S. Ranganathan, J. - (1.) These appeals raise a common point. They arise out of two out of a batch of writ petitions, disposed of by the Punjab and Haryana High Court, which challenged the validity of S. 244 of the Punjab Municipal Act. The High Court concluded that, both on principle and precedent, the provisions should be struck down as they plainly suffer from the taint of unconstitutionality. The State of Punjab has preferred these appeals.
(2.) The Punjab Municipal Act (hereinafter referred to as the 'Act') was an Act to make better provisions for the administration of municipalities in Punjab. The procedure for constituting any local area as a municipality is set out in Ss. 4 to 10 (Chapter II) of the Act. Under S. 4, the State Government is empowered by notification to propose any local area (other than any part of a military cantonment) to be a municipality under the Act. Any inhabitant, who desires to object to such a proposal, can put forward his objections in writing within a specific period. The State Government is obliged to take such objections into consideration. It may then, by a notification, declare the local area to be a municipality of the first, second or third class as the case may be. Section 5 enables the Government to alter the areas of a municipality by including within the municipality and other local area. In such a case also the inhabitants of the municipality or the local area proposed to be included, are entitled to file objections which the State Government is obliged to take into account before notifying the inclusion of the local area in the municipality. Section 6 provides for a notification of the intention of the Government to exclude from a municipality any local area comprised therein. Here again, any inhabitant of the municipality or local area is entitled to put forward his objections and a final notification of exclusion of the local area from the municipality will be issued by the State Government after taking such objections into consideration. Section 9 confers a power on the State Government to except any municipality or part thereof from the operation of such of the provisions of the Act as are unsuited thereto. Section 10 of the Act (as originally enacted) gave power to the State Government to withdraw from the operation of the Act the area of any municipality constituted thereunder with the result that the Act would not apply within the .limits of that area. These are the sets of provisions relating to the constitution of a local area as a municipal area to be fully governed by the provisions of the Municipal Act. These municipalities are managed by committees constituted as provided in S. 12 and they have powers of raising money by taxation. The fund of the municipality, called the municipal fund, consists of all sums raised by or on behalf of the Committee under the Act or otherwise. The funds are to be defrayed by the committee on various types of civic needs set out in detail in S. 52 of the Act.
(3.) The Act also contemplates the constitution of certain local areas into what may be described as 'notified areas'. These notified areas do not function as municipalities proper but they are given a certain amount of local autonomy. The State Government appoints a committee and the committee manages the affairs of the local area. They are in charge of all aspects of local administration like a full-fledged municipality. They are given powers to impose certain taxes as are permitted by the State Government and only such provisions of the Act are applicable to them as may be extended by the State Government. The creation of a notified area is the recognition by the Government of the necessity for granting powers of local administration to a particular area in a smaller measure than is the case with a municipality. The provisions governing the constitution of a notified area are set out in S. 241 to S. 245 (Chapter XIII) of the Act. It is, however, sufficient to set out the provisions of Ss. 241 to 244 here for a proper appreciation of the issue that arises in these appeals: Section 241: Constitution of Notified Area (1) The State Government may, by notification, declare that with respect to some or all of the matters upon which a municipal fund may be expended under section 52, improved arrangements are required within a specified area, which nevertheless, it is not expedient to constitute as a municipality. (2) An area in regard to which a notification has been issued under sub-section (1) is hereinafter called a notified area. (3) No area shall be made a notified area unless it contains a town or a bazar and is not a purely agricultural village. (4) The decision of the State Government that a local area is not an agricultural village within the meaning of sub-section (3) shall be final, and a publication in the Official Gazette of a notification declaring an area to be notified area shall be conclusive proof of such decision. Section 242: Power of State Government to impose taxation and regular expenditure of proceeds thereof.. (1) The State Government may - (a) impose in any notified area any tax which could be imposed there by the committee under the provisions of section 6 if the notified area were a municipality: Provided that any tax imposed on buildings and lands shall not be subject to the maximum limits prescribed by sub-clause (a) of clause (1) of section 6:Provided also that a tax payable by the owner may be made payable by the occupier: (b) apply or adapt to the notified area for the assessment and recovery of any tax imposed under clause(a), any of the provisions of this Act, or of any rules for the time being in force, with respect to the assessment and recovery of any tax imposed under this Act: (c) arrange for the due expenditure of the proceeds of taxes imposed under clause (a) and for preparation and maintenance of proper accounts: (d) appoint a committee of one or more persons for the purposes of clauses (b) and (c): (e) appoint a president of such committee and fix the term of office of member or president of the committee: (f) extend to any notified area provisions of any section of this Act subject to such restrictions and modifications, if any, as the Government may think fit. (2) The proceeds of any tax levied in any notified area under this section shall be expended only in some manner in which the municipal fund of such notified area might be exopended if the notified area were a municipality. Section 243: Application of Act to notified area- For the purposes of any section of this Act which may be extended to a notified area the committee appointed for such area under section 242 shall be deemed to be a municipal committee under this Act and the area to be a municipality. Section 244 Discontinuance of notified area- The State Government may at any time cancel or modify any notification under section 241 or any order under section 242.;