of demand were also issued against the assessees on the basis of the revised list. The President had, in the meantime, intimated to the Collector that the Sub-Committee had shown partiality, particularly to rich assessees and invited him to suspend the revised list in exercise of his supervisory powers. On October 9, 1963 the Collector made the following order: "In exercise of the powers delegated to me under S. 323 of the M. P. Municipalities Act; 1961 I hereby suspend the execution of the decision of the Sub-Committee appointed by the Municipal Council, Khurai, under S. 71 (v) of the said Act for assessment of the House Tax and Latrine Tax, vide its resolution No. 2 dated 28-12-1962, as the decision taken by the said Committee is not in conformity with the law, is detrimental to the interest of the Council and is causing annoyance to the public. The decision shall remain suspended until the assessment is properly revised afresh.' He forwarded a copy of the order to the Government of Madhya Pradesh and requested that his Order may be confirmed under S. 323 (2) of the Act. He made the following endorsement on the copy of the order forwarded to the President of the Municipal Committee: "Copy forwarded to the President, Municipal Council, Khurai, for information and immediate necessary action in respect of the demand notices issued for recovery of the taxes. Apparently the assessment has not been properly made. No reasons for not accepting the overseer's valuation have been given and rich persons have been shown favour thereby. The Council has thus defaulted in performing the duty imposed on it under the said Act. The Council is, therefore, called upon to show cause for its failure as required under S. 327 (1) of the said Act and to furnish its explanation within a period of 15 days to my office. " After receiving this communication the President caused a proclamation to be made bringing it to the notice of the assessees that the assessment list had been suspended and intimating to them that taxes on the basis of the revised list should not be paid. The Government acting upon the communication received from the Collector issued notice to the Council on December 2, 1963 under S. 323 (2) to show cause why the order passed by the Collector should not be confirmed. Eventually the Government confirmed the Collector's Order.;